The Role of Social and Technical Lean Implementation in Improving Operational Performance: Insights from the Pharmaceutical Industry

Authors: M. Bernasconi, M. Grothkopp, T. Friedli

Abstract:

The objective of this paper is to examine the relationships between technical and social lean bundles as well as operational performance in the context of the pharmaceutical industry. We investigate the direct and mediating effects of the lean bundles Total Productive Maintenance (TPM), Total Quality Management (TQM), Just-In-Time (JIT), and Human Resource Management (HRM) on operational performance. Our analysis relies on 113 manufacturing facilities from the St.Gallen OPEX benchmarking database. The results show that HRM has a positive indirect effect on operational performance mediated by the technical lean bundles.

Keywords: Human resource management, operational performance, pharmaceutical industry, technical lean practices.

References:

[1] J. P. Womack, and D. T Jones, Lean thinking: banish waste and create wealth in your corporation, New York, NY: Simon & Schuster, 1996
[2] J. P. Womack, D. T. Jones, and D. Roos, The machine that changed the world, New York, NY: Harper Perennial, 1990
[3] M Holweg, “The genealogy of lean production”, Journal of Operations Management, Vol. 25, 2007, pp. 420-437
[4] U. Dombrowski, D. Ebentreich, and P. Krenkel, “Impact analyses of lean production systems”, CIRP, Vol. 57, 2016, pp. 607-612
[5] J. R. Hackman, and R. Wageman, “Total quality management: empirical, conceptual, and practical issues”, Administrative Science Quarterly, Vol. 40, 1995, pp. 309-342
[6] B. B. Flynn, S. Sakakibara, and R. G. Schroeder, “Relationship between JIT and TQM: practices and performance”, Academy of Management Journal, Vol. 38, 1995, pp. 1325-1360
[7] R. Shah, P. and T. Ward, “Lean manufacturing: context, practice bundles, and performance”, Journal of Operations Management, Vol. 21, No. 2, 2003, pp. 129-149
[8] K. O. Cua, K. E. McKone, and R. G. Schroeder, “Relationships implementation of TQM, JIT, and TPM and manufacturing performance”, Journal of Operations Management, vol. 19, 2001, pp. 675-694
[9] G. Dal Pont, A. Furlan, and A. Vinelli, “Interrelationships among lean bundles and their effects on operational performance”, Operations Management Research, Vol. 1, No. 2, 2008, pp. 150-158
[10] R. J. Schonberger, World class manufacturing: the lessons of simplicity applied, New York, NY: Free Press, 1986
[11] J. Liker, The Toyota way: 14 management principles from the world’s greatest manufacturer, New York, NY: McGraw-Hill, 2004
[12] N. Bloom, B. Eifert, A. Mahajan, D. McKenzie, and J. Roberts, “Does management matter? Evidence from India”, The Quarterly Journal of Economics, Vol. 128, No. 1,2011, pp. 1-51
[13] J. Liker, and M. Hoseus, “Toyota culture: the heart and soul of the Toyota way”. New York, NY: McGraw-Hill, 2008
[14] J. Shook, “How to change a culture: lessons from NUMMI”, MIT Sloan Management Review, Vol. 51, No. 2, 2010, pp. 63-68
[15] Y. Sugimore, K. Kusunoki, F. Cho, and S. Uchikawa, “Toyota production system and kamban system: materialization of Just-in-Time and respect for human systems”, International Journal of Production Research, Vol. 15, No. 6, 1977, pp. 553-564
[16] A. Furlan, A. Vinelli, and, G. Dal Pont, “Complementarity and lean manufacturing bundles: an empirical analysis”, International Journal of Operations & Production Management, Vol. 31, No. 8, 2011, pp. 835-850
[17] V. Wickramsinghe, and G. L. D. Wickramsinghe, “Effects of HRM practices, lean production practices and lean duration on performance”, The international Journal of Human Resource Management, Vol. 31, No. 11, 2020, pp. 1467-1512
[18] C. Bai, A. Satir, and J. Sarkis, “Investing in lean manufacturing practices: an environmental and operational perspective”, International Journal of Production Research, Vol. 57, No. 4, 2019, pp. 1037-1051
[19] A. Camuffo, and F. Gerli, “Modeling management behaviors in lean production environments”, International Journal of Operations and Production Management, Vol. 38, No. 2, 2018, pp. 403-423
[20] T. Friedli, P. Basu, D. Bellm, and J. Werani. “Leading pharmaceutical operational excellence”. Heidelberg, Springer, 2013
[21] F. A. Abdulmalek, J. Rajgopal, and K. L. Needy, “A classification scheme for the process industry to guide the implementation of lean”, Engineering Management Journal, Vol. 18, No. 2, 2006, pp. 15-25
[22] US Food and Drug Administration, “FDA enforcement statistics – summary fiscal year 2017”
[23] A.C. Lyons, K. Vidamour, R. Jain, and M. Sutherland, “Developing an understanding of lean thinking in process industries”, Production Planning & Control, Vol. 24, No. 6, 2013, pp. 475-494
[24] J. E. Delery, and D. H. Doty, “Modes of theorizing in strategic human resource management: Tests of universalistic, contingency and configurational performance predictions”, Academy of Management Journal, Vol. 39, 1996, pp. 802-835
[25] J. P. Guthrie, P. C. Flood, W. Liu, and S. MacCurtain, “High performance work systems in Ireland: Human resource and organization outcomes”, The International Journal of Human Resource Management, Vol. 20, 2009, pp. 112-125
[26] G. H. Harel, and S. S. Tzafrir, “The effect of human resource management practices on the perception of organizational and market performance of the firm”, Human Resource Management, Vol. 38, 1999, pp. 185-199
[27] K. Laursen, and N. J. Foss, “New human resource management practices, complementarities and the impact on innovation performance”, Cambridge Journal of Economics, Vol. 27, 2003, pp. 243-263
[28] P. Cappelli, and D. Newmark, “Do high-performance work practices improve establishment-level outcomes?”, Industrial and Labor Relations Review, Vol. 54, 2001, pp. 737-775
[29] A. Som, “Innovative human resource management and corporate performance in the context of economic liberalization in India”, The International Journal of Human Resource Management, Vol. 19, 2008, pp. 1278-1297
[30] A. A. Katou, and P. S. Budhwar, “Human resource management systems and organizational performance: A test of a mediating model in the Greek manufacturing context”, The International Journal of Human Resource Management, Vol. 17, 2006, pp. 1223-1253
[31] A. K. Paul, and R. N. Anantharaman, “Impact of people management practices on organizational performance”, The International Journal of Human Resource Management, Vol. 14, 2003, pp. 1246-1266
[32] Y. Gong, K. S. Law, S. Chang, and K. R. Xin, “Human resources management and firm performance: the differential role of managerial affective and continuance commitment”, Journal of Applied Psychology, Vol. 94, 2009, pp. 263-275
[33] S. Sakakibara, B. B. Flynn, and R. G. Schroeder, “A framework and measurement instrument for just-in-time manufacturing”, Production and Operations Management, Vol. 2, No. 3, 1993, pp. 177-194
[34] J. W. Dean, and D. E. Bowen, “Management theory and total quality: improving research and practice through theory development”, Academy Management Journal, Vol. 19, 1994, pp. 392-418
[35] J. P. MacDuffie, “Human resource bundles and manufacturing performance: Organizational logic and flexible production systems in the world of auto industry”, Industrial and Labor Relations Review, Vol. 48, 1995, pp. 197-221
[36] P. Edwards, and M. Whright, “High-involvement work systems and performance outcomes: The strength of variable, contingent and context -bound relationships”, The International Journal of Human Resource Management, Vol. 12, 2001, pp. 568-585
[37] J. L. Callen, C. Fader, and I. Krinsky, “Just-in-time: A cross-sectional plant analysis”, International Journal of Production Economics, Vol. 63, 2000, pp. 277-301
[38] L. M. de Menzes, S. Wood, and G. Gelade, “The integration of human resource and operation management practices and its’link with performance: a longitudinal latent class study”, Journal of Operations Management, Vol. 28, 2010, pp. 455-471
[39] M. Swink, R. Narasimhan, and C. Wang, “Managing beyond the factory walls: Effects of four types of strategic integration on manufacturing plant performance”, Journal of Operations Management, Vol. 25, 2007, pp. 148-164
[40] T. Bortolotti, S. Boscari, and P. Danese, “Successful lean implementation: Organizational culture and soft lean practices”, International Journal of Production Economics, Vol. 160, 2015, pp. 182-201
[41] T. S. Najafi, H. Sharifi, and H. Ismail, “A study of contingency relationship between supplier involvement, absorptive capacity and agile product innovation”, International Journal of Operations & Production Management, vol. 34, pp. 65-92
[42] R. R. Fullerton, F. A. Kennedy, and S. K. Widner, “Manufacturing and firm performance: the incremental contribution of lean management accounting practices”, Journal of Operations Management, vol. 32, 2014, pp. 414-428
[43] K. Imai, L. Keele, D. Tingley, and T. Yamamoto, “Unpacking the black box of causality: Learning about causal mechanisms from experimental and observational studies”, American Political Science Review, vol. 105, 2011, pp. 765-789
[44] R. M. Baron, and D. A. Kenny, “The moderator- mediator variable distinction in social psychological research”, Journal of Personality and Social Psychology, vol. 51, 1986, pp. 1173-1182
[45] C.M. Judd, and D. A. Kenny, “Process analysis: Estimating mediation in treatment evaluations”, Evaluation Review, vol. 4, 1981, pp. 602-619
[46] L.R. James, and J. M. Brett, “Mediators, moderators and tests for mediation”, Journal of Applied Psychology, vol. 69, 1984, pp. 307-321
[47] D. A. Kenny, D. A. Kashy, and N. Bolger, “Data analysis in social psychology” in The handbook of social psychology, 4th ed., D. Gilbert, S. Fiske, G. Lindzey, Ed. Boston, McGraw-Hill, 1998, pp. 233-265
[48] K. A. Bollen, Structural equations with latent variables. Hoboken, NJ: John Wiley & Sons, 1989
[49] A. F. Hayes, Introduction to mediation, moderation, and conditional process analysis: a regression-based approach. New York, NY: Guilford Publications, 2018
[50] K. A. Bollen, and R. Stine, “Direct and indirect effects: Classical and bootstrap estimates of variability, Sociological Methodology, vol. 20, 1990, pp. 115-140
[51] P. E. Shrout, and N. Bolger, “Mediation in experimental and nonexperimental studies: New procedures and recommendations, Psychological Methods, vol. 7, 2002, pp. 422-455
[52] D. Tingley, T. Yamamoto, K. Hirose, L. Keele, and K. Imai, “mediation: R package for causal mediation analysis”, Journal of Statistical Software, Vol. 59, 2014
[53] M. Soliman, T. A. Saurin, and M. J. Anzanello, “The impacts of lean production on the complexity of socio-technical systems”, International Journal of Production Economics, Vol. 197, 2017, pp. 342-357