Impact of lean practices on operations performance and business performance

Purpose – This study aims to investigate the relationship between lean practices, operations performance (OP), and business performance (BP). Design/methodology/approach – This survey-based study was a cross-sectional study. The samples were drawn by using stratified random sampling procedure from large Indonesian manufacturing companies based on the directory provided by the Data and Information Center of Indonesian Ministry of Industry with the final number of respondents of 139. Four main hypotheses were developed and tested statistically by applying multivariate data analyses. Findings – The results provided evidence that lean practices should be implemented holistically. Lean practices have a positive and significant impact on both OP and BP. Moreover, OP partially mediates the relationship between lean practices and BP. Research limitations/implications – The data used in this survey represent self-reporting by mainly the middle or top management in production. Practical implications – This study contributes to the lean manufacturing (LM) body of knowledge by identifying the relationships between the LM practices, OP, and BP. Understanding these relationships will help practitioners in making better decisions in manufacturing organizations as well as enable application of the concepts in this study to other contexts such as service organizations. Originality/value – Although there are a growing number of anecdotal and empirical evidences in favor of LM in manufacturing environment, there has been almost no theory-building and methodologically rigorous research examining the link between LM, OP, and BP. This study is addressed to fill this gap.