CHAPTER 7

A MODEL TO IDENTIFY THE BARRIER FACTORS IN LEAN

IMPLEMENTATION

7.1 INTRODUCTION
In the introduction chapter it was indicated that SMEs are required to implement the
competitive strategy adopted by large size companies .It was also indicated that various
competitive strategies like total quality management, six sigma and lean manufacturing that
have been established in the world are highly applicable for practice in large scale companies
and it is required to make them applicable in SMEs also. In this context, this chapter concerns
about identification of key barrier factors, which are required to overcome for implementation
of lean manufacturing in small and medium enterprises.

7.2 RESEARCH METHODOLOGY

The survey instrument used in the research is a questionnaire that has been developed from the
literature review. Research carried out through the face-to-face interview with the small and
medium scale managers or supervisors. Analysis of the questionnaire (Annexure No 2) was
conducted in Kerala SMEs in January 2015 to June 2015. The questionnaire consists of 31
questions. Five-point Likert scale from 1 (very low) to 5 (very high) was used for the total 31
questions to measure the responses. Initially, 133 SMEs considered for the survey and face-to-
face interview was conducted with 133 organizations. This represents 100% response rate. The
research details are shown in table 7.1.

A pilot study was conducted beginning of the questionnaire survey. The comments about the
questionnaire during the pilot study were positive and validated that the questionnaire was
suitable for the survey .Reliability test for the questionnaire was carried out using Cronbach’s
Alpha to ensure its consistency. A minimum value of Cronbach’s Alpha 0.6 was considered as
acceptable in this research. As it is agreed, that 0.6 is an appropriate threshold (Sakakibara
et.al, 2009). Cronbach’s Alpha value obtained in this research is 0.810 which is significantly
greater than the threshold value of 0.60and hence it is reliable. Kaiser Meyer Olkin (KMO) test
were employed to measure the sampling adequacy. It is generally agreed that 0.5(Kim, J., &
Mueller, L.W 1978) is an appropriate threshold. The validity test result of KMO value was
0.761 exceeding the minimum score of 0.5 making it valid. The model is developed using
confirmatory factor analysis, structural equation modelling and it is verified by the various fit
indices.

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Table 7.1 Research data

Characteristics Research Data

Population under study SMEs

Geographical area in Kerala ,State of India

Data collection method face to face interview

Sample size 133 organisations

Sample size January–June 2015

Respondent profiles Industrial manager, supervisor

Response of organisation from the 100%

sample

7.3 BARRIER FACTORS OF SMEs

The researcher found that the working environment of SMEs in different countries vary.
However, the barrier factors of SMEs are commonly visible in global scenario. The content of
this table 7.2 would indicate the frequently cited barrier factors of SMEs in literature.

Table 7.2 Barrier factors with notations

Barrier factor Notation Barrier factor Notation

High inventory F1 High rejection rate F2
Employee absenteeism F3 High contract labour F4
high set up/change over time F5 Lack of practical implementation F6
knowledge within the company
Lack of knowledge about F7 Frequent breakdown F8
the existing specialist
Frequent breakdown F9 Lack of support from the top F10
management
Owner cum manager F11 High response time F12
Poor communication F13 High lead time F14

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Table 7.2 Barrier factors with notations (cont’d)

Barrier factor Notation Barrier factor Notation

High competition F15 Frequent change in supply F16
Lack of job security F17 Poor salary wages F18
High customer pressure F19 Lack of knowledge F20
Lack of time F21 Employee resistance F22
Inadequate knowledge F23 Risk of disputation in operation F24
Need to integrate the other F25 Lack of top management interest F26
department
Lack of training F27 Departmental conflicts F28
Lack of well trained and F29 Culture and resistance to change F30
experienced technical staff
Lack of awareness F31

7.4 CONCEPT OF SEM

As discussed in chapter 3.7.3,SEM is used to analyze the relationship between the exogenous
and endogenous variables. A test of goodness of fit of the SEM has been conducted to
determine whether the specified variable provides the adequate fit to the model.Based on this
if the satistical indices as indicated in chapter 3.7.3 are within the recommended level, the
model is considered to be a reasonable representation of data.

7.5 CONFIRMATORY FACTOR ANALYSES TO VERIFY MODEL BY

STRUCTURAL EQUATION MODELLING

All the 31 items in the questionnaire were factor analysed using principal component extraction
with varimax rotation. The number of factors were constrained to five. For the convergent
validity, 0.4 was used as a factor-loading cut off point. Using these criteria, resulted in five
factors totalling 31 items. The confirmatory factor analysis aims to improve the questionnaire
through its four structural model configuration based on criteria maximum likely hood. Each
of the models (M1, M2, M3, M4) as shown in figure no 7.1, 7.2, 7.3, 7.4 is judged by a set of
indices. These factors are labelled as strategic, organization, structure, managerial, employee
as shown in below figure no 7.1 is judged by a set of indices. Modifications of theoretical
model are generated from parameter estimate, modification indices and residual values.

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 Figure 7. 1 Model M1 (Five Factor Model)

N1-Departmental factor, N2-Organisation factor, N3-Operational Factor, N4-Structural Factor,

N5-Managerial factor

Model (M1)

This is the model, which originates from the confirmatory factor analysis as a theoretical
model. Goodness of fit index (GFI), adjusted goodness of fit index (AGFI), Root Mean Square
Error Approximation (RMSEA) and Comparative fit index (CFI), are respectively, 0.805,
0.753, and 0. 078 and 0.768, which are not within the recommended level (Joreskog and Sorban
1993) so that the data are not indicating the perfect fit model. The summary of fit indices is
given in the below table 7. 3

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Table 7.3 Goodness-of-fit statistic for model 1

Statistics Model Values Recommended value for good fit

χ2 602.572
Probability level 0.000 ≥ 0.05
χ2/df 1.74 ≤3.00
GFI 0.805 ≥0. 9
AGFI 0.753 ≥0. 9
CFI 0.768 ≥0. 9
RMSEA 0.078 ≤0. 05

Figure7.2 Model 2 (Four Factor Model)

Model (M2)

The second model arises from the modification of the first model (figure7.1). It has 12 items
and 4 factors from the M1, GFI, AGFI, RMSEA, CFI values are 0. 873, 0.794, 0.115 and 0.693,
which is not within the recommended, level (Joreskog and Sorban 1993) so that the data are
not indicating the perfect fit model. The summary of fit indices has given in the below table
7.4

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Table 7.4 Goodness-of-fit statistic for model 2.

Statistics Model Values Recommended value for good fit

χ2 164.595
Probability level 0.000 ≥ 0.05
χ2/df 3.429 ≤3.00
GFI 0. 873 ≥0. 9
AGFI 0. 794 ≥0. 9
CFI 0.693 ≥0. 9
RMSEA 0.115 ≤0. 05

Figure 7.3 Model 3(Three-Factor Model)

Model (M3)

The third model represents the three factors with nine items. GFI, AGFI, RMSEA and CFI
values are. 0.917, 0.845, 0.103and 0.845 respectively which are not within the recommended
level (Joreskog and Sorban 1993) so that the data are not indicating the perfect fit model.
Summary of fit indices has given in the below the table 7.5

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Table 7.5 Goodness-of-fit statistic for model 3.
Statistics Model Values Recommended value for good fit

χ2 64.9

Probability level 0.000 ≥ 0.05

χ2/df 2.704 ≤3.00

GFI 0. 917 ≥0. 9

AGFI 0. 845 ≥0. 9

CFI 0.843 ≥0. 9

RMSEA 0.103 ≤0. 05

Figure 7.4 Model 4(Two Factor)

MODEL (M4)
Figure 7.4 shows the measure of fit between the empirical data and the model. The popular
measurement of fit goodness of fit index are GFI, AGFI, RMSEA and CFI, their values are
0.978, 0.935, 0.047and 0.978 respectively, which is within the recommended level (Joreskog
and Sorban 1993) so that data indicating the perfect fit model. The summary of fit indices are
given in table 7.6

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Table 7.6 Goodness-of-fit statistic for model 4

Statistics Model Values Recommended value for good fit

χ2 9.026

Probability level 0.251 ≥ 0.05

χ2/df 1.289 ≤3.00

GFI 0. 978 ≥0. 9

AGFI 0. 935 ≥0. 9

CFI 0.978 ≥0. 9

RMSEA 0.047 ≤0. 05

In the above model N1 represent the employee factor and their contributing variables are lack
of well-trained and experienced staff, lack of knowledge about the existing specialist, Cultural
resistance to change and N2 represent the process factor, and their contributing variables are
high ejection rate, employee absenteeism and frequent break down.

7.6 SUMMARY

This research investigates the structural relationship between lean implementation and its
barrier factors. To meet the successful implementation of lean manufacturing the SMEs should
overcome the two factors, one is the employee, and the second one is the process factor of
small and medium enterprises. A summary of our findings suggests that these factors are lack
of knowledge about existing specialist, lack of well-trained and experienced staff, cultural
resistance to change, high rejection rate, employee absenteeism, and frequent break down. The
next phase of the study will examine the empirical support of this proposed model.

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