CHAPTER 5

IDENTIFICATION AND MODELLING OF MANAGERIAL FACTORS

5.1 INTRODUCTION

This chapter tries to formulate the framework for the variables of managerial factors, which is
identified as one of the success factors for implementation of lean manufacturing in small and
medium scale enterprises. This framework is very useful to small and medium scale enterprises
to implement lean manufacturing in their organizations

5.2 METHODOLOGY

The survey instrument used in the research is a questionnaire that has been developed after
conducting a pilot study with a small group of small and medium scale organizations. Research
is carried out through face-to-face interview with the small and medium scale managers or
supervisors. Analysis of the questionnaire (Annexure No 3) was conducted in Kerala SMEs in
September 2015 to February 2016. The questionnaire consists of 26 questions in four
categories. The questionnaire was developed with expert opinions of the manager or
supervisors who are likely to hold the charge of the lean implementation. Five-point Likert
scale from 1 (very low) to 5 (very high) was used for all 26 questions to measure responses.
Initially, 124 SMEs considered for the survey and face-to-face interview was conducted with
124 organizations. This represents 100% response rate. The research details are shown in table
5.1

Table 5.1 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 124 organisations
Time frame September–February2016
Respondent profiles Industrial manager, supervisor
Response of organisation from the 100%
sample

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Structural equation modelling (SEM) was used to test the model with data collected using face-
to-face interview questionnaire. The conceptual framework presented in figure 5.1 is developed
from the SEM approach. The questionnaire was developed based on the four enablers namely
- managerial responsibility of data analysis (F1), managerial responsibility of floor
commitment and employee trust (F2), managerial responsibility of linking lean to the business
strategy (F3) management responsibility of business strategy based on the customer demand
(F4),all of which lead towards leanness. These managerial factors have become a potentially
valuable way of securing competitive advantage and improving organization performance. For
example the factor, getting shop floor commitment and employee trust(F2) consists of seven
variables viz., maintain good interaction and communication with employees (V15 ), identify
and solve the personal issues( V16 ), provide transportation, food and an allowance(V17),
encourage and motivates the employee(V18) maintain good manager, worker
relationship(V19 ), criticize the worker privately not, in the crowd ( V20) and coach and train
employee and not command them( V21). The number of enablers were limited to four so that
model will be simple and easy to understand. Further, adding of enablers increase the
complexity of the model and reduce the validity of the present study. A conceptual framework
was developed incorporating the dimension of lean manufacturing relationship with the
managerial performance.

Figure 5.1 Conceptual framework of Managerial Factor

F1= Analysis of data, F2= shop floor commitment and employee trust, F3= Linking lean to
business strategy, F4= business strategy based on customer demand
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The internal consistency of the questionnaire has been estimated using a reliability coefficient
such as Cronbach’s Alpha on the given set of managerial factor construct using the reliability
test procedure of SPSS. The Cronbach’s Alpha value of these five constructs are 0.648, 0.832,
0.644, 0.656.All these values are above the threshold value of 0.60(Black and Porter, 1996)
and indicate that the scale constituents reliable (Table5. 2).

Table 5.2 Internal consistency Analysis of four critical Factors

Original Original No of items Final no of Final

Factors
No of items Alpha deleted Items Alpha
shop floor commitment
7 0.614 2 5 0.648
and employee trust
Business strategies based
6 0.695 2 4 0.832
on the customer demand

Analysis of data 4 0.644 Nil 4 0.64

Linking Lean into the

9 0.623 3 6 0.656
business strategy

5.3 DEVELOPMENT OF MANAGERIAL FACTORS USING STRUCTURAL

EQUATION MODELLING

Structural equation modelling allows to examine the relative strength of relationship among
variables. In this research, first we perform a confirmatory factor analysis (CFA) to ensure that
all indicator variables used to measure the construct are reliable and valid. Second, we postulate
and test the significant factors between each construct and indicating variable. The figure 5. 2
shows an overview of SEM results linking managerial factor towards success of lean
implementation

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Figure 5.2 SEM showing the linkage between data analysis (F1), shop floor commitment and
employee trust (F2), linking lean into the business (F3), and business strategy based on
customer demand (F4)

A test of goodness of fit of SEM is conducted to determine whether specified variable provide
an adequate fit to the model. This requires accepting the H0 which states that the overall
hypothesized model has good fit (H0). To do so, we look for a probability result that of higher
than 0.05. The SEM result shows χ2 value of 80.202 with 71degrees of freedom and p value of
0.212.This result supports the H0 that the SEM has a good fit. The p value considerably high
(P value ≥0.05) and this indicates well support for the overall model with the data. Furthermore,
other statistical structural indices such as Goodness of fit index (GFI 0.912), Bentler
comparative fit model (CFI 0.094), and Root Means square error approximation (RMSEA
0.032) further suggest that the model has a satisfactory fit. Table 5.3 shows that our probability
value (0.213≥0.05) and structural modelling indices are well above the recommended level, so
model is considered to be a good representation of the data (Hair et.al 1995)

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Table 5.3 Measurement result of SEM (Goodness-of-fit statistic values)

Statistics Model Values a

Recommended value for good fit

χ2 80.202
Probability level 0.213 ≥ 0.05
χ2/df 1.13 ≤3.00
GFI 0.912 ≥0. 9
CFI 0.974 ≥0. 9
RMSEA 0.032 ≤0. 05
Source: a (Joreskog and Sorban1993)

The SEM can also measure the magnitude and the contribution each variable on the
corresponding construct. By examining the loading on the construct (shop floor commitment
and employee trust) in Table 5.4 we can show that, criticize the worker privately ,not in the
crowd (structural loading = 0. 942) has higher contribution towards the shop floor commitment
and employee trust, followed by maintaining good manager and worker relationship (structural
loading=0. 50), for overtime work provide food and allowance (structural loading =0. 398) and
encourage and motivate the employee (structural loading =0.282).All these indicators have
significant probability value (critical ratio≥2) thus providing statistical evidence that their
contribution towards statistical data analysis are significant. The table 5.4 shows that other
indicating variables have positive significance on each construct.

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Table5.4 Measurement result of SEM

Standard Standar Critical

Construct Indicators Probability
loading d error Ratio

For overtime work

provides transportation 0.398 0.103 2.899 Significant
food and an allowance
Shop floor
commitment Encourage and motivates
and 0.282 0.087 2.394 Significant
the employee
employee Criticise the worker
trust 0.942 0.146 3.156 Significant
privately not in the crowd
Coach and train the
employee and not
0.5 N/A Significant
command them
Demand quality, price and
0.720 0.097 8.709 Significant
time delivery
For quality of job work
based on the quality
0.863 0.098 10.663 Significant
business prescribed by customer
strategy order, raw material
based on Customer rework should
customer 0.569 0.108 6.490 Significant
be free of cost
demand
Production planning based
on customer demand 0.66 N/A Significant

Analysis of data once or

twice in a month's time 0.523 0.190 3.616 Significant
based

Data analysis mainly

Analysis of 0.573 0.117 3.678 Significant
carried out in raw material
data
Convert all documentation
into the computer for data 0.77 N/A Significant
analysis in smes

Conduct the management

programs related to lean 0.378 0.494 2.304 Significant
principle
All level employees
Linking Lean
should aware about lean 0.448 0.565 2.468 Significant
into the
principle
business
Help of lean consultant
strategy
may be required in the
0.33 N/A Significant
initial stage of lean
implementation

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5.4 SUMMARY
Summary of findings suggests that in shop floor commitment and employee trust, supporting
variables are - for overtime work provide transportation food and an allowance, encourage and
motivate employee, criticize the worker privately not in the crowd and coach and train the
employee and not command. Business strategy based on customer demand supporting variables
are, quality, price and time delivery in the business, for quality of job work based on the quality
prescribed by customer order raw material, customer rework should be free of cost, and
production planning based on customer demand. The data analyses construct supporting
variables are analysis of data once or twice in a month's time based on SMEs, convert all
documentation into the computer for data analysis in SMEs, and data analysis mainly carried
out in raw material. In linking lean into the business strategy, the supporting variables are
conduct the management programs related to lean principle, all level employees should be
aware about lean principle, help of lean consultant may be required in the initial stage of lean
implementation.

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