The S-Curve Effect of Lean Implementation

Production and Operations Management, Forthcoming

33 Pages Posted: 16 Jan 2016 Last revised: 20 Jan 2016

See all articles by Torbjørn Netland

Torbjørn Netland

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC)

K. Ferdows

Georgetown University - Department of Decision Sciences, Information Sciences & POM

Date Written: January 14, 2016

Abstract

There is currently no theory that explains the pattern of change in a plant’s performance as it implements a lean program. Does it improve at a declining, increasing, or constant rate, or in some other pattern? We use empirical data from the implementation of the Volvo Group’s lean program worldwide to develop a grounded theory to explain this pattern. We find that the pattern roughly follows an S-curve shape: as a plant progresses in its implementation of lean production, its operational performance improves slowly first, then grows rapidly, and finally tapers off. The initial stage can be characterized by “exploration”, during which the plant is essentially discovering and experimenting with lean principles, and the later stages by “exploitation”, during which the plant is realizing their benefits. We derive the grounded theory from quantitative internal company data and find additional qualitative support for it from our visits to 45 Volvo plants on 5 continents and 210 interviews with employees in these plants and Volvo headquarters. The S-shape pattern has important implications. Practitioners must assess a plant’s maturity in lean implementation and adjust their targets, action plans, and expectations accordingly. Scholars must take the position of the plant on the S-curve into consideration when they analyze the impact of lean programs.

Keywords: Lean production; production improvement; operational performance; grounded theory

Suggested Citation

Netland, Torbjorn and Ferdows, K., The S-Curve Effect of Lean Implementation (January 14, 2016). Production and Operations Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2715681

Torbjorn Netland

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC) ( email )

ETH-Zentrum
Zurich, CH-8092
United States

K. Ferdows (Contact Author)

Georgetown University - Department of Decision Sciences, Information Sciences & POM ( email )

Washington, DC 20057
United States

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