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IJLSS 4,1

Critical success factors of Lean Six Sigma for the Malaysian automotive industry

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Nurul Fadly Habidin Faculty of Management and Leadership and Faculty of Management and Economics, Universiti Pendidikan Sultan Idris, Tanjung Malim, Malaysia, and

Sha’ri Mohd Yusof Department of Manufacturing and Industrial Engineering, Universiti Teknologi Malaysia, Skudai, Malaysia Abstract Purpose – The objective of this paper is to explore the critical success factors (CSFs) for Lean Six Sigma (LSS) in the Malaysian automotive industry. Design/methodology/approach – Structural equation modeling (SEM) was employed to test the model drawing on a sample of 252 Malaysian automotive organisations. Exploratory factor analyses (EFA), confirmatory factor analysis (CFA), and reliability analysis empirically verified and validated the underlying items of CSFs of LSS. Findings – The results of EFA, CFA, and reliability analysis show that two items for supplier relationship are recommended to be excluded from the analysis. The result indicates that LSS has identified 40 items as compared to the original questionnaire which had 42 items. Based on the survey of empirical data, the two factors of leadership and customer focus have been shown to be the extremely important factors for LSS implementation in the Malaysian automotive industry. Research limitations/implications – Firstly, this survey is based only on the automotive industry in Malaysia, and therefore it is not generalisable to other industries. Secondly, there may be other CSFs for LSS such as culture change, project management skill, and employee involvement, which were not included in this study. Finally, for future research agenda, the authors are looking at the structural relationship between LSS practices and organizational performance in the Malaysian automotive industry. Originality/value – The developed and tested content of this study fills the research gap by providing reliable and useful reference material on the CSFs of LSS. On top of that, the contribution for academic researchers and practitioners is to provide important guidelines for automotive and related companies to implement LSS strategic practices to improve organizational performance. Keywords Critical success factors, Lean Six Sigma, Quality initiatives, Automotive industry, Malaysia Paper type Research paper

International Journal of Lean Six Sigma Vol. 4 No. 1, 2013 pp. 60-82 q Emerald Group Publishing Limited 2040-4166 DOI 10.1108/20401461311310526

1. Introduction In this globalization era, the role of continuous quality initiatives within organization has improved and matured. The automotive industry is one of the most active industry involved in the quality effort, low production cost, continuous improvement activities; development of supply chains, and adoptability of advanced technology. It is believed that, The researchers would like to acknowledge the Ministry of Higher Education (MOHE) for the financial funding of this research through the Fundamental Research Grant Scheme (FRGS), and the Research Management Centre (RMC), UPSI for the Research University Grant (RUG).

world class manufacturing (WCM) has achieved global competitive advantage through the use of their manufacturing capabilities as strategic weapon and providing world class performance in areas of productivity, quality, safety, environment, delivery, morale, flexibility, and cost (Hayes and Clark, 1985; Nachiappan et al., 2009). One of the main principles in implementing the lean initiative is to eliminate any waste that adds to the cost of the product and service (Womack and Jones, 1996; Ohno, 1998). Waste has been classified into seven categories which are also known as seven deadly waste. These seven deadly waste includes over production, waiting, transportation, over processing, inventory, motion and defects (Womack and Jones, 1996). Li et al. (2005) suggest that through waste elimination, the continual implementation of lean has the advantage in increasing the speed of production process, improving the quality of product and customer satisfaction. Apart from that, the objective of lean practice is to ensure smooth manufacturing flow by upgrading productivity to the level of quality products, utilization of production labor, reduced delivery time and effective manufacturing cost through continuous improvement process. Consequently, it helps organizations in improving the targeted performance and gaining benefit from the environment (Womack et al., 1990; Imai, 1997; Liker, 2004; Doman, 2007; Forrester et al., 2010). Besides that, Six Sigma initiatives reduce the number of defect which assists company to increase both customer satisfaction and financial benefit (Pyzdek, 1999; Snee, 1999; Breyfogle and Meadows, 2001; Tennant, 2001; Nonthaleerak and Hendry, 2008). Today, lean is integrated with Six Sigma that has assisted organization to achieve high level continuous improvement activity and better saving in terms of operation and quality cost. Nowadays, many industry and companies are recognizing the powerful synergy that is produced when these two quality initiatives are combined (O’Rourke, 2005; Habidin and Yusof, 2012). In order word, Lean Six Sigma (LSS) (combining two most important improvements) for businesses and organization focuses on operational excellence for continually seeking better improvement in customer satisfaction, saving in quality cost, process speed and in turn against competitive advantage. LSS is the latest of the managerial practices where it helps in creating value by eliminating waste form the process, removing the causes of defect in the product (Kumar et al., 2006), which is the function of LSS. Recently, there has been effort to study LSS in automotive industry (Kumar et al., 2006; Thomas et al., 2009; Habidin and Yusof, 2012; Habidin et al., 2012; Thomas and Barton, 2011). LSS advantage like elimination waste, reduce defect, minimize process variation, and increase quality (Kumar et al., 2006; Spector, 2006) reflects that LSS is an excellence business improvement initiative to address current challenges automotive. Hence, LSS is considered as an important catalyst in this context (Basu and Wright, 2003; Sharma, 2003; Arnheiter and Maleyeff, 2005; Pepper and Spedding, 2010) to continually seek better performance. In addition, several authors have proposed to further research in the field of business engineering and continuous improvement program to continue to focus on the implementation of LSS initiatives to increase the literature about the benefits and success stories in the implementation of the LSS initiatives (Furterer and Elshennawy, 2005; Pickrell et al., 2005; Kumar et al., 2006; Cavallini, 2008; Rodriguez, 2008; Pranckevicius et al., 2008; Niu et al., 2010; Wang and Chen, 2010; Corbett, 2011). Henceforth, to ensure success in the implementation of LSS, a study of the empirical analysis is needed to determine the critical success factors (CSFs) of LSS. It coincided with the statement from Jeyaraman and Teo (2010) which says that not many empirical studies on the implementation of CSFs of LSS.

Critical success factors of LSS

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2. Literature review CSFs can be said as one of the important method in order to achieve effective quality management (Saraph et al., 1989), organizational target and goal (Hardaker and Ward, 1987; Fishman, 1998; Hayes, 2000; Henderson and Evans, 2000), and OP (Guimaraes et al., 1999; Dwyer et al., 2000). Many studies investigate on CSFs as a quality initiative. But most of the studies on CSFs concerned on successful implementation of total quality management (TQM) (Yusof and Aspinwall, 1999), lean production (Achanga et al., 2006), and Six Sigma (Antony and Banuelas, 2002; On, 2006) but none that focused on LSS implementation. In order to be successful in implementing the LSS, first, one needs to know what CSFs of LSS is. To fill this gap, this study explores the CSFs for LSS in Malaysian automotive industry. Byrne et al. (2007) has mentioned that LSS has been the key of success in organization. The concept of lean is a comprehensive approach to continuous manufacturing improvement based on the notion of eliminating waste in the manufacturing process (Sakakibara et al., 1993). In recent years, many of lean articles on the topic of lean focus on the relationship between lean implementation and other management practices. Lean is also a multidimensional approach that encompasses a wide variety of operation and management practices, including just in time ( JIT) flow, quality improvement/TQM, total productive maintenance (TPM), workforce development, advance manufacturing technology, statistical process control, customer and employee involvement, supplier management in and integrated system (Sakakibara et al., 1993; Flynn et al., 1995; Swink et al., 2005; Narasimhan et al., 2006; Shah and Ward, 2007). Meanwhile, Achanga et al. (2006) has classified four CSFs of lean in SMEs, namely; leadership and management, finance, skills and expertise; and culture of the continuous improvement. Next, according to On (2006), to understand on how to implement Six Sigma successfully, the CSFs need to be identified. Several researches have discussed the CSFs for implementing Six Sigma such as management commitment, cultural change, organization infrastructure, training and education, business strategy, customer focus (CF), human resource management, supplier management project management skill, project selection and priority, and understanding tool, techniques, and define-measure-analyze-improve and control (DMAIC) methodology (Henderson and Evans, 2000; Goldstein, 2001; Caulcutt, 2001; Sandholm et al., 2002; Coronado and Anthony, 2002a, b; Spanyi and Wurtzel, 2003; Antony, 2004; Antony and Fergusson, 2004; Waxer, 2004; Antony et al., 2005; Habidin et al., 2008; Kumar and Anthony, 2008; Sujar et al., 2008; Antony and Desai, 2009; Kumar et al., 2009; Mahanti and Antony, 2009). In his study, On (2006) developed Six Sigma performance models for China enterprise. This was formed by using the CSFs of Six Sigma which was then used to measure performance of Six Sigma implementation. The eight measured the performance of Six Sigma which were used to be implemented in the firm; leadership, people management, process management, management by fact, methodology and tool and application, continuous improvement, CF, and result. Schroeder et al. (2008) proposed the definition of the Six Sigma based on its four organized and relevant element such as parallel-meso metric; leadership engagement and strategic project selection, improvement specialist, structured methods, and performance metric to achieving strategic objective, reduce variation and for better

result in performance improvement. Hence, recently Zu et al. (2008) investigated on how the three factors of Six Sigma practices from work by Schroeder et al. (2008) namely: Six Sigma role structured improvement procedures (SIPs), and Six Sigma metrics integrated with seven traditional quality management practices to effect quality management and business performance in 226 US manufacturing plant. The three Six Sigma practices were distinct practices from traditional quality management practices, and that they complement the traditional quality management practices in improving performance. The results found that Six Sigma element contributed to higher performance improvement. However, only a few studies have been found within the context of Malaysian manufacturing industry. Jeyaraman and Teo (2010), for example, explored the CSFs of LSS implementation in multinational electronic manufacturing services (EMS) industries. The pilot study results from 23 company showed nine CSFs for LSS implementation, namely; management engagement and commitment, reward and recognition system, competency of master black belt and black belt, company financial capability, frequent communication and assessment on LSS results, project prioritization, selection, review and tracking, project success stories, best practices sharing and benchmarking, effective LSS training program, established LSS dashboard in order to impact on company performance of EMS industries. Based on the review of the extant literature, the authors have summarized the success factors to be as follows: leadership, SIP, quality information and analysis (QIA), supplier relationship (SR), JIT, CF, and focus in metric (FM). Most of these factors are adopted and adapted based on Lean and Six Sigma study (Sakakibara et al., 1993; Flynn et al., 1995; Boyer, 1996; Koufteros et al., 1998; Cua et al., 2001; Shah and Ward, 2003; Li et al., 2005; On, 2006; Zu et al., 2008). Although these studies produced different results such as critical factor, they actually discovered a common set of practices that is required for the success of LSS implementation. 2.1 LSS construct Previous studies have investigated the composition of Lean and Six Sigma initiatives for CSFs for Lean or Six Sigma. Although this study has different findings, but it reflects a comprehensive set for implementing LSS practices. Table I shows the proposed two construct and items which are SIP and FM. 2.1.1 Leadership (LP). The leadership construct addresses the critical role to provide training and development, allocating financial and resources, encouraging culture sharing knowledge and experience, and involving in problem solving and decision making to achieve quality initiatives and organization strategy (Flynn et al., 1994; Wang and Chen, 2010; Snee, 2010). Leadership effectiveness allows employee involvement in continual improvement activity, effective communication and collaboration, and better dissemination of operation information and organization strategy in managing quality improvement. Based on previous research in Lean and Six Sigma practices, the emphasis on the critical role of leadership drives the overall Lean and Six Sigma implementation in the organization (Boyer, 1996; On, 2006; Henderson and Evans, 2000; Coronado and Anthony, 2002a). In addition, Wang and Chen (2010) opined that the CSFs of LSS implementation requires commitment from all level of managers in order to provide training, resources, knowledge and authority to solve problem. Empirical research has supported the link between leadership and organizational performance (Lee, 2002).


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Constructs Leadership

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Table I. LSS construct and measurement items

Items

Responsibility, personal leadership, quality is the top priority, encouraging quality improvement, encouraging employee involvement, and communication vision effectively Structured Managing improvement, decision making in improvement planning process, review project process, record procedure keeping on continuous project, procedure of continuous project, procedures of product design Quality information Process are under SPC, techniques to reduce and analysis variance, identify cause of quality problem, information analysis before product lunch, analysis of quality information, and quality information displayed Supplier Suppliers commitment, location of suppliers, relationship communication on important issues, and reduction of suppliers Just in time Vendor supply us a JIT basis, customers receive JIT from us, lower setup times, lower lot sizes, process are in close proximity, schedule design for JIT Customer focus Customer feedback, customer involvement, customer demand, customers willingness, customer relationship, and customer design requirement Focus in metric Strategic goals for improvement, comprehensive goal-setting process, communication on goals, specification on quality goals, customer expectation on quality, measurement on quality goals

References Flynn et al. (1995), Boyer (1996), Cua et al. (2001), On (2006) On (2006), Zu et al. (2008)

Sakakibara et al. (1993), Flynn et al. (1995), Shah and Ward (2003), On (2006) Shah and Ward (2003), Li et al. (2005) Sakakibara et al. (1993), Koufteros et al. (1998) Shah and Ward (2003), Li et al. (2005), On (2006) On (2006), Zu et al. (2008)

2.1.2 Structured improvement procedure. In implementing quality approach, a methodology of improvement and problem solving method is required to achieve organizational goal (Snee, 2010). Towards achieving the organization strategy, organization can implement SIPs as formal paradigm of conducting improvement project, team assistant in learning and knowledge acquisition, quality problem solver in order to increase productivity (Linderman et al., 2003, 2006; Choo et al., 2007a, b; Zu et al., 2008). Standardized improvement procedure using quality engineering tool and techniques application as arranged in each step of the structured procedure is deemed as crucial in planning and improving product design and process (Zu et al., 2008). Recently, LSS is needed by organization and individuals as a methodology in the pursuit of continuous improvement and problem solving (Snee, 2010). To date, the methodology of LSS DMAIC method is used to monitor existing products or manufacturing process. Successful completion of each step in DMAIC process will realize project goal, improve project performance, and improve and sustain the quality (Linderman et al., 2006; Basu, 2009). 2.1.3 Quality information and analysis. The application of SPC provides information that helps to control management by process and decision making through the use of statistical tools and techniques (Basu, 2009). This argument is also supported by

Zakuan et al. (2009) who stated that analysis of information facilitates management to make effective decision in managing quality. For Malaysian automotive industry itself, most of automotive suppliers have good knowledge and experience to understand the seven basic tools (histogram, Pareto chart, cause and effect diagram, check sheet, scatter diagram, flow chart, and control chart). The implementation of SPC is considered as important in continuous process improvement (Rahman et al., 2009; Zain et al., 2008; Rohani and Teng, 2001). Recently, companies are in need of a comprehensive database composing of current quality performance, customer need and expectation, and also firm performance to achieve profitability and customer satisfaction (Zu et al., 2008). Previous studies also demonstrated significant impact of quality information analysis and performance (Prajogo, 2005; Zakuan et al., 2009). 2.1.4 Supplier relationship. Effective SR should have long term and cooperative relationship between organization and suppliers (Li et al., 2005; Zakuan et al., 2009). This construct is important to improve quality design product, improve purchasing order system and management, improve long term cooperative relationship and improve strategic partnership (Gunasekaran et al., 2001; Li et al., 2005; Zadry and Yusof, 2006). In relation to this, automotive firm should have sustainable and continuous improvement efforts on their relationship with the supplier in order to improve competitive advantage (Lee, 2004). Supplier management is often limited to a few suppliers (Shah and Ward, 2007), products conformed to the specification and standard (Ahmad et al., 2007), long term relationship (Shah and Ward, 2007), close collaboration (Basu and Miroshink, 1999; Zakuan et al., 2009), supplier selection based on quality performance and quality certified within the firms. In addition, Abdullah et al. (2008) suggested that effective two way communication, long term relationship and commitment, as well as continuous collaboration can help PROTON achieve their program on supplier development. Tracey and Tan (2001), in their finding suggested that there is an impact of supplier selection and involvement on customer satisfaction and firm performance. Other study by Kuei et al. (2001) also advocated that supplier management and supplier selection process has positive impact on the company performance. 2.1.5 Just in time. JIT is a system based on the concept of waste elimination and continuous improvement that leads to more efficient operation resulting in improved manufacturing performance and business performance (Fullerton and McWatters, 2002; Isa and Keong, 2008). This has also been proven by Callen et al. (2000) who did a study on 100 Canadian plants from the auto part and electrical industries. In their study, they have classified plants as either JIT or non-JIT. Their results showed that JIT implementation leads to higher profit and contribution margins and lower variable cost. Adding up to this point, other empirical study states that, JIT has significant positive relationship to profitability (Fullerton et al., 2003), competitive performance (Matsui, 2007), lead time performance (Ward and Zhou, 2006), process flexibility (Swink et al., 2005), delivery performance (Li et al., 2005), financial performance (Claycomb et al., 1999), and operational performance (Pont et al., 2008). 2.1.6 Customer focus. Another key aspect to successful LSS implementation is CF. Focusing on customer need and satisfaction should be the most important practice for implementing quality initiatives (On, 2006; Antony and Fergusson, 2004; Antony et al., 2005; Sujar et al., 2008; Zakuan, 2009). Therefore, organizations must be aware and responsible about listening to the voice of the customers (Ahmad et al., 2007; Snee and


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Gardner, 2008), fulfill customers’ need and expectations (Fullerton and Wempe, 2009; Sodikoglu and Zehir, 2010), and predict customer demand (Shah and Ward, 2007). In doing so, CF is measured by basing on customer database, establishing customer relationship management, conducting regular customer satisfaction measurement, resolving all customer complaints quickly and effectively, and ensuring that all employees are aware of the feedback from customers (Abdullah et al., 2008). Several empirical studies in automotive industry revealed that CF has significant relationship with performance (Ittner and Larcker, 1997; Dow et al., 1999; Zakuan et al., 2009). 2.1.7 Focus in metric. FM is the key to encourage team members to continuously improve their quality of work or activity, increase workers knowledge, understanding of process operation, and managerial decision making tool (Linderman et al., 2003; Arnheiter and Maleyeff, 2005; Friday-Stroud and Sutterfield, 2007; Basu, 2009). Through a clear understanding among the employees’ on the organization metric will encourage employee for better comprehension on objective, effort, and commitment in daily operation activity in order to improve quality management process (Linderman et al., 2003; Zu et al., 2008). Basically, most employees understand, support and work toward the achievement of the organization’s mission and goals. However, companies sometimes lack focus in measures that lead to metric deployment (Gunasekaran et al., 2001). To improve the Six Sigma, project performance should focus on measurement and selecting the correct metric (Abdolshah and Yusuff, 2008; Zu et al., 2008). Empirical survey exhibited that product or service design and process management mediates the effects of FM on quality performance (Zu et al., 2008). Other empirical study (Fening et al., 2008) discovered a positive correlation between operational and business result and firm performance. 3. Methodology The survey instrument for this study used use the seven-point Likert scale, representing a range of perception from very low (very low – 1) to very high (very high – 7). The use of seven-point Likert scale in this type of operation management study using structural equation modeling (SEM) analysis has been employed by other researches (Ahire and Dreyfus, 2000; Chen et al., 2004; Krause et al., 2007; Zu et al., 2008; Kim, 2009; Hallgren and Olhager, 2009; Flynn et al., 2010; Su and Yang, 2010). The questionnaire was sent and reviewed by ten LSS experts from both academic and industry to check for the content validity. The questionnaire was modified based on comments from these ten experts. A pilot study was conducted to determine the clarity relevancy of the questions, clear meaning and jargons normally used in the industry, time taken to complete the whole questionnaire, and to test the internal reliability of the measures. From the 100 questionnaires sent, 57 were completed and gave response rate of 57 percent. 57 respondents in the pilot study seem appropriate, as Emory and Cooper (1991) suggested that respondents ranging from 25 to 100 are appropriate for the purpose of a pilot study. The personnel involved in the survey were the top management of the company. Respondents’ titles (e.g. managing director/CEO, QC/QA manager, manufacturing/ production manager) were selected so that questionnaires could be mailed to the person who is most likely to have understanding, knowledgeable, practical experience about LSS environment and practices, SCS and performance of the companies. In further, inclusion of some title (e.g. head of section, head of group) ensured that some typical small companies were included in the target sample. Finally, the questionnaire was

distributed to 161 companies with each company was given two or three sets of questionnaire. Since the questions in this questionnaire are in the form of perception, it is important to get various perceptions of managers on LSS execution from the view of plant operation, quality management, strategic management, and OP. The author believe that it is crucial to find out the perception of critical factors from those who have understanding and practical experience in actual industrial environment. During the full survey, data collection period between August 2010 and November 2010, 400 questionnaire were distributed to top management in Malaysian automotive suppliers and 252 completed forms received, giving a 63 percent response rate. The final item used for these constructs are include in the Appendix.


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3.1 Validity and reliability SEM is a data analysis method which is increasingly becoming popular in operation management empirical studies (Shah and Goldstein, 2006). Exploratory factor analysis (EFA) with varimax rotation was performed on the LSS constructs. The Kaiser-Meyer-Olkin (KMO) measures that sampling adequacy is 0.950 which is more than 0.7, indicating that the present data is suitable for principal component analysis. Similarly, Bartlett’s test of sphericity is significant ( p , 0.001), indicating sufficient correlation between the items to proceed with the analysis. At a minimum, 0.4 loading of each item on its respective factor are considered adequate for that factor (Hatcher, 1994). The EFA of 42 items of LSS construct have yielded in seven factors explaining 63.929 percent of the total variance. Two items of SR are recommended to be excluded from the analysis. The result indicates that LSS have identified 40 items as compared to original questionnaire which are 42 items. The Cronbach’s a measure of reliability of LSS construct is between 0.877 and 0.943. Nunnally (1978) allowed a slightly lower minimum limit such as 0.6 for exploratory work involving the use of newly developed scales. Since, Cronbach’s a value for each factor above 0.70, all factor are accepted as being reliable for the research. Table II shows the result of EFA and reliability analysis. 3.2 Confirmatory factor analysis The next analysis involves testing the measurement model for CSFs of LSS on multiple factor. Refer to Table III, the LSS construct was tested for its validity using the maximum likelihood method with multiple factor. The results of confirmatory factor analysis (CFA)

Factor LSS Leadership Structured improvement procedures Quality information and analysis Supplier relationship Just in time Customer focus Focus in metric

Number of items

First eigen value

% of variance explained

17.327

63.929

Cronbach’s a

6

0.920

6

0.902

6 4 6 6 6

0.910 0.878 0.877 0.913 0.943

Table II. EFA and reliability analysis of the LSS construct

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indicating an excellent fit, with x 2/df with a value less than 2.0 indicating a good fit. The GFI, AGFI, CFI and TLI are more than 0.8 indicate marginal fit and the RMSEA value of less than 0.08 showing good fit. The R 2 value for each indicator is between 0.57 and 0.79. These constructs are graphically shown in Figure 1. The results suggest that these seven construct can be used to measure the LSS implementation.

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4. Results and discussion Figure 2 and Table IV shows the result of the CSFs of LSS in Malaysian automotive industry. The various means for the perception of importance were analyzed. The overall mean for each factor was obtained to investigate the level of LSS practice perceived by respondents. These mean values range from 5.619 to 5.110 which is at good at LSS practice level. The two highest CSFs are leadership (5.619) and CF (5.596). The next CSFs were FM (5.427), QIA (5.396), and JIT (5.374). On the other hand, SR (5.110) and SIP (5.359) are the two least practice CSFs perceived by respondent. The result of EFA, CFA, and reliability analysis show that seven CSFs are valid and reliable for measurement CSFs of LSS in Malaysian automotive industry. From the survey result, it was shown that overall respondent companies have high degree of perception of LSS practice on most of the factor. Table shows among these CSFs, “leadership” is given the highest score by respondents. These CSFs with an average of 5.619 is the most practiced CSFs for LSS implementation. The second most practiced CSFs is “customer focus”. The degree of practices of the first two CSFs identified by this study is the same as (Antony et al., 2005; Antony and Desai, 2009; Chakrabarty and Chuan, 2009; Kumar et al., 2009; Brun, 2011). Leadership for quality improvement program is perceived by respondents as one of the most important foundation LSS practices. Hence, successful LSS implementation requires leader to change the continuous improvement culture. This is because without leadership, this change and improvement activity may face problem and obstacles during their LSS implementation and unclear link between strategy and LSS project because the project is not tied to business goal and financial result (Snee, 2010). Leadership enhancement in group will increase the use of Six Sigma SIP (Zu et al., 2008). This is because the structure of LSS helps the company in recruiting employees in the process on quality improvement such as statistic prosses control and DMAIC methodology for problem solving. This can be carried out by supplying practical training as well as developing the leadership skill to improve the lean operation of the company. Besides that, the use or the implementation of continuous improvement is also considered as a tool of leadership development (Snee, 2010). The role of leadership in changing the organizational culture and influencing the element of structured practice assist the company in defining the gap, residual and suggesting ideas for improvement (Delgado et al., 2010). The leadership that is transfered into commitment is providing personal leadership, working to encourage quality improvement and employee involvement, communicated Factor

Table III. CFA: multiple factor for LSS

LSS 2

x2

df

x 2/df

p-value

GFI

AGFI

CFI

TLI

RMSEA

967.290

719

1.345

0.000

0.848

0.826

0.958

955

0.037

Notes: x – chi-square; df – degree of freedom

Critical success factors of LSS Chi-Square = 967.290 df =719, p-value = 0.000 e1 e2 e3 e4 e5 e6 e7 e8 e9 e10 e11 e12 e13 e14 e15 e16 e17 e18 e19 e20 e21 e22

LP1 LP2 LP3 LP4 LP5 LP6 SIP1 SIP2 SIP3 SIP4 SIP5 SIP6 QIA1 QIA2 QIA3 QIA4 QIA5 QIA6 SR1 SR2 SR3

e23 e24 e25 e26 e27 e28

JIT1 JIT2 JIT3 JIT4 JIT5 JIT6

e29 e30 e31 e32 e33 e34 e35 e36 e37 e38 e39 e40

CF1 CF2 CF3 CF4 CF5 CF6 FM1 FM2 FM3 FM4 FM5 FM6

0.68 0.74 0.72

0.77 0.80 0.78

Chi-Square/df = 1.345

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GFI = 0.848 AGFI = 0.826 L.P

CFI = 0.958 TLI = 0.955 RMSEA = 0.037 0.79

0.80 0.78 0.84 0.80 0.79 0.70

S.I.P

0.65

0.57

0.70 0.75 0.69 0.85 0.77 0.77 0.72

0.70

0.59

0.64 0.68 0.77 0.60 0.65

0.59

Q.I.A

S.R

0.63

0.61

0.63

0.72

SR4 0.64

0.61 0.75 0.58

J.I.T

0.67

0.81 0.79 0.75

C.F

0.69 0.67

0.67 0.77 0.69 0.77

0.75

0.64

0.59 0.60 0.60

0.73

0.72

0.86 0.87 0.69

0.79 0.83 0.85

F.M

Figure 1. The output path diagram for seven factors LSS model

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CSFs of LSS in Malaysian Automotive Industry 5.7

Leadership (LP)

5.6 5.4

Structured Improvement Procedure (SIP) Quality Information and Analysis (QIA)

5.3

Supplier Relationship (SR)

70 Figure 2. CSFs of LSS implementation in Malaysian automotive industry

Mean Score

5.5

5.2

Just in Time (JIT)

5.1 5

Customer Focus (CF)

4.9

Focus in Metric (FM)

4.8 CSFs of LSS

effectively, ensuring the attainment of project goals and objectives in the specified time, involvement in the selection and evaluation of project decision, and inculcating suitable culture for continuous improvement for every step of factory operation and sustainable improvement activities. A good role of leadership should focus on product factors and also matters regarding continuous and sustainable improvement. In other words, without leadership from the aspect of commitment, involvement and active support, a continual improvement program will never be realized. It is also supported by Kuei and Madu (2003) who opine that leadership is the key of success in accomplishing improvement project, if there is no role of leadership, there is no reason to have project implementation. Moreover, most of LSS projects are failed due to leadership weakness in the project management skill (Eckes, 2001). The next most important CSFs for successful LSS implementation is CF, which is the most important part of continuous improvement process; fulfill customer need and expectation, obtained current demand information and, feedback on quality performance. Meanwhile, the third highest CSFs is FM. According to Linderman et al. (2003) suggest that using the specific goals will encourage team members to make more effort, to be more persistent in their task, and to focus on more relevant activities to accomplish objectives. On the other hand, the lowest it was found that level of perception is SR. This concurs with Antony and Desai (2009) also found that SR factor was given less attention by respondents. Supplier integration is one of the continuous improvement concept of LSS that requires companies to limit the number of suppliers for effective management and for product collaboration. This encourages the attainment of objective and metric, resources sharing and increase in collaboration. Henceforth, sustainability program between company and supplier will be successful (Delloite, 2008). Collaborative relationship with suppliers may only occur when the top management leaders prioritize the product quality and delivery time performance compared to price in supplier selection, quality management system recognition, and preparation of measurement tool to evaluate the quality of company supplier (Flynn et al., 1995; Kaynak, 2003). Therefore, it is essential to have a mechanism that ensures good quality is received from supplier. With that, leadership at the early stage plays the key role in ensuring the involvement of supplier in product development and quality improvement project.

Factors Leadership (LP) LP1 LP2 LP3 LP4 LP5 LP6 Structured improvement procedure (SIP) SIP1 SIP2 SIP3 SIP4 SIP5 SIP6 Quality information and analysis (QIA) QIA1 QIA2 QIA3 QIA4 QIA5 QIA6 Supplier relationship (SR) SR1 SR2 SR3 SR4 Just in time (JIT) JIT1 JIT2 JIT3 JIT4 JIT5 JIT6 Customer focus (CF) CF1 CF2 CF3 CF4 CF5 CF6 Focus in metric (FM) FM1 FM2 FM3 FM4 FM5 FM6

Mean

SD

5.706 5.568 5.706 5.579 5.627 5.528

0.941 0.874 0.966 0.922 0.890 0.912

5.425 5.301 5.389 5.385 5.353 5.290

0.918 0.897 0.910 0.961 0.909 0.940

5.258 5.389 5.516 5.472 5.476 5.262

0.819 0.897 0.938 0.770 0.780 0.844

5.071 5.103 5.107 5.159

0.834 0.831 0.842 0.896

5.329 5.294 5.349 5.325 5.310 5.639

0.940 0.954 0.864 0.891 0.901 0.962

5.651 5.560 5.452 5.615 5.631 5.667

0.895 0.911 0.829 0.901 0.885 0.852

5.520 5.472 5.452 5.452 5.413 5.250

0.912 0.916 0.933 0.889 0.899 0.831

Average mean

Average SD

Rank

5.619

0.730

1


71 5.359

0.760

6

5.396

0.676

4

5.110

0.651

7

5.374

0.640

5

5.5959

0.708

2

5.4266

0.762

3

Table IV. Average rating of CSFs by degree of LSS practice

IJLSS 4,1

Every supplier is assessed based on quality. Organisation provides suppliers with training and technical assistance (Zu et al., 2008). This is because by choosing suppliers based on quality, the company is indirectly encourages the supplier to keep on improving the quality of the product or service for every customer and consequently encourage the culture of continuous quality improvement, that aids to decrease process variability of components or purchased parts (Flynn et al., 1995).

72 5. Conclusion This study aims to identify and evaluate the CSFs effecting LSS implementation in Malaysian automotive industry. CSFs may ensure effective LSS implementation and realization of the promised benefits. Factors affecting LSS implementation are complex and abundant. Data for the study were collected from a sample of 252 Malaysian automotive suppliers and the research model was tested using SEM. Based on EFA, CFA, and reliability, all factors are accepted as being valid and reliable for the research. Finally, the result of this study show that the seven CSFs of LSS for Malaysian automotive industry. With regard of the CSFs level of LSS, it was found that overall the majority Malaysian automotive company level was between slightly high to high. In other words, there is positive progress in adopting and practicing CSFs of LSS implementation as to improve business operation and organizational performance. Based on the empirical data survey, the two factors of “leadership” and “customer focus” have been shown to be the extremely important factors for LSS implementation in Malaysian automotive industry. Agenda for future research, the authors are interested to study the structural relationship between LSS practices and organizational performance in Malaysian automotive industry. Later on, organizational performance was developed based on review of empirical study on LSS performance measure. The different lean performance metric was categorized under four perspectives, and this assisted the industry to evaluate LSS performance in balanced scorecard way from the angle of financial and non financial measurement perspectives (financial, customer, internal business process, and innovation and learning growth). References Abdolshah, M. and Yusuff, R.M. (2008), “Fundamental elements for the successful performance of Six Sigma projects in service industries”, paper presented at 11th QMOD Conferences, Quality Management and Organizational Development Attaining Sustainability from Organizational Excellence to Sustainable Excellence, Helsingborg, Sweden. Abdullah, R., Keshavlall, M. and Tatsuo, K. (2008), “Supplier development framework in the Malaysia automotive industry: proton’s experience”, International Journal of Economics and Management, Vol. 2 No. 1, pp. 29-58. Achanga, P., Shehab, E., Roy, R. and Nelder, G. (2006), “Critical success factors for lean implementation within SMEs”, Journal of Manufacturing Technology Management, Vol. 17 No. 4, pp. 460-71. Ahire, S.L. and Dreyfus, P. (2000), “The impact of design management and process management on quality: an empirical investigation”, Journal of Operation Management, Vol. 18, pp. 549-75. Ahmad, M.F., Yusof, S.M. and Yusof, N.M. (2007), “Comparative study of quality practices between Japanese and non-Japanese based electrical and electronics companies in Malaysia: a survey”, Jurnal Teknologi, Vol. 47, pp. 75-89.

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Further reading Antony, J. and Kumar, M. (2005), “Six Sigma in SMEs UK manufacturing enterprises”, International Journal of Quality & Reliability Management, Vol. 22 No. 8, pp. 860-74. Browne, M.W. and Cudeck, R. (1993), “Testing structural equation model”, in Bollen, K.A. and Long, J.S. (Eds), Alternative Ways of Assessing Model Fit, Sage, Newbury Park, CA, pp. 136-62.


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Devane, T. (2004), Integrating Lean Six Sigma and High-Performance Organizations: Leading the Change Toward Dramatic, Rapid and Sustainable Improvement, Pfeiffer, San Diego, CA. Doble, M. (2005), “Six Sigma and chemical process safety”, International Journal of Six Sigma and Competitive Advantage, Vol. 1 No. 2, pp. 229-44. Hair, J.F. Jr, Anderson, R.E., Tatham, R.L. and Black, W.C. (1998), Multivariate Data Analysis with Readings, 4th ed., Prentice-Hall, Englewood Cliffs, NJ. Handley, S.M. and Benton, W.C. Jr (2009), “Unlocking the business outsourcing process model”, Journal of Operation Management, Vol. 27 No. 5, pp. 344-61. Hu, L. and Bentler, P.M. (1998), “Fit indices in covariance structure modeling: sensitivity to under parameterized model misspecification”, Psychological Method, Vol. 3 No. 4, pp. 424-53. Hu, L. and Bentler, P.M. (1999), “Cutoff criteria for fit indexes in covariance structure analysis: conventional criteria versus new alternatives”, Structural Equation Modeling, Vol. 6 No. 1, pp. 1-55. Joreskog, K.G. and Sorbom, D. (1993), LISREL 8: Structural Equation Modeling with the SIMPLIS Command Language, Scientific Software International, Chicago, IL. Naslund, D. (2008), “Lean, Six Sigma and Lean Sigma: fad or real process improvement methods?”, Business Process Management Journal, Vol. 14 No. 3, pp. 269-87. Pyzdek, T. (2000), “Six Sigma and lean production”, Quality Digest, January, p. 14. Rockart, J. (1979), “Chief executives define their own information needs”, Harvard Business Review, Vol. 57 No. 2, pp. 81-92. Rockart, J. (1982), “The changing role of the information systems executive: a critical success factors perspective”, Sloan Management Review, Vol. 23 No. 1, pp. 3-13. Zakuan, N., Yusof, S.M., Mat Saman, M.Z. and Shaharoun, A.M. (2010), “Confirmatory factor analysis of TQM practices in Malaysia and Thailand automotive industries”, International Journal of Business and Management, Vol. 5 No. 1, pp. 160-75. Appendix Leadership LP1

Extent to which all major department heads within our plant accept responsibility for quality.

LP2

Extent to which plant management provides personal leadership for quality improvement.

LP3

Extent to which quality performance is the top priority in evaluating plant management.

LP4

Extent to which all major department heads within our plant work to encourage quality improvement.

LP5

Extent to which the top management encourages employees’ involvement in the production process.

LP6

Extent to which visions is communicated effectively by the organization to all employees.

Structured improvement procedure SIP1 Extent to which a structured approach is used to manage quality improvement activities. SIP2 Extent to which formal planning process is involved in the decision of major quality improvement projects.

SIP3 Extent to which all improvement projects are reviewed regularly during the process. SIP4 Extent to which records are kept about on each continuous improvement project is conducted.


SIP5 Extent to which continuous improvement projects are conducted in our plant by following a formalized procedure (such as DMAIC – define, measure, analyze, improve, control). SIP6 Extent to which the product design process follows a formalized procedure in our plant. Quality information and analysis QIA1 Extent to which large number of processes on shop floor are currently under statistical process control. QIA2 Extent to which statistical techniques are extensively used to reduce process variance. QIA3 Extent to which fishbone type diagrams are used to identify cause of quality problems. QIA4 Extent to which process capabilities study is conducted before product launches. QIA5 Extent to which quality data is reviewed in regular meeting to oversee the performance. QIA6 Extent to which quality data, control chart, etc. is displayed at working areas. Supplier relationship SR1

Extent to which our suppliers are contractually committed to annual cost reductions.

SR2

Extent to which our key suppliers are located in close proximity to our plants.

SR3

Extent to which corporate level communication is applied on important issues with key suppliers.

SR4

Extent to which active steps are taken to reduce the number of suppliers in each category.

SR5

Extent to which quality is considered as our number one criteria in selecting suppliers[1].

SR6

Extent to which problems are regularly are jointly solved with our suppliers[1].

Just in time JIT1 Extent to which vendors supply in just-in-time basis. JIT2 Extent to which customers receive just-in-time basis. JIT3 Extent to which work is done to lower setup times in our plant. JIT4 Extent to which work is done to lower lot sizes in our plant. JIT5 Extent to which shop floor is laid out so that processes and machines are in close proximity to each other. JIT6 Extent to which schedule is designed to allow time for catching up, due to production stoppages. Customer focus CF1

Extent to which feedback is given from customer on quality performance.

CF2

Extent to which customers are actively involved in future product.

CF3

Extent to which customers share current demand information with marketing department.

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IJLSS 4,1

CF4

Extent to which customers’ ability is facilitated in seeking assistance from us.

CF5

Extent to which the importance of relationship with customer is periodically evaluated.

CF6

Extent to which design is determined according to customer requirement.

Focus in metric

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FM1 Extent to which strategic goals are set for quality improvement. FM2 Extent to which our plant has a comprehensive goal-setting process for quality. FM3 Extent to which quality goals are clearly communicated to employees in our plant. FM4 Extent to which quality goal are clearly specified in our plant. FM5 Extent to which our plant translates customers’ need and expectation into quality goals. FM6 Extent to which measures for quality performance are aligned with the plan’s strategic quality goals. Note 1. Drop item (exploratory factor analysis). Corresponding author Nurul Fadly Habidin can be contacted at: [email protected]

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