The effect of lean manufacturing on operations performance and business performance in manufacturing companies in Indonesia

The purpose of this mixed methods sequential explanatory study was to understand the effect of lean manufacturing on operations performance and business performance in the context of manufacturing companies in Indonesia. In the first phase, a quantitative research was conducted to investigate the relationship among the variables. 174 large manufacturing companies were involved in the quantitative phase. Structural equation modeling (SEM) approach was applied to test all the hypotheses. The findings of the quantitative data analysis indicate that all the lean manufacturing practices are highly correlated and interdependent. The results provide evidence that lean manufacturing should be implemented holistically, because the practices are mutually supportive and complement each other. Lean manufacturing is also positively related with operations performance and business performance. More importantly, operations performance complementary mediates the relationship between lean manufacturing and business performance. A qualitative research based on a case study method was conducted in Toyota Indonesia to explain, elaborate, and triangulate the quantitative findings. The outcomes of the qualitative research are consistent and supporting the quantitative results. This study provides a deeper insight regarding the relationship between lean manufacturing, operations performance, and business performance. Therefore, this study could expand the boundary of the existing literature, and contributes to the body of knowledge related to the effect of lean manufacturing theoretically, practically, and methodologically.