Advanced Production Practices and Performance: Empirical Evidence from Spanish Plants

This paper presents an empirical study that analyses the effect of applying three Advanced Production Practices (APPs) (Total Quality Management-TQM, Just in TimeJIT, and Total Productive Maintenance-TPM) on business performance measured with financial and non-financial (or operational) indicators. The study was conducted on a sample of Spanish companies in the automotive components, electronics and machinery sectors that took part in the 3rd Round of the High Performance Manufacturing (HPM) Project. The results of an analysis using Partial Least Squares (PLS) show that only two of the nine implementation indicators for the APPs being analyzed (process emphasis in TQM, and JIT delivery by suppliers) are positively related with non-financial performance. No significant relationship was found with financial performance, or between operating and financial performance. However, it should be borne in mind that the small size of the sample used in this study only enables strong relationships to be detected; a larger sample would be required to detect moderate or weak relationships.

[1]  Malcolm Jones.  What is autonomous maintenance , 2015 .

[2]  Jeffrey L. Callen,et al.  Just-In-Time: A Cross-sectional Plant Analysis , 2000 .

[3]  Katherine J. Barker,et al.  Activity-Based Costing, Total Quality Management and Business Process Reengineering: Their Separate and Concurrent Association with Improvement in Financial Performance , 2006 .

[4]  Jayant V. Saraph,et al.  An Instrument for Measuring the Critical Factors of Quality Management , 1989 .

[5]  Anand Nair,et al.  Relationship between just-in-time manufacturing practices and performance: A meta-analytic investigation , 2010 .

[6]  I. Winfield.  Japanese manufacturing techniques , 1994 .

[7]  Cornelia Dröge,et al.  Quality-related Action Programs: Their Impact on Quality Performance and Firm Performance , 2000, Decis. Sci..

[8]  Roger G. Schroeder,et al.  The impact of just-in-time manufacturing and its infrastructure on manufacturing performance , 1997 .

[9]  Juan José Tarí Guilló,et al.  Critical factors and results of quality management: An empirical study , 2004 .

[10]  Arawati Agus,et al.  The structural linkages between TQM, product quality performance, and business performance: Preliminary empirical study in electronics companies , 2005 .

[11]  E. Hartmann,et al.  Logistics Outsourcing Interfaces: The Role of Customer Partnering Behavior , 2012 .

[12]  C. Fornell,et al.  Evaluating structural equation models with unobservable variables and measurement error. , 1981 .

[13]  M. Lieberman,et al.  Inventory Reduction and Productivity Growth: Linkages in the Japanese Automotive Industry , 1999 .

[14]  Alberto Bayo-Moriones,et al.  The role of organizational context and infrastructure practices in JIT implementation , 2008 .

[15]  R. Schroeder,et al.  The impact of total productive maintenance practices on manufacturing performance , 2001 .

[16]  Hale Kaynak,et al.  The relationship between total quality management: practices and their effects on firm performance , 2003 .

[17]  Soo Wook Kim,et al.  Disentangling leanness and agility: An empirical investigation , 2006 .

[18]  L. Swanson.  Linking maintenance strategies to performance , 2001 .

[19]  R. Schroeder,et al.  Manufacturing practices, strategic fit and performance: A routine‐based view , 2004 .

[20]  Jan Olhager,et al.  Lean and agile manufacturing: external and internal drivers and performance outcomes , 2009 .

[21]  Rosemary R. Fullerton,et al.  The role of performance measures and incentive systems in relation to the degree of JIT implementation , 2002 .

[22]  Peter Gibson,et al.  Experiences of TQM elements on Organisational Performance and future opportunities for a developing country. , 2013 .

[23]  Rosemary R. Fullerton,et al.  AN EXAMINATION OF THE RELATIONSHIPS BETWEEN JIT AND FINANCIAL PERFORMANCE , 2003 .

[24]  Michael R. Kinney,et al.  Further Evidence on the Extent and Origins of JIT's Profitability Effects , 2002 .

[25]  Arawati Agus,et al.  The structural impact of total quality management on financial performance relative to competitors through customer satisfaction: A study of Malaysian manufacturing companies , 2000 .

[26]  David F. Larcker,et al.  Total Quality Management and the Choice of Information and Reward Systems , 1995 .

[27]  Yoshiki Matsui,et al.  An empirical analysis of just-in-time production in Japanese manufacturing companies , 2007 .

[28]  Richard Schonberger,et al.  World class manufacturing : the lessons of simplicity applied , 1986 .

[29]  Jeffrey L. Callen,et al.  The profitability‐risk tradeoff of just‐in‐time manufacturing technologies , 2003 .

[30]  Peter T. Ward,et al.  Impact of Information Technology Integration and Lean/Just-In-Time Practices on Lead-Time Performance , 2006, Decis. Sci..

[31]  R. Frank Falk,et al.  A Primer for Soft Modeling , 1992 .

[32]  Harwinder Singh,et al.  Continuous Improvement Strategies: An Overview , 2013 .

[33]  Hongyi Sun,et al.  The implementation and evaluation of Total Productive Maintenance (TPM)—an action case study in a Hong Kong manufacturing company , 2003 .

[34]  David T. Boyd.  Corporate Adoption of JIT: The Effect of Time and Implementation on Selected Performance Measures , 2001 .

[35]  Hassan R. HassabElnaby,et al.  An Empirical Investigation of the Performance Consequences of Nonfinancial Measures , 2003 .

[36]  Jason Bennett Thatcher,et al.  Advancing operations management theory using exploratory structural equation modelling techniques , 2010 .

[37]  T. C. Powell.  Total Quality Management as Competitive Advantage , 1995 .

[38]  Ajay Das,et al.  Relative importance of contingency variables for advanced manufacturing technology , 2003 .

[39]  Rosemary R. Fullerton,et al.  Lean Manufacturing, Non-Financial Performance Measures, and Financial Performance , 2009 .

[40]  R. A. Inman,et al.  Agile manufacturing: Relation to JIT, operational performance and firm performance , 2011 .

[41]  Sujatha Perera,et al.  Customer-focused manufacturing strategy and the use of operations-based non-financial performance measures: A research note , 1997 .

[42]  Pietro Romano,et al.  Assessing the impact of just-in-time on operational performance at varying degrees of repetitiveness , 2013 .

[43]  Inderpreet Singh Ahuja,et al.  Assessment of contributions of successful TPM initiatives towards competitive manufacturing , 2008 .

[44]  Lars G. Hassel,et al.  Cost Accounting and Performance Measurement in a Just-in-Time Production Environment , 1999 .

[45]  Cipriano Forza,et al.  Achieving superior operating performance from integrated pipeline management: an empirical study , 1996 .

[46]  Rosemary R. Fullerton,et al.  The production performance benefits from JIT implementation , 2001 .

[47]  Beate Klingenberg,et al.  The relationship of operational innovation and financial performance—A critical perspective , 2013 .

[48]  M. Terziovski,et al.  The relationship between total quality management practices and operational performance , 1999 .

[49]  Halim Mad Lazim,et al.  Total productive maintenance and manufacturing performance: Does technical complexity in the production process matter? , 2013 .

[50]  Kathleen E. McKone-Sweet,et al.  Improving Performance through an Integrated Manufacturing Program , 2006 .

[51]  Azmi Ahmad,et al.  The perceived impact of JIT implementation on firms’ financial/growth performance , 2004 .

[52]  Khim L. Sim,et al.  An empirical examination of successive incremental improvement techniques and investment in manufacturing technology , 2001 .

[53]  Ayman Bahjat Abdallah,et al.  The Influence of “Soft” and “Hard” Total Quality Management (TQM) Practices on Total Productive Maintenance (TPM) in Jordanian Manufacturing Companies , 2013 .

[54]  Jim Todd,et al.  World-Class Manufacturing , 1996 .

[55]  Jörn-Henrik Thun,et al.  Do it separately or simultaneously—An empirical analysis of a conjoint implementation of TQM and TPM on plant performance , 2011 .

[56]  R. Maull,et al.  The Impact of Operations Performance on Customer Loyalty , 2011 .

[57]  Christina A. Fader,et al.  The set of just-in-time management strategies: An assessment of their impact on plant-level productivity and input-factor substitutability using variable cost function estimates , 2002 .

[58]  David Dugdale,et al.  Non-financial performance measurement in manufacturing companies , 2005 .

[59]  N. Suresh,et al.  An impact of manufacturing flexibility and technological dimensions of manufacturing strategy on improving supply chain responsiveness: Business environment perspective , 2013 .

[60]  Peter T. Ward,et al.  Lean manufacturing: context, practice bundles, and performance , 2003 .

[61]  Marko Sarstedt,et al.  PLS-SEM: Indeed a Silver Bullet , 2011 .

[62]  I. Sila,et al.  Critical linkages among TQM factors and business results , 2005 .

[63]  Christian Hofer,et al.  The effect of lean production on financial performance: The mediating role of inventory leanness , 2012 .

[64]  Andrea Vinelli,et al.  Interrelationships among lean bundles and their effects on operational performance , 2008 .

[65]  R. Schroeder,et al.  Relationships between implementation of TQM, JIT, and TPM and manufacturing performance , 2001 .

[66]  Ekrem Tatoglu,et al.  An analysis of the relationship between TQM implementation and organisational performance: evidence from Turkish SMEs , 2006 .

[67]  Barbara B. Flynn,et al.  Relationship Between JIT and TQM: Practices and Performance , 1995 .

[68]  Rick L. Edgeman,et al.  Fundamentals of Total Quality Management , 1998 .

[69]  Kee-hung Lai,et al.  An operational and institutional perspective on total quality management , 2007 .

[70]  Bhanu S. Ragu-Nathan,et al.  Development and validation of a measurement instrument for studying supply chain management practices , 2005 .

[71]  Peter T. Ward,et al.  A mapping of competitive priorities, manufacturing practices, and operational performance in groups of Danish manufacturing companies , 2003 .

[72]  P. Swamidass,et al.  Matching plant flexibility and supplier flexibility: Lessons from small suppliers of U.S. manufacturing plants in India , 2007 .

[73]  K. Langfield-Smith,et al.  Antecedents to management accounting change: a structural equation approach , 2003 .

[74]  Amrik S. Sohal,et al.  The relationship between organization strategy, total quality management (TQM), and organization performance--the mediating role of TQM , 2006, Eur. J. Oper. Res..

[75]  Pietro Romano,et al.  JIT-production, JIT-supply and performance: investigating the moderating effects , 2012, Ind. Manag. Data Syst..

[76]  Roger G. Schroeder,et al.  The importance of recruitment and selection process for sustainability of total quality management , 2002 .

[77]  Yoshiki Matsui,et al.  Comparative study on the relationship between just-in-time production practices and operational performance in manufacturing plants , 2010 .

[78]  Rudolf R. Sinkovics,et al.  The Use of Partial Least Squares Path Modeling in International Marketing , 2009 .

[79]  Salina Daud,et al.  The Influence of Soft and Hard TQM Factors on Knowledge Management : Perspective from Malaysia , 2022 .