Measuring lean implementation for maintenance service companies

Abstract

Purpose – Implementation of lean manufacturing is currently performed in the production industry; however, for the airline maintenance service industry, it is still in its infancy. Indicators such as work in process, cycle time, on-time performance and inventory are useful indicators to measure lean implementation; however, a financial economic perspective taking fixed assets into consideration is still missing. Hence, the purpose of this paper is to propose a method to measure lean implementation from a fixed asset perspective for this type of industry. With the indicators, continuous improvement scenarios can be explored by value stream discrete event simulation. Design/methodology/approach – From literature, indicators regarding asset specificity to measure lean implementation are found. These indicators are analysed by a linear least square method to know if variables are interrelated to form a preliminary model. The indicators are tested by value stream-based discrete event simulation regarding continuous improvement scenarios. Findings – With the new found lean transaction cost efficiency indicators, namely, turnover, gross margin and inventory pre-fixed asset (T/FA, GM/FA and I/FA, respectively), it is possible to measure operation performance from an asset specificity perspective under the influence of lean implementation. Secondly, the results of implementing continuous improvement scenarios are measured with the new indicators by a discrete event simulation. Research limitations/implications – This research is limited to the airline maintenance, repair and overhaul (MRO) service industry regarding component repair. Further research is necessary to test the indicators regarding other airline MRO service companies and other sectors of complex service industries like health care. Practical implications – The lean transaction cost efficiency model provides the capability for a maintenance service company to simulate the effects of process improvements on operation performance for service-based companies prior to implementation. Social/implications – Simulation of a Greenfield process can involve employees with possible changes in processes. This approach supports the adoption of anticipated changes. Originality/value – The found indicators form a preliminary model, which contributes to the usage and linkage of theories on lean manufacturing and transaction cost theory – asset specificity.