CHAPTER 1 INTRODUCTION

1.1 BACKGROUND Leading industries have started implementing lean and they are getting good results like increase in efficiency, reduce costs, improved quality, greater profitability, and enhanced public image. Some companies have started implementing green system by reducing negative impacts of their operations on the environment. Research studies show that lean companies show significant environmental improvements by reducing waste and improving productivity of firm. The primary goal of green manufacturing is to reduce environmental impact created by industries. Some study shows that how lean and green systems share many of the same best practices to reduce wastes (G. Bergmiller et al. 2009). In general, the success of implementation of any particular management practice frequently depends upon organizational characteristics, and not all organizations can or should implement the same set of practices. Indian medium scale manufacturing industries are an integral part of Indian economy. The contribution to the economic development of the country is indeed significant, but due to liberalization and globalization they are facing tremendous challenges in the market. Imports and MNCs and especially china are becoming major threats to Indian industries. Many industries in abroad are having lean and green thinking in a way of life. But in India lean and greenimplementation is still in initial stage. In India there are 10000 - 15000 medium scale industries. They contribute to GDP up to 2%, 5% to manufacturing output, 10% to national export (MSMED act, 2006). Now a days due to increase in prize of energy, increase in pollution, global warming, international rules and regulation regarding green manufacturing, cheaper prize of competitors, improvement in quality standards, so to sustain in this environment company should adopt lean and green concept. 1.2 LEAN MANUFACTURING Eiji Toyoda and TaiichiOhno at Toyota Motor Company in Japan pioneered the concept of Toyota Production System (TPS), or what is known today in USA as Lean Manufacturing. The basic idea behind the system is eliminating waste. Waste is defined as anything that does not add value to the end product from the customers 1

perspective. Lean metrics guides the organizations in their transformation into lean enterprises. The primary objective of lean manufacturing is to assist manufacturers who have a desire to improve their companys operations and become more competitive through the implementation of different lean manufacturing tools and techniques. Quickly following the success of lean manufacturing in Japan, other companies and industries, particularly in the US, copied this remarkable system. Lean is to manufacture only what is needed by thecustomer, when it is needed and in the quantities ordered. The manufacturing of goods is done in a way that minimizes the time taken to deliver the finished goods, the amount of labour required, and the floorspace required, and it is done with the highest quality, and usually at the lowest cost. Lean manufacturing represents an incorporated approach to manufacturing of goods with the purpose of achieving better quality, timely delivery and competitive cost for customer satisfaction. In order to compete in todays fiercely competitive global market; manufacturing industries have come to realize that the traditional mass production concept has to be adapted to the new ideas of lean manufacturing. The basic difference between traditional and lean organization with respect to various concepts can be framed as shown in table 1.1 Table 1.1 Traditional vs. Lean Organization Traditional Lean Organization Organization An asset, as defined by A waste - ties up capital and Inventory accounting terminology increases processing lead time Ideal Economic One, single piece flow Very large more Order Quantity & continuous efforts are made to waiting time. Batch Size reduce downtime to zero Use high-speed Processes need to only be Process Utilization processes and run them designed to keep up with demand all the time Production Based on forecasting Based on customer requirement Traditional (functional) Work Groups Cross-functional teams departments Inspect/sort work at end Processes, products, and services of process to make sure are designed to eliminate errors Quality we find all errors Concept The goal of lean manufacturing is to reduce the waste in human effort, inventory, time to market and manufacturing space to become highly responsive to customer demand while producing world-class quality products in the most efficient and economical manner. So the resounding principle of lean manufacturing is to reduce cost through 2

continuous improvement that will eventually reduce the cost of services and products, thus growing more profits.Kanban, 5ss, Visual Control, Value Stream Mapping, Work Cell, Total Productive Maintenance, Poke Yoke, SMED (Single Minute Exchange of Dies) these are some lean tools. Some of the advantages of adopting lean are decreased lead time for production, reduced inventories, and reduced cost, good quality. Selecting the right tools for their current condition becomes the key to success in lean implementation (Wan et al. 2009). Following table 1.2 shows nine forms of wastes in lean manufacturing. Table 1.2 Nine forms of waste Form Overproduction Underutilization of work force. Transportation Inventory Motion Corrections Over-Processing Waiting Environmental waste Description Producing more than is needed and/or used. Not using peoples minds, their skills and not getting them involved. Unnecessary movement of tools, materials, sub assembly. Includes raw material, work in process and finished goods inventory. Unnecessary Movement of people (walking, riding) This includes rework or fixing of products. Additional work above the requirements and/or needs. Delay of materials, information or people. Environmental impact created by companies operation

1.3 GREEN MANUFACTURING Today, the main problem that mankind faces every day are environmental effects caused by the industries operation. Industries are focusing more on the cost reduction but the environmental consideration is ignored (Srivastava 2007). So the researchers and industries started to redefine the supply chain by taking into account environmental factors and also making the industries economically profitable by using this extended supply chain. Srivastva (2007) defined green supply chain management as integrating environmental thinking into supply-chain management, including product design, material sourcing and selection, manufacturing processes, delivery of the final product to the consumers as well as end-of-life management of the product after its useful life. This indicates that in each and every process of the product life cycle, the environmental aspects are considered. In the present globalized and competitive market the industries are pressurized to follow the environmental management, these pressures are derived from the internal and external sources in the organization (Zhu et al, 2008). Winroth (2009) stated that green supply chain aims for 3

continuous improvements of industrial processes and products to reduce or prevent pollution to air, water and land. There are some challenges that has been pointed out by Richards et al. (1994) in associating with the green manufacturing which are meeting the customer demands for environmentally sound products, development of recycling schemes, minimizing the materials use, and selecting the materials causing low environmental impacts. Success of green supply chain management is depends on how the industries work with their suppliers and customers to improve their environmental performance. This environmental performance can be achieved by focusing on reducing or eliminating the excess materials used in the manufacturing processes or products, suppliers environmental compliance status during the operations, collaboration from different entity of supply chain management for developing the new materials, products and solutions for environmental issues, giving training to the suppliers regarding the material use, prevention of pollution.

1.3.1 Motives for Green Supply Chain Management Major obstacles for implementation of green supply chain management in medium scale manufacturing industries are high initial investment, slow rate of return, lack of information, fear of success. So, green implementation is mainly relay on the motivation factors which are classified as internal and external motivations.Internal motivational factors are risk management, supply interruption, long term risk to human and environment, competitive disadvantage, suppliers knowingly or unknowingly provide problematic substances. External motivational factors are enhanced brand image,international purchasing restrictions, eco-labelling,

international rules and regulation regarding green, increasing focused on disassembly or recycling, customer demand for eco-friendly product.

1.3.2 Environmental and Economic Benefits of Green Supply Chain Management The study on environmental performance and their benefits were done by several authors. Zhu et al. (2007) mentioned that environmental management systems such as green supply chain management have positive relationship on the organizational economic performance. According to a study performed by Sangwan K. S (2011) the benefits are classified into two types quantitative and qualitative benefits of green manufacturing. Qualitative benefits are improved working condition, better organization in public, improved staff morale, enhanced customer loyalty/satisfaction, establishing or improving brand value, lowered regulatory concerns, increased market 4

opportunities, improved product performance, and decreased liabilities. Then quantitative benefits are reduced waste handling cost, lowered waste categorization cost, reduced waste treatment cost, reduced waste disposal cost, reduced waste storage cost and decreased packaging cost, low maintenance cost.

CHAPTER 2 LITERATURE REVIEW

2.1LEAN MANUFACTURING A majority of articles on the topic of lean production system focus on the relationship between implementation of lean and performance. Upadhye et al. (2010) has told that Indian manufacturing industries are facing problem with less resources and this can be overcome by implementing lean manufacturing. Leonard, B. S. (2007) has defined lean as a business system for organizing and managing product development, operations,suppliers, and customer relations that requires less human effort, less space, less capital, less material, and less time to make products with fewer defects to precise customer desires, compared with traditional management. Several studies have also been undertaken to study the lean implementation in different industries. Considerable research has been done to assess the lean strategy using various techniques. Lean manufacturing focuses on the systematic elimination of wastes from an organizations operations through a set of synergistic work practices to produce products and services at the rate of demand (Shah et al. 2007). Lean manufacturing represents a multifaceted concept that may be grouped together as distinct bundles of organizational practices (Shah et al. 2003). A list of bundles of lean practices includes JIT, total quality management, total preventative maintenance, and human resource management, pull flow, low setup, controlled processes, productive maintenance and involved employees. White et al. (1999) told thatlarger companies more likely to implement JIT (lean) practices and outcome of lean also dependents on manufacturers size. Baks et al. (2011) has told in his paper that small and medium-sized enterprises are having more focus on cost reduction.So, in this competitive environment lean system will help them to achieve low cost of manufacturing and to overcome the global and local competition.Lean manufacturing have-not received appreciable attention in MSMEs globally (Gunasekar et al. 2000). 2.2 GREEN MANUFACTURING Now a day due to increasing pollution levels, energy consumption rate and waste generation, the pressure from government to become green is increasing and also there are some strict 6

international rules and regulations regarding green supply chain management so rather than option it is mandatory to implement green technology in industries (Deif, A. M. 2011). Mohanty, R. P et al. (1999) highlighting the importance of green productivity which aims at reducing waste. Burke et al. (2007) also presented a framework for sustainability to realize green manufacturing. The framework was based on their studies of SME manufacturers who achieved ISO 14001 certification. In Muchir Thomas Kangangi et al.(2008) study four best approaches for green system were identified; Aligning the goals, evaluating the supply chain as a single life cycle system, innovation using green supply chain analysis, reducing ofwastage at each supply chain stage. Selvaraj, R.K. (2011) has told that tools should comprise both lean and green supply chain management systems. G. Bergmiller et al. (2009) has made hypothesis that lean firms which are implementing green production are getting better results. He has suggested that green manufacturing drives lean result and particularly improve cost performance.Gary G. Bergmiller et al. (2006) has performed a full system correlation analysis, utilizing forty-eight measures of lean and green manufacturing. 2.3 INTERPRETIVE STRUCTURAL MODELING Interpretive Structural Modeling methodology has been used by Kannan, G. (2007) to find out the interaction among the criteria, driving and dependence power for each criterion for supplier selection, and thus giving the results of which are driving factors and which are depending factors.This attempt made to build a supply chain for its tyre-manufacturing product. The goal was to rank the criteria and sub-criteria used for supplier selection and also find the interactions among them using Interpretive Structural Modeling(ISM). Interpretive Structural Modeling (ISM) can be used for identifying and summarizing relationships among specific variables, which define a problem or an issue (Sage, 1977). It provides us a means by which order can be imposed on the complexity of such variables. Variables which resists knowledge sharing (KS) in the organizations are known as Knowledge Sharing barriers (KSBs) were identified and ISM model is proposed showing solutions (Sharma et al. 2012). 2.4 MODIFIED INTERPRETIVE STRUCTURAL MODELING Parthiban, P et al. (2013) has suggested Modified Interpretive Structural Modeling technique. In this method he has introduced two more new constraints E and U. The paper suggested that 7

Modified Interpretive Structural Modeling is easier to find different levels of each criterion, and it gives clear idea about driving power and dependence power of each factors and thus giving the clear results of which are driving factors and which are depending factors. Analytical hierarchy Process (AHP) was used after it to rank the supplier and to find out the best one from the bunch of suppliers. 2.5 ANALYTIC NETWORK PROCESS Analytic Network Process (ANP) has been introduced by Saaty. Saaty has told in his paper that ANP uses a network and does not consider hierarchy. The main concept of ANP is influence. Analytical hierarchy process provides a basis for analytical network process. ANP finds the importance of the criteria, it determine the importance of the alternatives as in a hierarchy and also the importance of the alternatives which may have impact on determining the importance of the criteria (Saaty, 1996). ANP is not a hierarchical structure with a linear top to bottom form and thus it is suitable for a complex system. Whenever hierarchy is there we used Analytical Hierarchy Process (AHP) (Cheng, E. W. et al. 2004). For modeling more complicated decision problem which involves interdependencies between elements of the same cluster or different clusters requires the analytic network process elements (Meade et al. 1998).Meade et al. (1999) have told that ANP is feedback approach which consists of network of different element. 2.6 FUZZY ANALYTIC NETWORK PROCESS A major contribution of fuzzy set theory is its capability of representing vague data. Huang et al. (2008) presented a fuzzy analytic hierarchy process method and utilize crisp judgment matrix to evaluate subjective expert judgments. Mohantyet al. (2005) used fuzzy ANP along with fuzzy cost analysis in selecting research and development projects. Dagdevirenet al. (2008) used fuzzy ANP to calculate the faulty behaviour risk (FBR) in work system. He has used Fuzzy ANP method to calculate weightage of factors and sub-factors.Tuzkaya et al. (2008) studied on evaluating alternative modes of transport by using fuzzy ANP with a case study between Turkey and Germany.The fuzzy number in the fuzzy decision matrix can be defuzzified to the crisp number by the function (K. K. F. Yuen et al. 2012).Kiri, . (2013) studied, a fuzzy analytic network process approach to determine the weights of the criteria and the scores of the inventory items were determined with simple additive weighting by using linguistic terms. 8

2.7 RESEARCH GAP ANALYSIS Leading companies have started implementing lean technology in their industries. Many researchers investigate on lean implementation in industries; very few of them studied lean implementation in small and medium-sized enterprises. Researchers told that resulting Green manufacturing are able to reduce environmental impact created by industries. Lean results in cost reduction, on time delivery, waste reduction, customer satisfaction, and minimum usage of resources. Some studies show that industries which are implementing lean and green manufacturing are getting better results than implementing only lean. Lean and green systems includes management systems, waste identification, and implementation of waste reduction techniques to achieve desired business results. Results indicate that implementation of both lean and green systems lead to improved business results. Mostly lean wastes are associated with manufacturing industries and also these industries results in major environmental pollution. So, present study focuses on to find out the critical success factors for implementation of lean and green concept in medium scale manufacturing industries in India.

2.8 RESEARCH SCHEME 9

Literature Review

Identifying of factors affecting lean implementation in industries

Identification of factors affecting green implementation in industries

Finalising critical success factors for lean and green implementation in medium Scale manufacturing industries in India

Finding out levels of factors by

Interpretive Structural Modeling (ISM)

Modified Interpretive Structural Modeling (Modified ISM)

Form a questionnaire and has been asked to six medium scale manufacturing industries

Form a network model and Rank the industries by

ANP

Fuzzy ANP

Comparing results

Conclusion 10

Figure 2.1 Research Scheme.

CHAPTER 3 METHODOLOGY
3.1 PROBLEM DEFINITION Project begins with the identification of important factors for lean and green implementation in medium scale Indian manufacturing industries with the help of literature survey and advice from expert team member. After finalising the factors, Interpretive Structural Modeling, Modified Interpretive Structural Modelingmethod had been usedfor finding out the importance of factors and levels of factors. Questionnaire had been prepaid regarding lean and green concept and that had been asked to six medium scale manufacturing industries manager. After collecting responses from industries, ANP method had been used to determine the extent to which the main principles of lean and green manufacturing had been carried out in six Indian median scale manufacturing industries. Further in order to reduce uncertainty for the obtained results we had used Fuzzy ANP. After ranking the industries by ANP and Fuzzy ANP, suggestion to each industry had provided.

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