The Lean Index: Operational "Lean" Metrics for the Wood Products Industry
Keywords:Business metrics, factor analysis, lean production
AbstractNo standard definition for lean production exists today, especially specific to the wood products industries. From a management point of view, even the more straightforward management issues surrounding the concept of "lean" are complex. This exploratory research seeks to develop a methodology for quantitative and objective assessment of the leanness of any wood products operation. Factor analysis is a statistical approach that describes the patterns of relationships among quantifiable predictor variables, with the goal of identifying variables that cannot be directly measured, such as the leanness of a company. Using this technique, a factor model was identified and a factor score, or "Lean Index," was developed. For the nine wood products companies included in this study, the average Lean Index is demonstrated to be 5.07, ranging from a low of 2.33 to a high of 12.00. Based on the quantified standards of lean production developed in this study, (1) primary wood products operations are inherently leaner than secondary wood products operations; (2) process throughput variables explain approximately twice the total variance of all consumed resources, compared to process support variables; and (3) energy consumption is shown to be the single most significant contributor to the leanness of any wood products company.
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