Analysis of lean manufacturing strategy using system dynamics modelling of a business model

Abstract

A system dynamics-based methodology is described for analysing the impact of lean manufacturing strategies on a company's business performance, using Business Model Canvas perspective. A case study approach is used to describe the methodology which consists of conceptualizing a system dynamics model on the basis of Business Model Canvas. The base system dynamics model is elaborated to include variables and concepts that consider the effects of lean manufacturing metrics on business performance. In the modelling experimentation, the lean manufacturing metrics are made to take on likely values one would expect if certain lean practices are initiated or improved. The experimental results provide one with the likely impact on business performance, if one were to improve lean manufacturing practices. The simulation results for the case study show that lean improvements, on the short-run, have a significant impact on business performance, but on the long-run, the impact is only marginal. The described methodology provides one with a structured format for investigating the impact of lean practices on business performance. Although the developed system dynamics model was built with generality in mind, it remains to be reproduced in other settings to test its replicability. The methodology enables an organization target which lean improvements to initiate based on their strategic impact on the business. Limited studies exist where system dynamics and business models are combined to test the strategic impact of lean manufacturing.