*Article* **Implementation of a Lean 4.0 Project to Reduce Non-Value Add Waste in a Medical Device Company**

**Ida Foley <sup>1</sup> , Olivia McDermott 1,\* , Angelo Rosa <sup>2</sup> and Manjeet Kharub <sup>3</sup>**


**Abstract:** The fourth industrial revolution, also referred to as Industry 4.0, has resulted in many changes within the manufacturing industry. The purpose of the study is to demonstrate how an Industry 4.0 project was scoped and deployed utilising Lean tools to reduce non-value add wastes and aid regulatory compliance. A case study research approach was utilised to demonstrate how the Lean Industry 4.0 project was implemented in a Medtech company to enhance Lean processes while increasing digitalisation. This research demonstrates that Industry 4.0 can enhance Lean, improve flow, reduce nonvalue add waste, and facilitate product lifecycle regulatory compliance to reduce defects, enhance quality, improve cycle time, and minimise reworks and over-processing. Lean and Industry 4.0 combined offer many benefits to the MedTech Industry. This research will support organisations in demonstrating how digital technologies can synergistically affect Lean processes, positively impact product lifecycle regulatory compliance, and support the industry in building a business case for future implementation of Industry 4.0 technologies.

**Keywords:** Industry 4.0; medical device; Medtech; regulatory compliance; engineering change management; product lifecycle management; Regulatory 4.0; Lean 4.0

**Citation:** Foley, I.; McDermott, O.; Rosa, A.; Kharub, M. Implementation of a Lean 4.0 Project to Reduce Non-Value Add Waste in a Medical Device Company. *Machines* **2022**, *10*, 1119. https://doi.org/10.3390/ machines10121119

Academic Editor: Mosè Gallo

Received: 17 October 2022 Accepted: 17 November 2022 Published: 26 November 2022

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

### **1. Introduction**

The Medical Device Industry is one of the largest growing industries in the world. This growth is driven by ageing populations, advancing technologies and new innovations to meet clinical needs [1]. In order to reduce costs, improve manufacturing productivity, and reduce cycle times, the Medtech industry, along with other industries, has embraced Lean [2]. However, with the advent of Industry 4.0 and increased digitalisation, the MedTech industry can improve efficiencies, reduce operational costs, and support organisational decisions through big data analytics [3,4]. Some studies have investigated Lean 4.0, the combination of Lean and Industry 4.0, and concluded that there is a synergistic effect between Lean and Industry 4.0 [2,5]. A recent Boston Consulting Group (BCG) study showed that states have a multiplier effect when lean and Industry 4.0 are combined. The study found that Lean can reduce operational costs by 15–20%, and digitalisation can reduce costs by 10–15% but combine both, and you get up to 40% cost reduction [6].

The impact of digital technologies on product lifecycle regulatory compliance has also not been widely researched. Product lifecycle regulatory compliance or regulatory compliance is how medical device manufacturers comply with the different statutory, mandatory, and voluntary regulatory requirements to ensure their organisations deliver a safe and effective product and meet various regulatory jurisdictions' specific regulatory requirements [7,8]. Increasingly changing regulations in Europe related to medical devices and other jurisdictions and staying compliant with technological advances have increased regulatory compliance complexity [9].

There have been few practical case studies of a Lean Industry 4.0 application [10], and neither one specifically focused on the Medtech organisation nor Lean Industry 4.0's impact

<sup>1</sup> College of Science and Engineering, University of Galway, H91 TK33 Galway, Ireland

on regulatory compliance [11,12]. This study will utilise a case study of a multinational medical device manufacturer with several global sites. This research aims to investigate the impact of Lean practices combined with Industry 4.0 on regulatory compliance and enhancing Lean processes within the MedTech Industry using the case study organisation as a reference. This research will address the following research questions:

RQ1:What impact can Lean 4.0 have on a Medical Device manufacturer's Total Product Lifecycle and Regulatory Compliance?

RQ2: How can Industry 4.0 enhance and enable Lean in a Medical Device manufacturer?

Section 2 reviews the published literature that is currently available on Lean Industry 4.0 in Medtech and how Lean and digitalisation can support regulatory compliance. Section 3 discusses the research methodology, while Section 4 documents the findings and results. Finally, the discussion and conclusion are outlined in Sections 5 and 6.

#### **2. Literature Review**

#### *2.1. Lean 4.0*

According to Antony et al. [11,12], in studies on Lean and Six Sigma combined with Industry 4.0, Lean 4.0 has emerged as a topic of researcher interest only from 2017 onwards. A systematic literature review found that Lean and Industry 4.0 (or Lean 4.0) combined, while still a nascent area, have many symbiotic and synergistic needs for each other [13,14]. Lean has become digitally enabled [15]. Integrating Industry 4.0 with Lean can enhance cost-competitiveness [16] and can generate reduced waste [17]. Several Lean concepts can be improved by integrating I4.0 technologies [13]. I4.0 can increase data availability which will enable Lean and aid in measuring, monitoring, and improving key performance indicators (KPI's) in organisations [18]. Thus, the synergistic effect between Lean and Industry 4.0 in Lean processes by improving flows and reducing bottlenecks [19].

Within a Lean value stream, integration of Industry 4.0 technologies benefits the Lean approach by combining the simplicity and efficiency of Lean with the agility of the I4.0 technologies [17]. Antony et al. [11] argued that there is a bidirectional relationship between Lean and Industry 4.0. Some studies have argued that, while Lean is an enabler for I4.0 or a pre-requisite for its introduction, there still needs to be more studies and guidance on its integration [13,20].

#### *2.2. How Is Lean and Industry 4.0 Impacting Medtech Regulatory Compliance?*

The Medtech sector is by its very nature, highly regulated with many different regulatory requirements globally, from the European Medical Device Regulation (MDR) and in vitro diagnostic medical device Regulation (IVDR) to the American Food & Drug Administration (FDA)'s Code of Federal Regulations (CFR) in the United States of America (USA), the Pharmaceutical and Medical Device Act (PMD Act) in Japan, the Regulation on the Supervision and Administration of Medical Devices, Order 739 in China, and the Therapeutic Goods (Medical Devices) Regulations 2002 in Australia, to name just a few. Global Regulations set out the regulatory requirements, including pre and post-market requirements, to ensure that medical devices are produced which are safe and effective [21].

Many Medical device companies have deployed Lean, with one recent study by McDermott et al. [2] on the Irish Medtech sector highlighting that over 95% of Irish Medtech companies had a Lean program. Lean in the medical device industry, as in other industries, has enabled waste reduction, particularly non-value add activity and improved process flow [22]. However, medical device regulatory compliance involves manual tracking and surveillance of multiple databases, leading to over-processing.

While Industry 4.0, Quality 4.0, Supply Chain 4.0, and even Healthcare 4.0 are studied in academic literature, Regulatory 4.0 or Industry 4.0's impact on regulatory affairs digitalisation is not a term that has been widely used [23–25]. In particular, the Quality (QA) function is more advanced on its digital transformation path than the Quality Assurance and Regulatory Affairs (QARA) partner function Regulatory Affairs (RA) [26]. Industry 4.0, in particular, can support Regulatory compliance using tools such as Regulatory informa-

tion management systems (RIMs) [27]. RIMs provide secure access to real-time regulatory data and visibility across regions. A challenge for device manufacturers is to remain current with global regulations and changes in achieving regulatory compliance throughout a product's life cycle [28]. IMs aid the RA function in quicker regulatory submission times and product registrations, resulting in faster access to markets in organisations across global sites.

RA functions must access several regulatory databases; for example, the European database on medical devices (EUDAMED) is used to access medical device-related data to understand how a device is performing in the market, its risks and benefits, and if post-market surveillance corrective actions are required based information that has been inputted into the system on individual devices as required by the European Union Medical Device Regulations (EU-MDR). To adhere to the MDR, manufacturers must register devices, sites, unique device identification (UDI), notified bodies' information and certificates, clinical investigation results data, device performance studies, vigilance, and post-market surveillance (PMS) information [29].

Many regulatory functions utilise Excel for tracking and trending, which is not Lean. Regulatory intelligence can be obtained and managed using digital technology, removing data inventory, defects or errors, waiting, delays, and over-processing [30]. Several types of information must be tracked, including Regulatory Impact Assessments (RIAs), change notifications (CN), licenses, submissions, and device registrations [31]. Industry 4.0 technologies can help aid RIMs to be more efficient and Leaner. The digitalisation of an organisation's regulatory data is key in supporting RA moving forward on its Lean journey. The digitalisation of RIMs will drive flow, a reduction in non-value add activities, and ensure standardised, efficient systems. Industry 4.0 digitisation ensures RA functions know when regulators have made changes to guidance documents, standards, and regulations, reducing the non-value add waste of checking global regulatory websites to keep abreast of the latest changes and other systems that can manage regulatory information [22]. It is key that manufacturers are aware of changes to standards or regulations as they occur, as they need to demonstrate regulatory compliance and have access to the latest revisions in a more automated manner [32]. Much of an RA professional's time is spent waiting and searching for regulatory information in a non-value add manner.

Within the medical device regulatory world, several global jurisdictions have put in place legislation to protect patient data, enhance cybersecurity in relation to smart devices, and implement standards and guidance documents that can support their implementation [33]. Industry 4.0 can aid device manufacturers' data security, implementation of digital signatures, transaction time stamping and data encryption, which enhance traceability and increase cybersecurity [33]. However, there are many regulators and standards organisations, such as the International Organization for Standardization (ISO), American National Standards Institute (ANSI), European Committee for Standardization (CEN), the American Society for Testing and Materials (ASTM), and European Telecommunications Standards Institute (ETSI); there must be a more effective technological method of keeping abreast of all relevant regulatory requirements [34,35].

#### *2.3. Challenges to Lean Industry 4.0 Deployment*

Implementing Lean 4.0 is impacted by many factors, including management support, organisational vision, and investment [36]. The difficulty in implementing Industry 4.0 systems can be off-putting due to the technical complexity and resources involved, as well as the time required [37]. In particular, for the medical device industry, new European medical device regulations have provided severe resource challenges in preparing for more stringent regulatory requirements [38]. While this EU-MDR is not precluding Industry 4.0 deployment, it has stifled the MedTech Industry from implementing it [39]. System changes in device manufacturers need regulatory authority approvals [40]. These regulatory approvals consume time and resources [2]. Many studies have highlighted the importance of management support and leadership commitment in both Lean and

Industry 4.0 deployment [41,42]. However, given the costly nature of digitalisation, it is very important that the right technology is chosen and understood and the cost benefits analysed [43,44]. In addition, the technology chosen needs to be aligned with the organisation's strategic vision so that the technology can be integrated across the organisation and multisite functions [45]. The timing of when Industry 4.0 is adopted can also affect organisations. According to Antony, Sony, and McDermott [43], late adopters benefit from cost reductions in technology and can benchmark tried and tested solutions, while early adopters pay more but can achieve market share through increased competitive advantages. Table 1 summarises the Lean 4.0 opportunities from the literature.


**Table 1.** Lean Industry 4.0 Opportunities and Challenges.

#### **3. Methodology**

This research aims to demonstrate, through a case study on a Lean Industry 4.0 project, that digitisation positively affects both Lean processes and regulatory compliance. The case study approach allows the researcher to focus on just one instance rather than multiple instances, supporting an in-depth review that can provide insight that may not be visible using multiple cases. A case study can also help the reader better understand the researched topic [46]. This study uses a single case to support the research. The case study will concentrate on one of the organisation's Industry 4.0 projects currently in implementation. Using a case study is a means by which the researcher can explore the subject in-depth, understanding how and why the subject is being implemented and how it is received by the organisation [47]. Data for the case study was gathered using local documents and having Microsoft Teams meetings with the case study organisations project lead to understand how the project progressed through to implementation, what challenges there were and why this particular Industry 4.0 project was chosen.

This research focuses solely on Company X, a medium-sized MedTech company in the early stages of its digital transformation. The case study will review and demonstrate how regulatory compliance has been impacted through detailed planning and execution of one of the organisation's Industry 4.0-type projects. Data was collected throughout the project with data collected beforehand to justify and quantify the need for the project.

Company X has over 23,000 products in its portfolio, employs over 14,000 people globally, generates just under \$3 billion dollars in revenue, and has over 120,000 customers. Company X products are used in over 24,000 surgical procedures in the United States, and its products are used in Intensive Care Units (ICU), Cardiology, Radiologists, Vascular Surgeons, and Emergency Responders. Therefore, Company X must continue to deliver products that meet customer and regulatory requirements. With the organisation's growth, its use of digital technology has also expanded. Due to how Company X has grown, through acquisition, multiple management systems manage its data, including product data, complaints, records, documentation, and the supply chain. Multiple systems have led to complex, difficult-to-manage processes, inefficiencies, a lack of global processes, and interconnectivity between IT systems, non-conformances, and recalls. Because of these issues, Company X is currently working on having one platform, system, and data source across all sites to enhance its production, reporting capabilities and compliance. While company X has had a mature Lean program for many years, it is considered a late adopter in terms of its Industry 4.0 deployment. Antony et al. [43] defined late adopters of Industry 4.0 as those organisations which delay the implementation of enhanced technology and adopt a more cautious approach to investing in such technologies.

The project this case study will focus on is internally referred to as "Project Impact". Project Impact is the organisation's Enterprise Change Management (ECM) program. ECM is the cornerstone program that will support the organisation's roadmap for the rollout of future Industry 4.0 initiatives. The project is a strategic initiative that aims to deliver a bestin-class ECM process for Company X's product data. Managing change in organisations is a laborious task that consumes value-added time in various segments of the product lifecycle, including design and development, production, delivery, and product disposition [48]. ECM and Product lifecycle management play an important role in minimising the time required for managing engineering changes [49].

#### **4. Results**

#### *4.1. What Were The Industry 4.0 Tools Implemented?*

The ECM program focuses on two key elements, Product Lifecycle Management (PLM) and Master Data Management (MDM). PLM is the process of managing the entire lifecycle of a product from inception, through engineering design and manufacture, to service and disposal of manufactured products and product end of life. ("Product Life Cycle Management System for the PLM Process") PLM is the business activity that effectively manages and supports Company X products throughout their lifecycle; refer to Figure 1 for an overview of PLM. The new PLM will use Oracle Agile, cloud-based software that will manage the following electronically: the Design History File, Registrations, Device Master Record, Change Process and Sustaining. *Machines* **2022**, *10*, x FOR PEER REVIEW 6 of 16

PLM impacts all aspects of Company X's business, including people, culture, tech-

MDM is a combination of systems and processes that link, manage and process key

MDM will provide Company X employees with clear roles and responsibilities; it will deliver end-to-end metrics so that decisions can be made based on accurate data; it will simplify the current complex processes using technology and implementing one global system. The interface between PLM and MDM is a Business-to-Business (B2B) interface; MDG, in turn, consolidates and shares data with SAP. The two systems were chosen as both provide different functionalities. PLM will be used for managing product design and engineering specifications, change control, product lifecycle, workflow and task management, registrations, training, and document management. MDM will be the central repository for consolidated and clean data containing rules for integration and synchronisation of data that will be shared across both systems through workflow and task

As well as the two systems, another important element of Project Impact is Organisational Change Management (OCM) which is key in any project but even more so when

ical data to one file, called a master file or golden record. Refer to below Figure 2 for an overview of MDM. MDM uses Systems Applications and Products (SAP) Master Data Governance (MDG) software that will be the following for Company X's master data: a data hub, a golden Record, a Gatekeeper, and a workflow, which automates and defines

**Figure 1.** PLM Structure. **Figure 1.** PLM Structure.

data ownership.

**Figure 2.** MDM Structure.

management using an interface.

nology, and processes, as seen in Figure 1 above.

PLM impacts all aspects of Company X's business, including people, culture, technology, and processes, as seen in Figure 1 above. nology, and processes, as seen in Figure 1 above. MDM is a combination of systems and processes that link, manage and process key

PLM impacts all aspects of Company X's business, including people, culture, tech-

MDM is a combination of systems and processes that link, manage and process key product data. MDM is a comprehensive method enabling an enterprise to link all its critical data to one file, called a master file or golden record. Refer to below Figure 2 for an overview of MDM. MDM uses Systems Applications and Products (SAP) Master Data Governance (MDG) software that will be the following for Company X's master data: a data hub, a golden Record, a Gatekeeper, and a workflow, which automates and defines data ownership. product data. MDM is a comprehensive method enabling an enterprise to link all its critical data to one file, called a master file or golden record. Refer to below Figure 2 for an overview of MDM. MDM uses Systems Applications and Products (SAP) Master Data Governance (MDG) software that will be the following for Company X's master data: a data hub, a golden Record, a Gatekeeper, and a workflow, which automates and defines data ownership.

*Machines* **2022**, *10*, x FOR PEER REVIEW 6 of 16

**Figure 2.** MDM Structure. **Figure 2.** MDM Structure.

**Figure 1.** PLM Structure.

MDM will provide Company X employees with clear roles and responsibilities; it will deliver end-to-end metrics so that decisions can be made based on accurate data; it will simplify the current complex processes using technology and implementing one global system. The interface between PLM and MDM is a Business-to-Business (B2B) interface; MDG, in turn, consolidates and shares data with SAP. The two systems were chosen as both provide different functionalities. PLM will be used for managing product design and engineering specifications, change control, product lifecycle, workflow and task management, registrations, training, and document management. MDM will be the central repository for consolidated and clean data containing rules for integration and synchronisation of data that will be shared across both systems through workflow and task MDM will provide Company X employees with clear roles and responsibilities; it will deliver end-to-end metrics so that decisions can be made based on accurate data; it will simplify the current complex processes using technology and implementing one global system. The interface between PLM and MDM is a Business-to-Business (B2B) interface; MDG, in turn, consolidates and shares data with SAP. The two systems were chosen as both provide different functionalities. PLM will be used for managing product design and engineering specifications, change control, product lifecycle, workflow and task management, registrations, training, and document management. MDM will be the central repository for consolidated and clean data containing rules for integration and synchronisation of data that will be shared across both systems through workflow and task management using an interface.

management using an interface. As well as the two systems, another important element of Project Impact is Organisational Change Management (OCM) which is key in any project but even more so when As well as the two systems, another important element of Project Impact is Organisational Change Management (OCM) which is key in any project but even more so when implementing such a transformational change across the organisation. Anticipating and managing changes to people and process is critical to mitigating risk and enabling success [45]. Effective change management is more than training and communications; it also includes having and sharing the organisation's vision, having leadership support, bringing people on the journey as it happens, encouraging and enabling behavioural change, managing stakeholders, and continuously analysing and assessing on a daily, weekly, monthly, annual basis how the goals and objectives of the project and the team are progressing. Having a governance model in place to help and support the team in their decision-making gives the team the autonomy it needs to be successful and deliver per the agreed-upon timelines. Having the support of the Steering Committee, Project Leaders, and Project Team helps to ensure that decisions are made in a timely manner so that timelines are not impacted. It is about managing the change so that the people, processes, and technology are aligned, which ensures a successful outcome, benefiting all involved.

To deliver such a project, the team worked on obtaining buy-in from the Senior Leadership Team, which enabled them to build the team required to plan and execute the deliverables. The team includes a Steering Committee, Program Leadership/Advisors, and Project Management Office (PMO) Leadership who offer knowledge and support to each workstream, including PLM, MDM, Transformational Change, and IT. In addition, each workstream is supported by a core team and extended teams across the organisation.

#### *4.2. Why Implement Industry 4.0 Tools?*

The reasons for embarking on this transformational journey include product quality and compliance, recall reduction, revenue growth, improved time to market, operational efficiency, re-registration cost savings, effort during quality and regulatory audits, cycle time reduction for product management, and cost of goods sold (COGS) reduction, including scrap reduction and acceleration of cost improvement projects (CIPS). The team first built a strong business case to obtain Senior Leadership buy-in and support to support this project. The business case included reasons and examples of why and what could be achieved through implementing the PLM and MDM technologies and what the benefits are including customer, internal, and financial benefits. Table 2 gives an example of the importance of these technologies from a customer and internal point of view, including the issue, risk, and impact. Having an effective PLM/MDM prevents the type of error and consequences.

**Table 2.** Example of Internal and Customer Impact scenario that PLM/MDM can prevent.


Product: A medical device kit designed to support the most urgent clinical needs of the critical care patient.

Issue: Incorrect component listed on Bill of Materials (BOM)

Risk: The issue could have resulted in patient irritation during kit use, thereby complicating an already compromised patient during use.

Impact: Recall, Regulatory non-compliance, Business Impact

**Internal Impact Story**

Site to Site (Transfer issue)

Issue: Component manufactured in a new facility not cleared for release in EMEA by a regulatory agency. Insufficient controls for containment between regulatory plans, change control process, and product release at finished goods, semi-finished, or component level.

Risk: Finished goods/components were distributed without required regulatory clearance

Impact: Possible Recall, Regulatory non-compliance, Business Impact

The Teams vision enables Company X's accelerated growth by driving excellence in managing product creation and change through a unified global process. Thus the ECM will support the organisation's vision by standardising and deploying a global PLM process to reduce the risk of quality-related issues and introduce an MDM system for the management of product-related data for consistency and accuracy.

Other non-value add wastes specifically related to compliance identified by Company X as part of project brainstorming sessions and Value Stream Mapping (VSM) demonstrated the need to implement such technologies. The challenges included safety risks, quality risks, compliance risks, recall risks, impact on brand equity, highly manual work, and increased costs:


In addition to the above challenges, Company X has many disparate processes to manage product master data and document changes across the organisation. These result in very complicated workflows that can be challenging to manage and control, resulting in

manual processes with many resources required to maintain them. Value Steam Mapping was utilised to map the current process and identify all non-value add (NVA) wastes [50]. Figure 3 demonstrate schematics based on the high-level VSMs before and after implementation of the Industry 4.0 project (Note: a schematic has been included rather than the original VSMs for legibility purposes). The new system creates pull and flow, adds value and can aid continuous improvement. The new system is more "Lean" and has a less complicated process resulting in reduced overprocessing and more streamlined processes for change management and master data maintenance. ping was utilised to map the current process and identify all non-value add (NVA) wastes [50]. Figures 3 demonstrate schematics based on the high-level VSMs before and after implementation of the Industry 4.0 project (Note: a schematic has been included rather than the original VSMs for legibility purposes). The new system creates pull and flow, adds value and can aid continuous improvement. The new system is more "Lean" and has a less complicated process resulting in reduced overprocessing and more streamlined processes for change management and master data maintenance.

*Machines* **2022**, *10*, x FOR PEER REVIEW 8 of 16

management of product-related data for consistency and accuracy.

• Product changes implemented without adequate review/approval;

• Inaccurate and non-compliant label information being released; • Poor management of global label variations (language, metadata).

work, and increased costs:

tionality;

The Teams vision enables Company X's accelerated growth by driving excellence in managing product creation and change through a unified global process. Thus the ECM will support the organisation's vision by standardising and deploying a global PLM process to reduce the risk of quality-related issues and introduce an MDM system for the

Other non-value add wastes specifically related to compliance identified by Company X as part of project brainstorming sessions and Value Stream Mapping (VSM) demonstrated the need to implement such technologies. The challenges included safety risks, quality risks, compliance risks, recall risks, impact on brand equity, highly manual

• Lack of verification of requirements to ensure the design meets the intended func-

• Manufacturing processes not updated in coordination with product design updates;

In addition to the above challenges, Company X has many disparate processes to manage product master data and document changes across the organisation. These result in very complicated workflows that can be challenging to manage and control, resulting in manual processes with many resources required to maintain them. Value Steam Map-

• Discrepancies between product specifications, BOM, and commercial labels;

**Figure 3. Figure 3.**  High-Level VSM before and after implementation. High-Level VSM before and after implementation.

Note: The diagram is intended to show visually the removal of non-value add systems and steps (represented as differently coloured lines in the diagram) via the research project implementation. Also the 22 types of system interactions before project versus the 8 systems after (PLM, ERP, Lansa and Kata) are represented.

#### *4.3. Benefits*

In addition to the above, Table 3 below lists the additional benefits that were gained post-full implementation of PLM and MDM.

The benefits directly impact the people, processes, and systems at Company X. Many of the benefits have a positive impact on regulatory compliance, ensuring that Company X products, processes, and services deliver a product that is safe and effective, meets customer requirements and expectations and meets regulatory requirements by delivering a harmonised global change management process with access to accurate and reliable master data.


#### **Table 3.** Benefits of the Lean 4.0 project.

#### *4.4. Detailed Examples of ECM Impact on Regulatory Compliance*

The following section takes a more in-depth look at some of the benefits associated with implementing ECM and how they will positively impact regulatory compliance. One common element across all areas of the ECM is the reduction in non-value add wastes in terms of man-hours and human interaction across each process. Reducing the number of people involved in any process reduces the number of opportunities for human error. Human error is one of the main sources of non-conformances across Company X; therefore, reducing human interaction directly impacts regulatory compliance by reducing nonconformances and defects.

#### *4.5. Reduction in Non-Conformance Investigations and Recalls Related to ECM*

Based on initial figures, 15% of Non-Conformance Reports (NCRs) were due to ECM activities (17 out of 110). Implementing an ECM program will reduce the number of ECMrelated NCRs, positively impacting regulatory compliance and patient safety. Less NCRs result in fewer recalls and reduced effort in processing both NCRs and recalls freeing the ECM team up to work on other tasks, such as continuous improvement projects. ECM will deliver a 50% improvement in the number of ECM-related NCRs and recalls. Refer to Table 4 below for improvements relating to NCRs / recalls.

**Table 4.** Reduction in NCRs and Recalls related to ECM.


#### *4.6. Reduced Effort for Quality Audits*

The introduction of an ECM program means having all the product and master data available electronically. Having data that is readily available and easily accessed during audits/inspections reduces the number of people involved in pulling data manually and having to copy or scan documents to provide to an auditor/inspector. In addition, it ensures that documents, when requested, are available to the auditor/inspector promptly and without undue delay. This is particularly useful where there are many actors within an organisation working across many different time zones who are required to support audits and inspections across multiple sites depending on their actor statuses such as manufacturer, sub-contract manufacturer, component supplier, importer, distributor, authorised representative, or specification developer. As a result, ECM will deliver a 20% improvement in the effort it takes to manage a quality audit/inspection. Refer to Table 5 below for improvements relating to quality audits/inspections.


**Table 5.** Reduced effort for Quality Audits.

#### *4.7. Reduction in Re-Registration Efforts*

As stated above, introducing an ECM program means having all product and master data available electronically. Having data that is readily available and easily accessed supports the registration process. When it is time to re-register products, rather than reaching out to different business units that must pull documents manually, scan them and arrange them for submission, ECM will support this process and make it easier and less time-consuming. As a result, ECM will deliver a 20% improvement in the effort it takes re-register the product. Refer to Table 6 below for improvements relating to re-registration.

**Table 6.** Reduction in re-registration efforts (Source: Project Impact Lead).


#### *4.8. Cycle Time Reduction*

Implementing an ECM will deliver a 48% reduction in the cycle time. Reducing cycle time means faster time to market, so customers and patients will have access to devices. Refer to Table 7 below for improvements relating to cycle time.


**Table 7.** Cycle Time Reduction (Source: Project Impact Lead).

#### *4.9. Faster Time to Market*

Based on the project's complexity, the time to market based on the implementation of ECM differs from between 5% and 15% improvement in the time it takes to get a device to market post-implementation. Having products on the market faster means customers can access life-changing and life-saving devices quicker, as seen below in Table 8.

**Table 8.** Faster Time to Market Benefits.


The case study was performed on Company X, a medium-sized medical technologies (MedTech) manufacturer that provides medical devices and technologies globally. Company X has grown through acquisition resulting in its many management systems. The case study provides an overview of Company X's history, which includes why the organisation has started implementing some Industry 4.0 tools to aid its Lean processes. These include simplifying processes, improving Lean flow, realising efficiencies, and reducing the number of errors and recalls across the organisation through implementing a global system for managing changes and product data. In addition, as a case study, company X provides examples of how Lean Industry 4.0 tools have a more positive than negative impact on regulatory compliance.

#### **5. Discussion**

This research met its objectives to define the impact Lean 4.0 can have on the Total Product Lifecycle and Regulatory Compliance in a Medical Device manufacturer (RQ1) and to demonstrate how Industry 4.0 enhance and enable Lean (RQ2).

Lean processes, combined with Industry 4.0 technology as an enabler, can aid in regulatory compliance by optimising processes, reducing non-value add work and overprocessing, and enabling ease of vigilance and aces to regulatory information. Improved Industry 4.0 technology can aid process flow and prevent errors that can result in missed compliance deadlines and errors that could result in recalls. Lean 4.0 is an enabler for enhanced Lean processes and reduces manual tasks [11,17]. The synergistic effects between the two concepts ensure a more successful and symbiotic relationship and implementation of Lean 4.0 [44].

Many studies on Lean, Industry 4.0, and Lean 4.0 combined discussed the benefits of an enhanced product and process quality, improved compliance, faster time to market and product cycle times, improved profits and revenue, and increased market share [12,23,41]. In addition, there have been improvements in the case study organisation in the following areas.


Other benefits included brand equity, faster integration of Mergers and acquisitions (M&A), procurement efficiencies and inventory optimisation. To achieve these benefits, Company X chose two well-established technologies, Agile for PLM and SAP for MDM. Choosing the right technology and understanding how it can be integrated into an organisation is a critical success factor for Industry 4.0 [51]. These technologies are the foundation for the organisation's digital transformation journey. These technologies will provide the organisation with the infrastructure needed to execute the organisation's Strategic Vision and what is also considered the organisation's Industry 4.0 roadmap. A strategic plan and map for Industry 4.0 implementation is key to the success of the initiative [52].

From the project's initiation, Company X's leadership team were fully invested, involved and supportive of the strategic plan for Industry 4.0 deployment. While it took some time to gain approval from the Senior Leadership Team (just under 2 years), significant investment was approved by the organisation in terms of resources, both people and finances. Many Industry 4.0 projects can fail without this level of management support and involvement to understand the alignment of digitalisation with strategy [53]. The project team had to provide the Senior Leadership Team with the evidence they needed in terms of benefits and return on investment before committing to the project. A detailed cost–benefit analysis and understanding of the need for such technology are key to the success of such deployments [24].

Another key aspect of the project was driving change within the organisation and the requirement for effective communication and training. People need to understand what is being changed and why it is being changed so they can buy into and support the project [4].

Digital transformation involves significant effort, time, and money [54]. However, the benefits the project could bring to make the organisation Leaner and enhance its regulatory compliance, the project needed Senior Leadership to buy in given its significance and for it to be successful and deliver the benefits to the organisation. The data presented in this case study demonstrates how Industry 4.0 and Lean combined can have a synergistic effect.

#### **6. Conclusions**

The research met its research objectives to demonstrate that Lean and Industry 4.0 can improve and enhance Lean processes, reduce waste and improve productivity and quality while enhancing digitalisation. Integrating Lean and Industry 4.0 can enhance regulatory compliance to ensure that organisations adhering to global regulations and legislation can deliver safe and effective products. A limitation of this research was that it was a single case study. Using similar or different-sized companies (small or large) would have provided another perspective on how and why other companies are implementing Lean 4.0 and at what stage they are in their journey so that a comparison could be made. The case study organisation used was only in the early implementation of its strategic plan for digitalisation to enhance Lean. Therefore, while it is possible to review the first stages of the project's success, further research could focus on the ongoing deployment across company X. Further research should be taken post-implementation to gain more longterm data on the digital technologies implemented, their effects on Lean, and their impact on regulatory compliance. In addition, future studies should consider including other MedTech companies to make a comparison.

**Author Contributions:** Conceptualisation, I.F. and O.M.; methodology, I.F. and O.M.; validation, I.F., O.M., A.R. and M.K.; formal analysis, O.M., I.F. and A.R.; investigation, M.K. and I.F.; resources, I.F. and A.R.; writing—original draft preparation, I.F., O.M., A.R. and M.K.; writing—review and editing, O.M., A.R. and M.K.; supervision, O.M. and M.K.; project administration, O.M. and I.F. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Data Availability Statement:** Not applicable.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **References**


**Geandra Alves Queiroz 1,\* , Alceu Gomes Alves Filho <sup>2</sup> and Isotilia Costa Melo <sup>3</sup>**


**Abstract:** For organizations to remain competitive, they must now adapt to sustainability requirements, which have become performance criteria for supplier selection for most original Equipment manufacturers (OEMs). In this sense, environmental performance is now included as a competitive priority throughout the supply chain. Therefore, this study aims to verify, through two case studies, the competitive priorities of two first-tier suppliers from the automotive chain that have adopted lean and green practices. The findings show that the quality priority is the main source of competitive advantage and the focus of the operations that are analyzed here, while the environmental priority is not considered the most important by the companies. However, it is still included as a priority. Furthermore, it is demonstrated that lean practices could generate compatibility for the environmental priority, even indirectly, while trade-offs can arise between priorities. Therefore, the integration between lean and green practices can facilitate the inclusion of the environmental priority into the operations strategy and management systems.

**Keywords:** lean–green; sustainability; competitive priority; operations strategy; supplier

#### **1. Introduction**

#### *1.1. Contextualization and Research Objective*

As shown by Skinner (1969) [1] in his seminal article, manufacturing balances consumer demands and production function resources. Thus, industrial operations play a crucial role in achieving these goals. Remarkably, operations strategies that address environmental issues have been adopted by organizations through the inclusion of environmental performance as a competitive priority, referred to here as the "environmental priority" [2–4].

In this context, to be competitive, organizations have to establish long-term strategies to achieve environmental sustainability, and all supply chain members have an essential role in supporting this [5]. Besides managers, researchers in operations management also face a significant challenge in including an environmental priority [6]. In this context, equalizing the cost, quality, delivery, flexibility, and service priorities in a stable trade-off become an urgent necessity [7]. Along these lines, organizations and researchers have sought solutions that promote the integration and alignment of practices, enabling operational (lean) and environmental (green) gains [8,9].

The literature discusses the integration of lean manufacturing, known as the production management philosophy, and green manufacturing, an approach to reduce environmental impacts in manufacturing. This integration is named lean–green manufacturing and has been understood as a key to improving the competitiveness of organizations as a way to balance the environmental priority with the other competing priorities [3,7,10,11].

The literature also points out several compatible aspects between these approaches. Especially regarding the reductions in waste generated by lean processes that lead to the efficient use of resources, this approach can indirectly lead to the removal of negative

**Citation:** Queiroz, G.A.; Filho, A.G.A.; Costa Melo, I. Competitive Priorities and Lean–Green Practices—A Comparative Study in the Automotive Chain' Suppliers. *Machines* **2023**, *11*, 50. https:// doi.org/10.3390/machines11010050

#### Academic Editor: Dan Zhang

Received: 24 October 2022 Revised: 28 November 2022 Accepted: 7 December 2022 Published: 1 January 2023

**Copyright:** © 2023 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

environmental impacts caused by production flows [12]. Additionally, there are studies such as the paper by Jamali et al. (2017) [13] that argue that competitive strategies can implement lean and green practices. However, there are studies such as the one by Suifan (2019) [7] that point out that the competitive priorities can differ in each approach. However, these studies still do not provide a wide understanding of the relationships between lean– green and operations strategies.

Furthermore, a literature review [14] showing the current state of the trade-offs between the competitive priorities of lean and green processes found a few studies that have developed and validated a conceptual framework that seeks to put into context these practices. Additionally, there are discussions about digital innovations and their impacts on improving environmental performance, as presented by Yin et al. (2022) and Queiroz et al. (2022) [15,16].

Therefore, although synergies between lean and green processes and issues related to new technologies have been presented, these studies have not provided a discussion from a strategic perspective while presenting and understating the competitive priorities of such integration [4]. Considering the relevance of the operations for an organization's global strategy and the lack of studies about the lean–green approach from the operations strategy perspective, an analysis of the competitive priorities can provide an update about how these practices relate to the competitive strategy.

In this fashion, the following question arises, "What are the competitive priorities in companies that adopt lean and green practices?".

Given this background, this paper aims to identify the competitive priorities of two first-tier supplier companies of the automotive chain that have adopted lean and green practices, specifically to understand how these priorities are ordered and how the environmental priority is considered. This industry is considered a reference case for lean manufacturing. Consequently, most of the lean–green models are developed in organizations in the automotive industry [17].

The remainder of this paper is organized as follows. Section 2 presents the fundamental concepts about the competitive priorities of operations strategy and the lean and green approach. Next, Section 3 describes the research method. Section 4 presents the results and a discussion. Finally, the final considerations of this study are also given.

### *1.2. Theoretical Background*

#### 1.2.1. Competitive Priorities

The corporate strategy gives rise to the functional designs of a company, among them the operations strategy, which will be the focus of this study and is considered the primary source of competitive advantage over the last 40 years and until today, meaning it deserves attention [18,19]. Additionally, the operations strategy seeks to define an organization's business operations and decisions regarding the acquisition and allocation of resources. It is aimed at the entire organization [20].

Skinner's (1969) [1] study was the pioneer in highlighting and conceptualizing operations strategy, showing the importance of incorporating and aligning the operational elements of the production function into the corporate strategy. According to this author, production should be considered strategic and a source of competitive advantage. In this way, companies must recognize and establish a relationship between corporate and operations strategies so that the production systems are competitive and collaborate to achieve the organization's goals [21]. Hence, the operations play a decisive role in achieving a favorable competitive position [22].

In this sense, the operations strategy is defined as a sequence of decisions that over time allow a business unit to achieve a structure, the desired production infrastructure, and a set of specific resources, i.e., a consistent pattern of decision-making in the production function, aligned to the business strategy [20].

The content of the operations strategy is related to the company's decisions around the corporate system's effectiveness [23]. This is a set of competitive priorities related to the operations and decisions in the structural and infrastructural areas of production [24]. The competitive priorities are related to the performance objectives that the production function adopts to align with the company's competitive strategy [1]. In other words, as the organization outlines a strategy to meet the market requirements, it is determined how the operations need to be performed [25].

The competitive priorities of production, also called performance objectives, competitive dimensions, and production missions, should be part of the priorities that will guide the programs to be implemented by the production function of a company. This means competitive priorities represent how the company will meet customer needs concerning the production function's performance targets. In other words, they define how the company intends to compete in the market to meet the needs of its customers [26].

In this article, the competitive priorities proposed by Garvin (1993) [27] and Slack and Lewis (2011) [25] are adopted, which represent the most recurrent studies on operations strategy. Hence, the adopted priorities for this research are the cost, quality, delivery, service, flexibility, and environment. The cost priority may be related to the objectives of reducing the costs of acquisition, production, and distribution and the price to customers. The quality priority involves aiming to produce goods according to specifications, aesthetics, perceived quality, and performance. Flexibility is the ability to react to changes in the volume and mix of products and in the production schedule. The delivery priority is related to reductions in lead time between the beginning and the end of the operations. Additionally, it is related to the availability and quicker delivery of the product and meeting the agreed delivery deadline. Finally, the environmental priority is the search to reduce the environmental impacts from energy consumption, the use of materials, gas emissions, and waste generation from certain processes, as presented in the lean and green literature [3,28–31].

The inclusion of the environmental priority might make operations management even more complex, given that this impacts the company's performance in a multidimensional manner [32]. Thus, when the environment is considered a competitive priority, it is essential to consider the environmental issues in the operations strategy. Consequently, modifications or redesigns of the operations strategy are required [33].

Furthermore, it is crucial to consider that there are trade-offs between the competitive priorities, as argued by Skinner (1969) [1]. For this author, the organization must prioritize only one or another competitive priority, seeking to be better than its competitors. The operations must be focused once it is not possible to obtain low cost and quality at the same time. To this effect, Skinner (1969) [1] explains that organizations must make certain decisions regarding the size of the manufacturing unit, whether to have high stocks or low stocks, the types of equipment to be used, and the level of standardization. In summary, Skinner (1974) [34] introduced the concept of a focused factory, which concerns the impossibility of a factory working well for all competing priorities.

However, Sarmiento, Thurer, and Whelan (2016) [35] consider it is possible to focus on more than one priority. However, choices need to be made and trade-offs are inevitable, since a production system must be excellent to meet all criteria to create a competitive advantage. In a context where competitiveness increases and it becomes necessary to meet more than one customer need, the trade-off model proposed by Skinner (1969) [1] is questioned. Such questioning culminated in the proposal of a cumulative capabilities model that simultaneously implies high performance in more than one competitive priority [36].

In one of the first studies on cumulative production capabilities, as pointed out by Boyer and Lewis (2002) [36], Japanese organizations developed productive capabilities based on a previously established order, and the practices adopted allowed cost reductions and the production of quality products simultaneously. Ferdows and De Meyer (1990) [37] propose the "sand cone model", which establishes that the organization can achieve all competitive priorities over time and that there is an adequate sequence for their construction, with quality being considered the basis for the implementation of other improvements. In this way, Ferdows and De Meyer (1990) [37] also argue that it is important to focus on

avoiding failures in the system, and that in this way the costs could be reduced by means of other capabilities, such as via better quality in the processes. The authors also point out that improvements obtained through good production practices are more lasting and stable.

However, Flynn and Flynn (2004) [38] noted no evidence for the sequence of priorities presented in the sand cone model. The authors argue that the development of cumulative capabilities is complex and not limited to a specific sequence, as several factors influence it.

Regarding the inclusion of the "environment" as a new competitive priority, the literature emphasizes possible trade-offs that may arise between the environment and the other priorities [4,39]. Vargas-Berrones, Sarmiento, and Whelan (2020) [39] show for smalland medium-sized enterprises (SMEs) that the implementation of some green initiatives may be extraordinarily costly, and this scenario could discourage businesses from pursuing them. However, according to Porter and Linde (1995) [40], it is possible to meet the economic and environmental objectives of products and processes, since the preservation of resources generates greater process efficiency.

#### 1.2.2. Lean–Green

Lean manufacturing emerged in the 1950s. It is considered a management philosophy and has been one of the most widely used approaches to managing operations [41]. Lean manufacturing has been considered a great solution to improve all kinds of processes, in the production of both goods and services [42]. Lean manufacturing is a set of principles and practices that seek to eliminate all forms of waste from processes. The main lean practices are 5S, Kaizen, value stream mapping, just-in-time (JIT), rapid tool change, total productive maintenance, standardization work, visual management, 5 whys or Ishikawa diagram (fishbone), and Kanban (pull production) [43]. In addition, the focus on the implementation of lean systems is via delivery (lead time reductions), quality, and cost reduction [7,42,44]. Organizations from various industries around the world are adopting lean practices to become more competitive [45].

On the other hand, green manufacturing emerged in the 1990s as an operational and philosophical approach to reducing the adverse environmental effects of products and processes [3]. In short, this approach aims to reduce the impacts generated by operations and deals with the search for reduced pollution, energy consumption, and emissions of toxic substances through the development of new processes in manufacturing [46].

Green manufacturing is composed of different practices. These practices seek to reduce the environmental impacts generated by production processes, such as via the environmental accreditation of suppliers and the use of product life cycle analyses, reverse logistics, environmental management systems, waste management policies, and effluent treatments, as well as via programs for water conservation, energy, recycling, materials consumption, and environmental education [47].

The pioneering study on lean and green manufacturing was presented in 1996 by Florida (1996) [11] and discussed the integration of these approaches, exploring how organizations could include the environmental issue in manufacturing through the "lean– green" approach, arguing that the waste reduction generated by lean manufacturing contributes to environmental performance. Based on the previous literature, the lean–green concept is understood as an approach that supports the search for sustainable development in the economic, environmental, and social pillars of a production system [48] and focuses on waste reductions and the efficient use of resources [3,12,49].

Some studies [50–52] have shown that lean manufacturing can bring environmental benefits and that this can be attributed to the more efficient use of resources (such as water and other inputs). In lean implementation cases, it is possible to note many improvement efforts to reduce variation or waste from operations [53,54]. Thus, the congruent aspect of lean and green manufacturing is waste reduction [49].

The lean–green literature [55,56] suggests that implementing lean practices can offer significant advantages and synergy with a firm's environmental performance, without compromising other competing priorities. Lean and green processes are considered complementary [29,57,58]. Moreover, according to these studies, the organizational structure and lean culture facilitate the development of environmental management and the formation of a "green" company. Additionally, it was demonstrated that the vital link between operational excellence and the lean–green approach enables the achievement of competitive advantage in the sustainability era [59].

However, generally lean manufacturing does not directly cover environmental impacts. In the literature, surveys about the lean implementation model [60] did not find a framework for lean implementation that considers environmental impacts. Therefore, there are blind spots in lean manufacturing concerning the environment, such as the environmental risks of the improvements and practices [61]. Along these lines, organizations need to use green tools to fill this gap [29] and make the "environment" a competitive priority. Consequently, since lean and green processes have different objectives, trade-offs may arise between competitive priorities [4,7]; it is an urgent necessity to integrate green processes into lean manufacturing explicitly by considering the environmental aspects of lean performance indicators and practices [55,62,63]. Some studies point out that digitalization can be an enabler in supporting this integration and solving these trade-offs [8,16].

The lean–green literature emphasizes that the main trade-offs are between delivery and the environment, because JIT can increase emissions [4,64,65]. Additionally, the tradeoff between the environment and quality is relevant because of the utilization of raw materials to achieve the best product quality [66]. Other trade-offs pointed out in the literature are related to flexibility and the environment, since small batches allow more product variety, but they may increase the number of setups [12,67]. Additionally, the cost can present a trade-off to green implementation [39]. Some studies point out that cost can be a motivation for lean organizations to reduce their environmental impacts [55,68]. Additionally, environmental performance has been considered an important criterion for supplier selection [69].

Therefore, based on the literature, the use of lean–green practices can be understood as an approach that supports the pursuit of sustainable development in the economic, environmental, and social pillars of a production system [48] and focuses on reducing waste and focusing on the efficient use of resources [70,71].

The lean paradigm was created in the automotive industry. Additionally, considering the concept of lean–green manufacturing, it is possible to find studies that sought to understand these practices in the automotive industry. In Iran, it was identified that the lean–green efforts are focused on packaging materials and concentrated on increasing the useful life of recyclable materials. At the operational level, the focus is on reducing pollution and waste. Finally, the strategy is seen as the basis for enhancing operational and environmental efficiencies [72]. Another example of lean–green manufacturing in the automotive chain [73], taking the concept of waste "Muda" and based on lean tools, is another case study in Iran that concluded that the assembly body and paint rooms are the areas, in this order, where the lean practices impact the green performance more.

The study also investigated how the integration between agility and lean manufacturing led to enhanced sustainability in the Indian automotive industry. The main conclusion of this investigation was that the legislation represents a driver for automotive companies to improve the ecological aspects of their business operations. Ecological aspects are seen as antagonist forces to competitiveness [74]. In another case [75] in Indonesia, it was demonstrated that some green issues need to be improved in line with lean and green criteria, namely the guidelines for "ISO 14000 and OHSAS Certificates", "Collaboration with Suppliers and Customers in Protecting the Environment", "Carrying out Industrial Waste Recycling", and "Product Design that can Reduce the Consumption of Energy and Raw Materials".

Finally, for the consolidation of the theoretical basis of this paper, and as presented in the research by Carvalho et al. (2014) [76], it is important to highlight that given the fact the lean and green paradigms can lead to opposite goals depending on the focus on each paradigm, an exploratory case study was conducted in the automotive supply chain context.

All companies belonging to the observed supply chain required higher implementation levels for all lean–green practices. Two separate sequences of capabilities were found, one for the automaker and another for the first-tier supplier. According to the authors, the first-tier supplier echelon should develop their "quality" first, then their "flexibility" and "delivery", and finally their "cost" and "environmental protection" aspects.

#### **2. Materials and Methods**

This article adopted the case study as a research strategy, since it is suitable when questions such as "why?", "what?", and "how?" are asked, which must be answered with a complete understanding of the nature and phenomenon studied and when the focus is on contemporary phenomena embedded in a real context [77]. Moreover, the main trend in all case studies is that they try to shed light on why a decision or set of decisions were made, how they were implemented, and what results were achieved [78]. This research sought to compare two cases of companies in the automotive chain, specifically two first-tier suppliers. In Figure 1, it is possible to see a summary of the research steps based on the case study method proposed by Yin (2017) [78]. *Machines* **2022**, *10*, x FOR PEER REVIEW 7 of 19

**Figure 1.** The followed research steps. **Figure 1.** The followed research steps.

The first step of this research consisted of elaborating a theoretical background about the competitive priorities of the operations strategy and lean–green approach. Subsequently, the protocol for the case studies was elaborated and experts validated it. The next step was the pilot case study, followed by adjustments to the protocol and conducting the case studies. The first step of this research consisted of elaborating a theoretical background about the competitive priorities of the operations strategy and lean–green approach. Subsequently, the protocol for the case studies was elaborated and experts validated it. The next step was the pilot case study, followed by adjustments to the protocol and conducting the case studies.

based on the study by Ward et al. (1998) [79], the lean questions were based on the study by Shah and Ward (2003) [43], and the green section was based on practices presented by

The criterion for selecting the companies was a search for two companies that acted as first-tier supplier companies of the automotive chain that had implemented lean and green practices in their operations. The study on these companies was conducted in May of 2021. Thus, the two selected companies will be referred to in this study as company X and company Y. They are in southern and southeastern Brazil. The interviewees were the production manager and the environmental manager of each company using the questionnaire in Appendix A. The questionnaire was sent to the interviewees in advance,

The reason for choosing companies from the automotive industry was attributed to the origins of lean manufacturing, as the lean management approach was created in this

The first step of the data collection consisted of a structured questionnaire that helped identify the main characteristics of the companies, the strategies adopted, the ranking priorities, and the practices adopted. The second part was a semi-structured interview to

Thanki, Govindan, and Thakkar (2016) [80].

and the interviews were recorded.

The first step of the data collection consisted of a structured questionnaire that helped identify the main characteristics of the companies, the strategies adopted, the ranking priorities, and the practices adopted. The second part was a semi-structured interview to understand the major complementarities and conflicts generated between competitive priorities by the lean and green practices. The section about competitive priorities was based on the study by Ward et al. (1998) [79], the lean questions were based on the study by Shah and Ward (2003) [43], and the green section was based on practices presented by Thanki, Govindan, and Thakkar (2016) [80].

The criterion for selecting the companies was a search for two companies that acted as first-tier supplier companies of the automotive chain that had implemented lean and green practices in their operations. The study on these companies was conducted in May of 2021. Thus, the two selected companies will be referred to in this study as company X and company Y. They are in southern and southeastern Brazil. The interviewees were the production manager and the environmental manager of each company using the questionnaire in Appendix A. The questionnaire was sent to the interviewees in advance, and the interviews were recorded.

The reason for choosing companies from the automotive industry was attributed to the origins of lean manufacturing, as the lean management approach was created in this industry. Womack, Jones, and Roos (1991) [81] explained that the origin of lean manufacturing lies in the Toyota Production System. Moreover, as shown in the study by Caldera and Dawes (2017) [17], most of the lean and green models were developed in companies in the automotive industry. Additionally, this industrial segment is representative in terms of benchmarking for lean implementation [41,82–84]. Thus, companies in the automotive sector chain were the focus of this investigation, since it is a sector that can provide more empirical data on operations strategies regarding the adoption of lean and green approaches.

#### **3. Results**

#### *3.1. Company Overview*

Brazil produces passenger vehicles, trucks, and agricultural machinery. In 2020, 27 vehicle manufacturers and 446 auto parts companies were in operation in the country. In 2019, 2.94 million vehicles were produced [85]. Both of the studied companies are multinational automotive tier-one suppliers. Company X has over one thousand employees. Its operations are in southern Brazil, and it is headquartered in Germany. The products manufactured by company X are considered strategic components in the vehicle's final assembly, such as tires and mechanical belts. Company Y is also large and has over one thousand employees in southeastern Brazil. However, it is headquartered in the United States. Company Y produces components for assembly in its product portfolio, such as coatings, adhesives, and safety products. The products manufactured by Company Y are considered less strategic than those manufactured by company X.

#### *3.2. Competitive Priorities of the Companies*

Firstly, it is vital to highlight the aspects related to the companies' competitive strategies. They are mainly directed toward quality. In other words, quality is the main positioning factor for both companies in the market. According to the results, company X's main competitiveness factor is only quality. On the other hand, company Y also considers innovation capacity and flexibility. Regarding the main competitive advantages vis-à-vis competitors, company X competes on quality and price, while company Y competes only on quality. Figure 2 summarizes in a graphic main factors and their respective levels of importance for the competitiveness of these companies, according to the interviewees, with 1 being the least important and 5 being the most important.

**Figure 2.** Factors for competitiveness.

In addition to quality, as already highlighted, it was observed that company X attributes a high degree of importance to price, and in a less critical manner to innovation, delivery, and flexibility, while considering the others not important at all. On the other hand, company Y considers other criteria important to ensure its competitiveness in the market. For example, flexibility in the production mix, product design process, and innovation capacity is considered very important, followed by the reliability and speed of delivery and finally the price and environmental sustainability.

Regarding the overall objective of the operations strategies, both companies consider cost reductions very important via defect reductions. In the case of defect reductions, these are convergent with the competitive strategy being driven by quality. Table 1 shows the order of competitive priorities as adopted by each company.


**Table 1.** Ranking of the companies' competitive priorities.

The results show that the quality priority is considered very important in all its aspects, being scored as the first priority, converging with corporate strategy, and demonstrating alignment between corporate strategic and operational objectives. On the other hand, cost comes in second place. Another observation point is the similarity in the ordering of priorities, differing in the prioritization of delivery and the environment. In the case of delivery, company X ranks it as the fourth most crucial priority, whereas company Y ranks it as the second, followed by cost. The environmental priority is considered the least essential priority by company X, while company Y considers it the third most important priority.

#### *3.3. Lean–Green Practices*

This topic highlights the main aspects of the lean–green practices in the studied companies. Tables 2 and 3 present the implemented practices and the stages of implementation.

**Table 2.** The companies' lean practices.


**Table 3.** The companies' green practices.


Company X has implemented lean processes since 2006, but only in 2010 did the program became part of the company's management system. As for their green practices, they have been implemented since 2002, since these practices were adopted to meet the environmental laws required at the time. According to the production manager, their lean approach focuses on quality improvements, and in as much as their green practices are concerned, according to the environmental manager, these are focused on meeting the current standards and legislation.

Currently, company X integrates lean and green issues through their strategy, whereby the company needs to comply with international corporate targets for reducing carbon emissions. To this effect, in addition to the practices taken to comply with environmental regulations, environmental indicators are being deployed utilizing the Hoshin–Kanri approach, a practice widely used in lean manufacturing to deploy the strategy for operations. Still, in the interviewees' view, this integration is very incipient, but it was emphasized that lean manufacturing reduces waste and that this leads to improvements of some environmental aspects, especially in terms of energy and material consumption. Furthermore, lean manufacturing is a facilitator for the inclusion of green practices and environmental improvements, since the environmental management system is based on its philosophy and practices.

Regarding company Y, the person responsible for managing their operations pointed out that the program made its first attempt to implement lean practices in 2013, but only in 2015 did the program become part of the management system to improve quality and achieve process standardization. Regarding green manufacturing, the company first implemented their practices in the 1990s, with their specific cleaner production initiatives being some of the forerunners in implementing this program. However, despite being a pioneer, the company operates these practices as an isolated program that seeks to encourage isolated projects to achieve environmental impact reductions for products or processes. The integration of green processes into lean procresses, as at company X, is still very nascent. Tables 2 and 3 present, respectively, the lean and green practices and their implementation levels.

It was possible to observe that only the safety indicator is addressed in the daily management of lean practices, and occasionally projects to improve environmental performance occur within the lean system. Additionally, according to the interviewees from company X, it is believed that the organizational structure and lean culture can contribute to an improvement of the environmental priority. Similarly, they exemplify lean projects in which reductions in energy and material consumption were achieved. However, despite the green gains being measured in some lean projects, there are still no environmental performance indicators in the lean management system.

What can be observed is that the companies are very close when it comes to the level of implementation of their practices, both lean and green. Regarding lean practices, company Y uses two practices, just-in-time and pulled production, which are in the preliminary stages. Still, it was possible to identify a similar implementation level or with a small difference between being partially implemented and totally implemented in the remaining lean practices. In the same way, company X presents a slightly lower level of green practices. However, it uses the practice of environmental accreditation of suppliers that is not implemented at company Y. On the other hand, company Y uses cleaner production and life cycle analysis practices at advanced levels.

A point of convergence between all interviewees is that lean practices, which help reduce waste, indirectly lead to the improvement of environmental aspects, especially concerning reductions in material and energy consumption. Furthermore, both companies mentioned that there is still a trade-off between cost and the environment. Projects that seek to reduce their environmental impact beyond what is required by law must bring some financial return to the company—regardless of the positive environmental impact. At the same time, cost reduction projects that generate environmental effects within the limits of the legislation and carbon reduction targets are not usually implemented.

#### **4. Discussion**

The main point to be discussed is the difference regarding the ordering of the competitiveness priorities. The environmental priority is positioned fifth and third. This may be attributed to the fact that only company Y considers environmental sustainability as a factor in competitiveness. In addition to practices for the compliance of environmental aspects, it also has the cleaner production program, which is a proactive strategy for the eco-efficiency of its processes, although it is still an isolated initiative from the lean program. Similarly, it is essential to note that despite the order of prioritization, this confirms what is shown in the literature, namely that environmental priority becomes included as a competitive priority in both companies [62].

Another point to be observed is that although the environmental priority is not considered the most important priority and is not a focus priority in lean manufacturing, the interviewees agreed with the literature [62]. They stated that the reduction in lean waste also impacts the environmental priority. Furthermore, the results confirm that lean manufacturing assists in achieving the main quality priority, as suggested by Ball (2015) and Suifan, Alazab, and Alhyari (2019) [7,44]. Moreover, the interviewees' account illustrates what is proposed in [29,57,58] when reporting that lean manufacturing can be a complementary facilitator for implementing green practices in management systems.

These results converge with the cumulative capabilities theory of the sandal cone approach presented by Ferdows and De Meyer (1990) [37] regarding competitive priorities when there are improvements in lean waste reductions; consequently, the companies achieve better environmental performance. Lastly, the results show that the lean and green level of company Y is higher than in company X. At the same time, the trade-offs between the environment and another competitive priority in company Y are less frequent. The environment is considered more important in company Y than in company X.

In the two cases, it was also observed that the investments in green initiatives depended on the investment level. The results showed that the trade-offs lens could be viewed from the perspective of Skinner (1969) [1] when companies do not adopt costly green initiatives. In addition, the trade-off between the cost and environment was exposed, as punctuated by Longoni and Cagliano (2015) and Vargas- Berrones, Sarmiento, and Whelan (2020) [4,39]. However, the question related to legislation pointed out by Mathiyazhagan et al. (2021) [74] was not clear, regarding how ecological aspects are seen as antagonist forces to competitiveness.

Given this background, based on the theory of cumulative capabilities, it is clear that by developing good practices that seek to improve the environmental priority, one also has the ability to reduce costs. Thus, integrated practices that make the environment a priority become essential. Additionally, compared with a study done in 2014 [76], it is possible to observe that environmental protection will become more important for first-tier suppliers. Finally, it is important to emphasize that previous studies [72,73,86] from the automotive industry also show that lean manufacturing can support the environmental priority.

#### **5. Conclusions**

This study indicated that the environmental priority has become a factor of competitiveness, whether incipient or behind other priorities, from the corporate strategy to the operations strategy. However, the priorities of quality, cost, and delivery in the cases presented here are still considered more important.

In the cases of the companies analyzed here, it was demonstrated that the integration between lean and green practices could facilitate the inclusion of the environmental priority in the operations strategy and in the management systems, as presented in the literature. Furthermore, as demonstrated in company X, this integration can help in unfolding long-term environmental and operational goals. In company Y, lean manufacturing is a facilitating factor, by means of the organizational structure and culture of this approach, for the implementation of green practices.

Additionally, it is essential to reinforce that the results show what the lean–green literature proposes, and most of the results are from cases in the same industry. Furthermore, the results show that the environment has become more important. They also show that legislation can be an influencing factor for strategic decisions regarding the adoption of greener practices.

Like all research, our study is not without its limitations. Consequently, these limitations can serve as the basis for further investigations. Although the results presented here can highlight relevant aspects regarding the integration of lean and green practices and their role in operations strategies, this is still a preliminary discussion. Only two cases were analyzed, and the choice of the sample was intentional due to the limited number of companies that already operate lean–green practices in the Brazilian context. This limitation prevents generalizations. Thus, the development of further research on this theme is necessary, especially in other relevant markets that have not yet been investigated. As a future research direction, empirical studies in other industries for comparative purposes are also recommended, as well as quantitative studies in larger samples, seeking to analyze in depth how much each practice contributes to each competitive priority when implementing lean and green practices. Finally, standardization in data collection can enable cross-country and cross-temporal analyses.

**Author Contributions:** Conceptualization, G.A.Q. and A.G.A.F.; methodology, G.A.Q.; validation, G.A.Q.; formal analysis, G.A.Q.; investigation, G.A.Q.; resources, A.G.A.F.; data curation, G.A.Q.; writing—original draft preparation, G.A.Q.; writing—review and editing, I.C.M.; visualization, G.A.Q.; supervision, A.G.A.F. and I.C.M.; project administration, G.A.Q. and I.C.M.; funding acquisition, I.C.M. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Data Availability Statement:** Not applicable.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **Appendix A. Case Study Questionnaire**

#### **A. Company description**


\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

3. *Position in the supply chain (Nominal level ranging from Original Equipment Manufacturer to n-tier supplier)* First tier Second tier Third Tier Fourth Tier Fifth tier or more

#### **B. Operations strategy**


Customization Less environmental impact Service Level Another: 3. *Concerning your competitive strategy, please rank in order of importance the 5 main factors for your company's competitiveness (5 being the most important, 1 being the less important).* 5 4 3 2 1 Price Design (product characteristics, technology) Quality Volume flexibility Flexibility of production mix (product variety) Delivery reliability Delivery speed Environmental sustainability Innovation capacity Another (Example: Location, aggregate services, etc.) 4. *Competitive Priorities (Please use this scale to signal the degree of importance for each competitive priority for your operations).* 5 4 3 2 1 Cost of production (total cost of products sold) Direct costs (labor and material) Overhead costs (administration, maintenance) Design quality (projected performance of main product characteristics) Conformance (a product manufactured according to design specifications) Reliability (probability of the product not failing) Product Flexibility (ability to adapt products to customer's needs) Volume Flexibility (ability to respond to variations in required quantities) Process Flexibility (includes production mix flexibility, sequencing flexibility, and routing flexibility) Reliability (probability of delivering the right product in the right quantity and on time) Speed of service (time elapsed between order and delivery of the product to the customer) Customer problem solving Supplier support (in-product development, process planning, and component production) Actions to reduce material waste, energy consumption, water consumption, and emissions. 3R—Remanufacturing, reuse, and recycling. **C. Lean Manufacturing** 1. *Indicate the year bracket in which Lean Manufacturing practices were implemented in your organization.* Before 1990 Between 1990 and 2000 Between 2001 and 2005 Between 2006 and 2010 Between 2011 and 2015

From 2016 onwards

2. *To your knowledge, which of the following factors motivated the implementation of Lean Manufacturing practices in your organization? (You can choose several options if needed.)* Cost reduction Quality improvement Customer's requirement

Market competition Corporate strategy

Another:

3. *Lean Manufacturing Practices. Please use this scale to signal the level of implementation of Lean Manufacturing in your current operations.*

> Nothing has been done Currently at the "project" level but not yet implemented Incipient implementation Partially deployed Fully deployed and tracked

Lean Manufacturing Practices:

Kanban (pull production) Just-in-Time (JIT) Just-in-Sequence (JIS) Total Productive Maintenance (TPM) 5S (five S) Value Stream Mapping (VSM) Poka-Yoke (error-proofing system) Cellular Manufacturing Visual Management 5 why/Ishikawa (fishbone) diagram Kaizen Standardized work

#### **D. Green Manufacturing**


Nothing has been done Currently at the "project" level but not yet implemented Incipient implementation Partially deployed Fully deployed and tracked

Green Manufacturing Practices:

Environmental Management Plan Waste Management Policy Effluent Treatment

Water consumption reduction program Energy conservation program Recycling program Program to reduce material consumption Publication of reports with environmental information Product life cycle analysis Environmental accreditation of suppliers Environmental education programs for the community Inter-process resource-sharing programs Cleaner production program Reverse logistics Another (please, specify)

#### **E. Understanding Lean–Green and Competitive priorities**


#### **References**


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