Improvement of Productivity by Using Means of Lean Manufacturing,

Just in Time, and Production Technology in Thai SMEs Manufacturing

Industry

PIYACHAT BURAWAT

Faculty of Business Administration

Rajamangala University of Technology Thanyaburi, Pathumthani,

THAILAND

Abstract: - This study investigated the current situations, opportunities, and obstacles in manufacturing industry,

and to create a model for improving the efficiency while reducing the levels of inventory. This study gathered

information from in-depth interview using snowball sampling from 20 manufacturing companies in Thailand.

The results revealed that the organization has implemented lean production principles as a strategic initiative to

mitigate losses. The implementation of comprehensive work manuals, offered in diverse languages such as Thai,

Burmese, Japanese, and English, serves as an additional mechanism to mitigate losses by ensuring clarity and

understanding among the workforce. Furthermore, the integration of modern technologies, encompassing

machine technology, robotics and artificial intelligence, is actively pursued to streamline production processes

and consequently reduce losses. The results presented that companies refrain from adopting Just-In-Time

production systems due to operational challenges associated with fulfilling customer orders. Specifically,

frequent machine shutdowns for adjustments are necessitated, leading to elevated unit costs. Manufacturing

companies in Thailand continue to harbor potential for growth, despite the inevitable rise in employee wages

leading to increased operational costs. To navigate this challenging landscape, companies must remain adaptive,

responding not only to shifts in customer preferences but also to advancements in technology, proactive

examination of customer needs prior to initiating the production process, a paradigm shift from low-cost

production to the premium-grade products addresses the demands of customers seeking superior product quality,

and the process of broadening customer bases both overseas and globally, and the analysis of distinct customer

groups in identifying new target demographics.

Key-Words: - Productivity, Lean Manufacturing, Just in Time, Modern Production Technology, Manufacturing

Industry

Received: February 21, 2024. Revised: August 19, 2024. Accepted: September 13, 2024. Published: October 15, 2024.

1 Introduction

In the current era of globalization, streamlined

communication and business operations have

intensified competition, necessitating manufacturing

and service companies to devise strategies for

gaining competitive advantage. Intense competition

pervades across all sectors, with manufacturing

companies particularly focused on delivering high-

quality products, competitive pricing, prompt

delivery, and adherence to customer specifications.

Moreover, the success of businesses is contingent

upon various global economic factors such as product

demand, trade policies, market liberalization, and the

proliferation of free trade zones worldwide. These

factors compel organizations to undergo

transformation in order to adapt to evolving

organizational landscapes. Recently, there has been a

burgeoning emphasis on knowledge-based

approaches to confront changing customer demands,

necessitating robust management methodologies.

Over successive periods, modern management

theories and principles have continuously evolved,

with a particular emphasis on novel concepts aimed

at enhancing quality and productivity. Furthermore,

there is a growing recognition of the significance of

technology and information systems in augmenting

productivity and quality, prompting increased

attention towards their integration into organizational

processes.

Labor productivity stands as a pivotal determinant

of competitiveness within industries. Not only does it

foster enhanced sustainable revenue streams, but it

also serves as a critical factor in sustaining

competitiveness. Enterprises burdened with elevated

operational costs face diminished competitiveness,

inevitably leading to financial losses and potential

business withdrawal. Thailand's labor productivity

growth has been modest, averaging a 2% annual

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increase, notably lower compared to countries such

as Vietnam and China, where productivity has surged

by 4% and 10% respectively [1]. Concurrently,

Thailand has witnessed a 3% rise in unit labor costs,

while Indonesia has experienced a notable 12%

reduction in the same metric [1]. This combination of

subdued productivity growth and escalating unit

labor costs inevitably diminishes Thailand's overall

competitiveness in the global market landscape.

While approximately 70% of manufacturing firms

prioritize lean manufacturing, only 26% achieve

significant success [2]. Many companies attribute

unsatisfactory outcomes to inadequate focus on the

supply chain and insufficient encouragement for lean

practices implementation. Moreover, some firms,

despite winning prestigious awards such as the

Shingo Prize, fail to sustain lean programs, resulting

in the inability to maintain sustainable results [2].

Successful lean program implementation correlates

with several factors, including management

attention, goal clarity, active involvement and

commitment from all members, empowerment of

employees, clear performance metrics, and a well-

defined plan for process improvement [3].

The primary advantages commonly attributed to

lean manufacturing encompass enhancements in

labor productivity, product quality, and reductions in

lead time to customers, cycle time, and production

costs [4]. However, divergent findings emerge from

studies exploring the relationship between lean

manufacturing and organizational performance.

While some research suggests a positive association

between certain aspects of lean manufacturing and

organizational performance, others indicate a lack of

correlation [5][6]. Furthermore, certain studies

indicate that lean manufacturing influences financial

performance through its impact on operational

performance [7][8].

Inventory stands as a significant asset for

numerous companies, often constituting up to 50% of

total invested capital. Given its substantial financial

implications, effective inventory management is

widely acknowledged as pivotal by managers. While

reducing inventory can lead to cost savings, the

downside entails potential production halts and

customer dissatisfaction in instances of stockouts [9].

Companies that have embraced integrated

technologies demonstrate notably elevated levels of

effort in strategic planning and team-based project

management, consequently attaining superior

performance across diverse performance metrics

compared to their counterparts. Moreover, firms

emphasizing the development of human factors

appear to reap greater benefits from advanced

manufacturing technology implementation [10].

This study endeavors to investigate productivity

enhancement within the Thai SME manufacturing

industry through the implementation of lean

manufacturing, just-in-time practices, and modern

production technology. The aim is to provide

guidelines for productivity improvement and waste

reduction, ultimately enabling enterprises to achieve

heightened competitiveness within the

manufacturing sector

2 Literature Review

This section elucidates the significance of the

research model by elucidating its alignment with

established theoretical frameworks pertaining to

productivity, just-in-time practices, production

technology, and the manufacturing industry.

2.1 Productivity

Productivity is commonly defined as the ratio of

outputs or products generated by a manufacturing or

service process to the inputs or resources utilized to

attain these outputs [11]. Accordingly, productivity

entails the efficient utilization of inputs such as labor,

machinery, materials, finances, land, information,

energy, and management in the production of diverse

outputs, encompassing both services and products

[12]. Moreover, heightened productivity levels

denote achieving greater output quantities or superior

product quality with the same input resources [13].

Additionally, productivity can be perceived as the

effectiveness and efficiency in job performance [12].

In response to the pervasive and relentless

competition spurred by globalization, scholars have

argued that the conventional definition of

productivity, solely focusing on the quantitative

relationship between outputs and resources, is

inadequate for assessing organizational effectiveness

in contemporary contexts [14][15]. Recent

perspectives on productivity advocate for a broader

framework that incorporates considerations such as

social and ecological costs, adaptability to evolving

customer demands, value creation for all

stakeholders in the supply chain, resilience in fiercely

competitive environments, and agility in responding

to customer needs [15][16].

2.2 Just in Time

Just-In-Time (JIT) production is a manufacturing

strategy centered on minimizing material inventory

by introducing necessary raw materials or

components into the production process precisely

when needed and in the required quantity. This

method avoids warehousing finished products.

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Successful JIT implementation requires

synchronizing the production system to ensure

balanced operations across each stage, evenly

distributing working hours. Timely introduction of

raw materials is crucial, requiring collaboration with

suppliers [17].

The effective operation of JIT production hinges

upon establishing strong relationships among raw

material suppliers, production lines, and marketing

units. A cohesive network ensures timely raw

material delivery, enhancing overall production chain

efficiency. Any component or process failure has

significant ramifications, impeding prompt product

production and highlighting the interdependence

among involved entities. Thus, the absence of timely

input disrupts the delicate balance of the JIT system,

hindering production workflow and compromising

the objective of timely product delivery [9].

2.3 Production Technology

Technology plays a critical role in modern

production methods, driving efficiency, cost

reduction, and product quality enhancement. In

today's business landscape, technology is

indispensable, exerting a significant influence on

production methodologies. It has transformed

business operations, fostering the emergence of more

streamlined and economical production processes.

Automation stands out as a prominent manifestation

of technological advancement in production.

Leveraging robotics and artificial intelligence,

automation has supplanted manual labor across

various industries, resulting in heightened

productivity and diminished labor expenses. For

example, within the automotive sector, robots

deployed in assembly lines execute repetitive tasks

with precision and swiftness, amplifying output and

minimizing errors.

Furthermore, technology has facilitated the

implementation of advanced production techniques

such as Just-In-Time (JIT) and lean manufacturing.

These methodologies heavily rely on sophisticated

software systems for inventory management,

scheduling, and quality control. For instance, JIT,

which aims to minimize waste by producing goods

only when needed, necessitates accurate forecasting

and real-time tracking of inventory levels, made

feasible by technology. Moreover, technology plays

a crucial role in enhancing product quality.

Computer-Aided Design (CAD) and Computer-

Aided Manufacturing (CAM) enable precise design

and production, reducing the likelihood of defects

and ensuring consistency in product quality.

Additionally, technology enables stringent quality

control through automated inspection systems

capable of detecting flaws that may elude human

inspectors. Furthermore, technology has enabled the

adoption of flexible manufacturing systems,

permitting the production of a variety of products on

the same production line. This flexibility is

particularly advantageous in industries where

product differentiation is pivotal for competitive

advantage. For instance, in the electronics sector,

companies can swiftly transition from producing one

type of device to another, responding promptly to

shifts in market demand [18].

Advanced digital production technologies

encompass a wide array of innovations, including

new materials, the Internet of Things (IoT), big data

analysis, advanced robotics, cloud computing,

additive manufacturing, artificial intelligence (AI)

supported manufacturing, nano and biotechnological

production. These emerging technologies are poised

to impact numerous sectors in the future, albeit not

instantaneously. The integration of these

technologies into industries is expected to occur

gradually and organically. Once production facilities

incorporate technology into their workflows, smart

production platforms will emerge, characterized by

data sharing, deep learning networks, AI, IoT, and

remote-controlled machine and hardware integration.

Consequently, traditional production areas and

machines are anticipated to occupy a smaller

percentage of factories [18].

2.4 Manufacturing Industry

The manufacturing industry encompasses sectors

involved in the production and processing of goods,

contributing to either the creation of new

commodities or value addition. This sector holds a

substantial share of the industrial sector in developed

countries, with final products serving as finished

goods for sale to customers or intermediate goods for

use in further production processes.

In 2021, Thailand's GDP structure delineated the

service sector as the predominant economic activity,

comprising 60% of the GDP, followed by the

manufacturing and agriculture sectors, constituting

32% and 8%, respectively [19]. The GDP of the SME

sector in 2022, categorized by SME sizes, amounted

to 6,105,604 million baht, representing 34.5% of total

GDP [20]. Further analysis of the GDP structure for

small and medium-sized businesses revealed the

service sector as the most significant activity,

accounting for 43.6%, followed by the manufacturing

sector at 35.4%. The retail and wholesale sector and

the agricultural business sector represented

proportions of 20.5% and 0.5%, respectively [20].

The study revealed that Thailand is ranked 35th in

terms of industrial potential, with seven Thai

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industries positioned among the top 15 globally.

These include the coking coal and oil refining

products industry (9th), the rubber and plastic

industry (9th), the food and beverage production

industry (11th), the health industry (11th), the

recreation industry (13th), the retail and wholesale

industry (14th), and the textile industry (15th).

Conversely, Thai industries positioned in the bottom

three globally encompass the construction industry

(64th), the education industry (60th), and the IT

industry (61st) [21].

Interestingly, other ASEAN countries also exhibit

industries with significant potential, with Vietnam

excelling in the clothing and textile industry,

Singapore leading in financial and computer-related

affairs, and Indonesia ranking fifth in food and drink

proficiency. This data suggests that neighboring

countries may experience rapid development, posing

increased competition for Thailand in the coming

years [21]. Given the aforementioned context, the

sample population for this study comprised

executives and managers employed within the

manufacturing industry in Thailand.

In conclusion, lean manufacturing, just-in-time

practices, and advanced digital production

technologies play a pivotal role in modern production

methods. These methodologies enhance efficiency,

reduce costs, and improve product quality, thereby

enabling businesses to maintain competitiveness in

the dynamic global market landscape.

3 Research Methodology

The study employed a qualitative approach, utilizing

in-depth interviews conducted through snowball

sampling with 20 participants comprising managing

directors, executives, production managers, and sales

managers from 20 companies. Data collection took

place from March 2023 to March 2024, and analysis

was conducted using content analysis techniques.

4 Research Results

The study comprised primarily companies from the

automotive industry (20), followed by the food and

beverage industry (5), construction industry (3),

electric and electronic industry (3), garment and

textile industry (2), plastic industry (1), energy

industry (1), rubber industry (1), cosmetic industry

(1), machinery industry (1), and thermoplastic paint

industry (1).

4.1 Lean Manufacturing Practices

Participants reported that their organizations have

adopted lean production principles strategically to

mitigate losses, focusing on minimizing losses

attributed to employee errors and machine

inefficiencies during production. Various

methodologies have been deployed to address

employee-related losses, including rigorous quality

assessments of raw materials, thorough scrutiny of

work processes, and meticulous inspection of

machinery and equipment. Additionally, measures

such as employee training programs are emphasized

to enhance skills and bolster pre-production

preparedness, further contributing to loss prevention

efforts.

The provision of comprehensive work manuals,

available in multiple languages including Thai,

Burmese, Japanese, and English, is employed as a

supplementary measure to mitigate losses by

promoting clarity and comprehension among the

workforce. Additionally, the incorporation of modern

technologies such as robotics and artificial

intelligence (AI) is actively pursued to optimize

production processes and minimize losses. This

multifaceted approach highlights the organization's

dedication to adopting contemporary tools and

methodologies to enhance resilience against losses

incurred during the production phase.

Addressing losses stemming from machine failures

necessitates a multifaceted approach, including

robust employee training initiatives. These programs

aim to equip personnel with essential skills for

proficient machinery operation and basic

maintenance tasks. Encouraging employee

engagement in ongoing machine monitoring,

alongside a streamlined reporting system for

identified issues, facilitates swift problem resolution.

Moreover, promoting a culture of employee

engagement in ongoing machine monitoring, coupled

with a responsive reporting mechanism for identified

issues, facilitates prompt problem resolution.

The proactive involvement described above

demonstrates its effectiveness in swiftly resolving

machine problems, resulting in a reduction of

associated losses. Central to this strategy is

addressing the challenge of producing substandard

products, with artificial intelligence (AI) playing a

pivotal role. AI technologies are utilized to analyze

machine-generated data, enabling precise diagnostics

of problems. Subsequent repairs are aligned with

identified machine issues, thereby minimizing losses

related to the production of inferior-quality products.

Moreover, the incorporation of AI enables nuanced

analysis to formulate strategic plans for timely and

appropriate maintenance interventions. This forward-

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looking approach optimizes maintenance schedules,

ensuring that corrective actions are implemented

judiciously, thereby reinforcing the organization's

resilience against losses resulting from machine

failures.

4.2 Just in Time Practices

Participants revealed that the organization has

implemented a Just-In-Time (JIT) production system

strategically to improve operational efficiency by

minimizing or eliminating inventory and ensuring

timely deliveries to customers. Orders from

customers are typically placed within a 10-15 day

window before the designated delivery date. Unlike

conventional practices, where production planning

begins post-receipt of customer orders, the company

adopts a proactive approach to streamline production

processes. Upon order receipt, the purchasing

department initiates raw material procurement,

coordinating deliveries from suppliers at a frequency

of 1-2 rounds per day. This scheduling minimizes

raw material storage space in the warehouse,

reducing associated costs and time spent locating

materials. The production department, informed by

customer orders, dispenses raw materials in required

quantities.

Concurrently, the shipping or distribution department

meticulously plans truck routes to optimize

efficiency, coordinating routes to prevent

unnecessary diversions and ensure coherent paths.

Such strategic route planning is crucial in avoiding

redundant detours and associated time wastage.

Moreover, goods are loaded during both outbound

and return truck journeys to prevent empty vehicle

returns to the company premises. This concerted

effort aligns with the JIT philosophy, contributing to

the organization's goal of waste reduction and

logistical efficiency enhancement across the supply

chain.

Concurrently with production processes, the shipping

or distribution department carefully strategizes truck

routes to maximize efficiency, ensuring coherent

paths and minimizing unnecessary diversions. This

strategic route planning is essential to avoid

redundant detours and time wastage. Additionally,

goods loading is coordinated during both outbound

and return truck journeys to avoid empty vehicle

returns to the company premises. This concerted

effort aligns with the Just-In-Time (JIT) philosophy,

supporting the organization's objective of waste

minimization and logistical efficiency improvement

across the supply chain.

Participants highlighted that some companies

hesitate to adopt Just-In-Time (JIT) production

systems due to operational hurdles in meeting

customer orders. Notably, frequent machine

shutdowns for adjustments incur higher unit costs.

Additionally, the procurement of raw materials from

suppliers presents challenges, as it mandates meeting

minimum purchase requirements stipulated by the

suppliers, thus necessitating the acquisition of larger

quantities of raw materials to comply with supplier

conditions.

To tackle these challenges, one alternative strategy

involves establishing a production contract between

the company and its customer. In this framework, the

customer forecasts production orders in advance,

enabling proactive planning by the company for raw

material procurement and production scheduling.

This approach allows the company to place bulk

orders for raw materials and conduct large-scale

production runs, ultimately reducing unit production

costs. However, it also leads to increased inventory

storage costs due to the higher volume of goods held

in storage.

In essence, the negotiated production contract serves

as a strategic compromise, enabling the company to

balance considerations of unit production costs with

inventory storage expenses. This tailored approach

aims to optimize operational efficiency and cost-

effectiveness, navigating the complex trade-offs

inherent in JIT production systems and their

implications for the overall economic viability of the

production process.

4.3 Production Technology Applications

Participants underscored contemporary challenges

encountered by production companies, especially

those heavily dependent on human labor, including

rising labor costs resulting in workforce reductions.

Despite increased labor mobility facilitated by

ASEAN integration, particularly through the

ASEAN Economic Community (AEC), escalating

wages and labor shortages persist as critical concerns

for manufacturing entities.

To tackle these challenges, companies primarily rely

on machine technology as their primary production

methodology. Automated machinery, controlled by

computer systems, is favored to mitigate errors

associated with human labor. Complementing this

automation, the integration of sensor systems assists

in both production processes and product quality

inspection. The incorporation of software is

instrumental in organizational resource management,

helping to mitigate operational errors. The real-time

and current data updates facilitated by these

technologies contribute to enhanced

interdepartmental coordination.

Moreover, the integration of Artificial Intelligence

(AI) into production processes and machinery

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functions as an advanced analytical tool. AI plays a

crucial role in accurately identifying and analyzing

problems, providing timely and effective solutions.

This multifaceted technological integration not only

improves the precision of issue detection but also

streamlines the problem-solving process,

exemplifying a comprehensive approach to

addressing challenges in both production and

machinery domains.

5 Discussions and Conclusions

Manufacturing companies in Thailand retain growth

potential despite rising employee wages, which

elevate operational costs. To navigate this

challenging scenario, companies must remain

adaptive, responding to both customer preferences

and technological advancements [22]. A key aspect

of adaptability is proactively assessing customer

needs before commencing the production process.

Through comprehensive surveys, companies can

glean valuable insights into evolving customer

requirements.

Moreover, investing in research and development to

explore innovative product formats facilitates market

expansion, particularly in international arenas,

streamlining the process of broadening customer

bases both overseas and globally. Analyzing distinct

customer groups is imperative in identifying new

target demographics. Additionally, shifting focus

from traditional goals of low-cost production to

creating premium-grade products addresses the

demands of customers seeking superior product

quality.

In looking towards the future, the integration of

advanced production technologies such as robotics

and Artificial Intelligence (AI) emerges as a strategic

imperative [23]. These technologies offer a dual

advantage by reducing production costs and

enhancing competitiveness. As manufacturing

enterprises in Thailand realign their strategies in

response to dynamic market forces and technological

advancements, the prudent adoption of these

innovations is poised to play a pivotal role in

sustaining and advancing their competitiveness in the

global marketplace.

Acknowledgement:

The author extends appreciation to all participants

from 20 organizations for granting permission that

facilitated the successful completion of this research.

Furthermore, gratitude is expressed to each

participant for providing invaluable information for

this study, as well as to the anonymous reviewers

whose feedback further enhanced the quality of this

research.

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Contribution of Individual Authors to the

Creation of a Scientific Article (Ghostwriting

Policy)

Assistant Professor Burawat Piyachat, Ph.D.

Lecturer in management, Rajamangala University of

Technology Thanyaburi

Mailing address: 4th Building, 6th Floor, Faculty of

Business Administration, Major Management,

Rajamangala University of Technology Thanyaburi,

39 Moo1, Klong6, Thanyaburi, Pathumthani,

Thailand, 12110, piyachat_b@rmutt.ac.th

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Sources of Funding for Research Presented in a

Scientific Article or Scientific Article Itself

No funding was received for conducting this study.

Conflict of Interest

The authors have no conflicts of interest to declare

that are relevant to the content of this article.

Creative Commons Attribution License 4.0

(Attribution 4.0 International, CC BY 4.0)

This article is published under the terms of the

Creative Commons Attribution License 4.0

https://creativecommons.org/licenses/by/4.0/deed.en

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