Extending the pursuit of flow (lean) management to encompass sales, general and administrative functions

Abstract

Operations management tends to be treated independent of other business functions—the silo syndrome. In this article, we call for operations management (OM) to broaden its perspective by strengthening linkages with other functions of the business, thereby to realize competitive advantages and strategic integration, as well as to avoid resource misallocation. The issues involved are presented and tested by examining the effects of intermeshing sales, general and administrative (SG&A) expenditures with customer-centred flow manufacturing, the latter being measured by system inventory as surrogate for customer lead time. In doing so, we designate trends in total inventory as the independent variable—representative of a dominant target of flow/lean management—and trends in SG&A expenditures as the output variable. The research tasks are enabled by inventory and SG&A data being widely available in companies’ audited financial statements. Such hard data offers methodological and validation advantages over, say, opinion-based survey research. The research adds bulk to existing flow/lean management theory and can be helpful in inducing primary business functions (e.g. OM, finance, sales and marketing) and sub-functions (such as SG&A and management accounting) to engage in cross-functional efforts in the cause of flow-oriented process improvement and company competitiveness.

Keywords:

• Flow/lean management
• SG&A expenditures
• inventory trends
• resource allocation
• competitive strategy

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Richard J. Schonberger

Richard J. Schonberger has for many years been an independent researcher/author. Formerly a practicing IE, Richard earned advanced degrees and joined the faculty of the University of Nebraska, becoming George Cook Professor in operations management and information systems; and later affiliate professor in management science, University of Washington. His publications include 16 text and professional books, including Japanese Manufacturing Techniques (1982)—first westerner-authored book detailing lean management principles and methodologies; followed by World Class Manufacturing (1986). His latest is Flow Manufacturing – What Went Right, What Went Wrong: 101 Mini-Case Studies that Reveal Lean’s Successes and Failures (2018). His 200-plus articles have appeared in a wide range of academic and practitioner periodicals. Richard’s honors include 1995 Shingo Institute Academy; 1990 British Institution of Production Engineers’ International Award in Manufacturing Management; and 1998 IIE Production and Inventory Control Award. Schonberger is on several editorial and governing boards, including IISE’s Industry Advisory Board.