«LEAN PRODUCTION» AS A DRIVER OF SOCIO-ECONOMIC DEVELOPMENT OF THE REGION
Abstract
Subject of research. The article discusses the possibilities and limitations of improving the socio-economic development of the region through the introduction of «lean production» technologies in industrial enterprises and social organizations.
The aim of the study is to identify some ways to improve the socio-economic development of the region through the introduction of «lean production» technologies.
Methodology. Within the framework of the study, the authors conducted the analysis of statistical data on labor productivity in Russia and developed countries; summarized domestic and foreign experience in the implementation of technologies «lean production».
Results. In the course of the study, the authors obtained the following results: there were identified the ways to improve the socio-economic development of the region; there were revealed the main difficulties in the introduction of «lean production» technologies; there were formulated recommendations for the introduction of «lean production» technologies at the regional level.
Conclusion. The introduction of «lean production» technologies in industrial enterprises and social organizations will contribute to the socio-economic development of the region through the use of a unified system approach and coordination of efforts to implement them at the regional level. The recommendations formulated in the article suggest the creation of a methodology for the introducing «lean production» technologies in the region.
Keywords: technologies lean production, labor productivity, social and economic development of the region
Introduction
Labour productivity at the micro-, meso- and macro- levels is one of the most important indicators of socio-economic development. The President of the Russian Federation has repeatedly stressed the importance of this indicator. Thus, at the meeting of the Commission on monitoring the achievement of target indicators of socio-economic development V.V. Putin noted that key factors and reserves for increasing labour productivity were not involved to achieve effective development of Russian economy. [National Project ‘Labour Productivity and Employment Support’, 2019].
Even M. Porter brought the category of labour productivity to the general level of productivity of the country. High labour productivity was considered by the author as a necessary condition in international competition. At the same time, M. Porter emphasized the importance of increasing productivity in all sectors of the economy [Porter, M., 1993].
It should be noted that labour productivity is often considered only as one of the indicators of a single enterprise or industry and is rarely used in scientific research in assessing the level of a region’s socio-economic development. At the same time, the growth rate of GRP (the most commonly used indicator in assessing the level of socio-economic development of the region) directly depends on the level of labour productivity, which confirms the need to define this indicator as one of the main ways to increase the effectiveness of the socio-economic development of the region.
Similarly, the level of labour productivity reflects the quality of life, which depends on the quality of work. Confirmation of this statement about the mutual connectedness of these categories was found in the work of M. Todaro [Todaro, M., 1997], who proved that low labour productivity and low standard of living are mutually reinforcing the problem that impede the development of the country [Golovanov, A.I. , 2013].
Summarizing the foregoing, we consider it expedient to use the level of labour productivity as one of the key indicators characterizing the level of the socio-economic development of the region.
W. Petty noted that the increase in labour productivity can be achieved either through a great labour strain or through the use arrangements that reduce and facilitate labour [Golovanov, AI, 2013]. Projecting the words of the English economist on today's realities of socio-economic development, we see an increase in productivity in two directions:
1) an increase in capital expenditures on upgrading equipment and automation (which not every business entity can afford under the circumstances);
2) cost reduction by eliminating losses that do not add value to the final product in production systems.
Note that the second approach is implemented using ‘lean manufacturing’ technologies.
‘Lean manufacturing’ is a methodology of improvement of processes based on cooperative efforts of employees to increase productivity by continuously identifying the key causes of emerging problems and by continuous improvement [Zu, X., Fredendall, L. D., Douglas, T.J., 2008]. The implementation of this methodology does not entail capital expenditures, a high effect is achieved by activating internal reserves in production systems, eliminating losses (such as unnecessary movements, transportation, large stocks, etc.) and the involvement of each employee in the process of continuous improvement.
The indicator which characterizes the dynamics of labour productivity is the index of its change. Generally speaking, the labour productivity index reflects the dynamics of how effectively labour is used to create the added value for all activities. The dynamics of labour productivity index in the Russian Federation are presented in Figure 1.
Fig. 1. Dynamics of the index of labour productivity in Russia
(2010-2016) [Efficiency of the Russian economy, 2019]
As seen from the figure, negative dynamics of the labour productivity index has been observed in Russia since 2011. For the period from 2011 to 2015, the index has decreased by 5.7%. Such a decline is disastrous for socio-economic development. Even though in 2016 there is an increase in the indicator by 1.6%, this is not enough to stabilize the situation and reach the level of 2011, when the highest value of this indicator was observed.
The analysis of the data of the study provided by the Organization for Economic Cooperation and Development (OECD) presented in Figure 2 showed that the product equal $ 24 is produced during one hour of working time in Russia, it is more than two and a half times less than in the USA and half as much as in EU countries.
At the same time, Russia has one of the highest rates of work hours per capita. Employees spend 1982 hours per year at work in the Russian Federation, conceding only to Greece in Europe – 2034 hours per year [Baida, E.A., 2016]. Accordingly, domestic enterprises use the work time inefficiently.
The results of the analysis of statistical data emphasize the need for implementing measures and finding ways to increase labour productivity. At the same time, in the current economic and geopolitical situation, solving this problem by introducing new technologies into production, acquiring new equipment is problematic and often impossible. This fact necessitates the search for internal reserves to increase labour productivity, reduce costs and eliminate losses in the production of goods and services [Naugolnova, I.A., 2014].
The analysis of international and local domestic practice has shown that such a task can be solved by introducing lean manufacturing technologies that contribute to building efficient production systems, the improvement and development of which does not require capital expenditures, but makes it possible to reduce costs, improve the quality of products and services provided the use of the hidden reserves of the enterprise, taking into account their specifics and features of the external environment [Baida, E.A., 2016].
It should be noted that the approach of ‘lean manufacturing’ in its modern sense ‘absorbed’ the best approaches to defining the ways to increase labour productivity, including: F. Taylor’s school of scientific management, E. Mayo’s theory of human relations, G. Ford’s conveyor method of production, scientific organization of labour by A.K. Gastev, and Toyota's Total Production System (TPS) by T. Ono and M. Imai.
According to the study by O.S. Vikhlensky, the introduction of instruments and technologies of ‘lean manufacturing’ depending on the particular enterprise and industry, gives the following results:
- reduction of time of a production cycle by 80%;
- release of 25% of the production area;
- increase in quality by 40%;
- increase in productivity by 35%;
- reduction of production waste from 6% to 1.2%;
- reduction of electricity consumption by 56%.
Also, it is possible to note that the introduction of lean manufacturing technologies in the USA has led to savings of $ 1.44 billion, sales growth of $ 10.5 billion, and the creation of 16,740 jobs [Gusarov, D.N., 2013].
The positive experience of the introduction of ‘lean manufacturing’ determines the relevance and the need to study the specifics of the approach not only at industrial enterprises, as well as identifying possible directions of state policy to stimulate them at the federal and regional levels.
Today, more and more enterprises are starting to improve their production systems according to the principles of ‘lean production’. There is a clear tendency to transfer the principles of ‘lean manufacturing’ from the private sector to the public sector and the regional economy sector.
Thus, the instruments of lean technologies are very successfully used in the field of administration, providing state and municipal services. The example is the Federal Priority Project ‘Creating a New Model of a Medical Organization Providing Primary Health Care’ that has been implemented in the healthcare system since 2017. This project involves the introduction and use of lean technologies in the primary health care system of the region, aimed at increasing public satisfaction with the quality of medical care provided on an outpatient basis to 60% by 2020 and up to 70% by 2022, at accessibility and quality of medical care. [Kitanina K.Y., Lastovetsky, A.G., 2018]
In our opinion, ‘lean manufacturing’ should be considered as the basis for effective socio-economic development of the region. As noted in the study of S.G. Tyaglov: ‘In the future, the level of socio-economic development of the regions would be determined by the effect of the introduction of lean technologies’ [Tyaglov, S.G., Takmasheva, I.V., 2017].
It should be emphasized that the lean manufacturing approach is primarily aimed at improving the efficiency of systems. According to M. Imai, one of the founders of this approach: ‘quality, cost, supply is the goal of management’. [Imai, M. Gemba, 2015] The validity and importance of the selected elements when considering the concept of the effectiveness of the socio-economic development of a region is given in the table.
Table 1
Characteristic elements of effective management social and economic development
Elements | Importance in terms of efficiency |
1 | 2 |
Quality | The development of the socio-economic system of the region should be aimed at improving the quality of working life, which directly affects labour productivity; management decisions; goods and services produced in the region |
Quantity | The resources needed to achieve the target indicators of the development of the socio-economic system should be used rationally |
Timeliness | Progressive development and competitiveness of the socio-economic system of the region depend directly on the timeliness of the adoption of managerial influences |
However, while analyzing the domestic practice of introducing lean manufacturing technologies into production systems, regardless of the type of organization’s activities, we identified several limitations that do not allow the effective implementation of this approach:
- implementation of the approach is not systematic, there is no integrated approach;
- the choice of methods of lean manufacturing is not justified, often limited to one or two instruments;
- refusing to improve the production system due to high resistance from employees, lack of involvement;
- lack of clear understanding in the distribution of responsibilities and effective use of resources;
- full copying of Western technology without considering the features of the enterprise;
- lack of a clear understanding of instruments and technologies for lean manufacturing.
In addition, as noted in E.S. Balashova’s study, one of the reasons for the inefficient and ubiquitous use of lean production technologies is the lack of a uniform methodology for introducing the concept in Russian enterprises and organizations [Balashova, E.S., Gromova, E.A., 2015].
In view of the foregoing, it is necessary to develop a practice-oriented methodology for the effective implementation of lean manufacturing technologies that contribute to the socio-economic development of the region, including not only industrial enterprises, but all sectors of the economic and social sphere of the region. The implementation methodology should address the target indicators of socio-economic development, primarily labour productivity, include specific principles, methods and models. In order to ensure a unified approach to the qualitative and quantitative assessment of the implementation of ‘lean production’, the methodology should include methods for the integrated assessment of socio-economic efficiency of the implementation of the above approach in the region.
The model for the implementation of ‘lean manufacturing’ in the region should be built from the perspective of a systematic approach, in which the region is represented as a mesosystem. The objects of the mesosystem are enterprises and organizations of the economic and social sphere, and its subject is the center, which is part of the structure of regional government bodies. The model should meet the following parameters: strict regulation of the interaction of participants, procedurally controlled, the presence of co-financing between the state and private investors in the region; working risk distribution system; the existence of a performance criterion - a synergy effect - from the interaction of participants distribution system synergy effect. The synergy effect for the region from the introduction and effective functioning of the model should be understood to ensure economic security and sustained development through an increase in economic and social indicators (labour productivity, GRP, quality of life, tax revenue growth, investment inflow, innovation activity, employment growth).
Conclusion
Thus, the article discusses the use of ‘lean manufacturing’ technologies as a driver for the socio-economic development of the region. According to the study, it is concluded that the introduction of ‘lean manufacturing’ technologies at industrial enterprises and social organizations would contribute to the socio-economic development of the region, if using a single system approach and coordinating efforts to implement them at the regional level. The recommendations formulated in the article suggest the creation of a methodology for introducing lean production technologies in the region.
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