Evaluating the Impact of Lean Practices on the Supply Chain Performance of Multinational Companies in Jeddah, Saudi Arabia

Abstract

The objective of the study was to investigate the impact of lean practices on supply chain performance in Saudi Arabia’s multinational companies. However, based on the past studies conducted within the same topic of study and also in different regions, the performance of the chain supply management is pegged on lean practices adopted by the multinational companies. Some of the practices include the “just-it-time” (JIT) production strategy adopted by Toyota company and strategies to reduce the amount of waste for the company. To ascertain whether these practices have an effect on the supply chain management, the study investigated on the impact of lean practices on the supply chain management which served as the primary objective/hypothesis of the study. In order to achieve the objective of the study, quantitative and qualitative data was collected from the annual reports and through website quick search on the studied factors which include the lead time delivery, cost of supplies, closing inventory, percentage of waste and the lean practices used by different companies to improve on the supply chain management. The data was then compiled in excel. Further, both inferential and descriptive analysis was conducted in both Excel and SPSS version 20. Correlation analysis was the inferential analysis conducted for the study. The study results were more consistent with the existing knowledge. Both percentage of waste and annual closing inventory have a negative correlation with the lead time delivery which conform with the study conducted by Drohomeretski et al., (2014). In addition, the cost of supplies had a positive correlation with the lead delivery time. This can be explained by the fact that when the lead delivery time is shorter, it resonates to more supplies per year and thus an increased cost of supplies altogether as suggested by Yao and Dresner, 2018 & Tortorella et al., 2017. In addition, companies ensure 100% collection of the packaging materials to reuse or recycle in supply chain to minimize on the waste. Also, there is training offered to management of waste in company and the establishment of socially production environments (ZARA Annual Report).