Fit manufacturing: Production Waste Index and its effect on Production Profitability

Rapid changes of market demands resulted in emergence the numbers of manufacturing concept; i.e. Lean Manufacturing (LM), Agile Manufacturing (AM), Responsive Manufacturing (RM), Reconfigurable (ReM), and Sustainable Manufacturing (SM). However, the models of manufacturing concept have been presented independently. In this study, the model of Fit Manufacturing (FM) concept is developed through the integration of three models of manufacturing concept: (i) LM, (ii) AM, and Sustainability concepts. In FM, Production Fitness represents as the performance measure of production operations that determined by integration of measure for Leanness, Agility, and Sustainability. The objective of this paper is to discuss the effect of Production Waste Index (PWI) on Production Profitability Index (PPI). In this regard, PWI represents as the measure of Leanness that based on the LM concept. PWI indicates the level of production wastes which are determined through accumulation of seven types of Lean production wastes. PPI represents the size of profit margin that affected by production costs. A case study at six micro-SMEs in Malaysia had been conducted to validate the PWI model. Results of the case study proved that the PWI has effect on PPI in which the effective capacity in the main influence factor. In conclusion, this research contributes to development of measurement index for production waste and profitability that can be used as an indicator to monitor the production effectiveness.