Journal of Enterprise Information Management

Analyzing relationship between ERP utilization and lean manufacturing maturity of

Turkish SMEs
Cagatay Iris Ufuk Cebeci
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Cagatay Iris Ufuk Cebeci , (2014),"Analyzing relationship between ERP utilization and lean manufacturing
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maturity of Turkish SMEs", Journal of Enterprise Information Management, Vol. 27 Iss 3 pp. 261 - 277
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ERP utilization
Analyzing relationship between and lean
ERP utilization and lean manufacturing
manufacturing maturity
of Turkish SMEs 261
Cagatay Iris
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Department of Transport, Technical University of Denmark, Copenhagen,

Denmark and Department of Industrial Engineering,
Istanbul Technical University, Istanbul, Turkey, and
Ufuk Cebeci
Department of Industrial Engineering, Istanbul Technical University,
Istanbul, Turkey

Abstract
Purpose – The purpose of this paper is to understand how effective Turkish small and medium size
enterprises (SMEs) use enterprise resource planning (ERP) systems in module aspect and to assess the
adherence to lean manufacturing requirements. Obtaining each efficiency result separately is not
adequate to make an inference about relationship between ERP and lean practices. Hence, a relational
model is developed to analyze correlation between use of ERP and lean manufacturing implementation
in white goods manufacturing SMEs of Istanbul, Turkey.
Design/methodology/approach – The examination of the proposed conceptual framework is made
by statistical analyses. In parallel, leveling efficiency of each enterprise requires an expert analysis in
order to obtain a fair comparison. Hence, authors have visited each facility to evaluate performance of
ERP efficiency and lean manufacturing applications. In Istanbul region, 53 of total listed SMEs are
visited. The questionnaire survey is designed by considering different scales of performance.
Exploratory factor analyses and various correlation analyses are applied to figure out relationship
between ERP use and lean manufacturing.
Findings – Interaction with rapid development of information technology (IT) and progress in
modern production management strategies have emerged. Obtained results show that Turkish SMEs
have widely initiated lean production practices. However, applications are in initial level in the most
cases. In respect to ERP systems, enterprises are more active, some basic modules are extensively
used. Another finding of this study implies that effective usage of specific ERP modules can contribute
toward applying lean principles, vice versa.
Research limitations/implications – The whole sample space of white goods SMEs could not be
covered due to the fact that, each facility is visited and field studies are done. However, sample size
calculations prove that attained feedback is statistically significant (adequate) to reflect sample space.
Originality/value – The literature studies reveal that there is an obvious lack of studies which
focus on relationship between ERP use and lean manufacturing. Finding such a correlation helps
IT-practitioners to design ERP modules by assessing related requirements of lean philosophy.
Keywords Enterprise resource planning (ERP), SMEs, Factor analysis, Correlation, Lean production
Paper type Research paper

1. Introduction Journal of Enterprise Information

Nowadays, companies are continuously looking for ways to improve their performance Management
Vol. 27 No. 3, 2014
and stay competitive in their markets. The impact of global competition forced all pp. 261-277
r Emerald Group Publishing Limited
of the contributing partners in the supply chain to optimize its own areas of interest. 1741-0398
In this respect, enterprise resource planning (ERP) and lean production applications DOI 10.1108/JEIM-12-2013-0093
 JEIM are important not only for big companies but also for small and medium size
27,3 enterprises (SMEs) to cope with competitors and to add value to supply chain involved.
The latest reports released by Turkish Statistical Body (TUIK) reveal that 65 percent of
overall production and 85 percent of employment deployed in Turkey are by SMEs
(TUIK, 2012).
The increasing competitive nature of industry has increased the diffusion of ERP
262 systems and lean manufacturing applications due to valuable contributions to
efficiency of enterprises. The prior principle lying under both tools is to create efficient
ways to facilitate business activities. ERP systems which are based on information
technology (IT) focus on integrating different business functions and departments in
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an efficient manner. While, lean production which has proven itself successfully with
different practices, aims to keep the value-added activities in the process while
eliminating all wastes and non-value added operations. In the initial phases of
implementation, ERP systems are considered as the bottlenecks in applying lean
production approaches (Halgeri et al., 2008). Such a misconception may result in
systems where ERP use and connection with shop-floor operations are not integrating.
Additionally, lean spreads beyond the relatively stable manufacturing environment
which originally was designed to support (Riezebos et al., 2009).
In order to determine the efficiency of system, researchers should measure the
utilization of ERP system and the gain obtained via lean tools. Using ERP systems
does not directly mean that they are commonly accepted and utilized by users in the
enterprise. Therefore, understanding how effective SMEs use such tools has a vital role
to improve the related business functions and consequently overall system
performance. However, measuring and scaling these parameters are mostly based
on perceived outcomes. To overcome such a problem, researchers need to consider
utilization in terms of common master data, degree of integration of business
processes, utilization of the broad functionality, and to what extend potential users use
the system.
Lean production is another fundamental strategy (apart from ERP use) which aims
to conduct business activities with value-added aspects. It is considered that the
measurement of lean maturity will be of enormous help to enterprises embarking upon
their roadmap by distinguishing the possible focus of concentration. Areas which
are described with strong applications may be improved, and the ones which lack
application may be initialized. Equally, lean maturity findings along with ERP
utilization may give new insights to analyze both tools together.
The aim of this study is to analyze the maturity levels of Turkish SMEs on ERP
systems and adherence to lean manufacturing applications. Models that focus on both
distinct areas (ERP and lean manufacturing) have not analyzed relationship levels in a
combined aspect. The prior goal is to quantify ERP usage and its utilization in module
aspect and then test each lean approach tool application with regular visits to
enterprises. The study also proposes a relational model that formulates an empirical
relationship between usage of ERP systems and lean production implementations in
white goods SMEs of Turkey. By having a reasonable correlation between ERP
modules and lean tools associated, both companies and ERP software developers may
concentrate on pre-defined development areas. Since, there are some studies about
different sectors (Sezen et al., 2012), white goods SMEs are selected as pilot application.
The organization of the paper is as follows. In the second section, a wide-scale
literature review will be conducted, and lack of study aspects will be revealed.
After describing the requirements, methodological structure of paper is presented,
 parameters regarding ERP utilization and lean maturity will be clarified. Related result ERP utilization
of the survey will be detailed with factor analyses of each tool and correlation analysis and lean
between factors in the fourth section. Finally, conclusion and future research direction
are to be noted. manufacturing
2. Literature review
Focus of literature survey is decomposed into three basic research areas. As mentioned 263
before, the first part is looking into details about analyzing performance of ERP
systems, and their utilization. In this section, studies, which explore use of ERP by
SMEs and measuring effectiveness of use, are presented. In second sub-section,
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selection of lean tools that reflects adherence to lean philosophy is initially discussed.
After this, some empirical studies applied in automotive industry to determine
maturity of leanness are presented. Additionally, studies which focus on survey design
on lean tests are explained. In this last part, contradiction between ERP and IT is
discussed. Then, effects of ERP use on different business functions such as supply
chain management (SCM), business performance (BP) are analyzed. Finally, studies
about ERP systems, which support lean production that are deployed and convergence
of ERP systems to lean philosophy with proving relationships in between, are
explained.

2.1 ERP systems and utilization

During the past decade ERP has attracted attention from both academic and industrial
communities. Some extensive literature surveys which include high numbers of papers
are published, and each literature survey has emphasized some lack of concentration in
ERP literature (Schlichter and Kraemmergaard, 2010; Pagès et al., 2010). Most of the
latest reviews note that implementation of ERP systems in SMEs systems are not
extensively clarified. Most of the implementation articles are best practices of ERP
applications in SMEs, however, there is not detailed studies on performance evaluation
of ERP usage in these companies. Esteves (2009) has described the roadmap for an
effective ERP system integration in SMEs. Proposed empirical study shows that
implementation phase of ERP systems should be evaluated analytically in order to
clarify needs and outcomes. Another study which focusses on Belgian SMEs has
explained a comparison of critical success factors in ERP implementation. It is deduced
that the need to adjust their businesses quickly to be able to exploit their niche to the
fullest extent is prior driver. Hence continuous analysis of infrastructure and
approaches has a vital role in order to manage process in an efficient manner (Doom
et al., 2010).
There are some other studies which analyze factors affecting ERP system
integration in SMEs (Maditinos et al., 2012; Ramdani et al., 2009). One of these articles
has proposed an examination of the conceptual framework with the use of a newly
developed structured questionnaire and the results offer interesting implications to
ERP adopting companies. The paper helps practitioners to measure input variables for
ERP efficiency (Maditinos et al., 2012). Federici (2009) has explained some other factors
influencing ERP outcomes of SMEs. And, it is found out that one of the most influential
factors is attaining valuable business activities. In this respect, it is vital to evaluate
maturity level of ERP usage. Buonanno et al. (2005) have explored the use of ERP by
SMEs and tested numerous hypotheses. In this study, performance evaluation in
respect to ERP application is done according to modules’ usage efficiency in a
quantitative way. The precision with the members of the ERP analysis teams could
 JEIM provide an evaluation which is limited by their knowledge, experience, and even
27,3 cognitive biases, as well as by the complexity of the ERP system execution. Hence,
evaluating utilization of ERP systems analytically have also embarked the attraction of
many researchers (Wei, 2008; Hedman and Johansson, 2009). Some studies are based
on fuzzy linguistic results of the ERP examination of the users involved (Chen and Lin,
2009). Due to fact that different users may have imprecise attitudes toward the tool,
264 fuzzy techniques may work quite efficiently. In this study, we have tried to quantify
ERP utilization with three basic aspects that may help to obtain output variables.
Factor analysis is utilized to create the shortened list of such variables (Amid et al.,
2012; Botta-Genoulaz and Millet, 2005).
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2.2 Lean production maturity measurement

Since scope and significance of lean thinking is evolving over time with new challenges
in the industry, studies that cover literature becomes more detailed and popular.
In such articles, authors intend to determine key parameters and tools of lean
philosophy so that a comprehensive way of understanding may be established.
Lean studies mostly cover the operational best practices of lean techniques with such
pre-determined tools (Sezen et al., 2012; Satoglu and Durmusoglu, 2003).
In this paper, empirical studies will be mostly presented in order to assess lean
maturity levels of white goods SMEs. Shah and Ward (2007) have defined
parameters that can be used to test lean production activities. The aspects are
limited to ten fundamental requirements used in internal, external, and value chain
lean philosophy activities. These aspects are tested statistically and results show
that lean production is conceptually multifaceted, and its definition spans
philosophical characteristics that are often difficult to measure directly.
Furthermore, the practices/tools used to measure lean production, even when
associated uniquely with a single component, indicate mutual support for multiple
components (Shah and Ward, 2007). Another study which concentrate on Turkish
automotive industry with a high sample size, has proposed a similar methodology.
In this study, Sezen et al. (2012) have listed basic maturity assessment tools as
setup time reduction, pull production, small lot sizes, inventory reduction, one piece
flow, value stream mapping, process improvement, preventive maintenance,
cellular manufacturing, 5S, cleanness, root-cause analysis, kaizen, poke-yoke,
waste elimination, etc. According to factor analysis results, it is deduced that the
list of the tools represents a remarkable percentage of lean applications. Some
other studies have been proposed in order to determine maturity and capability of
enterprises in lean production. And, it is stated that the aspects that trigger or
catalyze adoption and the measurement of capability are not extensively clarified
(Moyano-Fuentes and Sacristan-Dı́az, 2012). Finally, most of empirical studies state
that measure of alignment to lean philosophy is mostly presented with Likert scale
(Sezen et al., 2012; Furlan et al., 2011).

2.3 Correlation between ERP utilization and lean maturity

Most of the studies in literature focus on ERP and lean in separate focusses. Schlichter
and Kraemmergaard (2010) have published a literature survey on ERP studies and
emphasized that affect of ERP usage on other business activities of facilities are not
analyzed in detail. However, Yang and Su (2009) have established a relational model
that reflects relationship between ERP and SCM performance. The methodology used
in study is based on canonical correlation which aims to build a correlation between
 multivariate parameters. Other studies which reflect ERP usage and relevant areas ERP utilization
consider ERP with operational performance (OP) and financial performance (Madapusi and lean
and D’Souza, 2012; Liu et al., 2007; Pagès et al., 2010).
Riezebos et al. (2009) have focussed whether there is a connection or contradiction manufacturing
between ERP usage and lean production. It is emphasized that ERP software mostly
lack supporting lean production activities in aspects. According to the authors,
the strong application findings may be grouped into three basic ERP modules; 265
maintenance, production planning and control, and computer-aided production.
Another study that proposes ERP enabled KANBAN system, has been prepared as a
best practice with real-time roots in industrial application (Steger-Jensen and Hvolby,
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2008). In this study, ERP module is configured with requirements of pull-based system.
Some other implementations that consider Just-in-time ( JIT) practices, and lean
production planning is also presented (Ward and Zhou, 2006; Moyano-Fuentes et al.,
2012). Finally, a literature survey is published that focus on ERP systems that support
lean production. In this study, examples of lean process mapping tools, JIT
applications, KANBAN, demand smoothing, value-stream mapping have been detailed
(Halgeri et al., 2008). However, the studies that focus on statistical correlation between
these tools have not extensively attracted researchers.

3. Methodology
3.1 Establishment of research model
The empirical objective of this study is to identify the dimensional structure
underlying lean production applications and ERP utilization and to develop reliable
and valid scales to represent relationship between these tools. We adopt a
comprehensive multi-stage approach which starts with the sample size validity
analysis, after that a questionnaire was constructed based on an extensive review of
the literature in the areas of ERP and lean production implementation. By using results
obtained from surveys detailed factor analyses are applied for each tool. Obtained
factors are interpreted with convergences to cases in real production life. After having
listed each factor, an extensive statistical analysis is applied to understand correlation
between these factors.
3.1.1 Instrument development and measurement. In the phase of instrument
development, previous literature is utilized to obtain insights into measurement. To
minimize expected variability and measurement errors pre-tested scaling systems are
adapted (Shah and Ward, 2007). In order to reflect overall characteristic of lean
philosophy, proposed test parameters are validated with practitioners who are
continuously dealing with such problems. Final test plan is presented in Table IV
header. Maturity of ERP use for each of 14 modules is determined by using two main
parameters. It is a combined version of the effective usage of modules (E1: percentage
of tasks done by using ERP) and efficient usage of modules (E2: correctly usage of ERP
modules). Hence, overall utilization of ERP module is a non-metric parameter to be
used in statistical inferences (Overall ¼ E1  E2). As it is mentioned, each ERP module
is tested with strategy proposed in (Federici, 2009). In parallel, lean production is
tested by considering six fundamental aspects; 5S, single minute die exchange (SMED),
pull-based production (KANBAN), total preemptive maintenance, cellular
manufacturing, quality assurance and management. Each of listed frames has
sub-questions to understand actual level of lean production maturity. The data
gathering questions are qualified with a five-point Likert scale which reflects perceived
performances. After defining pilot test instruments with ten different experts working
 JEIM on ERP systems and lean manufacturing, questionnaire is revised regarding self-
27,3 testing of adapted parameters with easy-to-rate performance measures. Selection of
ideal respondents is made by using jobs-description matrices which is prepared by
human resource departments.
3.1.2 Sampling. Since the study is applied to Turkish White-Goods SMEs located
in Istanbul region, first the candidate enterprises were determined to participate.
266 One manager of each enterprise who was responsible for implementing ERP was
visited, and authors rate the level of the success in achieving improvements and lean
production maturity. Related list of all alternative companies is obtained from Istanbul
Chamber of Commerce. In 2011, overall alternative space which is sample domain
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contains 148 different enterprises. Obtained 53 observations correspond to a 0.35

efficient response rate. Calculation of minimum sample size could be done by using
Equation (1) shows statistical significance:

N  t2  p  q
n¼
d2  ðN  1Þ þ t 2  p  q

where, N is the sample domain ¼ 148 (2011); t is the Std. normal distribution
coefficient ¼ 1.96 (95 percent); p is the observation frequency (probability) ¼ 0.5; q is
the non-observation frequency ¼ 0.5; d is the sensitivity ¼ 10 percent; n is the
representing minimum sample size (X52): statistically adequate.
3.1.3 Data gathering. Direct interviews and factory visits are made to collect
information from the engineers and IT professionals/manager in every company.
Although interviewer-administered surveys are expensive and time consuming, it was
preferred because it allowed us to gain a fairly good quality of response. Additionally,
self measuring the rate of lean practices, and ERP usage is hard for companies, because
the questions about ERP usage and lean are of a contemporary nature. This technique
was useful because it enabled the interviewer to correct any ambiguities and unfold
any issues raised by respondents (Ramdani et al., 2009). It should be noted that
obtaining good response rates are crucial for statistical analysis. By applying field
study and direct interviews, quality of responses has increased, and requirements for
early/late response analysis have disappeared.

3.2 Exploratory analysis and data reduction

In order to state characteristics more precisely, descriptive statistics regarding open-
ended questions and missing item analysis were conducted for each of both ERP and
lean parameters. The results did not indicate any problems with the missing item
analysis. Second, an item to total correlation (ITC) score was calculated for each lean
item to assess item reliability. Since, not a Likert scale but the percentages are assigned
for ERP modules, ITC calculation is not required. Results, which are shown in Table IV
with “ITC” row, are used to drop the questions which are not strong enough to reflect
characteristics of research model. The rule of strength is set with parameter higher
than 0.30 (Shah and Ward, 2007). After this, descriptive statistics of enterprise pool
is presented in Table I.
Table I shows the distribution of 53 companies in three separate categories,
namely, “company size,” “customer group,” and “financial indicators.” In total, 92
percent of the companies in the sample operate as the first tier suppliers in the white
goods industry based on the main product they offer to the market. Regarding the
fact that 48 of all enterprises are owned by Turkish capital, enterprises may be
 Variables Categories Frequency Mean (M ) SD
ERP utilization
and lean
Number of employees 0-50 23 140.12 202.06 manufacturing
50-150 18
150-250 12
Enterprise ownership Local 48 – –
Global 5 267
Age of enterprises 0-10 3 26.4 12.22
10-20 16
20-30 14
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430 20
Number of customers 0-50 27 38.14 18.14
50-100 15
100-150 9
4150 2
Annual revenue (million $) 0-5 21 14.52 15.44
5-15 17
15-30 5 Table I.
30-50 6 Descriptive statistics of
450 4 enterprise profiles

attributed as local SMEs. The sizes of enterprises are measured by the number of
employees, age of company, and the number of customers. Although, there
are a number of micro enterprises which have relatively low numbers of employees
and customers, the average values of parameters reflect that sample has mostly
medium size companies. When companies included in the survey are classified
according to their size based on the number of employees, it is revealed that the
representations of large-, medium- and small-size companies are comparable (Sezen
et al., 2012).
The research model finally requires a framework to show basic steps of the
analysis. With the information gathered by company profiles, further analysis may be
conducted. Initially, the data are analyzed by means of 14 ERP modules and descriptive
parameters are obtained for each module (mean usage, standard deviation). The same
procedure is also applied for lean manufacturing assessment. After determining overall
means, exploratory factor analysis is applied to understand actual characteristics of
modules and lean production application. Finally, correlation analysis is made to
understand relationship between each factor, and results are explained in respect to
ERP software improvement phase and lean production application capability. Figure 1
represents general flow of information gathering and component of survey which is
applied by authors to enterprises.

4. Survey results
The conceptual framework of the present study suggests that ERP modules have
factors that may describe overall system utilization in the best manner. Additionally, it
is also noted that lean production requirements have their own levels, and listing them
as a whole is not enough to reflect core effects of lean implementation. Finally,
interaction between specific ERP modules and lean application parameters are up to
analysis, if ERP packages that supports lean are investigated. For these conceptual
requirements, survey results are clustered not according to the analysis type, but
considering analyzed factors.
 JEIM
27,3 Lean Production

ERP System (38 Questions)

General Information
• General Information Closed ended
Open ended questions (7 questions) questions
5 Likert Scale
• Cost of ERP use (Maintenance,
268 • Founded year
• Enterprise ownership
Customization, etc.)
• 5S (8 Questions)
• Application period
• Number of employees • SMED (3 Questions)
• Foreign trade • Modules Overall usage • Kanban (5 Questions)
(14 questions)
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capability • TPM (5 Questions)

• Governmental • Effective usage of each • Cellular Manufacturing
supports module(%) E2 (6 Questions)
• Number of customers • Tasks done by related • Error Detection and
Figure 1. • Annual Revenue module(%) E1 Prevention(11 Questions)
Survey components • Number of Customers • Gap from Ideal usage (%)
• OV=E1×E2

4.1 ERP utilization results

In order to evaluate the extent of ERP performance of Turkish white good suppliers
(SMEs), the mean values of responses to the questions in the ERP modules are
examined (e.g. Hedman and Johansson, 2009; DeLone and McLean, 1992). The
calculated mean values for the questionnaire items in Table II show that the ERP
utilization levels differs with respect to modules of ERP system. Basic ERP modules
which are listed here are coded for ease-of use as; purchasing (PR), bill-of-material
(BOM), production management and scheduling (PM), inventory management (IM),
sales (SL), customer relationship management (CRM), finance (FN), accounting (AC),
master planning (PL), quality management (QR), human resource management (HR),
budgeting (BT), data automation (DA), maintenance management (MM).
In Table II, maturity of ERP usage for each of 14 modules is calculated by using two
main parameters. It is a combined version of effective usage of modules (E1: percentage
of tasks done by using ERP) and efficient usage of modules (E2: correctly usage of
ERP modules).
Table II reflects that Bill-of-Material and accounting modules are most commonly
used, while CRM and automated data gathering systems are not widely utilized. Since
the most utilized modules are basic initialization modules, the rest of information
architecture is built upon them. It is also deduced that relatively new modules
such as CRM, data automation, real-time information sharing with shop-floor, and
maintenance management modules are not commonly used. However, enterprises that
initiate these modules use them in a more effective way.
Although, modules such as purchasing, inventory management, finance have
relatively high utilization. Enterprises lack further performance by applying all tasks
by these modules such as ABC analysis, continuous supplier evaluation plans, contract
management, on-order inventory planning, available-to-promise analysis, purchasing
lot sizing and optimization, financial scenario management, capacity planning,
scheduling, inter-depot transfer, etc. tools of ERP systems. It is also required to
consider the standard deviation of results of each module. It is observed that there
is a huge fluctuation in usage of human resources and data automation between
enterprises.
There are also some modules which are used in average. These modules may be
clustered as; quality management, sales, human resource management. These business
 Downloaded by CHALMERS UNIVERSITY OF TECHNOLOGY At 15:10 30 January 2016 (PT)

PR BOM PM IM SL CRM FN AC PL QM HR BT DA MM

Usage E1 E2 E1 E2 E1 E2 E1 E2 E1 E2 E1 E2 E1 E1 E2 E1 E2 E1 E2 E1 E2 E1 E2 E1 E2 E1
Mean 0.81 0.79 0.95 0.90 0.82 0.76 0.85 0.83 0.71 0.72 0.46 0.41 0.81 0.82 0.96 0.96 0.73 0.72 0.58 0.65 0.53 0.63 0.86 0.85 0.28 0.30 0.38 0.39
SD 0.18 0.22 0.08 0.20 0.15 0.19 0.13 0.14 0.26 0.25 0.29 0.29 0.18 0.18 0.10 0.08 0.27 0.28 0.32 0.29 0.37 0.35 0.17 0.19 0.37 0.37 0.35 0.32
Overall 0.64 0.86 0.63 0.71 0.51 0.19 0.65 0.91 0.52 0.37 0.34 0.73 0.08 0.15
ERP utilization

Descriptive statistics
manufacturing

module usage
and lean

269

for ERP
Table II.
 JEIM functions correspond to basic support activities. Although, main frames of each
27,3 module are applied (quality control, inspection, sales order, employee data records),
extended analysis aspects are neglected.
It is found out that most of the SMEs use basic modules, but they do not efficiently
utilize the report and analysis capabilities of ERP software.
To assess divergent validity, the 14 items that were retained were subjected to an
270 exploratory factor analysis. Phases of factor analysis are diversified by similar
literature studies (Amid et al., 2012). Factor analysis is conducted on explanatory
variables, with the objective of determining minimum number of factors representing
maximum variance of data obtained in ERP module usage results. For related data
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set, Kaiser-Meier Olkin test statistics is obtained as 0.61 which corresponds to an

applicable set with Bartlett’s test significance zero. Overall statistics show that data set
is applicable for factor analysis. Varimax rotation is used with principle component
analysis. Factors having an eigenvalue 41 are selected to be presented in the factors
list. For rotated component matrix, there are five different factors with item-loadings
which are illustrated in Table III. These factors explain 84.32 percent of overall
variance.
According to rotated component matrix; F1 (including; QM, MM, HR dominantly)
represents overall equipment efficiency (OEE) parameters which all together
corresponds efficiency of manufacturing systems. F2 (including; CRM, DA
dominantly) corresponds to new technologies adapted to ERP systems recently.
While F3 (including; PR, AC, BT) directly represents purchasing based accounting and
budgeting activities. F4 (including; BOM, IM, PM, PL) corresponds to production
planning and control activities. Finally, F5 (including; SL, FN, BT) gives direct
information on sales and finance activities. Factor derived from survey is very sensible
in respect to usage comments that are made in previous sections. Factors obtained in
this phase will be used in further analysis.
After defining each factor which combines rational subgroups to reflect different
characteristics of ERP module utilizations, further analysis may be applied to
understand drivers of ERP usage in SMEs. Data regarding ERP implementation period
(for how long) may also have an impact on ERP utilization. Average factor utilization is
used in this sense. The obtained results denote that the higher implementation period
has the enterprises, ERP utilization gets higher. However, this correlation is
comparatively low between F2 and ERP implementation length.
Empirical results of this phase should also be compared with other studies in order
to come up with implacable solution strategies. Compared with Botta-Genoulaz and
Millet (2005) which present a synthesis of three recent French surveys, Turkish SMEs
perform very similarly in a number of modules. In this study, average usages are
distributed between 75-90 percent for main modules, and to a lesser extend support
modules have implementation frequency around 30-50 percent (Botta-Genoulaz and
Millet, 2005).
In the next phase, similar analyses will be conducted to lean production maturity
tests. However, clustering of lean application techniques will not be done, because each
technique will be presented under a pre-defined topic in literature (Sezen et al., 2012).

4.2 Lean production maturity results

In this phase, we have performed a field study to measure lean production maturity of
listed enterprises. Initially, descriptive statistics of each lean philosophy component are
presented. The relevant comments on how to improve these areas may be considered as
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Customer
Bill-of- Production Inventory relations Quality Human Data Maintenance
Purchasing material management management Sales management Finance Accounting Planning management resources Budgeting automat management
Factors (PR) (BOM) (PM) (IM) (SL) (CRM) (FN) (AC) (PL) (QM) (HR) (BT) (DA) (MM)

F1 0.28 0.48 0.29 0.33 0.36 0.82 0.67 0.83

F2 0.44 0.88 0.25 0.52 0.30 0.89 0.27
F3 0.84 0.74 0.36 0.25 0.76
F4 0.80 0.58 0.81 0.31 0.61
F5 0.81 0.80 0.42 0.49
ERP utilization

Rotated component matrix

manufacturing
and lean

Table III.
271
 JEIM a system analysis phase for designing ERP modules. In this study, relationship
27,3 between ERP and lean manufacturing is determined as a direction-free arc. The basic
tools of lean production that are assessed are; 5S applications, pull-production systems,
total productive maintenance (TPM), SMED, cellular manufacturing, and quality
assurance and management.
The survey questions are designed in such a way that starting from the first
272 question, implementation performance gets higher with the increasing number of
questions. The initial questions of each phase correspond to initial implementations in
shop-floor.
Obtained results (Table IV) show that adherence to value-addition principle of lean
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production is not in satisfactory level. The first aspect that takes the attention is
KANBAN-based pull-production strategy is the main problem in the most of facilities.
It seems that facilities mostly apply lean instruments in initial phases. Further steps
which require analytical projects are mostly neglected. Easy-to-implement strategies
are very common among facilities, but further analysis mostly lacks. In sub-sections of
pull-production, TPM, SMED, and cellular manufacturing, points are dramatically
getting lower with the further questions. In 5S (7S), enterprises show an average
performance. Most of them believe that they perform well, however the continuity of
implementation and tools of 5S are not commonly internalized by workers. Similarly,
TPM policy and goals are set by most of SMEs but implementations starting from
OEE calculation with autonomous maintenance scheduling are not performed widely.
It is deduced from analysis phase that activities which are directly linked to production
activities are not optimized. Cellular manufacturing which may be linked to production
planning phase in ERP systems is locally implemented in shop-floor. Parameters of
quality assurance and management have low marks; however, standard deviations of
these parameters are relevantly high.
The questions about each subtitle are inspired by a lean capability model which
emphasize lean understanding, optimization, lean interventions, and proactive lean
culture ( Jorgensen et al., 2007).
According to obtained results, there should be six factors which are direct
representatives of main frames that we have proposed in this study. Hence, means are
calculated for each type of lean production aspect and these values are used in
correlation analysis. After this phase, correlation between ERP usage and lean
maturity may be analyzed.

4.3 Canonical correlation analysis

One of the prior aims of this study is to identify how strong is the interaction between
efficient implementation of ERP and implied lean production performance. In order to
summarize this relationship, canonical correlation analysis is conducted using both the
ERP data and the matching lean production maturity data described in previous
section. Canonical correlation analysis is a way of making sense of cross-covariance
matrices. If we have two sets of variables, x1,y, xn and y 1, y y m, and there are
correlations among the variables, then canonical correlation analysis will enable us to
nd linear combinations of the x’s and the y’s which have maximum correlation with
each other (Sohn and Lee, 2012). Canonical correlation is appropriate in the same
situations where multiple regression would be, but where are there are multiple
intercorrelated outcome variables. Canonical correlation analysis determines a set of
canonical variates, orthogonal linear combinations of the variables within each set that
best explain the variability both within and between sets. The output analysis begins
 Downloaded by CHALMERS UNIVERSITY OF TECHNOLOGY At 15:10 30 January 2016 (PT)

5S (7S) applications Pull production TPM

itc 0.70 0.64 0.58 0.61 0.62 0.75 0.61 0.66 0.53 0.67 0.64 0.65 0.80 0.71 0.51 0.60 0.72 0.66

TPM
Safety Implication One – policy
Continuous 5S 5S 5S control Red tag Visualization factors Security of zero KANBAN KANBAN Visual piece and Autonomous Planned TPM OEE
5S standardization plans charts application of 5S of 5S factors inventory usage calculation inventory flow goals maintenance maintenance trainings calculation
M 2.6 2.5 2.5 2.4 2.0 2.9 2.8 2.6 2.7 1.6 1.4 2.2 2.1 2.8 2.6 3.3 2.1 2.0
SD 1.2 1.5 1.2 1.3 1.2 1.1 1.1 1.1 1.4 1.2 1.0 1.1 1.1 1.2 1.3 1.2 1.1 1.3

SMED Cellular manufacturing Quality assurance and management

itc 0.68 0.76 0.72 0.64 0.70 0.64 0.55 0.60 0.55 0.63 0.77 0.60 0.58 0.69 0.67 0.75 0.77 0.74

One – Work
Part and Part – piece Visual Pareto and Education study
Setup SMED Effc. product machine Production flow inventory fishbone ANOVA Value stream Kaizen Hoshin and and
clustering plans implementation lists matrices cells in cell man diag tests mapping activities kanri Heijunka Shojinka Poke – Yoke training measurement
M 2.2 2.0 2.1 3.6 3.4 2.8 2.4 2.4 3.3 1.9 1.5 3.1 2.0 2.0 2.2 2.9 2.9 2.7
SD 1.3 1.3 1.4 1.1 1.1 1.2 1.2 1.1 1.4 1.2 1.0 1.1 1.2 1.2 1.1 1.3 1.2 1.3
ERP utilization

manufacturing

lean manufacturing
Table IV.
and lean

273

Descriptive statistics for

maturity levels
 JEIM with an overall multivariate test of the entire model using two important multivariate
27,3 criteria of Wilk’s a (0.75) and Hotellings (0.32). Obtained results show that criteria
calculated give further analysis opportunities (Chang et al., 2008; Shatat and Udin,
2012).
This is followed by the five canonical correlations and the multivariate tests of each
of the dimensions which are shown in Table V. These results show that the first two of
274 the two canonical correlations are statistically significant at the 0.05 level.
We also have the canonical correlations as well how much variance of the dependent
variables is explained by the dimensions. For this particular model there are five
canonical dimensions of which only the first two are statistically significant. After
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conducting related dimensions analysis, only the first two resolved as statistically
significant.
Results show that there is a strong correlation of 5S activities with F1 (which
reflect maintenance), F4 (production activities), F5 (managerial issues). It is also
detected that there is an obvious statistically approved correlation between F1
(quality tools) and VAR6 (quality assurance) systems. The correlations which are
not statistically validated should also be clarified; SMED applications seem to be
effected by the most of modules used in ERP systems. Pull-based production
strategies are mostly affected by F4 and F5 which are production dependent factors.
Finally, obtained results of VAR4 (TPM) activities are mostly affected by F1 which
contains HR, MM together.
The results of two canonical correlation functions support the methodological
section. The square values of canonical correlation of these functions indicate a strong
relationship between ERP performance and lean production maturity. The canonical
correlation analysis results show that there is enough evidence to support the existence
of this relationship (Chang et al., 2008).
5. Discussion and conclusion
The key aspects of this research are its sole focus on the SME segment, the ERP
implementation performances on module integration, the adherence of these SMEs to
lean production principles, and determining relationship between ERP module
utilization and lean production.
There are numerous positive contributions of the study. It is deduced that Turkish
white goods SMEs are in the growth phases of ERP implementation. Although, most of
them have launched fundamental modules, usage efficiency is not relatively high.
What is more, factor analysis results show that modules may be clustered in order
to implement them in an effective manner. Our research suggests that a modular
approach may contribute to the usefulness of the ERP system. The enterprises, which
highlight production capabilities and operational excellence, may focus on the related

Canonical correlation Squares of canonical Significance

functions Eigenvalue correlation Approx. F ( po0.05)

1 6.56 0.84 8.35 0.01

2 4.32 0.77 4.56 0.04
Table V. 3 1.56 0.61 1.35 0.09
The test of canonical 4 0.58 0.37 0.97 0.51
correlation coefficients 5 0.30 0.23 0.74 0.69
 set of factors. The ones which seek for advanced improvements may integrate modules ERP utilization
which are clustered as new trends and technologies. and lean
Results also give clues for ERP software companies. In the development stage of
ERP packages, developers may take into account results of analysis so as to design manufacturing
information architecture of each module regarding associated lean perspective. Not
only the developers of ERP systems, but also the marketing experts may utilize factor
clusters of ERP systems. Proposed groups may be offered as combined packages in 275
order to take the attention of SMEs with different levels of ERP applications.
Another significant contribution is to assess lean production performances.
Correlations between the lean measurement items indicate that the elements of the
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model are complementing each other as a whole. The proposed model for measuring
adherence to lean practices can be used for evaluating the leanness level of companies.
Obtained results reveal that lean manufacturing applications are mostly in
initialization level in this sector. Most of the SMEs are aware of the need to become
leaner, but have problems with implementation phases. This model would also serve to
catalyze decision making as managers seek to match the ERP implementations to
evolving lean needs. Hence, the idea of contradiction between ERP and lean has
disappeared in the SMEs. Previously, they believed integration might not be unfolded.
However, applications and best practices give some fruitful clues from where to start.
Results are presented in different organizations to inform SMEs to act in an effective
way.
Future research could focus on establishing models that propose some hypothesis
to test each relationship between modules and other relevant business parameter.
The model may contain factors on company size, and its tier in the supply chain.
Another aspect that may be covered is to extend the analysis to other sectors. By
having such an extension, a fair comparison of white goods SMEs can be made, and
with the increasing size of sample size more validated empirical analyses may be
unfolded. Such studies that directly try to link lean production activities to business
activities and ERP modules, will finally contribute to improve overall BP.

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Corresponding author
Cagatay Iris can be contacted at: cagai@transport.dtu.dk

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