Managing demand variability and operational effectiveness: case of lean improvement programmes and MRP planning integration

Although a lean focus is widely popular in general manufacturing environments, there are limited studies that empirically investigate how lean improvement programmes can be integrated with a material requirement planning (MRP) system. The aim of this research is to examine if the integration of lean improvement programmes with a MRP system has a positive effect on operational effectiveness when manufacturers are experiencing high levels of customer demand variability. Based on the contingency theory perspective and using data collected from the international manufacturing strategy survey (IMSS-V), a sample of 382 international manufacturing companies are first divided into two groups based on the degree of their customer demand fluctuation. Moderated hierarchical regression is then applied to each group to empirically test the research hypotheses. Statistical results suggest that operational effectiveness significantly improves when lean improvement programmes support MRP systems as manufacturers are experiencing high levels of fluctuations in demand.