Effect of lean practices on operational performance of microfinance institutions in Mombasa county

Abstract

Adopting lean practices for many organizations is to increase profit either directly by reducing costs or indirectly by improving productivity. However its effects on the operational performance isn’t well established. In spite of the popularity of lean, some studies paint an ambiguous link on the positive effects of lean production on operational performance. The study aimed to establish the effect of lean practices on the operational performance of microfinance institutions in Mombasa. The focus was on the microfinance institutions in Mombasa County registered under the Central Bank of Kenya and Association of Microfinance Institutions. Census survey approach was used so as to cover all the 17 MFIs. The data was gathered exclusively from the questionnaire as the research instrument of which a response rate of 65% was obtained. Descriptive analysis, correlation and regression analysis was used to present the results in tables and figures. On the relationship that exists between lean practices and operational performance of MFIs in Mombasa County, the study concludes that a significant positive relationship exists. The study concludes that Just in Time, Total productive maintenance, Total quality management and Kaizen are some of the main practices used in enhancing the operations of the organizations. The study thus recommends that the implementation process of these strategies should be given top priority during formulation of organization policies.