Lean Management Practices and Operational Performance of Commercial Banks in Kenya

Abstract

Lean management practices have emerged as critical success factors that drive focus in not only cutting costs but also simultaneously improving services to customers. These practices enable organizations to improve processes and structures through eliminating product and process wastes. Today, organizations that adopt lean management practices are responsive to business needs and deliver positive results. The main objective of this research was to identify the relationship between lean management practices and operational performance. This study employed a cross sectional descriptive survey design. Cross sectional design was considered most suitable because information was collected at a specific time over a short period. This study also adopted a census survey due to the small population of commercial banks in Kenya which was 39. Out of the 39 questionnaires, 30 were received, resulting to a response rate of 76.9% which was regarded sufficient. Data analysis done using SPSS generated descriptive statistics and correlation results. The outcome showed that the three lean management practices; VSM, TQM and lean leadership had a significant relationship with operational performance. Value stream mapping practices were implemented to a moderate extent whereas TQM and lean leadership were implemented to a great extent in commercial banks in Kenya. Whereas there was a neutral agreement among the respondents that adoption of these practices had led to a decrease in costs, respondents agreed that operational speed and operational flexibility equally improved. They further strongly agreed on improvement in quality of services offered. Additionally, respondents highlighted that regulatory control to ensure compliance that made it difficult to remove some non-value adding activities was the most experienced challenge during implementation. To conclude, the study recommends implementation of these practices together at the same time. This is because they all have their individual strengths and implementing them as one system together will result to overall benefits that can be replicated organization wide.