Kaizen in Zambian Firms

The current project is an attempt to better understand new development concepts, and to analyze culture and development from an economic perspective. More specifically, the projects tries to understand the impact of Japanese corporate culture, narrowly defined as a set of management practices inspired by the Japanese school, in affecting profitability and productivity of firms in Africa. In particular, this project focuses on the Japanese Kaizen and lean management practices. This transferability of practices is being analyzed in the context of Micro and Small Enterprises (MSEs) in Zambia. The sector being analyzed are micro furniture producers located in four markets in low income areas of Lusaka.

The project started with an exploratory phase, to determine the appropriate sector and scale of industries to be targeted. We decided to focus on micro producers as they are the most ubiquitous enterprise form, accounting for more than 80 percent of employment in the non-agricultural sector, and suffer from low productivity. The initial exploratory phase was followed by a listing of all furniture producers located in these markets in Lusaka. The baseline survey (“fact finding”) was carried out with 120 furniture producers in these markets in April 2015. The baseline survey was to obtain a picture regarding the key characteristics of the entrepreneurs and the businesses they own; the current levels of revenue, profit and cost; business practices being followed; and the key constraints facing the business; and the motivations and objectives of the business owners.

The analysis of the data shows that only 25 percent of the entrepreneurs have had training to become a carpenter and less than 10 percent have received any business training or maintain business records. The average stated profits of a firm are around 200 Euros per month. The survey contained 13 pages; more micro data on personal characteristics, enterprise characteristics, performance data, business practices, environment and entrepreneurial orientation are available on request (“diagnosis”).

In light of the fact finding and in consultation with Japanese management experts a training program designed on the principles of “lean management” and “Kaizen” was designed. The concrete tools were based on the “5-S” tools, one of the most widely used Japanese management techniques. The primary objective of the training program is to enable individuals to think about the production process in a structured manner to be able to identify key areas in which the costs of production can be reduced. The other important objective was to emphasize to the entrepreneurs that increasing profits was possible through not only higher sales, but through reduction of costs, an aspect under the entrepreneurs’ control, and in the process promote entrepreneurial agency and initiative.

The training involved two classroom and four onsite training sessions. One of the distinguishing features of our study, in relation to other training programs that have been implemented (refer to McKenzie et. al 2014 for an overview), is the emphasis (a) on practical onsite sessions and (b) on a low-cost approach, both motivated by the Japanese school of management.

The initial findings (based on own visits to the firms and exchange with the trainer) suggest Japanese management practices as a good match to the management of Zambian micro firms. This is an astonishing finding itself given that Kaizen and lean management have been developed for large firms in high-tech sectors, and often have been said to be strongly institutionally bounded. The results of the training show:

• The qualitative effects of the training program were already visible – there were clear signs that the 5S in terms of organizing workshop and timber were already in place. The visual appearance of the treated group compared to the control group clearly differs.
• Other important insights from the classrooms session regarding time management by not indulging in idle talk and starting on customer orders as soon as being received were also reported.
• Similarly, in relation to the training objective of promoting cooperation in procurement of raw materials, one of the markets had started using blackboards to help people coordinate dates and times for purchase of raw materials.
• Other participants reported deliberately looking out for other carpenters when at timber market for the possibility of sharing transportation costs.

As originally planned, the final evaluation survey at the end of the training program was completed in the second quarter of 2016. The results will be made public soon.

Workshop and timber organization of the treated group:

5STreated1.jpg

5STreated2.jpg

5STreated3.jpg

Workshop and timber organization of the control group:

5SControl1.jpg

5SControl2.jpg