The retrospective determination of process improvement's economic value at the individual manufacturing firm level: Literature review and proposed measurement framework

Abstract

Abstract Even a cursory reading of the literature on process improvement shows that there are many accounts proposing that operational as well as financial gains can be made using methodologies like JIT, TQM, Six Sigma, and Lean. While some studies have investigated the statistical links between process improvement practices and corporate financial outcomes in large populations of firms, documentations of how individual firms can determine economic value derived from their own process improvement projects are scarce. We reviewed the literature, first ad hoc then systematically, to investigate the extent to which studies have covered the determination of process improvements' economic value in manufacturing companies postimplementation, and how such assessments are conducted. The results suggest that retrospective value determinations at the plant level are exceedingly rare. In fact, only 0.09% of 35,968 scholarly articles produced on process improvement in the period 1980–2020 have that focus. Since expenditures on process improvement have alternative uses, organizations should have at their disposal benefit determination frameworks so that financially efficient decisions can be made. Building on literature reviews and additional sources, this study proposes a set of principles and a model for cost–benefit determination that make up such a framework in the context of process improvement.

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