How Does 5s Implementation Affect Company Performance? A Case Study Applied to a Subsidiary of a Rubber Goods Manufacturer from Serbia

Abstract

5S can be viewed as a system of workplace rules devised to create a safe and productive work environment and to provide efficient and effective realization of business tasks. Its implementation is expected to reduce defects, improve quality, increase safety and the morale of the employees, and improve employees' productivity. In the present paper, over the period of seven years, we investigate the case of a rubber goods manufacturer from Serbia which has implemented 5S in one of its subsidiaries. To assess the effects of the 5S implementation we use operational and financial performance indicators. Our results suggest that the implementation of 5S can contribute to performance of an organization in the short and medium term. In the case we analyze here, effects of 5S were not evident in longer term due to the influence of some external factors (increase in raw material prices and decrease in purchasing power of demand) and strong investment activity of the subsidiary. We argue that the performance of the subsidiary under the influence of these factors would be weaker if it did not implement 5S. In addition, subsidiary in our study implemented TDABC to make possible preparation of reports important for efficient decision making in the new business environment. This finding points to the importance of the management accounting system improvements after the continuous improvements implementation.

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