A STUDY ON THE FACTORS INTEGRATING CIRCULAR ECONOMY AND LEAN MANAGEMENT IN AUTOMOBILE COMPANIES

Abstract

There has been an increasing number of automobile companies turning to more sustainable business practices due to the increasing focus on environment and restrictions on available resources. The purpose of this research is to determine the key factors that impact the integration of Circular Economy and Lean Management into automobile companies’ production department. Lean Management has a central focus on removing wastage in production to create operational efficiencies, while Circular Economy has a strong emphasis on reuse, recycle, and sustainable production systems. Companies are expected to achieve increased economic performance and increased environmental performance due to the integration of both practices.The methodology of this study uses a descriptive and analytical design through a quantitative means of data collection. The primary data was obtained through a structured questionnaire that was collected from a sample size of 50 employees, selected using purposive sampling methods, who all work within the production department of an automobile manufacturer. The collected data was processed using percentage analysis and the Analysis of Variance (ANOVA) in order to determine relationships and differences among the selected variables.

The results of this study indicate there are many operational, environmental, economic, organizational, technological, and human factors that will help determine the successful integration of Lean Management and Circular Economy. The integration of both Lean Management and Circular Economy is also associated with lower production waste through enhanced resource efficiency, reduced costs, and enhanced sustainability performance. The identified barriers to the effective adoption of these two systems are the high cost of implementation, lack of knowledge or understanding, and resistance to change for the employees. In summary, the key elements for implementing lean management as part of the Circular Economy will involve training staff, creating awareness among employees, and having strong management commitment. The findings from this study contribute to understanding how automobile firms can build long-term competitiveness by combining lean management with principles associated with the Circular Economy.