Entrepreneurial applications of the lean approach to service industries Sang M. Lee, David L. Olson , Sang-Heui Lee, Taewon Hwang and Matt S. Shin Department of Management, University of Nebraska, Lincoln, NE, USA (Received 5 November 2007; final version received 7 November 2007) Service industries have grown significantly in recent years, especially in the advanced economies. The applicability of the Toyota system for manufacturing excellence to other industries has been widely studied. This paper seeks to contribute to this growing body of research by exploring the applications of the Toyota approach, particularly the lean system in the service sector. The paper examines the information systems that have enabled benefit in the service industries, to include vendor-managed inventory systems and variants, and then compares the benefits from information systems in support of supply chains. We also review why enterprise systems provide more opportunities in aiding the implementation of the lean systems. We present a case study of a South Korean supply chain system to demonstrate the entrepreneurial application of such approaches. Keywords: supply chains; lean manufacturing; entrepreneurial Introduction The Toyota system for manufacturing excellence was a critical factor in enhancing Japan’s global presence as a highly efficient producer of quality products subsequent to World War II. The Toyota Production System, based on Kanban control, was introduced to academic research by Sugimori, Kusunoki, Cho, and Uchikawa (1977). This extraordinary innovation was tremen- dously important in the history of manufacturing, making terms such as Kanban, just-in-time (JIT), lean manufacturing, and agile manufacturing common. Lean manufacturing, a bundle of techniques pioneered by Toyota in the 1950s, focuses on the supply chain side of production. It has become a common philosophical approach to supply chain organisational design in the automobile industry as well as a practical approach to production excellence. The key principle of lean manufacturing is to cut out waste by elim- inating activities that do not add value, by making sure that this principle is applied throughout the supply chain, by creating continuous flows of product without bottlenecks, by producing to order (demand-pull rather than supply-push), and by emphasising quality. This approach typi- cally leads to the elimination of backlogs and more synchronised production to forecast. Lean manufacturing approaches have been credited with improved customer service as well as reduced procurement and plant-floor costs (Bradford, Mayfield, & Toney, 2001). Agile manufacturing systems focus on providing value to customers at the retail end of a supply chain, especially relative to on-time delivery, developing systems capable of rapid response to market and technology changes, and using these systems to gain competitive advan- tage in turbulent markets (Helo, 2004). Supply chain performance is enhanced by matching supply and demand, thus reducing costs at both end of the supply chain while improving the customer satisfaction through better on-time performance. This requires reducing uncertainty within the supply chain as much as possible. However, uncertainty is often impossible to ISSN 0264-2069 print/ISSN 1743-9507 online # 2008 Taylor & Francis DOI: 10.1080/02642060701846853 http://www.informaworld.com Corresponding author. Email: dolson3@unl.edu The Service Industries Journal 2008, iFirst Article 1–14