International Journal of Production Research

ISSN: 0020-7543 (Print) 1366-588X (Online) Journal homepage: http://www.tandfonline.com/loi/tprs20

Implementation of Industry 4.0 and lean

production in Brazilian manufacturing companies

Guilherme Luz Tortorella & Diego Fettermann

To cite this article: Guilherme Luz Tortorella & Diego Fettermann (2017): Implementation of
Industry 4.0 and lean production in Brazilian manufacturing companies, International Journal of
Production Research, DOI: 10.1080/00207543.2017.1391420

To link to this article: http://dx.doi.org/10.1080/00207543.2017.1391420

Published online: 19 Oct 2017.

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 International Journal of Production Research, 2017
https://doi.org/10.1080/00207543.2017.1391420

Implementation of Industry 4.0 and lean production in Brazilian manufacturing companies

Guilherme Luz Tortorella* and Diego Fettermann

Systems and Indutrial Engineering Department, Universidade Federal de Santa Catarina, Florianópolis, Brazil
(Received 23 June 2017; accepted 28 September 2017)

The adoption of Industry 4.0 technologies has been deemed as a strategy to increase product quality and make manufac-
turing processes more efficient. However, the way that these technologies are integrated into existing production systems
and which processes they can support is still under investigation. Thus, this paper aims to examine the relationship
between lean production (LP) practices and the implementation of Industry 4.0 in Brazilian manufacturing companies.
To achieve that we use data from a survey carried out with 110 companies of different sizes and sectors, at different
stages of LP implementation. Data collected were analysed by means of multivariate analysis. Our findings indicate that
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LP practices are positively associated with Industry 4.0 technologies and their concurrent implementation leads to larger
performance improvements. Further, the contextual variables investigated do matter to this association, although not all
aspects matter to the same extent and effect.
Keywords: Industry 4.0; lean manufacturing; manufacturing management; lean production; emerging economies;
empirical research

1. Introduction
The implementation of automation equipment raises product quality, while making manufacturing processes more effi-
cient (Landscheidt and Kans, 2016). Such trend is especially true when taking into account the transformation that many
industries are undergoing as a result of Industry 4.0 (Lasi et al. 2014). The further development and integration of digi-
tal automation of production by means of electronics, information technology (IT) and industrial robots, led to com-
puter-integrated manufacturing (CIM) systems, currently denoted as Cyber-Physical Systems (CPS). These CPS enable
the production systems to be modular and changeable, which is required to produce highly customised products in mass
production (Kagermann et al. 2013). However, the way that Industry 4.0 technologies are integrated into existing pro-
duction systems and which processes they can support is still under investigation (Kolberg, Knobloch, and Züehlke
2016).
Contrary to conventional belief, researchers claim that automation will not lead to less human interaction or worker-
less production facilities; but the competence requirements may change (Dworschak and Zaiser 2014; Weyer et al.
2015). In fact, the individuals’ skills requirements are more likely to increase and become even more specialised. Fur-
ther, the level of capital expenditure that underlies Industry 4.0 technologies is quite intensive, reducing its implementa-
tion attractiveness (Sanders, Elangeswaran, and Wulfsberg 2016), especially for manufacturing companies located in
developing economies’ context (Anderl 2014). In this scenario, additional aspects must be taken into account for imple-
menting Industry 4.0, such as the existing low-cost labour force and predominance of high production volumes’ manu-
facturers (Mexican Ministry of Economy 2016).
On the other hand, lean production (LP) is an approach widely deemed and spread among several industries that
aims at reducing waste and improving productivity and quality according to customers’ requirements (Womack, Jones,
and Roos 2007; Lage Junior and Godinho Filho 2010; Jasti and Kodali 2015). The implementation of LP means a sys-
tematic human-centred approach of various management principles and practices (Seppälä and Klemola 2004). The prin-
ciples are the elements of the strategic level and they represent the ideals of the system, such as identifying value from
the customer’s perspective, eliminating all kinds of waste, producing according to the pull of the customer, and continu-
ous flow production (Liker 2004; Papadopoulou and Özbayrak 2005). The practices are the elements that operationalise
the principles (Tortorella, Vergara, and Ferreira 2016). In essence, the implementation of LP comprises a low-tech
approach that excels for simplicity and effectiveness usually aligned with a shared business vision.

*Corresponding author. Email: gtortorella@bol.com.br

© 2017 Informa UK Limited, trading as Taylor & Francis Group

 2 G.L. Tortorella and D. Fettermann

Additionally, LP emphasises the need for involving and empowering employees so that they become change agents
within their workplace, regardless their hierarchy or function. According to Liker and Convis (2011), LP reinforces that
anyone can easily identify problems and abnormalities, triggering the problem-solving process. Indeed, Hoseus and
Liker (2008) and Spear (2009) claim that an effective problem-solving process is a fundamental capability in a lean sys-
tem, since it provides the development of both the organisational processes and the individuals who perform it. Siba-
trova and Vishnevskiy (2016) state that Industry 4.0 will impact LP implementation, allowing overcoming currently
existing barriers and bringing new challenges to a successful implementation. Therefore, clear identification of pro-
cesses’ status quo and information sharing can be differentials to faster improvements and, hence, higher competitive-
ness (Baudin 2007; Dora, Kumar, and Gellynck 2016). In fact, von Haartman, Bengtsson, and Niss (2016), based on a
survey in manufacturing companies from developed countries, indicate that LP may be a prerequisite for digital tech-
nologies used in production.
In this context, this paper aims to examine the relationship between LP practices and the implementation of Industry
4.0 within a developing economy context, such as the Brazil. As previously indicated by Landscheidt and Kans (2016),
Kolberg, Knobloch, and Züehlke (2016), and Gjeldum, Mladineo, and Veza (2016), there is a lack of studies that empir-
ically investigate the relationship between a successful lean implementation and the progression into Industry 4.0 in
manufacturing companies from emerging economies. The literature that correlates LP and Industry 4.0 is scarce and
only suggests a positive association between these approaches, but without testing empirically. To achieve that we use
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data from a survey carried out with 110 Brazilian companies of different sizes and sectors, at different stages of LP
implementation. Respondents were asked to provide answers to four questionnaires: Q1, which described the companies’
contextual variables identified in the literature as influential in the adoption of both approaches; Q2, which assessed the
implementation level of 41 inter-related and internally consistent LP practices, which have been empirically validated by
Shah and Ward (2007); Q3, which comprised the identification of the adoption level of 10 inter-related Industry 4.0
technologies that are more likely to be implemented in this context, as suggested by Brazilian National Confederation of
Industry (2016); and Q4, which aimed at identifying the operational performance improvement within the companies in
last few years.
The analytical approach adopted here to reach our objective uses cluster analyses to group companies according to
(i) lean implementation level (derived from Q2), (ii) adoption of Industry 4.0 technologies (derived from Q3), and (iii)
their observed performance improvement (Q4). Once homogeneous groups of companies are available, we check for sig-
nificant differences in levels of contextual variables (Q1) across groups, and draw conclusions. The analytical framework
adopted in this paper is one of its original contributions.
Besides its theoretical contribution, our research provides managerial implications that may support leaders and prac-
titioners to better comprehend the synergies and the advantages of incorporating Industry 4.0 technologies into the LP
implementation across organisations. In this sense, we argue that Industry 4.0 tends to be highly associated with LP and
may increase managers’ awareness regarding operational status and performance. Furthermore, the understanding of the
relationship between these approaches helps to anticipate occasional difficulties and sets the proper expectations along
the LP implementation in the era of the fourth industrial revolution, providing improvement guidelines that might sup-
port certain strategic objectives.
This rest of this paper is structured as follows. Section 2 presents the theoretical background. Section 3 describes
the proposed method, with results of its application presented in Section 4. Section 5 closes the paper presenting conclu-
sions and future research opportunities.

2. Literature review
2.1 Industry 4.0
The term ‘Industry 4.0’, coined in 2011 on the Hannover Fair in Germany, describes an industry whose main character-
istics comprehend connected machines, smart products and systems, and inter-related solutions. Such aspects are put
together towards the establishment of intelligent production units based on integrated computer and/or digital compo-
nents that monitor and control the physical devices (Ashton 2009; Lasi et al. 2014). In this sense, Industry 4.0 aims for
an autonomous and dynamic production, which integrates Information and Communication Technologies (ICT) to enable
a mass production of highly customised products.
Hermann et al. indicate six design principles, derived from Industry 4.0 technologies, which support companies in
identifying possible pilot projects: (i) interoperability, (ii) virtualization, (iii) decentralisation, (iv) real-time capability,
(v) service orientation and (vi) modularity. Despite the growing notoriety, various companies still struggle to grasp the
overall idea of Industry 4.0 and particular concepts and principles hereof (Sanders, Elangeswaran, and Wulfsberg 2016).
 International Journal of Production Research 3

Erol, Schumacher, and Sihn (2016) argue that companies usually experience problems in determining their current state
with regard to Industry 4.0 development and, hence, fail to identify concrete fields of action, programmes or projects.
Hence, to facilitate and guide the implementation of Industry 4.0 in order to mitigate misinterpretations and misconcep-
tions, a few roadmaps or maturity models have been proposed in the literature (Qin, Liu, and Grosvenor 2016).
For instance, Lee, Bagheri, and Kao (2015) suggest a five-level CPS structure that guides its development and
deployment for manufacturing application; they are: (i) smart connection, (ii) data-to-information conversion, (iii) cyber,
(iv) cognition and (v) configuration. Anderl (2014) suggests the utilisation of a practical implementation roadmap named
‘Toolbox Industrie 4.0’, which is structured based on six dimensions and five development levels. In turn, the German
Government proposed a maturity model for assessing Industry 4.0 with 62 items grouped into nine dimensions; they
are: strategy, leadership, customers, products, operations, culture, people, governance and technology (Schumacher, Erol,
and Sihn 2016). Complementarily, Chukwuekwe et al. (2016) suggest the existence of key drivers of Industry 4.0 such
as cloud computing, 3D printing technology, CPS, Internet of Things (IoT), Internet of Services (IoS) and big data. Par-
ticularly within the context of small and medium enterprises (SME), Ganzarain and Errasti (2016) suggest a three-stage
maturity model towards Industry 4.0, which are: envision, enable and enact.
Further, several governmental institutions have started to study and assess the implementation of Industry 4.0 tech-
nologies in their countries, such as Germany, United States and Canada. Specifically, within the developing economies’
context, such as Brazil, the National Confederation of Industry (2016) has carried out a survey to identify the existing
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challenges for implementing Industry 4.0 technologies. High implementation costs were pointed as the main internal
barrier for advancing on Industry 4.0, while lack of skilled workers was indicated as the biggest challenge among the
external factors. Overall, 10 digital technologies grouped into 3 different application areas were identified, as shown in
Table 1. Results also indicated that a feature of digitalization in Brazilian industry is the focus on processes, i.e. on
increased efficiency and productivity. These findings corroborate to the study undertaken in Mexico, which is responsi-
ble for producing 80% of high tech exports of Latin America (Mexican Ministry of Economy 2016). Similarly, in India,
the government has presented in 2014 an initiative with the purpose of positioning the country as one of the main hubs
of global manufacturing and design (Forbes India 2016). However, despite these initiatives, there is still much to under-
stand and deepen about the benefits and challenges posed by the adoption of Industry 4.0 technologies in these con-
texts.

2.2 Lean production

In the past few decades, scientific journals have published a number of articles that focus on describing and characteris-
ing the content of LP; yet, there is not a precise and agreed upon way of defining or measuring LP. Although, research-
ers usually agree upon several overlapping practices (Marodin and Saurin 2013), and their positive association with
operational performance, in both developed (Shah and Ward 2003; Demeter and Matyusz 2011; Netland, Schloetzer,

Table 1. Digital technologies surveyed within Brazilian industrial context.

Focus Technology

Process i1 – Digital automation without sensors

Development/ reduction in time
to market
Product/ new business models
i2 – Digital automation with process control sensors
i3 – Remote monitoring and control of production through systems such as MES* and SCADA**
i4 – Digital automation with sensors for product and operating conditions identification, flexible
lines
i5 – Integrated engineering systems for product development and product manufacturing
i6 – Additive manufacturing, rapid prototyping or 3D printing
i7 – Simulations/analysis of virtual models (finite elements, computational fluid dynamics, etc.) for
design and commissioning
i8 – Collection, processing and analysis of large quantities of data (big data)
i9 – Use of cloud services associated with the product
i10 – Incorporation of digital services into products (Internet of Things or Product Service
Systems)

*MES – Manufacturing execution systems.

**SCADA – Supervisory control and data acquisition.
Source: Adapted from National Confederation of Industry (2016).
 4 G.L. Tortorella and D. Fettermann

and Ferdows 2015) and emerging economies countries (Taj and Morosan 2011; Panizzolo et al. 2012; Jasti and Kodali
2016). In general, LP can be implemented in a part or at the entire company, as well as at the whole supply chain,
including product development, procurement, distribution and service (Hines, Holweg, and Rich 2004). Nevertheless, it
is more common to start by applying LP practices at the shop floor (Shah and Ward 2007), as they serve as a way to
gradually introduce LP principles at a corporative level (Mann 2005).
In this sense, companies generally start their LP implementation using one or two practices, and implement them
throughout the company, realising later that such practices do not lead to systemic improvements in the value stream
(Bhasin and Burcher 2006). Further, the selection of appropriate LP practices and identification of their applicability in
an operational environment feature an additional challenge for management (Herron and Braiden 2006). This problem
can be potentially enhanced by the large number of LP practices cited in the literature (Pavnaskar, Gershenson, and Jam-
bekar 2003). Despite that, the approach of measuring the maturity of LP implementation based on the assessment of the
adoption level of pre-defined practices has been extensively used in previous studies (Netland and Ferdows 2014;
Marodin et al. 2015). In fact, Shah and Ward (2007) proposed ten LP bundles composed by 41 practices (see Table 2),
empirically validating such framework.

2.3 Lean production and Industry 4.0

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The recent integration between LP practices and Industry 4.0 technologies has been denoted as Lean Automation (LA),
which aims for higher changeability and shorter information flows to meet future market demands (Kolberg and Zühlke
2015). The first initiatives for incorporating automation technology into LP date from the beginning of 1990s (e.g.
Franke 1993; Groebel 1993; Schling 1994). Due to the potential benefits of implementation of Industry 4.0 technologies,
a few authors (e.g. Takeda 2006; Gjeldum, Mladineo, and Veza 2016; Sanders, Elangeswaran, and Wulfsberg 2016)
have been arguing the existence of new available fields of application for LA. However, current approaches are usually
proprietary solutions which have to be tailored to individual needs.
Overall, Kolberg, Knobloch, and Züehlke (2016) affirm that LP can be considered as a complement to the techno-
logical point of view emphasised in Industry 4.0. Both LP and Industry 4.0 favour decentralised and simple structures
over large and complex systems; while aim for small and easily integrated modules with lower levels of complexity
(Zuehlke 2010). However, contradictory evidences found in literature (e.g. Erol, Schumacher, and Sihn 2016; Sanders,
Elangeswaran, and Wulfsberg 2016; Schumacher, Erol, and Sihn 2016) indicate that the comprehension of such associa-
tion and its impact on operational performance still needs to be deepened and better explored. Hence, although research
initiatives and practical experimentations already exist, they are mostly the application of a single or isolated aspect. In
this study, we examine the relationship between the simultaneous implementation of LP and Industry 4.0 readiness, and
their influence on the companies’ operational performance.

3. Method
There are three stages to the research method proposed here: (i) questionnaire development and data collection, (ii) clus-
tering of data, and (iii) data analysis. These stages are detailed in the sections to follow.

3.1 Questionnaire development and data collection

A recent study from Kull et al. (2014) suggests that national culture could influence the implementation of lean prac-
tices. Since our study is focused on Brazilian manufacturing companies’ context, we limited our sample to these compa-
nies. Moreover, the respondents should have experience in lean and be aware of Industry 4.0 technologies. Due to these
criteria, our sample included companies from different industrial sectors because of the limited number of companies in
Brazil adopting both LP practices and minimally initiated at Industry 4.0. Additionally, although implementing LP is
usually associated primarily with high volume and discrete parts manufacturers, pervasiveness of practices across the
industrial spectrum is unknown (Tortorella et al. 2015), which justifies our cross-industry sample. Such criteria that con-
duces to a non-random choice of companies for surveys is a commonly used strategy in other studies on LP (e.g. Shah
and Ward 2003, 2007; Tortorella, Marodin, et al. 2016).
The questionnaire was sent by email to 465 companies that fulfilled the selection criteria. A first email message con-
taining the questionnaire was sent in January 2017, and two follow-ups were sent in the following weeks. The final
resulting sample comprises 110 valid responses representing a response rate of 23.65%. Although this response rate is
higher than the 15% average rate in management surveys (Hair et al. 2006), we tested the possible non-response bias
using Armstrong and Overton’s (1977) procedure. Thus, we evaluated the differences in means between the early
 International Journal of Production Research 5

Table 2. LP constructs and practices.

Underlying
constructs Operational constructs Lean production practices

Supplier related Supplier feedback lp1 – We frequently are in close contact with our suppliers
lp2 – We give our suppliers feedback on quality and delivery performance
lp3 – We strive to establish long-term relationship with our suppliers
JIT delivery lp4 – Suppliers are directly involved in the new product development process
lp5 – Our key suppliers deliver to plant on JIT basis
lp6 – We have a formal supplier certification programme
Developing suppliers lp7 – Our suppliers are contractually committed to annual cost reductions
lp8 – Our key suppliers are located in close proximity to our plants
lp9 – We have corporate level communication on important issues with key suppliers
lp10 – We take active steps to reduce the number of suppliers in each category
lp11 – Our key suppliers manage our inventory
lp12 – We evaluate suppliers on the basis of total cost and not per unit price
Customer related Involved customers lp13 – We frequently are in close contact with our customers
lp14 – Our customers give us feedback on quality and delivery performance
lp15 – Our customers are actively involved in current and future product offerings
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lp16 – Our customers are directly involved in current and future product offerings
lp17 – Our customers frequently share current and future demand information with
marketing department
Internally related Pull lp18 – Production is pulled by the shipment of finished goods
lp19 – Production at stations is pulled by the current demand of the next station
lp20 – We use a pull production system
lp21 – We use kanban, squares, or containers of signals for production control
Flow lp22 – Products are classified into groups with similar processing requirements
lp23 – Products are classified into groups with similar routing requirements
lp24 – Equipment is grouped to produce a continuous flow of families of products
lp25 – Families of products determine our factory layout
Low set-up lp26 – Our employees practice setups to reduce the time required
lp27 – We are working to lower setup times in our plant
lp28 – We have low set up times of equipment in our plant
c8 – Controlled lp29 – Large number of equipment/processes on shop floor are currently under SPC
processes lp30 – Extensive use of statistical techniques to reduce process variance
lp31 – Charts showing defect rates are used as tools on the shop floor
lp32 – We use fishbone type diagrams to identify causes of quality problems
lp33 – We conduct process capability studies before product launch
c9 – Involved lp34 – Shop floor employees are key to problem solving teams
employees lp35 – Shop floor employees drive suggestion programmes
lp36 – Shop floor employees lead product/process improvement efforts
lp37 – Shop floor employees undergo cross functional training
c10 – Productive lp38 – We dedicate a portion of everyday to planned equipment maintenance related
maintenance activities
lp39 – We maintain all our equipment regularly
lp40 – We maintain excellent records of all equipment maintenance related activities
lp41 – We post equipment maintenance records on shop floor for active sharing with
employees

Source: Adapted from Shah and Ward (2007).

(respondents to the first email sent; n1 = 46) and the late (respondents to the two follow-ups; n2 = 64) respondents using
the Levene’s test for equality of variances and a T-test for the equality of means. These results showed significance
levels higher than 0.05, which suggests that the groups did not have different means and variances and, consequently,
there is no statistical evidence that our sample is significantly different from the rest of the population.
The sample presents a balanced amount of companies for each contextual variable (see Table 3). Most respondents
were from large companies (67.3%); the majority of companies belonged to metal-mechanics sector (61.8%); and most
companies (70.9%) started their LP implementation more than 2 years ago.
The questionnaire was structured in four parts. The first part aimed to collect demographic information of the
respondents and their companies. The second part of the questionnaire assessed the level of LP practices adoption based
on Shah and Ward’s (2007) assessment model, which comprises 41 questions related to ten operational constructs. Each
 6 G.L. Tortorella and D. Fettermann

Table 3. Sample characteristics.

Size of the company

Small and medium (<500 employees) 36 32.7%
Large (>500 employees) 74 67.3%
Industrial sector
Metal-mechanics 68 61.8%
Textile 12 10.9%
Automotive 8 7.2%
Food 6 5.4%
Others 16 14.6%
LP implementation in the company
≤2 years 32 29.1%
>2 years 78 70.9%

practice is described in a statement that was evaluated according to a Likert scale that ranged from 1 (fully disagree) to
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5 (fully agree). Several researchers (e.g. Pettersen 2009; Hofer, Eroglu, and Hofer 2012) have indicated this instrument
as the basis for their studies, or even referred as a key research for growing from it (e.g. Sousa and Voss 2008; Yang,
Hong, and Modi 2011; Stone 2012). Therefore, the practices and operational constructs encompassed in this instrument
have been widely deemed and validated and, hence, we applied in our research.
The third part of the questionnaire aimed at measuring the degree of adoption of the Industry 4.0 technologies within
the studied companies. For that, 10 questions were formulated according to different technologies as suggested by
Brazilian National Confederation of Industry (2016), which are claimed as the most adopted ones by Brazilian manufac-
turing companies. Similarly, the degree of adoption was measured in a five-point Likert scale ranging from 1 (not used)
to 5 (fully adopted). Since Industry 4.0 was formally coined in 2011, it is quite a recent concept whose understanding
is still shallow among companies. However, a few authors (e.g. Rüßmann et al. 2015; Wan, Cai, and Zhou 2015) argue
that Industry 4.0 is based on enabling technologies, such as embedded systems, wireless sensor network, industrial
robots, 3D printing, cloud computing, and big data, which most of them have been developed previously to 2011. In
this sense, many manufacturing companies may have started adopting these technologies even before they were formally
included as part of the portfolio of Industry 4.0 technologies. Therefore, to avoid misinterpretations and blurred respon-
dents’ perceptions, we assessed the adoption level of these technologies, without explicitly mentioning that they are part
of Industry 4.0.
Finally, the fourth part assessed the observed operational performance improvement during the last three years,
according to five indicators: (i) productivity, (ii) delivery service level, (iii) inventory level, (iv) workplace safety (acci-
dents) and (v) quality (scrap and rework). A five-point scale ranging from 1 (worsened significantly) to 5 (improved sig-
nificantly) is used in the questionnaire.
Further, we tested all responses related to the 41 LP practices, 10 technologies of Industry 4.0 and the 5 performance
indicators for reliability, determining their Cronbach’s alpha values. An alpha threshold of 0.6 or higher was used (Mey-
ers, Gamst, and Guarino 2006). Responses displayed high reliability, with an overall alpha value of 0.993, 0.857 and
0.834, respectively. External validation of LP implementation questions was not carried out, since those questions are
widely used and validated in the literature to measure the level of lean implementation in companies (Shah and Ward
2007); they were deemed pertaining to a single dimension, Lean Implementation Level. Similarly, for the Industry 4.0
technologies the dimension denoted as Industry 4.0 Level was determined.

3.2 Clustering of data

In this step, we perform three clustering of observations using questions on (i) implementation level of LP practices, (ii)
adoption level of Industry 4.0 technologies and (iii) operational performance improvement as clustering variables. Clus-
tering tools are used to analyse relationships within a database in search of a summarised representation of data, group-
ing observations in a small number of clusters (Everitt 1980; Gordon 1999). According to Rencher (2002), observations
in a cluster should be similar to those assigned to the same cluster, and different from those assigned to other clusters.
In all clusterings performed on the same sample of observations, we first applied a hierarchical method to identify the
proper number (say k) of clusters – we used Ward’s method for that – and then the k-means clustering method, to rear-
range observations into k clusters. See Rencher (2002) for more details.
 International Journal of Production Research 7

When clustering using the implementation level of LP practices as clustering variables, two clusters were identified.
An ANOVA (Analysis of Variance) was performed to verify differences in means of clustering variables calculated
using data from each cluster. For all 41 clustering variables, we found significant differences in means (p-values < 0.05
in all cases). The 48 observations assigned to cluster 1 presented a high average adoption level of LP practices, and the
cluster was labelled HLP (high level of lean production implementation); the 62 observations assigned to cluster 2 pre-
sented a low average adoption level of LP practices, and the cluster was labelled LLP (low level of lean production
implementation).
The same observations were clustered using the adoption level of the 10 technologies of Industry 4.0 as clustering
variables. The same procedure was used and found two clusters. Among the 10 clustering variables, an ANOVA (Analy-
sis of Variance) identified significant differences in means (p-values < 0.01 in all technologies). The 78 observations
assigned to cluster 1 presented a low average adoption level of Industry 4.0 technologies, and the cluster was labelled
LTC (low level of Industry 4.0 technologies implementation); the 32 observations assigned to cluster 2 presented a high
average adoption level of Industry 4.0 technologies, and the cluster was labelled HTC (high level of Industry 4.0 tech-
nologies implementation).
Finally, a third cluster analysis was performed taking into account the operational performance improvement. Results
for the five performance indicators were similarly processed, indicating the existence of two clusters, whose significant
differences in means (p-values < 0.01) were verified through an ANOVA. The first cluster corresponds to 42 observa-
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tions whose average improvement level of operational performance was lower, being named as LPI (low level of perfor-
mance improvement); the second cluster is comprised of the 68 remaining observations that presented a high average
improvement level of operational performance, and labelled HPI (high level of performance improvement).

3.3 Data analysis

In step 3.2, three sets of clusters became available. In the first set, observations were grouped in clusters HLP and LLP
according to LP implementation level; in the second set, observations were grouped in clusters HTC and LTC according
to the adoption level of Industry 4.0 technologies; and the third one, with regards to the performance improvement level,
grouped into HPI and LPI. We now test for differences in the means of two contextual variables (company’s size and
time of LP implementation in the company) across clusters in each set.
We first check the data for normality using the Kolmogorov-Smirnof (KS) test, and find that the sample data do not
follow a normal distribution (p-value < 0.05). We then identify nonparametric techniques suitable to analyse the data at
hand. Since we are using the dimensions obtained from the clustering analysis, these variables were considered as cate-
gorical, allowing the application of the chi-square test with contingency tables and adjusted residuals. Similarly, for the
analysis of the contextual variables, which are categorical, we applied the same procedure, which is used to test the
hypothesis that frequencies in the contingency table are independent (Tabachnick and Fidell 2013). First, we tested
whether the frequency of observations from the cluster of LP implementation (LLP and HLP) was associated to the
adoption level of Industry 4.0 technologies (LTC and HTC) according to the level of operational performance improve-
ment (LPI and HPI). Second, we tested data from each contextual variable according to Industry 4.0 technologies and
to LP implementation levels. We considered significant associations with adjusted residual values larger than |1.96| and |
2.58|, corresponding a significance level of 0.05 and 0.01, respectively.

4. Results
Table 4 presents the contingency table and chi-square results for all combinations of levels (LLP and HLP) of LP prac-
tices implementation and Industry 4.0 technologies (LTC and HTC), according to the performance improvement level of
the companies. Frequencies indicate the number of companies assigned to each cluster combination; for example, there
are 16 companies appearing simultaneously in clusters LLP, LTC and LPI. Adjusted residual values indicate that, for
companies that have not observed higher levels of operational performance improvement in the last three years, none of
the associations between Industry 4.0 and LP are significant. Contrary to conventional expectation, despite the existence
of companies that claim to be widely implementing LP practices and/or Industry 4.0 technologies within this group,
none of them perceived a relevant operational performance improvement. An explanation for such outcome relies on the
arguments presented by Pay (2008), Liker and Rother (2011) and Longoni et al. (2013), which highlight that any
improvement approach, regardless of its methods, when misunderstand or misapplied in a company may have its bene-
fits reduced, causing even contrary effects to the expected ones. Consequently, before deciding to implement any pro-
ductivity improvement approach, management must first examine its business strategy and verify if such approach can
contribute directly to the company’s strategy.
 8 G.L. Tortorella and D. Fettermann

Table 4. Chi-square test among levels of Industry 4.0 technologies and LP implementation according to operational performance
improvement.

LLP HLP
Operational performance Industry 4.0 Adjusted Adjusted Total
improvement technologies Frequency residual Frequency residual frequency

LPI LTC 32 −1.01 4 1.01 36

HTC 4 1.01 2 −1.01 6
Total frequency 36 6 42
HPI LTC 24 2.88** 18 −2.88** 42
HTC 2 −2.88** 24 2.88** 26
Total frequency 26 42 68

*Significant at 5%.
**Significant at 1%.

Table 5. Chi-square test among levels of Industry 4.0 technologies and LP implementation according to companies’ size.
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LLP HLP
Companies’ size Industry 4.0 technologies Frequency Adjusted residual Frequency Adjusted residual Total frequency

Small and medium LTC 20 2.21* 6 −2.21* 26

HTC 2 −2.21* 8 2.21* 10
Total frequency 22 14 36
Large LTC 36 2.84** 16 −2.84** 52
HTC 4 −2.84** 18 2.84** 22
Total frequency 40 34 74

*Significant at 5%.
**Significant at 1%.

On the other hand, for HPI companies, results show a significant association (p-value < 0.01) between Industry 4.0
technologies and LP practices. In fact, our findings suggest that companies that are widely implementing LP practices
are more likely to adopt Industry 4.0 technologies, and their operational performance appears to be positively impacted
by such association. Surprisingly, companies that are poorly implementing both LP and Industry 4.0 also observed a
high level of performance improvement in the last few years. This result might be justified due to the socio-economic
context in which these companies are located. In emerging markets, such as Brazil, the economic instability tends to
have repercussions on exchange rate variations, which can significantly affect the operational performance of a company
depending on the business profile (quantity of exports vs. imports) (Aulakh, Kotabe, and Teegen 2000; Wong, Boon-Itt,
and Wong 2011). Thus, this finding suggests that, despite the efforts on improvement approaches such as LP and Indus-
try 4.0, companies within this context might take into account other socio-economic aspects for supporting their busi-
ness strategy. In this sense, decisions that properly consider these aspects may lead to significant performance
improvements, although their sustainability might be susceptible to economic variations.
Table 5 displays the results for chi-square tests among implementation levels of Industry 4.0 and LP according to
companies’ size. Previous researchers (e.g. Shah and Ward 2003; Kagermann et al. 2013) have argued that the imple-
mentation of both approaches may be positively influenced by the size of the company, since larger companies usually
present a higher capital expenditure capability. Our results raise a different discussion, since they demonstrate that the
association between Industry 4.0 and LP is significant regardless the companies’ size. Indeed, they indicate that both
small- and large-sized companies that are highly adopting Industry 4.0 technologies are more likely to be widely imple-
menting LP practices. This finding suggests that, although smaller companies may face different challenges than larger
ones, the concurrent adoption of Industry 4.0 and LP is feasible in both contexts and size should not be seen as an
impediment for that. Further, within the studied sample, it is worth noticing that the frequencies of small and large com-
panies that are poorly implementing LP and Industry 4.0 is higher than the other combinations. As suggested by Saurin
and Ferreira (2009) and Tortorella et al. (2015), LP implementation in Brazil is still rare and focused mainly on case
studies with a few selected companies. When considering the adoption of Industry 4.0 technologies in Brazilian context,
 International Journal of Production Research 9

Table 6. Chi-square test among levels of Industry 4.0 technologies and LP implementation according to companies’ time of LP
implementation (years).

LLP HLP
Time of LP Industry 4.0 Adjusted Adjusted Total
implementation technologies Frequency residual Frequency residual frequency

≤2 years LTC 20 1.33 4 −1.33 24

HTC 4 −1.33 4 1.33 8
Total frequency 24 8 32
>2 years LTC 36 3.36** 18 −3.36** 54
HTC 2 −3.36** 22 3.36** 24
Total frequency 38 40 78

*Significant at 5%.
**Significant at 1%.

this gap is even larger, according to Anderl (2014) and National Confederation of Industry Brazil (2016). Therefore, it
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is quite reasonable to expect such low frequency of companies adopting both approaches and our results corroborate to
this assumption.
Finally, regarding the contextual variable ‘time of LP implementation’ Table 6 shows results of the contingency table
with chi-square test values. For companies that have been implementing LP for less than 2 years (usually categorised as
beginners), results do not indicate a significant association between Industry 4.0 and LP. Generally, the experience on
LP implementation experience is associated with a higher level of awareness, which provides a better understanding of
its practices and underlying principles. Since LP is a forerunner approach and these companies are not quite experienced
on it, it is reasonable that no association was found between LP and the technologies from Industry 4.0, which is an
even newer approach. This fact is also observed in companies that claim to be widely implementing LP and Industry
4.0. However, as companies become more experienced on LP implementation (>2 years), results show a significant asso-
ciation with Industry 4.0. Analogously to the obtained results for companies’ size, experienced companies that claim to
be highly adopting Industry 4.0 technologies are the ones that also implement LP practices more extensively. In turn,
despite their experience, it appears that the frequency of companies that still struggle in implementing LP practices is
much higher when they also poorly adopt Industry 4.0 technologies. Therefore, our results converge to previous studies
(Hines, Holweg, and Rich 2004; Jasti and Kodali 2015) and bear that company’s experience on LP implementation is
an important variable to be considered when associating LP practices to other improvement approaches, such as Industry
4.0.

5. Conclusions
The current research was conducted assessing Brazilian manufacturing companies, but our findings may apply to a
wider population. Implications of this study are of considerable importance and relevance for both researchers and prac-
titioners.

5.1 Theoretical contribution

This research presents some important theoretical contributions to the state-of-the-art on LP and Industry 4.0. We pro-
pose a new approach to identify how the integration of Industry 4.0 technologies into current management practices,
such as the LP practices, corroborate to operational performance improvement. The specialised literature on LP that
approaches its relationship with the technologies from the fourth revolution is scarce, and shallowly suggests a positive
association without any empirical validation. Further, previous studies (Kolberg, Knobloch, and Züehlke 2016; Sanders,
Elangeswaran, and Wulfsberg 2016) which investigated how LP could benefit with the advent of Industry 4.0 perform a
post hoc analysis focusing on companies located in high developed economy countries companies, such as Germany
and USA, and disregard the inherent socio-economic challenges that companies from emerging economy countries may
face.
Our approach identifies how the association of LP and Industry 4.0 according to different contextual variables (com-
pany’s size and time of LP implementation) may contribute to improving operational performance in emerging econo-
mies. For that, we analyse our sample of respondents grouping them in clusters according to implementation level of
 10 G.L. Tortorella and D. Fettermann

LP practices and Industry 4.0 technologies, and according to improvement level of operational performance indicators
in the last few years. Analysis of companies’ contextual variables is carried out across clusters, in a nouvelle analytical
approach. Using our proposition, researchers may identify the context with the highest likelihood of contributing to the
implementation of LP practices and Industry 4.0 technologies.
We also provide a better understanding on how Industry 4.0 can support the implementation of LP, allowing compa-
nies undergoing lean implementation to better manage their change processes while they move towards the fourth revo-
lution. As companies continue to focus on implementing LP and efficient ways of doing business, there will be an
increasingly demand for incorporating novel technologies. In this sense, Industry 4.0 will revolutionise manufacturing
and tends to raise productivity to different levels, while creating new business models and novel services. Therefore, to
find the proper balance for change could be the key for successfully compete under this paradoxical scenario where
technology and human-based simplicity must concurrently exist. Further, we state that companies’ contextual variables
are associated with the adoption of Industry 4.0 and LP, indicating that the expected relationship between the implemen-
tation of both approaches may not be as pervasive as suggested in the existing literature.
Overall, our findings show that companies from emerging economies with higher levels of performance improve-
ment in the last few years that have been implementing LP extensively are more likely to concurrently adopt Industry
4.0 technologies. This outcome suggests a positive association between both approaches, even if the socio-economic
conditions are not as favourable as in developed countries. In this sense, this study provides theoretical evidence that,
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although LP is claimed as a socio-technical and low-tech continuous improvement approach, its benefits can be
enhanced if digital technologies are properly incorporated. In fact, due to market trends and customers’ profile changes,
manufacturing companies may need to gradually insert both their processes and products into the fourth revolution era
in order to remain competitive and to meet new value-adding requirements.

5.2 Practical implication

We presented empirical evidences on how Industry 4.0 technologies and implementation of LP practices are associated.
For instance, we have demonstrated that this association can be observed in companies regardless their size. Results
showed that the frequency of both small- and large-sized companies that claim to be barely implementing LP and Industry
4.0 is higher. On the other hand, most companies that are have a higher adoption level of Industry 4.0 technologies also
state a higher implementation level of LP. Such evidence indicates that size may not be a barrier for a concurrent imple-
mentation, and smaller companies may be encouraged to follow the same path. Previous studies focused on LP have sug-
gested that larger companies are more likely to extensively implement LP. However, when combined with the adoption of
Industry 4.0, this variable does not seem to show the same effect. According to National Confederation of Industry Brazil
(2016), many manufacturing companies that are leading the Industry 4.0 adoption are from technology sectors, such as
start-up companies. Since these companies are usually comprised by few employees and offer a high value-added product,
it becomes quite reasonable to evidence the absence of company’s size on the investigated relationship.
Further, the influence of companies’ background on LP implementation is significant only for companies that have
been implementing it for more than 2 years. In fact, results suggest that experienced companies that widely implement
LP practices might be more likely to adopt Industry 4.0 technologies. Overall, evidences presented here suggest that the
studied Industry 4.0 technologies are significantly associated with the implementation level of LP practices. Analysing
those results, companies undergoing lean implementation may be able to set and adopt these technologies in order to
achieve higher operational performance improvements.
With the advent of the Industry 4.0, the applicability of LP will acquire special importance. Its principles and prac-
tices are likely to become more relevant as new industrial revolution makes it possible to better understand the structure
of customers’ demand and speed up the process of data exchange and information throughout the value chain. It is also
worth noticing that Industry 4.0 may change the nature of LP, leading companies to superior levels of excellence. Thus,
the identification of a positive association between the implementation of both approaches provides managers and practi-
tioners arguments to enhance their business processes and lapidate their organisational culture according to LP principles
and practices, while introducing CPS technologies and ICT in a collaborative way. Particularly within emerging econo-
mies’ context, that is quite relevant since technological changes usually entail prohibitive capital expenditures and a
more skilled labour.

5.3 Limitations and future research

Our study presents some limitations that are associated to the nature of the sample used in the survey. First, respondents
were from companies located in Brazil; their answers may be influenced by local issues. That may be relevant; recent
 International Journal of Production Research 11

data suggest that both LP and Industry 4.0 have been more extensively studied and implemented in developed countries,
providing a more robust understanding on the topics (Kagermann et al. 2013; Kull et al. 2014; Bortolotti, Boscari, and
Danese 2015). Second, our sampling of respondents was not probabilistic, and our results are only generalizable to pop-
ulations with the same characteristics.
It was not possible to identify in the survey sample of respondents those companies that would qualify as authentic
‘Industry 4.0’. According to Lasi et al. (2014), authentic ‘Industry 4.0’ companies are the ones that extensively apply
CPS and ICT throughout the whole value stream, and both their operational performance and socio-economic relevance
are positively impacted and strengthened. The identification of such companies and their maturity classification were
beyond the scope of this study, being viewed as a promising future research topic. Further, the influence of the industry
sector may characterise an additional opportunity for future research. As indicated by National Confederation of Industry
Brazil (2016), different industry sectors may benefit differently from both approaches. Thus, studies that encompass a
study sample that provides significant data from different sectors would help to empirically investigate such effect.
Regarding the proposed objective, this investigation empirically verified the association between LP implementation
and Industry 4.0 to improving operational performance. Due to poor evidence in the literature on the likelihood of any
interdependent influence, further sampling of companies would be required to establish a more general perspective about
the problem. Such extension would require a more elaborate data collection and analysis.
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Disclosure statement
No potential conflict of interest was reported by the authors.

Funding
This work was supported by the Conselho Nacional de Desenvolvimento Científico e Tecnológico [Edital Universal 2016].

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