Investing in lean to improve basic capabilities: A strategy for system supply?
Abstract: This paper describes
the perceived effects of implementing lean production in a Swedish SME contract
manufacturer. Especially focused are the effects on, and possible trade-offs
between, cost-efficiency and flexibility.
Design/methodology/approach: SME suppliers need basic capabilities of
qualitative production performance which may then be stepping-stones to develop
more system supplier capabilities for added customer value: leadership to
manage systems and processes, SCM, communications and relations management.
Development of stable production processes is seen as a way to reach stable
basic performance, efficient and with higher resource utilization. Quality is a
precursor to delivery performance as well as to cost reduction and flexibility.
This is a longitudinal single case study of a SME supplier striving to become a
system supplier. Two main sources of data collection are used: interviews and
the main author’s presence as employee and business developer, participating in
and following up the ongoing change process.
Findings: Two specific findings appeared: (1) An initial effect was an
important “eye-opener” for the balance between cost efficiency and flexibility
in the organization. (2) Process orientation, as the basis of both lean and
agile approaches, allows many improvements without any conflicts or trade-offs
between these two goals. Stability in the production leads to increased
controllability, initially resulting in both higher cost-efficiency and higher
flexibility. As the organization develops however, strategic considerations
relating to the chosen market strategy might occur: cost leadership or
differentiation.
Research limitations/implications: These results reflect the experiences
of one SME supplier and further studies are needed for generalizability.
Originality/value: The study increases the understanding of how a SME may
develop stable processes in its different supplier-customer contexts. The study
points at some necessary basic components of this process approach as a first step
for the transition to system supplier.
Keywords: SME, system supplier
capability, lean production, agility, stable processes
Author: Inga-Lill Carlsson,
Håkan Aronsson
Journal Code: jptindustrigg170010
