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Investing in Lean to Improve Basic Capabilities: A strategy for System Supply?
Linköping University, Department of Management and Engineering, Logistics & Quality Management. Linköping University, Faculty of Science & Engineering.ORCID iD: 0000-0001-7339-9225
Linköping University, Department of Management and Engineering, Logistics & Quality Management. Linköping University, Faculty of Science & Engineering.ORCID iD: 0000-0002-4020-4943
2017 (English)In: Journal of Industrial Engineering and Management, ISSN 2013-8423, E-ISSN 2013-0953, Vol. 10, no 1, 28-48 p.Article in journal (Refereed) Published
Abstract [en]

Purpose: This paper describes the perceived effects of implementing lean production in aSwedish SME contract manufacturer. Especially focused are the effects on, and possible tradeoffsbetween, cost-efficiency and flexibility.Design/methodology/approach: SME suppliers need basic capabilities of qualitativeproduction performance as stepping-stones to develop more system supplier capabilities foradded customer value. Development of stable production processes is seen as a way to reachstable basic performance, efficient and with higher resource utilization. Quality is a precursor todelivery performance as well as to cost reduction and flexibility. This is a longitudinal single casestudy of a SME supplier striving to become a system supplier. Two main sources of datacollection are used: interviews and the main author’s presence as employee and businessdeveloper, participating in and following up the ongoing change process.Findings: Analyzing the development over time illustrated the importance of context andcontent for the change process. Two specific findings appeared: (1) An initial effect was animportant “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 improvementswithout 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. Asthe organization develops however, strategic considerations relating to the chosen market strategymight occur: cost leadership or differentiation.Research limitations/implications: These results reflect the experiences of one SME supplierand further studies are needed for generalizability.Originality/value: The study increases the understanding of how a SME may develop stableprocesses in its different supplier-customer contexts. The study points at some necessary basiccomponents of this process approach as a first step for the transition to system supplier.

Place, publisher, year, edition, pages
Omnia Publisher SL , 2017. Vol. 10, no 1, 28-48 p.
Keyword [en]
SME, system supplier capability, lean production, agility, stable processes
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:liu:diva-139587DOI: 10.3926/jiem.2163OAI: oai:DiVA.org:liu-139587DiVA: diva2:1130325
Available from: 2017-08-09 Created: 2017-08-09 Last updated: 2017-10-26
In thesis
1. Towards System Supply: Development of Small and Medium-Sized Contract Manufacturers
Open this publication in new window or tab >>Towards System Supply: Development of Small and Medium-Sized Contract Manufacturers
2017 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

One way for a small subcontractor to meet increasing global competition is to develop a system supplying ability, implying a transition in the supply chain toward a larger overall responsibility. As large corporations outsource parts of their manufacturing and services, many small and medium-sized enterprise (SME) suppliers are expected to deepen their capabilities and take on the role of system suppliers. The overall purpose of this thesis is to advance the understanding of how SME contract manufacturers can develop such capabilities, identifying demands and abilities in various steps of this process. The research approach is based on the resource-based view.

This longitudinal case study of an SME supplier striving to become a system supplier covers the period from 2006 to 2014. The researcher’s role as business developer and member of the management made it possible to follow the company's development continuously and closely, providing access to relevant internal data complemented with internal and external semi structured interviews and focus discussions. The longitudinal aspect is evident in the overall description of the development of the focal supplier. More specific issues are covered in the separate studies, described in the appended articles.

SME suppliers need basic capabilities of qualitative production performance as stepping-stones to develop more system supplier capabilities for added customer value. Development of stable production processes through lean implementation was by the focal supplier seen as a way to reach stable basic performance and to enable continuous development. The study further shows that knowledge integration with customers is an effective means to build system capability and indicates a stepwise and sequential process of developing specific supplier capabilities.

The longitudinal case study deepens the knowledge of development of SME system suppliers and specifically point out three prerequisites that need to be in place for the supplier transition: (1) a capability of the supplier to manage internal processes of standardisation and continuous improvements for stable performance without disruptions, (2) a capability to collaborate in development projects with a limited number of customers, and (3) customer commitment to a long-term relationship. A customer demanding improvements is constantly driving its suppliers to better performance and proven supplier capabilities in turn promotes long-term customer commitment. The most essential component in supplier development is a competent and strategically oriented management, capable of identifying the specific system supplier offerings appropriate for the particular company in order to create customer value.

This study contributes to better understanding of the conditions of medium-sized contract manufacturing SMEs, from a supplier perspective, and contributes to SCM research in illustrating how shifting responsibilities and subsequent activities in the supply chain may pave new competitive paths for SMEs. One issue here is the importance of knowledge integration for the development of supply chains. This has not often been discussed within SCM and thus provides a contribution to this theory.  

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2017. 86 p.
Series
Linköping Studies in Science and Technology. Dissertations, ISSN 0345-7524 ; 1874
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-142230 (URN)9789176854648 (ISBN)
Public defence
2017-11-24, A24, A-huset, Campus Valla, Linköping, 10:15 (English)
Opponent
Supervisors
Available from: 2017-10-26 Created: 2017-10-26 Last updated: 2017-10-26Bibliographically approved

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