Quality and flexibility performance trade-offs between lean and agile manufacturing firms in the automotive industry

Abstract Firms operating in the automotive industry have traditionally been ascribed with efficiency and high levels of quality, as lean production has been extensively applied within this context, but given the recent dynamics in the automotive sector, there is also a need for high levels of flexibility, widening our attention to agile production. However, when lean and agile production have been explored simultaneously, the quality and flexibility trade-offs have been mixed and unclear. In order to dispel the lean-agile ambiguity, and given that both high levels of flexibility and quality are required within the automotive industry, the purpose of this study was to: (a) Identify the relationship between flexibility and quality; and (b) Explore the quality and flexibility differences between lean and agile production. Primary quantitative data was obtained via a survey and a total of 140 automotive manufacturing firms within the UK returned the survey. Logistic regressions were utilised as the main mode of analysis. Not only was an inverse relationship found between quality and flexibility, but our findings depict two distinctive Business Models (BMs) existing in the automotive industry, one lean and one agile. We advance the lean-agile debate by asserting that lean and agile firms acquire quality (efficiency) and flexibility strengths respectively, and not vice-versa. Given this, we theoretically side with the notion of performance ‘trade-offs’ and contend the idea that capabilities are cumulatively gained. By incorporating an argument built on the strategy literature on BMs and Dynamic Capabilities, we assert that lean and agile firms have evolved to underpin different kinds of competitive advantage within the same industry, but these advantages are placed at different tiers in the automotive supply chain.

[1]  Rambabu Kodali,et al.  A critical review of lean supply chain management frameworks: proposed framework , 2015 .

[2]  Giuliano Almeida Marodin,et al.  Contextual factors and lean production implementation in the Brazilian automotive supply chain , 2016 .

[3]  D. Gerwin.  Manufacturing flexibility: a strategic perspective , 1993 .

[4]  J. Scott Armstrong,et al.  Estimating nonresponse bias in mail surveys. , 1977 .

[5]  Alan W. Mackelprang,et al.  Are internal manufacturing and external supply chain flexibilities complementary capabilities , 2012 .

[6]  Adel Azar,et al.  Business excellence via advanced manufacturing technology and lean-agile manufacturing , 2018 .

[7]  Rajiv Vaidyanathan,et al.  Dictionary of statistics and methodology : #a #nontechnical guide for the social sciences , 1994 .

[8]  K. Lai,et al.  Responsive supply chain : A competitive strategy in a networked economy , 2008 .

[9]  Manoj Kumar,et al.  A fuzzy programming approach for vendor selection problem in a supply chain , 2006 .

[10]  Farman A. Moayed,et al.  Comparison and evaluation of maintenance operations in lean versus non‐lean production systems , 2009 .

[11]  Mooweon Rhee,et al.  Exploration and Exploitation , 2016 .

[12]  Qing Cao,et al.  The impact of alignment between virtual enterprise and information technology on business performance in an agile manufacturing environment , 2005 .

[13]  Bhaba R. Sarker,et al.  Optimal batch quantity models for a lean production system with in-cycle rework and scrap , 2008 .

[14]  T. Bortolotti,et al.  Successful lean implementation: Organizational culture and soft lean practices , 2015 .

[15]  Arthur G. Money,et al.  How does information sharing affect first-tier suppliers’ flexibility? Evidence from the automotive industry in Sweden , 2018 .

[16]  R. Cantrell,et al.  The Effects of Transformational and Transactional Leadership on Quality Improvement , 2009 .

[17]  Kenneth K. Boyer,et al.  COMPETITIVE PRIORITIES: INVESTIGATING THE NEED FOR TRADE‐OFFS IN OPERATIONS STRATEGY , 2002 .

[18]  D. Bennett,et al.  Supplier relations impact within the UK automotive industry , 2018, Benchmarking: An International Journal.

[19]  Yahaya Yusuf,et al.  A comparative study of lean and agile manufacturing with a related survey of current practices in the UK , 2002 .

[20]  D. Bennett,et al.  Logistics supplier integration in the automotive industry , 2012 .

[21]  R. A. Inman,et al.  Agile manufacturing: Relation to JIT, operational performance and firm performance , 2011 .

[22]  J. Barney.  Gaining and Sustaining Competitive Advantage , 1996 .

[23]  Ullisses Shimizu,et al.  Lean Production, Market Share and Value Creation in the Agricultural Machinery Sector in Brazil , 2009 .

[24]  Constantin Blome,et al.  Ambidextrous Governance in Supply Chains: The Impact on Innovation and Cost Performance , 2013 .

[25]  Jian Cai,et al.  Improving supply chain performance management: A systematic approach to analyzing iterative KPI accomplishment , 2009, Decis. Support Syst..

[26]  Bimal Nepal,et al.  The impact of lean practices on operational performance – an empirical investigation of Indian process industries , 2018 .

[27]  D. Teece.  Business Models, Business Strategy and Innovation , 2010 .

[28]  A. Chiarini,et al.  What really matters for a successful implementation of Lean production? A multiple linear regression model based on European manufacturing companies , 2019, Production Planning & Control.

[29]  Giuliano Almeida Marodin,et al.  Relationships between lean product development enablers and problems , 2016 .

[30]  E. James Flynn,et al.  World class manufacturing: an investigation of Hayes and Wheelwright's foundation , 1999 .

[31]  Constantin Blome,et al.  Antecedents and enablers of supply chain agility and its effect on performance: a dynamic capabilities perspective , 2013 .

[32]  Soo Wook Kim,et al.  Disentangling leanness and agility: An empirical investigation , 2006 .

[33]  Evangelos Psomas,et al.  Quality management benefits through the “soft” and “hard” aspect of TQM in food companies , 2014 .

[34]  Pankaj C. Patel,et al.  Enhancing effects of manufacturing flexibility through operational absorptive capacity and operational ambidexterity , 2012 .

[35]  Maurizio Bevilacqua,et al.  Implementing lean information management: the case study of an automotive company , 2015 .

[36]  G. Tortorella,et al.  Lean supply chain management: Empirical research on practices, contexts and performance , 2017 .

[37]  G. Reiner,et al.  Evaluating the impact of modular product design on flexibility performance and cost performance with delivery performance as a moderator , 2018, International Journal of Operations & Production Management.

[38]  Paul Forrester,et al.  A model for evaluating the degree of leanness of manufacturing firms , 2002 .

[39]  Ross L Chapman,et al.  A practical approach to achieving Agility–a theory of constraints perspective , 2009 .

[40]  Benita M. Beamon,et al.  Measuring supply chain performance , 1999 .

[41]  Matteo Mura,et al.  Modelling the impact of performance management practices on firm performance: interaction with human resource management practices , 2017 .

[42]  Monideepa Tarafdar,et al.  Agile supply chain strategy and supply chain performance: complementary roles of supply chain practices and information systems capability for agility , 2017, Int. J. Prod. Res..

[43]  Hossein Sharifi,et al.  Agile manufacturing in practice ‐ Application of a methodology , 2001 .

[44]  Mohamed Mohamed Naim,et al.  The development of a lean, agile and leagile supply network taxonomy based on differing types of flexibility , 2014 .

[45]  Christopher A. Voss,et al.  Contingency research in operations management practices , 2008 .

[46]  Jose Arturo Garza-Reyes,et al.  Green and lean: a Gemba–Kaizen model for sustainability enhancement , 2019, Production Planning & Control.

[47]  Andrew C. Lyons,et al.  Developing an understanding of lean thinking in process industries , 2013 .

[48]  Derrick E. D'Souza,et al.  Toward a taxonomy of manufacturing flexibility dimensions , 2000 .

[49]  Steve Brown,et al.  The contribution of manufacturing strategy involvement and alignment to world-class manufacturing performance , 2007 .

[50]  José Moyano-Fuentes,et al.  Key determinants of lean production adoption: evidence from the aerospace sector , 2014 .

[51]  S. G. Deshmukh,et al.  Key Issues for the Implementation of Lean Manufacturing System , 2009 .

[52]  Angappa Gunasekaran,et al.  Lean manufacturing in Brazilian small and medium enterprises: implementation and effect on performance , 2016 .

[53]  Keng Lin Soh,et al.  What is the leanness level of your organisation in lean transformation implementation? An integrated lean index using ANP approach , 2014 .

[54]  R. Wallace.  Is this a practical approach? , 2001, Journal of the American College of Surgeons.

[55]  S. Vinodh,et al.  Computer‐aided design and engineering as enablers of agile manufacturing: A case study in an Indian manufacturing organization , 2011 .

[56]  J. March.  Exploration and exploitation in organizational learning , 1991, STUDI ORGANIZZATIVI.

[57]  J. Jayaram,et al.  Relationship building, lean strategy and firm performance: an exploratory study in the automotive supplier industry , 2008 .

[58]  Frank Wiengarten,et al.  Internal lean practices and operational performance: The contingency perspective of industry clockspeed , 2013 .

[59]  Joseph Sarkis,et al.  Investing in lean manufacturing practices: an environmental and operational perspective , 2018, Int. J. Prod. Res..

[60]  A. Shahin,et al.  An integrated approach for prioritizing lean and agile production factors based on costs of quality with a case study in the home appliance industry , 2018 .

[61]  A. Qamar,et al.  Lean versus agile production: flexibility trade-offs within the automotive supply chain , 2018, Int. J. Prod. Res..

[62]  D. Gligor.  Performance implications of the fit between suppliers' flexibility and their customers' expected flexibility: A dyadic examination⋆ , 2018 .

[63]  Qingyu Zhang,et al.  Manufacturing flexibility: Defining and analyzing relationships among competence, capability, and customer satisfaction , 2003 .

[64]  R. Klassen,et al.  Environmental management and manufacturing performance: The role of collaboration in the supply chain , 2008 .

[65]  J. Jayaram,et al.  Examining the interrelationships between supply chain integration scope and supply chain management efforts , 2010 .

[66]  Jan Olhager,et al.  Lean and agile manufacturing: external and internal drivers and performance outcomes , 2009 .

[67]  Neal Schmitt,et al.  Configurations of Organizational Effectiveness and Efficiency , 1993 .

[68]  José Moyano-Fuentes,et al.  International Journal of Operations & Production Management Emerald Article: Cooperation in the supply chain and lean production adoption: Evidence from the Spanish automotive industry , 2012 .

[69]  M. C. Holcomb,et al.  Performance outcomes of supply chain agility: When should you be agile? , 2015 .

[70]  A. Sánchez,et al.  Lean indicators and manufacturing strategies , 2001 .

[71]  José Moyano-Fuentes,et al.  Cooperation in the supply chain and lean production adoption , 2012 .

[72]  Virgilio Cruz-Machado,et al.  Agile and resilient approaches to supply chain management: influence on performance and competitiveness , 2012, Logist. Res..

[73]  G. Tortorella,et al.  Implementation of Industry 4.0 and lean production in Brazilian manufacturing companies , 2018, Int. J. Prod. Res..

[74]  G. D. Silveira,et al.  Exploring the trade‐off concept , 2001 .

[75]  H. Walker,et al.  Theoretical perspectives in operations management: an analysis of the literature , 2015 .

[76]  Constantin Blome,et al.  Determining how internal and external process connectivity affect supply chain agility: a life-cycle theory perspective , 2019, Production Planning & Control.

[77]  Juan Manuel Maqueira-Marín,et al.  Development and validation of a lean supply chain management measurement instrument , 2018, Production Planning & Control.

[78]  D. Gursoy,et al.  Employee satisfaction, customer satisfaction, and financial performance: An empirical examination , 2009 .

[79]  Zoe J. Radnor,et al.  Theoretical perspectives in purchasing and supply chain management: an analysis of the literature , 2010 .

[80]  Rosemary R. Fullerton,et al.  Lean manufacturing and firm performance: The incremental contribution of lean management accounting practices , 2014 .

[81]  S. Vinodh,et al.  Implementing lean sigma in an Indian rotary switches manufacturing organisation , 2014 .

[82]  Ben Clegg,et al.  Quality management and performance: a comparison between the UK and Turkey , 2013 .

[83]  R. Darlington,et al.  Factor Analysis , 2008 .

[84]  Ben Clegg,et al.  Managing enterprises and ERP systems:a contingency model for the enterprization of operations , 2013 .

[85]  Fatma Pakdil,et al.  Criteria for a lean organisation: development of a lean assessment tool , 2014 .

[86]  Ge Wang,et al.  Product-driven supply chain selection using integrated multi-criteria decision-making methodology , 2004 .

[87]  Leandro Loss,et al.  Agile Business Models: an approach to support collaborative networks , 2011 .

[88]  Ikou Kaku,et al.  Lessons from seru production on manufacturing competitively in a high cost environment , 2017 .

[89]  N. Foss,et al.  Fifteen Years of Research on Business Model Innovation , 2017 .

[90]  Suresh P. Sethi,et al.  Flexibility in manufacturing: A survey , 1990 .

[91]  Kai Foerstl,et al.  Tackling the sustainability iceberg: A transaction cost economics approach to lower tier sustainability management , 2018 .

[92]  J. Ebben,et al.  Efficiency, flexibility, or both? Evidence linking strategy to performance in small firms , 2005 .

[93]  Patrick Addai,et al.  Measuring Supply Chain Performance , 2017 .

[94]  Danny Berry,et al.  Leagility: Integrating the lean and agile manufacturing paradigms in the total supply chain , 1999 .

[95]  Ben Clegg,et al.  A study into the effectiveness of quality management training: A focus on tools and critical success factors , 2010 .

[96]  Léony Luis Lopes Negrão,et al.  Lean practices and their effect on performance: a literature review , 2016 .

[97]  B. G. Dale,et al.  Lean production: A study of application in a traditional manufacturing environment , 2000 .

[98]  Peter T. Ward,et al.  Lean manufacturing: context, practice bundles, and performance , 2003 .

[99]  A. Gunasekaran,et al.  Supply chain agility, adaptability and alignment: empirical evidence from the Indian auto components industry , 2018 .

[100]  Ching-Hsin Wang,et al.  Lean Six Sigma applied to process performance and improvement model for the development of electric scooter water-cooling green motor assembly , 2019, Production Planning & Control.

[101]  Jose Arturo Garza-Reyes,et al.  Measuring lean readiness through the understanding of quality practices in the Turkish automotive suppliers industry , 2015 .

[102]  L. Miller,et al.  Handling Nonresponse Issues. , 1983 .

[103]  A. Pavlov,et al.  Performance management practices in lean manufacturing organizations: a systematic review of research evidence , 2018 .

[104]  Z. Irani,et al.  Working towards agile manufacturing in the UK industry , 1999 .

[105]  Amir M. Hormozi,et al.  Agile manufacturing: the next logical step , 2001 .

[106]  Kuldip Singh Sangwan,et al.  Lean manufacturing: literature review and research issues , 2014 .

[107]  Gunjan Soni,et al.  Evaluating reliability and validity of lean, agile and leagile supply chain constructs in Indian manufacturing industry , 2012 .

[108]  David A. Wuttke,et al.  The Dark Side of Buyer Power: Supplier Exploitation and the Role of Ethical Climates , 2017 .

[109]  Sanjay Bhasin,et al.  Performance of Lean in large organisations , 2012 .

[110]  M. Hall,et al.  Can Lean and Agile organisations within the UK automotive supply chain be distinguished based upon contextual factors , 2018 .

[111]  Angappa Gunasekaran,et al.  A relational study of supply chain agility, competitiveness and business performance in the oil and gas industry , 2014 .

[112]  Simona Daniela Grigore.  Supply chain flexibility , 2007 .

[113]  R. Schmenner,et al.  On theory in operations management , 1998 .

[114]  A. Roth,et al.  The effect of an ambidextrous supply chain strategy on combinative competitive capabilities and business performance , 2010 .

[115]  Rachna Shah,et al.  Defining and developing measures of lean production , 2007 .

[116]  U. W. Thonemann,et al.  Supply Chain Flexibility, Uncertainty and Firm Performance: An Empirical Analysis of German Manufacturing Firms , 2010 .

[117]  Constantin Blome,et al.  The performance impact of supply chain agility and supply chain adaptability: the moderating effect of product complexity , 2015 .

[118]  M. L. Mittal,et al.  The propagation of lean thinking in SMEs , 2019, Production Planning & Control.

[119]  David Bamford,et al.  Partial and Iterative Lean Implementation: Two Case Studies , 2015 .

[120]  Wen Luo,et al.  Lean and Six Sigma in logistics: a pilot survey study in Singapore , 2016 .

[121]  Carmen Weigelt,et al.  Performance implications of outsourcing for technological innovations: managing the efficiency and adaptability trade‐off , 2012 .

[122]  Angappa Gunasekaran,et al.  Agile manufacturing: A framework for research and development , 1999 .