Supply Chain Strategy,Product Characteristics,and Performance Impact: Evidence from Chinese Manufacturers*

Supply chain management has become one of the most popular approaches to enhance the global competitiveness of business corporations today. Firms must have clear strategic thinking in order to effectively organize such complicated activities, resources, communications, and processes. An emerging body of literature offers a framework that identifies three kinds of supply chain strategies: lean strategy, agile strategy, and lean/agile strategy based on in‐depth case studies. Extant research also suggests that supply chain strategies must be matched with product characteristics in order for firms to achieve better performance. This article investigates supply chain strategies and empirically tests the supply chain strategy model that posits lean, agile, and lean/agile approaches using data collected from 604 manufacturing firms in China. Cluster analyses of the data indicate that Chinese firms are adopting a variation of lean, agile, and lean/agile supply chain strategies identified in the western literature. However, the data reveal that some firms have a traditional strategy that does not emphasize either lean or agile principles. These firms perform worse than firms that have a strategy focused on lean, agile, or lean/agile supply chain. The strategies are examined with respect to product characteristics and financial and operational performance. The article makes significant contributions to the supply chain management literature by examining the supply chain strategies used by Chinese firms. In addition, this work empirically tests the applicability of supply chain strategy models that have not been rigorously tested empirically or in the fast‐growing Chinese economy.     

竞争优先权与供应链战略匹配关系研究

研究了竞争优先权与供应链战略之间的匹配关系,把优先权战略区分为成本优先权、质量优先权、时间优先权和柔性优先权,把供应链战略区分为精益供应链战略和敏捷供应链战略。通过理论分析指出,不同的优先权战略与供应链战略之间存在一定的匹配关系,在此基础上提出了一个战略匹配模型以及一组理论假设,并通过中国制造业数据对提出的理论模型进行了检验。     

Response strategy to environment context factors using a lean and agile approach: Implications for firm performance

Based on the environment-strategy performance perspective and dynamic capabilities framework, we develop a theoretical model and hypotheses specifying how supply chain collaboration as a response to environment context factors – competitive intensity, supply uncertainty, technological turbulence and market turbulence, using a lean and agile strategy may influence firm performance. We test the model using partial least square structural equation modelling on data collected from a field survey with responses from 152 manufacturing firms representing a variety of industries. Empirical findings generally support the relationship between collaboration and firm performance using a lean and agile strategy. Also, for firms in industries that face environments characterised by high supply uncertainty and competitive intensity with, technological turbulence, the study finds evidence of a direct relationship between these environmental factors and supply chain collaboration. The findings provide an initial strategic response framework for appropriately aligning a lean and agile supply chain strategy through collaboration with environment context factors to achieve firm performance improvements.     

Employment Policy Implications of New Management Systems

ABSTRACT: Technical change, economic internationalisation and generally increased competition have caused management in many firms to adopt new employee management systems such as “lean production”, TQM, and have placed a premium on “high performance” cooperative industrial relations systems. This article seeks to provide a first analysis of their likely effects upon the structure of employment, and whether they exacerbate the unemployment problems of many categories of workers. It is argued that these systems place a premium on employment stability of those workers for whom functional flexibility and high levels of cooperation are needed. It asks whether a mix of job stability and limited functional flexibility among incubent workers in many Western European countries has contributed to low hiring rates, and how far cooperative relations within the firm can be cultivated in isolation from conditions in other firms.     

A practical approach to achieving Agility–a theory of constraints perspective

This article documents an action research (AR) project aimed at identifying the practical steps needed to become an agile manufacturer through a combination of the theory of constraints (TOC) and resource- based view (RBV) approaches in a small to medium enterprise (SME) in the Australian manufacturing sector. To date, lean production has been highlighted as a possible catalyst for creating an agile manufacturer, despite the evidence suggesting that lean manufacturing lacks the responsiveness and adaptability to effectively handle a rapidly changing market place and only works well in a stable environment. A more flexible system of production is required to fully encompass the agile characteristics needed to attain a competitive advantage. This research provides empirical evidence that the TOC perspective can be used as a practical approach for becoming an agile manufacturer. The study provides a workable approach for small firms to achieve ‘Agility’ in practice.     

Trade-offs among the elements of flexibility: a comparison from the automotive industry

Flexibility has long been recognized as a manufacturing capability that has the potential to impact the competitive position and the business performance of an organization ([1]: Cox Jr, T. Toward the measurement of manufacturing flexibility. Production and Inventory Management Journal 1989; First Quarter:68–72, [2]: De Meyer A, Nakane J, Miller JG, Ferdows K. Flexibility: the next competitive battle. Strategic Management Journal 1989;10:135–144). This recognition, however, has not led to a unanimous approach to flexibility. For example, Japanese manufacturers emphasize flexibility more than North American or European manufacturers ( [2]: De Meyer A, Nakane J, Miller JG, Ferdows K. Flexibility: the next competitive battle. Strategic Management Journal 1989;10:135–144). While this finding provides insight into the strategic choices made by these organizations in these countries, it does not provide an in-depth comparison of specific aspects of flexibility that are leveraged and emphasized differently. Such a comparison is necessary, however, if flexibility is to be more fully understood.This paper takes a step in that direction by first breaking down the concept of flexibility into its constituent elements and dimensions. Then we introduce the notion of looking at flexibility as a capability that must be planned for and built by a firm over a period of time along these constituent elements and dimensions. Questions are subsequently raised regarding whether trade-offs occur among different elements for a given flexibility dimension. We use industry wide as well as firm-specific qualitative data from the automotive industry to answer these questions, and show that several key aspects of manufacturing flexibility have been acquired and leveraged differently by American and Japanese producers. While linkages to business performance are not directly explored, our analysis reveals that even within the same industry, firms from different countries do indeed follow different strategies to developing their flexibility capability. Implications of these results for managerial practice, along with avenues for further research in this area, are also presented.     

Lean Production Practices: International Comparisons in the Auto Components Industry1

In recent years the application of lean production principles has been forcefully expounded as the route to high-performance manufacturing. This paper examines the relationship between lean production and performance empirically, using data from a benchmarking study of 71 plants in the international automotive components industry. The top performing plants (and their suppliers and customers) showed consistently better process control than did the lower performing plants. UK plants did not perform very well in terms of either quality or productivity, and links between economic context and manufacturing performance are discussed in relation to the UK.     

Understanding the emergence of redistributed manufacturing: an ambidexterity perspective

Abstract

This paper extends operations strategy theory on efficiency and flexibility trade-offs to the emergent phenomenon of redistributed manufacturing (RDM). The study adopts a multiple-case design including five small and five large pharmaceutical firms. We propose that organizations can gain the efficiency benefits of centralized manufacturing and the flexibility advantages of RDM by building an ambidexterity capability. To build such a capability, large firms can structurally partition their manufacturing and supply management functions, with one sub-unit managing centralized production and the other RDM. Smaller enterprises can build an ambidexterity capability by creating the right organizational context, where multi-skilled workers switch between efficient and flexible tasks. This paper contributes to theory by explaining the emergence of RDM using an organizational ambidexterity lens, laying the groundwork for new theory development in the field. We provide managers with a practical example of how to build an ambidexterity capability to realize flexibility and efficiency advantages.     

Electronic markets in support of procurement processes along the automotive supply chain

Since the introduction of the internet, firms have continued to seek ways to use these public networks to gain competitive advantage. The procurement function is beginning to take on greater strategic importance as these networks started providing firms wider opportunities such as choices of suppliers. This aims not only to reduce procurement costs, but also to build stronger relationships with suppliers to improve quality and flexibility in meeting customer demand. This type of linkage of firms with their suppliers when the product manufactured is complex and supply-chain is heavily tiered, such as the case of the automobile industry, creates challenges to any electronic market or exchange that is aiming to support such a system. Based on discussions with some key individuals in an automotive supply chain and an in-depth analysis of a supply-chain segment, this paper explores the role electronic markets may have to play, if they are to support the procurement processes of various agents along the supply chain.     

The moderating effects of corporate and national factors on lean projects barriers: a cross‐national study

Abstract

Despite companies’ efforts to develop lean thinking in their industrial context, the implementation of many lean projects has not been consistently successful, often resulting in delay, failure, abandonment or rejection. Whereas some authors emphasised that company characteristics, like the product demand profile, are significant factors in lean projects, other studies analysed the impact of national culture. This paper aims to study the combined effect of various factors related to national culture and company characteristics of lean implementation barriers in order to determine whether the environmental context in which the company operation can affect the outcome of lean project implementation. A survey has been conducted to collect information about companies of various sizes (small–medium–large) in all industry fields. Data from companies, including manufacturing firms, in 23 different countries, were analysed in depth by a combination of Association Rules and Network Analysis. The results show that some national culture dimensions, such as Performance Orientation and Gender Egalitarianism, influence lean management success and help to maintain a lean culture. Maintaining a lean culture is even more critical than developing it. Furthermore, if the implementation of lean practices is an arduous task for large organisations, it becomes even greater for SMEs. Other cultural factors of individuals such as Uncertainty Avoidance, Future Orientation and Institutional Collectivism also help to support a lean culture and overcome human and cultural barriers.     

Development and validation of a lean supply chain management measurement instrument

It is widely argued that to be competitive, a company not only needs to focus on internal aspects but on the entire supply chain. Lean supply chain management has become a means of enhancing competitiveness by improving efficiency and increasing flexibility at all stages of the supply chain. This research develops and validates a lean supply chain management measurement instrument. A two-phase approach is used for scale development and refinement. In the first phase, a literature review is conducted to identify definitions of lean supply chain management and agile supply chain management and their corresponding measurement items. In the second phase, the lean supply chain management measurement instrument is validated using survey data based on scales developed in the first phase by 59 scholars with experience in lean management and/or supply chain management. The results provide a structured and comprehensive measure of lean supply chain management indicating that there are two differentiated dimensions in the measurement instrument: one related to the operational aspects of lean supply chain strategy implementation and the second related to lean supply chain planning.     

Mass Customization in the Automotive Industry: Comparing Interdealer Trading and Reconfiguration Flexibilities in Order Fulfillment

Mass customization has been viewed as desirable but difficult to achieve in the volume automotive sector. Here we consider flexibility in automotive order fulfillment systems to enhance the ability to satisfy customers with their desired vehicle variants within acceptable delivery lead times. Two types of flexibility are compared in a Virtual‐Build‐to‐Order system—reconfiguration in the planning pipeline and interdealer trading. A representative simulation model is used to investigate the impact of the two types of flexibility across a wide spectrum of product variety levels. The impacts on major stakeholders in the system—the producer, dealers, and customers—are considered. The study shows that both types of flexibilities can bring significant benefits in terms of reductions in lead time and inventory holding. The level of product variety strongly influences the observed effects—an important finding in the mass customization context. Upstream reconfiguration flexibility brings greater benefits than downstream trading flexibility. Reconfiguration tends to dominate trading as a fulfillment mechanism when both are in operation. The findings have implications for the design and management of automotive order fulfillment systems in improving their ability to offer mass customization. The study has relevance for companies in other sectors with high levels of variety that seek to combine efficiency, speed, and flexibility in order fulfillment.     

The Impact of Contract Manufacturing on Inventory Performance: An Examination of U.S. Manufacturing Industries

In recent years, a growing number of original equipment manufacturers (OEMs) have transferred their manufacturing processes to specialized firms, known as contract manufacturers. In so doing, contract manufacturers can reduce an OEM's production costs and provide OEMs with flexibility in the production process. We examine another potential reason for the use of contract manufacturing—the potential for efficiency gains from inventory reductions. Employing econometric models and data representing manufacturing industries in the USA, we provide statistical evidence that contract manufacturing can lead to lower industry‐wide inventory levels, after controlling for other relevant factors. Key managerial implications are derived from the analysis.     

The Impact of Competitive Strategy and Supply Chain Strategy on Business Performance: The Role of Environmental Uncertainty*

This article investigates the relationships among competitive strategy, supply chain strategy, and business performance while examining the moderating effect of environmental uncertainty. A total of 604 questionnaires were collected from three cities in China, and the statistical results show significant moderating effects of external environment on the relationships among competitive strategy, supply chain strategy, and business performance. Firms that primarily focus on a differentiation strategy emphasize an agile supply chain strategy. Cost leaders are inclined to implement both lean and agile supply chain strategies, but their emphasis on agile strategy is significantly greater in a volatile environment than in a stable environment. The choice of supply chain strategy does not appear to be an “either‐or” decision and firms could adopt either a lean or an agile strategy, or both, depending on the environment. This article provides significant managerial implications for supply chain practitioners to co‐align supply chain strategy and competitive strategy with the environment to improve performance.     

Can you have your cake and eat it? Investigating trade-offs in the implementation of green initiatives

Abstract

Is it possible for manufacturing or service businesses that pursue green initiatives to ‘have it both ways’? In the words of some researchers in the corporate sustainability field, the answer is ‘no’. According to those authors, executives who attempt to implement a green agenda in their firms will encounter tensions/trade-offs at various levels and in different forms. Assessment of these trade-offs is a critical issue in the formulation and implementation of corporate sustainability strategies. Similarly, some authors in the operations management field affirm that, due to the limitations of all manufacturing and service systems, trade-offs in their operations are inevitable. In order to provide insights into these important issues, our paper investigates potential trade-offs in the implementation of a green initiative in a SME that manufactures cleaning products. The results show that there is a trade-off between the green initiative pursued by the SME and its overall production costs. Interestingly, once other problems were resolved, this trade-off did not stop the SME from implementing the green initiative. Important implications for practitioners and researchers are discussed, and opportunities for future investigations are outlined.     

Evolution of product quality in European,Japanese and US automotive firms: An exploratory longitudinal analysis

For years we have been hearing that US automobile manufacturers have been losing market share to their Japanese rivals who are reputed to make better quality vehicles. Most such reports are based on the initial quality surveys on new automobiles. In this paper we address two exploratory questions: (1) how does the quality of an automobile change with its age, and, (2) can firm level variables help explain differences quality. To answer these questions, we collected Consumer Reports’ reliability ratings on approximately 300 automobile models made by European, Japanese and US automotive firms during the 1998–2007; and approximately 240 models made by these firms over period of 2008–2015. For both periods we found that not only do automobiles made by Japanese firms have higher initial quality, but, as automobiles get older the difference in the product quality between Japanese versus European and US firms increases. We also found that the more generalist a European or US automobile firm, i.e., the wider is the firm׳s product offering in the marketplace, the lower its overall automobile quality during the 1998–2007 period. Conversely, Japanese generalist firms were found to have higher quality than specialist firms over the same period. The result is partly explained by the fact that Japanese firms have taken a different path to broadening their product variety – they have ensured a high level of quality of their initial offerings before entering newer market segments. The rate of reliability decline was found to be slower for all firms, and the differences in reliability across the 3 groups of firms were much less pronounced during the 2008–2015 period. This improvement may be as result of restructuring done by US automobile firms.     

Flexible manufacturing systems performance in U.S. automotive manufacturing plants: a case study

Flexible manufacturing systems (FMS) philosophy is a key weapon in achieving global manufacturing competitiveness. It encompasses a wide range of dimensions to improve all aspects of operational performance metrics. The aim of the study is to examine the current state of flexibility adoption in U.S. automotive manufacturing facilities and its impact on operational performance metrics. It utilizes survey questionnaire developed based on previous work in U.S. manufacturing industry. The survey was originally distributed to 420 facility managers in the U.S. domestic automotive industry. It was revealed that 70% of the respondents had implemented all 15 flexibility dimensions listed in the questionnaire. The data analysis conducted shows that implementation of certain flexibility dimensions will lead to significant improvement in specific operational performance metrics. This considerable finding can be used as a guide for manufacturing managers to achieve certain objectives in operational performance improvement in a rapidly changing environment.     

Critical success factors and green supply chain management proactivity: shedding light on the human aspects of this relationship based on cases from the Brazilian industry

Abstract

By applying the resources-based view (RBV) theory to green management, this study aims to analyse the relationship between critical success factors (CSFs) and the adoption of green supply chain management (GSCM) practices for some Brazil-based manufacturers of automotive batteries considered focal in their supply chains. It also analyses how human issues, known as green human resource management (GHRM) aspects, can help to increase the effectiveness of CSFs for GSCM strategies that are still not totally well-managed, justifying a RBV perspective. This research assumes that firms tend to be in different stages of GSCM development (more strategic or less strategic) and tests four research propositions to determine whether more proactive GSCM is related to higher levels of effectively managed CSFs. Three focal companies that operate in the Brazilian automotive battery industry were studied. Research results suggest that more proactive GSCM practices correlate to more effectively managed CSFs and to a greater support from GHRM. We argue that managers with a clear GHRM strategy will have more success in GSCM adoption, using more green training, green recruitment and selection, green performance evaluation and employee rewards.     

Optimizing lot size and setup time in a JIT environment: a multiple objective application

The just-in-time (JIT) system has been studied extensively and implemented by a number of US firms as an ell'ective production system. The core of JIT involves determination of lot size and setup time reduction so as to increase manufacturing flexibility while minimizing the inventory level. This decision problem usually involves multiple conflicting objectives and mixed-model production. In this paper, goal programming (GP) is applied to a real-world JIT problem involving fabrication of different automotive and industrial rubber composite belts. The model results provide new insights concerning the conflicting nature of several goals, especially between meeting demand and reducing setup or idle time. Also, the GP solution is superior to the current JIT practice of the company.     

How Sourcing of Interdependent Components Affects Quality in Automotive Supply Chains

In the automotive industry, many firms source key components from different suppliers, even though the components may function interdependently. In this study, we investigate how component level interdependence impacts quality performance and analyze how various operational factors moderate this relation. We synthesize information from several case studies to model the quality challenges faced by an automotive firm. For several sub‐assemblies that go into its products, the firm sourced key components from two different suppliers. The sub‐assemblies would fail whenever a component fails, but due to interdependent operations, failure of one component could cause the failure of the other. The firm found it challenging to improve the suppliers' quality performance as it was difficult to trace the failures to specific components. Our analysis reveals that – (i) the impact of interdependence is governed by the supply chain structure: reducing the interdependence between components improves quality when suppliers provide the components, but reducing interdependence worsens quality when the firm manufactures the entire sub‐assembly; and (ii) the relation between interdependence and quality performance is moderated by factors such as penalties, production costs, and interdependence costs. Additionally, we find that quality performance is lower when the firm outsources the components than when the firm manufactures the entire sub‐assembly. We identify coordinating mechanisms that leverage incentives and penalties to bridge the quality performance gap.