The primary objective of lean supply is to generate a system that is efficient and devoted to continuous improvement. Manufacturing firms that adopt lean supply strategies eliminate all possible causes of waste and enjoy well organized systems of production (Parker, 2007). Manufacturers have classified the lean production philosophy into four practices: just-in-time supplies, preventive maintenance of facilities, total quality management and human resource management (Dayna & Damien, 2005). These practices are vital in controlling production expenses and eliminating wastes arising from recalled products and spoilage. Just-in-time supply eliminates stockholding costs and reduces chances of waste due to storage.
Success of the lean manufacturing system depends on mutual investment in methods of improving performance between the supplier and manufacturer (Dayna & Damien, 2005). Lean manufacturers are exclusively competitive in terms of quality, delivery and cost since they make multiple demands of their suppliers and require them to be highly reliable in supplying raw materials. Suppliers directly impacts on the manufactures’ dimensions of cost, quality, technology, flexibility, and profits (Parker, 2007). A properly routinized supply chain encourages a mutual approach to problem solving, which leads to cost reduction, quality improvements, and transfer of critical knowledge. The competitive advantages that manufacturers confer to lean supply management include cost-efficiency, increased productivity, large market share and relatively higher profitability.
Lean manufacturing firms acquire and maintain the competitive advantages through lateral integration, effective communication and industrial partnering. Lateral integration is where firms pursue diversification strategy under uniform management in the economy (Parker, 2007). Firms that manufacture related, but not competitive products may integrate to enhance their production effectiveness. Manufacturing firms that laterally integrate usually belong to the same industry, but different stages in the production cycle (Dayna & Damien, 2005). Effective communication ensures free flow of information between the supplier and the manufacturer in order to guarantee and maintain undisrupted material supply. Industrial partnerships between manufactures and suppliers are vital in boosting just-in-time suppliers, proper coordination and closer corporate relationships (Golinska & Andres, 2012). These elements create a collaborative environment of production that reduces costs and boosts profitability in the long-run.
The supply relationship is not only intended for material supply, but also for achievement of broader objectives of the firm. Manufacturers should develop and maintain supply relationships through compliance and collaboration. Compliance and collaboration result from power and trust. These elements establish a governance structure and minimize opportunism to increase the chances of the firm achieving desired business outcomes from its suppliers. The customer-supplier relationship needs to be closer and cooperative to enhance all aspects of manufacturing performance (Dayna & Damien, 2005). Manufacturers ought to improve supplier performance through periodical assessment of the supplier’s operations, providing incentives to tee supplier for improvement and working directly with the supplier, creating fair competitions among the suppliers and educating the supplier on effective methods of production. These activities will improve supplier performance and secure broader objectives for the organization.
Dayna F. S. & Damien J. P. (2005). Use the supply relationship to develop lean and green suppliers. Supply Chain Management: An International Journal, 10 (1), 60 – 68.
Golinska, P., & Andres, R. C. (2012). Environmental issues in supply chain management: New trends and applications. Berlin: Springer.
Parker, K. (2007). Current trends in supply chain management. Manufacturing Business Technology, 25(9), 2-7.