Investing in Lean to Improve Basic Capabilities: A strategy for System Supply?

Purpose: This paper describes the perceived effects of implementing lean production in a Swedish SME contract manufacturer. Especially focused are the effects on, and possible tradeoffs between, cost-efficiency and flexibility. Design/methodology/approach: 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 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: Analyzing the development over time illustrated the importance of context and content for the change process. 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