Lean versus agile production: flexibility trade-offs within the automotive supply chain

Abstract

Given the recent dynamics of the automotive industry in the UK, the ability for a firm to be flexible has often taken priority over other performance indicators. Using the notion of distinct business models and trade-offs as our theoretical lens, the purpose of this study was to: (1) Distinguish lean and agile firms based upon production methods; and (2) Compare lean and agile levels of external flexibility (EF) and supply chain flexibility (SCF). Data was obtained from 140 automotive firms in the Midlands (UK) via a survey which was sent by emails. Findings supported the theoretical notion of trade-offs, as firms implementing agile production methods were found to be more flexible in comparison with firms implementing lean production methods. More importantly, the agile firms that possessed high EF levels and SCF levels were predominantly positioned at the lower end of the automotive supply chain, whereas the lean firms were largely found to be operating at the top of the supply chain. First, we provide an innovative way in which lean and agile firms can be conceptualised. Second, as flexibility levels were assessed on actual numerical values, as opposed to using opinion based Likert Scale questions, a methodological contribution is made. Third, as flexibility is in its infancy stage of theoretical development we make an empirical contribution by developing a taxonomy that distinguishes each production concept. Finally, given the supply chain position to where lean and agile firms were found, we invoked a power perspective better understand this phenomenon.

Keywords:

• flexibility
• lean
• agile
• automotive
• trade-offs
• business models
• power

Notes

1. Please note that new product flexibility and sourcing flexibility were measured with time (days) being the unit of measurement, which do not imply negative association, but connotes a negative association with the unit of measurement in mind. In essence, a negative correlation corresponding to these two flexibility measures refers to a positive correlation with other flexibility levels.