Lean Supply Chain Practices and Performance in the Context of Malaysia

Abstract

Supply chain nowadays becoming a vital entity to the organizations performance measurement and metrics, has received much attention from researchers and practitioners. To support this, Gunasekaran, Patel (2001) and McGaughy (2004) have discussed that the role of these measures and metrics in the success of an organization cannot be overstated because they affect strategic, tactical and operational planning and control. Some more, the revolution of SCM in the last decade has testified that an increasing number of companies seek to enhance performance beyond their own boundaries (Boyson et al., 1999; Proirier, 1999). Supply chain has been viewed on every perspective. According to Agarwal & Shankar (2002), a supply chain is an inter-linked set of relationships connecting customer to supplier, perhaps through a number of intermediate stages such as manufacturing, warehousing and distribution processes. Accordingly, Harland (1996) have clearly stated that supply chain also often refers either to a process-oriented management approach to sourcing, producing, and delivering goods and services to end customers or, in a broader meaning, to the co-ordination of the various actors belonging to the same supply chain. Intense competition compels companies to create close relationships with their upstream and downstream partner (Togar & Ramaswami, 2004). In the competitive environment, most leading edge companies realized that by transferring costs either upstream or downstream, they are actually not increasing their competitiveness, since all costs ultimately make their way to consumers (Cigolini, Cozzi & Perona, 2004). Hence, Cigolini, Cozzi and Perona (2004), have mentioned that supply chain management guides firms to co-operate with a common goal to increase the overall channel sales and profitability, rather than competing for a bigger share of a fixed profit. One strategy for coordinating within and between firms with a focus on achieving efficiency, eliminating waste or overburden and creating value in products is the concept of lean management (Womack & Jones, 1996). Consequently, Vonderembse, Uppal, Huang, and Dismukes (2006), highlighted on the strategies and methodologies for designing supply chains that meet specific customer expectations. According to them, three different types of supply chains can be defined: 1. A lean supply chain, which employs continuous improvement efforts which focuses on eliminating waste or non-value steps along the chain.