Linking Supply Chain Management and Lean Capability to Firm Performance

Abstract

The rise of supply chain management and lean in industrial application has led to increased attention in research. While various theoretical frameworks have been proposed for supply chain management and lean separately, little has been done on the interaction of these two areas and their respective impact on firm performance. This paper extends the literature by examining supply chain management practice, lean capability, and firm performance, and also the particular role of supply chain management on lean capability. Through a structural equation model, we are able to show that lean capability has a substantial effect on firm performance and that a higher level of supply chain management practice leads to higher lean capability. This implies that firms should emphasise on the development of their lean capability and seek more engagement in supply chain management.