Sustainability performance assessment of small and medium sized enterprises

Abstract

Lean and innovation both enhance competitiveness of small and medium sized enterprises (SMEs) in a sustainable way. Lean is efficiency-focused, whereas process innovation emphasises responsiveness. Although lean and process innovation have been separately researched, there is a gap in knowledge on the combinative effect of lean and process innovation on SME supply chain sustainability. SMEs have limited resources and face immense competition. Therefore, their supply chain sustainability can only be achieved through appropriate trade-offs between economic, environment and social aspects of business. The purpose of this chapter is to understand the combinative effect of innovation led lean practices on supply chain sustainability of SMEs through developing a framework based on data envelopment analysis (DEA). The proposed framework is applied for assessing and improving the supply chain sustainability of a group of SMEs in the Eastern part of India. Lean and innovation are considered as input criteria, and economic, operational, environmental and social aspects are considered as output criteria of the proposed framework for supply chain sustainability analysis of SMEs. The findings are useful for policymakers to segregate SMEs on the basis of efficiency. Individual SMEs can derive improvement measures through benchmarking with appropriate peers. The study also reveals that inefficient SMEs can use an innovation-led lean approach to achieve sustainability. This research contributes an innovative model to analyse SMEs’ supply chains to achieve sustainability through a combined process innovation and lean approach. According to the authors’ knowledge there is no prior work that combines lean and innovation to achieve SME sustainability. The effectiveness of the proposed framework has been demonstrated within SME supply chains in Indian industries.