Relationship building, lean strategy and firm performance: an exploratory study in the automotive supplier industry

Abstract

In contrast to previous literature, we propose that commitment to lean strategy should be preceded by building close relationships with key supply chain partners (suppliers and customers). Two aspects of lean strategy, lean manufacturing and lean design are studied in this paper. We hypothesize that relationship building positively affects both aspects of lean strategy, which in turn positively influences firm performance. To test these relationships, we use data from the top 150 auto suppliers to the ‘Big Three’ original equipment manufacturers (OEMs). The results show positive relationships between (1) relationship building and lean design, (2) relationship building and lean manufacturing, and (3) lean design and firm performance. This suggests that relationship building is more valuable for enhancing the ‘product’ aspects of lean strategy as opposed to the ‘process’ aspects of lean strategy. Process aspects of lean strategy appear to be largely a function of internal efforts.