Complex and lean or lean and complex? The role of supply chain complexity in lean production

Abstract

Research on Lean indicates that its association with performance improvement, although compelling, is not uniformly positive. Prior researchers have posited that plants implementing Lean may become too lean or may only implement selected aspects without fully embracing Lean's synergistic prescriptions. We explore another potential reason for lower-than-expected performance sometimes associated with Lean: supply chain complexity. Using survey data from 209 manufacturing plants in seven countries across three industry groups, we test two alternative mechanisms by which supply chain complexity may influence performance improvements expected from Lean: moderation and mediation. We find that, while supply chain complexity has very little moderating impact on this relationship, it mediates the relationship between Lean and performance. While the majority of the significant mediating effects are negative, serving as a tax on Lean's effect on performance, our analysis reveals some positive mediating effects, highlighting the difference between dysfunctional and strategic supply chain complexity. Our results indicate that managers should reduce internal and upstream complexity to improve Lean's effect on performance. In particular, reducing the number of inputs a plant must manage has the widest and largest effect on realizing Lean's positive influence on performance. Further, we highlight the importance of reducing dysfunctional supply chain complexity, while developing strategies to accommodate strategic supply chain complexity.