T.wu@open - Ac.uk: Page 1 of 22
Topics covered
T.wu@open - Ac.uk: Page 1 of 22
Topics covered
Authors’ information:
PhD Student
Walton Hall
Milton Keynes
MK7 6AA
Page 1 of 22
Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
Summary:
In the past two decades, Japanese vehicle manufacturers (VMs) have transplanted
their lean production systems and vehicle development processes to the US and
Due to the fierce competition and ever rising customer demand, companies need to
have more responsive supply chains in order to have a substantial advantage over
leading Japanese car manufacturer based in the UK. Important questions include what
strategies are adopted for achieving quick response to market demand meanwhile
maintaining a lean supply chain, how these different strategies are applied and
together form a responsive lean supply chain, and the issues and difficulties in
implementation.
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
1. Introduction
Supply chain management in the automotive industry has been intensively and
automotive industry began with lean manufacturing. The lean concept can be traced
back to the Toyota Production System (TPS) with its focus on the reduction of waste
within the manufacturing environment (Ohno, 1988). The focus of lean supply chains
established (Naylor et al., 1999). Lean manufacturing implies a ‘zero inventory’, just-
in-time (JIT) approach, that has brought mass production to high levels of efficiency
(Womack et al., 1990). The idea of ‘lean manufacturing’ (Womack et al., 1990) and
the concept of ‘lean thinking’ (Womack and Jones, 1996) have attracted much
research interest in the last decade, and indeed influenced and positively impacted
many market sectors ranging from automotive to construction (Aitken et al., 2002),
especially in those industries where low cost is the crucial factor for market winners
(Mason-Jones et al., 2000b, Aitken et al., 2002, Christopher and Towill, 2001). It is
the consensus that the applicability of lean is that market demand for the product is
relatively stable and predictable, and the product variety is low (Towill and
Christopher, 2002b).
Many successful examples of lean practice can be found in the automotive industry
(Warnecke and Huser, 1995, Lamming, 1996, MacDuffie and Helper, 1997,
Ohuallachain and Wasserman, 1999, Taylor, 1999, Gulyani, 2001). It is not surprising
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
to see that focus is given to the application of lean manufacturing in the automotive
industry, as the initial success of lean production were found in the Japanese car
manufacturer Toyota. Lean manufacturing has been tested with a high degree of
However, due to fierce competition and rising customer demand from the turbulent
and volatile market, companies need to seek competitive advantage not simply by
adopting the lean principles but defining and developing other domains to create and
accomplish a more balanced approach (Cusumano, 1994). Lean is not the universal
solution to meet all the needs in supply chain management. In order to have
substantial advantages over the rivals and to meet the fluctuating market demand,
companies need to have more flexible and responsive supply chains. This
responsiveness and the flexibility to change in product mix or volume have been
Conventional supply chains have been forecast-driven, but agile supply chains are
The idea of agility in the context of supply chain management focuses on flexibility
(Aitken et al., 2002) - The original business concept was based on Flexible
fluctuating and the requirement for product variety is high, agility is desired (Towill
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
The lean and agile approaches are not two distinct or exclusive supply chain models
in business operation; and are not to be viewed in opposition or isolation of each other.
They can coexist if properly managed. Researchers have examined the lean and agile
paradigms which have been successfully designed and operated in total supply chains
of various industries, such as: fashion retailer, personal computer, electronics products,
bicycle, lighting factory, carpet maker and precision mechanical products (Naylor et
al., 1999, Christopher, 2000, Christopher and Towill, 2001, Mason-Jones et al., 2000a,
Aitken et al., 2002, Towill and Christopher, 2002b, Bruce et al., 2004, Goldsby et al.,
2006, Mason-Jones et al., 2000b). In general, the approaches are: postponing product
differentiation, adopting the de-coupling point and product re-engineering. Towill and
Christopher (2002a) illustrated how firms could combine the two strategies, for
example a bicycle manufacturer adopted lean production in winter and agile in the
summer; a carpet company applied the lean paradigm to some products through the
upstream lean and downstream agility through product re-engineering and locating the
de-coupling point.
The fierce competition, fluctuating market demand and rising customer requirements
also apply to the automotive industry. Turner and Williams (2005) pointed out that
customers are becoming more demanding and the sheer variety of cars create an
specific requirements for each car, which includes the range of body-styles, engine
sizes, colours, options, and trim levels etc. As a result, VMs are experimenting with
the dilemma of providing the exact vehicles and reducing the escalating costs and
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
complexity in manufacturing (Alford et al., 2000). It is argued that lean supply chains
do not prove to be the universal recipe for staying ahead of today’s volatile and
especially true since focusing on efficiency does not automatically generate quick
response to the market demand. VMs are forced to seek competitive advantage not
simply by following the lean principles that everyone already knows and uses, but by
defining other domains of competition (Cusumano, 1994, Alford et al., 2000). In other
words, to create and balance an efficient and responsive total supply chain is the next
The recent studies and literature in the automotive supply chains seem to emphasize
flexibility and responsiveness, such as: how VMs achieve mass customisation and
fluctuating market demand. For instance, Alford et al., (2000) discussed that VM are
facing sophisticated customers, mass customisation is the enabler to better meet the
needs of customers and its application in the automotive industry. They argued that it
production will meet the challenge of mass customisation. Since lean can not
understand the relationships with suppliers and the assembly process and to find a
balance between cost management and the devolution of risk, and to create an
supply chain strategy that delays product differentiation at a point closer to the
customer (Van Hoek, 2001), Wadhwa and Bhoon (2006) examined the feasibility of
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
and inexpensively once actual consumer demand is known. Childerhouse et al., (2003)
studied current practices concerning information flow as perceived by typical first tier
environment.
However, it seems that whilst attention has been given to improving agile
manufacturing in the automotive industry, very little has been done on how
automotive companies manage to balance both leanness and agility, and what
responsiveness in their supply chains. This paper aims to introduce, explore and
exemplify the strategies and issues of achieving and balancing both a responsive and a
lean supply chain in an automotive manufacturer. This paper discusses the approaches
and strategies for achieving a lean and responsive supply chain within this company,
and to examine the two paradigms that can be combined within a total supply chain. It
is anticipated that the findings will give a set of possible approaches on how to
balance both efficient and responsive supply chains in the automotive industry and
In this paper, the primary data has been collected from a Japanese vehicle
manufacturer in the UK. The data collection was conducted in February and June
2007. The data included over 7 hours of face to face semi-structured interviews with
senior managers from different departments and observations recorded from two plant
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
visits at various work stations and production lines within the plant. Complementary
data has been gathered from text books, company websites, industry reports and
marketing databases.
The following section will offer a brief introduction to this company. A figure will
becoming both lean and responsive. The activities shows in the figure will be broken
into three sections; upstream, midstream and downstream. Quotes from the
interviewees will be given to support and illustrate the discussion. Finally, the
produces a wide range of mainstream cars and trucks. The plant in the United
Kingdom was completed in 1980s. This factory is said to be the largest car plant in
the United Kingdom and is widely recognised as the most productive factory in
From the analysis of the interview data, a figure has been generated to illustrate the
lean total supply chain; they are shown in Figure 1 as below. In this figure, the total
(2001), arrows indicate which activities contribute to which part of the total supply
chain.
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
Figure 1. The approaches to achieve the lean and responsive total supply chain
contribution to each part of the supply chain. Although some approaches for instance,
just in time, may contribute to both upstream and midstream supply chain, or even to
the total supply chain. The next section will discuss and illustrate each approach in
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
The majority of parts and components are from the UK, with the rest sourced in
Europe. There is a supplier park located in the same area as the plant; more than 40
key suppliers are resident within 50km of the factory and supply over 4,000 parts and
components. The geographical closeness reduces transportation delays and aids JIT
delivery.
At this plant, parts and components are kept in a minimum inventory, suppliers and
third party logistics deliver the required parts and components in the right order at the
point of fit to the production line to match the specifications of each vehicle. All the
parties share production plan information and only produce and deliver what is
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
needed. Whilst most manufacturers are removing inventories from either upstream
equipment, material, parts, space and labour. This plant applies JIT delivery and JIT
manufacturing throughout the plant and beyond. The production plan/delivery plan is
sent to the suppliers and 3rd party logistics (3PL) electronically, thus suppliers and
3PL will only deliver and produce what is needed. Parts and components are delivered
every two hours in a JIT manner to the point of fit. From the plant visiting tour, it was
observed that some components are only stored by the assembly line for 12 minutes
The above factors are some approaches for achieving lean supply chain in this plant.
Most importantly, in this plant it is recognized the lean practice is not a destination,
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
chain
Figure 3. The approaches to achieve lean and responsive in the midstream supply
chain
This plant collects orders on a daily basis, those orders will go in the main scheduling
system and structure the weekly/monthly forecast, and generate the production plans.
This enables the company to form the production plan largely based on actual market
demand.
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
‘…to be able to build exactly what you want in the right time, and give the
customer what they want, you have to be able to reduce complexity. And that
is slightly confusing in that you would think that by increasing the complexity
you can give a wider variety of choice to the customer. But then that doesn’t
‘if we wanted to reduce cost by taking stock out the pipeline, there is the
possibility that we could run out of our stock. Also if we took out cost by
have to be flexible enough to give customers what they want, but not end up
items.....’
In the automotive industry, the complexity of the products has always been a
want at the right time. It manages to have better standardization of the products,
therefore the complexity and specifications of each vehicle can be added in at the very
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
In this plant, it has got over 65% build-to-order, which means 65% vehicles on the
production line have already been purchased by the customers. The remainder of
In the past the 200 plus suppliers, both from European and the UK delivered their
parts by themselves each day or every two days to the plant. Now a 3PL firm collects
parts from each supplier and delivers them to the plant. This delivery strategy is called
the ‘milk run’ and this method has reduced transportation costs and increased
efficiency.
This plant has achieved mass-customization; the specifications are literally added at
the point of fit. This strategy of delayed vehicle differentiation at the point as closer as
possible to the customer is so that the required vehicle can be customized quickly and
inexpensively. This company works closely with its suppliers and third party logistics
based on their production systems and supported by their flexible working practices.
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
This company works closely with its partners and shares information with them.
Suppliers and 3PL can easily check inventory, order information and production plans,
and can quickly respond to the market demand and customer specifications.
‘You have to have very strict quality and delivery KPI’s – key performance
centre)
The collaboration and coordination with suppliers ensures the efficiency and
responsiveness of its supply chain, this company uses KPI (key performance
indicators) to manage their suppliers and always makes sure that their suppliers
strictly adhere to the targets for good quality and disciplined delivery. In this plant,
97% of parts and components are delivered on time, and over 98% of cars enter the
finished vehicle compound within two hours of their allocated slot. The strict supplier
management ensures a smooth operation and production, and enhances the quick
‘….the problem with the market is that it fluctuates, it’s very seasonal. For
particularly in the UK, when it comes to new registration, there will always be
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
a busy period…..we can handle the peaks and the drops of production by
In order to balance the low-seasons and peak time workload, this plant alters their
work schedules, for instance, working additional shifts and applying flexible work
practice through stand-up and stand-down. This plant gives the employees who work
in the production area their Friday shifts off. During busy times, the employees will
pay those back by working additional shifts in the weekend when the company needs
them. The suppliers also have got the same agreement as the employees; they will
work the required shifts to support the production line, based upon the shared
philosophy of ‘1 man – 3 jobs and 3 men – 1 job’ which means, a worker is trained to
be able to do at least three different jobs, and at least three people should be capable
of doing each job. This also means that workers are flexible in operating in the
resilience means that when things go wrong, there has to be a way of being
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
This company is pursuing resilient systems both within and outside the plant. If
anything goes wrong, there will be a back-up plan or solution to solve the problems
and to ensure the smooth operation of the production line. The resilient systems
ensure the smooth operation of the production schedule, and avoid the waiting time
caused by unexpected events. For instance, if there is a delay in a delivery, all the
parties involved will automatically apply the back-up plan to ensure the delay is
minimized.
4.3 The approaches to achieve a lean and responsive downstream supply chain
A transporter comes to the plant in every two hours, and each one can take about 8 to
10 vehicles depending on the model. Finished vehicles are constantly transfered onto
the lorries. Every one minute a car comes out the factory and is put on the transporter.
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
The onward transportation will also be managed in a swift manner to achieve highly
The distribution centre (DC) is only one mile away from the plant which makes it
very convenient. In addition, the plant and the distribution centre are close to large
‘......we share and cut the logistic cost, we could possibly share the same
This company uses third party logistics to ship vehicles to overseas countries. To
reduce the cost in transportation, the third party logistics will combine vehicles with
the same destination and share containers to eliminate the cost. In addition, each
distribution) should apply the agile paradigm. However, due to the fierce competition
over costs, companies have to find ways of reducing costs, via the utilization of third
party logistics. This company shows that there are also approaches for companies to
be lean and responsive even in the downstream supply chain. It can therefore be
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
suggested that lean could also apply in the downstream supply chain to help
5. Conclusion
In this paper, a total supply chain in automotive manufacturing environment has been
examined. Approaches and strategies which contribute to becoming both lean and
supply chain management, a model has been proposed that shows how lean and
supply chain. This paper has also demonstrated that whilst the downstream supply
chain is usually expected to be agile, it can include both lean and responsive
paradigms. Both efficiency and responsiveness are equally important for companies
to survive and thrive. The combination of lean and agile paradigms can optimize the
total supply chain and enables companies to obtain both efficiency and responsiveness.
The limitation and constraints of this study are that the research covered just in one
company, also it was also conducted only in a single automotive industry, thus it is
not guaranteed that the strategies and approaches are also applicable to other
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
References:
Bruce, M., Daly, L. and Towers, N. (2004) 'Lean or agile: A solution for supply chain
Childerhouse, P., Hermiz, R., Mason-Jones, R., Popp, A. and Towill, D. R. (2003)
Christopher, M., Lowson, R. and Peck, H. (2004) 'Creating agile supply chains in the
Christopher, M. and Towill, D. (2001) 'An integrated model for the design of agile
27-32.
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
clustering: Evidence from the Indian auto industry', World Development, 29, 7,
1157-1177.
4, 118-&.
Naylor, J. B., Naim, M. M. and Berry, D. (1999) 'Leagility: Integrating the lean and
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Responsive Lean Supply Chain
Case study in a Japanese vehicle manufacturer in the UK
- 458.
Womack, J., Jones, D. and Roos, D. (1990) The machine that changed the world,
Womack, L. and Jones, D. (1996) Lean Thinking, Simon and Schuster, New York.
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