**1. Introduction**

To deal with heavy competitive pressure, building a supply chain has become an important competitive strategy. Under the supply chain, the effective practice of using more operations between manufacturers and suppliers is critical to promote

competitiveness and increase common economic profit; however, it also leads to increased pollution emissions. Considering social pressure, more manufacturers have adopted remedies to deal with pollution. However, if pollution emissions continue to increase, remedy costs are increased and lead to a reduction in common profits. Reducing remedy costs may cause conflict relative to social awareness.

To avoid this conflict, the development of sustainable supplier management is necessary. Sustainability is the concept of balancing the environmental, social, and economic profit cycles. To realize sustainability, resilience is a critical factor. Resilience is the capability of supply chains to prevent, respond, and recover from uncertainty risk [1, 2]. When they possess stronger resilience, manufacturers can strengthen environmental prevention, continue to detect potential problems caused by environmental pollution and recover from them in the shortest period, avoid large improvement costs, maintain economic profits, and meet green and satisfactory social requirements.

However, it is possible that profit motives will still drive suppliers to engage in opportunistic behavior and indirectly increase pollution emissions, further breaking sustainability. These opportunistic behaviors are hard to prevent and control even when there is awareness of opportunistic behavior, and pollution emissions usually become quite serious. Therefore, opportunistic behaviors are like uncertainty risks. If opportunistic behavior is hard to prevent when it appears, how to reduce and recover from the damage of opportunistic behavior in the shortest time is an important research issue.

To enhance the recovery ability of resilience, current theory indicates that information integration [3] and the preparation of redundancy resources [4] are two critical factors. When opportunistic behavior appears, a great information-sharing mechanism can adjust redundancy resources in the shortest period to recover from damage. Even so, redundancy resources, such as inventories, will increase long-term costs, and their preparation and adjustment also affect operational efficiency. Therefore, although redundancy resources reduce the damage level of opportunistic behavior and provide faster recovery, they also raise recovery costs and affect operational efficiency.

Based on the above, researchers, such as Spieske and Birkel [5], found that the development of the industry 4.0 environment has a positive effect on the improvement of resilience. It can integrate related information and further realize the supply chain visibility, help manufacturers and partners to avoid the preparation of redundancy resources, and raise a fast-responding ability. Therefore, it certainly has a positive effect on resilience ability raising. However, the industry 4.0 environment is hard to implement and establish. Based on the above, a lean environment should be established on a priority basis [6]; in addition, the lean environment should have a great auditing mechanism to ensure the lean practice. Even though, improvement of resilience admits of no delay. Therefore, if the improvement of resilience needs to await the finished development of the industry 4.0 environment, the development period will be vulnerable and is hard to control pollution emission. However, if the combination of lean and audit mechanisms has a positive effect to enhance the prevention ability of resilience, it can help the manufacturer to promote gradually the resilience. When the industry 4.0 environment is established, the resilience will become stronger. Even though, does the combination of lean and auditing have a positive effect on resilience?

Lean practices are used to eliminate redundant activities and achieve the maximization of operational efficiency through pull production, 5S, employee involvement, and total productive maintenance (TPM) [7]. Related research, such as that by

#### *Enhancing the Resilience of Sustainable Supplier Management through Combination with Lean… DOI: http://dx.doi.org/10.5772/intechopen.102465*

Spiegler et al. and Birkie [8, 9], has indicated that the elimination of redundancy activities goes against the recovery ability of resilience. However, according to a few successful cases, such as the Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Group, if manufacturers make good use of pull production and employee involvement under lean practices that can strengthen supplier management robustness and further enhance prevention resilience, then they are better able to prevent and control the appearance of opportunistic behavior and reduce recovery costs. If lean practices are combined with an audit mechanism, then synergy will occur and strengthen the prevention ability of resilience.

However, how do manufacturers make good use of pull production and employee involvement under lean practices that can strengthen supplier management robustness and enhance the ability of resilience to prevent and control opportunistic behavior? Why does the combination of lean practices with an audit mechanism strengthen the practice effect of pull production and employee involvement and even produce synergy to prevent and control opportunistic behavior by suppliers? The purpose of this study is to explore these research questions.

This chapter contributes to the operations management and sustainable development literature in two ways. First, our research results can guide managers in setting a suitable mechanism through a combination of lean practices and audits to enhance resilience and ensure sustainable supplier management within their organization, avoid the damage caused by opportunistic behavior of suppliers, achieve the goal of sustainability, and not rely on redundant resources. Second, understanding the role of audit in lean practices can guide manufacturers in knowing how to promote the audit mechanism.

## **2. Literature review and theoretical framework**

#### **2.1 Prevention and control of opportunistic behavior and resilience**

The definition of sustainability in the supply chain is "the strategic, transparent integration and achievement of an organization's environmental, social and economic goals in the systematic co-ordination of key inter-organizational business processes for improving the long-term economic performance of the individual company and its supply chains" [10]. Sustainable supply chains also emphasize supplier management and promote the gradual development of sustainable supplier management [11].

To maintain sustainability, Rajesh and Ravi [12] believed that stronger resilience is necessary. Resilience can be defined as the ability of a system to prevent and recover from disruptions with negative effects and unpredictable risk events and return to a better situation [13–15]. Unpredictable risks are hard to avoid; however, compared with unpredictable natural risks, artificial risks are common. Of all unpredictable artificial risks, destructive opportunistic behavior by suppliers is the worst.

Opportunistic behavior by suppliers is not purposeful. The appearance of opportunistic behavior is usually profit-oriented, and suppliers worry about damage to their profits [16], which is a normal mindset. If we analyze a profit distribution based on the product selling price, the supplier's profit is just a small ratio of the selling price. Therefore, it is easy to trigger opportunistic behaviors that attempt to increase profits. These opportunistic behaviors may reduce production costs and increase profits; however, they also may indirectly increase pollution. Crucially, the probability of opportunistic behavior by suppliers is higher than other unpredictable risks and is

hard to prevent. Therefore, researchers believe that manufacturers should enhance the recovery ability of resilience to reduce the damage level of opportunistic behavior. If prevention ability is increased, its efficiency is lower than that of its prevention ability and has no effect on the prevention and control of opportunistic behavior.

However, more manufacturers have indicated that enhancing the prevention ability of resilience has a substantial positive effect on the prevention and control of opportunistic behavior. If the prevention ability of resilience is increased, its efficiency is better than that of its recovery ability. Related studies, such as those by Pereira et al. and Brown and Badurdeen [17, 18], have also found that real-world enhancement of resilience is used to prevent and control opportunistic behavior. Therefore, enhancing the prevention ability of resilience is related to controlling opportunistic behavior. When the prevention ability of resilience is enhanced, opportunistic behavior by suppliers can be effectively prevented and controlled. Therefore, we developed the following hypothesis:

H1. When the prevention ability of resilience is enhanced, opportunistic behavior by suppliers can be prevented and controlled.

#### **2.2 Lean and resilience**

Lean is a business model that originated with Toyota Production Systems (TPS) that first came to be known in Western countries as "just-in-time" (JIT) manufacturing [19]. In the 1980s, researchers at the Massachusetts Institute of Technology coined the term "lean" to describe the simplicity of some car assembly plants, with Toyota being the best example [20]. Lean focuses on the elimination of everything that does not add value to the product and therefore is considered a "waste" of resources, such as overproduction, wait for time, transport, overprocessing, inventory, unnecessary motion, defects, and rework [21], to deliver quality products at a low cost with high productivity [22]. Studies, such as those by Kalyar et al. and Yu et al. [23, 24], argue that the practice of lean depends on related means or tools, including employees' involvement, pull production, elimination of waste, and 5S or total productive maintenance (TPM). Through lean, redundancy resources will be eliminated and reduce related costs and operational efficiency will also be promoted.

However, how can resilience prevention be enhanced through lean? The critical factor is supplier management robustness. A few successful cases indicate that promotion of the pull production process and driving employee involvement can enhance supplier management robustness. However, why do these two mechanisms have a positive effect on promoting supplier management robustness and further enhancing the prevention ability of resilience? We contemplate the following dynamics:

1.Enhancing responsible purchasing: Responsible purchasing means that every supplier needs to bear responsibility for tracking material quality, maintaining replenishment efficiency, and ensuring stable purchasing sourcing [25]. Lean elicits and avoids redundant production activities. When improving pull production, the supplier is required to bear the purchase responsibility to strengthen the purchasing process and avoid redundant production activities due to purchasing problems with raw material. When responsible purchasing is enhanced, supplier management robustness can be strengthened. Therefore,

*Enhancing the Resilience of Sustainable Supplier Management through Combination with Lean… DOI: http://dx.doi.org/10.5772/intechopen.102465*

according to Carvalho et al. and Azadegan et al. [26, 27], if any supplier exhibits an opportunistic behavior that could affect production efficiency and cause pollution to increase, it is easy to catch due to responsible purchasing. Thus, responsible purchasing becomes an inhibitor to prevent and control the appearance of opportunistic behavior. Based on the above, responsible purchasing has a positive effect on the prevention ability of resilience [28].


Based on the above, three hypotheses are developed to explore our first research question.

H2a: Establishing responsible purchasing has a positive effect on enhancing the prevention ability of resilience.

H2b: Enhancing emergency-response ability has a positive effect on enhancing the prevention ability of resilience.

H2c: Enhancing manufacturing process coupling has a positive effect on enhancing emergency-response ability.

#### **2.3 Synergy of combination with audit**

According to the Oxford dictionary, an audit is defined as a systematic review or assessment [43]. In the past, the concept of an audit has usually been applied in the quality management field, and its purpose is to self-assess to allow continuous improvement to further ensure that the system, process, or product satisfies requirements or criteria [44]. Recently, the concept of audit mechanisms has also been implemented in green improvement. When an audit mechanism is applied to the green improvement field, its purpose is to measure the performance of pollution-prevention activities [45, 46].

With the practice of lean proven to have a positive effect on green environmental improvements, an increasing number of studies, such as those by de Freitas et al. and Leong et al. [47, 48], have found that combining audits can produce synergy to promote green environmental development. Audits can help manufacturers assess and monitor lean processes, avoid any redundant activities causing pollution emissions, and further prevent and control pollution. The audit process can be divided into two phases, including the development of prevention standards or criteria and follow-up and assessment [49]. The development of prevention standards is beforehand work, and suppliers or partners are required to follow. Then, under lean practices, follow-up suppliers or partners follow the standards or criteria. In addition, manufacturers play the role of leader auditors to assess whether these suppliers and partners attend to and obey these standards or criteria. When these two phases are combined with lean, it is similar to the monitoring process of lean practice efficiency in green environmental improvement [50].

Pull production and employee involvement are two important mechanisms in lean practice. This study believes that these two mechanisms can promote supplier management robustness and further enhance resilience to prevent and control opportunistic behavior by suppliers to avoid sustainable disruptions. According to the experiences of a few successful cases, if lean is combined with audits, it can produce positive synergy to strengthen the practice of pull production and employee involvement and have a positive effect on enhancing the prevention ability of resilience. However, why these effects occur requires an understanding of the following dynamics:

1.Development of standards and criteria to control dysfunctional behavior. Dysfunctional behavior is a resistance phenomenon [51, 52] that derives from a conflict of interest. The appearance of opportunistic behavior is based on profit orientation. Pull production and employee involvement can enhance manufacturing process coupling, responsible purchasing, and emergencyresponse ability to restrain these opportunistic behaviors. However, though they can be restrained, these factors are hard to control further. According to Feld [53], designing the standards and criteria of audits is based on real demand and decisions about the environment. Through these standards and criteria, suppliers will be able to understand their opportunistic behaviors that cause risk and could lead to serious damage which makes it difficult for these suppliers to obtain more profit. Therefore, this strategy can control their dysfunctional behavior. When dysfunctional behavior is controlled, it can ensure the enhancement of manufacturing process coupling, responsibility purchasing, and emergencyresponse ability to produce better effects [54–56], further strengthening resilience to prevent and control opportunistic behavior. Based on the above, we develop the following three hypotheses to explore.

*Enhancing the Resilience of Sustainable Supplier Management through Combination with Lean… DOI: http://dx.doi.org/10.5772/intechopen.102465*

H3a: Control of dysfunctional behavior through the development of standards and criteria will strengthen responsible purchasing. H3b: Control of dysfunctional behavior through the development of standards and criteria will strengthen emergency-response ability. H3c: Control of dysfunctional behavior through the development of standards and criteria will strengthen manufacturing process coupling.

2.Follow-up and assessment will trigger a trade-off. Although the purpose of follow-up and assessment is to establish a process to help and guide suppliers to follow related standards and criteria to cooperate in improving pull production and employee involvement, follow-up and assessment processes trigger supplier trade-off [57, 58]. Specifically, under the follow-up and assessment process, manufacturers have the responsibility to help suppliers to understand that they will encounter related risks and lose related benefits. As a reminder of the previous discussion, the appearance of opportunistic behavior comes from a concern about losing profit and not bearing related costs. Therefore, the process of follow-up and assessment is a chance to communicate thoroughly with suppliers about delivery risks and strengthen cooperative intentions to maintain suppliers' benefits [59]. Based on the above, audits will trigger a trade-off in risks and benefits that will guide suppliers to self-control opportunistic behavior and heighten their intention to cooperate in enhancing supplier management robustness [57, 60, 61]. Trade-off enhances the control effect of dysfunctional behavior. Therefore, we develop the following three hypotheses to explore.

H4a: Triggering of a trade-off has a mediating effect on the control of dysfunctional behavior and the enhancement of responsible purchasing. H4b: Triggering of a trade-off has a mediating effect on the control of dysfunctional behavior and the enhancement of emergency-response ability. H4c: Triggering of a trade-off has a mediating effect on the control of dysfunctional behavior and the enhancement of manufacturing process coupling.

#### **2.4 Theoretical framework**

According to the related literature review and hypotheses development, this study develops the theoretical framework shown in **Figure 1**. In line with **Figure 1**, this study further tests the path relationships amongst the prevention ability of resilience, prevention and control of opportunistic behavior, enhancement of manufacturing process coupling, the establishment of a responsible purchasing process, emergencyresponse ability training, control of dysfunctional behavior, and triggering of a tradeoff. Through the verification of our theoretical framework, we can explore and explain our research questions.
