The mediating effect of lean accounting on the relationship between supply chain and manufacturing companies performance in Malaysia

The main objective of this research is to examine the effect of the supply chain and lean accounting on manufacturing performance. This research also aims to investigate the mediating role of lean accounting in the relationship between the supply chain and manufacturing performance. Additionally, this research seeks to develop a model of manufacturing performance specifically for the Malaysian context. Based on the list of manufacturing companies registered at the Federation of Malaysian Manufacturers as of 2020, a simple random sampling method was employed. Questionnaires were distributed through email to selected manufacturing companies, and responses were collected using a 7-point Likert scale. A total of 282 completed questionnaires were analysed using Structural Equation Modelling. The findings indicate that supply chain has a significant effect on manufacturing performance. However, each component of supply chain which is measured by strategic supplier partnership (SSP), customer relationship (CUR), information sharing (ISH) and information quality (INQ) shows a weak direct effect. Further, supply chain constructs also significantly related to lean accounting. Furthermore, lean accounting which measured by eliminating transaction (ELT), performance measurement (PFM), financial benefits (FNB) and value stream management (VSM) has a strong and significant effect on manufacturing performance, while value stream costing (VSC) was found to be insignificant. ELT also emerges as a crucial factor for lean accounting through its focus on waste elimination. The results also confirmed that lean accounting partially mediates the relationship between supply chain and manufacturing performance in Malaysia. This research concludes that implementing lean accounting is essential to support lean manufacturing and to enhance manufacturing performance. Moreover, the structural model indicates that the manufacturing performance has 59% of the total variance explained by supply chain and lean accounting. This model can serve as practical guideline for industry practitioners pursuing lean accounting transformation, and a useful reference for future research.