The competitive climate of production and high labour cost, motivate western companies to use technologies like automation as a mean to increase manufacturing competitiveness. On the other hand companies are aware about cost reductive policies like lean production which has shown noticeable achievement; consequently some manufacturers tend to follow such system. In this situation, in order to have lean enterprise, it is vital to find a clear picture of challenges and potentials of implementing automation within a lean environment. If the process of developing automation is not efficient and companies’ strategy and mission is not considered in time of project development, the result may not be lean at the end. So finding an appropriate guideline that can be used in time of developing automated projects is very important.This thesis aims to develop a guideline that can be used in developing automation solutions to have lean result at the end of the projects. The guidelines can be used in both assembly and manufacturing development projects.VOLVO GTO has chosen as the case study for this thesis. In order to find the answer of research questions two main areas in manufacturing and assembly are marked.

Operations capabilities provide the fundamental basis of competitive advantage for manufacturing firms. Thus, it is crucial for managers as well as researchers to understand the importance of operations capabilities within the respective market environment. This thesis evaluates the most important operations capability dimensions as well as operations capabilities for competitive manufacturing in a high-cost environment and how they differ based on manufacturing firm characteristics. Therefore, a quantitative survey was conducted within the high-cost environments Sweden and Germany. Empirical findings show that quality is the order-winning criterion in high-cost environments, followed by delivery, cost and flexibility. However, the importance highly differs across the various manufacturing firm characteristics. Managers of manufacturing firms in high-cost environments can use these findings to validate and adjust their operations strategy to achieve a competitive advantage.