Bash – Why Grep Doesn’t Work with Redirection

use --line-buffered switch on grep

tail -3f logfile.log | grep --line-buffered "action.*add" | sed -u -e "s/^/'/" -e "s/$/'/" | xargs -L 1 -P 5 bash testscript.sh

from man grep:

--line-buffered Use line buffering on output. This can cause a performance penalty.

or you can use stdbuf read more

stdbuf allows one to modify the buffering operations of the three standard I/O streams associated with a program. Synopsis:

use this syntax:

... | stdbuf -oL grep ... | ...

your example:

tail -3f logfile.log | stdbuf -oL grep "action.*add" | sed -u -e "s/^/'/" -e "s/$/'/" | xargs -L 1 -P 5 bash testscript.sh

To get each filename printed to the output and THEN have the grep results corresponding to that file printed after, you could wrap the -exec foo {} | grep pipe in a shell:

find . -name '*.o' -type f -print -exec sh -c 'foo "$1" | grep "bar"' sh {} \;

To to make the -H argument of grep work with standard input, if your version of grep supports the --label= option you could do

find . -name '*.o' -type f -exec sh -c '
  foo "$1" | grep -H --label="$1" "bar"
' sh {} \;

or (if your find supports the + multi-argument alternative to \;):

find . -name '*.o' -type f -exec sh -c '
  for f; do foo "$f" | grep -H --label="$f" "bar"; done
' sh {} +