TECNOLGICO DE MONTERREY | THUNDERBIRD

Production Operation Management

Esterline Technologies: Lean Manufacturing Study Case Report

Ruben Dario Alba Fonseca Raul Danilo Blanco Reyes Alejandro Pardo Werpajosky Adriana Ximena Santos Suarez Andres Eduardo Venegas Ramirez

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2 ESTERLINE: LEAN MANUFACTURING CASE REPORT

1. What is the central question being addressed in this case? Why is it

important to Bob Cremin? What issues are raised in the debate? (OP)

The central question addressed in the case is whether IT should be actively involved in the implementation of lean manufacturing and its role within the process to achieve expected results. It is important to Bob Cremin for he struggled with the process mainly driven by high costs that need be incurred due to effective IT expenditures to support lean manufacturing. Issues of accountability in terms of lean manufacturing implementation were raised among different company departments. There was high hesitation towards the effectiveness of IT systems due to their one size fits all promise that proved not to be so. Operations was seeing IT systems as a barrier to effectively implement lean manufacturing measures for it added additional tasks instead of simplifying processes. The costs were always an issue that concerned the general management for the ROI in such expenditures was not clearly seen and the company had already had a prior IT endeavor that didnt succeed. 2. How does lean manufacturing differ from more traditional approaches to production? What outcomes can a company expect from an effectivelyimplemented lean manufacturing initiative? Traditional approaches to production are based on scale economies and maintaining high volume of inventories to satisfy costumers needs. Scale economies aim to reduce cost, while high inventories look forward to providing customers with quick and prompt deliveries. In traditional production approaches, during the manufacturing process, parts and raw materials are 95% (non-adding value) of the time in standby or waiting to be assigned to another step of the production line. On the other hand just 5% of the time is used for manufacturing (add value). Lean manufacturing reduces waste or waiting time (non-adding value) aiming to increase consumer satisfaction through reducing delivery timing and it does not require high inventory volumes. Operating practice Process architecture Material flow discipline Employee involvement in process Traditional manufacturing Push production system. Batches through the whole manufacturing line. Direct and established process flows. Designed in constant rates to obtain predetermined quantities of output Low involvement and the supervisors overlook improvement themselves. Lean manufacturing Pull production system. Operating practices in ongoing specialized work cells. Process flows designed according to specific requirements. Kanban cards Employees accountable and encouraged to find and implement improvement

improvement Output volume

Scheduling

Inventory Ratio of waiting time to touch time Maintenance of equipment Job Design

High volume production using large amounts of inventories resulting in waste. Production Schedule driven Scheduling is demand-driven by push targeted production Uniform plant loading and Kanban production control system Held in stock in big JIT inventory system quantities. 95%percent of waiting time Increased touch time and 5% of touch time compared to traditional manufacturing As per maintenance Preventive focused on schedule or when a failure inspections and observation, occurs intervention and replacement Is focused on individuals Is focused on individuals performance by execution of performance by execution of activities required activities required, but to a greater extent it is included skills/competencies development that leverages continuous improvement and process failure detection

opportunities High volume production using minimal inventories

3. Based on the case, and your own experience, what do you believe to be the most significant challenges for implementing lean manufacturing? How can organizations overcome these obstacles? Challenge or obstacle More control to employees so supervisors are uncomfortable Lean processes require fewer employee potential job loss is a threat Employees have a Potential implementation practice to overcome this obstacle Implementing change management programs can solve this situation. With this, supervisors can raise awareness in order to meet expectations for their new role. Their new role is more strategic, becoming sponsors of the change towards continuous improvement by channeling resources to achieve better performance from operative employees. Idle employee manpower may be used in other projects and processes that can be identified as valuable for customers. Though layoff is a threat, this is an opportunity for the company to implement a reward system based on performance and competences to retain the top class people. Senior management must implement a communication strategy

4 ESTERLINE: LEAN MANUFACTURING CASE REPORT natural tendency to revert back to batching - Korry section Tendency to revert from cross-functional cells back to functionallyorganized work groups More reliance in team work and not all employees to work in teams to show employees the benefits beneath the implementation of lean manufacturing focusing on the benefits to be perceived in terms of saving time, reducing workload, implementing process efficiency and enhancing financial performance. Working in interdisciplinary teams will enable the group to enhance their knowledge with different points of views, finding new ways to do things and new procedures. Recognition programs carried out by teams instead of individuals will allow team spirit to prevail. Teamwork promotes competitiveness resulting in company efficiency gains. Recognition programs carried out by teams instead of individuals will allow team spirit to prevail.

In summary, part of the success in the implementation of lean manufacturing, depends on the time taken to conduct the culture change, thus having everyone aligned within the organization. A sound internal marketing campaign is necessary to support the cultural change with change management programs tailored to the nature of each individuals job and targeted to different levels of the organization.