ESTERLINE TECHNOLOGIES:
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What evidence does the case offer regarding Esterline´success?
Facilities with decentralized responsibility for different functional areas (engineering, production, marketing, sales, …) Strategy: Lean Manufacturing – Minimize waste; use resources to create added value to end customer – Just In Time and autonomation and/or standardization; Process simplification; centered in production; give some responsibility to operating level employees => lower costs, improve quality, create barriers to entry; Set annual goals by business unit: profitable growth, ROI From… Jumble Flows (people/machines/resources organized by function – adv: high utilization of resources; disadv: create long lead times, complex – IT support is needed) To… Families (people/machines organized in cells arranged sequentially, typical of LEAN System
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How does lean production ?
differ
from
more
traditional
approaches
to
Traditional manufacturing methods: developed during the age of mass production, focused on economies of scale and massive machine utilization => Goals : Customer satisfaction is achieved by maintaining large inventories in anticipation of customer orders, and to reduce the unit cost. "Batch and Queue" Process - Parts are made in batches and upon completion they are moved and placed into a queue where they wait for the next operation to become available. Main problems with this practice: • •
machine set-up times define the length of the production run time. : A product encounters a combination of three things during a process: 1. Its moved. 2. Its processed. 3. Its waiting. Studies have shown that in a traditional business, during the total time taken for a product to go through the manufacturing process it
moves or waits 95% of the time. Its only processed for 5% of the total lead time. This leads to: •
Difficulty when trying to schedule the job because of the time a product is simply waiting for the next process to become available because of long changeovers.
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A higher percentage of lost production time, because while the machine is down, nothing is produced.
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Higher levels of poor quality because if parts are made in batches, they can be made incorrectly and the problem will not usually be noticed until the next operation starts to work on them. This results in a higher level of rework, which is costly and ties up valuable resources.
Lean Manufacturing focuses on the waste throughout the process and ways to reduce changeover and cycle times. Doing this will allow more flexibility and smaller quantities of parts to be made. This results in reduced inventory, shorter lead times and allows more frequent deliveries to the customer. Goal of Lean manufacturing: reduce waste in order to produce what the customer wants, and deliver products it in the fastest time. Focus of Lean Manufacturing is to achieve “Continuous or Single Piece Flow”. This can only be achieved by linking operations to eliminate or reduce the total time a part is traveling or waiting in between each operation, and this includes machine set-up time. During the process of creating product flow all activities are identified and categorized as "Value Adding" or "Non-value Adding." When you know which part of the process is a "Non-value adding" activity, you can eliminate, reduce or combine it. Before implementing a Lean Manufacturing program, it is not unusual to find that non-value adding activities (waste) make up 95% of the total lead time required to ship a product.
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Of the key lean elements described in the case,which ones do you think are most important for Esterline?
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What is the essential question adressed in this case? What advice do you have for Bob Cremin?
IT Systems – ERP - Disappointing experiences with these sorts of mismatches had fueled the debate about adoption of enterprise IT systems. In general, ERP’4(Enterprise Resource Planning) systems are designed to standardize information entry and create central data repositories for information sharing across the organization. ERP advocates have claimed numerous advantages of ERP adoption, induding improved customer service, better inventory accuracy, reduced setup times, higher quality, and improved cash flow. Skeptics argue that most of these advantages could be achieved through processsimplification and lean production methods, without relying on complex computer systems
Involve and give responsibility and authority to employees – new way of thinking, power to improve processes Employees were free to choose the tool set that worked for them Individual units make own decisions about ERP implementation
Lower costs, identify and fix quality problems and build barriers to entry, motivation, eliminate waste
Training programs in areas of basic lean techniques and change management, periodic seminars and workshops with experts to stretch lean thinking
Offering more on-time delivering, improving quality and responding more quickly to customers’ needs; performance measured through inventory turnover and ROI Supporting tool, better inventory accuracy, reduced setup timesimproved cash flow
Simplify product flow and level-load work across process elements; People and machines arranged sequentially
At Korry’s… 90’s
Distribution in cells ASSEMBLY AREAS:
1999
technique used to analyze the flow of materials and information currently required to bring a product or service to a consume; steps, delays and flows required to deliver the product; Goals – Create flow, eliminate waste and identify opportunities for improvement in lead time and workflow to reduce the need of ERP
2002 2003
2004
2005
Productivity gains
Cell #1 – assembly of high-volume products with regular frequency Cell #2 – assembly products ordered infrequently, and in small numbers - uncertainity
Identify what is necessary and eliminate the rest; eliminate dirt; place for everything & everything in its place; standardize; sustain, make a habit – average process from 3 days to 1 day For on-time delivery, smaller deliveries but more frequent, to standardize production processes Improvement of delivery service to 100% and productivity of 30%, average throughput time decreased 90%
Inventory costs dropped, better inventory level control Educate 3rd parties Flat panel screens put pressure in employees so used TAKT times to set the pace of production based on customer demand rate; Optimized time, configurations are
90’s - 5-S systems, Kanban system to control inventories – 1999 – Value Stream Mapping
Point-of-use storage system; 5-S Systems in administrative office also started to use value stream maps to identify bottlenecks, problems
2004 – Heijunka – level loading in order to flat production Heijunka
Heijunka extended to suppliers and recently to customers (discounts for smaller batchers) Water spider – deliver parts in hourly basis -mizusumashi – there is someone always available Extended “water spider” concept through the supply chain to the suppliers – Weekly order, even if it wasn’t needed Visual Management – flat panel screens for schedule displays at the beginning were substituted by manual daily schedules based on TAKT times Inspection – Initially it was a separate
handled in loco and on time
entity but it was allocated to the cell
Change Management o Basic Leadership Skills Training o Basic Team Skills Training o Technical tools of lean’3including: o Value Stream Mapping - technique used to analyze the flow of materials and
information currently required to bring a product or service to a consume; steps, delays and flows required to deliver the product; - GOALS: creating flow and eliminate waste o Standard work o Kaizen – Improving standardized techniques and processes, define best methods to produce with the available resources, in order to incorporate efficiency and eliminate waste “check to see what’s wrong!” o Heijunka – production leveling, to transform customer needs into something flatter, in order to standardize production processes o One-piece flow o TAKT time o Mistake proofing (poka yoke) o Set-up reduction and quick changeover o 5-S organization methods o Kanban methods of moving inventory o Six-sigma processes o Visual management o Total Production Maintenance (TPM) o Jidoka – Implements supervisory functions, o Co-location of equipment o
