Esterline Technologies: Lean Manufacturing Case Study
Tiye Cort, Robert Morris, Evelyn Ozburn, Braulio Soto,
Key Facts: Characters:
Robert Cremin- Chairman, President and Chief Executive Officer of E sterline Technologies Tom Heine- Director of Organizational Effectiveness Frank Houston- Corporate Group Vice President Richard Schonberger- expert on world class manufacturing and lean methods Michael Taylor- Senior Production manager Gary Dytrt- Korry president Cary Gammon- Korry lean staff member Allison Eiford- Korry lean staff member Annette O’Neal- manager of Korry’s Customer Service department
Partners:
Boeing Airbus
Financial Performance :
- 2004, revenues of $614 million, and income from continuing operations of $29 million - Closed 2005 with revenues of $835 million and income from continuing operations of $51 million - In 2006, revenues were expected to exceed $1 billion
Timeline of the Case:
1976-2006 Issues Conflicts
1. To simplify systems so they don’t need to be tracked wit h complicated IT systems.
2. Using flat panel screens for schedule display: - Implied “big brother is watching” - Gave employees a sense that they would never be finished - Imposed a sense of measurement anxiety for operators 3. Implementing lean manufacturing into fabrication Central Problem
Interface Standardization: Different clients had various ways of communicating with the company for orders, but since Esterline was becoming the best in its industry, they are trying to mandate a standard interface method for consistency. Analysis:
In 1995, Esterline was a multi-industry company with $350 million in revenues. Becoming CEO in 1999, Cremin and his corporate team brought down the company’s focus to key industries and technologies. The 30 new acquirements made between 1999 and 2005 strengthen Esterline’s targeted market -product position. With all the changes and possessions they made, by 2005 the company was in a solid financial position. But things didn’t always look as bright for Esterline Technologies. Around 2000, Esterline had placed process improvement efforts such as Total Quality Management (TQM) and Quality Function Deployment (QFD) which returned mixed success. A problem however is that Esterline had not given enough authority and ownership to employees at the operating level. Another problem was that employees tended to narrowly focus on isolated process steps, making certain improvements that had unintentional negative effects on downstream operations. Performance measurement supported the implementation of lean initiatives. Each business unit implemented annual goals where 3 were set by the corporations such as: 1. Profitable Growth 2. Return on Investment 3. Aggressive Lean Implementation Employees received monetary rewards based on their business unit’s achievement of annual goals. Though Esterline Technologies had a few problems, overall they didn’t have major issues due to the fact that action was taken as needed. Conclusion and Recommendation:
Some of the recommendations that we have in order for them to be successful is that management should work to create an environment that honors
the true value that people bring to the business. If they learn to value the people then the people will feel more respected and will begin to trust the company. It is important to engage the people more in the business, encourage their ideas and put them to work. This can be achieved by investing in training and actively involving the employees. Overall if they fix the minor problems instead of focusing on an isolated section then there is no doubt that they will be more successful.
