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Esterline Technologies Lean Manufacturing Case Solution
Esterline Technologies was a multi-industry conglomerate. The company relies majorly on lean manufacturing and they believe that lean manufacturing is a key to their success. There is an ongoing debate in the company about whether to implement IT systems or not. The company has attempted a lot of times to implement an IT system but they failed. The company is unable to come up with a standardized IT system that can fulfill the needs of the customer and of suppliers. Implementing an IT system is a big risk for the company, but they have to make a decision whether to adopt a new ERP system or not. The company has achieved the status of Tier 1 supplier from its two major customers and it has added a lot of pressure on the company. The company doesn't want to repeat the same mistakes again. This time the company has to take the decision very carefully.
Following questions are answered in this case study solution
How would you judge Esterline Technologies‟ approach to IT management?
Would you agree with the opinion that IT systems hamper lean manufacturing as they interfere with efforts to reduce waste and simplify processes?
Should the IT function be considered as a strategic asset or run as a cost center?
How should be firm deal with conflicting standardization needs from their major customers?
Why is it important to Bob Cremin? What issues are raised in the debate?
How does lean manufacturing differ from more traditional approaches to production? What outcomes can a company expect from an effectively-implemented lean manufacturing initiative?
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?
Case Analysis for Esterline Technologies Lean Manufacturing
1. How would you judge Esterline Technologies‟ approach to IT management?
According to the case study, Esterline Technologies' focus on not relying on IT management is a great approach. As mentioned by Bob Cremin, IT systems are complex and they only dictate to people what to do. But if we look at lean manufacturing it pushes the decision to the people who are directly involved in the production. Also, the IT system is considered to interfere with process innovation. In 1980, the company faced a lot of issues when they decided to implement a standardized IT system across all their business units, this approach failed as the company was unable to meet the requirements of their subsidiaries. It was quite hard for the company to come up with an IT solution that will work well for a plant and also for the manufacturing components.
In my opinion and on the experiences faced by the company, adopting an IT management system is not a good approach for Esterline Technologies. As to achieve higher quality, better inventory accuracy, improved customer service, and reduced setup times the best approach is to rely on lean production methods and simplification instead of relying on complex IT systems they can use IT management as a supporting tool but not to rely much on it that it started controlling or limiting the lean manufacturing As Frank Houston mentioned in the case study, that the challenge for Esterline Technologies is to simplify the processes so they don’t need to rely on complex IT systems. Also, if we look at Korry which is a home-grown division of Esterline, it shows that IT management has made the process more complex like the company realized that the Cerebellum system that was introduced to support a Kanban material flow and to help the staff with scheduling system was not a good fit. Also, by implementing the flat-panel displays the company realized that these screens are creating a sense of anxiety for operators.
2. Would you agree with the opinion that IT systems hamper lean manufacturing as they interfere with efforts to reduce waste and simplify processes?
I agree with the opinion that the IT system does hamper lean manufacturing. Lean manufacturing helps the company to lower costs, build credible barriers to entry for competitors and improve the quality of production. IT systems are inflexible and they tend to bound employees. IT systems make the process more complex and lean manufacturing simplifies the process they help the company to respond timely to the customer's need, to improve conformance quality and timely delivery. The case study shows that Esterline Technologies has experienced many disappointing experiences due to the IT systems. Example: In 1998, Korry's executive hired a team of consultants to help them acquire an IT system that was best suited according to the company's needs. Esterline invested $1 million to implement the state-of-the-art IT system, soon the executives realized that they took the wrong decision as the system was too cumbersome and inflexible to allow the company to overtime change its process and adapt to the system.
If we look into Korry's plant operations, lean methods had proven to be more effective. Korry's customer service department has adopted the lean methods really well. But if we look into IT systems, they are a problem as IT interfaces used for customers and suppliers cannot meet the requirement of all the customers. As for each customer, the order placement varied. For placing an order, the two most key clients of the company used different communication methods so it's really difficult for the company to expect that all clients use a standard ERP system to place an order. Similar is the case with suppliers. Instead of relying on an ERP system, it's best for a company to adopt lean manufacturing and method and through simplifying their processes instead of relying on complex IT systems.
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