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1. Why Dell uses a lean manufacturing system.

DELL Lean Manufacturing System – DELL avoid overproduction by building


PC‘s, laptops, and servers on a build-to-order basis. Their factories are great
examples of flow, raw material comes in one side, and finished product
comes out the other, with minimal work in progress in between. Dell‘s
―Direct Model‖ has often been compared to Toyota TPS system which also
reducing waste.

Apart from Dell using lean manufacturing system, there are other small scale
industries who use this system. Mumbai Dabbawallas are employed in a
unique service industry whose primary business is collecting the freshly
cooked food in lunch boxes from the residence to the office workers and
returning the empty boxes. They work according to the requirements of the
customers and work on a six sigma concept.

2. How their build to order system operates

Dell has completely automated its ability to take thousands of orders,


translate them into millions of component requirements and work directly
with its suppliers to build and deliver products to meet customer
requirements. In fact, more than 90 percent of Dell's component purchases
now are handled online: Suppliers use an Internet portal to view Dell‘s
requirements and changes to forecasts based on marketplace activity, and to
confirm their ability to meet Dell‘s delivery requirements. Then, as Dell
factories receive orders and schedule assemblies, a "pull" signal to the
supplier triggers the shipment of only the materials required to build current
orders, and suppliers deliver the materials directly to the appropriate Dell
assembly lines.

They partnered with Accenture to quickly create a new, high-performance


supply chain planning solution. Now in place in Dell's plants around the
world, the program paid for itself five times over during the first 12 months
of operation. Dell is able to adapt more quickly to rapidly changing
technologies, and maintain its position as a high-performance business.

Typically, a customer's order history and a business forecast are used as the
basis for planned purchasing and manufacturing activity. At Dell, the
refinement of processes sought to move order fulfillment closer to real time
by simultaneously evaluating supply constraints, factory capacity, shipping
constraints and the specific requirements of each customer order. These
capabilities were realized through Accenture‘s customization, implementation
and integration of i2 Factory Planner (manufacturing scheduling), i2 Supply
Chain Planner (MRP and inventory planning) and i2 Collaboration Planner
(communication with suppliers and logistics operations). This marked the
first time that all three modules were implemented concurrently in a build-
to-order environment.

The entire solution was implemented in a ―Wintel‖ environment—entirely on


Dell PowerEdge servers and PowerVault storage products—a move that could
drop Dell ‘s ongoing ownership costs by up to two-thirds compared to a
Unix-based environment.

3 Why inventories are low

Since its inception, Dell has excelled by challenging conventional business


wisdom. For example, it pioneered direct-to-customer and global build-to-
order processes in the high-tech industry. Dell never assembles a computer
system until it has received an actual order, so every system the company
makes already has a waiting customer. That, in turn, means ultra-low
inventory levels (one-tenth that of many competitors) as well as a favorable
cash-conversion cycle (minus 20 days in the most recent quarter).

4 How quality is tracked

Time Quality management of Dell: This direct business model eliminates


retailers that add unnecessary time and cost, or can diminish Dell's
understanding of customer expectations. The direct model allows the
company to build every system to order and offer customers powerful,
richly-configured systems at competitive prices. Dell also introduces the
latest relevant technology much more quickly than companies with slow-
moving, indirect distribution channels, turning over inventory in just under
five days on average.
5 Watch the following video which is about inventory management
system under the Kanban system. Lean manufacturing is associated
with the Kanban or a just in time system. Explain how it is possible
to maintain work flow and low inventories.

In companies that employ Kanban, every step of the manufacturing process


has some kind of ―alert‖ to signal to the previous step when new parts are
required. This creates a pull mechanism that cascades backwards through
the manufacturing process to the beginning of the cycle. In companies that
employ the conventional push mechanism, more process are wasted in the
process. When every manufacturing step produces a large batch before it is
needed by the following step, there is overhead effort to store, track and
maintain the unused parts. The system of pull between manufacturing steps
facilitated the model of just-in-time (Liker, 2004). Just-in-time production
allows a workflow that quickly reacts to customer needs. Companies can
produce products in small quantities in short time in order to meet special
demands. The general idea of just-in-time is to deliver ―the right items at
the right time in the right amounts‖ (Liker, 2004, p. 23). Especially in rapidly
changing markets like car manufacturing, JIT enables companies to react to
shifts in market demand in order to stay competitive. Logistics play a key
role in making JIT work. There is an expression about JIT in German that
can be roughly translated to ―inventory on wheels‖. As on-site inventory
levels are kept as low as possible, the whole process succeeds or fails with
supply chain logistics. We discussed our experiences of working companies
that provide logistics services and discovered that these service providers
actually are today's stock inventories. On the downside of this development,
logistics can also be the reason for failure in just-in-time production.
Infrastructural problems or strikes can cause the short-term oriented
process to fail, as local inventory levels are only sufficient for a few days.
Nevertheless, the advantages of flexibility and lower inventory costs
outweigh these problems. Due to the lower inventory levels, there is less
risks in fluctuating demand since businesses only have a limited amount of
capital bound in the form of manufacturing materials.

The video that demonstrates the Naples Sailboat Company outlines a similar
process. The production process consists of three workcenters (1, 2, 3) that
work towards the product that is then handed over to shipping. Each of
these stations has a Kanban, e.g. a visual signal for processes further up the
stream. The chained usage of these Kanban's causes an upstream process to
be triggered. Selling a completed boat via the shipping department causes a
signal to previous workcenters. The flow of Kanban signals goes from the
customer backwards through the workcenters, e.g. 3 → 2 → 1. The flow of
materials goes the opposite direction, from basic parts assembly in
workcenter 1 to final assembly in workcenter 3. This pull-system underlines
the customer-focused approach of this system, similar to the Toyota
Production System. The process begins by selling a product at the end of the
line and not by putting the first piece together. Signals throughout the
workcenters are handled the same way as signals to external vendors, in
order to replenish stock inventories. The continuous need for replenished
inventory keeps the overall workflow going, while every workcenter retains
its independent responsibility to have the right level of inventory.
6. Watch the following videos and explain how a pull system differs
from a push system and what the benefits of a pull system are:

A pull system is exactly what it sounds like. The production of a product or


system is varied depending strictly on the demand from the customer or the
market, not from forecasts or previous performance. While most businesses
strive to use a pull business model from end user to shop floor, it is rare for
this to happen, as there are usually some aspects of the supply chain that
are push systems.

A pull system is one in which the supply chain sends a product through the
supply chain because there is a specific demand for that one product, as
opposed to creating inventory and ―pushing‖ the product out to distributors,
wholesalers, vendors, or customers so they have to keep inventory, or
worse, the production company has to keep inventory. A ―push‖ supply chain
is the exact opposite: they consist of many warehouses, retail stores, or
other outlets in which large amounts of inventory are kept to satisfy
customer demand on the spot.(learnleanblog.com)

When a business employs JIT(Just In Time) and the pull model of business,
they are taking on a few risks, but at the same time they are reducing costs
dramatically. Because they do not have to stock inventory at that point in
the supply chain, there is no risk of lost investment in that inventory, and
they will not be scrambling when a demand signal changes based on
seasonality, current events, publicity, or any of other reasons why customer
demand and purchasing behaviors change.

There are many businesses that can benefit from the pull methodology of
supply chain management, and it should be the goal of most businesses to
make as many aspects of their supply chain pull systems instead of push
systems as possible. The businesses that can most benefit from these
strategies are manufacturing, more so than any other business. Because
they run the greatest risk of losses when they have unsold inventory, they
benefit the most from this pull system.

A perfect example of an almost ideal pull supply chain is the Dell business
model. Michael Dell started manufacturing computers out of his dorm room
while in college. The difference between him and his competitors is that he
did not own a storefront or a manufacturing plant. He had to keep his
inventory down to a minimum, if any at all, and did not have room for parts
storage, no matter how small the components may have been.To counter
these constraints, Dell created the ultimate business model: customers built
their computer's specifications on the internet, and using those
specifications, the computer was built. Not a single spare part was left over,
and Dell had no inventory, as each computer was shipped out the door as
soon as it was manufactured.(learnleanblog.com)

7 Watch the following video to identify the sources of financial


benefit from lean manufacturing

From the video one can understand come to know the financial benefits a
company gets when its shifts it operation to Lean methods and also uses the
Lean based ERP system. The video also talks about how most of the
American companies are yet to follow the Lean process of manufacturing
even though it has a lot of benefits. Also concept of Inventory turns is
mentioned in the video. The inventory turns is a performance metric and
refers to buying less and more often than buying raw material at but at one
time. The higher the inventory turn a company has more will be the
transactions. The increase in transaction can be seen in three functional
areas namely the Purchasing, Al invoicing and Receiving Department.
Initially when a company practicing Mass production shifts it operation to
Lean production, there is a constraint that it faces. The constraint is not with
respect to the production but within corporate administrative process itself.
The constraint is seen in the exciting ERP system. By going on a leaner
method the company can decrease the its employee strength, increase
revenue per employee. Also significant increase can be seen in inventory
turn, purchase order line items and invoices. Also decrease is seen in the
value of on hand inventory. But the constraint can be seen with the increase
of purchasing professional, receiving professionals and AP Invoices
professionals. In order to get rid of the constraint one has to do away with a
labour intensive ERP system and introduce a leaner ERP system. By doing so
the constrained seen in the increase in the number of purchasing
professionals and other professionals is completely negated. Also using the
Leaner ERP system results in a lot financial benefits like decrease in number
of employees, increase in revenue earning per employee, significant increase
in purchasing order line items and invoices. Also significant decrease can be
seen in the value of inventory on hand. Thus seeing all these benefits a
company can increase its revenues by a significant amount and also expect
considerable profits. Following article explains the concept of inventory
turns: Inventory Turnover: The number of times that a companies inventory
cycles or turns over per year. It is one of the most commonly used Supply
Chain Metrics. Calculation: A frequently used method is to divide the Annual
Cost of Sales by the Average Inventory Level. Example: Cost of Sales =
$36,000,000. Average Inventory = $6,000,000.

$36,000,000 / $6,000,000 = 6 Inventory Turns

OR Inventory Turns can be a moving number. Example: Rolling 12 Month


Cost of Sales = $16,000,000. Current Inventory = $4,000,000

$16,000,000 / $4,000,000 = 4 Inventory Turns

Projected Inventory Turns: Divide the ―Total Cost of 12 Month Sales Plan‖ by
the ―Total Cost of Goal Inventory‖ Example: The Total Cost of 12 Month
Sales Plan is $40,000,000. Total Cost of Goal Inventory = $8,000,000

$40,000,000 / $8,000,000 = 5 Projected Turns

Turns can be viewed using Cost Value, Retail Value, or even in Units. Just
make sure that you're using the same Unit of Measure in both the
Numerator and the Denominator.

Although results vary by industry, typical manufacturing companies may


have 6 inventory turns per year. High volume/low margin companies (like
grocery stores) may have 12 inventory turns per year or more

8. What is the impact of team working in lean manufacturing?

The Lean process usually demands development of a number of interrelated


policies covering virtually every aspect of personnel policy and practice. The
transformation from ‗leader‘ oriented work to ‗team‘ oriented work is usually
the biggest change which is evident. In this lean system, through
empowerment the difference between traditional white and blue collar
workers is lifted. The change in role has implications for organisational
structure, creating flatter structures focused on process, not hierarchies. The
whole lean process is a people-centred one, with employees becoming more
involved and flexible. Lean production has to be a people-driven process,
because only the employees can identify ways of improving the existing
process or product. One of the cultural changes that become visible is the
waste reduction. This has an impact on both macro and micro departmental
level. The whole culture production department shifts away from pushing as
much material out to the shop floor, to a system of materials being pulled to
the line as production requires them. As a result the tasks of warehouse staff
become less to do with goods coming into warehouse, and more focused on
the increased frequency of delivery both from suppliers and to the line,
which has to be co-ordinated through the Kanban (signalling/ticketing)
system. Team leaders usually get involved in the floor level work with other
team members, thus, hierarchy is diminished in an organisation. The idea of
developing a team forces the creation of the concept of team leaders rather
than the managers. The team leaders have a broader role than the
traditional managers. Their duties usually encompass production of their
team, housekeeping, repairs, minor maintenance and quality control. From
the HRM perspective, this requires a new selection strategy for the
recruitment of team leader who is able to do multi-tasking. The roles of
team members also shift with the introduction of more flexible job
descriptions and involves multi-tasking. Individual employees no longer have
their own jobs, but have a collection of team responsibilities. To assist in this
process each separate task which is carried out is now required to be
performed in the ―one best way‖. The move towards Lean process puts
stress not only on production processes, but also on individuals, making any
weak links vulnerable, and drawing attention to the importance of having the
right employee in the right position. This forces the recruiters to review the
validity and reliability of their selection programmes for every level of the
organization. The team members in an organisation need to be trained on a
broader range of work as a result of lean production to include different
processes and techniques instead of being concerned purely with how to
carry out a single operation. Lean production triggers the bias towards
problem solving in an organisation. Any weaker links in the production
process is immediately rectified. This problem solving often improves the
employee motivation and thus increases the overall performance of the
organisation. Most often, the introduction of Lean production brings along a
different pay structure in an organisation. The package can be organised so
that it can create a package which would include base pay and other
experience and performance related incentives.(Rosalind Forrester (1995))

9. What do you understand by Kaizen?

Kaizen was created in Japan following World War II. The word Kaizen means
―continuous improvement‖. It comes from the Japanese words 改 (―kai‖)
which means ―change‖ or ―to correct‖ and 善 (―zen‖) which means
―good‖(graphicproducts.com) Kaizen is based on making changes anywhere
that improvements can be made. Western philosophy may be summarized
as, ―if it ain't broke, don't fix it.‖ The Kaizen philosophy is to ―do it better,
make it better, improve it even if it isn't broken, because if we don't, we
can't compete with those who do.‖ In the Unites States its also termed as
Continuous Improvement or CI. Some people also refer to this as
Continuous Value Improvement and so on. Kaizen is a system that involves
every employee - from upper management to the cleaning crew. Everyone is
encouraged to come up with small improvement suggestions on a regular
basis. This is not a once a month or once a year activity. It is continuous.
Japanese companies, such as Toyota and Canon, a total of 60 to 70
suggestions per employee per year are written down, shared and
implemented.

Some of the aspects associated with Kaizen are as follows.

 Eliminating Waste
 Improving Efficiencies
 Improving Processes and
 Improving Morale

Kaizen involves every employee in making change–in most cases small,


incremental changes. It focuses on identifying problems at their source,
solving them at their source, and changing standards to ensure the problem
stays solved. Effective Kaizen relies on three main principles (Magee, 2007):

 Process and results (not only results)


 Systematic thinking (seeing the big picture, holistic perspective)
 Non-blaming (blaming is wasteful as it does not help to achieve)

Toyota is well-known as one of the leaders in using Kaizen. In 1999 at one
U.S. plant, 7,000 Toyota employees submitted over 75,000 suggestions, of
which 99% were implemented.(graphicproducts.com) For Kaizen to work for
a company, operations should be standardized and following this
improvements should be made,changes should take place and then re
standardized and measured again. Making changes, seeing improvements
over previous work and re standardizing are some of the important aspects
of Kaizen.To support the higher standards Kaizen also involves providing the
training, materials and supervision that is needed for employees to achieve
the higher standards and maintain their ability to meet those standards on
an on-going basis. If a company or manager fails to do so then the whole
Idea of Kaizen takes a hit.
10. Why might low inventories make innovation easier?

Low inventories might make the life of the employees a bit easier. A
company having lower inventories will have lower inventory turn over and
this results in higher revenue and more cash to spend,also the revenue per
employee increases.There are other benefits also with lower inventory and
these are mentioned in the previous answers. With company adopting leaner
method's the responsibilty of the employee increases. Each employee is
more responsible and also it gives them an opportunity to work the exciting
problems and find solutions. With a team based model being followed there
is not authoritarian rule and this makes innovation or inventive ideas to
occur more easily or in other words scope of newer innovation or better
inventive methods is more. Also as the company has more cash to spend
then can be very encouraging and support their staff with good innovative
ideas. Also this gives companies a chance to work on better products and
systems and they won‘t be pulled down by legacy and large inventory
pending in their stocks. Toyota and Dell were the first companies to adopt
lean practices and have shown that it‘s possible for companies to innovate
continuously and come up with better customer service and products.

11. What are the key differences between conventional mass


production and lean production?

Some of the key differences between the conventional mass production and
lean production are summarised below

 the traditional mass production managers tends not to think about the
work force as a social entity, where as the lean production makes a
deliberate and explicit effort to organize the informal social network in
production system to align employee interest as closely as possible
with the company goals.
 Lean production combines technological mastery of mass production
with the preindustrial respect for individual‘s autonomy as a
craftsperson.
 Customer Satisfaction: Incase of mass production engineers make
products in large quantities at statistically acceptable quality levels;
dispose of unused inventory at fire sale prices. In case of lean
production engineers make what the customers want with zero
defects, when they want it and only in quantities they ordered.
 In mass production Leadership by executive fiat and coercion and in
lean production Leadership by vision and broad participation.
 Individualism and military-style bureaucracy functioning was seen in
mass production, where as in lean production team based operations
and flat hierarchies.
 Culture of loyalty and obedience: subculture of alienation and labor
strife can be seen in mass production. Harmonious culture of
involvement based on long term development of human resources is
seen in lean production.
 Mss production is usually associated with large scale machines,
functional layout, minimal skills, long production runs and massive
inventories . where as lean production has human scale machines,
cell type layput , multiskilling, one piece flow and zero inventories.
 In mass production information management was poor and based on
abstract reports generated by and for managers. In lean production
information management was rich based on visual control systems
maintained by all employees.
 Mass production had a model of isolated genius, with little input from
customers and little respect for production realities. whereas the lean
production had a team based model, with high input from customers
and concurrent development of product and product process design.

12. Especially explain the differences between the role and position
of the shopfloor workforce in lean and mass production.

Lean production and the implementation of Kanban create a different kind of


workflow for employees. Because every employee is empowered to ―order‖
parts from the previous assembly step, there is a stronger sense of
responsibility for the overall process and the final outcome. In traditional
mass manufacturing, employees have to do repetitive tasks at a constant
rate, regardless of the following or previous steps. Kanban creates a more
engaging process because it is more dynamic and changes occur regularly.
This ultimately leads to a higher motivation of the workforce as it is easier to
identify with the overall goals and objectives of the company.
In the original mass production system of Ford, workers received unusually
high wages to compensate for the simple and repetitive work. I (Tim) once
did a holiday job on an assembly line for radiators. While I spent multiple
weeks in that position, I never thought about what happens before or after
my position in the assembly line. It was all about finishing the single step as
quickly as possible without caring about the global idea. As a result, mass
production can lead to lower quality products because workers do not feel
responsible for the final outcome. The workforce is just an individual part of
the chain in the same way as any piece of machinery. It is possible to
compensate that with paying higher wages, but workers will not be satisfied
over the long-term.

In Kanban-based pull systems like the TPS, every step of the process
considers the following step as customer (Magee, 2007). The individual steps
of the manufacturing process are treated like independent companies within
the system. Employees are given the responsibility to manage their
inventories and improve the process by themselves, which is a lot more
engaging than a position in mass production. By trusting the shopfloor
workforce with these tasks, people feel more valued and a part of the final
outcome. As a result, individual employees pay more attention to quality and
the product is likely to be better.

13. Why is team working important in lean production?

Under Lean production the social entity is very important and cannot be
ignored. Lean production legitimizes the informal social network in an
company as an important source of co ordination and commitment.
Employees are encouraged to identify themselves with company rather than
their team or department. In lean production the team doesn't only
represent the formal structural unit but represents the notion of team work,
that embodies the goal of a co-operative relationship among the work team,
work departments and the organization as a whole. Goals and incentives are
formulated and work is organized to support the central influence of social
interaction on the operation of a productive system.

In lean production the peer relationship among the team members, support
provided by the team leader replaces the traditional foreman whose rules
was authoritarian in nature and rule based.Social relation is extremely
important in lean production.The peer control that comes from lean
production could easily go wrong if there is no cohesion ,some process of
close to the source dispute resolution, personal influence that is based on
expertise and not seniority and incentives that align the team members
interst with each other and with the other teams in the plant.

To summarize,the traditional mass production managers tends not to think


about the work force as a social entity, where as the lean production makes
a deliberate and explicit effort to organize the informal social network in
production system to align employee interest as closely as possible with the
company goals.(Steve Babson,Lean work: empowerment and exploitation in
the global auto industry)

14. How is lean production related to high responsiveness to


customer need?

Lean production and pull mechanisms in general are customer-driven.


Selling a product at the end of the production line causes a backwards
cascade of inventory replenishments and production tasks. This approach is
also applied outside of the manufacturing plant, when conducting market
research and connecting to customers. Toyota employs the philosophy
of genchi gembutsu, which means ―going to the source to see and learn
firsthand‖ (Magee, 2007). In order to serve customers desirable products,
companies first have to know their customers. Jim Press (former President of
Toyota Motor Sales, currently Deputy CEO of Chrysler Group LLC)
summarises this philosophy in three key points:

 Learn the customer


 Live the customer
 Empathize with the customer

When Toyota started out to create Lexus, their luxury sub-brand, the
designers were sent out to live and learn a luxurious life themselves in order
to gain in-depth knowledge about the target audience. On a more abstract
level, this creates a strategy of winning and earning customers rather than
forcing products on a market. This underlines how the pull concept reaches
into all branches of an organisation, not only manufacturing. By continually
learning about customers and adapting internally, Toyota can translate
customer feedback directly back to product design and manufacturing. Due
to the low inventory levels and flexibility of lean production, emerging trends
and customer demands can be served better as the manufacturing process
can be adapted more quickly than conventional mass-production systems.
2nd set

1 ‘Lean’ thinking became a massive influence in 1990s but what


evidence is there that much so called leanness was superficial?

The most significant fact can be observed are the success of Japanese car
industry, especially Toyota. The so called ―Third industrial revolution‖ (Rose
& Parsons 2009) combines with responsiveness, quality and innovation. Take
Toyota for example, after World War II it observed the Ford‘s factory to
learn the mass production line system, and then integrate the mass
production idea into their production idea late. Toyota also learns from
Deming, who developed the theory in World War II. The experiences
contribute to Toyota‘s lean production and Just-In-Time (JIT) system. Toyota
applied some approaches on production, which includes high education level
of workforce, work as a team, the quality circle based on Deming‘s theory,
transfer the duty and permission about quality control to shop floor level,
and build knowledge base for shop floor level. Finally Toyota develops
principles for lean production:

• Production in small batches but avoids cost from rising.

• The team is responsible for the quality, not only the manager.

• High quality of labour force.

• Research and Development department work together.

• Apply robotics on the production line.

• Based on the relationship with suppliers to support JIT system, remove the
inventory from stock.

• Close relationship with customers to make sure a better understanding of


customer demand.

• Build the car only when the order is sent.

2 What are the key rules on developing a lean approach?

There are five steps to develop a lean approach (Womack 1996):

1. Define value.
Value from the end customer > specification of product or service >
specification capabilities + timing + the right place. This is the step to
convert the customer‘s concept into reality, which means in provider‘s
language, so the demand can be translated into the goal of production.

2. Identify value stream and eliminate waste:

The value stream consists of

a. Product definition: Translate the customer‘s demand into the detail layout
and specification for engineers and workers to design the first stage of
production. I think in this stage the gap between the buyer and seller can be
a key factor. If the communication got misunderstanding, it may lead the
following procedure to fail.

b. Information management: Begins with the customer‘s order until the final
delivery stage. I‘d like to take my experience for example, when I place an
order on ASDA, it will record my delivery address, debit card number and
contact details. The information will be used until the delivery stage. To
avoid the inconsistent problem in the whole process, ASDA lock the
permission to modify my account detail until the delivery is complete. It can
be seen that ASDA is unable to communicate with the delivery staff in a
short time, so what ASDA can do is only to stop the customer from
modifying their detail.

c. Physical transformation: From the raw material to the final delivered


product.

3. Making value creating steps flow.

In the process of making continuous flow, the muda (waste in Japanese) can
be observed. Remove muda and make the production process continuous
will speed up the value creation process.

4. Design and provide only when customer wants only. Since the end
customer is the source of value, the end customer should lead the product
line. In order to minimize the time from order to delivery, a fast reaction in
the product system should be designed, thus more muda will be discovered.

5. Pursue perfection When applying theory to reality, something unexpected


happens. Mistakes, misunderstanding and process in the production line can
be improved better for the next stage. In the perfection pursue, more muda
is removed.
3 What forces encouraged Lantech to shift to a lean production
system?

It is thought that the fundamental concept of lean production is Kaizen,


which means ‗improvement‘ in Japanese. Eliminating wasteful elements and
keeping high quality with flexibility can be also thought to be the goal of
improvement processes in ordinary. This is not about pursuing dominant
innovation from enormous investments, but pursuing something better than
yesterday even though the progress is minor. From this perspective, it can
be said that Lantech kept stepping into a lean production gradually.

After losing its exclusive position in the market due to losing a patent-
infringement suit in 1989, Lantech faced problems which threatened its
perpetuity; time taking for minor improvement or new model; quality issue
in terms of manufacturing defects, overall no added value to deliver to
customers. Nevertheless, the key driving forces that enabled Lantech to
move to a lean production system are: (1) Commitment of founder and (2)
Hiring personnel who can trigger revolution in the organisation.

(1) Commitment of founder:

The founder, Lancaster kept trying new methods for better business position
from the beginning. Especially, after losing patent position, he perceived the
importance of value delivery to customers and worked on below 4 elements
for improvement. Yet, it didn‘t get into a lean production system and these
approaches didn‘t work well, ongoing experiments were worthwhile in terms
of ‗Kaizen.‘

a. separation of profit centres into standard products and intensively


customized products and introduction of total quality management calling for
valuing customers.

b. setting up an empowered organization to build trust between


management and workforce, among departments.

c. New production method, Max-Flex, was adopted to cut lead time and
deliver customised wrapping machines to customers

d. better information technology was also adopted to control the status of all
machines in production.

(2) Hiring Ron Hicks: It seems that hiring him worked as a trigger to start
full-scale lean production system. His join to Lantech inspired Lancaster in
terms of lean thinking, and stimulated the company to shift into a lean
production system.
4 What changes were involved in making the shift from mass to lean
production?

Redefinition of management: Before Lantech initiate lean production


system, the founder re-defined management roles as a cornerstone and
simply lined-up with following 3 types of managing roles.

(1) Leadership with long term vision

(2) Deep knowledge in lean techniques

(3) Initiative to flexible organisation for changing environment

Rethinking of 'Value Stream' and product development: Even before Lantech


shifted to lean production system, the founder put high priority on customer
value, although his previous trials didn't work well. The steps they followed
for value stream is one of the key features of lean production process as
well.

(1) Identification of required activities

(2) Elimination of no value-adding activities (i.e. muda)

(3) Performing in a rapid sequence by processing one machine, one design,


one order at a time

Initiating To make it happen, Ron Hicks teamed up to initiate so-called


'Kaikaku' phase to re-engineer the production system by breaking down the
whole processes and activities. Throughout this plan, he set separated
production cells for 4 main product groups and re-engineered by re-
arranging production cells for each products specifications. As a consequence
their production concept changed from batch to flow with much speed.

In theory, according to Micheal E. Porter(2000), the components of lean


production include:

- Total quality control

- Continuous improvement (Kaizen)

- Just-in-time (JIT) manufacturing

- Dising for manufacturability

- Close supplier relationships


- Flexible manufacturing

- Rapid cycle time

5 What were the implications of letting the customer pull the


product?

Based on the material given by tutor, the implications of letting the


customer pull the product were the MRP system was no longer used to order
parts from suppliers. Most suppliers delivered parts right before the
production cells needed them or just in time, for example, under Lantech‘s
kanban system, when a cell used a small box of parts, a card was sent
immediately to the supplier of the box, telling that it had to deliver another.
Increasing the blank space on the white board is an excellent example of
another lean technique: visual control. Rethinking the product development
process and then decide to make new product design flow to reduce the
time. In addition, to satisfy customers, the company would have been an
interesting technical exercise, however, the amount of investment required
was virtually zero, and most part, workers freed up by the elimination of
inefficient tasks, and the transformation reduced the amount of computers,
space and expensive tooling that the company required

In short, here are some good point of letting the customer pull product:
Production and distribution are demand driven, no inventory, response to
specific orders, point of sale data comes in handy when shared with supply
chain partners, goods are produced when inventory is low, keep inventory at
efficient levels, allows for customization, decrease in lead time, space,
mistakes while improving the product to more of what the customer wants.
This leads to greater perfection.

6 What implications does this approach have for e-business?

E-business is business and therefore a strategic issue. E-business will impact


business process, technology and organizational structure and e-business
opportunities exist in: sale & marketing, product development, supply chain
management & procurement, support processes & people enablement. E-
business is about connecting the extended enterprise which creates new
relationships and changes the nature of existing relationships. And according
to wiki, e-business methods enable companies to link their internal and
external data processing systems more efficiently and flexibly, to work more
closely with suppliers and partners and to better satisfy the needs and
expectations of their customers. E-business involves business processes
spanning the entire value chain: electronic purchasing and supply chain
management, processing orders electronically, handling customer service
and cooperating with business partners. Special technical standards for e-
business facilitate the exchange of data between companies. In summary,
letting customers pull the product have implications for e-business such as
work more closely with suppliers and partners, handling customer service,
low inventory, and pursue perfection in business.

References

Liker, J. K. 2004, The Toyota Way, McGraw-Hill

Magee, D. 2007, How Toyota Became #1, Portfolio

http://www.learnleanblog.com/2009/07/pull-system-key-lean-concept.html

Lean work: empowerment and exploitation in the global auto industry - by


Steve Babsons(1995)

http://www.graphicproducts.com/tutorials/kaizen/kaizen-benefits.php

Strategos. Toyota Production System and Lean Manufacturing. Available


online: http://www.strategosinc.com/toyota_production.htm Accessed 13th
November 2009

Implementing a lean management system By Thomas Lindsay Jackson,


Karen R. Jones

http://mtchowdhury.blogspot.com/2007/12/possibilities-and-limitations-
for.html

http://www.lantech.com/

Beyond Toyota: How to Root Out Waste and Pursue Perfection, By: Womack,
James P., Jones, Daniel T., Harvard Business Review, Sep/Oct96, Vol. 74,
Issue 5.

http://en.wikipedia.org/wiki/Kaizen

http://en.wikipedia.org/wiki/E-business

Poter, M. 2000, Can Japan Compete?, Macmillan Press Ltd.


http://www.indianmba.com/Faculty_Column/FC592/fc592.html

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