ESTERLINE TECHNOLOGIES:

• 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

• How does lean differ from more traditional approaches to

production ?

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.
• A higher percentage of lost production time, because while the
machine is down, nothing is produced.
• 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.

• Of the key lean elements described in the case,which ones do you think are most
important for Esterline?

• 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 Lower costs, identify and fix quality Training programs in areas of basic lean
responsibility and problems and build barriers to entry, techniques and change management,
authority to employees – motivation, eliminate waste periodic seminars and workshops with
new way of thinking, experts to stretch lean thinking
power to improve
processes
Employees were free to Offering more on-time delivering, Simplify product flow and level-load work
choose the tool set that improving quality and responding more across process elements; People and
worked for them quickly to customers’ needs; machines arranged sequentially
performance measured through
inventory turnover and ROI
Individual units make own Supporting tool, better inventory
decisions about ERP accuracy, reduced setup timesimproved
implementation cash flow
At Korry’s…
Distribution in cells Productivity gains
90’s ASSEMBLY AREAS: 90’s - 5-S systems, Kanban system to
control inventories –
1999 technique used to analyze the flow of 1999 – Value Stream Mapping
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 Point-of-use storage system;
2003 Identify what is necessary and 5-S Systems in administrative office also
eliminate the rest; eliminate dirt; place started to use value stream maps to identify
for everything & everything in its bottlenecks, problems
place; standardize; sustain, make a
habit – average process from 3 days to
1 day
2004 Cell #1 – assembly of For on-time delivery, smaller deliveries 2004 – Heijunka – level loading in order to
high-volume products with but more frequent, to standardize flat production
regular frequency production processes
Cell #2 – assembly Improvement of delivery service to Heijunka
products ordered 100% and productivity of 30%,
infrequently, and in small average throughput time decreased
numbers - uncertainity 90%
Heijunka extended to suppliers and
recently to customers (discounts for
smaller batchers)
2005 Inventory costs dropped, better Water spider – deliver parts in hourly basis
inventory level control -mizusumashi – there is someone always
available
Educate 3rd parties - Extended “water spider” concept through
the supply chain to the suppliers – Weekly
order, even if it wasn’t needed
Flat panel screens put pressure in Visual Management – flat panel screens
employees so used TAKT times to set for schedule displays at the beginning were
the pace of production based on substituted by manual daily schedules
customer demand rate; based on TAKT times
Optimized time, configurations are 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