Compiled Innovation Week 7 Answers

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 buildto-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-toorder 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 slowmoving, 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 patentinfringement 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 rearranging 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. Ebusiness 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 ebusiness 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-limitationsfor.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