:Assignment 3 – Harvard Case Study

Esterline Technologies: Lean

Manufacturing
“. . . if a pilot touches it, looks at it, talks to it, or reacts to it chances
are it’s made by Esterline.”1

Aim
The aim of assignment 3 is to analyse a case on IT enabled change efforts and
answer the questions assigned to the case. This entails the use of
theory(s)/framework(s)/model(s) from the course, or other materials of relevance
that you may find appropriate, to elaborate and support your answers.
deadline 7th and presentation is on 9th .

Theoretical framework
Hobbs (2003) step-by-step lean implementation

Q1) What evidence does the case offer regarding Esterline’s success? What factors
appear to have contributed to Esterline’s performance?
a)Evidence:
Impressive growth:
- revenue
- Thirty new acquisitions made between 1999 and 2005.
- scale: expansion of the company’s footprint to many states within US: Wisconsin,
Michigan, Illinois... . 34 business units and 7,500 people employed across the United
Kingdom, United States, Germany, France, Mexico, and China.
- Improved performance across multiple indicators

In 2005, achieve Tier-1 supplier status with the 2 very important customers: Boeing
and Airbus.

b)Factors contributed to sucess:

+ Consistency and vision of Bob Cremin: The new CEO and his corporate team
narrowed down the company’s focus to key industries and technologies. This cleared
up confusion in the marketplace and made it easier to raise funds and grow, which
they did.
+ Strategic focus on lean manufacturing, adoption lean principle (with innovation). This
kind of approach enabled the reduction of production costs, and also improved
quality of Esterline products and improved competitiveness of the company.
+ Showcase adaptive (flexible) nature, processes is catered to fit unit level. Continuous
improvement at organizational and at unit level (another key principle of lean)
+ Consistent stance on information system. complicated and standardized erp as
distraction for lean manufacturing. 2005 effort shoud apply lean principle as
foundation for ERP implementation (supporting tool). Allowed business unit to made
own decision about ERP and IT system.
Q2) What is the role of an ERP system in a “traditionally run” manufacturing plant?
Does it present conflicts for lean manufacturing? Why or why not?

IT system is a supporting tool, not a tool to control or limit lean manufacturing (Nolan,
Brown & Kumar, 2006). It means that if well implemented, an ERP system should be able
to improve the performance of the lean manufacturing processes.

1. System depends on flow of information, as it creates dependability, connecting or

align which leads to smooth business operations therefore end –up to performance. The
enhancement of system through more adequate, transparent and visible yet assessable
system that only acts as a catalyst for better performance is the role-played bye ERP.
2. Today, commonly observed business are striving hard for being best in various ways,
firms are looking forward for better technology that makes their organization more
effective, ERP adds value to level of sharing information by making it more proficient
3. Add more simple yet competent ways of doing routine acts in companies and
reducing errors, which eventually results in improved administration.
4. The case talks, about keeping it simple whereas ERP systems are complicated but
education and training employees with the nature and vision of the company with
customizing it accordingly to demands, would lead to better performance.
5. ERP system is a way that increase chances of error free and transparent information
sharing, no it doesn’t conflict with the lean but it adds value by keeping lean integrated in
system and spreading through out in enormous organization fastest and accurate. As
lean is more into just-in-time, timelines and waste management, as proper education for
system will reduce the chances for ERP to be a waste

6. Knowing that the aim of Esterline's lean efforts is to simplify the product flow and the
level-loading work across process element (Nolan, Brown & Kumar, 2006), and that the
role of the ERP system in business beside the integration of functional applications and
organizational information, is to better position the organization to change its business
processes (Motiwalla & Thompson, 2013), we can say that an ERP system does not
present conflicts for lean manufacturing when it is not well implemented.

NOTE : We can discuss the exhibit 3 , for discoursing what areas can get simple IT
system. Its not directly relevant though.

Q3) If you were Korry Electronics President Gary Dytrt, what decision would you
make about replacing the outdated MPR system? Would you just let it die and live
without it? If you would replace it, what selection criteria would you use to identify
a system with the best fit?
Replacing the outdated MRP-system
· Replace it with an ERP-system (an outdated MRP-system might not be the best fit for
lean manufacturing)
· Essential for accommodating demands of two of their major customers
o Communication with suppliers and customers - coordination management
o Improve customer service
· Facilitates implementation of lean production techniques
o Information sharing & real time information
o Easier to keep track of inventory levels & cash flow etc.

Selection criteria
o Should be able to forecast demands (one of Esterlines main problem)
o The system should be simple – user friendly
 o Adjustable and scalable (Esterline makes a lot of changes due to the implementation
of lean processes – also needs to fit their expansion plan)
o The system should be compatible with lean manufacturing
o Use an established supplier of ERP-systems (reduce uncertainty)
o Information should be accurate and easy to access (inventory levels, cash flow etc.)
o Incorporate some of the major benefits of the MRP-system
o Make it easier to communicate with suppliers and customers (improve customer
service)

Presentation agenda Time (max) group members doing it

Title and names 2min danielle

Case summary danielle

Focus of the case study - 1 min aisha

questions

Theoretical framework 1 min long

Analysis - Q1 2.5 min Long

Analysis - Q2 3 min aisha

Analysis - Q3 2.5 min Fabian

Reflection 2 min Saadman

References

Title and your names

Case summary
 Esterline Technologies founded in 1906,Bellevue, Washington is a specialized
manufacturing company serving principally aerospace and defense markets
(approximately 70% of their total revenues). It was a multi-industry company before 1999
when a new CEO came to the company. Together with his corporate team they narrowed
down the company’s focus to key industries and technologies by selling 12 of their non-
aligned companies, which resulted in a temporally draw back of their total revenue to
about 155 million dollars. The also reduce their industry mix from 10 markets down to 2
markets which are, commercial aerospace and defense. For the CEO, this proved to be
a good strategy, because in 2005 they achieved Tier-1 supplier status with two of their
most important customers ( Boeing and Airbus) and the annual revenue had reached 835
million dollars, forecasting a total revenue of over 1 billion in 2006. According to the CEO
their success was based on product development supplemented with targeted
acquisitions. At a tactical level, lean production was the cornerstone for their success.
The issue in this case was the dilemma about the implementation or not of an enterprise
IT system to support the lean manufacturing processes. While some wething the
company believed that an enterprise IT will be an asset to successful performance, others
believed that an enterprise IT system may interfere with the effort to remove waste and
simplify processes, they also argue that most of the advantages that an ERP system
present could be achieved through process simplification and lean production methods.
Due to the complexity of the batch and queue architecture that created long lead times,
the needed the support of an IT systems such as MRP (Material Requirements Planning)
to track the progress of parts through the system. In 1980s they tried to implement a
standardized enterprise IT system, but it did not work (Nolan, Brown & Kumar, 2006). So,
for Esterline, It systems were too complex; But they adopted an It system that allowed
individual business units to make their decisions about ERP. Korry Electronics one of
Esterline division implemented its MRP. In 1999, Korry abandoned the ERP
implementation project because it was too complicated to handle and support the lean
manufacturing practices. So, the returned to their MRP system. But in 2006 their was a
need to implement a new ERP system that would replace the MRP.

Focus of the case study – questions to be answered

Theoretical framework
Analysis – answers to assigned questions
Reflections
References

Hobbs, D. P. (2003). Lean manufacturing implementation: a complete execution manual for any size
manufacturer. J. Ross Publishing.