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Beyond Toyota

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The document describes the journey of Lantech, a manufacturing company, in adopting lean principles. It discusses how Lantech initially struggled with long lead times and batch production. It then implemented lean techniques like value stream mapping, continuous flow, visual management and dedicated teams. This transformed Lantech's production system and significantly reduced lead times and inventories while improving quality and increasing market share. The document emphasizes that lean is a continuous improvement journey towards perfection.

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Anjali Raj Nidhi Upadhyay Vasundhra Agarwal Nimisha Karnani Priyanka Das Anirudh Chaudhari
Managers across the world professing that their company is adopting lean techniques. Claims are all just wishful thinking. The main problem is that though many managers have got the individual lean techniques right , they are not able to put it together into a coherent business system. More than 50 companies across the world have been studied and 5 steps have been discovered which will be useful to managers everywhere.
Define value precisely from the perspective of an end customer in terms of a specific product with specific capabilities offered at a specific price and time. Identify the entire value stream for each product or product family and eliminate waste. Make the remaining value creating steps flow. Design and provide what the customer wants only when the customer wants it. Pursue perfection
HISTORY: Pat Lancaster grew up in the family workshop, convinced from his early age that he could be an inventor. In 1972, he had his big idea: a new way for manufacturers to wrap their products for shipment. With a small investment of $300, went to work under the corporate name of Lantech. Lancasters idea was a device that would stretch-wrap pellets of goods with plastic film in place of the traditional shrink wrapping so that they could be shipped easily from one place to another
Like all startups, Lantech was born lean, but as the company scaled up maintaining lean production did not seem practical. Lancaster appointed an operations manager, an engineering director and a sales director. Lantech was organized into a series of departments. In pursuit of efficiency, Lantech built its four basic types of machines in batches.10 to 15 machines of one type were assembled at a time. As customers bought only one machine at a time, the company had to store most of the machines in the warehouse.
Complexity increased exponentially as Lantech tried to move the orders gathered by the independent sales force through the office and the plant. Proposals were sent for cost analysis to the engineering department which then sent the acceptable price back to the sales force. Once the order is accepted, the order traveled from the sales staff through engineering aplications, design and credit checking before returning to design, which generated a bill of materials.
The order with the bill of materials then went to the production operations scheduling department. There were usually delays as there was a queue of orders. As a result, orders generally took 12 to 14 workdays to travel from the sales staff to the scheduling department, even though the actual processing time was less than 2.
Since the movement of products through the plant was so erratic, the company created a separate order management department within the sales force to communicate with the plant about where the machine was in the production process and to expedite the order if the customer was getting restless. This system was fine in theory but always a mess in practice because of the conflict between customers changing desires and the logic driving the production system.
Severe communication issues within the company which increased with increase in staff numbers. Each engineer had a stack of projects on his desk. Moststeps added no value and managers focused on minimizing variations in operations rather than on pursuing perfection.
On June 26 1989, Lantech lost a patent- infringement suit against a competitor that was offering lower-priced clones of Lantech machines. By the end of 1989 clones with roughly comparable performance started to appear everywhere. Itwas like Lantech was walking dead. Change was necessary.
Firstapproach was to reorganize the company into separate profit centers for standard products and special products. TQM was introduced. The talk about good enough changed to talk about perfection.
To create an empowered organization and to build trust between management and the workforce and among different departments. Autocratic managers were replaced with managers focused on team work. Company conducted extensive training in team processes, team leadership and individual interaction. Even after all this the factory was still a mess.
New production method called Max-Flex was introduced. Theidea was to slash lead time by building inventories of major components in advance, then assembling machines to customers specifications very quickly when an order was confirmed. Leadtime fell from 16weeks to 4, but costs were very high.
Introduction of better information technology. The new system was wildly inaccurate because many times items did not get entered into the system. Also, the magnitude of inputs and changes made the computer run very slowly. By end of 1991, Lantechs orders were falling despite price reductions and the factory was unable to accommodate the continual shifts in demand.
Ron Hicks joined Lantech in March 1992 as Vice President- Operations. To transform into a lean organization, a company needs three types of leaders: Someone who is committed to the business and can be the anchor that provides the stability and continuity Someone with deep knowledge of lean techniques Someone who can smash the organizational barriers that inevitably arise when dramatic change is proposed. Lancaster filled the first role, Hicks the second and Zabaneh the third
Lantech would immediately form teams to rethink the value stream and the flow of value for every product and every process. Lantechwould identify necessary activities and eliminate the rest. Perform activities in rapid sequence. Batches, queues , backflows would be banished.
Dedicated production processes was established for each product family. Throughput time was reduced. Lantech needed standardizing their work. Establishing takt time was critical. Lantech also needed to figure out how to perform equipment changeovers quickly. By 1992 lantech had converted its entire production system from departmentalized batch methods to continuous flow in cells.
Visual control was established. It is one of the principles of lean thinking. Its says that if every employee can see the status of an activity, he or she will be able to take appropriate action. Lantech started a new system of dedicated teams led by a directly responsible individual who would be charged for the success of the product during its lifetime.
Once the employees were totally involved in the design and production process , the outcome was that good products were produced. The demand went high and production was based on customer demand unlike before. Lantechs share of stretch wrapping market zoomed from 38% in 1991 to 50% in 1995.
Lantech as an organization is steadily striving for perfection- a state in which every action in the organization creates value for the customer. Despitethe performance leap that Lantech has made, it can identify as many opportunities for improvement today as it could then.
By making continuous incremental improvements in pursuit of perfection, companies can double productivity within two to three years and halve inventories , errors and lead time. The problem today is that technology is present but it is misapplied and hence perfection not attained. There is shortage of managers with the knowledge and capability to apply comprehensive lean techniques.
Beyond Toyota

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Beyond Toyota

  • 1. Anjali Raj Nidhi Upadhyay Vasundhra Agarwal Nimisha Karnani Priyanka Das Anirudh Chaudhari
  • 2. Managers across the world professing that their company is adopting lean techniques. Claims are all just wishful thinking. The main problem is that though many managers have got the individual lean techniques right , they are not able to put it together into a coherent business system. More than 50 companies across the world have been studied and 5 steps have been discovered which will be useful to managers everywhere.
  • 3. Define value precisely from the perspective of an end customer in terms of a specific product with specific capabilities offered at a specific price and time. Identify the entire value stream for each product or product family and eliminate waste. Make the remaining value creating steps flow. Design and provide what the customer wants only when the customer wants it. Pursue perfection
  • 4. HISTORY: Pat Lancaster grew up in the family workshop, convinced from his early age that he could be an inventor. In 1972, he had his big idea: a new way for manufacturers to wrap their products for shipment. With a small investment of $300, went to work under the corporate name of Lantech. Lancasters idea was a device that would stretch-wrap pellets of goods with plastic film in place of the traditional shrink wrapping so that they could be shipped easily from one place to another
  • 5. Like all startups, Lantech was born lean, but as the company scaled up maintaining lean production did not seem practical. Lancaster appointed an operations manager, an engineering director and a sales director. Lantech was organized into a series of departments. In pursuit of efficiency, Lantech built its four basic types of machines in batches.10 to 15 machines of one type were assembled at a time. As customers bought only one machine at a time, the company had to store most of the machines in the warehouse.
  • 6. Complexity increased exponentially as Lantech tried to move the orders gathered by the independent sales force through the office and the plant. Proposals were sent for cost analysis to the engineering department which then sent the acceptable price back to the sales force. Once the order is accepted, the order traveled from the sales staff through engineering aplications, design and credit checking before returning to design, which generated a bill of materials.
  • 7. The order with the bill of materials then went to the production operations scheduling department. There were usually delays as there was a queue of orders. As a result, orders generally took 12 to 14 workdays to travel from the sales staff to the scheduling department, even though the actual processing time was less than 2.
  • 8. Since the movement of products through the plant was so erratic, the company created a separate order management department within the sales force to communicate with the plant about where the machine was in the production process and to expedite the order if the customer was getting restless. This system was fine in theory but always a mess in practice because of the conflict between customers changing desires and the logic driving the production system.
  • 9. Severe communication issues within the company which increased with increase in staff numbers. Each engineer had a stack of projects on his desk. Moststeps added no value and managers focused on minimizing variations in operations rather than on pursuing perfection.
  • 10. On June 26 1989, Lantech lost a patent- infringement suit against a competitor that was offering lower-priced clones of Lantech machines. By the end of 1989 clones with roughly comparable performance started to appear everywhere. Itwas like Lantech was walking dead. Change was necessary.
  • 11. Firstapproach was to reorganize the company into separate profit centers for standard products and special products. TQM was introduced. The talk about good enough changed to talk about perfection.
  • 12. To create an empowered organization and to build trust between management and the workforce and among different departments. Autocratic managers were replaced with managers focused on team work. Company conducted extensive training in team processes, team leadership and individual interaction. Even after all this the factory was still a mess.
  • 13. New production method called Max-Flex was introduced. Theidea was to slash lead time by building inventories of major components in advance, then assembling machines to customers specifications very quickly when an order was confirmed. Leadtime fell from 16weeks to 4, but costs were very high.
  • 14. Introduction of better information technology. The new system was wildly inaccurate because many times items did not get entered into the system. Also, the magnitude of inputs and changes made the computer run very slowly. By end of 1991, Lantechs orders were falling despite price reductions and the factory was unable to accommodate the continual shifts in demand.
  • 15. Ron Hicks joined Lantech in March 1992 as Vice President- Operations. To transform into a lean organization, a company needs three types of leaders: Someone who is committed to the business and can be the anchor that provides the stability and continuity Someone with deep knowledge of lean techniques Someone who can smash the organizational barriers that inevitably arise when dramatic change is proposed. Lancaster filled the first role, Hicks the second and Zabaneh the third
  • 16. Lantech would immediately form teams to rethink the value stream and the flow of value for every product and every process. Lantechwould identify necessary activities and eliminate the rest. Perform activities in rapid sequence. Batches, queues , backflows would be banished.
  • 17. Dedicated production processes was established for each product family. Throughput time was reduced. Lantech needed standardizing their work. Establishing takt time was critical. Lantech also needed to figure out how to perform equipment changeovers quickly. By 1992 lantech had converted its entire production system from departmentalized batch methods to continuous flow in cells.
  • 18. Visual control was established. It is one of the principles of lean thinking. Its says that if every employee can see the status of an activity, he or she will be able to take appropriate action. Lantech started a new system of dedicated teams led by a directly responsible individual who would be charged for the success of the product during its lifetime.
  • 19. Once the employees were totally involved in the design and production process , the outcome was that good products were produced. The demand went high and production was based on customer demand unlike before. Lantechs share of stretch wrapping market zoomed from 38% in 1991 to 50% in 1995.
  • 20. Lantech as an organization is steadily striving for perfection- a state in which every action in the organization creates value for the customer. Despitethe performance leap that Lantech has made, it can identify as many opportunities for improvement today as it could then.
  • 21. By making continuous incremental improvements in pursuit of perfection, companies can double productivity within two to three years and halve inventories , errors and lead time. The problem today is that technology is present but it is misapplied and hence perfection not attained. There is shortage of managers with the knowledge and capability to apply comprehensive lean techniques.