The Lean Enterprise In Aerospace Marketing Essay For assignment help please contact at [email protected] or [email protected]Today most people identify lean with reducing waste, which is to take a very narrow view of this exciting idea. Reduction of waste isn't the sole focus of lean. In lean, waste reduction and value creation are two parallel concepts which must be executed simultaneously to meet the demands of the end customer. Womack, Jones and Roos argue in their book, The Machine That Changed the World- How Lean Production Revolutionized the Global Car Wars, that while lean thinking can be applied by any company anywhere in the world, its fullest potential is only realized when it is applied across the spectrum of the enterprise. And they called such an enterprise as Lean Enterprise. 'Lean Enterprise is an integrated entity that efficiently creates value for its multiple stakeholders by employing lean principles and practices.' (Murman et al, 2002) Lean enterprise is a firm that embraces lean principles. The organizational structure of a lean enterprise is intolerant of waste and every member of the organization proactively seeks improvement in the existing processes. Lean enterprise prioritizes customer value and every activity within the organization aligns itself to achieve that goal. Another trait of a lean enterprise is its outreach. As Womack et al points out in their work, Toyota reached out to its suppliers and not only involved them in the design process but also encouraged them to come up with their own innovations. They encouraged their big suppliers to consolidate the smaller suppliers to cope with the high demand from emerging markets. Toyota itself holds an equity stake in its major suppliers.
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The Lean Enterprise In Aerospace Marketing EssayFor assignment help please contact
Today most people identify lean with reducing waste, which is to take a
very narrow view of this exciting idea. Reduction of waste isn't the sole
focus of lean. In lean, waste reduction and value creation are two parallel
concepts which must be executed simultaneously to meet the demands of
the end customer.
Womack, Jones and Roos argue in their book, The Machine That Changed
the World- How Lean Production Revolutionized the Global Car Wars,
that while lean thinking can be applied by any company anywhere in the
world, its fullest potential is only realized when it is applied across the
spectrum of the enterprise. And they called such an enterprise as Lean
Enterprise.
'Lean Enterprise is an integrated entity that efficiently creates value for
its multiple stakeholders by employing lean principles and practices.'
(Murman et al, 2002)
Lean enterprise is a firm that embraces lean principles. The
organizational structure of a lean enterprise is intolerant of waste and
every member of the organization proactively seeks improvement in the
existing processes. Lean enterprise prioritizes customer value and every
activity within the organization aligns itself to achieve that goal. Another
trait of a lean enterprise is its outreach. As Womack et al points out in
their work, Toyota reached out to its suppliers and not only involved
them in the design process but also encouraged them to come up with
their own innovations. They encouraged their big suppliers to consolidate
the smaller suppliers to cope with the high demand from emerging
markets. Toyota itself holds an equity stake in its major suppliers.
The Toyota success story points out the importance of cooperation and
co-ordination between the firm and its various suppliers. In increasingly
complex world of Aerospace, most of the aircraft manufacturers are
acting as system integrators and rely on their first tier suppliers for
manufacturing individual parts of an aircraft and these lessons from
Toyota story are invaluable to the aerospace industry to understand the
firm and supplier relationship.
In this context, lean enterprise's definition needs to be extended to
include the phenomenon of outreach. Therefore, lean enterprise can be
defined as a collective group of organizations working together to
achieve a set of common goals. This collective group formulates a
common strategy to manage the value streams extending from one
organization to another, share gains and profit, manage targets for
improvement, and eliminate waste.
Murman et al in their book, Lean Enterprise Value, identify five
principles of Lean Enterprise Value. They fuse together the words lean
and value to emphasize the importance of simultaneously eliminating
waste and creating value in a lean enterprise. Enterprise represents a
firm centric approach rather than factory floor approach. An organization
can truly become lean only when the principles of eliminating waste and
value creation are applied across the spectrum of the firm. Five
principles of Lean Enterprise Value are,
Principle 1: Create Lean value by doing the job right and by doing the
right job.
This argues for a dynamic approach where exists a constructive
relationship between doing the job right and doing the right job.
Principle 2: Deliver value only after identifying stakeholder value and
constructing robust value propositions.
Value delivery is facilitated by a well structure value proposition and of
course, a solid value proposition can't be structure around poorly
identified value.
Principle 3: Fully realize lean value only by adopting an enterprise
perspective.
It is very important that lean is implemented at the enterprise level
otherwise overall net gain would be limited. A study conducted by Cook
and Graser for RAND Corporation suggests that all aerospace
manufacturers in the United States have adopted lean to a certain
degree. The problem is that these adoptions tend to be localized and as a
consequence there benefits. This creates isolated success stories of 'lean
projects.' Murman et al call these success stories as 'islands of success.'
Principle 4: Address the interdependencies across enterprise levels to
increase lean value.
There are different levels of enterprise and they are all interdependent.
Detail discussion of the various levels of enterprises follows.
Principle 5: People, not just processes, effectuate lean value.
In order to eliminate waste and create value, knowledge and capability
must exist at three distinct levels of enterprise, value identification, value
proposition and value delivery. For this to happen, people working an
enterprise to understand and facilitate lean principles. Talking about
Toyota Production Systems, Sugimori et al highlight the central role of
people.
"…'respect for human' systems where the workers are allowed to
display in full their capabilities through active participation in running
and improving their own workshops." (Sugimori et al, 1977)
Value Stream
Second step in formulation of research question is to define value stream.
Value Stream is broadening of Porter's concept of value chain. Porter
defines value chain as a basic tool for conducting a systemic analysis of
all of the activities (and their interactions) that a firm performs, in order
to understand the sources of competitive advantage.
Womack and Jones in their book Lean Thinking define value stream as
the set of all specific end-to-end and linked actions and processes and
functions necessary in transforming raw materials into a finished product
delivered to the customer, and then in providing post-sales customer
support. They argue that when value stream is mapped it gives a very
clear indication of processes and activities that a) create value, b) create
no value but are unavoidable and c) create no value and are avoidable.
This process of mapping the value stream facilitates the elimination of
waste and helps in implementation of lean principles.
Evolution of value stream is result of progress made in the sphere of
technology. In response to increasing technological complexity in recent
times, corporations have begun to concentrate all their efforts on their
core competency while outsourcing activities in the external periphery of
their value adding activities. While this approach creates a specialist
organization, it also results in loss of breadth of expertise. Johns, Crute,
and Graves (2006) argue that as a consequence, we find customers
seeking broad systemic offerings while suppliers are moving in opposite
direction of specialisation in narrow band of core competence. This
creates a vacuum which can be filled by organisations that can forge
strong supplier relationships and bring together a wide array of
specialists to develop a systemic offering and create value streams in the
process. . Aerospace Innovation and Growth Team (AIGT), a UK
government agency, reported in 2003:
"The nature of UK Aerospace Industries 2022 will have changed
considerably, driven primarily by globalisation. The business model of the
future will be value chain competing against value chain, not just single
company versus single company as we witness predominantly today.
Supply chains will have evolved to include the end-user or consumer in
value creation and through this will have become known as value chains."
While AIGT uses the phrase 'value chain', in author's opinion it
corresponds more closely with Womack and Jones' 'value stream' than
Porter's value chain! Johns, Crute and Graves' also comment on value
stream in their paper on lean supply,
"…to realise the full advantages, Lean practitioners in UK aerospace
must move beyond the current primary focus on manufacturing
techniques and optimising only their own company's part in the supply
chain as an isolated process, toward embracing a Value Stream
perspective."
This is not only true for UK but the entire industry as a whole. One
instance of failure on part of a manufacturer to involve suppliers in the
development and decision making process would be Boeing's attempt to
increase production of the 737 and 747 jumbo jets in 1997. Neither its
factories nor its suppliers could cope up with the production target and
Boeing had to shut down the production of the concerned aircrafts for a
month. This, in parts was responsible for the first net loss recorded by
Boeing in more than 50 years! Today when both big player in aerospace,
Boeing and Airbus are targeting an ambitious 40% increase in production
of single and twin aisle passenger aircraft by 2015, principles of lean
enterprise and value streams are more relevant and crucial to the
success of the industry than ever.
Lean Enterprise in Aerospace
Discussion of lean principle in context of aerospace presents its own
challenges. Lean philosophy, as discussed earlier, was developed by
Toyota in post-World War II Japan with focus on creating maximum value
with least investment of the resources whereas the rest of aerospace
industry, particularly the United States which 'was' also the
unchallenged leader in the field, had Cold War priorities. Implementing a
new business philosophy, which worked in the very dynamic market of
automobiles, in aerospace industries with its higher degree of complexity
and lower volumes is nothing short of introducing a new paradigm.
To continue the discussion further one must understand the evolution of
lean. Lean is a way of thinking and not a set of theoretical steps. Lean
philosophy was observed to work in practice and only then it was codified
into theory. This evolutionary curve provides lean it's 'legitimacy'.
Murman et al in their book, Lean Enterprise Value: Insights from MIT's
Lean Advancement Initiative put forward implications of lean thinking for
the aerospace industries. They point out the peculiar nature of
aerospace; industries are highly interdependent with a very wide
supplier base. They are both a source and importer of technological
innovation, and have a rich intellectual capital base and highly skilled
workforce. Also, failure is not an option in aerospace, the products and
systems must operate with zero failures! Another aspect of aerospace
industries which is poles apart from automobile is the lifecycle of
products. Aerospace systems and platforms have life cycles spanning
over decades with continuous evolution of the subsystems and
components. For instance, Boeing B-52 Stratofortress, a long range
strategic bomber first manufactured by Boeing in 1950s, is still in service
with the United States Air Force!
Murman et al argue for a broader and more holistic view of lean thinking,
centred on the enterprise, to be implemented in aerospace. Most of the
value addition in aerospace lies in upstream design and development
phase, which can last for years as oppose to months in case of
automobiles, and in downstream sustainment operations which typically
last for decades. These particular traits demand that lean enterprise
should be focus of the efforts of aerospace industries in implementing
lean thinking. Johns et al argue for the proliferation of value streams in
aerospace and that is another essential step in transforming aerospace
industries into 'lean enterprise'. Aerospace thrives on technological
innovation and lean's philosophy of Kaizen or continuous improvement
sits well with that trait. One can conclude on the basis of arguments laid
that lean thinking offers lots of incentives for aerospace.
Vision 2016
'People working together as a global enterprise for aerospace leadership'
Boeing - Forever New Frontiers
Values
Leadership
Integrity
Quality
Customer Satisfaction
People working together
A diverse and involved team
Good corporate citizenship
Enhancing shareholder value
Core Competencies
Detailed customer knowledge and focus
We will seek to understand, anticipate and be responsive to our customers' needs.
Large-scale systems integration
We will continuously develop, advance and protect the technical excellence that allows us to integrate effectively the systems we design and produce.
Lean Enterprise
Our entire enterprise will be a Lean operation, characterized by the efficient use of assets, high inventory turns, excellent supplier management, short cycle times, high quality and low transaction costs.
Figure 1 Boeing's Vision 2016 (Source: The Boeing Company)
Members of MIT's Lean Advancement Initiative consortium developed
generic process architecture for lean enterprise.
Lifecycle Processes
Business Acquisition and Program Management
Requirement Definition
Product/Process Development
Supply Chain Management
Production
Distribution and Support
Enabling Infrastructure Processes
Finance
Information Technology
Human Resources
Quality Assurance
Facilities and Services
Environment, Health, and Safety
Enterprise Leadership Processes
Strategic Planning
Business Models
Managing Business Growth
Strategic Partnering
Organizational Structure and Integration
Transformation Management
Figure 2 Enterprise Process Architecture
Processes under the label 'Lifecycle Processes' comprises of value stream
activities which directly contribute towards revenue generation through
creation of products, systems and services for the customer. The next set
of processes, 'Enabling Infrastructure Processes' provide support for
'Lifecycle Processes'. 'Enterprise Leadership Processes' deal with the
human aspect of the lean enterprise and plays a critical role in the
transformation to lean.
At Toyota, manufacturing and supply chain operations were main focus of
the transformation to lean (Womack et al, 2007). But in aerospace,
manufacturing contributes a much smaller proportion to the value
associated with a product. The challenge, therefore is, how to apply
lessons from automobile industry to aerospace with its greater product
and technological complexity, much lower production volumes, very
different (and small) customer base and business practices which directly
contradict principles of continuous improvement?
In 1995, Lean Advancement Initiative at MIT developed a Lean
Enterprise Model (LEM) to better understand these challenges.
"The LEM is a synthesis of principles and practices, a hypothetical model
of a generic lean enterprise." (Murman et al, 2002)
Principles
Overarching Practices
Enabling Practices
Supporting Practices
Figure 3 Lean Enterprise Model Architecture (Source: Murman et al,
2002)
Figure 3 represents the architecture of the Lean Enterprise Model
developed by MIT researchers and LAI consortium members. First in this
hierarchy are principles of a lean enterprise.
Waste Minimization
Responsiveness to change
Right thing at right place, at right time, and in right quantity
Effective relationships within the value stream
Continuous improvement
Quality from the beginning
Figure 4 Principle of a lean enterprise (Source: Murman et al, 2002)
First principle of lean enterprise is at the very core of lean thinking.