February 24, 2014

The Lean Transformation in Pratt and Whitney - 1991 - 1995

Mark Coran, UTC Controller got a new assignment on 1 June 1991, to manage the costs of Pratt and Whitney, UTC's largest subsidiary and builder of aircraft engines.

After discussions, it was decided to implement lean principles in physical production first.

Coran announced that every product would be made in continuous flow to the maximum extent possible with a cost reduction target of 35% in constant dollar terms in four years and lead time reduction target of four months.  He brought in a lean thinker from UTC Headquarters, Bob D'Amore.  Despite initial attempts things did not move as expected.  In the mean time George David moved up to become President of Untied Technologies and was introduced to lean thinking by Ary Byrne. He visited Wiremold and saw Shingijutsu consultants working on the shop floor and coming up with improvement suggestions. When Mark Coran reported his status of the project to David, he immediately suggested to him to employ Shingijutsu consultants. But they came to know that GE's Aircraft Engine Group is planning to engage them. But David made an emergency appointment with them and got into a multiyear agreement.

Chihiro Nakao, a Shingijutsu consultant visited the factory in May 1992.  In the space of a week, he demonstrated many improvements in the Pratt's Middletown, Connecticut plant. Also, Karl Krapek, an industrial engineering degree holder from Purdue and who also completed General Motors' IE program was deputed as President of Pratt and Whitney.

Krapek tried to implement JIT in General Motors, but got into problems and them moved to Otis Elevator. From there, he moved to Carrier where he was implementing lean with the help of Shingijutsu. He came to Pratt, and grouped the two thousand parts of in a jet engine into seven product categories - rotors and shafts, turbine airfoils, combustors and cases, nacelles, forged compressor airfoils, compressor stator assemblies and general machines parts. Each product category was housed in a plant with the eighth plant being final assembly.

The fall in demand of Pratt at this point in time demanded head count reduction. Lean transformation required the concepts of multiskilling and mutli machine operations, job rotation, and continuous shuffling work groups to accommodate varying volumes of different varieties of engines. After protracted negotiations between the International Association of Machinist, George David and Karl Krapek, and the State of Connecticut, an agreement was reached in the spring of 1993 to reduce manpower to 29,000 from 53,000 in 1991.

The two basic activities of P&W are fabrication of parts from castings or forgings and assembling them into engines.

Turbine Blade Manufacturing Division

In 1991, 1,350 employees used 600 machines to manufacture #1 billion worth of turbine blades and guide vanes.   Ed Northern organized the plant in 1993 into flow lines and also made it possible to reconfigure them as needed. With the modification in the next two years, overdue parts fell to zero, inventory was cut in half, manufacturing cost was reduced by 50% in many cases, and labor productivity doubled.

Redesign of a Monument in Turbine Blade Manufacturing Division

Womack and Jones say a monument in lean thinking is any machine which is too big to be moved and whose scale requires operation in a batch mode. In the case of this North Haven turbine blade unit it is a massive $80 million complex of Hauni-Blohm blade grinding centers.

The redesing involved $1.7 million per cell and it reduced throughput time to 175 minutes from the earlier 10 days. The grinding cost per blade was also brought down to 50%.

The Final Assembly Plant

Bob Weiner was appointed a head of final assembly in july 1984.  The engine was placed on a moving track. Yuzuro Ito  was asked to help in the quality area.

Pratt's lean transformation did turn around the plant from problems.

Operating results improved from losses in 1992 and 93 to profits in 94 and 95.


Lean Thinking
Jim Womack and Dan Jones
Simon and Schuster, 2003

February 23, 2014

Lean Thinking - James Womack and Daniel Jones - Book Summary

A presentation done by Dr. K.V.S.S. Narayana Rao on Lean Management

James Womack and Daniel Jones were involved in the MIT Project that came out with the book "The Machine that Changed the World." They further elaborated their ideas on lean enterprise in the book "Lean Thinking: Banish Waste and Create Wealth in Your Corporation."

Essential Background Reading to Understand Lean Thinking

Toyota Production System - Origin and Development - Taiichi Ohno

Taiichi Ohno on Industrial Engineering - Toyota Style Industrial Engineering

The Machine That Changed the World - Book Summary and Excerpts  1990

Lean Thinking - Book Summary

They proposed five lean principles and wrote one chapter on each principle

Five Principles of Lean - Womack and Jones

1. Value
2. Value Stream
3. Flow
4. Pull
5. Perfection

Case Studies on Lean Transformations

6. The Lean Revolution in Lantech
7. The Lean Revolution in Wiremold

Lean Thinking - Further Development

Professor Peter Hines, who worked with Daniel Jones, says that the five are not sufficient and proposed 8 principles

8 Principles Proposed by Professor Peter Hines


Lean Thinking - Bibliography



Peter Hines, Matthias Holweg, Nick Rich, (2004) "Learning to evolve: A review of contemporary lean thinking", International Journal of Operations & Production Management, Vol. 24 Iss: 10, pp.994 - 1011

The genealogy of lean production
Matthias Holweg
Journal of Operations Management, Volume 25, Issue 2, Pages 420-437

Lean distribution: concepts, contributions, conflicts
Andreas Reichhart, Matthias Holweg
International Journal of Production Research, Volume 45, Issue 16, Pages 3699-3722

The lean toolbox: The essential guide to lean transformation
John Bicheno, Matthias Holweg
Publisher: Production and Inventory Control, Systems and Industrial Engineering (PICSIE) Books

Rania A.M. Shamah, (2013) "Measuring and building lean thinking for value creation in supply chains", International Journal of Lean Six Sigma, Vol. 4 Iss: 1, pp.17 - 35

The role of Lean thinking in increasing resource efficiency in the UK food and drink supply chain
September 2013

A Conceptual Model of Lean Manufacturing Dimensions
Procedia Technology
Volume 11, 2013, Pages 1292–1298
4th International Conference on Electrical Engineering and Informatics, ICEEI 2013

Applying Lean Thinking to Software Development
Steven Peeters on Dec 05, 2013

Principles of Lean Thinking - International Certificate Course - South Australia  Brochure

Lean Awareness 1 Day Workshops in  Melbourne, Sydney, Adelaide and Brisbane in 2014

Association for Manufacturing Excellence - Training Brochure

Article-McKinsey Quarterly - Next frontiers for lean - February 2014

Article- McKinsey Quarterly Lean at Amazon

Lean Management by CEOs

Lean is strategic issue. Efficiency is strategic issue. Lean Management is creating value for the customer efficiently. That is the definition of management given by Koontz and O'Donnell. But it is Toyota's manager who really proved by becoming world class company giving great quality at a lower price and beating the great American companies.

If lean is strategic, the CEO must understand it. He has to embrace it. He has to put it into his organization. He has to organize lean production facilities which are mainly cells that can produce multiple products in a continuous flow. He has to organize a lean supply chain. He has to direct his organization to follow lean practices. Of course, he has to ensure the directions and plans are being followed. Control system to ensure lean, value creation and efficiency are there.

There are some CEOs explaining their involvement in successful lean transformations.

Tuesday 18 February 2014

Lean is the Strategy
Art Byrne | 1 January 2013

Interview with Ary Byrne - CEO Lean Implementer
Author of the book - The Lean Turnaround


Value Adding Lean CEO - Presentation by Art Byrne

The Lean CEO Must ‘Lead by Example'
In the book,  The Lean Turnaround, Art Byrne stresses the importance of the Chief  Executive
involvement for lean transformations to be successful.

The Lean CEO Effect
There's a big difference between CEOs who engage in lean and those who simply encourage it.
Oct. 17, 2012
Jonathan Katz | IndustryWeek

The Lean Revolution in Wiremold - 1991 - 1995

Art Byrne joined Wiremold as CEO in September 1991. He found a classic batch and queue system in production, sales order taking and scheduling process and product development. The cycle time of products was four to six weeks. Order taking process was a week. Product development took two and half to three years from concept to launch.

In this company Art Byrne announced an early retirement package to the aging workforce. Almost all of the eligible hourly workers took the retirement offer, but only small fraction of office staff took the offer.  So, he has given to some of the office staff also a forced severance. (Is is right? This is the typical American way, which is in practice even today).

But when the planned manpower reduction has occurred, Byrne called a meeting of the entire workforce and announced to them that there will an improvement exercise in the company but nobody will lose job because of process and productivity improvements. The union did not believe it and went through the promise very carefully. But in the end they concluded that Byrne would honor his word and he has the plan and capability to do it.

But managers were sceptical. Byrne explained to them, while he expects good things to happen, if some expected fall in sales takes place there are tools to manage the downturn. Overtime can be reduced, surplus workforce can be employed in improvement projects, some outsourced components can be manufactured inside, work week can be reduced and new product line can be developed. We are going to make the operators more skilled and management will not be interested to lose highly skilled operators.

Art Byrne led the first training session in the company himself. Byrne implemented lean in his earlier companies. Based on a manual that he developed, he conducted a two day program for 150 people and followed it with a three day improvement exercise to provide opportunity to them to practice what they learnt.  He took them around the plant himself and showed them muda (excess resources being used every where). Then he told them that they are going to convert all activities into continuous flow activities that are activated through pull. He promised them the support of top Japanese consultants and trainers.

Soon hundreds of weeklong kaizen activities were started and improvements were made visible. The company was reorganised into six product families. Each team was given its own punch presses, rolling mills and assembly equipment.

A score board was setup which showed productivity of the team expressed as sales per employee, customer service as on time delivery, inventory turns and quality as rework inside and returns from outside.

The expectation per each time is 50 per cent reduction in defects, 20 per cent increase in productivity, 100 per cent ontime delivery, and inventory turns of 20 per year.

To help the teams to improve continuously, the JIT Promotion Office (JPO) was started. The product team leader and the JPO jointly evaluate the value stream(Order, production and delivery process) to determine kaikaku (reengineering a major portion of the process) and kaizen (local operation improvements) activities to be performed. JPO is given the major responsibility to get the projects implemented. The JPO also conducts training sessions and teaches every employee the principles of lean thinking (identifying value to be delivered to the customer, charting the value stream, flow and pull principles and continuous improvement for perfection.). The principles are to be reinforced in the organization periodically to stop people from reverting to the old habits.

The product development process was reengineered next.  Order taking process was made lean. Employees were given a share in profits.

Supplier improvement was done converting them into lean suppliers.

Lot of cash was released from the system due to reduction of inventory and was used buy some companies, which were converted into lean companies.

The benefits realized include doubling of sales per employee in five years, throughput time of one or two days, and  increase in operating profit of 600%.

Source: Lean Thinking
James Womack and Dan Jones
Simon & Schuster, 2003

Lean System in Lantech - 2004 Onwards

Innovation at Lantech
May 2013

Ron Hicks - The Man Who Implemented Lean in Lantech - Interview in 2013

Ron Hicks'  degree was in industrial engineering in 1972. He then went through the intensive three-year manufacturing management program at General Electric Co.

To understand and implement lean, the new industrial engineering - management paradigm, I have to learn first that the many philosophies taught during my  industrial engineering course are null and void and are replaced by better paradigms is the statement of Hicks.

The old American  manufacturing model is being  replaced by a leaner, more automated environment in which the global competition is the driving force. There are still many in America who do things the same way they always have, because it worked then and it still works now.

Lantech chooses lean approach

The goal of lean thinking is to identify what adds value to the product from a customer's perspective (painting a piece adds value; time spent looking for the right tool does not) and then to cut out as much waste as possible.
The work then is designed to flow at a pace to create what the customer needs, when the customer needs it.
Before switching to lean manufacturing, Lantech worked under the traditional batch-and-queue process in process layout.

Production scheduling was complicated, involving multiple departments and the entire process required space for huge inventories of material and finished products.

In the lean model a cell has all of the equipment it needs to build a certain type of machine. Lantech builds only to order, and a machine that used to take weeks now is completed in a single day,
Problems are found immediately because inspection and verification are done at the site where the machine is built. In the lean system,  Lantech has seen "a quantum leap in quality." Now Lantech produces a broader range of product, three times the output, but still empty space in the plant and customers that are satisfied.

Lean Lantech Vision - Jim Lancaster, President, Lantech
Pat Lancaster, Father of Jim Lancaster implemented Lean in Lantech in 1992 with Ron Hicks as VP, Operations


The Lean Revolution in Lantech - 1992-2003 - Womack and Jones

Ron Hicks as Vice President of Operations started the lean revolution in Lantech in 1992. Ron Hicks was an industrial engineer.

He learnt lean from the Japanese trainers at Hennessy Industries of Nashville, Tennessee, a manufacturer of automotive repair tools and garage lifts. Ron Hicks was the vice president of operations there. Before that Hicks was at General Electric Company.

During the interview for Lantech, Ron Hicks explained his manufacturing strategy.  He would form cells and manufacture one machine at a time. The batch and queue system will be changed. Lantech management decided that Ron Hicks was the best choice for their company and hired him.  After joining the company, he eliminated the existing process based departments and created four cells for the four varieties of machines.  All activities relating to a machine are done in the same cell in a continuous flow. This is the kaikaku (radical transformation) phase as per the plan of Ron Hicks. The existing arrangement was torn apart and a new system was put in place.

To make the system work, standard work procedures were developed and standard times were specified. The quality of the output has to go up at every stage. To form the cells, many machine tools had to be right sized and number of new tools had to be developed so that multiple tools could be used on the same machines in a flexible manner. Quick changeover (SMEDs) were developed.

But in the initial days, number of problems surfaced. Doubts were expressed on the changes created by Ron Hicks. Jose Zabaneh, a production manager came out as a determined person to go through all the problems and resolve them. Pat Lacaster the CEO gave unfaltering support to the new system. The consultant Anand Sharma and Ron Hicks were there with the necessary technical skills. By the fall of 1992, the whole Lantech production system had been converted from batches to single piece flow.

A clear vision or plan or design, technical mastery over the details, and a passionate will to succeed are essential for any lean transition. Some times only a single person may be sufficient to provide the leadership and sometimes a team may do the job like at Lantech. But to sustain the lean system, they must be developed in all people in the organization.

Benefits of lean transformation: The manpower stayed the same at three hundred. But the number of shipments doubled from 1991 to 1995. The plant had 30% extra space in 1995. The number of defects reported by customers fell from 8 per machine in 1991 to 0.8 per machine in 1995. Production throughput time became fourteen hours from the earlier figure of sixteen weeks. On time delivery of machines reached the level of 90 per cent. The wages were increased to $8.5 from the earlier $7.00.

Then the order taking process was also redesigned to be a lean process. A reengineering team has gone through the process. A cost table was prepared that helped the sales to come up with a quotation quickly. Once the order was received, it was inserted into the schedule in two days.  MRP was used for ling-term materials ordering from suppliers, but day-to-day scheduling was done on the shop floor.

In 1993, the attention was directed to product development.  Lantech set up a project team under a Directly Responsible Individual clearly charged with the success of the product during its lifetime. A team of dedicated specialists consisting of marketing, mechanical engineering, electrical engineering, manufacturing engineering, purchasing, and production engineers and workmen. They were asked to work nonstop on the project.  In the process it was found that many people have a broader range of skills than was thought earlier and could learn some skills that were needed during the project. Also, some advance scheduling could release for other important tasks for sometime in between.

The first product that came out of the new development system, the new S series, was developed in one year, compared to the four years that was the standard earlier. The launch was much smoother than in the past and the number of defects reported by customer was very low compared to the previous models during the initial production periods.

Lean Thinking
James Womack and Dan Jones, 2003 Edition

Further Reading


Manufacturing Cells Support Lean Production at Lantech - Ron Hicks, 1998

Leaders to Teachers: Lantech’s Plan to Spread the Faith
by Emily Adams, 2001

February 19, 2014

Introduction to Organizational Behavior

Organizational Behavior Revision Article Series

Based on Organizational Behavior by Fred Luthans

Organization behavior can be defined as the understanding, prediction, and management of human behavior in organizations. (Luthans).

Managing the people, or the human resources of an organization is a major challenge in managing organizations. People are the key to working of an organization. Today human resources are recognized as capital by the terms human capital and intellectual capital.

The academic field or subject of organizational behavior may be only 30 years old. But the problems of organizing people existed for a long time. The Old Testament (Exodus 18:13-27) describes the predicament of Moses and the solution given by Jethro his father-in-law regarding resolving day-to-day problems and strategic problems of people through an organizational set up. Day-to-day problems are solved by certain people and Moses is expected to handle environment, set policy for solving day-to-day problems.

Management is considered to have three major dimensions - technical, conceptual and human. Organizational behavior is a subject that examines behavior of human beings in organizations.

Douglas McGregor identified that certain managers assume a set of assumptions regarding people in their work situations. These assumptions include the ideas that employers were basically lazy, are interested in earning money only and if you could make them happy through giving money they would be high performers. But McGregor also found that they are managers who follow different set of assumptions. Employees under those managers were more happy and committed and also more productive. This set of assumptions are called as Theory Y. Organizational behavior, a subject developed out of Hawthorne studies, now has outlined high performance work practices of organizations in the area of human resources. But only one eighth of organizations of are using these practices.

Stanford Professor Jeff Pfeffer, gave the opinion that only half of the managers really believe that human resources are important and they have to be taken proper care of. Only about half of who believe about the importance of human resources take practical steps to implement their concern. And then only half of the managers who start implementing the organizational behavior prescriptions manage the implementation adequately and stick with the practices for a long time and institutionalize them. Thus only about one-eighth of managers are practising high performance human resource related work practices.

Organizational behavior is related to subjects titled as Organization Theory (OT), Organization Development (OD), and Human Resource Management (HRD).

Organization behavior can be defined as the understanding, prediction, and management of human behavior in organizations. (Luthans).

All managers, regardless of their technical function, are human resource managers as they will deal with humans and human behavior in organizations. All managers need to have an understanding of theories of organizational behavior.

Organizational behavior represents the human side of management and there are other sides to running an organization. Processes of production and marketing, information systems etc. are some of them. All the behavioral sciences (anthropology, sociology, and especially psychology) make a significant contribution to the discipline. But organizational psychology and organizational behavior are two different subjects. Organizational structure and management processes are not part of organizational psychology.

The texts on organizational behavior attempt to provide the specific, necessary background, and skills to make the managers effective with human dimension of management.


Fred Luthans, Organizational Behavior, McGraw-Hill, 10th Edition.
Book Review of Organizational Behavior by W.Jack Duncan,

July - Management Knowledge Revision

Article originally posted in
http://knol.google.com/k/narayana-rao/introduction-to-organizational-behavior/ 2utb2lsm2k7a/ 1203
2000+ page views on it.

Emotions – OB Perspective

Organizational Behavior Article Series

Emotions have received some attention in organization behavior literature.
Neal M. Ashkanasy et al., Emotions in the Workplace: Research, theory and Practice, Quorum, West Port, 2000.
Richard P. Bagozzi, “Positive and Negative Emotions”, in K.S Cameroon et al., Positive Organizational Scholarship, Berrett-Koehler, San Francisco, 2003, pp. 241-258.

The best description of emotion would be how a person feels about something.
Emotions are reactions to an object. They are not traits. They are object specific.

Types of Emotions

Positive Emotions:  Love/affection, Happiness/joy,  Surprise
Negative Emotions: Fear, Sadness, Anger, Disgust, Shame

Emotions can be shown as a continuum.

Happiness - Surprise - Fear - Anger - Disgust.

Emotional Labor

Some employees have to put in emotional labor as they have to control their emotions in the presence of provocation and show the behavior that is expected from them because of the job they are performing.
Emotion labor has dysfunctional consequences for the employees doing it (e.g., stress and burnout) [Luthans, 2005]. Some companies try to hire only those with very positive personalities. They tend to express genuine positive emotions instead of positive emotion which is result of emotional labor.

Recently emotional intelligence became a popular concept. The topic ‘emotions’ is now part of OB texts as emotional intelligence emerged as an important concept in OB.

Emotional Intelligence

Peter Salovey and John Mayer are usually given credit for developing the theory and definition of emotional intelligence first. Salovey and Mayor defined emotional intelligence as "the subset of social intelligence that involves ability to monitor one's own and others' feelings and emotions, to discriminate among them and to use this information to guide one's thinking and actions.

Daniel Goleman, the author of "Emotional Intelligence" explains emotional intelligence as "the capacity for recognizing our own feelings and those of others, for motivating ourselves, and for managing emotions well in ourselves and in our relationships."
Goleman classified this emotional intelligence and skill into two components: one component is related to self and the other component is related to dealing with others.
In the component dealing with self, the stages are self-awareness,self-management and self motivation. In the component dealing with others the stages are empathy and social skills.

Goleman makes the positive statement that emotional intelligence and competence continues to develop and grow. In a study, if was found that, measured EI of college students increased in a range of 50 to 300 percent after a course designed to enhance their EI.

EI helps people to get along with others and also to manage themselves in highs and lows of life. Therefore, it is not surprising that there is some longitudinal research indicating EI to be a better predictor of life success than IQ.

Luthans, Fred (2005), Organizational Behavior, 10th Edition, McGraw-Hill, New York

Article originally posted in

Related Articles

February 13, 2014

Productivity, Safety, Comfort, and Operator Health Management

Industrial engineering departments have to make productivity improvement plans for every year. Toyota Style Industrial Engineering demands that IEs plan the cost reduction for each product every year. They even demand monthly plans (Kaizen Costing).

Total Productivity Management (TPMgmt) is being promoted Japanese Industrial Management Association as top down plan for productivity improvement

Safety is an important human resource management responsibility under OSHA act. Industrial engineering need to plan their involvement in safety management and in developing human effort designs which are safe to the highest degree.

Comfort studies are to be done periodically.

Health is also covered under OSHA. Industrial engineering have to take care of operator health in the design of motions of the operators and also in the design of hand-tools,  machine controls to be operated by operators and work station.

February 1, 2014

Stress Test of Strategy

McKinsey Provides the following ten questions as stress test of your strategy. It is a test of the output of your strategy process.

Test 1: Will your strategy beat the market?
Test 2: Does your strategy tap a true source of advantage?
Test 3: Is your strategy granular about where to compete?
Test 4: Does your strategy put you ahead of trends?
Test 5: Does your strategy rest on privileged insights?
Test 6: Does your strategy embrace uncertainty?
Test 7: Does your strategy balance commitment and flexibility?
Test 8: Is your strategy contaminated by bias?
Test 9: Is there conviction to act on your strategy?
Test 10: Have you translated your strategy into an action plan?

All the ten questions are given an explanation and additional reading from McKinsey quarterly is indicated in the article Have you tested your strategy lately?