ABSTRACT
- More Articles of InterestOrganizations increasingly chose to adopt lean enterprise strategies but implementing strategy is a difficult task, prone to failure. Transforming our businesses into a new model, one that removes non-value added activities, requires a three-phase transformation: a cultural transformation, implementing lean tools, and extending lean principles into the value stream outside the business. This paper focuses on the first two aspects of the transformation. In moving an enterprise to lean, leading the change must come from the top but other leaders must also be present. Change leaders at the business unit level, called Transformanagers, and plant level implementers, called "Lean Berets," provide the skills, knowledge, and involvement to implement lean systems throughout the organization. Supporting mechanisms, such as unwavering sponsorship from the top, a clearly articulated vision, and alignment of all employees are other necessary components for successful lean transformations. Organizational structures that support teams, and organizational linkages that cut across functional boundaries must be implemented. Finally, the importance of extensive training and dedicated resources is stressed and a recommended training program is presented. Such a commitment of resources to the training effort recognizes that people are as important as equipment, tools, and processes in implementing a lean transformation strategy.
INTRODUCTION
We live in a world where information has become the dominant value driver, where markets and competition are global, and where rocketing IPO's, mega-mergers, and predatory acquisitions are changing both the business landscape and its clock speed forever. The last fifteen years of unprecedented prosperity have created amazing growth, along with a troubling level of complacency and expectation for its continuance; yet we all know that no tree grows to heaven. Likewise, we know that the management systems we currently use to run our businesses will not be adequate for creating ever-increasing stakeholder value in a declining market. In the face of such challenges, many organizations are adopting a lean enterprise strategy. Yet, implementing a strategy, particularly one that demands major change at all levels of the firm and within its culture, is difficult and prone to failure. For that reason, it is imperative to take a fresh look at how to transform our businesses into the new lean enterprise model
TRANSFORMATION
Business transformation moves an organization from an existing condition to a future state that represents a targeted strategic ideal. The connection between such business transformation and leadership is an important and recurring theme (Burns, 1978; Bass & Avolio, 1993; Bass, 1997). Without effective leadership, business transformation will not succeed and the strategic vision will not come to fruition. In today's tumultuous business climate, organizations often need to work against the competitive clock to transform systems, processes, methodologies, and competencies in order to enjoy brief competitive advantage, or even just to sustain profitability. The transformation we are presenting is not about the evolution of a new business entity (e.g. from hardware to systems solutions), and it differs fundamentally from "kaizen events" or site focused process improvement activities. Rather, the business transformation of concern here is implementing lasting change in the behaviors of an established organization, focusing on the preparation necessary to create the right structure, behavior, and methodologies as the underpinnings of business excellence. The ideal future state of the business transformation under discussion is the lean enterprise.
EXCELLENCE: THE LEAN ENTERPRISE
The lean enterprise embodies lean principles at its heart, that is, its operations are based on a manufacturing philosophy that eliminates activities that add cost but not value and it "reduces the time from customer order to delivery by eliminating sources of waste in the production flow." (Liker, 1997:7) The same principles flow from the operational heart throughout the organization, then upstream to suppliers and downstream to customers, encompassing an entire enterprise. In the words of James Womack and Daniel Jones (1996), the lean enterprise is a "channel for the value stream" from the design of a product or service to customer delivery. The lean enterprise articulates all its activities in answer to the question : What does the customer consider value?
The lean enterprise has two essential characteristics: focus on customers and cooperation (Maskell & Baggaley, 2003). In both, the end focus lies outside the boundaries of the organization, either by focusing on adding value to the customer or by interacting in a cooperative manner with customers, suppliers, and other third parties. Yet, the foundation for the lean enterprise lies in transforming the organization internally first through a cultural transformation and implementing lean tools. This paper focuses on the foundation.
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