Danahar Corporation

Danaher Corporation specializes in designing, manufacturing, and marketing industrial items to out side vendors. Their instruments are used for measurements, displays, and controls. The company consists of three main component, the professional, industrial, and tools. The main source of business comes from the Danaher sensors and control, which is a leading manufacturer of process and environmental controls. The company is a strong believer in lean manufacturing, which in other terms means they want to produce their products the easiest and straight to the point way. They try to cut the non productive time in making their products. The Danaher Corporation feels that movement towards the lean manufactures would use waste reduction to improve processes and to keep the rate of inventory usage low, reduce working capital, and fulfill orders faster and precise.

The man in charge of this diligent task to keep the division lean is the Vice president of supply chain management Tom Mathis. The pervious method used by Danaher Corporation is derived from the Japanese word "Kanban", which means sign or signboard. The company preferred this method over the usual Manufacturing Resource Planning (MRP) system. The kanban system was basically a simple system in which companies could use to reorder products when inventory is running low. They would place a card in front of the storage bins to symbolize what products in the bin needed to be replenished and for what company it needed to go out to. The cards would be handled by an individual named a pacer. The pacer hand delivers stacks of card to the factory buyers, whom in return would start the order process by writing down their orders. The only problem with the kanban system was the disappearance of cards due to negligence and carelessness. At least one percent of inventory was lost daily, which resulted in customers not receiving their right order and production counts not being precise. The production suffers and both parties are left dissatisfied and there for money can not be made from both parties.

Mathis had to find a way to make up for the loss of business and find a better or more proficient way to supply Danaher Corporation's customers. The solution he came up with would solve some of the problems, but from other perspectives not significantly enough. The company would stick to the traditional method of the "Kanban" due to its success from previous years. They were being cautious and afraid of change. Mathis did not want to change the system so drastically, but just evolve it. He wanted to implement an electronic kanban system, which would strengthen communications between the manufactures and its suppliers. By eliminating the manual process, one could be able to make fewer mistakes and provide better service to expediters. The electronic kanban would rely on faxes and e-mail spreadsheets to remind suppliers that inventory needs to be refilled. The cards from the storage bins would be replaced by standard bar codes, which could be scan at any time of the process and help suppliers, keep a track of their inventory.

The problem for Danaher