Management Perspective

Question One

The specific environment consists of the actual organisations, groups and persons with whom an organisation interacts and conducts business. The specific environment includes employers, customers and suppliers1.Cessna and AOMS have a range of different stakeholders, however all stakeholders are common with their needs, emphasising on the fact that LIS can be applied to companies in a range of industries.

Customers:

Cessna’s main operation is to supply their customers with single engine aircrafts and business jets. With this market jets and aircrafts are produced for customers to specific orders. Manufacturing begins on receipt of an order. The customer therefore requires a quick delivery with non negotiable quality. The customer requires a quick delivery due to cash flow. A payment requires to be made in order to begin manufacturing process. While the jet or aircraft is being produced the money invested by the customer is not turning over. The customer also requires a high quality standard. With imposed legislative requirements the customer’s can not afford the jet or aircraft to be grounded due to poor manufacturing techniques. Cessna’s objective would be to constantly improve manufacturing time to increase cash flow and increase market share. The quality of the product must also be constantly improved to match aviation legislation. Poor quality could result to temporary or definite closure of the organisation.

AOMS is a small oral surgery office whose customer database consists of dental patients. The patient’s expectations include minimum waiting time and availability. Patients constantly require their surgeon to be available to their needs. If a patient is suffering from dental pain they require seeing a surgeon as soon as possible. If the surgeon is unavailable the patient will visit another surgeon, meaning in loss of business and income. Patients constantly demand minimum waiting time. They are constantly frustrated whilst sitting in the waiting room because of an expired appointment. AOMS need to address these issues to successfully grow its organisation.

Suppliers

The suppliers of both organisations hold similar attributes. Both organisations require quickly delivered high quality products. Due to aviation legislation, Cessna requires parts that meet aviation standards in order to assemble the aircrafts and jets. AOMS require medical equipment to be supplied to a specific standard, in accordance with medical legislation. In both cases the supplier is required to provide a prompt delivery to ensure minimum disruption in the manufacturing process and scheduling of patient surgery.

Both organisations are required to manage the prices of products supplied to their organisation. Due to the long manufacturing process, Cessna may experience price increases which would ultimately affect profit margins. AOMS may also experience a price increase in insurances or even medical equipment which would also affect profit margins. Managers are required to constantly negotiate with suppliers about any price increases that may arise.

Owners/ Investors

Cessna is owned by Textron. Cessna’s obligation to Textron is to continuously increase profit margins for share distribution and expansion. Textron may then invest in other industries or may decide to reinvest and expand Cessna. Without profitability, the existence of Cessna may be compromised by its parent company.

AOMS is owned by Dr Gary Wadhwa. As with Cessna, AOMS’ obligation was to increase profit margins. The principal owner was interested in achieving its goals by utilising the existing staff to maximise profit.

In general, although both organisations have different types of stakeholders, they all would like the same result. Customers are satisfied when lead/waiting times are reduced, suppliers would like to carry out ongoing trade with the organisation and owners and investors are keen on turnover and profit. Therefore LIS can be successfully applied to companies in a range of industries.

Question 2

Lean Implementation Systems (LIS) is an effective control process. LIS is identifiable in all the steps of the control process and is effective when applied as a control process in organisations.

The control process is made up of four parts. These include, establish performance and objectives, measure actual performance, compare actual performance with objectives and make the necessary decisions for improvements.

Establish performance and objectives is when managers establish a goal to direct the organisation into the future. Performance and objectives should be established prior to commencing work or implementing changes. In the case of Cessna, data was collected and correlated to demonstrate to managers that there was an increasing demand for customised products and shorter lead times. Cessna managers had established a new goal to improve its operational performance to reduce lead time. Cessna’s managers had engaged in LIS to achieve this confirming that LIS is a control process. LIS lead to shop floor employees bring approached and asked to contribute ideas of how to improve efficiency prior to any elimination of unnecessary tasks. Cessna also employed kanban productivity method to try and eliminate overstocking of unused parts.

AOMS also implemented LIS in the form of a control process. AOMS had established a new set of goals that included the reduction of overheads and reduction process times without compromising their workforce and enlist new patients without increasing the number of staff employed. Doctors, nurses and other staff at AOMS were consulted about their processes prior to eliminating any unnecessary work. Standard work practice was developed for all doctors, which was implemented. Like Cessna, AOMS also employed kanban productivity method to try and eliminate overstocking and free cash flow.

Measuring actual performance is when data is collected and correlated to produce reports that tell a story of how the organisation is performing in all facets, including cost of production and lead times. The measurement of the performance of the organisation must be carried out consistently prior to any changes.