Esterline Case

Esterline Case

As Esterline looks towards making decisions for the future success of its business, many factors must be taken into account to ensure optimum execution relative to its proposed business plans.  Taking a look at Esterline’s current status, it is apparent that they are in a good position to continue to increase revenues based upon market penetration and customer perception. Esterline made a continuous effort to establish its position within the market space, and as a result obtained a very favorable financial position.  

There are many different elements that have contributed towards its improved performance.  One of the major elements aiding in the success of Esterline’s performance was its decision to reduce its portfolio size down to two main industries: commercial aerospace and defense. By becoming more concentrated, Esterline was able to develop its “core competencies,” and as a result was able to develop a more tailored strategy relative to its acquisition objectives.  In addition, the realization by Cremin to place the ownership of process improvement initiatives in the hands of the employees at the operating level provided a great opportunity for Esterline to gain invaluable input from its workforce, while also gaining buy-in towards the overall corporate strategy.  Acts such as these helped lead Esterline towards a better understanding of what true metrics to focus on to drive the behavior of other supplementary metrics for optimized success (i.e. focusing on on-time-delivery vs. inventory turnover goals).

With Esterline continuously looking for improvements to be made towards its operations, it appears that the central question being asked internally is, “Can lean manufacturing and ERP systems co-exist to produce successful results for Esterline’s future?”  Finding out the answer to this question is extremely important to Bob Cremin due to his responsibility tied to his new strategic focus relative to Esterline’s aerospace and defense markets.  When comparing ERP systems vs. lean manufacturing, many factors such as increased complexity, decreased flexibility and employee reliance on automation are all raised in opposition of implementing ERP systems.  However, other advocates of ERP systems cite that implementation can play a vital role in analyzing existing business practices and potentially restructuring them to operate in a lean environment. Having this information organized in a single place of reference can be very valuable towards lean implementation because ERP systems organize information needed about products, production, facilities, resources and demand (Thilmany, 2009).

When tackling a question such as this, one has to think, “How does an ERP system run in a ‘normal’ manufacturing environment?”  ERP systems attempt to integrate all departments and application modules into one computer system to serve each department’s needs from a central location.  This central location of information allows all entities within the organization the ability to share and view desired information, while eliminating data entry and update redundancies, and effectively enhancing communication with easy access to work flows.  In addition, ERP systems solidly integrate all necessary business functions such, as production planning, accounting, purchasing, inventory control, finance and human resources, into a single system with a shared database which enables a variety of automatic data collection not previously possible (McHaney, 2010).