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Lean Enterprise Distribution Tactics with Customer Supply Chain Integration by Eric A Lean Enterprise Distribution Tactics with Customer Supply Chain Integration by Eric A. White B.S. Mechanical Engineering Kettering University 1999 Submitted to the Sloan School of Management and the Department of Mechanical Engineering in Partial Fulfillment of the Requirements for the Degrees of Master of Science in Mechanical Engineering and Master of Science in Management in conjunction with the Leaders for Manufacturing Program at the MASSACHUSETTS INSTITUTE OF TECHNOLOGY June 2003 ª2003 Massachusetts Institute of Technology All Rights Reserved Signature of Author _______________________________________________________ Department of Mechanical Engineering MIT Sloan School of Management June 9, 2003 Certified by _____________________________________________________________ Stephen C. Graves Abraham J. Siegel Professor of Management Science and Engineering Systems Thesis Supervisor Certified by _____________________________________________________________ Deborah Nightingale Professor of the Practice of Aeronautics and Astronautics and Engineering Systems Thesis Supervisor Read by ________________________________________________________________ David Hardt Professor of Mechanical Engineering and Engineering Systems Thesis Reader Accepted by _____________________________________________________________ Margaret Andrews Executive Director, MBA Program MIT Sloan School of Management Accepted by _____________________________________________________________ Ain Sonin Chairman, Graduate Committee Department of Mechanical Engineering Lean Enterprise Distribution Tactics with Customer Supply Chain Integration by Eric A. White B.S. Mechanical Engineering Kettering University 1999 Submitted to the Sloan School of Management and the Department of Mechanical Engineering in Partial Fulfillment of the Requirements for the Degrees of Master of Science in Mechanical Engineering and Master of Science in Management Abstract This thesis focuses on distribution tactics developed and analyzed for the lean extended enterprise of a chemical/imaging firm. The work describes the application and concept of value delivery heijunka as a key capability of lean extended enterprises. The thesis also encompasses topics important for lean extended enterprises. Notable topics include the theory of the firm and the evolution of business models, technologies, and lean enterprises as complex adaptive systems. The central concept of partitioning complexity through heijunka in value creation, value capture, value development, and value delivery is proposed. Future research of heijunka complexity partitioning is suggested for lean extended enterprises and natural complex adaptive systems. Company: Eastman Kodak Co.; Rochester, NY; chemical/imaging industry Thesis Advisors: Stephen C. Graves Abraham J. Siegel Professor of Management Science and Engineering Systems Deborah Nightingale Professor of the Practice of Aeronautics and Astronautics and Engineering Systems Keywords: lean enterprise, supply chain, distribution, evolution, complex adaptive systems 2 Acknowledgements I would like to thank Eastman Kodak Co. for sponsoring this work. I greatly appreciate the company’s continuing support of the Leaders For Manufacturing program. I sincerely hope I added enough value from the project and this thesis in return for the value that I gained from the experience. I also thank the Leaders For Manufacturing program for its support. The faculty, staff, corporate partners, and peers in the program truly are an amazing community of people. It has been a privilege and an honor to learn, work, and live with you. In particular, I would like to acknowledge the following individuals: Stephen Graves, thesis advisor – for your deep insights Deborah Nightingale, thesis advisor – for your creativity and flexibility Earl Chapman, Eastman Kodak Co., supervisor – for your inspiration and determination Tom Mooney, Eastman Kodak Co. – for your energy and persistence I would personally like to thank Jon Griffith, Patty Sullivan, and Nancy Young-Wearly for letting Elizabeth and I into your lives. You have been great friends and supporters throughout the program. Your friendships have made this experience significantly more enjoyable and stimulating. I would also like to thank my family, particularly my parents Graham, Joann, Jack, and Pat. I have been awed by the substantial support and guidance you have provided through this long and sometimes painful process. I dedicate this thesis to my wife Elizabeth. I thank you so much for your patience and understanding throughout these stressful months. We have endured so much together. I hope I can provide as much love and support as you have afforded me during this journey. Although it has been difficult, I would only be willing to go through it for you. 3 Table of Contents Abstract ............................................................................................................................... 2 Acknowledgements .............................................................................................................. 3 Table of Contents ................................................................................................................ 4 Chapter 1: Introduction ..................................................................................................... 6 1.1 Lean enterprise activities at Eastman Kodak Co. .................................................... 6 1.2 Motivation................................................................................................................ 9 1.3 Organization............................................................................................................. 9 Chapter 2: Literature Review .......................................................................................... 10 2.1 Supply Chain & Operations Research (OR) .......................................................... 10 2.2 Logistics ................................................................................................................. 12 2.3 Operations and Technology Strategy..................................................................... 12 2.4 Alliances ................................................................................................................ 16 2.5 Organizational Strategy............................................................................................. 18 2.6 Prescriptive Accounts ............................................................................................ 18 2.7 Historical Taxonomies ........................................................................................... 23 2.8 Massachusetts Institute of Technology resources.................................................. 26 Chapter 3: Project Analysis............................................................................................. 29 3.1 Problem Statement ................................................................................................. 29 3.2 Situation/Background ............................................................................................ 29 3.2.1 Approach......................................................................................................... 29 3.2.2 Summary of Findings...................................................................................... 30 3.3 Current value stream map ...................................................................................... 30 3.4 Training simulation of current and future value streams ....................................... 33 3.5 Heijunka process description and challenges ........................................................ 42 3.5.1 Withdrawal card process................................................................................. 42 3.5.2 Production card process .................................................................................. 43 3.5.3 Heijunka challenges ........................................................................................ 44 3.6 Supply chain model................................................................................................ 48 3.6.1 Information collection..................................................................................... 48 3.6.2 Model construction ......................................................................................... 48 3.6.3 Model analysis ................................................................................................ 52 3.7 Value Stream Future State Map ............................................................................. 53 3.8 Implementation ...................................................................................................... 54 3.8.1 Constraint discovery ........................................................................................ 54 3.8.2 Constraint mitigation ....................................................................................... 54 3.8.3 Team preparation ............................................................................................ 58 Chapter 4: Organizational Processes.............................................................................. 59 4.1 Three Perspectives on Organizational Processes ................................................... 59 4.1.1 Strategic design ............................................................................................... 59 4.1.2 Political ..........................................................................................................
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