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Lean and agile operations Essay


Introduction

For a long period of time, organizations have been adjusting their management and operations tactics. The main objective behind this approach has been to trend to consolidate management and operational elements that are closely linked together so that they can be monitored easily (Drew, McCallum & Roggenhofer, p.6). Lean management has over time replaced mass production.

This form of operation calls for a different form of thinking and operation. On the other hand, companies are attempting to change or adjust their departments. In the present day, Networks are more agile in terms of being adaptive, operationally efficient and informally lean (Goodpasture, 2009, p. 268).

Some of the elements that are associated with agile operations include cultural acceptances in business relationships, expansion in accessing and adoption of instant messaging plus wireless connectivity and electronic networking (Goodpasture, 2009, p. 268).

This paper explores the concept of lean and agile operations and also offers a succinct comparison of both types of operations in manufacturing and service sectors.

The concepts of lean and agile operations

According to Mattias and Jan (2009, p.976-999), lean and agile operations have been used in all sectors of production. They have highly been utilized in service and manufacturing sectors. There are internal and external factors that drive companies to adopt these measures of management. In most cases, lean and agile operations have been tested to be operationally effective.

Agile operation can be defined as the use of specific principles such as techniques, interactive developments and automation in running an organization. On the other hand, lean is a concept and a philosophy developed to minimize wastage during the process of production.

It focuses on specific values as perceived by customers, creating value streams, making value flow from raw materials to end user, pulling productions together and striving towards perfection. Lean operation is highly valued in most organization since demanded by customers is well met.

The differences between lean and agile operations/management can best be understood from a supply point of view. The following table highlights some of the major distinguishing attributes between agile and lean supply.

Distinguishing attributes Lean supply Agile supply
Life cycle and product variety Long life cycle and low variety Short life cycle and high variety
Forecasting mechanism Algorithmic Qualitative: Consultative
Market Predictable Volatile
Profit margin low High
Stock demand Stable long term Volatile and immediate availability

Source: Nieuwenhuizen (2009, p. 124)

Agile supply operations are market sensitive and can easily respond to movement in demand emanating from various market dynamics or players such as customers and the suppliers. To achieve this, there must be unconventional mechanisms in hearing the daily voices coming from the market (Nieuwenhuizen, 2009, p. 125).

Agile supply operations also introduces the concept of electronic data exchange which helps partners in the supply process to have and react to actual demand or same data. Lean operation is more of a theoretical application than a practical one. However, when molded well, it can serve as an ideal operation in any situation.

According to Reiner (2009, p. 163), the concept of lean management has been hyped as ideal concept fitting the new millennium. It has a set of tools that can assist in steady elimination of waste, production of time, cost reduction and quality improvement (Reiner, 2009, p. 163). It is built upon experience and insights from just-in-time applications.

Applicability of lean-agility

There are various examples that can be equated to lean and agile operations. The basic principle of lean agility is on reducing the costs of production and increasing value in customer service (Waters, 2003, p. 41). For example, a supplier can increase customer services and reducing costs of operations by improving EDI links. These strategies have dominant themes of low cost operations and a focus on customer satisfaction.

Organizations are able to focus specific operation features of their products by enhancing the ability to deliver goods and services quickly to the customers. The best form of satisfying customers is by ensuring that goods and services reach them in time, are of high quality, their volumes are flexible, there is product flexibility and there is specialization as well as diversification (Waters, 2003, p. 41).

Some organizations in Information Technology are clinging to the environment that apply centralized control, tight notions of operations and rigorous blocking of services coming from outside. However, some companies have adopted service delivery that gives the end user or the customer some sense of pride despite the fact that the services are low cost and are leaner.

El-Haik and Al-Aomar (2006, p. 23) write of a lean six sigma approach and note that it has been the hype in latest engineering paradigms. This is because it has a focus for quality management and increasing general operational effectiveness. The Lean Six Sigma (LSS) approach is capable of helping companies reduce variability and cut the process lead time.

Martins (2006, p. 379) is categorical that LSS has better maturity when it is put in the supply chain which for long has demanded for an effective change style/program. On this, Hill (2011, p. 4) gives the bottom principles of Lean Six Sigma as good, fast, strong and cheap. However, Martins (2006, p. 379) cautions against compromising customer satisfaction in the efforts to make supply chain cheap.

Challenges in lean and agile operations

Lean operations

The main objective of lean operation or management is to enable transformation of an organization from problems of functionality to effective and proactive management (Martins, 2006, p. 379). However, there are many challenges that are identified with this form of operation. According to Bell (2006, p. 69), practitioners of lean management are confronted with real challenges.

For example, there are many constrains that come with management of volatility of goods and services, keeping knowledge content high and management of variability of process mix. There is also a challenge that comes with trying to approach all manufacturing operations with one style conversant with lean management.

Mahadevan (2010, p. 563) is however categorical that with a strong implementation strategy in the organization, it is possible to make lean management journey enjoyable, easier and fruitful.

Lean management has become hype in health care industry. However, it is more recognized as an ad hoc practice rather than a style that can last forever in the industry. Therefore, this approach is not recognized as a means to effective end, rather, as a means to solve immediate problems (Young, 2009, p. 310). There are three major critical challenges that are identified in the health care industry.

Young (2009, p. 310) puts them as lack of evidence for management quality, it has not brought strong value in the health sector because of the sensitive nature of the sector and low metrics. Quality management is supposed to achieve at least 75% in terms of effectiveness, and whenever the percentage is low, it is categorized as low metrics.

Black (2008, p. 194) summarizes the difficulties that come with lean management as inability of operational managers to cope with dramatic change management. Mostly, change of organizational culture drags implementation of these dramatic management changes.

Agile operations

Anna and Lars (2005, p. 362) categorize the challenges that come with agile management into three; lack of improvement initiative, unsupportive environment and failure to adhere to targeted practices. Mostly, agile operations are practical in IT sector and a failure to many other developmental sectors.

Even though there have been efforts to replicate this style of management in other operational areas such as service industry, the method has not succeeded to levels that could be desired. Levine (2005, p. 353) is clear that the problems of agile operations are only beginning and if there are no immediate measures to resurrect it, it may collapse easily or fail to be utilized.

With a shift towards strong agile models, it is possible to transform workplaces towards realization of goals conversant with 21st century management. As well, agile operations tend to take the concept of lean operations, and therefore, some of the challenges that are associated with lean management are common in agile operations.

Ramesh (2010, p. 453) introduces two risks that come with the introduction of agile operations. The first problem is with the inability of the customers and lack of concurrence in customers to impact agile developments as may be envisioned. Secondly, neglecting non functional requirements like scalability and security is a major problem.

He adds that all developers who are keen on using agile operations should first of all evaluate inherent risks, and work towards eliminating them as much as possible. They should outweigh these risks and the costs involved as a measure of countering the challenges.

Babar (2009, p. 84) is categorical that agile development especially in the IT sector has brought in mechanisms of reducing costs while at the same time increasing abilities to handle market dynamics. However, there are some concerns on the importance and the role of issues that are related with software architecture developed through agile approaches.

Examples of lean operations

Manufacturing sector: Toyota

By late 1960’s, Toyota management had started to push for lean production (Dennis & Shook, 2007, p. 10). The management was compelled to adopt such strategic management measures due to demanding price reductions. The company’s management permeated entire supply chain by 1970 and this has continued to present day. In Toyota Company, the method has succeeded in a number of ways.

For example, equipment maintenance has become effective; there is pull production, supplier involvement, quality at the source of production, high employee involvement plus empowerment, small lot production and reduced set up times. However, this company has faced a number of challenges that are associated with adopting lean strategies in operations.

For example, this method has become a major focus rather than the putative results that come with it. Toyota has failed to define the operations and actually brushes the importance that comes with such an operation.

Service industry: Vodafone Company

Vodafone Turkey started lean operations in the year 2006 and this has led to change initiative. Some of the results that were foreseen with such a method of operation were effective deployment and proper work design.

The company was prompted to get into lean management due to a high need for data based management, customer driven focus and a structured approach to management of its systems. Some of foreseen efforts were improved customer experience, elimination of wastes, costs and increase revenue; empower and develop people and more importantly, move to a model and culture of continuous improvement.

Challenges included slow stakeholder management, high expectations from people, lack of combination of a top down and a bottom up approach and failure to retain right resources.

Examples of agile operations

Manufacturing sector: Hewlett-Packard Co

Hewlett-Packard Co. is one of the companies in the world which have remained agile for many years. According to Pride and Hughes (2011, p. 211), the company strives to remain agile as well as adaptable to changes in management environments. The company’s management identifies clinging to this style of management as its major challenge but hopes that it will remain glued to it for long.

However, the company has experienced lots of challenges in its agile style of management. For example, in a number of times, the style demanded a lot especially in approaches that are collaborative, iterative and incremental. As well, agility operations have resulted to salary cut controversies amongst the employees.

Even though this measure was not directly related to agile operations, it was seen as a way of keeping everything low and maximizing customer service and quality production.

Service sector: Sony Life

This is an insurance company that focuses on giving made- to -order insurance services to their customers. These are based on specific demands of the customers, and in Japan, this method has made it possible for the company to increase customer base to 4.4 million. Cummins (2008, p.93) equates made- to- order services with agile operations.

He writes that with such management style, it is possible to track the needs of the customers, and this way, companies can increase quality of their services to the people. It is a production- line mode that has gained fame in the 21st century (Cummins, 2008, p. 93).

However, Sony Life has faced major challenges with this style of management. A major challenge was in keeping with the pace of change management. Companies are increasingly adopting new measures, and since a made –to- order service is expensive, the management may be forced to drop the style in the middle of operation.

Recommendations/suggestion

Lean- agility management is a concept that has come with change management of 21st century. From the discussion, it is clear that companies are adopting these methods for the purposes of enhancing quality delivery, minimizing time in delivery, satisfying customers and improve growth of organizations. However, there are various challenges that have been noted to come with these forms of management.

As a remedy, there ought to be a number of measures that organizations should adopt to make lean -agility management style work. For lean operations, it is proper to visualize workflow by splitting works into various pieces, always specify the values that are demanded by customers, always strive for perfection and create value streams.

For agile management, it is essential to adopt a build- to -order style of production, make just- in- time deliver effective by combining with just-in-time sequence delivery, enhance real-time management and put together supply chain with supplier and customers.

To recap it all, two of the methods that have been adopted in the 21st century for management of companies are agility management and lean operations. Lean -agility operation looks at satisfying the end user, providing products of high quality and improving the production of an organization.

However, with dramatic changes in management field, companies are finding it quite cumbersome to stick to these styles of management. Therefore, the styles are not leading into any quality production quality, delivery and customer satisfaction as envisioned. With such challenges, it is only fair to always keep alert of any form of changes so as to plan on how to counter and improve the process of production.

This paper has analyzed the concepts of lean operations and agility operations as applicable in manufacturing and service sectors. In agility operations, HP Company and Sony Life have been analyzed while Toyota and Vodafone companies have been analyzed in terms of lean management. Lean operation mainly aims at changing or transforming the operation status of an organization.

As already mentioned in the essay, most organizations which often opt for lean operations always target minimal use of raw materials in a bid to reduce wastage.

It is indeed crucial to mention that while agile operation may be practiced alongside lean management both in the service and manufacturing sectors, managing both types of operations may demand stringent skills and knowledge due to the complexity of each. For instance, goods and services that are highly volatile in nature may pose a real challenge when these types of operations are unilaterally integrated in the process of production.

References

Anna, B., Lars, M. 2005. Improving software organizations: agility challenges and implications. Journal of Information Technology & People, 18 (4), 359 – 382.

Babar, M.A. 2009. An exploratory study of architectural practices and challenges in using agile software development approaches. Software architecture, 2009 & European Conference on software architecture. WICSA/ECSA 2009. Joint working IEEE/IFIP Conference, 81-90

Bell, S. 2006. Lean enterprise systems: Using IT for continuous improvement. Hoboken: John Wiley & Sons, Inc.

Black, J. R. 2008. Lean production: Implementing a world-class system. New York: Industrial Press, Inc.

Cummins, F. 2008. Building the agile enterprise: With SOA, BPM and MBM. Burlington: Elsevier publishers.

Dennis, P., Shook, J. 2007. Lean production simplified: A plan language guide to the world’s most powerful production system. New York: Productivity Press.

Drew, J., McCallum, B. & Roggenhofer, S. 2004. Journey to lean: Making operational change stick. Hampshire: Palgrave Macmillan.

El-Haik, B., Al-Aomar, R. 2006. Simulation-based lean six sigma and design for six sigma. Hoboken: John Wiley & Sons, Inc.

Goodpasture, J.C. 2009. Project Management the Agile Way: Making it work in the enterprise. Fort Lauderdale: J. Ross Publishing.

Hill, A.V. 2011. The encyclopedia of operations management: A field manual and glossary of operations management terms and concepts. New Jersey: Pearson Education, Inc.

Levine, L. 2005. Reflections on software agility and agile methods: Challenges, dilemmas, and the way ahead. Journal of Business agility and information technology diffusion, 180(1), 353-365.

Mahadevan, B. 2010. Operations management: Theory and practice. New Jersey: Pearson Education, Inc.

Martins, J.W. 2006. Lean six sigma for supply chain management lean six sigma for supply chain management. New York: McGraw-Hill Companies.

Mattias, H. & Jan, O. 2009. Lean and agile manufacturing: external and internal drivers and performance outcomes. International Journal of Operations & Production Management, 29 (10), 976 – 999.

Nieuwenhuizen, C. 2009. Business management for entrepreneurs. Cape Town: Juta and Co ltd.

Pride, W.M. & Hughes, R.J. 2011. Business. Belmont: CengageBrain Learning.

Ramesh, B. 2010. Agile requirements engineering practices and challenges: An empirical study. Journal of Information systems, 20(5), 449-480.

Reiner, G. 2009. Rapid modeling for increasing competitiveness: Tools and mindset. New York: Springer Dordrecht.

Waters, C.D. 2003. Inventory control and management. New Jersey: John Wiley & Sons, Inc.

Young, T. 2009. Some challenges facing lean thinking in healthcare. International Journal of Quality Health Care, 21(5), 309-310.

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IvyPanda. 2019. "Lean and agile operations." May 15, 2019. https://ivypanda.com/essays/lean-and-agile-operations-essay/.

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IvyPanda. (2019) 'Lean and agile operations'. 15 May.

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