Lebanon Gasket Company| October 24
| Creating a Trim Enterprise
BUILDING A LEAN VENTURE:
THE CASE WITH THE LEBANON GASKET COMPANY
I actually. Summary of facts
2. Lebanon Seal Company's Topeka, Kansas Center began operation in 1979. 2. The company had operated in using mass production.
5. In January of 2005 LGC acquired about 109 employees.
* The LGC Topeka plant depends on two main manufacturing procedures вЂ“ treatment molding and extrusion molding. * The injection molding process offers three key product families- OS1, TX4 and KC13, more than 100 product models are made across these types of three product families. 2. The extrusion molding process has two main item families-LX22 and KB8, more than 75 merchandise models are produced around these merchandise families. 5. LGC chosen Tom Walsh as the rose manager of its Topeka Facility in January of 2004. 2. Tom Walsh has twenty years of encounter as a developing engineer; his knowledge in accounting is incredibly limited. * Walsh's work at LGC was to convert the plant that were suffering from declining profits and margins, excessive waste and inventory levels, unsatisfactory on-time customer delivery performance, and shrinking business * The program to achieve this was going to focus on one particular core approach, " Operational ExcellenceвЂќ, simply by focusing on a lean creation strategy. * 18 months later on the LGC, with Walsh and his colleagues had achieved many goals related to the plans low fat transition. * Implementing the lean procedure dramatically improved the goal of the Topeka plant's manufacturing operations and the routings for all of its products. Previously, the goal of the plant's mass creation process was to achieve the lowest possible cost per product by increasing employee and equipment productivity. * Actually after a good transition inside the plant's creation strategy, the profits continued to decline. 5. The Monetary and Production Departments happen to be blaming the other person for the issues with the weak profits. 2. Major Complications
Tom Walsh's strategy on the Topeka center was to focus on operational technique. Following this procedure he started a transition to lean creation. Even though the low fat training program helped to improve order-to-delivery cycle and therefore sales, the financial outcome was still undesirable. The goal of the plan's cell phone oriented low fat approach is usually to deliver customer-driven value and Tom Walsh believed that once this kind of goal was achieved by correctly managing the manufacturing flooring, financial effects would increase. However , this did not include the case. Walsh asked for the help of his Fund Manager Robert Dwyer to explain the reason for declining profits. Dwyer pointed out three operational efficiencies: 1 . Purchasing agents were paying an excessive amount of for raw materials (Unfavorable immediate materials variance) 2 . An unfavorable immediate labor difference indicated a high level of labor inefficiency; and 3. An unfavorable expense variance mentioned poor equipment utilization and overhead price recovery. Dwyer suggested that the costs could possibly be reduced by simply laying off a few employees due to the low-level in efficiency. Walsh is not comfortable armed with the idea of laying off employees and believed that if the creation process have been changed significantly, the finance function were required to change too. In addition , he believed that since Dwyer was planning on retiring rapidly, he had simply no interest in critically reviewing the department's procedures and reporting practices. 3 main questions would help solve the problems at the Topeka plant: 1 ) Do the classic accounting procedures adopted in 1979 support the newest lean environment? 2 . Just how can the accounting function aid in decision-making concerning capacity preparing, aligning staff incentives with goals and product blend decisions? several. How can the accounting function aid value stream earnings analysis, linking strategic...