How to Manage Through Worse-Before-Better Harvard Case Solution & Analysis

Many Western managers were introduced lean manufacturing in 1990, with the publication of "The Machine, who changed the world," based on a five-year study of Toyota International Program at the Massachusetts Institute of Technology of the vehicle. Since then, thousands of managers used the principles of Lean Management to achieve faster cycle, reducing the number of defects and a sharp increase in the timely delivery. Lean Management allows significant reduction in inventory levels throughout the supply chain, which should lead to improved financial performance - especially as companies achieve simultaneously reducing production and maintenance costs. But, as the authors point out, the transition takes time and full of obstacles. One obstacle is the predictable crisis in confidence that occurs when management fails to improve financial results quickly. Lean transformations are usually short-term adverse effect on the company's bottom line (that is, things get worse before better.) Management needs to anticipate these problems and explain them clearly. To help managers overcome the financial obstacles to lean on, the authors propose new tools for predicting deterioration in financial performance, which takes place in a mass manufacturer is lean and to understand the real performance improvements that are taking place in this period. Their approach, called "value stream accounting," helps managers plan for the short-term effects should understand operational improvements and develop a strategy to maximize the long-term benefit. Managers need to understand that "bad" news is not too bad - it's part of the necessary process of creating a stronger, more productive organization. Authors approach replaces the traditional cost accounting system with a transparent accounting system, which tracks the flow of the company, which include all of the value added and no added value activities required to bring a product or service from start to finish. "Hide
by Robin Cooper, Brian Maskell Source: MIT Sloan Management Review 10 pages. Publication Date: July 1, 2008. Prod. #: SMR288-PDF-ENG

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