strategic management case study manufacturing

Examples of Strategic Management: Learn from Industry Leaders

Welcome to the world of strategic management, where businesses navigate the complex landscape of competition, innovation, and growth. In this comprehensive guide, we’ll delve into the fascinating realm of strategic management by exploring real-world examples of how some of the most successful companies and organizations have used strategic thinking to achieve remarkable results.

Strategic management is the art and science of formulating, implementing, and evaluating cross-functional  decisions that enable an organization to achieve its long-term objectives. It’s a critical aspect of business leadership, driving sustainable success and ensuring that companies not only survive but thrive in dynamic markets.

Our journey will take us through various sectors, from technology giants and automotive pioneers to startups, nonprofits, and government entities. By examining both successes and failures, you’ll gain valuable insights into the principles and practices of strategic management, allowing you to apply these lessons to your professional endeavors.

So, without further ado, let’s embark on this enlightening exploration of strategic management through the lens of remarkable examples from the business world.

Strategy Management

Strategy management is the systematic process of formulating, implementing, and evaluating strategies to achieve organizational goals and sustain a competitive advantage.

Understanding Strategic Management

Before we dive into the captivating examples of strategic management, let’s establish a solid understanding of what strategic management entails.

Strategic management is the comprehensive process of defining an organization’s direction,  making decisions  decisions on allocating its resources to pursue this direction and guiding the implementation of these  decisions .

It’s not a one-time task but rather an ongoing, dynamic process that aligns an organization’s internal capabilities with the demands of its external environment.

Key Components of Strategic Management

• Setting Clear Objectives: Strategic management begins with establishing clear, specific, and measurable objectives. These objectives provide a sense of purpose and direction for the entire organization.
• Environmental Analysis: Understanding the business environment is crucial. This includes analyzing industry trends, competitive forces, market dynamics, and potential risks and opportunities.
• Strategy Formulation: Once the organization’s objectives are defined and the external environment is assessed, the next step is developing a strategy. This involves determining how the organization will achieve its objectives, often considering factors like differentiation, cost leadership, or niche focus.
• Strategy Implementation: Formulating a strategy is only the first step; implementing it is equally important. This phase involves aligning the organization’s structure, processes, people, and culture with the chosen strategy.
• Evaluation and Control: Continuous evaluation and control mechanisms are necessary to ensure that the chosen strategy is producing the desired results. If not, adjustments may be required.

Now that we have a solid foundation in place, let’s explore how these principles are put into action with real-world examples of strategic management across diverse industries.

Strategic Management Frameworks and Tools

Strategic management involves the use of various frameworks and tools to analyze, plan, and execute strategies effectively. Understanding these tools is essential for any business professional.

Here are some of the most commonly used ones:

1. SWOT Analysis: A framework that helps organizations identify their Strengths, Weaknesses, Opportunities, and Threats. It’s a fundamental tool for  strategic planning .

2. PESTEL Analysis: This tool evaluates the Political, Economic, Sociocultural, Technological, Environmental, and Legal factors that can impact an organization.

3. Porter’s Five Forces: Developed by Michael Porter, this framework assesses the competitive forces within an industry, helping organizations determine their competitive position.

4. BCG Matrix: It’s a portfolio analysis tool that helps organizations assess their product offerings and allocate resources effectively. Products are categorized as Stars, Cash Cows, Question Marks, or Dogs.

5. Balanced Scorecard: This performance measurement framework considers financial and non-financial factors, allowing organizations to track progress toward their strategic goals.

6. Scenario Planning: In an uncertain environment, scenario planning involves creating multiple future scenarios to prepare for various outcomes.

7. Key Performance Indicators (KPIs): These are specific metrics that organizations track to measure progress toward strategic objectives.

The 5 Phases of the Strategic Management Process

Strategic management is a comprehensive and iterative process that guides organizations in making informed  decisions , formulating strategies, implementing them effectively, and evaluating their outcomes.

Understanding the various phases of the strategic management process is essential for achieving strategic objectives.

Let’s delve into each phase:

Examples of Strategic Management in Action

In this section, we’ll delve into captivating examples of strategic management from various sectors. These case studies offer valuable insights into how organizations leverage strategic thinking to thrive in competitive markets, innovate, and adapt to changing circumstances.

Stay tuned as we explore the strategic moves and  decisions made by industry leaders that have shaped their success.

1. Strategic Management at Apple Inc.

Our first stop on this tour of strategic management excellence is none other than Apple Inc. Founded in 1976, Apple has become a household name synonymous with innovation and cutting-edge technology.

Apple’s Strategic Vision: Apple’s co-founder, Steve Jobs, was known for his visionary approach to product development. He famously said, “Innovation distinguishes between a leader and a follower.”

Apple’s strategic management has been deeply rooted in this philosophy, focusing on creating products that are not just technologically advanced but also beautifully designed and user-friendly.

Key Strategic Moves:

• Product Diversification: Apple started as a computer company, but it didn’t stop there. The introduction of the iPod, iPhone, iPad, and Apple Watch showcased Apple’s ability to diversify its product portfolio strategically.
• Ecosystem Integration: Apple’s ecosystem is a prime example of strategic management. The seamless integration between devices, software (iOS, macOS), and services (Apple Music, iCloud) fosters customer loyalty and increases brand stickiness.
• Retail Strategy: Apple’s retail stores are strategically positioned in high-traffic locations, offering not just products but experiences. The design of Apple Stores, along with well-trained staff, creates a unique customer journey.
• Supply Chain Mastery: Efficient supply chain management allows Apple to deliver products to customers promptly. The company’s ability to source components globally and assemble them on time is a strategic advantage.
• Brand Image: Apple has meticulously cultivated its brand image as an innovator that challenges the status quo. This strategic positioning has helped Apple command premium prices for its products.

Takeaway: Apple’s strategic management demonstrates the importance of a clear vision, innovation, diversification, and a relentless focus on the customer experience.

2. Toyota: Pioneering Operational Excellence

Our next example hails from the automotive industry, and it’s none other than Toyota. Toyota’s approach to strategic management has revolutionized manufacturing processes and set new standards for operational efficiency.

Toyota’s Strategic Vision: Toyota’s vision revolves around “delivering better products and better services.” Its strategic management is grounded in the philosophy of “continuous improvement” or Kaizen.

• Lean Manufacturing: Toyota pioneered the concept of lean manufacturing, aiming to reduce waste, increase efficiency, and improve quality. The Toyota Production System (TPS) is a renowned example of strategic management focused on operational excellence.
• Global Expansion: Toyota strategically expanded its operations globally, becoming one of the largest automakers in the world. Its diverse product range caters to different markets and customer segments.
• Innovation in Hybrid Technology: Toyota’s introduction of the Prius, the world’s first mass-produced hybrid car, showcased its strategic commitment to sustainability and innovation.
• Quality Control: Toyota’s relentless pursuit of quality and its “stop the line” policy emphasizes its commitment to delivering exceptional products.
• Supply Chain Resilience: Toyota’s strategic management includes building a resilient supply chain. This was evident when the company navigated supply chain disruptions caused by Japan’s 2011 earthquake and tsunami.

Takeaway: Toyota’s strategic management teaches us the importance of operational excellence, continuous improvement, and a long-term commitment to quality and sustainability.

3. Airbnb: Disrupting the Hospitality Industry

Our final example brings us to the world of sharing economy and disruptive innovation—Airbnb.

Airbnb’s Strategic Vision: Founded in 2008, Airbnb’s strategic vision is to “create a world where anyone can belong anywhere.” It disrupted the traditional hospitality industry by leveraging technology to connect travelers with hosts offering unique accommodations.

• Platform-Based Model: Airbnb’s strategic management centers on its platform-based business model. It doesn’t own properties but provides a marketplace for hosts and guests to transact.
• Global Expansion: Airbnb strategically expanded its presence to become a global platform with listings in nearly every country. This expansion was supported by localization efforts and strategic partnerships.
• User-Centric Design: Airbnb’s focus on user experience and design thinking has been a strategic advantage. The platform is user-friendly, with features like reviews, secure payments, and personalized recommendations.
• Community Building: Airbnb strategically built a sense of community among hosts and guests through its branding and initiatives like host meetups and the “Airbnb Community Center.”
• Diversification: Over time, Airbnb strategically diversified its offerings beyond accommodations to include experiences and adventures, further enhancing its value proposition.

Takeaway: Airbnb’s strategic management illustrates the power of disruptive innovation, platform-based models, user-centric design, and the importance of building a strong community.

4. Amazon: Mastering Customer-Centricity

Amazon, the e-commerce giant founded by Jeff Bezos, epitomizes strategic management in the digital age. Its relentless focus on customer-centricity has propelled it to the forefront of the global retail industry.

Amazon’s Strategic Vision: Amazon’s vision is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online.” Their strategic management revolves around leveraging technology to enhance customer experience.

• eCommerce Dominance: Amazon strategically disrupted the retail industry by pioneering e-commerce. They focused on providing customers with vast product selections, competitive prices, and convenient delivery options.
• Amazon Prime: The introduction of Amazon Prime, a subscription service offering free shipping and access to streaming services, was a strategic move that boosted customer loyalty and retention.
• Innovation Hub: Amazon’s strategic management includes heavy investments in innovation. They introduced the Kindle e-reader, Amazon Web Services (AWS), and Amazon Echo, expanding their reach into various tech sectors.
• Marketplace Model: Amazon’s strategic  decision to allow third-party sellers on its platform broadened its product offerings and created a win-win situation for sellers and customers.
• Supply Chain Optimization: Amazon’s strategic brilliance extends to supply chain management, allowing them to fulfill orders efficiently. This includes investments in robotics and a vast distribution network.

Takeaway: Amazon’s strategic success highlights the significance of customer-centricity, innovation, and adaptability in today’s dynamic business landscape.

5. Coca-Cola: Branding Mastery

Coca-Cola, a global beverage giant, is renowned for its strategic management in brand building and marketing. It’s a classic example of how a company can turn a product into an iconic global brand.

Coca-Cola’s Strategic Vision: Coca-Cola’s vision is “to refresh the world in mind, body, and spirit.” Their strategic management revolves around creating an emotional connection with consumers through their brands.

• Brand Portfolio: Coca-Cola strategically expanded its brand portfolio beyond Coca-Cola to include a variety of beverages such as Diet Coke, Fanta, and Sprite, catering to diverse consumer preferences.
• Global Reach: Coca-Cola’s strategic global expansion made its products available in over 200 countries. This extensive reach bolsters its brand recognition and market presence.
• Marketing and Advertising: Coca-Cola’s iconic marketing campaigns, including the “Share a Coke” campaign and memorable Super Bowl ads, showcase its strategic emphasis on advertising and brand promotion.
• Sponsorships and Partnerships: Coca-Cola’s strategic partnerships with major sporting events like the FIFA World Cup and the Olympics demonstrate their commitment to associating their brand with positive experiences.
• Product Diversification: Recognizing evolving consumer preferences, Coca-Cola has strategically diversified its product offerings to include healthier options and reduced-sugar beverages.

Takeaway: Coca-Cola’s strategic management illustrates the power of branding, marketing, and diversification in building a globally recognized and cherished brand.

6. Netflix: Pioneering Digital Streaming

Netflix, the global streaming giant, is a prime example of a company that strategically disrupted the entertainment industry by transitioning from DVD rentals to digital streaming.

Netflix’s Strategic Vision: Netflix’s vision is “to become the best global entertainment distribution service, licensing entertainment content around the world.” Their strategic management focuses on providing high-quality content to subscribers.

• Content Creation: Netflix strategically shifted from being a content distributor to a content creator. Their original content, like “House of Cards” and “Stranger Things,” has garnered critical acclaim and subscriber loyalty.
• Global Expansion: Netflix strategically expanded globally, making its streaming service available in over 190 countries. This global reach is a testament to their strategic vision of becoming a global entertainment powerhouse.
• Data-Driven Personalization: Netflix’s strategic use of data analytics enables it to personalize content recommendations for each user, enhancing the viewing experience and subscriber retention.
• Subscription Model: Netflix’s strategic  decision to adopt a subscription-based model allows it to generate steady revenue and invest heavily in content creation.
• Technology Investment: Netflix’s strategic investment in streaming technology ensures a seamless and high-quality streaming experience for subscribers.

Takeaway: Netflix’s strategic management highlights the significance of content creation, global expansion, data-driven personalization, and subscription-based revenue models in the digital entertainment industry.

7. Google: Dominating Online Search and Advertising

Google, led by Larry Page and Sergey Brin, is a strategic management powerhouse that transformed online search and digital advertising.

Google’s Strategic Vision: Google’s vision is “to provide access to the world’s information in one click.” Their strategic management revolves around organizing information and making it universally accessible and useful.

• Search Engine Dominance: Google’s strategic focus on delivering highly relevant search results and a user-friendly interface made it the world’s leading search engine.
• Advertising Model: Google’s strategic monetization through pay-per-click advertising, primarily through Google Ads (formerly AdWords), revolutionized digital advertising.
• Android Ecosystem: Google strategically developed the Android operating system, powering a significant portion of the world’s smartphones and expanding its ecosystem.
• Cloud Services: Google Cloud, part of Alphabet Inc. (Google’s parent company), is strategically positioned to compete in the cloud computing market.
• Innovation Ventures: Google’s strategic approach to innovation includes projects like Google X, focusing on moonshot technologies like self-driving cars, and Project Loon for internet connectivity in remote areas.

Takeaway: Google’s strategic management highlights the importance of search engine dominance, advertising revenue models, ecosystem development, and moonshot innovation.

8. Facebook (Meta Platforms): Connecting the World

Meta Platforms, formerly Facebook, under Mark Zuckerberg’s leadership, is a strategic management example that transformed social networking and digital communication.

Meta Platforms’ Strategic Vision: Meta’s vision is “to give people the power to build community and bring the world closer together.” Their strategic management centers on connecting people globally.

• User Base Expansion: Meta strategically expanded its user base by acquiring platforms like Instagram and WhatsApp, diversifying its social media portfolio.
• Advertising Monetization: Meta’s strategic monetization primarily relies on targeted advertising, offering advertisers extensive user data for precise targeting.
• Virtual Reality (VR) and Augmented Reality (AR): Meta is strategically investing in VR and AR technologies, envisioning a future of interconnected virtual experiences.
• Metaverse: The strategic focus on building the metaverse, a collective virtual shared space, aims to redefine digital interactions and experiences.
• Data Centers and Connectivity: Meta’s strategic investments in data centers and internet connectivity infrastructure support its global operations.

Takeaway: Meta Platforms’ strategic management emphasizes user engagement, advertising-driven revenue models, innovation in VR and AR, and the vision of a metaverse future.

9. Nike: Mastering Branding and Innovation

Nike, led by visionary figures like Phil Knight and Mark Parker, showcases strategic brand management and innovation in the sportswear industry.

Nike’s Strategic Vision: Nike’s vision is “to bring inspiration and innovation to every athlete in the world.” Their strategic management revolves around innovation, athlete endorsements, and brand identity.

• Iconic Branding: Nike’s strategic branding includes the creation of the famous “Swoosh” logo, making it one of the world’s most recognizable brands.
• Endorsement Deals: Nike’s strategic partnerships with athletes like Michael Jordan, LeBron James, and Serena Williams bolster brand recognition and aspiration.
• Innovation in Footwear: Nike’s strategic focus on footwear innovation, such as Air Max and Flyknit technologies, sets industry standards.
• Marketing Campaigns: Nike’s strategic marketing campaigns, like “Just Do It,” resonate with consumers and reinforce the brand’s message.
• Sustainability Initiatives: Nike’s strategic commitment to sustainability includes efforts like “Reuse-A-Shoe,” recycling old athletic shoes into sports surfaces.

Takeaway: Nike’s strategic management underscores the power of iconic branding, athlete endorsements, product innovation, emotionally resonant marketing, and sustainability in the sportswear sector.

10. Tesla: Revolutionizing Electric Vehicles

Tesla, spearheaded by visionary entrepreneur Elon Musk, represents a paradigm shift in the automotive industry and strategic management.

Tesla’s Strategic Vision: Tesla’s vision is “to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” Their strategic management revolves around sustainability, innovation, and disruption.

• Electric Vehicle (EV) Leadership: Tesla’s strategic focus on electric vehicles disrupted the automotive industry and accelerated the transition to sustainable transportation.
• Autonomous Driving: Tesla’s strategic integration of autonomous driving features, such as Autopilot, showcases a commitment to innovation and safety.
• Gigafactories: Tesla’s strategic establishment of Gigafactories globally ensures efficient EV production and battery technology development.
• Direct-to-Consumer Sales: Tesla’s strategic approach of selling directly to consumers disrupted traditional dealership models.
• Energy Solutions: Tesla’s strategic diversification into solar energy and energy storage with products like Solar Roof and Powerwall demonstrates a broader vision beyond EVs.

Takeaway: Tesla’s strategic management exemplifies the transformative power of innovation, sustainability, direct sales models, and diversification into complementary industries.

Examples of Strategic Failures

1. nokia: missed opportunities in the smartphone era.

Nokia, once an undisputed leader in mobile phones, serves as a notable example of strategic failure. While they had a strong market presence, Nokia failed to adapt to the smartphone revolution effectively.

Strategic Missteps:

• Lack of Innovation: Nokia was slow to innovate and adapt to changing consumer preferences. They stuck to their traditional mobile phone models while competitors were developing smartphones.
• Ignoring the Ecosystem: Nokia underestimated the importance of a robust app ecosystem, an area where Apple’s iOS and Google’s Android thrived.
• Ineffective Leadership: Frequent changes in leadership and organizational restructuring led to a lack of focus and direction.

Takeaway: Nokia’s downfall underscores the importance of innovation, adaptability, and staying attuned to market trends, even for industry leaders.

2. Blockbuster: Failing to Embrace Digital Streaming

Blockbuster, a giant in the video rental industry, faced a catastrophic strategic failure due to its inability to embrace digital streaming.

• Lagging Technology: Blockbuster was slow to adopt digital streaming technology and underestimated its potential.
• Failure to Adapt: While Netflix was disrupting the industry with its subscription-based streaming service, Blockbuster clung to its brick-and-mortar rental model.
• Missed Opportunities: Blockbuster had the chance to acquire Netflix early on but declined, which proved to be a costly  decision .

Takeaway: Blockbuster’s demise highlights the critical importance of staying ahead of technological trends and being open to strategic partnerships.

3. Kodak: Missed the Digital Photography Wave

Kodak, a pioneer in photography, failed to adapt to the digital photography revolution, leading to a decline in its market presence.

• Overreliance on Film: Kodak was heavily reliant on film-based photography and underestimated the shift toward digital photography.
• Failure to Innovate: While they did develop digital camera technology, Kodak didn’t effectively commercialize it due to concerns about cannibalizing their film business.
• Lack of Vision: The company failed to envision a future where digital photography would dominate.

Takeaway: Kodak’s story emphasizes the importance of continuously innovating and not being afraid to disrupt your business model when necessary.

4. Blackberry: Ignoring the Smartphone Revolution

Blackberry, once synonymous with secure mobile communication, faltered when it failed to adapt to the rise of touchscreen smartphones.

• Innovation Gap: Blackberry’s failure to innovate and transition to touchscreen devices left it behind competitors like Apple and Samsung.
• Inadequate App Ecosystem: Blackberry’s app ecosystem couldn’t compete with the iOS App Store and Google Play Store.
• Complacency: Blackberry’s leadership was slow to recognize the competitive threat posed by touchscreen smartphones.

Takeaway: Blackberry’s decline underscores the need for established companies to remain agile and innovative in the face of evolving technologies and consumer preferences.

5. Xiaomi: Expanding Too Quickly

Xiaomi, a Chinese smartphone manufacturer, experienced a strategic setback when it expanded too rapidly into international markets.

• Overseas Expansion: Xiaomi aggressively expanded into markets outside China, including India and Europe, which stretched its resources.
• Supply Chain Issues: Rapid expansion led to supply chain challenges, including shortages of products in key markets.
• Brand Awareness: Xiaomi faced challenges in building brand awareness and trust outside China.

Takeaway: Xiaomi’s experience emphasizes the importance of measured, sustainable international expansion and the need for strong supply chain management.

These examples of strategic failures serve as cautionary tales, illustrating the significance of adaptability, innovation, foresight, and market awareness in the world of strategic management.

Lessons Learned from Strategic Management Examples

1. innovation is a game-changer.

• Key Lesson: Innovating in products, services, or business models can disrupt industries and create new market leaders.
• Examples: Apple’s continuous innovation in consumer electronics, Tesla’s pioneering electric vehicles, and Dollar Shave Club’s subscription-based razor service.

2. Customer-Centric Approach Pays Off

• Key Lesson: Prioritizing customer needs and preferences can lead to strong brand loyalty and business growth.

Examples: Amazon’s customer-centric e-commerce, Airbnb’s focus on user reviews and trust, and Warby Parker’s “Home Try-On” program.

3. Adaptability is Crucial

• Key Lesson: Being adaptable to changing market conditions and consumer trends is essential for long-term success.
• Examples: Netflix’s shift from DVD rentals to streaming, Slack’s evolution as a workplace collaboration platform, and Airbnb’s expansion into experiences.

4. Effective Marketing Matters

• Key Lesson: Creative and effective marketing strategies can generate significant attention and customer acquisition.

Examples: Dollar Shave Club’s viral marketing video, Airbnb’s storytelling approach, and Apple’s iconic advertising campaigns.

5. Ecosystem Development Drives Growth

• Key Lesson: Building an ecosystem of products, services, or partnerships can enhance value for customers and drive business growth.

Examples: Apple’s ecosystem of devices and services, Slack’s third-party integrations, and Tesla’s Supercharger network.

6. Sustainability is a Competitive Advantage

• Key Lesson: Incorporating sustainability and environmental responsibility into business strategies can attract socially conscious consumers and enhance brand reputation.

Examples: Tesla’s commitment to sustainable transportation, Airbnb’s Green Hosting program, and Patagonia’s eco-friendly practices.

7. Digital Transformation is Inevitable

• Key Lesson: Embracing digital technologies and online platforms is crucial in today’s business landscape.

Examples: Amazon’s digital retail dominance, Netflix’s streaming platform, and Tesla’s over-the-air software updates.

8. Diversification Reduces Risk

• Key Lesson: Diversifying product or service offerings can mitigate risk and expand revenue streams.

Examples: Tesla’s expansion into solar energy and energy storage, Amazon Web Services (AWS), and Apple’s ecosystem diversification.

9. Trust and Transparency Build Loyalty

• Key Lesson: Establishing trust through transparent practices and customer reviews can foster loyalty and credibility.

Examples: Airbnb’s user review system, Tesla’s commitment to safety and quality, and Amazon’s customer feedback-driven improvements.

10. Long-Term Vision is Essential

• Key Lesson: Maintaining a clear and ambitious long-term vision guides strategic decisions and sustains business growth.
• Examples: Amazon’s focus on long-term value over short-term profits, Tesla’s mission to accelerate the world’s transition to sustainable energy, and Apple’s dedication to innovation.

These lessons illustrate the diverse strategies and approaches employed by successful companies across various industries.

By studying these examples and applying the core principles to your own business, you can develop more effective strategic management practices and enhance your organization’s competitiveness and growth prospects.

In this comprehensive exploration of strategic management, we’ve dissected a multitude of examples, both successes and failures, from diverse industries. Through these cases, we’ve unearthed invaluable lessons that can guide businesses towards prosperity and sustainability.

Key takeaways include the paramount importance of innovation, adaptability, customer-centricity, and sustainability.

It’s not enough to merely acknowledge these lessons. To thrive in today’s competitive landscape, businesses must actively apply strategic management principles. Whether you’re a startup seeking growth, a corporate giant aiming to stay agile, or an organization striving for a brighter, more sustainable future, strategic management offers the compass to navigate these endeavors.

Lastly, it’s crucial to understand that strategic management is not static; it evolves alongside technology, market trends, and consumer behaviors. The examples we’ve examined serve as beacons of innovation and adaptation.

As we move forward, new case studies will emerge, reshaping our understanding of effective strategic management. Stay vigilant, stay adaptable, and continue learning from the ever-changing landscape of strategic management.

Tumisang Bogwasi

2X Award-Winning Entrepreneur | Empowering Brands to Generate Leads, Grow Revenue with Business Strategy and Digital Marketing | Founder, CEO of Fine Group

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Capturing the true value of Industry 4.0

In the past five years, a select group of companies have started pulling ahead in their efforts to implement Industry 4.0 across their manufacturing networks . Leading manufacturers are now realizing significant value from data and analytics, AI, and machine learning (ML). However, a large majority remain stuck in pilot purgatory, struggling to capture the full potential of their transformation efforts or deliver a satisfactory return on investment.

While digital transformations are notoriously difficult to scale up  across networks of factories, the pressure to succeed is intense. Companies at the front of the pack are capturing benefits across the entire manufacturing value chain—increasing production capacity and reducing material losses, improving customer service and delivery lead times, achieving higher employee satisfaction, and reducing their environmental impact. Scaled across networks, these gains can fundamentally transform a company’s competitive position.

With so much at stake, manufacturers are putting significant time and money behind their digital transformations . These investments are paying off for some, but most remain unable to scale successful pilot programs or fully leverage new tools and technology to see meaningful returns.

This article explores some of the common pitfalls associated with digital transformations and how a more strategic and value-driven approach could help manufacturers in the race to get ahead.

Delivering value across every area of the factory

The digitally enabled factory of today looks very different from the leading factory of ten years ago. Advances in data and analytics, AI, and ML—and the array of technology vendors in the market—mean manufacturers can choose from hundreds of potential solutions and tech applications to improve their ways of working.

Implemented successfully, these solutions deliver irresistible returns. Across a wide range of sectors, it is not uncommon to see 30 to 50 percent reductions in machine downtime, 10 to 30 percent increases in throughput, 15 to 30 percent improvements in labor productivity, and 85 percent more accurate forecasting (Exhibit 1).

While digital transformations are notoriously difficult to scale up across networks of factories, the pressure to succeed is intense. Companies at the front of the pack are capturing benefits across the entire manufacturing value chain.

Digital transformations are revolutionizing all aspects of manufacturing, touching not just processes and productivity but also people. The right applications of technology can lead to more empowered decision making; new opportunities for upskilling, reskilling, and cross-functional collaboration; better talent attraction and retention; and improved workplace safety and employee satisfaction.

Customers see the impacts through reduced manufacturing lead times, right-first-time launch management, and improved customer service and complexity management. And, of course, there are the win–win advantages associated with reduced environmental impact, made possible through lower emissions and reduced waste and more efficient energy, water, and raw-material consumption.

These productivity, process, and people improvements are not easy to accomplish—especially across a network of individual manufacturing sites, each with its own site leadership, IT infrastructure, and workplace culture. It is not uncommon to hear of companies achieving impressive results through pilot programs at one factory site only to find themselves unable to replicate these local wins across their network.

This was the situation at a global industrial company. Facing a considerable ramp-up in demand—volume more than doubled over just three years, which translated to producing more than 50 million additional parts—the business embarked on an ambitious digital transformation at one factory. The goal was to increase overall equipment effectiveness (OEE) by ten percentage points and reduce product unit costs by more than 30 percent.

The project delivered: the factory was admitted to the Global Lighthouse Network , a World Economic Forum initiative, in collaboration with McKinsey, that recognizes leadership in the Fourth Industrial Revolution. The site started welcoming external visitors to showcase its transformation. But despite this achievement, it was unclear to the company how to take this local success story and replicate it across other sites.

Would you like to learn more about our Operations Practice ?

The common pitfalls of scaling digital transformations.

There are five common reasons why manufacturers are not succeeding on this journey.

Siloed implementation. By pursuing digital transformations as a theoretical exercise, many companies unwittingly set up independent delivery teams that are decoupled from business leaders, site operations, manufacturing excellence, and central IT. Others focus too much on replicating a single site experience, failing to appreciate wider network complexities.

Failure to adapt. By deploying a one-size-fits-all approach, manufacturers miss the opportunity to build in the customization and adaptation needed to leverage the unique circumstances, culture, and values of separate factory sites.

Analysis paralysis. Performing a full and deep up-front analysis of an entire network can leave a manufacturer out of steam before a transformation can get off the ground. Instead, robust, accurate-enough insights can be gleaned from a well-developed extrapolation methodology.

Technology-driven rather than value-driven. A technology-first rollout means that solutions are deployed without a clear link to real value opportunities, business challenges, or capability requirements. The result: undermining crucial buy-in from the people charged with making deployment work.

Letting the ‘perfect’ defeat the good. By waiting until a fully fledged, ideal-state data and IT/OT (information technology/operational technology) architecture is defined and implemented before rolling out Industry 4.0 solutions, manufacturers lose out on the shorter time-to-impact made possible through a proven and pragmatic minimal viable architecture.

A technology-first rollout means that solutions are deployed without a clear link to real value opportunities, business challenges, or capability requirements, undermining crucial buy-in from the people charged with making deployment work.

Three company archetypes join the race

Manufacturers playing catch-up to the leading companies generally fall into one of three company archetypes.

The cautious starters. These companies are investigating how to begin their digital-transformation journeys. They need help to identify the full value that Industry 4.0 can bring to their business and to develop a network-wide strategy and deployment road map.

The frustrated experimenters. These companies have started experimenting through pilot programs with some successes. However, they find themselves deploying technologies without a clear understanding of how to achieve financial ROI.

The ready-to-scalers. These companies are deploying solutions and technologies but remain unable to maximize the returns or scale at pace across their networks. They need to recalibrate by focusing on how to capture the full benefits of Industry 4.0 or how to accelerate rollout to respond to shifts in business and customer needs.

Slowing down to go fast

No matter where a company falls on the spectrum of archetypes, there is great value in slowing down and regrouping around a new, more targeted strategy aimed at maximizing the value of a digital transformation.

An important lesson from the few organizations that have succeeded in scaling digital innovations is how they started their impact journey. Before jumping headfirst into procurement and deployment, the leading companies spend time identifying the full potential of Industry 4.0—pinpointing high-leverage areas across the manufacturing value chain—and architecting a laser-focused digital-manufacturing strategy and deployment road map.

The first phase of this approach includes a network scan to identify the value at stake and a priority list of technology use cases, taking into consideration data, IT/OT, and organizational maturity. An accompanying road map can then build on this groundwork, defining the deployment strategy and targeted sites for initial rollout, followed by a network-wide rollout plan to reach scale.

Taking the time up front to perform a network scan to find opportunities for big wins and quick wins can create significant momentum for a digital transformation. As manufacturing sites begin to capture financial and operational value—not to mention the benefits associated with improved organizational capabilities, workforce satisfaction, customer service performance, and environmental impact—these returns can create a virtuous feedback loop where programs become self-funding and initiatives translate more quickly into competitive advantage.

Scaling success

It is this methodology that underpinned the approach taken by the industrial company mentioned earlier. Following its lighthouse success, the business needed to understand how and where to invest to maximize returns across its network. By performing a network scan on a subset of its manufacturing value streams across more than a dozen sites, it identified five sites that together represented around 80 percent of the value at stake. Further, it found that ten out of the 17 identified use cases for technology accounted for 75 percent of the potential impact.

With a sound value-capture deployment strategy in place, and after structurally investing in the required capabilities, the company was able to replicate the network scan approach across the rest of its manufacturing network and scale to other business areas. A senior stakeholder in the company said: “We essentially wrote the playbook for how to scale this into our other sites and are making great progress in these places—not only across our downstream production network but also within our upstream production sites, leveraging digital to reduce human interventions and increase compliance.”

Focus on real business needs and current performance challenges, and follow a “strengths upward” approach, building on solutions that have already worked well at individual sites and can be rolled out pragmatically across the network.

In another example, a global consumer company had been piloting digital innovations in a number of business units for some time, but with few ideas achieving much impact beyond the individual line or site. Company leaders recognized the need to clarify which digital solutions could contribute to overall business needs and priorities, and where to focus transformation efforts to implement solutions at scale.

Following two months of up-front analysis focused on eight prioritized sites from a network of more than 40 factories in Europe and North America, the company realized that about 20 sites accounted for 80 percent of the total savings potential. It also identified a prioritized portfolio of digital solutions, with about two dozen use cases having relevance across the entire network, and a dozen identified as “no regrets” priorities.

Crucially, the process has enabled the company to understand the level of readiness of its data and technology infrastructure and the investment required in technical, managerial, and transformational capabilities. The company came out of the two months with an aligned and value-oriented road map for rolling out a digital transformation across its network. The plan integrated both digital and traditional lean or Six Sigma improvements, accounted for resources and technology requirements, and reflected a clear strategy for building capabilities at scale. The company went on to deploy at scale across multiple sites, pursuing more than $100 million of identified savings.

The seven golden principles for getting the best out of Industry 4.0

Whether manufacturers are starting out on their digital-transformation journeys—or recalibrating their approach after false starts or failed attempts—the approaches adopted by leading companies point to seven golden principles for scaling a successful digital transformation.

Communicate well and often. Establish an effective engagement plan and regular communication with critical senior stakeholders, site leaders, and a cross-functional core team.

Lighthouses reveal a playbook for responsible industry transformation

Be specific. Focus on real business needs and current performance challenges, and follow a “strengths upward” approach, building on solutions that have already worked well at individual sites and can be rolled out pragmatically across the network.

Segment, select, and syndicate. Segment the manufacturing network and select representative sites for an up-front network scan. Syndicate the extrapolation methodology up front to indicate how focused insights will be scaled to derive a networkwide analysis.

Formalize the value at stake. In each assessed site, describe the actual value at stake by linking the most applicable Industry 4.0 solutions or use cases with current digital readiness, data availability, and IT/OT architecture.

Develop a three- to five-year vision for the network. Describe the total value at stake from prioritized bundles of use cases to align business leaders on the ambition, and form a compelling change story  for the broader organization. An engaging visual representation of the key solutions can help to engage the broader organization with the vision (Exhibit 2).

Design a digital-manufacturing road map. Develop a prioritized rollout plan with a clear scaling strategy and articulation of the value to capture over time, integrating enablement of data and IT/OT architecture as well as resourcing requirements, capabilities, and change management.

Syndicate the vision and secure leadership buy-in. Circulate the business case and requirements with key stakeholders, aiming for a clear mandate from top leadership and close engagement on target setting and execution from site leaders.

Whether stuck in pilot purgatory or under mounting pressure to demonstrate returns, companies can become dispirited and discouraged. However, by taking just one or two months to slow down and develop a robust manufacturing strategy and deployment road map, companies can accelerate their Industry 4.0 transformations and chart a clear journey forward for the next few years.

Ewelina Gregolinska is an associate partner in McKinsey’s London office, where Rehana Khanam is a partner and Prashanth Parthasarathy is a senior expert; Frédéric Lefort is a partner in the Gothenburg office.

The authors wish to thank Søren Fritzen, Sven Houthuys, Regis Peylet, Mikhail Razhev, and Hariharan Vijaykumar for their contributions to this article.

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The Lean Post / Articles / Lean Management Case Studies Library

Lean Management Case Studies Library

By Chet Marchwinski

May 16, 2014

Learn how a variety of businesses and organizations used lean management principles to solve real business problems. We’ve arranged the examples in 16 categories to help you find the ones right for your environment.

Lean Management Examples from a Variety of Businesses

The following case studies of lean management principles in action show you how a variety of real businesses solved real business problems under diverse conditions.

We’ve arranged the stories in 16 categories to help you find the examples you need. There is some overlap. For instance, a “Lean Manufacturing” case study may also appear with “Privately Held Companies.”

Lean Manufacturing

• Logistics, Supply Chain, and Warehousing
• Lean Material Handling
• Job Shops (Low-volume, High-mix Manufacturing); Tool and Die
• Lean in Government
• Lean Healthcare
• Lean Accounting
• Lean Construction
• Lean in Office and Service Processes
• Lean in Education

Problem Solving

Pull Systems

Culture Change

People Development

Privately Held Companies

Maintenance

Many of the executives who took part in these transformations are interviewed in LEI’s Senior Executive Series on Lean Leadership . After reading the case studies, be sure to get their personal perspectives on leading change. (Feel free to link to this page, but please respect the copyrights of LEI and journalists by not copying the articles.)

Are you doing something new or notable in the practice of lean management? Let us share what you learned with the lean community. For more information, contact LEI’s Director of Communications Chet Marchwinski at cmarchwinski at lean dot org

Thrustmaster Turns Around

Learn how Thrustmaster of Texas successfully adopted lean thinking and practices to make sustainable improvements in a short period of time, and how other manufacturers of highly engineered, low-volume products can follow their lead using the Lean Transformation Framework.

Lean + Circular Principals = a New True North for Manufacturer

SunPower’s lean journey resembled most others until it defined a new mission, a new True North by combining lean principals with those of the “circular economy” to launch what it is calling a CLean Transformation.

Sustain Your Lean Business System with a “Golden Triangle” After a medical device maker took a hit to margins to fight off global competition, it rebuilt them by lifting its lean operating system to a higher level and keeping it there with a “golden triangle” of sustainability.

Followup Story:

Manufacturing Balancing Act: Pull Versus ERP

In this follow-up to “Sustain Your Lean Business System with a ‘Golden Triangle,’” a case study about Phase 2 Medical Manufacturing, the company needs warehouse space to keep pace with sales growth spurred by the lean transformation. Instead, it expands a pull system by connecting the plan-for-every-part database that underpins one-piece flow production with ERP, typically associated with big batch production.

Cultivating a Lean Problem-Solving Culture at O.C. Tanner If you are in the “appreciation business”, you have to live it in your own workplace. For O.C. Tanner that meant a lean transformation had to show the company appreciated and wanted people’s problem-solving ideas. Here’s a report on that effort, including what worked and what didn’t.

Lean Partnership with Dealer Network Helps Vermeer Reduce End-to-End Inventory on Top Sellers

A lean transformation had taken heavy-equipment manufacturer Vermeer away from batch manufacturing, but batch ordering by dealers was delaying how quickly they got equipment like brush chippers. Learn how it  began converting its domestic industrial-line distribution network to lean replenishment, improving service to end customers and improving cash flow for Vermeer and its dealers.

Herman Miller’s Experiment in Excellence At Herman Miller, the lean management effort helps it build problem solvers as well as world-class office furniture. And as this case study shows, lean practices also helped it weather a brutal recession.

Build Your “House” of Production on a Stable Foundation Rigorous problem solving creates basic stability in a machining intensive facility.

A Journey to Value Streams: Reorganizing Into Five Groups Drives Lean Improvements and Customer Responsiveness An approach to creating a value-stream culture centered on autonomy, entrepreneurialism, and lean principles.

Change in Implementation Approach Opens the Door at EMCO to Greater Gains in Less Time A relatively quick, intensive project accelerates the rate of improvement and creates a showcase facility for spreading lean concepts.

Creating the Course and Tools for a Lean Accounting System A lean accounting implementation fills the frustrating disconnect between shop-floor improvements and financial statements.

For Athletic Shoe Company, the Soul of Lean Management Is Problem Solving After taking a lean tools approach to change, management re-organized the transformation around problem solving and process improvement to create a culture that engaged people while boosting performance.

Knife Company Hones Competitiveness by Bucking the Status Quo An iconic family-owned company turns to lean manufacturing to reduce costs by at least 30% to keep its U.S. operations open.

Lean Transformation Lives and Dies with Tools and Dies After a failed first try at just-in-time production , a company transforms tool maintenance, design, and fabrication to create a solid foundation for a second attempt.

Seasoned Lean Effort Avoids “Flavor-of-the-Month” Pitfall A look at how one company’s approach to what new tools it introduced, in what order, and how it prevented each new technique from being viewed as a “flavor of the month” fad.

Shifting to Value-Stream Managers: a Shop-Floor Revolution Leads to a Revolution in Plant Organization

Two years into a lean transformation, the low-hanging fruit has been plucked and progress has started to slow. Read how a Thomas & Betts plant recharged the transformation and reached higher levels of performance by using value-stream managers to span functional walls.

Using Plan-Do-Check-Act as a Strategy and Tactic for Helping Suppliers Improve

At Medtronic’s Neuromodulation business unit, the plan-do-check-act cycle is used on a strategic level to guide overall strategy for selecting and developing key suppliers as well as on a tactical level for guiding lean transformations at supplier facilities.

back to top

Logistics, Supply Chain, and Warehousing How a Retailer’s Distribution Center Exemplifies the Lean Precept “Respect for People,” and Reaps the Benefits

To make sure training engaged and resonated with people after previous attempts at a lean transformation faltered, LifeWay matched lean management tools and principles to its Bible-based culture and language.

Lean management case study series: Lean in Distribution: Go to Where the Action Is!

Starting with daily management walkabouts and standard work , this distributor had laid the groundwork for steady gains for years to come, just two years after its first kaizen workshop .

Putting Lean Principles in the Warehouse

Executives at Menlo Worldwide Logistics saw an opportunity to leapfrog the competition by embracing lean in its outsourced warehousing and receiving operations.

Lean Thinking Therapy Spreads Beyond the Shop

A company expands the lean transformation from the shop floor to international distribution, domestic shipping, and product development.

Sell One, Buy One, Make One: Transforming from Conventional to Lean Distribution

Large inventories to cover fluctuations in demand once characterized Toyota’s service parts distribution system — but no more. Here’s how one DC made the switch.

Material Handling

Following Four Steps to a Lean Material-Handling System Leads to a Leap in Performance

Creating the critical Plan for Every Part was one step in a methodical four-step implementation process to replace a traditional material-handling system.

Low-volume, High-mix Manufacturing; Tool and Die

The Backbone of Lean in the Back Shops

Sikorsky managers apply the lean concept of “every part, every interval” (EPEI) to level the mix in demand and create flow through a key manufacturing cell .

Landscape Forms Cultivates Lean to Fuel Growth Goals

With single-item orders 80% of the time, a low-volume, high-mix manufacturer decided single-piece flow cells were the best way decided the best way to add new products without having to constantly reconfigure production.

Lean Transformation Lives and Dies with Tools and Dies

After a failed first try at just-in-time production, a company transforms tool maintenance, design, and fabrication to create a solid foundation for a second attempt.

Canada Post Puts Its Stamp on a Lean Transformation

The “ inventory ” of mail already is paid for, so moving it faster doesn’t improve cash flow as in lean manufacturing. But Canada Post discovered that traditional batch-and-queue postal operations could benefit from lean principles.

Lean Thinking in Government: The State of Iowa

This story examines a kaizen event at a veterans home and more broadly at the lean effort in Iowa government.

Lean Thinking Helps City of Chula Vista with Budget Crunch

Goodrich Aerostructures’ Chula Vista plant introduces city government to lean thinking and practices so in order to maintain municipal services without resorting to further cuts in the workforce.

Using Lean Thinking to Reinvent City Government

Grand Rapids, MI, turns to lean principles to consolidate operations, eliminate wasted time and effort, and streamline to improve productivity while providing the quality of service that residents want.

Transforming Healthcare: What Matters Most? How the Cleveland Clinic Is Cultivating a Problem-Solving Mindset and Building a Culture of Improvement

The Cleveland Clinic reinvents its continuous improvement program to instill a problem-solving mindset and the skillset to solve everyday problems among the clinic’s thousands of caregivers.

View from the Hospital Floor: How to Build a Culture of Improvement One Unit at a Time

In order to do more and improve faster, the Cleveland Clinic is rolling out a methodology for building a “culture of improvement” across the 48,000-employee hospital system as this followup to the above story shows. Here’s how it works according to the people making the changes.

Dentist Drills Down to the Root Causes of Office Waste

Dentistry is a job shop that Dr. Sami Bahri is out to improve fundamentally for the benefit of patients through the application of lean principles.

Lean management case study series: Pediatric Hospital in Tough Market Pegs Growth to Lean Process Improvement

Lean improvement projects at Akron Children’s Hospital have saved millions of dollars, increased utilization of expensive assets, and reduced wait times for patients and their families.

Lean Design and Construction Project an Extension of Lean Commitment at Akron Children’s Hospital

Input from nurses, doctors, therapists, technicians, and patient parents heavily influenced design decisions..

“Pulling” Lean Through a Hospital

A thoughtful rollout of lean principles in the ER and eye-opening results created a “pull” for lean from other departments.

Best in Healthcare Getting Better with Lean

Mayo Clinic, Rochester, MN, stresses to doctors that the lean effort is aimed not at changing the moment of care, the touch moment between doctor and patient, but the 95% of the time when the patient is not in the doctor’s office

Fighting Cancer with Linear Accelerators and Accelerated Processes

Cross-functional team design and implement a lean process to dramatically increase the number of patients with brain and bone metastases receiving consultation, simulation, and first treatment on the same day without workarounds or expediting.

Massachusetts General Looks to Lean

A proton therapy treatment center, for many adults and children the best hope of beating cancer, applies lean principles to increase capacity.

New Facility, New Flow, and New Levels of Patient Care: The wait is over for patients at the Clearview Cancer Institute in Alabama

Physicians and staff have tirelessly reengineer processes and patient flow to eliminate as much waiting and waste as possible.

The Anatomy of Innovation

At a hospital in Pittsburgh, the emerging vision for the “hospital of the future” is described as giving the right patient, the right care, at the right time, in the right way, all the time.

Creating the Course and Tools for a Lean Accounting System

A lean accounting implementation fills the frustrating disconnect between shop-floor improvements and the financial statement.

Knife Company Hones Competitiveness by Bucking the Status Quo

An iconic family-owned company turns to lean manufacturing to reduce costs by at least 30% to keep its U.S. operations open.

Office and Service Processes

The “inventory” of mail already is paid for, so moving it faster doesn’t improve cash flow as in lean manufacturing. But Canada Post discovered that traditional batch-and-queue postal operations could benefit from lean principles.

Lean Landscapers

At an Atlanta landscaping company, lean practices are making inroads into a service industry in unusual yet fundamental ways.

LSG Sky Chefs Caters to New Market Realities

Business at airline caterer LSG Sky Chefs dropped 30% when airlines cut flights after the terrorist attacks on September 11, 2001. Sky Chefs responded with a rapid launch of a lean initiative.

leveraging Lean to Get the Oil Out

Aera Energy LLC, a California oil and gas company,  relies on lean principles to improve key processes, including drilling new wells, repairing existing ones, and maximizing the number of barrels of crude pumped each day.

Columbus Public Schools Use Process Thinking to Improve Academic Achievement.

Columbus, OH, public schools, experiment with lean tools and process thinking to remove wasteful activities that don’t help them help students learn.

Lean Inroads into Alabama Academia

How the University of Alabama in Huntsville integrated lean concepts throughout its industrial engineering curriculum.

Linking Lean Thinking to the Classroom

Value-stream mapping is one of many activities included in the Ford Partnership for Advanced Studies (Ford PAS), an academic program designed to link high-school classroom learning to the skills needed in college and business.

Build Your “House” of Production on a Stable Foundation

Rigorous problem solving creates basic stability in a machining intensive facility.

For Athletic Shoe Company, the Soul of Lean Management Is Problem Solving

After talking a lean tools approach to change, management re-organized the transformation around problem solving and process improvement to create a culture that engaged people while boosting performance.

Toothbrush Plant Reverses Decay in Competitiveness

The rapid introduction of a lean system, beginning with just-in-time production and pull, helps a highly automated Midwest plant fight off overseas competition by reducing lead times and inventory while augmenting the plant’s advantage in service.

A Journey to Value Streams: Reorganizing Into Five Groups Drives Lean Improvements and Customer Responsiveness

An approach to creating a value-stream culture centered on autonomy, entrepreneurialism, and lean principles.

Making Lean Leaders — Ariens internship program develops lean and leadership skills

Besides making snow-blowers, mowers, and string trimmers, Ariens Co., of Brillion, WI, makes lean leaders.

Starting with daily management walkabouts and standard work, this 84-year-old, family-owned distributor laid the groundwork for steady gains for years to come, just two years after its first kaizen workshop.

Sustain Your Lean Business System with a “Golden Triangle”

After a medical device maker took a hit to margins to fight off global competition, it rebuilt them by lifting its lean operating system to a higher level and keeping it there with a “golden triangle” of sustainability. You’ll recognize two elements of the triangle right away: visual control and standardized work . The third, accountability management or a kamishibai system, is probably less well known but just as critical.

Cultivating a Lean Problem-Solving Culture at O.C. Tanner

If you are in the “appreciation business”, you have to live it in your own workplace. For O.C. Tanner that meant a lean transformation had to show the company appreciated and wanted people’s problem-solving ideas. Here’s a report on that effort, including what worked and what didn’t.

Lean Thinking in Aircraft Repair and Maintenance Takes Wing at FedEx Express

A major check that used to take 32,715 man-hours was cut to 21,535 hours in six months. That translated into a $2 million savings, which dovetailed with the company’s emphasis on reducing costs during the recession.

Construction

Input from nurses, doctors, therapists, technicians, and patient parents heavily influenced design decisions—from incorporating emergency room hallways that protect the privacy of abused children to the number of electrical outlets in each neonatal intensive care room.

Virtual Lean Learning Experience (VLX)

A continuing education service offering the latest in lean leadership and management.

Written by:

About Chet Marchwinski

Chet has been a humble, unwashed scribe of the lean continuous improvement movement since books by Taiichi Ohno and Shigeo Shingo first hit North America in the 1980s. At LEI, he contributes to content creation, marketing, public relations, and social media. Previously, he also wrote case studies on lean management implementations in…

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Lean Six Sigma for the improvement of company processes: the Schnell S.p.A. case study

The TQM Journal

ISSN : 1754-2731

Article publication date: 15 October 2021

Issue publication date: 17 December 2021

The aim of this study is to develop an in-depth case study on the implementation on Lean six sigma (LSS) in Schnell S.p.A., Italian company leader of an important multinational industrial group, highlighting the benefits that can be achieved from a careful application of this method, the main challenges and organizational learning from its implementation.

Design/methodology/approach

The study has been developed with a qualitative approach, creating a single in-depth case study, with the participant observation of researchers in the project which lasted 4 months. Periodic weekly meetings were done with the working group to exchange feedback on the development of the project to share opinions and data.

A project has been developed to stabilize the procurement process of a pull-type production cell, which experienced delays in supply lead times. The causes of the problems in their process of managing the supply of the production cell were found and some inefficiencies in the internal process of fulfillment of supply orders have been intercepted, the optimization of which has allowed the generation of an automatic system for sending supply orders, coming directly from the production line.

Originality/value

This study described the path and dynamics of the transformation process that business organizations undertake for optimizing their profitability and competitive advantage, placing emphasis on an innovative methodology for conducting business process improvement projects, which constitutes its operating philosophy on the effective and efficient use of company resources and skills, to guarantee to the company the achievement of a lasting and defensible competitive advantage over time.

• Lean thinking
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• Quality management
• Continuous improvement

Murmura, F. , Bravi, L. , Musso, F. and Mosciszko, A. (2021), "Lean Six Sigma for the improvement of company processes: the Schnell S.p.A. case study", The TQM Journal , Vol. 33 No. 7, pp. 351-376. https://doi.org/10.1108/TQM-06-2021-0196

Emerald Publishing Limited

Copyright © 2021, Federica Murmura, Laura Bravi, Fabio Musso and Aleksandra Mosciszko

Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

1. Introduction

The development of an effective quality improvement or continuous improvement strategy is a key factor for long-term success of modern organizations. Over the last decade, Lean Six Sigma (LSS) has become one of the most popular and proven business process improvement methodologies organizations have ever witnessed in the past ( Antony et al. , 2017 ), and it has been accepted globally as a management strategy for achieving Process Excellence ( Gijo et al. , 2019 ).

Lean Six Sigma is a management strategy for improving corporate productivity and profitability, that aim to maximize the Customer satisfaction by reducing constraints which the company organization is subject in terms of activities that do not create value for the Customer. In practice, LSS is an improvement strategy that analyze quantitative data on business performance to identify, eliminate and control problems and inefficiencies related to manufacturing cost, service cost, quality, productivity and customer satisfaction ( Singh and Rathi, 2019 ; Snee, 2010 ) throughout the business processes.

The objectives of quality and efficiency, supported by Lean Six Sigma, are made by DMAIC: a structured method for improving the performance of existing processes ( Sordan et al. , 2020 ), based on the application of the concepts Define, Measure, Analyze, Improve and Control. It provides a standardized guideline for the elaboration of improvement projects and provides different statistical tools and techniques appropriate to each phase of the DMAIC cycle ( Sordan et al. , 2020 ) able to lead to the root causes of business problems and to eliminate the wastes and reduce the variation, thus, ensuring substantial improvement in business processes ( Bhat et al. , 2020 ).

The term LSS was first introduced into literature around 2000 LSS, while LSS teaching was established in 2003 as part of the evolution of Six Sigma ( Timans et al. , 2012 ). Since that time, there has been a noticeable increase in LSS popularity and deployment in the industrial world ( Shah et al. , 2008 ) and researchers had the interest to publish more papers on LSS to try to come up with a comprehensive approach to achieve continuous improvement. However, as suggested by Albliwi et al. (2015) , there are still many gaps that need to be addressed in LSS literature such as benefits, motivation factors, challenges and limitations ( Pepper and Spedding, 2010 ; Laureani and Antony, 2012 ), and there is also a lack of research in the relation between LSS and organizational learning and in recent years a lot of systematic literature reviews on the topic have been published on the topic but only few case studies have been analyzed in the research field to cover this gap.

Therefore, the aim of this study is to cover this gap, by developing an in-depth case study on the implementation on LSS in an Italian company leader of an important multinational industrial group, that is Schnell S.p.A., that constitutes its main research and production center and provides technological, organizational and commercial support for the entire group. Schnell operates in over 150 countries around the world through its 11 subsidiaries, over 50 agents and resellers, and a dense network of service centers.

This research work has the objective of highlighting the benefits that can be achieved from a careful application of LSS method in the company, the main challenges and also organizational learning from LSS implementation, showing its application in details in an important reality like that of Schnell S.p.A.

The paper is structured as follows: Section 2 depicts the theoretical background, describing the merging of Lean Production and Six Sigma and defining the critical success factors of lean six sigma implementation; Section 3 defines the methodology used, Section 4 presents and discusses the results of the case study while the last section draws the main conclusions.

2. Literature review

2.1 the merging of two quality philosophies: lean production and six sigma.

The LSS notion was announced to the world in 2002, when Michael George used it for the first time in the book “Lean Six Sigma: Combining Six Sigma with Lean Speed” ( Sordan et al. , 2020 ; Sreedharan and Raju, 2016 ). He is the founder and Chief Executive Officer of the George Group, one of the largest LSS project consulting firms in the United States.

Although its appearance is quite recent, LSS arise from two complementary but different approaches ( Sordan et al. , 2020 ): Toyota Production System (TPS), a famous organizational orientation developed in Japan, from the 1960s and 1980s, spread with the concept of “Lean Thinking”; and Six Sigma, a technical quality management program, introduced by Motorola Corporation in manufacturing arena in 1987 ( Singh and Rathi, 2019 ).

The synergy between Lean and Six Sigma created a data-driven ( Sreedharan and Raju, 2016 ) and top-down business strategy to improve the quality and productivity of organizations ( Singh and Rathi, 2019 ; Sordan et al. , 2020 ).

When we talk about Lean Thinking, we are talking about a business culture, based on respect, trust and cooperation between employees and oriented by a constant search for perfection that allows to reach the highest quality of products and services offered by the company and consequently to maximize customer satisfaction.

To achieve this goal of perfection and to optimize profits, corporate actions must be aimed at a constant effort to reduce costs and wastes of tangible and intangible resources, by distinguishing valued-added activities from non-value-added activities and eliminating wastes that increases cost without adding value in the eyes of the customer ( Antony et al. , 2017 ; Cudney et al. , 2014 ): activities that are unnecessary and not required for the operations of the business ( Jayaram, 2016 ).

Lean Thinking emphasizes on productivity improvement along with speed to respond to customer needs and create a streamlined, high-quality system that produces finished products at the pace of customer demand with little or no waste ( Lande et al. , 2016 ).

Wastes are called Muda, and they can be defined as real sins that hinder the ideals of perfection. The eight types of waste are defined as transport, inventory, motion, waiting, overproduction, overprocessing, defects and non-utilized skills ( Gijo et al. , 2019 ). To identify and eliminate Muda, Lean strategy brings a set of proven tools and techniques that allow to reduce lead times, inventories, set up times, equipment downtime, scrap, rework and other wastes of the hidden factory ( Lande et al. , 2016 ). Corbett (2011) affirms that while lean focuses on the elimination of waste and improving flow, it has some secondary effects: quality is improved; the product spends less time in the process, thereby reducing the chances of damage and obsolescence.

But we have to remember that the commitment to Lean Thinking must start at the top management level and should be cascaded down to various levels across the organization to improve flow and efficiency of processes ( Antony et al. , 2017 ).

Six Sigma (SS) is a business process improvement and problem-solving approach ( Lande et al. , 2016 ) that seeks to find and eliminate causes of variability, as well as defects or mistakes in business processes, by focusing on process outputs which are critical in the eyes of customers ( Antony et al. , 2017 ). The main objective of Six Sigma is to obtain “zero defect” or, in statistical terms, to reduce defects up to 3.4 parts per million opportunities ( Singh et al. , 2019 ).

To study variability, Six Sigma utilizes a problem-solving methodology to define, measure, analyze, improve and control processes and implement cost-effective solutions leading to significant financial savings ( Singh et al. , 2019 ) not only for manufacture sectors but also remove the defects throughout the corporations ( Singh and Rathi, 2019 ). This methodology is called DMAIC and it emphasizes on variation reduction, defect reduction and process evaluation (the effectiveness issue).

The complementarity between both approaches can be justified when the deficiencies inherent in each of them are observed, acting in isolation ( Sordan et al. , 2020 ). Both had produced tremendous results but had limitations: Lean is not well suited to resolving complex problems that require intensive data analysis, and advanced statistical methods, and, Six Sigma implementation showed how not every problem can be resolved with only a big data collection ( Antony et al. , 2017 ).

Lean does not address variation within a process; rather it addresses variation between end-to-end processes which appears in the form of waste. One of the major limitations of Lean is that it cannot be used to tackle problems related to process stability and capability ( Gijo et al. , 2019 ) and it tends to work best with “solution known” problems, where we realize that we are not operating to best practices, Lean implements them and make rapid improvements with minimal data collection ( Hoerl and Gardner, 2010 ). Six Sigma is most effective when used for improvement projects intended to drive processes towards process entitlement, in situations where the solution to the problem is unknown ( Snee and Hoerl, 2007 ).

As stated by Pepper and Spedding (2010) if lean is implemented without Six Sigma, there is a lack of tools to fully exploit the improvement of its potential. Conversely, if Six Sigma is adopted without lean thinking, there would be a cache of tools for the improvement team to use, but no strategy or framework to bring one's application to a system.

Combining Lean manufacturing principles and Six Sigma tools and techniques enables organizations to form a powerful improvement combination ( Hoerl and Gardner, 2010 ; Lande et al. , 2016 ) that has allowed many organizations to solve more problems quicker ( Antony et al. , 2017 ). It is a successful integration because Lean focuses on improving the flow of information and materials between the steps in the process and Six Sigma works to improve the value-adding transformations which occur with in the process steps ( Antony et al. , 2017 ).

LSS defines an approach, but of course does not dictate the specific progression of the project or dictate the unique mix of tools to be used, which of course needs to be problem specific ( Hoerl and Gardner, 2010 ). The appropriate blend of Lean and Six Sigma tools useful on any one problem therefore depends on the nature of the specific problem being solved ( Antony et al. , 2017 ).

The marriage between these two methodologies provides a more integrated, coherent and holistic approach to continuous improvement ( Pepper and Spedding, 2010 ) and has led to the creation of a breakthrough managerial concept ( Sordan et al. , 2020 ; Chiarini, 2012 ) with the aim to create a new business culture that breaks the link with the traditional way of working in all productive functions. LSS adds a new task to daily working duties: the recovery of operational efficiency through training growth of people, extensive use of data culture and problem-solving methodologies; all activities that simultaneously allow the improvement of quality, the costs and business complexities reduction, the increasing revenue ( Galdino de Freitas and Gomes Costa, 2017 ; Jayaram, 2016 ) and, finally, greater reliability of the services provided to the end customer. The application of LSS methodology results in reduced waste, defects and improve process, which in turn provide high-quality products at minimum cost, and this leads to customer delight, which ultimately raises the societal living standard ( Singh et al. , 2019 ; Jayaram, 2016 ), the well-being of employees and the quality of the work environment (Galdino de Freitas and Gomes Costa, 2017 ).

LSS aims not only to improve financial results through the improvement of company production processes, but it targets to help organizations build an adequate relationship with society, employees and the environment ( Galdino de Freitas and Gomes Costa, 2017 ).

Both Lean and SS require a company to focus on its products and customers and LSS as a part of management strategy to increase the market share and maximize profit ( Lande et al. , 2016 ). It produces benefits in terms of better operational efficiency, cost-effectiveness and higher process quality, because it promotes total employee participation from both top-down and bottom-up as a win-win practice to both management and staff members ( Gijo et al. , 2019 ).

2.2 Critical success factors of lean six sigma implementation

Lean Six Sigma strategy is versatile in nature and has a lot of applications in a variety of industries.

It can be applied in manufacturing as well as non-manufacturing environment ( Singh and Rathi, 2019 ). It has broad applicability in service, healthcare, government, non-profits, education ( Antony et al. , 2017 ) automotive, textile, steel and aerospace industries ( Sordan et al. , 2020 ). Although LSS has its roots in manufacturing, it is proven to be a well-established process excellence methodology in almost every sector despite its size and nature ( Gijo et al. , 2019 ). It is useful in small-and medium-size organizations as well as large organizations ( Antony et al. , 2017 ).

LSS is also suitable for less experienced organizations: Bhat et al. (2020) write about the successful deployment of LSS strategy in an Indian industry with orthodox industrial practices, limited manpower, constrained capital and confined knowledge on scientific improvement practices, and the research proves that even a novice user can effectively participate and implement LSS with proper mentoring to enhance the system.

Regardless of the sector in which the LSS is applied, this shows the spread of LSS in various organizations as one of the best strategies for organizational excellence ( Sreedharan and Raju, 2016 ). But it is important to remember that achieving maximum strategic and management efficiency cannot be based on the replication of principles and models of Lean approach.

Each organization is immersed in different social, cultural and economic conditions. For this reason, lean tools must be sized and customized on business contexts and simultaneously the entire business organization must be adapted to the changes that Lean Six Sigma generates and that it needs to be applied effectively ( Lande et al. , 2016 ; Raval et al. , 2018 ; Singh et al. , 2019 ; Gijo et al. , 2019 ).

These requirements for cultural change are the main critical success factors for LSS ( Sreedharan and Raju, 2016 ).

Critical success factors are the actions and processes that must be controlled by the management ( Lande et al. , 2016 ) during the implementation of a LSS project.

Top management involvement and commitment ( Lande et al. , 2016 ; Gijo et al. , 2019 ). The top management involvement and commitment are essential for successful implementation ( Pepper and Spedding, 2010 ) of any LSS initiative. It must personally support all improvement initiatives and integrate the LSS culture into entire organizations. Its active participation can multiply the positive project effects and make a significant impact at all levels ( Gijo et al. , 2019 ). If the top management will not take initiatives and not show their full involvement it could cause the failure of LSS implementation ( Singh et al. , 2019 ).

Employee involvement, empowerment and training ( Lande et al. , 2016 ; Gijo et al. , 2019 ; Bhat et al. , 2020 ). The cultural growth of internal staff is the heart of LSS programs because it offers necessary tools to create a clear vision of the project, to focus on teamwork and, above all, to fight the resistance to cultural and operational changes ( Singh et al. , 2019 ; Sunder and Antony, 2018 ). Employee training also contributes to gain a high level of internal communication which facilitates the implementation of LSS ( Lande et al. , 2016 ; Singh et al. , 2019 ; Gijo et al. , 2019 ; Bhat et al. , 2020 ). Training is necessary to create a supporting infrastructure (the belt system) and a holistic approach to improvement including area of application and methodology used ( Antony et al. , 2017 ). The belt system includes Master Black Belt, Black Belt, Green Belt, Yellow Belt and depending on the complexity of the problem considered and skills required to solve it, the appropriate Belts are selected ( Gijo et al. , 2019 ) to play the role of leadership and guidance of the project team.

Linking LSS to business strategy and customer satisfaction ( Lande et al. , 2016 ). Improvement projects must be closely linked with maximizing customer satisfaction. Top management defines business objectives and identifies improvement projects capable of guaranteeing greater remuneration in terms of optimizing company productivity and profitability, as well as projects that can be reached using available resources, which do not require high investments and which allow to obtain undisputed results with limited deadlines in a limited period of time. Improper linkage between organizational objective and customer's requirement leads to failure of LSS implementation ( Singh et al. , 2019 ; Singh et al. , 2019 ; Gijo et al. , 2019 ).

3. Methodology

The study is a conceptual development and it has been developed with a qualitative approach, creating a single in-depth case study of Schnell S.p.A. that derives from a Group Purchasing Excellence Project. The case study allowed for examining in depth the implementation of a Lean Six Sigma improvement project for the transformation and simplification of the production process of the Schnell “Alfa” and “Beta” machines with the aim to reduce the delivery times of its products ( Yin, 1994 ). The case study was developed with the participant observation of researchers in the project which lasted 4 months, starting from November 4, 2019 to March 4, 2020. As for the participant observation, the researcher was directly involved in the LSS implementation activities, collaborating with the working group in the figure of the project manager, and facing directly obstacles and problems that emerged during these stages of the same (par. 4.2.1.1 will define the detailed description of the project). Periodic weekly meetings were done with the entire working group to exchange feedback on the development of the project, to share opinions and data. Participant observation activity was triangulated with secondary data, such as company reports and the website, collected during the period of support in the company. Secondary data have been used mostly to describe Schnell history, structure and the services it offers to customers.

Minitab 19 statistical analysis software was used to describe and summarize the data collected during the project and shown in the result section.

4. Results and discussion

4.1 company profile: schnell s.p.a.

Schnell S.p.A. is an Italian company that has been operating for almost 60 years in the manufacturing sector of automatic machines and plants for processing iron for reinforced concrete. It was born in 1962 thanks to the devotion of a group of entrepreneurs, driven by the dream of transforming the tiring and dirty world of iron working, into a modern industry, dedicated to conquering the global market. The company embarks on its own path by offering a first innovative solution that allowed faster binding of the reinforcing bars, flanked by the production of construction site machinery for cutting and bending the bars. The rise in the automatic machinery sector has started with the development of mechanisms for the production of cylindrical cages; however, the real change of course compared to its competitors will take place with the addition of electric servomotors, used, before now, only in fields such as robotics and military industry. Thanks to this type of instrumentation, Schnell machines are characterized by high power, speed, reliability and precision. They guarantee to the customer the achievement of economies of scale and better production techniques due to the high productivity offered, reduced set up times and low maintenance costs. Schnell S.p.A. offers the market a high range of machines and systems that allow a variety of processing of iron for reinforced concrete, including straightening, stirrup bending and shaping machines for bending, shaping and cutting iron in rolls or bars; cage making machines for the formation of cylindrical poles and cages for construction; machines and plants for the production of electrowelded mesh; machines for wire straightening and cold rolling lines; rotor straightening machines for processing steel wires for the industrial sector; machines for the production of prefabricated insulating panels for building construction; software for the management of iron processing centers using Schnell automatic machines. As a result of the high quality of these products, Schnell S.p.A. has managed to win the trust of its customers all over the world, reaching a turnover of over 100 million euros.

The Schnell Group is characterized by a staff of over 700 employees worldwide, and is made up of 5 production plants; 7 centers for installation, sales, spare parts and after-sales services; Schnell Software (Spain), which is a center for the creation and development of software systems for the management and organization of production carried out using Schnell machines and Schnell Home S.r.l., production center of machines for the construction of innovative elements for building construction, called “Concrewall”. Achieving a highly competitive advantage over its competitors in the same sector was possible due to constant investments in research, development and technological innovation of products and processes. Product innovation, since the company is always ready to respond to market needs through the development of a customer-oriented approach, which allows to offer integrated and customized production solutions. Process innovation, since, as stated in the “Integrated Quality Policy” and “Purchasing Excellence Group Program” of Schnell S.p.A., the efforts of the whole company are oriented to create effective methods of managing internal operational processes, with a view to maximizing end customer satisfaction.

As a result of the constant commitment in this direction, at the end of 2007, Schnell S.p.A. managed to obtain the quality system certification according to the ISO 9001 standard, delivered by the prestigious certification body TUV Italy, and renewed in 2019 in compliance with the updates undergone by the standard in September 2015.

The important results obtained in terms of product and process quality was also possible due to the dissemination and application of Lean Manufacturing principles and methodologies.

4.2 The development of the lean six sigma project in Schnell S.p.A

The layout of the cell, the equipment and the production tools have been designed and arranged horizontally following the phases of the process;

The production plans were planned on order, therefore, on the basis of the orders received from its customers, following the production theories with the pull logic;

The manufacturing of the machines was organized in small batches conducted with the one-piece flow system;

The management of the entire procurement process of raw materials and production components has been entrusted to the Kanban system;

The line operators have been trained to complete all manufacturing operations in complete autonomy.

The products supplied with their own identification codes;

Periodicity of reordering;

Minimum order quantity;

Delivery Lead Time (in working days);

Safety Stock Level: quantity of products to be held in the warehouse as a mandatory stock;

Technical specifications of production;

Specifications for packaging and delivery.

For further stabilization of the production process, aimed at increasing product quality, the characterizing element of the In-Lining Line was to reach a Free-Pass quality level. This qualitative incoming methodology has allowed a high reduction in the variability of the external production process, of the components characterized therein, while requiring significant direct and indirect investments by sourcing.

The entire In-Lining apparatus is governed by a vital element for the correct planning of the production phases: the supply Lead Time.

This index represents the time elapsing from the time of issue of the purchase order to the time of actual receipt of the goods. It allows to efficiently plan the supply of production components, and therefore, to define the periods for sending purchase orders.

Lead time of supply;

On-time Delivery (the ratio between the number of orders processed on time and the number of total orders processed, in the period considered).

With a view to Project Management, a work team was set up with the task of studying and analyzing the procurement process of the In-Lining line, and the phases of the Plan-Do-Check-Act (PDCA) and DMAIC approach were followed for the implementation of the project.

4.2.1 “Define” phase

The objective of the first phase of the project was to identify all the aspects necessary to define the process to be improved, therefore, to develop a planning prospectus called Project Charter containing: the representation of the problem detected, the objectives to be achieved, the requirements required from the customer, the inputs and outputs of the process and the metrics necessary to measure it, the enhancement of the current process and possible savings achievable by improving the process, the team members, and finally, the deadlines of the project phases.

4.2.1.1 Project description

Analyzing the lead times of supply of the supplying process of the In-Lining Line, conducted with the Kanban system, it was reported that the most important supplier in terms of quantity, tends not to respect the agreed delivery terms.

Upper specification limit (USL) = LEAD TIME 5 days (working);

Lower specification limit (LSL) = LEAD TIME 2 days (working).

Analyze the deliveries to the line of the last available calendar period, from 01/11/2018 to 31/10/2019;

Perform stratification of the detected deliveries, until the root causes are reached;

Define the initiatives and control charts to ensure the stability of the procurement process over time.

Lead Time of supply;

Defects per Unit – DPU;

Defects Per Million of Opportunity – DPMO;

Sigma Level.

The project team was made up of the members defined in Table 1 .

The implementation of the DMAIC phases was organized through the Gantt Chart ( Figure 1 ), with the aim of a precise subdivision over time of the individual activities to be carried out, while all the information that defines the project was collected in the Project Charter document of Figure 2 .

4.2.1.2 Project risk analysis

During the planning of the project, different potential risks were identified that could affect the smooth running of the project. These were found in relation to different sources from which they could derive (see Table 2 ).

Severity (P): expresses the potential damage that the occurrence of the risk could cause in the implementation of the project;

Occurrence (G): expresses the probability that the risk may occur;

Detection (R): expresses the probability of risk detection once it has occurred.

Each variable was assigned a score from 1 to 5, in which 1 represents an insignificant risk condition and 5 that of extreme risk (only for the Detection variable, the lower the score assigned, the greater the probability of risk detection).

The most critical risks have been identified through the Risk Priority Index – Risk Priority Number (RPN) obtained from formula f.1. f .1 ) RPN = S × O × D

The highest priority was checked for the risks “Inability to use software” and “Insufficient knowledge and skills of members” (see Table 3 ).

4.2.1.3 Process representation

To obtain a macro view of the process, the Supplier Input Process Output Customer (SIPOC) diagram has been developed ( Figure 3 ) which highlights the main elements that make up the activities examined.

4.2.2 “Measure” phase

The second phase was aimed at defining and measuring the progress of the process at the current stage. For a better representation, the flow of activities necessary to replenish the In-Lining line has been outlined through the Flow Chart ( Figure 4 ) which identifies on the left side the operations that add value within the process (AV), while, on the right side, those with non-added value (NAV), therefore considered as waste.

The process was further represented through the Value Stream Mapping technique ( Figure 5 ) which allowed to estimate a total Process Time (P/T) of 11.6202 h (11 h 37 min and 12 s), divided into 11.40417h (11 h 24 min and 15 s) for value-added activities and 2.216 h (12 min and 57 s) for non-value-added activities. Together with downtime and shipping times, the entire process is performed with a maximum total Lead Time (L/T) of 8 days, 8 h, 5 min and 28 s.

4.2.2.1 Data collection

PRODUCT A.1;

PRODUCT A.2;

PRODUCT B.1;

PRODUCT B.2;

PRODUCT C.1;

PRODUCT C.2;

These products are characterized by belonging to similar categories, therefore, with the aim of greater interpretation and a better comparison of data, the population has been grouped into stratified categories with reference to the product group to which they belong, type of production component and final product.

4.2.2.2 Interpretation of data with statistical tools

In the first phase, the graphical summary analysis was performed ( Figure 6 ) showing the results of the Anderson-Darling Normality Test, the descriptive statistics and the confidence intervals for the mean, median and standard deviation of the data population in exam. The graphs show that deliveries are characterized by an average delivery lead time of 9.4324 working days which falls within a range of 70 working days. The recorded variation therefore determines a standard deviation of 14.4877.

Second, from the Anderson-Darling normality test, a p -value <0.005 is obtained: this value demonstrates that the analyzed data derive from a distribution that cannot be approximated to a Gaussian model.

The current result is a consequence of the fact that in the population, in correspondence with the value in the 3rd Quartile of 7 days and Maximum of 74 working days, irregular values can be highlighted, called outliers, which arise from particular causes of a special type, and which therefore prevent a regular data analysis and interpretation, negatively affecting all study results.

It was highlighted that these were four deliveries relating to the same order, made on August 31, 2018, of two components of CATEGORY C, in particular of PRODUCT C.2.

Through a more in-depth investigation, it was possible to observe that the supply agreement was drawn up and confirmed prior to the first delivery of the product in the sample phase. Consequently, the high delivery lead time was justified by the fact that the supplier had to provide totally new products, the production of which had to be studied and adapted to their production processes.

Given the particular situation, to carry out a more meaningful analysis, it was decided not to consider the indicated outliers values, and to run the graphical summary analysis again, this time on a population made up of N  = 70 units ( Figure 7 ).

In this case, the standard deviation assumes the value 4.1852, the average delivery Lead Time tends to reduce to the value of 6.1429 working days; however, again it is possible to deduce a p -value < 0.005; therefore, the data derives from a distribution that cannot be approximated to a Gaussian model. It is possible to conclude that the entire process is not under statistical control: the distribution consists of values that cannot be approximated to a Gaussian model, characterized by a supply trend that cannot be predicted over time.

On the basis of these results, it was possible to state that the supplier encountered numerous difficulties in fulfilling supply orders from the In-Lining Line, since the delivery process of the components was characterized by Lead Times that deviate significantly compared to the average lead time recorded (see Figure 8 ).

To express the supplier's performance in terms of Process Sigma, the values of Table 4 were taken into consideration, which summarizes the variables necessary for the calculation of the Defects Per Units (DPU), the Defects Per Opportunity (DPO) and the Defects per Million of opportunity (DPMO) index: (1) DPU = Numerosità   difetti   rilevata ( D ) Numerosità   campione ( U ) (2) DPO = DPU Opportunità   di   errore ( O ) (3) DPMO = DPO × 1.000.000

The supply of the In-Lining line is characterized by a Sigma Level equal to 1.85, therefore, the current process is carried out with a yield of 63.51%.

4.2.3 “Analyze” phase

Based on the considerations obtained from the measurements made in the Measure phase, in this third stage of the project the team's goal was to intercept the categories of components that found the greatest difficulties in the procurement process.

Considering the high variability of the delivery process, in order to identify priority areas of intervention, the analysis was further processed through the Pareto diagram and, for easier interpretation, it was carried out by stratifying the data on the basis of the single category of belonging (see Figures 9 and 10 ).

It was observed that 39% of deliveries ( Table 5 ), carried out in the period under consideration, were carried out outside the established lead time specifications of 5 working days. The supplier presents the greatest number of critical issues with the fulfillment of orders relating to the GROUP A category, in particular with the fulfillment of PRODUCT A.1 and PRODUCT A.2, and to a lesser extent, with PRODUCT B.1 and PRODUCT B.2.

For the GROUP B category, difficulties were found in the delivery of the PRODUCT C.2 and PRODUCT D components; however, for the latter, the non-conformities found cannot be analyzed, as they are insignificant.

4.2.4 “Improve” phase

In the Improve phase, the purpose of the study activity was to identify the root causes of the problems that the Business Partner identified in the process of fulfilling the supply orders of the In-Lining line, and secondly to identify the paths for improvement to correct the criticalities detected.

4.2.4.1 Root cause analysis

The study was developed by analyzing the temporal trend of orders in the period considered for each PRODUCT category indicated at the end of the Analyze phase. For deliveries with greater difficulty, inquiries were carried out on the dates of issue and actual delivery of supply orders. In this phase, the help offered by the Production Planner of the Production Department who deals with the management of the production planning of the In-Lining cell was of great support. First of all, it was possible to deepen that in the delivery process of PRODUCT A.1 and PRODUCT C.2, in relation to the deliveries of the orders of the week 3/2019 and 2/2019, issued respectively with Lead Time of 23 and 22 working days, the supplier communicated the breakdown of a machinery necessary for the production of the components; therefore, it was not able to respect the contractual specifications. The Lead Time values detected here can be considered as outliers, determined by causes of a special type.

By analyzing PRODUCT A.2, it was possible to ascertain that some phases of the production process of the supplier in question were carried out in outsourcing to external suppliers not regulated by subcontracting contracts and, therefore, without evaluations in terms of lead time. As a result of this type of production management, instabilities in the internal delivery process have been generated.

For some deliveries, the supply lead time has been calculated incorrectly.

The supplier tends not to comply with lead time specifications, especially after prolonged company closure periods and in correspondence with orders processed in short periods.

To identify the root cause of the difficulties highlighted, the Five Why (5Why) method was used, which allowed to identify the cause-and-effect relationships of the problems to be analyzed ( Table 6 ). With the help of this problem finding tool, it was possible to ascertain that for some deliveries examined, the delivery lead time was calculated incorrectly as for orders corresponding to the deliveries themselves, the generation date did not correspond to the date of sending the order to the supplier. The system for sending supply orders for the In-Lining line provides that the verification and approval phase, carried out after the automatic proposal generation phase, takes place manually through the action of the Back Office – Purchase Department operator. In situations of absence of the operator, or late approval of the order, the supplier receives the document on a different date from that of issue.

With reference to the second problem identified, it was analyzed that the Business Partner highlights critical issues in terms of supply lead time, in relation to the fulfillment of orders received following prolonged company closure periods and for those received in short periods.

In the first case, these are deliveries made in the time interval corresponding to the periods of early January, late April and early September: time intervals that follow the periods of company holidays for national holidays.

It was assumed that prior to these company holiday periods, the warehouse safety stock was entirely consumed and not restored with further production of components. Therefore, it was considered that the supplier finds it difficult to ensure the restart of the post–holiday production activity through the forecast of its monthly requirements; therefore, it is unable to prevent the stock breaking of its warehouse.

For the second case, however, the supplier presented difficulties in fulfilling the orders placed in correspondence of short periods. More precisely, an out of specification Lead Time was highlighted in correspondence with the second/third order received in a monthly time interval. Also, for this criticality it has been hypothesized that there may be difficulties in ensuring an efficient planning of production activities and a correct forecast of one's monthly requirements, without incurring stock-outs in one's warehouse.

Activate an automatic system for generating, approving and sending orders to the supplier;

Arrange a meeting with the business partner in order to discuss the critical issues detected in the period studied.

With the aim of preventing further errors in the measurement system of the supply lead time indicator, and therefore overcoming the time gaps recorded between the generation phase and the order sending phase, the information technology (IT) department was entrusted with the task to generate an IT system that can automatically complete the entire process of fulfilling the supply orders coming from the In-Lining line. Considering the utmost importance of this improvement activity, the automatism created was implemented in the process starting from the first week of February 2020.

Check the efficiency of internal production planning;

Verify whether the process of managing the economic lot and purchasing the components creates an imbalance in the company loan;

Check if all the clauses contained in the stipulated subcontracting contract have been effectively understood;

Check if in the production planning phase, the periodicity of reordering of components is taken into consideration.

Lastly, having ascertained the delivery problems encountered when supplying the PRODUCT A.2 component, the Management of the production process of the In-Lining line carried out a strategic Make or Buy analysis. As a result of the evaluation carried out, on 14/11/2019, the subcontracting contract was canceled and the procurement of the components was entrusted to an alternative Business Partner.

4.2.5 “Control” phase

In the last phase of the DMAIC project, some activities were identified and implemented in order to keep under control the improvement activities introduced in the Improve phase.

To verify the operation and validity of the automated system for generating, approving and sending the supply orders of the In-Lining line, the IT department has launched a checkup mechanism with the aim of transmitting to the Purchase Department a daily report on the effective sending of orders created automatically.

Considering, however, the need to investigate the possible difficulties encountered, the meeting with the Business Partner was scheduled for the second week of March.

4.3 Benefits deriving from the implementation of the project

After an accurate analysis of the problem related to the reduction of lead time and its causes, it has emerged that the main concern is that in most cases the supply lead time has been calculated incorrectly, while in others supplier tends not to comply with lead time specifications, mostly after company closure periods and when orders are processed in short periods.

First, the implementation of the project has made the company become fully aware of the inefficiencies present in the delivery process of some of its components, allowing a high reduction in the variability of the external production process of these components. Reducing delivery times has also allowed to better plan the supply of production components, defining the periods for sending purchase orders. An automatic system for managing supplier orders has been activated, and it has permitted to reduce errors during the order creation and management process, having a positive effect on the consolidation of the process under consideration. Moreover, a meeting with suppliers was carried out and it has permitted to discuss and confirm together with the business partners the clauses contained in the subcontracting contract, to better plan the periodicity of reordering of components, but also internally improve the efficiency of production planning. From a quantitative point of view, the benefits will be assessed over the long term, with a careful analysis.

5. Conclusion, implications and future research directions

This study was carried out with the main objective of describing the path and dynamics of the transformation process that business organizations undertake with the aim of optimizing their profitability and competitive advantage following the profound environmental changes to which they are subject to, placing emphasis on an innovative methodology for conducting business process improvement projects, known as Lean Six Sigma, which constitutes its operating philosophy on the effective and efficient use of company resources and skills, to guarantee to the company the achievement of a lasting and defensible competitive advantage over time. Lean Six Sigma has been presented in this research as a methodology for improving business productivity, which operates through the reduction of the constraints and inefficiencies of each production and transactional process, aspiring to the maximum satisfaction of the internal and external customer and is configured as a real strategy, which offers to the human resources an innovative way of thinking and working based on training growth, data culture and the use of problem-solving methodologies that allow the improvement of quality, the reduction of costs and company complexities. In this detailed case study, the DMAIC technique was applied in a project to stabilize the procurement process of a pull-type production cell, which experienced some problems in terms of delays in supply lead times.

Thanks to the analyses carried out and the results obtained with the processing of the DMAIC phases, it was possible to highlight the potential causes of the problems that the business partner could have presented in their process of managing the supply of the production cell. Furthermore, some inefficiencies in the internal process of fulfillment of supply orders have been intercepted, the optimization of which has allowed the generation of an automatic system for sending supply orders, coming directly from the production line; a small tweak that will undoubtedly have a positive effect on the consolidation of the process under consideration, as the purchase department will be able to both keep order fulfillment under control and develop a more efficient measurement of business partner performance indicators.

With the development of the project, it was possible to structure the initial guidelines for the subsequent in-depth analysis of the critical issues identified. In particular, for the stabilization of the entire process, Schnell S.p.A. will have to develop an intense relationship of collaboration and mutual growth with his supplier to identify and implement the best solutions to the variability of the supply order fulfillment process.

The practical implementation of the Lean Six Sigma project confirmed the validity and power of the principles professed by this improvement methodology: the importance of customer orientation and the elimination of waste of resources; the value of a work team and the continuous search for qualitative and quantitative data that support and facilitate the decisions of each member of the group.

It was particularly fruitful to discover how collaboration and involvement within an LSS working group amplifies the skills and knowledge of each participant and generates a widespread climate of enthusiasm and strong determination for continuous improvement in every area, both at work and personal level.

Another practical implication that emerged from the study was the high importance to be attributed to the process of measuring company performance. From a consistent database and their level of reliability, it is possible to identify important opportunities for improvement and savings in terms of company resources; the data make it possible to highlight significant problems and inefficiencies, otherwise not recognizable, which are the result of high company costs that impact on company profitability.

The research shows how Lean Six Sigma can offer companies high advantages in achieving the highest quality in the value creation process, however, to ensure the successful success of projects, the desire for change must arise from the depths of top management; it will have to assume the role of promoter of the LSS culture and philosophy, so that the tools of the methodology are effective in managing and guiding the improvement and transformation actions, one step at a time, with rigor and discipline, but with the involvement of all own resources, with the greatest possible efficiency and effectiveness.

The main limitation of the study derives from the qualitative methodology adopted, that while it permits to analyze in depth and broadly all the phases of implementation of the LSS in the company, highlighting the difficulties encountered during the activities and the benefits obtained, these results should be integrated with an analysis on a large sample of companies that have developed similar projects to be more generalizable. Future research should be oriented on developing a quantitative analysis on LSS implementation. In any case, a qualitative study of this depth can give ideas for improvement and development for companies similar in structure and dimension to Schnell S.p.A.

Gantt Chart of the project

Project charter

SIPOC diagram – supplier, input, process, output, customer

Flow Chart: Diagram of the procurement process through the Kanban system

Value stream mapping of the procurement process of the In-Lining line with Kanban system

Population stratification

Graphical summary statistical analysis of Lead Times recorded in the period 01/01/2018–31/10/2019. Population with numbers N  = 74

Graphical summary statistical analysis of Lead Times recorded in the period 01/01/2018–31/10/2019. Population with numbers N  = 70

Frequency of deliveries with centered and delayed lead time (a) and boxplot lead time (b) for sub-category

Frequency of deliveries with centered and delayed lead time (a) and boxplot lead time (b) for sub-category type

Composition of the project team

Project risk analysis

Project risk and calculation of the Risk Priority Index

Process sigma calculation

Report of the performances analyzed in the period November 2018–October 2019

Five why matrix

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Acknowledgements

The authors acknowledge Schnell S.p.A. for supporting the research providing the data that allowed the realization of the case study.

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Nike Strategic Management: The Case Study Essay

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Introduction

Marketing environment and success strategy, drivers to superior performance, strategic management tools, marketing strategy and international markets, competitive advantage and value creation.

Nike Inc. is an international company based in the United States, which deals with sportswear and other apparels. The company is ranked as the top seller of sports shoe and clothing. Nike was started in 1964 by Bill Bowerman and was originally called Blue Ribbon Sports, but was later changed to Nike in 1978. During that time, its main goal was to produce low cost, high quality shoes for Americans to break Germans control over domestic trade (Nike, Inc., 2009).

Today, Nike not only distributes its products domestically, but also all around the globe. It has market regions in continents such as Asia, Europe, and United States. Besides, Nike has produced many brands such as Nike Skateboarding and Nike Pro. This paper focuses on the Nike Company and the strategic methods and tools that have led to its superior performance.

According to Peters (2009), Nike produces a wide range of products, which are categorized according to their relevant sports. Nike’s first products were track shoes, which were meant for running: the company has managed to design and produce shoes for different games such as baseball, hockey, football, basketball and Cricket.

This is due to the ever-increasing number of customers favoring the company’s products. The latest product that has been produced is the Cricket shoe named as air zoom Yorker (Nike, Inc., 2009). Air Zoom Yorker is better because it is 30% lighter as compared to the one designed by Reebok. Another new product is air Jordan XX3, which is meant for basketball.

Additionally, as a company that relies on collaborative marketing, Nike together with Apple Inc. has designed a product that is able to check runner’s performance through a radio device, which is placed inside the shoe and is connected with the iPod nano. Nike has also produced shoes that contain flywire and lunarlite foam meant to make the shoe lighter.

The Nike+sports brand records the mileage, lost calories, and time used. According to Mintzberg, Ahlstrand, and Lampel (2005), product differentiation and market segmentation form the basis for strategic management in marketing. In this light, meeting customers’ demands has been the strategic objective in Nike’s plan.

Dess and Alan (2006) affirm that the marketing strategy used by Nike is an essential element for its success. It has enticed its customers through advertising with a slogan ‘Just Do It’. Nike has also teamed up with athlete celebrities through sponsorship agreements. It has many elements of advertising such as advertising through television.

The first advert was created by Wieden and Kennedy at New York marathons. Similarly, Nike has also won Emmy Awards for commercial advert. The advert that won the award was based on what an athlete could face if there was Y2K realization on 1 January 2000.

The second commercial advert was called ‘move’, which marked the famous athletes. In product promotions, Nike pays players to wear their products such as t-shirts, shoes and shorts in order to advertise them. Such players include Michael Jordan, and through him, the promotion has boosted Nike’s publicity and sales. It also sponsors many football clubs in Brazil, Netherlands and United States.

Golf players like Tiger Woods and Michelle Wie have also benefited from the sponsorships. Nike also sponsors high school basketball and has developed websites for various sports such as nikerunning.com (Johnson & Scholes, 2008).

However, Nike has faced a tough competition in the market with companies such as Reebok and Adidas, which sell the same products as it does. Reebok has many female consumers, but has a weakness of poor marketing as compared to Nike. It does not always advertise its products on Televisions as compared to other Companies. Nike has tried to capture a big market share of female customers by sponsoring Women’s world cup football, which was held in 1999.

Nike has used the five forces model of competition that determines the industry structure. This model has helped it to deal with external forces such as, new entrants in the market, alternative products or services, bargaining influence of suppliers and buyers and competition and enmity among other competitors (Berman & Evans, 2006).

Onkvisit and Shaw (2004) argues that the risk of new entrants has been a threat to Nike since there are other firms in the clothing and shoe industry that have a potential to produce sportswear shoes and clothes if given a choice. Entry of new entrants has affected the prices because Nike has lowered some of its product costs.

However, the threat has been minimized by government regulations and brand loyalty. Further, Nike avoids extreme rivalry among other competitors because it is a risk to profitability rates. Nike, Inc. considers the bargaining power of the buyers as a threat because strong buyers have the power to lower the products prices and hence raise costs. The buyers are capable of buying in huge quantities and therefore getting a lot of profit while the firm suffers loss (Lynch, 2006).

The company has balanced its products productions and costs to minimize the bargaining power of buyers. Nike has also been able to cope with the bargaining power of suppliers, which poses a threat because the suppliers have power to increase the prices on raw materials. Nike has reliable suppliers who inform the management first upon the increase of costs of raw materials.

Nike has common drivers that produce superior performance. These drivers include people management, which entails realization of the potential of the employees either in groups or in an individual level. The company has come up with a strategy of upholding fairness among the employees, communication and caring for employees (Nike, Inc. 2009).

Through communication, the company ensures that there is a flow of information between the top, middle and higher levels to ensure that every employee’s contribution is taken into consideration. Nike, Inc. also motivates the employees by giving them incentives and rewards to build commitment to promote the organization.

People development enables employees to utilize their potentials and fully contribute to the organization’s goal realization. Rewards and recognitions motivate employees to give their best performance and strive to excel through continuous improvement (Berman & Evans, 2006). Furthermore, Nike has authorized the customer liaison manager to replace customer’s products in case of a complaint. The manager can make decisions without consulting the management.

Johnson and Scholes (2008) assert that leadership is another driver to superior performance, and it entails transforming the organizations direction and instigating others to follow. Leadership is paramount in Nike’s strategic management. Leaders have a stake in realization of the vision, mission and objectives of an organization because they ensure that other employees follow the organizations values. Leadership is developed at top, middle and lower levels in the organization.

Continuous improvement is another driver, which is activated by both customers and employees. In this case, there is feedback from the customers and from the employees and hence customer’s needs are met. Organizations’ processes are improved because customers provide their needs and the employees act and produce products according to customer’s specifications – all the stakeholders gain improvement benefits (Joshi, 2005).

Similarly, customer focus is a driver where a relationship with customers is an important issue. This entails assessing customer’s perceptions about products and acting on their response as soon as they raise an issue of concern about a product. Close relationships with customers benefits all the stakeholders involved. Nike has also employed process focus as a driver for performance improvement. The system performance has to meet the set objectives since it is a key technique (Nike, Inc., 2009).

Another important driver to performance is collaborating with suppliers. This entails relationships between the organization and the suppliers (Lynch, 2006). Nike has recognized suppliers as key for the organization to achieve shared goals while also sharing expertise and knowledge.

Improving on processes allows working with suppliers to share resources and improve performance. Nike applies various communication strategies within all its stakeholders to encourage openness and reliance. When communication flows through all the levels in the organization, it makes it easy for the employee’s ideas to be taken into consideration.

Stimulating innovation and creativity is another driver that has supported Nike to build up competitive products and services. This has been achieved by modifying the organization structure and being involved with product improvement activities. Nike has also managed its assets and resources to improve the effectiveness and efficiency of the organization. Protection of its properties maximizes customer’s value (Mark, 2000).

Onkvisit and Shaw (2004) concurs that measuring performance and benchmarking is another driver that Nike uses for superior performance. By utilizing a balanced score card, it has been able to measure process improvements alongside with the organizations objectives.

The company also monitors performance in other organizations and collect information from existing and future stakeholders. It uses the information to plan for the future, set targets to be achieved within a certain period, and get unique ideas on improvements from other organizations.

Furthermore, Nike employs corporate social responsibility as a driver to superior performance as well as interacting with the society representative. A good example of this is boosting children’s games in the community by sponsoring their sports and provision of uniforms that has Nike’s logo (Nike, Inc., 2009).

Strategic management is a technique that Nike, Inc. has been able to apply to determine how it is performing in its current position and how its future should be. This has greatly helped the managers to lay a plan for the organization and take it where they want it to be. The management employs strategic management components such as vision, environmental analysis, strategy creation, strategy implementation, and strategy assessment (Nike, Inc., 2009).

Nike has set business plans through strategic management in order to assess its business areas. It is a process which managers build strategies to get better results in performance. This involves studying the competitors’ techniques, both in the current and future. The Company has utilized strategic management tools which have supported it to examine itself in the present and perceive how its future will be. Strategic management acts as a road map to show managers the best direction to follow for the organization to be where it is supposed to be (Lynch, 2006). The tools employed for strategic management include mission statement, SWOT analysis, SMART goals and benchmarking.

Mission statements help to make clear how the organization is observed and how it will be perceived in the future. The organization reflects on how it will be different from other competitors like Reebok in the market place. SWOT analysis has been applied to find out the organizations strengths, weaknesses, prospects and risks.

Berman and Evans (2006) affirm that this has supported the organization to take advantage of its strengths and reduce the impact of its weaknesses. SWOT analysis has assisted the management to consider other external factors such as new openings and risks to be avoided.

SMART goals ensure that the goals and objectives laid down are specific, assessable, achievable, appropriate, and timely. SMART goals are essential for Nike’s management because they have enabled the company to get rid of frustrations due to unrealistic goals. The management has been specific to establish whether the set goals have been met.

Measuring enables the management team to gauge whether they are about to reach their goals and if not close to the goals, how much time and work is remaining in order to get there (Mintzberg, Ahlstrand, & Lampel, 2005).

Benchmarking is another tool that is employed to scrutinize and adapt to the best processes from other organizations around the globe. As explained earlier, managers have been able to improve the organizations performance to meet its goals and to be at the competitive edge over its competitors.

Other techniques that have been used in project management include program evaluations; this helps the company to evaluate a project from start to end. This has supported the management to ascertain the time left to for the completion of the projects. Nike utilizes these projects and programs to reach its goals and achieve its objectives.

The Company uses break even analysis technique to decide on the number of products to sell to break even and grow to be profitable. Lynch (2006) says that game theory is applied in the market to conclude how the customers will react and it does this either through increase in prices or introduction of new products.

Financial control techniques like budgets, audits, and financial breakdown are efficient in controlling and balancing the cost of business. Budgets are employed to manage the organizations income and expenditure as well as allocation of resources to different activities and projects.

Nike has many strategic management techniques organized in steps to achieve the laid down goals and objectives. First, environmental scanning is a process that the company employs to collect information from both internal and external environments that has power to influence the organization. This is meant for improving the processes through analyzing competitors, employees, products, and suppliers (Mark, 2000).

After analyzing the environment, strategy formulation is the next step where Nike management takes the best plan among many to accomplish organizational goals and objectives. Through this stage the managers set strategies for business and functional policies. Strategy implementation is taking the best plan and implementing it (Berman & Evans, 2006). Organization structure is devised in this step together with the allocation of resources, hiring of human resource and coming up with a clear decision making process.

Strategy evaluation is the last step where the strategy implemented is assessed to determine whether it is performing well and if it has deviated, and that the best corrective actions are taken. The purpose for the evaluation is to make sure that that the organization goals are met.

In light of this, Nike has been on the global market and has gained competitive advantage on the market. Its marketing managers keep on analyzing the global industries and how competition keeps changing. Trade is increasingly becoming global because of improvement in transport and communication. Nike’s consumers have been able to have access to a wide range of products in their countries. Nike started exporting its products in small amounts, but later increased and reached the export stage. It got more and more foreign orders until it was able to export its products all over the world (Nike, Inc., 2009).

Nike has stayed at international market for a long time and it applies many techniques such as adding new brands. Nike keeps on adding new products such as sports shoe and clothes. The information about the new product is posted on the website (nike.com) where consumers can read. Joshi (2005) asserts that through advertising of the new product, Nike gains an increase in sales because this has brought in new customers who have never bought the current products.

The existing customers have had a variety of the products to choose. Nike combines the new brand and the old ones into an exceptional package as an offer. Nike has also become a valuable resource to its customers by giving them free information about the products. They have assisted their customers to easily get services, fast deliveries, and at low costs.

The company is unique since it produces exclusive and best quality products. They have also promoted the end result of products by telling the consumers about the benefits they will get when they choose to use the products. Nike keeps on changing its marketing strategies due to other aggressive and innovative rivals like Puma, Reebok, and Adidas (Peters, 2009).

Nike’s brands have turn out to be to be very strong as compared to others such as Reebok and Puma. Their secret is brand management because despite selling their products at a higher price, consumers are still willing to pay more money for its brands which are believed to be of high quality with different styles. Due to the strong brand competitive advantage, Nike has been able to increase its market share all over the globe. Its prices are a bit high as compared to other competitors but it has made many sales than those of its competitors.

Nike, Inc. has gained a competitive advantage over its rivals. This is achieved through giving consumers a greater value and offering high quality products. The company has devised superior value over other competitors. Nike, Inc. uses Michael Porters strategies for competitive advantage such as cost leadership, focus, and differentiation (Johnson & Scholes, 2008).

The reason why Nike, Inc. has gained a competitive advantage over other companies is that it undertakes an evaluation process, which involves evaluation of resources, clarification of goals, defining customers and examining competitors.

In evaluation of resources, the company relies on the resources available and plans on how to use them through product offering and resources. In goals clarification, Nike plans on how to achieve its goals and objectives. Defining customer’s strategy entails looking at the products and services that the plans to develop, and is not provided by the other competitors.

This assists Nike, Inc. to determine and communicate to its customers in order to understand their needs and get additional suggestions from them. Examination of competitors helps to identify other ventures targeting a particular market. Through this, Nike compares its strengths and weaknesses with the other competitors (Nike, Inc., 2009).

In this regard, there are many techniques used to achieve a competitive advantage. These techniques include product differentiation, service differentiation, people differentiation, image differentiation, quality differentiation, and innovation differentiation (Lynch, 2006). Product differentiation implies that Nike has a wide range of products. Other competitors have tried to imitate its products but it remains upfront due to its quality and the products are different in styles and consistency.

Peters (2009) argues that in service differentiation, Nike, Inc. offers additional services such as delivery and product return services. This extra service is the one that consumers are after. Information and other instructions about the products are also extra services that attract customers.

People differentiation entails hiring result oriented employees who are better than those in other rival companies. Because employees are intangibles, it is difficult to imitate them as in the case of tangibles. Training employees and paying attention to their needs gives Nike Inc. a competitive advantage.

Employees such as production staff produce quality products, and it is hard for the competitor to know that the competitive advantage is due to employees’ improvement. The competitor may think that the competitive advantage is due to equipments and materials. People differentiation is essential when customers are directly served by the employees. The way employees handle a customer at first time determines whether he will return another time (Berman & Evans, 2006).

Image differentiation is another technique that has been applied by Nike to differentiate its brand image from other competitors. A negative image can destroy the company’s image within a short time. As Nike undertakes many activities, it supports its image because the “Nike” mark symbolizes good, and it is easy to identify. In quality differentiation, Nike sells high quality products to its customers. Innovation differentiation entails process innovation.

Process innovations reduce the costs of production and the competitors may take time to discover what the company is doing to gain competitive advantage (Nike, Inc., 2009). Nike strives to sustain its competitive advantage because it is not long lasting. This sustainability is achieved through giving value to customers, creation of non-imitable products, which may not be copied by its rivals, and production of products that cannot customers cannot substitute easily.

In selecting a competitive advantage, Nike, Inc. selects ways of making products that competitors cannot imitate easily because the management understands what its customers needs are.

The company has realized that variety is totally different from differentiation. Nike has strived to stay at the competitive edge because of its efforts and strategies. It has faced many challenges since other competitors have tried to copy it through successful advantages for their business in the dynamic market place. Thus, establishing the market edge is important as well as maintaining it (Mark, 2000).

There are many ways that Nike has attracted its customers for value creation. Customer incentive programs are one of the successful programs within the organisation (Nike, Inc., 2009). Nike offers give away to customers, tickets, sales, sponsorships and discounts. Nike sponsors many players in different sports.

Such players who have benefited from sponsorships include; James Blake and Roger Federer. It also sponsored Indian cricket team for a period of five years and national soccer clubs in countries like India, Netherlands and Malaysia. Top golfers like Tiger woods and Lucas Glover has also benefited from Nike’s sponsorships.

Moreover, Nike has retained both traditional and non-traditional methods of distribution in over 100 companies, but it focuses more on its primary market regions. Apart from product diversification, Nike has diversified supply chain and manufacturing due to international economic crises and other risks. It has many contracted suppliers outside the United States, including Vietnam and Thailand. There are other contractors who manufacture its products in over 35 countries.

In the year 2003, China manufactured 38%, Indonesia 27%, Vietnam 18% and Thailand 16%, while the rest was manufactured by other countries. This has enabled Nike to make large amount of sales. Supplier diversity has also increased its competitiveness in the market and it continues to contract more suppliers in many countries because it believes that supplier relationship is vital.

Nike Inc has also employed value creation as a management goal. Creating value for consumers has increased sales as well as the shareholders through the increase in stock price. Value creation is characterized by brands, people and innovation (Mintzberg, Ahlstrand, & Lampel, 2005). Nike, Inc. has prioritized value creation in its decision-making. This has helped the managers to know where and how to build the companies capability to attain profitable and lasting growth.

Mark (2000) agrees that through value creation, the company has been able to understand the basis and drivers of value creation in the business and market place. They have realized that the consumers value high quality and timely delivery of products and so the processes that lead to the delivery of high quality products are greatly valued. Some of the customers have valued innovation and so the processes involved in creation of new products are also highly valued.

Value creation also entails product and process innovation as well as knowing the consumers needs. Nike, Inc. has also realized that value for employees is essential since they feel motivated and work hard to produce better results. Therefore, proper treatment of the employees and involving them in decision-making creates value.

Nike has awarded and promoted managers who have defeated the other competitors like Puma in value creation. In this case the managers have positioned capital better than the other competitors. Nike has gained an advantage in developing the organizations ability to get more profits and future growth.

Other companies that have achieved the benefits of value creation are Coca-Cola and the Lloyds banks. These companies applied value creation as a technique and have realized growth and increase in their profitability. In acquisitions, Nike has acquired Upscale Footwear Company, surf apparel company, Hurley international and converse Inc. It has sold some of its subsidiaries such as Bauer Hockey and Starter (Nike, Inc., 2009).

Nike, Inc. has achieved its superior performance, mostly through competitive positioning and value creation. This has been achieved through advertising, brand name recognition, product innovation, and striving to be at the competitive edge despite having a stiff competition.

Nike employs many strategies and techniques such as strategic management tools and models, product differentiation, and proper distribution channels. Many consumers have realized the uniqueness of their products and recognize them through the trade name ‘Just Do it’ and Swoosh Logo. They have maintained customers because of their high quality products and unique marketing strategies.

Berman, B. and Evans, J. (2006), Retail Management, A strategic Approach , London: Prentice Hall.

Dess, G. L. and Alan, B. E. (2006), Strategic Management: Text and Cases. Boston: McGraw-Hill Irwin.

Johnson, G. and Scholes, K, (2008), Exploring Corporate Strategy , (8th edn), London: Prentice Hall.

Joshi, R. M. (2005), International Marketing , New York: Oxford University Press

Lynch, R. (2006), Corporate Strategy , (4 th edn) London: Prentice Hall.

Mark, M. H. (2000), Creating Public Value: Strategic Management in Government, Cambridge: Harvard University Press.

Mintzberg, H., Ahlstrand, B. and Lampel, J. (2005), Strategy Safari: A Guided Tour Through the Wilds of Strategic Management , London: Prentice Hall 11.

Nike, Inc. (2009), Annual Report on Form 10-K , [pdf]. Available at: < http://media.corporate-ir.net/media_files/irol/10/100529/AnnualReport/nike-sh09-rev2/docs/Nike_2009_10-K.pdf > .

Onkvisit, S. and Shaw, J. (2004), Process International Marketing. International Marketing: analysis and strategy , (4 th edn), OH: South-Western College Publishing.

Peters, J.W. (2009), The Birth of ‘Just Do It’ and Other Magic Words. August 19. The New York Times .

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IvyPanda. (2018, December 27). Nike Strategic Management: The Case Study Essay. https://ivypanda.com/essays/strategic-management-the-case-of-nike-inc/

"Nike Strategic Management: The Case Study Essay." IvyPanda , 27 Dec. 2018, ivypanda.com/essays/strategic-management-the-case-of-nike-inc/.

IvyPanda . (2018) 'Nike Strategic Management: The Case Study Essay'. 27 December.

IvyPanda . 2018. "Nike Strategic Management: The Case Study Essay." December 27, 2018. https://ivypanda.com/essays/strategic-management-the-case-of-nike-inc/.

1. IvyPanda . "Nike Strategic Management: The Case Study Essay." December 27, 2018. https://ivypanda.com/essays/strategic-management-the-case-of-nike-inc/.

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IvyPanda . "Nike Strategic Management: The Case Study Essay." December 27, 2018. https://ivypanda.com/essays/strategic-management-the-case-of-nike-inc/.

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Case Study | Project Management for Industrial Manufacturer

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Industrial Manufacturing

CONSULTANT ROLE

Project Manager

The Challenge

Refine Project Management Workflows

The client, a leading German industrial manufacturer, sought a project manager to refine the workflows of the Lifecycle Management Platform.

Role of Consultport

Consultport proposed 2 candidates within 24 hours. The client interviewed both candidates and selected a former consultant at Roland Berger with a specialization in PMO consulting and prior experiences working in several large German manufacturing companies. The project manager started working with the client 48 hours after the initial request.

Well-rounded Assessment

The project manager conducted process analysis to assess existing practices for project planning, resource allocation and risk assessment. He also performed stakeholder mapping to gain insights into roles and expectations of key stakeholders. Through the assessment, the project manager identified gaps in the current project management practices.

Improving Project Management Structure

The project manager proposed a refined project management structure with distinct workflows, clearly outlining goals and responsibilities for global and regional teams. Responsible for leading four agile teams, the project manager ensured regular exchange between business and IT teams to align priorities and tasks. 

The project manager also developed clear guidelines for selecting project steering committees and designed standardized communication practices to enable efficient collaboration between key stakeholders. In addition, internal workshops were held to educate team members on the new project management practices.

Optimized Project Management

With the refined project management practices, the client enjoyed streamlined workflows, improved resource allocation and enhanced stakeholder engagement, resulting in on-time project delivery.

Refined Project Management Structure

Enhanced Stakeholder Engagement

On-time Project Delivery

It was a pleasure collaborating with the project manager. His project management approach was invaluable in meeting our project goals and timelines.

Head of Digital Platforms of Industrial Manufacturer

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Getting LEAN? Avoid These 8 Wastes of Bad Digital Signage in Manufacturing

  — August 20th, 2024

In a manufacturing facility, every second counts. Efficiency isn't just a goal—it's a necessity.

This is where LEAN manufacturing principles come into play, aiming to reduce waste and maximize value in every aspect of a production facility. But have you considered how these principles apply to your digital signage strategy?

Digital signage is more than just a tool for displaying information.It can be a crucial component of your operational ecosystem, mission-critical even—if it’s done correctly. The right digital signage solution can drive productivity, enhance safety, and keep your team aligned with company goals.

But when poorly implemented, digital signage can introduce inefficiencies that conflict with the very essence of continuous improvement. Just like the 8 wastes of LEAN manufacturing, bad digital signage also has 8 wastes associated.

Our infographic, The 8 Wastes of Bad Digital Signage in Manufacturing , highlights the common pitfalls that can derail your continuous improvement efforts. From bottlenecked content creation to data disconnection, each of these wastes can have a significant impact on your operations.

In LEAN manufacturing, the goal is to create more value with less waste. The same applies to your digital signage strategy. By identifying and eliminating these eight wastes, you can transform your digital signage network into a powerful tool that supports your LEAN initiatives, driving efficiency, safety, and engagement on your production floor. Ready to eliminate waste and maximize the impact of your digital signage? Schedule a call to see what you can do with Poppulo.

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