Danaher Business System: Lean Thinking and Strategy

            
 
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : OPER108 For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Rs. 25 for Shipping & Handling Charges

Themes

Lean Manufacturing/ Policy Deployment/ Acquisitions

Case Length : 25 pages
Period : 1987-2013
Organization : Danaher Corporation
Pub Date : 2013
Teaching Note : Not Available
Countries : US; Global
Industry : Diversified

Abstract:

This case is about the lean operating mechanism evolved by the Danaher Corporation (Danaher) called the Danaher Business System (DBS). DBS was a mode of operation wherein the inefficiencies in any process were eliminated by going through multiple iterations of the process. The fine-tuned process was then standardized. Also DBS was not confined to just manufacturing operations but was implemented with equal rigor in all other operations such as product development and sales. The case also describes how some of the Danaher subsidiaries had initially perfected the single-piece flow manufacturing practice with a ‘just-do-it' mindset and continuous cycles of value stream mapping.

Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

It further talks about the importance of kaizen or continuous improvement events to DBS and the participation in it by employees at all levels at Danaher. Danaher institutionalized DBS throughout the organization with the help of Hoshin Kanri or policy deployment strategy so that the short-term profit goals of the company were not compromised. The case also describes the importance given to and the procedure that Danaher put in place to train all its managers in DBS. Danaher achieved significant growth through a proactive strategy of acquiring companies - it acquired 31 companies from 1995 to 2011. DBS again underpinned Danaher's acquisition strategy i.e. Danaher went ahead with an acquisition only if it was confident of implementing DBS in the acquired entity and of deriving the desired gains. This also involved having in place a systematic plan to train the senior managers of the acquired companies in DBS and a well-defined timeframe for implementation of DBS. However, some experts expressed concern over Danaher's acquisition driven strategy in light of increased competition, the compatibility of cultures, and the increased geopolitical risks to the conglomerate due to its enhanced geographical presence.

Issues:

Understand the key tenets (such as just-do-it) that an organization has to imbibe in order to institutionalize lean operating practices.
Appreciate the importance of manufacturing practices such as single-piece flow.
Understand the importance of Hoshin kanri or policy deployment to the smooth implementation of lean practices.

Discuss the steps taken by Danaher to derive the full potential of DBS in both its existing subsidiaries as well as in its potential acquisitions.

Discuss and debate the pros and cons of Danaher’s deliberate strategy to resort to inorganic growth.

Explore the ways in which Danaher could maintain its sales growth momentum with the help of DBS and in the event of acquisition opportunities drying up.

Contents:

  Page No.
Introduction 1
Background Note 1
The Evolution of the Danaher Business System 2
What the Danaher Business System had Evolved into 4
Phenomenal Growth and Returns by Acquisitions 7
DBS Pivotal to Danaher's Acquisition Driven Strategy 7
Looking Ahead 9
Exhibits 10

Keywords:

Lean Thinking; Lean manufacturing; Danaher Business System; Jacobs Business System; Toyota Production System; Hoshin kanri; Policy deployment matrix; Kaizen; Operating strategy; Value stream mapping; Just-in-time; Kanban: Lean accounting; Deliberate strategy; Acquisitions; Knowledge-based view (KBV); Post merger integration;

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