Enterprise Change
Justin Hemann
Master’s Candidate in
Engineering Systems
justinmh@mit.edu
650.823.5147
Improving complex enterprises with system models
About system dynamics modeling:
•
SD is a worldview and a framework for
analyzing problems.
•  SD provides insight into the interactions
between parts of a system.
•  SD has been applied to Air Force
sustainment before, resulting in
unintuitive conclusions: cannibalization
reduces F-16 mission capability.
Air Logistics Centers:
•  Air Force Sustainment is a complex,
large, integrated, and open enterprise.
Advisor: George Roth
groth@mit.edu
Key questions:
When compared to other improvement
methods (TQM, 6σ, etc.) does a
systems approach…
•  … lead to different conclusions?
•  Is it preferable? Under what
circumstances?
•  How does the approach
influence the change process?
•  There are unique challenges with
improving an ALC that may not apply to
private corporations:
Research applications
•  Enterprise Value Stream Mapping and
Analysis (EVSMA) helps participants set
goals, create alignment, and plan.
•  The system approach used here could be
applied in steps 5 and 8 of EVSMA:
•  Identification of enterprise interactions.
•  Development of an improvement plan
and selection of improvement projects.
Methods:
•  Observe the change process underway at
the US Air Force Ogden Air Logistics Center.
•  Apply system dynamics methods to
improving F-16 availability and reducing
costs.
•  Develop and test hypotheses with system
dynamics, and compare these with results
from the current change process.
•  ALCs are not-for-profiit.
•  There is a strong social contract
prohibiting layoffs.
•  Budgeting occurs years in advance,
making short-term changes difficult.
•  Turnover in leadership is very high.
•  Do these differences suggest that change
methods from industry should be
adjusted for the new environment?
Data Collection
approx. 2-3 Weeks
Phase 2: Stakeholder
Value Exchange
A. Identify Key Stakeholders
B. Define the Value Exchange
Between Each
T
Stakeholder and the
Enterprise
C. Prioritize and Quantify
T
Stakeholder Values
Ki ck-Off Meeting
approx. 1 Day
Phase 3: Strategic
Objectives
Phase 1: EVSMA Set-Up
A. Motivate Change
B. Identify & Empower
EVSMA Participants
C. Describe the Enterprise
T
A. Identify Strategic Objectives
B. Identify Associated Metrics
C. Analyze Current Enterprise
Performance Relative to
Strategic Metrics
EVSMA Focus Event
approx. 1 Week
Phase 5: Enterprise
Interactions
A. Apply LESAT
B. Assess the Process to
Process Interactions
C. Assess the Process to
Stakeholder Interactions
D. Assess the Process to
Strategic Objectives
Interactions
E. Assess the Strategic
Objectives to
Stakeholder Interactions
✓
Completed activity
T
T
Follow-On Planning
approx. 1 Week
T
T
Phase 8: Improvement
Plan
A.
A.
B.
D.
Identify Major Enterprise
Processes
B. Collect Enterprise Process
Performance Data
C. Determine Resources
Allocated to Each Process
Guide contains a Tool or
Template for this step
T
Phase 6: Current State
Synthesis
C.
Phase 4: Enterprise
Processes
T
E.
Quantify Current State
T
Interactions
Identify the Content of
Current State Interactions
Identify Enterprise
T
Level Waste
Assess the Alignment of
Enterprise Metrics to
Stakeholder Value Delivery
and Strategic Objectives
Analyze LESAT Results
Develop List of Proposed
Improvement Projects
B. Prioritize Improvement
Projects
C. Prepare EVSMA Proposal
for Executive Review and
Approval
D. Provide Input to Develop
Detailed Transformation/
Implementation Plan
A.
Phase 7: Future State
A.
Develop Lean Enterprise
Vision
B. Perform Gap Analysis
1400
1200
Hypotheses and recommendations
NUMBER OF ACFT
•  Hypothesis
1: System performance is
1000
800
conserved;
improving it will require
600
fundamental
changes to the enterprise.
•  Several hypotheses have been generated
from this approach (at right).
•  If the hypotheses are supported by evidence
then potential recommendations are:
•  Re-align metrics to discourage local
optimization.
•  Testing and recommendations for
Hypothesis 1: under development.
400
200
0
T AI
Depot Scheduled
Depot Unscheduled
+
1400
Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04
1200
1360
1357
1357
1357
1356
1355
1355
1355
1349
1349
1000
120
116
111
106
96
99
120
118
116
115
13 800 13
15
13
12
12
11
9
8
12
NUMBER OF ACFT
•  Enable the benefits of improvements
within the logistics organization to be reinvested in further improvements.
•  Hypothesis 2: Local optimization
results in negative system behaviors.
1348
1344
111
106
12
7
T NMCS
139 600137
138
139
141
143
136
133
139
126
120
131
NMCM
151
154
160
166
163
150
151
155
150
151
149
940
939
941
938
937
944
931
946
954
951
165
400
951
926
200
AVAIL
B
Jul-04 Aug-04
+
R
Sustainment Costs
+
-
R
-
R
Fix Rate
-
+
Jul-04 Aug-04
T AI
1360
1357
1357
1357
1356
1355
1355
1355
1349
1349
1348
1344
Depot Scheduled
120
116
111
106
96
99
120
118
116
115
111
106
12
12
7
126
120
131
150
151
149
946
954
951
Components
of15 availability
13
13
13
12
12fluctuate,
11
9
8
139
137
138
139
141
143
136
133
139
T NMCS
but
the
overall
availability
is
constant
151
165
154
160
166
163
150
151
155
NMCM
Depot Unscheduled
951
926
940
939
941
938
937
944
931
R
B
Total Mission Capable Rate
-
Cannibalization Rate +
R
Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04
•  In 2003 the depots had started all of
the 24 process improvement
initiatives identified in 2001.
+
0
AVAIL
From Keith Russel thesis, 2000
Aircraft Utilization Rate
-
Break Rates
-
R
Cannibalization hurts mission capability
rate while helping local performance
Reserve Mission
•  Logisics organization started only 7
of 19 initiatives.
R
+
Flying Scheduling Effectiveness
Active Duty Mission
•  Hypothesis 3: Reinvestment in process
improvement has helped the Ogden
depot maintenance organization to
advance.
Guard Mission
Depot organization reinvests working
capital fund, supply organization cannot
reinvest
T