Value Creation Through
Integration Workshop
Integration - Framing
January 30, 2002
Presented by:
Tom Shields
MIT
Lean
Aerospace
Initiative
Contents
➢21st century aerospace challenge
➢Industry maturity perspectives
➢Implications on the aerospace industry
➢LAI direction
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Lean
Aerospace
Initiative
Higher, Faster, Farther The 21st Century Enterprise Challenge
Aerospace has four core missions:
➢ Enabling the global movement of people and goods
➢ Enabling the global acquisition and dissemination of
information and data
➢ Advancing national security interests
➢ Providing a source of inspiration by pushing the
boundaries of exploration and innovation
These missions will never be routine and require
the best technology and the best organizations
“The
“Thecore
corechallenge
challengefor
forindustry
industryin
inthe
the21st
21stcentury
century
involves
involvesidentifying
identifyingand
anddelivering
deliveringvalue
valueto
toevery
every
stakeholder.
stakeholder.Meeting
Meetingthat
thatchallenge
challengerequires
requireslean
lean
capability
capabilityat
atthe
theenterprise
enterpriselevel.”
level.”
3 MS Shields - 1/30/02 © 2002 Massachusetts Institute of Technology
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Lean
Aerospace
Initiative
Better, Faster, Cheaper? Lean Enterprises
Application
Applicationof
ofLean
Leanacross
acrossthe
thetotal
totalenterprise
enterpriseis
isneeded
neededto
to
realize
realizeits
itsfull
fullbenefits.
benefits.Leadership
Leadershipis
iscritical
criticalat
atall
alllevels.
levels.
Customer
Acquirer
End User
Consumer
Shareholder
Enterprise
Corporation
Partners
Employees
Program
Program
Corporate
Corporateor
or
Government
Government
Suppliers
Society
Union
Stakeholders
National
Nationalor
or
International
International
F22
F22
Boeing
Boeing
Lockheed-Martin
Lockheed-Martin
USAF
USAF
Primes,
Primes,
Government,
Government,
Suppliers,...
Suppliers,...
Three Levels of Enterprises
AAlean
leanenterprise
enterpriseis
isan
anintegrated
integratedentity
entitythat
thatefficiently
efficientlycreates
createsvalue
valuefor
forits
its
multiple
multiplestakeholders
stakeholdersby
byemploying
employinglean
leanprinciples
principlesand
andpractices.
practices.
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Lean
Aerospace
Initiative
Success!
➢Won the cold war
➢Overpowering in all recent conflicts
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Lean
Aerospace
Initiative
The Needs of Aerospace
Customers are Changing
From a focus on single vehicles
to platforms…
To networks of platforms
and…
More flexible challenges
in their employment
Innovation
Innovation in
in the
the industry
industry is
is thus
thus shifting
shifting from
from
single
single vehicles
vehicles to
to networks
networks of
of capability
capability
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Aerospace
Initiative
Cost of Tactical Aircraft
Source: Augustine’s Laws
Then-Year Dollars
One
Quintillion
One
Quadrillion
uct
rod
P
l
a
n
atio
sN
Gros
One
Trillion
get
st
o
it C
Bud
e
s
n
e
f
De
$
n
One
Billion
U
aft
r
c
Air
One
Million
One
Thousand
1900
1950
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2000
2050
Year of Initial Operation
2100
2150
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Lean
Aerospace
Initiative
DoD Product
Development Time
Years)
Actual
Projected
11
10
Projected
Actual
9
8
7
6
5
4
3
2
1
0
65-69
75-79
70-74
85-89
80-84
95-99
90-94
2000 and >
Year of First Operational Delivery
Dev Cost ($M) ~ (1.36 + 0.03 x Dev Time(months))4
All Major Defense Acquisitions Programs. Milestone 1 to First Operational Delivery Data from RAND Selected Acquisition Report Database. Current as of Dec 1994.
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Aerospace
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Model of Product and Process
Innovation
➢ Rate of product
innovation highest
during formative years
➢ As product matures rate
of process innovation
overcomes product
innovation
➢ Very mature products
have low levels of both
product & process
innovations
Source: William Abernathy & James Utterback, 1978
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Lean
Aerospace
Initiative
Utterback’s Dynamics of
Innovation Model
Number of Firms
Emergence of the
Dominant Design
Fluid Phase:
Rapid technology
innovation,
many firms
founded
Transition Phase:
Shakeout, competition
shifts to process
Specific Phase:
Stable, small number of firms
competition shifts to price
Destabilizing changes in technology
or process can destroy industry!
Time
Source: Utterback, Dynamics of Innovation, 1994 as adopted by Hugh McManus , 2001
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Aerospace
Initiative
Dominant Design?
1958
1995
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Lean
Aerospace
Initiative
Dominant Design?
1953
1972
2002
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Lean
Aerospace
Initiative
Aerospace Industry
Industrial evolution and the emergence
of the dominant design
50
35
Cars: enclosed
steel body
Typewriters:
Open, moving carriage
20
25
Number of
major
automobile
companies
30
80
Government intervention
motivated by cold war
60
20
15
40
10
Natural
progression?
20
10
30
Number of major U.S.
Aerospace companies
Number of major
typewriter companies
40
Aeronautics:
Jet transport and
jet fighter-bomber
5
0
0
1860
1880
1900
1920
1940
1960
1980
2000
Year
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Aerospace
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Implications of Post Dominant
Design (Transition Phase)
➢ Little product differentiation
➢ Incremental product innovation
➢ Acquisition cost becomes focus
➢ Operating costs more of a concern
➢ Mergers, acquisitions & exits
➢ Process innovation dominates
➢ Organizations become more rigid & hierarchical
➢ Less risk taking
==AEROSPACE
AEROSPACEINDUSTRY?
INDUSTRY?
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Lean
Aerospace
Initiative
Fine’s 3-D Concurrent
Engineering Model
PRODUCT
PROCESS
Performance
Specifications
Technology
And process
Planning
Recipe, Unit
Process
Product
Architecture, and
Make/buy
Time,
Space, and
Availability
Details, strategy
Manufacturing
System, Make/buy
SUPPLY
CHAIN
Source: Charles Fine, Clockspeed, Perseus Books, p. 146
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Lean
Aerospace
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Fine’s Model and the Aerospace
Industry in the Transition Phase
PROCESS
PRODUCT
In a post dominant design
environment two relationships
predominate
➢Product interactions become
more interlinked with process
and the supply chain
➢Supply chain integration and
process improvements have a
predominant impact on cost
SUPPLY
CHAIN
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Design
Designmust
mustbe
bemuch
muchmore
more
interactive
interactivewith
withmfg
mfg&&suppliers
suppliers
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Lean
Aerospace
Initiative
Conclusions
➢ Aerospace industry innovation shifting to systems of
systems
➢ In a maturing single product environment
➢ Product and life cycle cost predominate
➢ Best addressed by process & supply chain improvements
➢ Lean beyond the factory floor means shifting the
enterprise focus to product realization from product
design
➢ Enterprise strategy should change in recognition of
this new competitive landscape
17 MS Shields - 1/30/02 © 2002 Massachusetts Institute of Technology
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Lean
Aerospace
Initiative
Current LAI Focus
Achieved success in functional areas
➢Product development
➢Design process improvements through application of
Lean
➢Application of value stream analysis to make
development and testing more efficient
➢Manufacturing systems
➢Major process improvement efforts
➢Shifting from batch and queue to flow
➢Supplier networks
➢Improvements in quality, supplier mgmt,
➢Improvements in communications, supplier roles
18 MS Shields - 1/30/02 © 2002 Massachusetts Institute of Technology
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Lean
Aerospace
Initiative
Future LAI Direction
Major improvements through
the integration of design,
manufacturing and the supplier
network
19 MS Shields - 1/30/02 © 2002 Massachusetts Institute of Technology
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Lean
Aerospace
Initiative
Frameworks for Integration…
➢…from the manufacturing perspective
➢…from the product development perspective
➢…from the supplier networks perspective
20 MS Shields - 1/30/02 © 2002 Massachusetts Institute of Technology
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