Enterprise Value:
The New Lean Horizon
Product Realization in the
Defense Aerospace Industry
March 27, 2002
Presented By:
Mandy Vaughn
2LT, USAF
Research Sponsored By Lean Aerospace Initiative
Background
❍
21st century aerospace challenge
❍
Industry maturity perspectives
❍
Implications on the aerospace industry
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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.”
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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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Cost of Tactical Aircraft
Source: Augustine’s Laws
Then-Year Dollars
One
Quintillion
One
Quadrillion
duct
o
r
P
l
tiona
a
N
s
Gros
udget
B
e
s
n
Defe
st
o
it C
n
ft U
a
r
c
Air
One
Trillion
$
One
Billion
One
Million
One
Thousand
1900
1950
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2000
2050
Year of Initial Operation
2100
2150
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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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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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Dominant Design?
1958
1995
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Dominant Design?
1953
1972
2002
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Aerospace Industry
Industrial evolution and the emergence
of the dominant design
35
50
40
80
Cars: enclosed
steel body
Typewriters:
Open, moving carriage
Aeronautics:
Jet transport and
jet fighter-bomber
30
60
20
40
Government intervention
motivated by cold war
1860
10
Natural
progression?
1880
20
15
20
10
0
Number of major
automobile companies
Number of major
typewriter companies
30
1900
1920
1940
1960
1980
Number of major U.S.
Aerospace companies
25
5
0
2000
Year
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Implications of Post
Dominant Design
❍
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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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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Fine’s Model and the Aerospace
Industry in the Transition Phase
PROCESS
In a post dominant design
environment two relationships
predominate
PRODUCT
❍
❍
SUPPLY
CHAIN
Product interactions become
more interlinked with process
and the supply chain
Supply chain integration and
process improvements have a
predominant impact on cost
Design
Designmust
mustbe
bemuch
muchmore
more
interactive
interactivewith
withmfg
mfg&&suppliers
suppliers
Source: Shields, LAI Joint Workshop ”Integration-Framing”, Jan 30, 2002
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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
Enterprise strategy should change in recognition of
this new competitive landscape
Lean beyond the factory floor means shifting the
enterprise focus from
product design to product realization
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Research Overview
❍
Research objectives
❍
Manufacturing System Design Framework
❍
Research Design
❍
Introduction of the case studies
❍
Results - with Bonus material!
❍
Conclusions
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Research Objectives
❍
Goals guiding the research effort:
❍
❍
Study and improve available tools in use
Understand the processes used in industry to
design manufacturing systems
❍
Propose a model for industry to use
❍
Test this model in industry
❍
❍
Establish key characteristics of this design
process
Create analytical models to predict
manufacturing system performance
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Elements for a Manufacturing
System Design Framework
❍
A holistic view of manufacturing system design environment
❍
Visual depiction of “design beyond factory floor” ideas
❍
Manufacturing as part of the product strategy
❍
Manufacturing system design is strategy driven, not product
design driven
❍
Combines multiple useful tools
❍
Provides insights into order and interactions
❍
Not prescriptive
❍
Can lead to innovative & new manufacturing system designs
❍
Shows the unending design cycle -- Continuous Improvement
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Manufacturing System Design
o
❍
Manufacturing system “infrastructure” design
❍
Manufacturing strategy
❍
Operating policy
❍
Partnerships (suppliers)
❍
Organization structure details
Manufacturing system “structure” design
❍
Buildings, location, capacity
❍
Machine selection
❍
Layout
❍
WIP
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Stakeholders
Society
Suppliers Customers
Corporate Level
Employees Stockholders Mgmt
Govt.
Manufacturing System Design
(Corporate Strategy)
[Seek approval]
[Interpret]
Business Unit (Business Strategy)
Product Strategy
Product Design
Manufacturing
Marketing
Requirements/Considerations/Constraints
Manufacturing System Design/Selection
`
Implement (pilot)
Optimizing
Evaluate/Validate
Full Rate Production
Modifications
Suppliers
Stakeholders
Manufacturing System Design
Corporate Level
[Seek approval]
[Interpret]
Business Unit
Product Strategy
Product Design
Make/Buy
Risk-sharing Partnerships
Manufacturing
DFMA,IPT
3-DCE
Concurrent Engineering
Marketing
Customer Needs
Technical Feasibility
Feasible performance guarantees
Requirements/Considerations/Constraints
- Miltenburg, - 3P, - 2D plots,
- MSDD, - AMSDD - design Kaizen
Manufacturing System Design/Selection
- Analytical Tools,
- Simulation Tools
Implement (pilot)
Fine Tune
Evaluate/Validate
Finalized Product Design
Modifications
Suppliers
• VSM
• Kaizen
• Trial & Error
• Kaikaku
Rate Production
Stakeholders
Manufacturing System Design
Corporate Level
[Seek approval]
[Interpret]
Business Unit
Product Strategy
Product Design
Make/Buy
Risk-sharing Partnerships
Manufacturing
DFMA, IPT
3-DCE
Concurrent Engineering
Marketing
Customer Needs
Technical Feasibility
Feasible performance guarantees
Requirements/Considerations/Constraints
- Miltenburg, - 3P, - 2D plots,
- MSDD - AMSDD - design Kaizen
Manufacturing System Design/Selection
- Analytical Tools,
- Simulation Tools
Implement (pilot)
Fine Tune
Evaluate/Validate
Finalized Product Design
Modifications
Suppliers
• VSM
• Kaizen
• Trial & Error
• Kaikaku
Rate Production
Research Design
❍
Assembly operations
❍
Site selection criteria
❍
Framework Evaluation Tool
❍
Performance Metric
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Data Collection
❍
❍
❍
30+ site visits since June 2000
Over 240 interviews ranging from vice
presidents to shop floor workers
Real time “fly on the wall” or retrospective
observations
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Case Studies - Air
❍
Major Aerostructures (6):
❍
❍
737NG, F-18 E/F EFF,
F-16, F-22 (wing/aft, mid),
X-35
Electronics (2):
❍
Wedgetail, TDR-94
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Case Studies - Space
❍
Launch Vehicles (2):
❍
❍
Space (4):
❍
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EELV: Atlas V, Delta IV
A2100, AEHF, Iridium,
HVSP
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Framework Validation Results
Framework Congruence versus Performance
3.5
R2 = 0.71
Actual/Planned Performance
3.0
2.5
2.0
Group 2
1.5
Group 1
1.0
0.5
0.0
20
30
40
50
60
70
80
90
100
Framework Congruence
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Scoring Breakdown
❍
Framework Congruence
Phase Presence
Timing
Breadth
96
94
91.9
81.7
78.3
77.67
69
57
53.5
50.3
45.3
26.73
25.90
25.90
22.48
18.57
23.24
20.90
21.24
17.24
13.33
12.33
15.00
7.33
30.71
30.00
29.00
26.62
24.19
25.90
26.62
19.76
15.90
17.90
18.76
11.76
39.38
38.05
40.38
36.62
30.86
30.86
21.19
20.14
24.29
20.14
12.29
7.67
Group 1
Group 2
How important are the different aspects?
❍
Which of Phase Presence, Timing or Breadth impacted the
ability of the system to meet its planned performance?
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Determinants of Performance
PhasePresence
Timing
Phase
versusPerformance
Performance
Breadth
Score versus
versus
Performance
3.5
Actual/Planned Performance
3.0
2.5
2.0
Group
Group
2 2Group 2
1.5
Group 1
Group
Group11
1.0
0.5
0.0
10
5
10
15
10 15
15
2020
25
25
2030
25
35 30
40
35
30
45
Phase
Timing
Score
Phase
Presence
Score
Breadth
Score
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Framework Validation Results
Framework Congruence versus Performance
3.5
R2 = 0.71
Actual/Planned Performance
3.0
2.5
2.0
Group 2
1.5
Group 1
1.0
0.5
0.0
20
30
40
50
60
70
80
90
100
Framework Congruence
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Strategy Presence Results
Existence of Strategy versus Framework Congruence
100
Group 1
Framework Congruence
80
60
40
20
0
No Strategy Present
Strategy Present
Existence of Manufacturing Strategy
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Scope of Results
Framework Congruence versus Performance
3.5
R2 = 0.71
Actual/Planned Performance
3.0
Example 1
2.5
2.0
1.5
1.0
0.5
0.0
20
30
40
50
60
70
80
90
100
Framework Congruence
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Corporate Level
Manufacturing System Design
Example 1
Corporate Goals
Manufacturing
Business Unit
Manufacturing System Design/Selection
- Review Requirements
- Picked Cells
Implement (pilot)
Fine Tune
Simulations
Evaluate/Validate
Finalized Product Design
Modifications
Stakeholders
• VSM
• Kaizen
• Trial & Error
• 5S
Rate Production
Scope of Results
Framework Congruence versus Performance
3.5
R2 = 0.71
Actual/Planned Performance
3.0
2.5
Example 2
2.0
1.5
1.0
0.5
0.0
20
30
40
50
60
70
80
90
100
Framework Congruence
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Stakeholders
Manufacturing System Design
Example 2
Corporate Level
[Seek approval]
[Interpret]
Business Unit
Product Strategy
Product Design
Manufacturing
Marketing
Customer Needs
Technical Feasibility
Feasible performance guarantees
Requirements/Considerations/Constraints
3P
Outside Intervention
Manufacturing System Design/Selection
Simulation Tools
Implement (pilot)
Fine Tune
• VSM
• Kaizen
Evaluate/Validate
Finalized Product Design
Rate Production
Modifications
Suppliers
Scope of Results
Framework Congruence versus Performance
3.5
R2 = 0.71
Actual/Planned Performance
3.0
2.5
Example 3
2.0
1.5
1.0
0.5
0.0
20
30
40
50
60
70
80
90
100
Framework Congruence
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Stakeholders
Manufacturing System Design
Example 3
Corporate Level
[Seek approval]
[Interpret]
Business Unit
Product Strategy (all products)
Product Design
Make/Buy
Risk-sharing Partnerships
Manufacturing
DFMA, IPT
Concurrent Engineering
Marketing
Customer Needs
Technical Feasibility
Feasible performance guarantees
Requirements/Considerations/Constraints
Manufacturing System Design/Selection
Pre-Design Kaizen
Simulation Tools
Implement (pilot)
Fine Tune
• VSM
• Kaizen
• Trial & Error
Evaluate/Validate
Finalized Product Design
Modifications
Suppliers
Rate Production
Scope of Results
Framework Congruence versus Performance
3.5
R2 = 0.71
Actual/Planned Performance
3.0
2.5
Example 4
2.0
1.5
1.0
0.5
0.0
20
30
40
50
60
70
80
90
100
Framework Congruence
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Stakeholders
Manufacturing System Design
Example 4
Corporate Level
[Seek approval]
[Interpret]
Business Unit
Enterprise Wide Product Strategy
Make/Buy
Best Value
Product Design
Manufacturing
DFMA, IPT
Concurrent Engineering
Marketing
Customer Needs
Technical Feasibility
Feasible performance guarantees
Requirements/Considerations/Constraints
Manufacturing System Design/Selection
- Simulation Tools
- Scale Models
Implement (pilot)
Pilot Plant
Pathfinder
Evaluate/Validate
Finalized Product Design
• VSM
• Kaizen
•6-sigma
Rate Production
Modifications
Suppliers
Conclusions
❍
❍
The role of manufacturing as a
source for competitive advantage
Framework Validation
❍
❍
Framework congruence and system performance
Key Characteristics
❍
Breadth
❍
Strategy
❍
Status
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