Lean Aerospace Initiative
Plenary Workshop
Cycle Time Reduction through Integrated Supplier
Networks: Overview and Introduction
March 31- April 1, 1998
Presented By:
Kirk Bozdogan
MIT
Research Sponsored By LAI
Lean Aerospace
Initiative
l
l
Focus
Kick-off today’s theme: Cycle time
reduction through integrated
supplier networks
Introduce today’s briefings
SR Bozdogan 033198-2 ©1998 Massachusetts Institute of Technology
Lean Aerospace
Initiative
Cycle Time Key to
Competitive Advantage
Focus
Focuson
onauto
autoindustry
industrybenchmarking
benchmarkingresults
resultscovering
covering1990s
1990s
MONTHS TO FIRST ENGINEERING PROTOTYPE,
JAPAN vs US, 1990s
2.9
2.7
Drawing Release
5.6
JAPAN
Prototype Build
7.8
4.6
12.4
US
0
1
2
3
4
5
6
7
8
9
10
11
12
13
(Months before first prototype completion)
SOURCE: Clark,Ellison,Fujimoto and Hyun (1995)
SR Bozdogan 033198-3 ©1998 Massachusetts Institute of Technology
Lean Aerospace
Initiative
Integrated Supplier Networks
Critical to Cycle Time Reduction
Japanese auto suppliers delegated greater design responsibility
(“Black Box” components)
SUPPLIER ROLE, JAPAN vs US, 1990s
39%
6%
55%
JAPAN
Suppliers'Proprietary
Parts
Black Box Parts
30%
58%
12%
DetailControlled
Parts
US
0%
20%
40%
60%
80%
100%
(Percent of total procurement costs)
SOURCE: Clark,Ellison,Fujimoto and Hyun(1995)
SR Bozdogan 033198-4 ©1998 Massachusetts Institute of Technology
Lean Aerospace
Initiative
Major Lessons from Auto Industry
l
Early supplier integration critical to sustained
competitive advantage
–
–
–
–
l
Shorter cycle time
Faster introduction of new technology
Continuous improvement
More rapid market response
Key success factors
–
–
–
–
–
–
Fewer first-tier suppliers
Strategic supplier partnerships
Major supplier role in design (“black-box” parts)
Up-front design/process integration
Close communications with suppliers
Target costing; supplier development
SR Bozdogan 033198-5 ©1998 Massachusetts Institute of Technology
Aerospace Industry
Learning Lean Lessons
Lean Aerospace
Initiative
Major
Majorproducer
producerof
ofcomplex
complexairframe
airframestructures
structuresachieved
achieved
significant
significantperformance
performanceimprovements
improvementsby
byusing
usinglean
leanprinciples
principles
REDUCED CYCLE TIME
(Order-to-Shipment, months)
IMPROVED SUPPLIER DELIVERY
(Dock-to-Stock)
REDUCED SUPPLIER DEFECTS
20.00%
18.00%
75%
80%
35
70%
Months
25
20
12
15
10
Percent of all supplier
shipments
30
60%
50%
40%
10%
0
1997
14.00%
12.00%
10.00%
8.00%
4.00%
7.10%
2.90%
2.00%
0%
0.00%
0%
1989
16.00%
6.00%
30%
20%
5
incoming supplier shipments
36
Rejections as % of all
40
1989
1997
1997 1989
SR Bozdogan 033198-6 ©1998 Massachusetts Institute of Technology
Lean Aerospace
Initiative
Key Practices
Integrated suppliernetwork linked to corporate strategic thrust
Before After
(1989) (1997)
l
Redefined business mix
– Commercial sales as % of total sales
l
48%
Reduced supplier base
– Number of direct production suppliers
l
162
4.90%
13
1.90%
7
0%
76.4%*
75%
83.0%
Improved supplier quality and schedule
– Procurement (dollars) from certified suppliers
– Supplier on-time performance (% of all shipments)
l
542
Improved procurement efficiency
– Procurement personnel as % of total employment
– Subcontracting cycle time (days)
l
92%
Established strategic supplier partnerships
– Procurement (dollars) under long-term agreements
0%
95%
NOTE: *Refers to 1991
SR Bozdogan 033198-7 ©1998 Massachusetts Institute of Technology
Lean Aerospace
Initiative
Early Supplier Integration:
Results from Other Case Studies
“Old” Approach
Prime
“Emerging”
Lean
“Current”
Lean
Rigid vertical
FFF interfaces
and control
Prime
Collaborative with rigid
organizational
interfaces
Virtual Team
w/o boundaries
Prime
Key Suppliers
Key Suppliers
Subtiers
Key Suppliers
Subtiers
Subtiers
Arm’s length; interfaces totally
defined and controlled
Collaborative; but constrained by
prior workshare arrangements
Collaborative and seamlessly
integrated, enabling architectural
innovation
•Case
•Casestudies
studiesdemonstrate
demonstratesignificant
significantbenefits:
benefits:more
morethan
than30%
30%cycle
cycletime
time
reduction;
reduction;40%-60%
40%-60%cost
costreduction;
reduction;significant
significantquality
qualityimprovements
improvements
•Major
•Majorbenefits
benefitsstem
stemfrom
fromarchitectural
architecturalinnovation
innovationin
inproduct
productdevelopment
development
SR Bozdogan 033198-8 ©1998 Massachusetts Institute of Technology
Lean Aerospace
Initiative
l
Introduction to Today’s
Briefings
Chrysler: Rethinking the Supply Chain
– Prof. Jeff Dyer, Wharton School, U of Pennsylvania
l
Cycle Time Reduction with Part Synchronization
– Tom Shields,LAI
l
Three Dimensional Concurrent Engineerings
– Prof. Charlie Fine, LAI (Sloan School)
l
Key Characteristics Maturity Model
– Basak Ertan, LAI
l
“Customer and Supplier Integration Across the
Supply Chain”- Summary of Implementation IPT
Workshop Results (February 12-13, 1998)
– Prof. Joel Cutcher-Gershenfeld, LAI (Sloan School)
SR Bozdogan 033198-9 ©1998 Massachusetts Institute of Technology
Lean Aerospace
Initiative
l
Introduction to Today’s
Briefings
Chrysler: Rethinking the Supply Chain
– Prof. Jeff Dyer, Wharton School, U of Pennsylvania
l
Cycle Time Reduction with Part Synchronization
– Tom Shields,LAI
l
Three Dimensional Concurrent Engineerings
– Prof. Charlie Fine, LAI (Sloan School)
l
Key Characteristics Maturity Model
– Basak Ertan, LAI
l
“Customer and Supplier Integration Across the
Supply Chain”- Summary of Implementation IPT
Workshop Results (February 12-13, 1998)
– Prof. Joel Cutcher-Gershenfeld, LAI (Sloan School)
SR Bozdogan 033198-10 ©1998 Massachusetts Institute of Technology
Lean Aerospace
Initiative
l
Introduction to Today’s
Briefings
Chrysler: Rethinking the Supply Chain
– Prof. Jeff Dyer, Wharton School, U of Pennsylvania
l
Cycle Time Reduction with Part Synchronization
– Tom Shields,LAI
l
Three Dimensional Concurrent Engineerings
– Prof. Charlie Fine, LAI (Sloan School)
l
Key Characteristics Maturity Model
– Basak Ertan, LAI
l
“Customer and Supplier Integration Across the
Supply Chain”- Summary of Implementation IPT
Workshop Results (February 12-13, 1998)
– Prof. Joel Cutcher-Gershenfeld, LAI (Sloan School)
SR Bozdogan 033198-11 ©1998 Massachusetts Institute of Technology
Lean Aerospace
Initiative
l
Introduction to Today’s
Briefings
Chrysler: Rethinking the Supply Chain
– Prof. Jeff Dyer, Wharton School, U of Pennsylvania
l
Cycle Time Reduction with Part Synchronization
– Tom Shields,LAI
l
Three Dimensional Concurrent Engineerings
– Prof. Charlie Fine, LAI (Sloan School)
l
Key Characteristics Maturity Model
– Basak Ertan, LAI
l
“Customer and Supplier Integration Across the
Supply Chain”- Summary of Implementation IPT
Workshop Results (February 12-13, 1998)
– Prof. Joel Cutcher-Gershenfeld, LAI (Sloan School)
SR Bozdogan 033198-12 ©1998 Massachusetts Institute of Technology