Lean Six Sigma in the Changing Business Environment

Lean Six Sigma in the Changing Business Environment Terry Emmert Lean Six Sigma Program Office Office of the Deputy Chief Management Officer November 15, 2010

Objective Breakout Session Objective and Abstract Learn about the primary challenges key Lean Six Sigma leaders are facing in their efforts to keep their organizations relevant in today s demanding business setting Abstract Lean Six Sigma in a the Changing Business Environment Lean Six Sigma (LSS) is a continuous improvement methodology that stresses process velocity and the elimination of defects and waste. It has been applied in both the public and private sectors to achieve significant performance improvements. This panel will discuss how the LSS approach, which was originally conceptualized for the manufacturing environment, is being applied for success at the enterprise level. Panelists will discuss key enablers, challenges, and lessons learned involved in moving LSS successes beyond the level of plant, site, or other relatively self-contained organizational unit. They will address successful enhancements to the methodology that they have applied to nurture systematic change in their organizations. These insights may be required of organizations that apply traditional improvement approaches and intend to keep pace in an environment that includes increasing numbers of customers, challenges, new technologies, distribution methods, and economic uncertainty. Key Enablers Strategic Alignment Leadership Engagement Lessons Learned Flexibility Results Project to define projects Requirements 2

DoD Strategic* Goals Strategic Alignment Goal 1 Goal 2 Goal 3 Goal 4 Goal 5 Prevail in today s wars OBJ 1.1.OCO: Degrade the Taliban to levels manageable by the Afghan National Security Force (ANSF), while increasing the size and capability of the ANSF. OBJ 1.2.OCO: Execute a responsible drawdown of the U.S. military presence in Iraq. Prevent and deter conflict OBJ 2.1.1F1: Extend a global posture to prevail across all domains by increasing capacity in general purpose forces and enhancing stability operations and foreign security force competency. OBJ 2.2.1F2A: Maintain a safe, secure, and effective nuclear arsenal to deter attack on the U.S. and on our allies and partners OBJ 2.3.1F3: Strengthen cooperation with allies and partners to develop and field robust, pragmatic, and costeffective missile defense capabilities. OBJ 2.4.1X2: Ensure sufficient ISR collection and analysis capacity for full spectrum operations and ensure resiliency of ISR operations. Prepare to defeat adversaries and succeed in a wide range of contingencies OBJ 3.1.1F2B: Improve the responsiveness and flexibility of consequence management response forces. OBJ 3.2.1F2C: Enhance capacity to locate, secure, or neutralize weapons of mass destruction, key materials, and related facilities. OBJ 3.3.1F2C: Enhance U.S. capabilities to train, advise, and assist foreign security forces and their sustaining institutions to operate with or in lieu of U.S. forces. OBJ 3.4.1X1: Expand capacity to succeed against adversary states armed with advanced anti-access capabilities and/or nuclear weapons and improve capabilities to conduct effective operations in cyberspace and space. OBJ 3.5.2D: Maintain a strong technical foundation within the Department s Science and Technology (S&T) pgram. Preserve and enhance the All- Volunteer Force OBJ 4.1.2M: Provide top-quality physical and psychological care to wounded warriors, while reducing growth in overall healthcare costs. OBJ 4.2.2P: Ensure the Department has the right workforce size and mix, manage the deployment tempo with greater predictability, and ensure the long-term viability of the Reserve Component. Execute a responsible drawdown of the U.S. military presence in Iraq. OBJ 4.3.2R: Better prepare and support families during the stress of multiple deployments. OBJ 4.4.2T: Train the Total Defense Workforce with the right competencies. Provide more effective and efficient logistical support to forces abroad. Implement Reform Agenda OBJ 5.1.2A: Increase use of renewable energy and reduce energy demand at DoD installations. OBJ 5.2.2C: Protect critical DoD infrastructure and partner with other critical infrastructure owners in government and the private sector to increase DoD mission assurance. OBJ 5.3.2E: Improve acquisition processes, from requirements definition to the execution phase, to acquire military-unique and commercial items. OBJ 5.4.2L: Provide more effective and efficient logistical support to forces abroad. OBJ 5.5.2U/2V: Increase efficiencies in headquarters and administrative functions, support activities, and other overhead accounts. *Based on crosswalk among the following strategic documents/sources: NDS, NMS, QDR, SMP, IPNSG, HPPG, GAO, OMB 3

MRAP Supply Chain is Critically Dependent on Kuwait-based Maintenance The MRAP Sustainment Facility (MSF) Operated by Joint Program Office MRAP Mission has evolved in its two-year life from fielding support in Iraq to remissioning for Afghanistan Provide safe, fully mission capable vehicles in volume and locations needed to support the warfighter Significant enabler of Afghanistan surge 28% of MRAP vehicles flowed through this facility MSF must master both flexibility and efficiency High mix, job shop Variable work statement to satisfy rapidly evolving requirements Rapid time-to-volume Global flow of MRAP vehicles In November 2009, facility was backlogged on the Cougar variant since then improvement efforts focused on throughput and cost CONUS CENTCOM AOR Joint Program Office, Stafford/ Quantico, VA SPAWAR, Charleston, SC Regional Support Activities, Iraq MRAP Sustainment Facility, Kuwait Remissioned vehicles New vehicles 4 Regional Support Activities / Receiving Units, Afghanistan

An enterprise-level assessment led to identification of ten projects Vehicles in Joint Program Office (CONUS) While the immediate focus was performance at the MSF Leadership (government oversight) Process (right subject matter expertise, Lean Six Sigma) MRAP Sustainment Facility 46 projects Parts Supply Throughput is a function of : Operations Inventory Supply Labor Facilities Equipment Capacity Planning Labor Configuration Management Technical Manuals Vehicles out Contract Management we had to simultaneously address supporting programmatic processes Project MaxxPro Line Improvement Requirements and Capacity Planning Process Production Scheduling Production Execution/SAMS IE Integration Labor Lead Time, Streamlining and Planning Factors MSF Inventory Optimization Configuration Management Technical Manuals Discussed today Cataloging and Provisioning MRAP Battle Damage Repair Status Closed Hold Hold Hold Hold Control Measure Measure Measure Hold 5

MRAP Sustainment Facility Operational Stock C4I Integration Bay Maintenance Line Maintenance Basic Facts: Production floor space: 150,000 sq ft Work in progress: ~150 trucks Direct labor: ~500 mechanics Parts stock space: 65,000 sq ft Lines stocked: ~4300 Quantity on hand: ~140,000 parts Incoming lot capacity: 3000+ trucks 6

Number of Trucks Ready to Ship Timeline: MaxxPro Line Throughput Project Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Initial Assessment MaxxPro Line Throughput Project Measure, Analyze Improve Control 120 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Increasingly Complex Truck challenge quantified Improvement focus areas: Takt Time Execution Work Standardization QA Feedback Maintenance Supply Reconciliation MaxxPro Base Mission Completed On Time Toughest trucks, and Incoming truck availability became a challenge Two Lines / Two Shifts 7 Two Lines / One Shifts Requirements shift away from MaxxPro; more variants run in Bays All focused on maintaining line throughput with increasingly tough trucks 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Avg Number of Parts Required per Truck Other Variants MaxxPro Bay MaxxPro Line MaxxPro Avg Parts Cons Relative difficulty in fixing truck

future needs Timeline: Inventory Optimization Project Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Initial Assessment Inventory trending upward # Lines # Locations Quantity On-hand (thousands of parts) Measure Analyze Improve Control 5114 5439 5531 5101 4696 3645 3743 3754 4086 147.5 4385 137.1 123.5 122.9 105.1 $64.72 $64.44 $67.35 $73.21 $51.71 Value ($M) Inventory Optimization Project Driven by mission mix and requirements uncertainty but is it the right inventory? To answer this question, project considered both historic consumption forecast future needs Sum of Sum of OH QTY Column Labels Row Labels No WON in 3 mo Zero Consumption < 1 Mo O/H 1 to 3 Mo O/H 3 to 6 Mo O/H 6 to 12 Mo O/H > 12 Mo O/H Grand Total > 300% Fcst 3-Mo Req 4948 15021 71 1139 3920 5627 59327 90053 200-300% Fcst 3-Mo Req 131 175 23 1804 2254 940 1826 7153 100-200% Fcst 3-Mo Req 127 663 197 3545 1891 568 2243 9234 50% to 100% Fcst 3-Mo Req 12 139 1622 1340 364 285 196 3958 < 50% Fcst 3-Mo Req 47 12 1691 537 170 148 26 2631 No WON History 21573 21573 Zero Fcast Requirement 1530 841 10 48 21 14 29 2493 Grand Total 28368 16851 3614 8413 8620 7582 63647 137095 Project delivered a monthly review process and analytics Recommended inventory adjustments to reduce risk of stockout and excess historic consumption OH Qtys % of Qtys OH Significant risk of stockout 1750 1% Moderate risk of stockout 2480 2% investigate 174 0% No action required 11222 8% Divest candidate 24066 18% Inventory Reduction candidate 97206 71% Stocking Sweet Spot 8

BAE TVS FPII BAE, GDLS Navistar BAE Timeline: Configuration Management, Catalog/Provision, Technical Manual Maturity Assessment Project Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Configuration Management, Catalog/Provision, Tech Manual Maturity Assessment 46 projects Parts Supply Throughput is a function of : Operations Inventory Supply Labor Facilities Equipment Capacity Planning Labor Technical Manuals Configuration Management Vehicle variant specific assessments Contract Management Define Measure Analyze Improve Control OEM Variant Volume RG-33 Base Cat II 731 RG-33 CAT II PLUS 995 RG-33 Base HAGA 128 RG-33 HAGA Plus 53 RG-33 Base SOCOM 262 RG-33 SOCOM Plus 44 RG-33 AUV 38 MaxxPro Cat I 2405 MaxxPro MEAP 550 MaxxPro Plus 1742 MaxxPro Plus Ambulance 505 MaxxPro Dash 1222 MaxxPro Dash DXM (ISS) 1050 RG31A2 610 RG31A2DO4 (std turning radius) 249 RG31A2DO4 RTR (reduced turning radius)424 RG31A3 EM 105 RG31A2 DO7 (ISS) 256 Cougar CAT I A1 839 Cougar CAT II A1 913 Cougar CAT I A2 151 Cougar CAT II A2 142 Cougar CAT I A1 ISS 1001 Cougar CAT II A1 ISS 39 Cougar CAT I A2 ISS 49 Cougar CAT II A2 ISS 80 Cougar CAT II Surge 200 Buffalo MK II A1 (BUFF702) 71 Buffalo MK III A2 (USMC) (B6ECA) 8 Caiman CATI 1154 Caiman Plus 1692 Oshkosh M-ATV 7687 Scorecard Results CM C&P TM 4 3 2 1 0 4 3 2 1 40 3 2 1 0 1 2 3 4 1 2 3 4 1 2 3 4 analyzed across the entire program to identify highest priority risks 9,000 100.00% MaxxPro Platform Overall Configuration Management Maturity Scorecard Configuration Management 4.0 3.0 2.5 2.0 1.0 0.0 1.8 3.1 Technical Manuals Catalog & Provision 8,000 7,687 7,000 6,000 5,000 4,000 3,000 2,405 2,000 1,742 1,692 1,222 1,154 1,050 1,001 995 913 839 1,000 731 610 550 505 85% 424 421 262 256 249 200 151 142 128 105 80 71 53 49 44 39 38 8 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% helped to focus improvement on 13 variants (85% of volume) and two OEMs 0 0.00% 9

Key Enablers, Challenges, Lessons Learned Key Enablers Strategic alignment Ensure results are relevant Must be continually revisited in dynamic environment Leadership engagement Ensure right process ownership Breaking down barriers will be required Tough calls Expect demonstration of results Challenges/ Lessons Learned Flexibility Expect immature processes and scant/unreliable data Standardize on a best practice (leverage doctrine) Sanity checks and corroborating data are better than guesses Use sampling Tailor tools to situation Results Method must deliver Actionable insight Urgency to make decision Means to monitor progress Project is about results not methodology If communication involves education something s wrong Project to define projects Provides the data to support mini-strategic alignment and prioritization Performance gap assessment 10 Requirements clarity Customer(Warfighter) can be a source of variability Requirements management process is critical Particularly important at enterprise level For government/industry partnerships, time spend upfront on requirements, pays dividends in execution