Akhbari, Hamid

Bozdogan, Kirk

Darden, Chris

DSpace@MIT

 Supplier Networks Working GroupThe Lean Supply Chain Now Pilot DemonstrationProjectPresented byKirk Bozdogan, MITHamid Akhbari, US Air ForceChris Darden, Northrop Grumman24 March 2005web.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 2Supplier Networks Working GroupFocus:• Help enhance aerospace supply chain managementcapabilities• Help streamline vertical interfaces in the supply chain• Enable collaborative arrangements to improveperformance of supplier networksMission: Enable the development of lean, value-creating, US aerospace supplier networksweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 3Emphasis Today• Supplier Networks Transformation Toolset --Integrated implementation toolset for building lean suppliernetworks• Lean Supply Chain Now pilot demonstrationproject -- New initiative to develop a validateddeployment model for redesigning and streamliningvertical interfaces in the aerospace supply chain toachieve significant performance improvements (cost,quality, delivery)web.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 4DESK REFERENCE Principles  ReferencesGlossary  i i l   flROADMAPfor building lean supplier networksHow-to, who, when,wheref  il i  l  li  t-t , , ,SUPPLIER MANAGEMENT SELF-ASSESSMENT TOOLWhat, current state, future stateI    t, t t t , f t  t tCore  conceptsTOOLSET Can Help AccelerateTransformation ofSupplier NetworksOBJECTIVE: Develop integrated lean, value-creating, suppliernetworksRESOURCEGUIDEFor smallersuppliers(Lean diagnostic;“yellow pages”)SupplierNetworksWorkingGroupActivityImplementationCore  conceptsweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 5©2003 Massachusetts Institute of Technology  EA KBozdogan 100903  1web.mit.edu/leanDESK REFERENCE Principles  ReferencesGlossary  i i l   f rlROADMAPfor building lean supplier networksHow-to, who, when,wheref r il i  l  li  t-t , , ,SUPPLIER MANAGEMENT SELF-ASSESSMENT TOOLWhat, current state, future stateI    t, rr t t t , f t  t tCore  conceptsOBJECTIVE: Develop integrated lean supplier networkstransformation toolsetRESOURCEGUIDEFor smallersuppliers(Lean diagnostic;“yellow pages”)ImplementationCore  concepts©2003 Massachusetts Institute of Technology  EA KBozdogan 100903  12web.mit.edu/leanROADMAP: Major Building Blocks                    4.0CREATE AND REFINELEAN   IMPLEMENTATION                 PLAN  +                                          2.0DEVELOP SUPPLIERNETWORKSTRATEGIC PLAN                        5.0        IMPLEMENT LEAN             INITIATIVES                1.0     DEFINE VISION               3.0ESTABLISH LEANCULTURE ANDINFRASTRUCTURE              6.0      STRIVE FOR    CONTINUOUS   IMPROVEMENT©2003 Massachusetts Institute of Technology  EA KBozdogan 100903  16web.mit.edu/leanLevel ITraditional -- Very little awareness of this practice; sporadicimprovement activities may be under way in a few areas.Level IILevel IIILevel IVLevel VAdopter - General but limited  awareness; informal and piecemealapproach deployed in a few areas focusing on specific projects withvarying degrees of effectiveness and sustainability.Performer - A systematic approach is deployed in all appropriate areas,functions and processes, with appropriate metrics; varying stages ofimplementation across most areas, exhibiting varying degrees of success;some deployments are still in relatively early stages.Reformer - On-going deployment, refinement and continuousimprovement of applicable practices across the enterprise, facilitated bythe use of appropriate metrics, exhibit mature, well-developed approach.Transformer - Exceptional, well-defined, innovative approach is fullydeployed across the extended enterprise; recognized as world-class bestpractice.Supply Chain ManagementCapability Maturity LevelsKB013001 - 7 © 2001 Massachusetts Institute of TechnologySUPPLIER TOOLSET VERSION 1.0-- AvailableNowweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 6Desk Reference• Objective: Provide a comprehensive and “useful”reference for lean supply chain management• Scope: Identify and elaborate basic concepts,definitions, tools and techniques, and providereferences for further learning• Target: Lean enterprise transformation champions;supply chain managers from across the enterprise• LAI’s value-added role: Providing educationalmaterial for use by the US aerospace communityweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 7Resource Guide• Objective: Provide useful and comprehensivereference guide on lean manufacturing basics• Scope: Identify and elaborate concepts,definitions, tools & techniques and providereferences• Target: Medium and small-size suppliers, as wellas by primes and major suppliers• LAI’s value-added role: Providing off-the-shelfeducational and informational material that wouldhelp raise the awareness level of small andmedium-size aerospace enterprises on lean basicsand where to seek further assistanceweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 8Toolset Development: Status• VERSION 1.0 -- Roadmap & Self-Assessment tools• Alpha & beta-tested• Integrated toolset completed in March 2004• Document version available on LAI website• VERSION 1.1 -- Add Desk Reference module• Core lean concepts & principles for supply chain management• Tools and techniques• Implementation examples• In-progress• VERSION 1.2 -- Add Resource Guide module• Basic lean manufacturing principles• Resource guide for smaller suppliers (“yellow pages plus”)• In-progressweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 9Supplier Networks Working Group• Flowing lean to the lower-tier supplier base     ⇒ Huge challenge, basically outside LAI’s scope      ⇒ But LAI can help “enable” collaborative action -- Example: Leveraging EdNetto help stakeholder member companies, in collaboration with local ManufacturingExtension Partnership (MEP) centers & other lean-delivery organizations• Helping to streamline vertical interfaces in the supplychain -- to drive out waste, speed flow, and improve quality     ⇒ Target of opportunity for LAI     ⇒  Working group exploring opportunities for collaborative actionExploring collaborative opportunities forenabling the development of lean, value-creating, aerospace supplier networksweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 10Enabling Products & ServicesRequirements& NeedsExploring Opportunities for LeveragingCapabilities through CollaborationLAINIST-MEP360 vuCMTCTECHSOLVEMASS-MEPOTHER MEPCENTERSSEAAIANACFAMOTHERAIA: Aerospace Industries AssociationCMTC: California Manufacturing Technology CenterLAI: Lean Aerospace InitiativeMEP MSI: Manufacturing Extension Partnership Management Services, Inc.NACFAM: National Coalition for Advanced ManufacturingNIST- MEP: National Institute of Standards and Technology Manufacturing Extension PartnershipSEA: Supplier Excellence Alliance360 vu: 360 vu Research & Education FoundationPrimesCustomers(e.g., SPOs)PartnersFirst TierSecond TierThird Tier...Existing, Funded CapabilityFragmented, Duplicative SupportMEP MSIweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 11Lean Supply Chain Now --Some Background• Responds to need for greater value delivery in three majorareas identified in a recent reassessment of the LAI valueproposition:• Improving industry-supplier interfaces• Streamlining transactions, institutionalizing lessons learned, sharing data & networking• Developing standardized tools, implementation methods, processes & metrics that primes andmajor suppliers can use as they interface with their lower-tier suppliers• Helping with deployment of tools within industry• Providing assistance with tools (access, deployment)• Promoting wider deployment of tools across industry• Establishing collaborative relationships with “lean-enabling” third parties• Supplier transformation -- improving supplier processes• Supplier training -- improving supplier capabilities to learn• Supports other initiatives addressing subcontractingmanagement and supply chain integration issues (e.g.,DCMA, AFMC, primes, major suppliers)web.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 12Lean Supply Chain Now --Builds on Lean Now Success• A Government Initiative…a totalenterprise team facilitated through theLAI venue• GOAL: Help with transformation ofgovernment enterprises• Leverages collective knowledge toeliminate barriers…capitalize ongovernment and industry teamwork• Industry’s experience in large-scaleenterprise-wide change• Cadre of coaches… Subject MatterExperts (SMEs)• Spiral approachAccelerate value creation andeliminate non-essentialactivity – Apply leanprinciples to government-industry critical processes:1.User-SPO-industry programinterfaces2.AF-industry businessprocesses3.AF-industry operatingprocesses-- LAI consortium working togetherweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 13Lean Supply Chain Now --Executive Summary• Purpose: Demonstrate through a pilot project that lean-enabled streamlining of vertical interfaces in the supplychain can achieve significant performance improvements(cost, quality, delivery)• Anticipated benefits:• Provide verified data rather than conjecture that can beextrapolated to the program level to establish ROIs onfuture lean investments by the DOD and primes• Document a set of lean best practices andrecommendations• Establish a set of lean supplier networks metricsweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 14Lean Supply Chain Now Pilot Project --Hypothesis & Methodology• Hypothesis:     A supplier network with streamlined vertical interfaces betweencustomers and suppliers in the multi-level DOD supplier base, enabledthrough “lean-intervention,” provides superior performance in termsof cost, quality and delivery.• Methodology:     Test for significant differences between the performance of a suppliernetwork receiving “lean-intervention” (serving as the experimentalgroup) AND the performance of another, equivalent, supplier networknot receiving such “lean-intervention” (serving as the control group),where the observed performance differences can be directly attributedto the “lean-intervention” event.web.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 15Lean Supply Chain Now -- SomeOperational Details• Directly focusing on critical vertical interface issues in the supply chain(e.g., requirements flowdown)• Deploying LAI tools and methods, as well as supplier lean developmenttools and best practices from all member organizations to redesign andstreamline vertical interfaces• Demonstrating concept through test-bed application in one or more pilotprojects framed around major acquisition program enterprises (e.g.,Global Hawk, C-17, F/A-22), by conducting a controlled experiment• Concentration on common suppliers & drilling down vertically to subtierlevel in the supply chain• Establishing collaborative relationships for lean deployment• AFMC: Transformation (Acquisition, Sustainment)• System Program Offices (SPOs)• DCMA, DFAS• Primes; major subcontractors/suppliers; lower-tier suppliers• LAI Supplier Networks Team• “Lean-delivery” service organizations; “Lean-enabling” alliances• We are on our way towards fleshing out an executable planweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 16Pilot Project Process• Develop concept and draft execution plan• Provide briefings to leadership and get buy-in• Obtain go-ahead & budgetary support• Develop detailed design and implementation plan• Conduct data collection and analysis• Document pilot project results• Brief results and build wider acceptance ofdeployment model• Prepare and provide portable deployment packageweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 17Design Pilot Project as a“Controlled” ExperimentProgram C/Prime CSupplier A Supplier B Supplier C Supplier D Supplier ESupplier 1 Supplier 2 Supplier 3 Supplier 4Supplier X Supplier Y Supplier ZTier 1Tier 2Tier 3Lean Improvement Implementation (“lean-intervention”)Develop Metrics &Baseline Performance(Supplier)Interface EventDevelop Metrics &Baseline Performance(Supply Chain)Program B/Prime BProgram A/Prime AControl GroupTest Group 2Test Group 1web.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 18VerticalInterfaces• Number oftransactions• Time it takes• Number of timesthere are problems• Number of people• How automatedPRIMESUPPLIERCUSTOMER / PROGRAM CCUSTOMER / PROGRAM BSUPPLIERCUSTOMER / PROGRAM ATechnicalDataPhysicalPartsContractual ItemsTechnicalDataPhysicalPartsContractual ItemsTechnicalDataPhysicalPartsContractual ItemsOtherInterfacesOtherInterfacesOtherInterfacesInterface Focusweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 19Key Interfaces IdentifiedContractual Interfaces• Proposal• RFP / RFQ• Proposal Preparation• Contract Modifications• Types – Schedule, Technical• Interface levels –• Customer to Prime• Prime to Supplier (Supplier Mgmt)• Supplier to Lower Tiers (Supplier Mgmt)• Requirements / Qty Flowdown• Contract Design• Long Term Agreements (Compare / Contrast)• Interface Levels• Customer to Prime• Prime to Supplier• Supplier to Lower Tiers• Negotiation, Evaluation (Rates, etc)web.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 20Key Interfaces IdentifiedTechnical Data Interfaces• Requirements Flowdown• Engineering Specs• Material Specs• Audits• Delivery Requirements• Packaging• Part Qualification Process• Testing Requirements• First Article Inspection• Configuration Change Management• Engineering Changes (ECO)• Manufacturing Requirements Changesweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 21Key Interfaces IdentifiedPhysical Parts Interfaces• Schedule communication and integration (Lead-time)• Change order implementation• Manufacturing and Inventory Mgmt response to Change Orders• Part QualificationOther Interfaces• Business Systems (Connectivity)• Electronic Payments• Electronic P.O.• Engineering Drawings• Forecasts• Audits• Multiple Audits = Redundancies• ISO9000, BQMS, Quality Audits,• Supplier Scorecards / Ratings• Multiple Ratings – Redundancies• Multiple Criteriaweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 22Refining the Concept --Current Activities• Business model -- stakeholders, value exchange,roles and responsibilities• Pilot design -- controlled experiment, interfaces,lean intervention strategies, benefits and costs• Execution plan -- engagement strategy,implementation steps, tools & techniques,resource requirements, schedule, changeprocess documentation• Outreach plan -- marketing & communicationplanweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 23Pilot Project -- Expected Results• Validated, action-oriented, portable deploymentmodel for streamlining vertical interfaces in thesupply chain• Integrated implementation tools & techniques• Business case -- metrics for quantifying benefitsand costs• Capturing lessons learned to define mosteffective methods for overcoming barriers• Collaborative framework for bringing aboutfundamental changesweb.mit.edu/lean© 2004 Massachusetts Institute of Technology   KBozdogan 02/16/05 - 24Points of Contact• Kirk Bozdogan, MIT     Tel: 617 253-8540     e-mail: “Bozdogan, Kirkor” <bozdogan@mit.edu>• Hamid Akhbari, US Air Force     Tel: 937 255-9883     e-mail: "Akhbari, Hamid R Civ ASC/ENSM"Hamid.Akhbari@wpafb.af.mil• Chris Darden, Northrop Grumman     Tel: 310 332-0861     e-mail: "Darden, Chris" <chris.darden@ngc.com>

The Lean Supply Chain Now Pilot Demonstration Project

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The Lean Supply Chain Now Pilot Demonstration Project

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