building lean supply chains

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www.altarum.org

Building Lean Supply Chains

Lean Shipbuilding & Repair Forum 3Tom Phelps, Altarum

Teri Hoenes, Boeing Integrated Defense Systems

May 12, 2004

Lean Forum 3 2004 2

Presentation Topics

Lean supply chain concept

The process and methods– Illustrated by new construction example– Overview of repair example

Closing thoughts

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Lean Forum 3 2004 3

Why Lean Supply Chains?

A supply chain is a complex system

The lean philosophy focuses on performance optimization– Local optimization rarely results in global optimization

The lean supply chain approach recognizes and addresses the complex supply chain system

This concept is very different from what is commonly called “Supply Chain Management,” which addresses how a

company uses its suppliers not what the suppliers do or how they work together.

Lean Forum 3 2004 4

Lean Supply Chain Concept

1st Tier Supplier

Manufacturing

2nd Tier Supplier

Manufacturing

Boundary Supplier

Manufacturing

Order Entry &Planning

Prime Contractor

Manufacturing

Order Entry

& Planning Pur

chas

ingOrder Entry

& Planning Pur

chas

ing

Order Entry

& Planning Pur

chas

ing

Orders/ReleasesMaterials & PartsInternal Requisitions/Orders

Information Flow

Material Flow

Apply lean methods to supply chain as a systemPrime to Prime Flow

Could be major system

supplier, repair center, or ship

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Lean Forum 3 2004 5

Example System: F/A-18 E/F Nose Landing Gear

Retraction Actuator

Shock Strut

Drag Brace

Lean Forum 3 2004 6

Supply Chain Value Stream Management Project

A project within the SPANS program (Supply Chain Practices for Affordable Navy Systems)

Project funding from Navy MANTECH at Office of Naval Research

Project management support from Advanced Technology Institute

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Lean Forum 3 2004 7

SCVSM Project Team

Teri Hoenes, Boeing Mike Smith, Messier-Dowty

Lean Forum 3 2004 8

Overall Process

Define Supply Chain

Assess Current State

Develop Macro Future State

Select Improvement Projects and Participants

Implement Change

Measure Improvement

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Lean Forum 3 2004 9

Define Supply Chain

Select target component– First-tier supplier willingness to play

• Start with those already implementing lean internally– Criticality of target component to overall system

• Lead time, cost, quality

Document basic supply chain relationships– Identify sub-tier suppliers– Capture impact on target component

Select key suppliers– Major sub-components– Criticality to target component

Lean Forum 3 2004 10

Nose Gear Supply Chain

Wyman Gordon(forgings)

Cam-Tag(machined parts)

S&L Aerospace(assembly and machining)

Carpenter(specialty materials)

Tecnickrome(surface treatment)

Superior Plating(surface treatment)

Messier-Dowty(assembly and machining)

VacAero(heat treatment)

Boeing(assembly)

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Compare: Shipbuilding Supply Chain

525 Navy Standard Valve

Forge Machine Shop

SFC Valve

Northrop Grumman Newport News

Electroplater

(Steel Suppliers)Heat Treater

Also similar to deck machinery, gearboxes, hydraulics

From SPANS Supply Chain Dynamics Project


Assess Current State

Build baseline process map for the material flow– Initial receiving through final shipment

Build baseline process map for the supporting business processes– Order entry– Estimation– Shop floor scheduling– Purchasing– Shipping

Focus on activities that affect overall lead time– If you can reduce lead time through better processes, costs

inevitably come down and quality improves

Identify opportunities for improvement

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Building a Value Stream Map

Develop the value stream map by walking the process– Designate one person to be the part or piece of paper traveling through

the process

Capture data for each process on the shop floor or in office, always looking for relationships with customers and suppliers

Document process and review with operators/support teams

Identify quick-hitter and longer-term opportunities for improvement– Internal to company– Between companies

Involve “customer chain” in assessment at every supplier


Example Quick Hitter Opportunities

Shorten Boeing/Messier-Dowty negotiation time by supplier providing information up front– Removed 1-2 weeks of lead time from Boeing business process– Reduced two people traveling to Messier-Dowty from (1-2

weeks to a few days, savings estimated at 2 person-weeks plus associated travel)

Messier-Dowty assembly work being undone and redone by Boeing– Removed 2 hours of labor and lead time from assembly process,

$12,000/year savings

Machine shop supplier found new ultrasonic inspection provider– Removed 2 weeks of lead time on part, $5,000/year savings just

in transportation & customs agent fees

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Top-Level Macro-VSM

Built from condensed versions of individual value stream maps– No benefit to showing entire map at level of detail used within

companies (too complex to grasp)

Top level version very simple, helps people understand what you are talking about– legible on 8.5 by 11 paper

Shows info flow propagating from end facility to third-tier suppliers and material/parts/assemblies moving from suppliers to the end facility

Used for both current and future states


Example Top Level View – Current State

Messier-Dowty MRP Delivery Schedule

Assembly Schedule

Delivery

Schedule

DeliverySchedule

Delivery

Schedule Manufa

cturin

g Sch

edule

Batch Size: 4

Shifts: 2-3

Lead Time: 13 days

Batch Size: 2

Shifts: 1-3

Lead Time: 13 days

Batch Size: 2

Shifts: 1-2

Lead Time: 9 days

Batch Size: 2

Shifts: 1-3

Lead Time: 61 days

1 xDay

1 xWeek

1 xDay

1 xMonth

1 xMonth

Batch: 2

Time: 1 day

Batch: 1

Time: 2 days

Batch: 2

Time: 1 day

Batch: 4

Time: 2 days

Batch: 1

Time: 3 days

Batch Size: 1

Shifts: 3

Lead Time: 57 days

Batch Size: 1

Shifts: 1

Lead Time: 52 days

I

I II I

BoeingBldg 101

CarpenterTechnology

WymanGordon

MessierDowty Vac Aero Messier

Dowty

I

I

Batch: 1

Time: 1 day

BoeingBldg 67

Man

ufac

turin

g Sc

hedu

le

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Macro Timeline Chart

Shows: – What time is spent where and proportion of that time the

companies are adding value– Where the handoffs are in the process and to whom– Who has responsibility when

Highlights a wide variety of opportunities

Also used for both current and future states


Example Timeline View

Next slide

Parts manufactured in parallel on

common timeline

Critical Path Obvious

Typical batch size

Long business process up front

Long raw material procurement

Long final assembly

Rows sometimes called “swim lanes”

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Timeline View Up Close

4Unusual ship

quantity

Unusual shipping

Unmapped processes

Value-added proportion

Push arrow

Chain-appropriate time scale

Candidate for improvement

Shipping time


Move Toward the Future State

Bring the companies together to – Compare future state to current state, determining the gaps

between the two– Identify a set of multi-company collaborative improvement

projects that will move the supply chain towards the future state– Identify which companies are going to work on which projects

Create detailed plans for each project– Set specific goals– Determine timelines– Assign responsibilities

Get to work!– Be ready to address additional opportunities as they arise

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Example Top-Level View – Future State

Messier-DowtyProduction

Control

Batch Size: 4

Shifts: 2-3

Lead Time: 13 days

Batch Size: 2

Shifts: 1-3

Lead Time: 10 days

Batch Size: 2

Shifts: 1-2

Lead Time: 5 days

Batch Size: 2

Shifts: 1-3

Lead Time: 61 days

Ship qty: 2

Time: 1 day

Ship qty: 1

Time: 1 day

Ship qty: 2

Time: 1 dayShip qty.: 2

Time: 2 days

BoeingBldg 67

Wyman Gordon

MessierDowty

VacAero

Messier Dowty

Batch Size: 1

Shifts: 3

Lead Time: 57 days

Batch Size: 1

Shifts: 3

Lead Time: 40 days

Monthly ForecastMonthly Forecast

Weekly

Monthly Foreca

st

CarpenterTechnology

Batch: 1

Time: 2 days

Batch Size: 1

Shifts: 1

Lead Time: 52 days

BoeingBldg 101

IShip qty: 1

Time: 2 days

Mon

thly

For

ecas

t

min/max


Nose Gear Improvement Projects

Rationalize inspections: Streamline the manufacturing process by removing redundant and otherwise unnecessary inspections

Rationalize batch sizes: Determine what the optimal batch sizes should be throughout the supply chain and do what’s necessary to make them possible

Fully dressed landing gear at Messier-Dowty: Shift assembly of electrical, hydraulics, and wheels from Boeing Material capability testing: Move material capability testing off the critical path

Forecasting & Scheduling improvement: Goal of concentrating on improving forecast and actual purchasing data at steel supplier.

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Additional Activities

Other cost and lead-time reduction activities spawned by the projects– Multi-company activities to reorganize/redesign manufacturing

processes to eliminate process steps and part handoffs• Collaborative development of chrome-to-size process between

Messier-Dowty, second-tier machine shop, and plating house• Messier-Dowty assembly process being substantially revised, with

new floor organization, tools, methods, and supplier inspection,kitting, and packaging

– Messier-Dowty recognized its spares quoting and contracting process was “broken,” has taken 6-month process to 10 days

• Robust, personnel changes have not hurt the timing

These unplanned activities may provide greater benefit than the planned ones


0

500000

1000000

1500000

2000000

2500000

Inve

ntor

y $$

's

3rd Qtr.02

3rd Qtr.03

Quarter

Wyman-Gordon

S&L

Cam-Tag

Messier-Dowty

Boeing

19% Reduction

Nose Gear Supply Chain Improvements

0

100

200

300

400

500

600

Day

s

3rd Qtr. '02 3rd Qtr. '03Projection

Tecnickrome

Superior

Carpenter

S & L

Wyman-GordonCam-Tag

Vac-Aero

Messier-Dow tyBoeing

Projected 45%

Reduction

Supply Chain Leadtime

Overall lead time has reached 48 week goal (from 62 weeks)

Lead time reductions off critical path• reduce costs • improve quality• prevent new critical path

Supply chain inventory reduced• Sum across chain = 19%• Greater savings to come as

more changes implemented and inventory bleeds off

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Broad Supply Chain Benefits

Greater understanding by all parties of each others’ strengths and opportunities– Encouraging collaborative problem solving– Greater sense of shared goals

Supply chain participation encourages management commitment– Joint Boeing/Messier-Dowty approach brought supplier managers on

board

Common tools, methods, and language across supply chain, improving cooperation and communication– Project training– Kaizen event (“Accelerated Improvement Workshop”) training at

Boeing

When Messier-Dowty recently warned its major suppliers to expect requests for a total of 25% in price reductions, only the two who were participating in this project responded with “We can do that”


Broad Supply Chain Benefits (2)

Suppliers moving forward with concepts– 3rd-tier steel supplier across 6000-person company, responded

to Boeing– 2nd-tier machine shop both across its internal activities and

working with additional suppliers on its own (will shift business away from those that don’t undertake internal lean efforts)

The improvements suppliers are making are not limited to focus parts– While Messier-Dowty is 15% of S&L’s business, more than 50%

of S&L’s business eventually ends up at Boeing, Sikorsky is next largest customer

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Air Force Repair Supply Chain

Flightline to Flightline Flow

Information &Carcass Flow

Serviceable Unit &Information Flow

Orders/ReleasesMaterials & PartsInternal Requisitions/Orders

Warehouse

Storage

Repair Shop

Repair

Warehouse Fighter Wing

Order Entry

& Planning Pur

chas

ing Order Entry

& Planning Pur

chas

ing

Order Entry

& Planning Pur

chas

ing

Removal &InstallationStorage

Order Entry

& Planning Pur

chas

ing


New Air Force Project

Mapping current state of supply chains for repaired F-16 parts– About 40% of mapping data collected

Looking at two complex parts (multiple subcomponents)– Emergency power turbine (mechanical)– Radar component (electronic)

Identifying opportunities across supply chains – Untracked wait time– Very complex information systems– Convoluted business processes– Many examples of “We’ve always done it that way”

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Lean Supply Chains in Shipbuilding

Lean supply chain approach is general– Not limited to aerospace, new construction, or DoD applications

Supply chains provide many ship components, both new and repair

Industry structure quite similar to aerospace– Low volumes– Limited selection of specialty suppliers– Limited number of shipyards– Spread across continent

Suppliers with primary responsibility for major systems can apply lean to their supply chains– E.g., propulsion systems, control systems, accommodations


Beyond Traditional Lean

The lean supply chain approach has 5 key elements that go beyond traditional lean:– Deliberately inclusive and broad-based thinking, from order to

delivery– Macro (supply-chain level) metrics that drive the process– Macro level analysis tools and methods– Supplier teaming, collaboration, communication– Joint customer/supplier participation in assessment and

implementation

The result is greater benefit than can be achieved by individual-company lean alone

Guidebook: Developing Lean Supply Chains downloadable from: http://www.altarum.org/altarum/publications/publications.asp

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www.altarum.org

Building Lean Supply Chains

Tom Phelps Teri Hoenes

734-302-4650 314-504-8419

[email protected] [email protected]

www.altarum.org www.boeing.com

building lean supply chains

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