les for managersseaonline.org/docs/execbriefinghandout.pdf · “the supplier of the future will be...

LES for Managers

An executive level overview of the Lean Enterprise System

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Accelerating Supply Chain Performance


2/17/09 SEA 2008 All Rights Reserved

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Michael G. Beason - Chairman for the SEA Organization

“The supplier of the future will be capable of 99.5% on-time delivery; lead time variation of less than two hours; six sigma quality; inventory turns in excess of 15; and year-on-year cost improvements of 5-8%

The future supplier will do all of this and still maintain a 10-15% profit before taxes.”




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Purpose  Provide information about SEA and the

reasons for the industry conversion effort

 Provide an executive overview of the entire Lean Enterprise System, the Conversion Plan, and the linkages between the various elements of the plan

 Prepare the manager for the implementation of SEA LES models and methodologies and the SEA annual certification

Our Industry Lean Effort

Consultants

Tiers Two - Four

Boeing Northrop Lockheed And more

MEPs

Public and private entities providing

services

Tier One Suppliers DoD

LAI

NACFAM

AIA

Various entities developing tools, standards, and

policies




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SEA SEA is the Joint Program Office for the aerospace, defense, and space supply chain conversion effort.

SEA Supplier Development Policy   The members of SEA have determined that the SEA Conversion Plan encompasses all

requirements for lean and continuous performance improvement for SEA’s member companies.

  Therefore if a supplier meets the definition of “engaged” reported quarterly to SEA, the supplier will be listed on the SEA National Directory with the status “Engaged.” Engaged has been defined by the SEA Board of Directors as meaning that a supplier has established monthly action towards meeting the requirements as listed in the SEA Roadmap.

  SEA member companies will do the following:

1. Strive to coordinate developmental visits – take SEA engagement as meeting the desirable level of effort to satisfy contractual requirements for lean and continuous improvement.

2. Strive to eliminate redundant audits – take the SEA engagement as evidence that the supplier is committed to achieving or sustaining the desirable level of continuous improvement.

3. Strive to eliminate duplicate effort – take the SEA “Engaged” status as evidence that the supplier is investing in developing its process management and lean capability and that the supply chain needs an appropriate and parallel effort from its customers to reduce duplicate systems and requirements that increase supplier costs.

4. Strive to establish a common framework – for suppliers engaged in SEA, members will strive to engage with suppliers on the basis of the SEA framework and integrate efforts with existing initiatives.




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Automotive  According to A.T. Kearney, there is a case to be

made for the comparison of what happened in the automotive supply chain to what is happening now in the Aerospace supply chain

 What happened in the automotive industry?

 They’ve already done this for the past 15 years - what can we learn?




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Four Major Trends  Globalization

 Consolidation

 Supply Chain Integration

 Lean Manufacturing




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Inventory Turns & Lean For a $200M Aircraft




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Joint Strike Fighter •  Center Fuselage •  Weapons Bay Door Drives •  Arresting Gear •  CV Control and Test •  Radar

•  Software •  LO Support System •  Training Courseware and

Management Systems

•  Aft Fuselage •  CV Wing Fold •  Fuel System •  Crew Escape •  Life Support •  EW System •  U.K. Support Center •  Throttle/Side Stick •  Horizontal/Vertical Tails •  Flight Control Computer •  STOVL Control and Test •  U.K. Rqts/Stores/SW

DISTRIBUTION STATEMENT A. Approved for public release; distribution is unlimited.




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Boeing 787

Boeing 737




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Pratt & Whitney “To capitalize on an emerging market that will be booming in a few years, Pratt & Whitney Canada needs to deliver a jet engine every four hours—a feat that would be impossible without the input of its supply base.”

Purchasing.com

"We have to drive a pulse or drum beat that triggers the supply chain to deliver to a takt time (customer demand rate) of every four hours," says DiPerna.




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Changes & Impacts

Adapted by SEA from Filling the Gap - rethinking supply management in the age of global sourcing and lean - APICS

Paul Ericksen, Rajan Suri, Bash’Shar El-Jawhari, and Aaron Armstrong

Seasonality of build-to-demand products can max out supplier capacity. Without finished goods inventory, insufficient production means lost sales.

With buffers in place, lost production could eventually be made up with overtime.

Firm zones are being reduced. Building ahead puts suppliers at financial risk.

Suppliers were given forecast “firm zones.” Suppliers built ahead.

OEM forecasts are revised in real time. Suppliers must vary quantities and mix on a daily basis.

OEM forecasts were set annually and updated infrequently. Suppliers scheduled “level production.”

Obsolescence is accelerating. Building ahead carries significant market and financial risk.

The market is more demanding. Mass customization is replacing inventory-based product offerings.

Suppliers must support higher magnitudes of OEM order variability.

Asset reduction initiatives have led OEMs to adopt build-to-demand strategies.

OEM operational effectiveness increasingly depends on supply chain order fulfillment capability.

Purchased content of OEM’s products has risen significantly.

The Impact The Change




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Supply Chain Lean Practices 1.  Pull Signal 2.  Kitting 3.  CBO/ Min-Max 4.  E-commerce 5.  Direct line feed (Point of use) 6.  Response to Supplier Technical Questions & Problems 7.  Supplier managed inventory 8.  Performance based payment 9.  Statement of Objectives (vs. SOW) 10.  Applications of company-specific specifications where

adequate industry standards exist 11.  Adjust quantity price break thinking 12.  Alignment 13.  Continuous improvement 14.  Directed Sources

Source: SEA Joint Committee on Supply Chain Practices 2005

The LES Works!

Purple - precision machining Red - electronic assembly Green - rubber products and seals




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Process Maturity Model “PMM”




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Process Maturity & Cost




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Roadmap




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Processes & Owners

Standard Work Definition, Master Trainers & SMEs

Vision - Mission - Strategic Goals

Leadership &

Culture

Workforce Development

Operational Excellence

Process Champions

SEA Process Architecture

Value Stream

Kaizen

Roadmap – Step by Step

Long Term Conversion Plan




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Implementation Considerations

  Conversion Plan - Managing the Sequence   Managing Inputs & Outputs - Linkages   Roles & Accountabilities   This is not a training program   Leadership, Leadership, Leadership   Lower the Waterline - Change Management

Membership Process SEA Supplier Registry

Quarterly Report

Roadmap Assessment & Planning

Annual Membership

Authorized Service Provider* Internal

Annual SEA Certification*

*Third Party Fees may apply

Startup*

Process Owner Forums*

SSR Engaged

Status



Process Owner Forums


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Sharing Best Practices Process-focused All Process Owners IPL Leadership Never leave the office




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Quarterly Report Annual Improvement Plan




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Quarterly Report Annual Improvement Plan

Annual Improvement Plan




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Preparing for the Annual Certification

 Champion of each track and Value Stream  Process Owner for each numbered process  Target minimum PMM level 3 on each

numbered process  Self-Assessment using online survey  Set date with auditor - 3 days onsite nominal  Receive and review feedback report with

team  Set improvement action plans and report

progress via quarterly report




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Thank You

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