Enterprise Transformation through Lean Six Sigma Deployment

VADM Wally Massenburg, USN (Ret)

1 May 2008

F404 Case Study – A Journey of Discovery

Requirements/Risk AssessmentCEO

CHIEF EXECUTIVE OFFICER

ProvidersCOO

CHIEF OPERATING OFFICER

SponsorsCFO

CHIEF FINANCIAL OFFICER

NAVAL AVIATION ENTERPRISE

RIGHT FORCE . . .RIGHT FORCE . . .RIGHT READINESS . . . RIGHT READINESS . . . RIGHT TIME . . .RIGHT TIME . . .RIGHT COST . . .RIGHT COST . . .

OPERATING AS AN ENTERPRISE

• SINGLE PROCESS OWNER • SINGLE FLEET-DRIVEN METRIC: AIRCRAFT UNITS READY

FOR TASKING AT REDUCED COST (CONTINUES TO MATURE)

• VALUES – WHAT WE BELIEVE– FLEET READINESS– “COST-WISE” (LESS $’S)– TIME ON WING (LESS STUFF)– SPEED (LESS TIME IN MAINTENANCE)– PEOPLE (CONTINUOUS IMPROVEMENT)

• THREE MAIN FOCUS AREAS: – READINESS: TODAY, TOMORROW, AND FUTURE– TOTAL FORCE READINESS (PEOPLE DIMENSION)– COST MANAGEMENT

THE INSPIRATION

FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11PB98 71 125 144 150 164

PB99 71 119 143 154 164

PB00 105 140 163 183 187 201

PB01 128 130 173 177 187

PB02 88 92 115 119 143 155

PB03 90 85 105 147 193

PB04 100 100 133 191 254 302

PB05 108 134 183 238 283

PB06 128 170 195 242 248 242

# AIRCRAFT

Where did the money go?

Basis for Process Improvement – Lean Six Sigma

Product Enterprise TeamExample: F-404 Capacity Reduction

(Pre-Cursor to Fleet Readiness Centers)

•FY03 State was 9 Intermediate Maintenance Activities with excesscapacity and manpower

•37 Options Considered, 7 selected for detailed evaluation w/AIRSpeed application, ie. TOC, Lean, Six Sigma where appropriate

•Team Recommendation:–Phased down approach from 9 (FY04) to 5 I-Levels in FY05to 3 in FY06

•Starting Basic Allowance was 480 billets and COB was 359 personnel

–End state became167 military personnel & 8 tech reps•$161M was saved over the FYDP

F404 I-Level Consolidation MetricsF404 RFI / NRFI Removals

50

520

50

100

150

200

Oct-02

Apr-0

3

Oct-03

Apr-0

4

Oct-04

Apr-0

5

Oct-05

Apr-0

6

RFI

NRFI

F404 I-Level In-Work TAT

13 11

01020304050

FY03 Q

1

FY03 Q

3

FY04 Q

1

FY04 Q

3

FY05 Q

1

FY05 Q

3

FY06 Q

1

Inw

ork

Day

s

F404-400F404-402RIMAIR RTAT Goal

F404 TOW

428

463

0 100 200 300 400 500

F404-400

F404-402

MTSR

FY03

FY04

FY05

FY05 Q3-FY06 Q2

F404 I-Level NRFI Transfers

15.4

21010203040

Oct-04

Jan-

05

Apr-0

5

Jul-0

5

Oct-05

Jan-

06

Apr-0

6

Jul-0

6

Tra

nsf

er C

ou

nt

& D

ays

F404 NRFI Infant Mortality

131

0 50 100 150 200 250 300

0-100

201-300

401-500

Removals

FY03

FY04

FY05

FY05 4th qtr - FY06 3rd qtr

F404 PRG Status

62

27-500

50100150200

F404-400 Goal

F404-400 Status

F404-402 GoalF404-402 Status

F404 MEFHBR Status

440

422

0

100

200

300

400

500

Oct-99

Oct-01

Oct-03

Oct-05

Oct-07

Oct-09

Oct-11

Oct-13

-400 Actual-400 Goal-400 Fan Blade Life Stepdown-402 Actual-402 Goal-402 Fan Blade Life Stepdown

Manpower (MP)Aug 06

MP InputsEngines per Body

(12-Month RFI)

AIMD Lemoore - BA 84 1.3AIMD Oceana - BA 85 3.3MALS-11 - TO 43 4.4MALS-12 - TO / BA 27 2.6MALS-31 - TO 45 1.5Major I-Level - BA / TO 284 2.5

AIMD Lemoore - COB 66 1.6AIMD Oceana - COB 91 3.1MALS-11 - COB 43 4.4MALS-12 - COB 32 2.2MALS-31 - COB 42 1.6Major I-Level - COB 274 2.6

AIMD Lemoore - mechs available 32 3.8AIMD Oceana - mechs available (28 CFT included) 90 3.2MALS-11 - mechs available (7 CFT included) 43 4.4MALS-12 - mechs available 21 3.6MALS-31 - mechs available (5 CFT included) 32 2.5mechs available (40 CFT included) 218 3.5manpower end state goal 167annual engine per body baseline 6.4

F404 I-Level Consolidation Over-Arching Benefits

• Eliminates I-1 training requirements• Aligns sea & shore duty billet skill sets (I-3 repairs mirrored

at sea & ashore)

• Utilizes manpower more efficiently with civilian workforce• Creates local permanent resident experts with civilian

workforce

• Eliminates high turnover of mechanics- Reduces lost time due to inexperience- Reduces infant mortality removals (TOW)- Reduces production assembly variances

• Increases projected reliability- Historically depot produced engines consistently had

higher TOW than I-level sites

- Depot MEFHBR 502 EFH FY00-05

- Five major I-1 activities MEFHBR 398 EFH FY00-05

- All options support CNO’s military manpower reduction

goals

18

CRITICAL NAVY ENTERPRISE PROCESSES AND BEHAVIORSCRITICAL NAVY ENTERPRISE PROCESSES AND BEHAVIORS

1. Identify Domains and assign Single Process Owners.

2. Assemble the right Enterprise teams and gain commitment .

3. Operate in support of a Single Fleet-Driven Metric (what the Enterprise values).

Agreement on scope, outputs, and linked metrics

Transparency of data to promote trust and monitor performance

Shared knowledge on issues and key problems affecting the Domain

Recognize, nurture and respect technical authority

Identified entitlements (what’s needed, when, how much, and no more)

4. Agree on desired output (e.g., Readiness over Cost), with focus/ trade-space involving current and future readiness.

5. Operate with discipline, governance, and a regular (timely) drumbeat.

6. Baseline every dollar, all the people, all the stuff, and all the capability within the domain, with assigned accountability for outcomes.

7. Establish entitlements. Continually measure gaps-to-entitlement.

8. Remove barriers to productivity.

FLEET-WIDE VISIBILITY

72%

76%

80%

84%

88%

Nov

-02

Dec

-02

Jan-

03

Feb

-03

Mar

-03

Apr

-03

May

-03

Jun-

03

Jul-0

3

Aug

-03

Sep

-03

Oct

-03

Nov

-03

Dec

-03

Jan-

04

Feb

-04

Mar

-04

Apr

-04

May

-04

Jun-

04

Jul-0

4

Aug

-04

Sep

-04

Oct

-04

Nov

-04

Dec

-04

RFT- ALLNAV Linear (RFT- ALLNAV)

AVAILABILITY

OUTER WING PANELS. DEPOT REPAIR, EXPECT HEALTHY BY AUG05 SYSTEM CONFIGURATION, A/C DISTRIBUTION

EA-6BP-3

< 70%

NMCM (S). ACFT INVENTORY.PROP MOD. RFT POLICY CHANGE IN WORK.

SH-60BE-2

70%-89%

F-14, F/A-18, S-3, SH-60F/H, C-2> 90 %

M&SCM IMPACTING RFTPLATFORMRFT %

READINESS . . . SLOWLY INCREASING

-100

-50

0

50

100

150

200

250

J F M A M J J A S O N D J F

Squ

adro

ns

In Limits 20% 30%

READINESSFLIGHT HOUR PROGRAM

OVERARCHING READINESS AND SUSTAINMENT CONCEPT

• Balance Capability and Availability @ Reduced Cost(Fleet Driven Metric)

• Supporting MetricsInventory (People and Stuff)ReliabilityCycle Time Reduction$$ Total Cost (All Financial Stovepipes)

• 10 Integrated Logistics Support Elements (Where all the cost is borne)

CONCEPT COMPARISONLegacy Concept

• Centralized Approach

• More Work / Fewer Places Is Better

• Expand Capacity

• Functionally Stove-piped

• Supply Push Model

• Inventory Oriented

• Result: Cost Neutral

Future Concept

• Fleet Driven - Enterprise Controlled

• Work Required Where It Makes Best Business Sense

• Continuous Improving and Synchronous (Lean)

• Fully Integrated – End To End• Demand Pull Model• Readiness Oriented• Result: Managed Cost and

Personnel Reductions

We Take Advantage Of Lean At The Nodes, And Take Advantage Of Cycle Time Reduction, Across The Enterprise To Take Greater Advantage of Continuous Reductions In People and Parts

While Only Producing the Required Readiness – AND NO MORE