Rick Nelson Director, Raytheon Missile Systems

Lean at Raytheon Missile Systems

RMN – RickDallas Page 2

Raytheon Government and Defense Businesses

Raytheon CompanyBill Swanson

Chairman and CEO

Missile Systems

Space & Airborne Systems

Integrated Defense Systems

Network Centric

Systems

Intelligence & Information

Systems

Raytheon Technical Services Company

RMN – RickDallas Page 3

Raytheon Missile Systems – Who We Are• 2003 sales: $3.5 billion• 11,000 employees • Headquartered in Tucson, Arizona• World’s largest developer, producer

and integrator of weapon systems– 43% of domestic market; 23% int’l– >1 million missiles produced since 1954

• Broad weapons portfolio– Missiles, Smart munitions, Projectiles,

Kinetic kill vehicles, Directed energy weapons

• Customers: all U.S. military services; Allied Forces of more than 40 countries

• Production business is a mix of new manufacture, re-manufacture, and repair– Twenty three production centers– IAM represented workforce

Firmly positioned as missile industry leader

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The RMS Journey

1994 1995 1996 1997 1998

Engineering Engineering Relocation Relocation to Tucsonto Tucson

Navy BestNavy BestPracticesPractices

Process Process Improvement Improvement PartnershipPartnership

• STRATEGICALLY ALIGNED• TEAM BASED

• VALUED AND INNOVATIVE WORK FORCE• A CULTURE OF LEARNING

• STANDARDIZED PROCESSES AND TOOLS

ACHIEVE 100% ONCOST, QUALITY AND

DELIVERY

• MEASUREMENT & FOCUS• COMMITMENTS• COMMUNICATION• RESPONSIVENESS

• INVOLVEMENT

IMPROVE CYCLE TIMEON OUR PROCESSES

BY 2X PER YEAR

• INTEGRATED PRODUCT DEVELOPMENT DEPLOYMENT

• AGILE MANUFACTURING• BUSINESS PROCESS

MODERNIZATION• ACQUISITION REFORM

REDUCE DEFECTS2X PER YEAR

• PROCESS MANAGEMENT

• ISO 9001• SIX SIGMA DESIGN• KNOWLEDGE

CENTER

QUARTERLYASSESSMENT OFEFFECTIVENESS

• COMMUNICATION• RECOGNITION• TRAINING• WORKFORCE DIVERSITY• CAREER DEVELOPMENT• UNION/MGMT PARTNERSHIP• HMSC LIVE

100% ACHIEVEMENTON OUR

COMMITMENTS

• SALES• RONA

• EARNINGS• WORKING CAPITAL

IMPROVEMENT• NEW ORDERS

CHANGE PROCESS

CUSTOMERSATISFACTION COMPETITIVENESS QUALITY

PEOPLEDEVELOPMENT

FINANCIALPERFORMANCE

• VISION EMBRACED BY ALL EMPLOYEES• FOCUS ON PEOPLE DEVELOPMENT• EFFECTIVE COMMUNICATION

• CONTINUOUS PERFORMANCE MEASUREMENT• LEADERSHIP THAT “WALKS THE TALK”

WORLD CLASS IN MISSILE SYSTEMS• #1 IN MARKET SHARE• LEADER IN FINANCIAL PERFORMANCE

Visioning TeamVisioning TeamFactory Factory

Agilization Agilization ProjectsProjects

Best Plant Best Plant AwardAward

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The RMS Journey

1999 2000 2001 2002 2003

Leveraging AcademiaLeveraging Academia

Plant Plant ConsolidationConsolidation

Leadership TrainingLeadership Training

Industry Industry BenchmarkingBenchmarking

AdvancedManufacturingDevelopmentCenter

Affordable Multi-Missile Affordable Multi-Missile Manufacturing ProgramManufacturing Program

ShingoShingoApplicationApplication

LeanLeanEnterprisEnterpris

ee

Supply Supply Chain Chain AwardAward

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Our Future State

standardization

common

lean

flexible work force

Affordable

highly trained

errors are detected immediately

continuous improvement

Effective

tools offer quick feedback

increasing throughput velocity

Quickmaterial is pulled rapidly

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The Manufacturing Excellence Model

• Developed a roadmap with a competency model architecture… leveraged from other models (LAI-LESAT,CMMI)

• Focus on twenty key elements… fourteen on the manufacturing business cycle and six on organizational foundation

• Designed to foster knowledge

sharing and provide a con-

sistent assessment

criteria– Elements define “well

run operation”

– Organized as roadmap (#1 thru 20)

– Emphasis on lean and customer

RMN – RickDallas Page 8

Lean Maturity Models

Traditional companyTraditional company

““Wanting to be lean”Wanting to be lean”

““Trying to be lean”Trying to be lean”

““Being lean”Being lean”

““The best there is”The best there is”

Level 5 is our vision broken down into twenty key elements

Quantitative element & level descriptions support measurement systemQuantitative element & level descriptions support measurement system

RMN – RickDallas Page 9

Implemented through a network

• A cadre of senior leaders (70) have been engaged across twenty-three (23) missile systems factories… three to each operation– Operations, Support Engineering, Supply Chain

– Quality Managers and R6s Lead Experts

• Embedded leadership driving for change– Learn, then teach elements and model behavior

• Consultant role: shared accountability with operations leader for improvement– Benchmark assessments and follow-up

– Best practice harvesting

– Organizational learning and development

– Team and individual development Organizational leaders Organizational leaders as consultantsas consultants

Organizational leaders Organizational leaders as consultantsas consultants

EKV Ops MgrEKV Ops Mgr

Strike 6Strike 6 Lead Lead

Test Eng DirTest Eng Dir

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Improvement Accountability

• Driving improvement through common operational metrics– Excellence Score one of nine

common measures for each RMS factory

– Composite average of all 20 elements

– Reported monthly at management review

– Weighted equal with cost, schedule, and quality

Oregon Productivity Oregon Productivity Matrix sets the goalsMatrix sets the goals

Monthly Operations Review Monthly Operations Review tracks progress to goalstracks progress to goals

Goal: Improve 1 point per year across all Operations

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Raytheon Six Sigma

• Initiated as the corporate change engine in 1999

• Provides Master, Green, and Black-belt level employee training and certification

• Focuses on three key elements of improvement – culture, tools, customer

• Provides the resources that enable the improvements that close the gap to the desired state

Lean Ÿ Quality Ÿ Safety Ÿ Customer

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Aligning A Large Organization

OperationsOperations ProductProductLineLine

RMSRMS

FactoryFactory

Dual OrganizationalDual OrganizationalAccountabilityAccountability

Shared EnterpriseShared EnterpriseVisionVision

CommunicationCommunicationForumsForums

LeadershipLeadershipTrainingTraining

Monthly OperationsMonthly OperationsReviewsReviews

Annual RecognitionAnnual RecognitionFor Top PerformersFor Top Performers

Shared and Shared and Collaborative GoalsCollaborative Goals

Common MetricsCommon Metrics

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1.30

1.03

145%

97%

Weighted Score

STRIKETomahawkTomahawkPavewayPavewayJ SOWJ SOWHARMHARMMaverickMaverickACMACM

Strike Customer Focus MetricsCurrent As Of October 30, 2003

0.85

0.90

0.951.00

1.20

1.40

1.600.85

0.90

0.951.00

1.20

1.40

1.60

SPI

0.80

0.85

0.900.95

1.00

1.05

1.100.80

0.85

0.900.95

1.00

1.05

1.10

CPI

40%

60%

80%100%

120%

140%

160%40%

60%

80%100%

120%

140%

160%

Bookings

76%

80%

84%88%

92%

96%

100%76%

80%

84%88%

92%

96%

100%

MOCAS

5%

0%

71%

5%

19%

Program Indicator (CPARs)Business Review

Processes

• MetricsMetrics• Management Management

engagementengagement• Customer Customer

satisfactionsatisfaction

Our “Systems Approach” To Improvement

CustomerFocused

Marketing

• PerformancePerformance• RelationshipsRelationships• SolutionsSolutions

Integrated Product Development System

• ProcessProcess• PlanningPlanning• Risk ManagementRisk Management

RMSPrinciples of

Manufacturing• LeanLean• SpeedSpeed• FlexibilityFlexibility

RMSManufacturing

ExcellenceModel

RMN – RickDallas Page 14

Manufacturing Excellence Model Lessons Learned

• Leadership must be committed and have a vision of the future

• The model must be your own… built around your own culture of change

• Apply a whole systems approach… aligning initiatives and infrastructure

• The model must be flexible, and rigid, to accommodate both the similarities and differences in the organizations

• The “must have’s” need to be defined (i.e. scoring system, run rules, focus areas)

• Mature the model as your organization matures