building lean supply chains
DESCRIPTION
TRANSCRIPT
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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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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.
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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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Example System: F/A-18 E/F Nose Landing Gear
Retraction Actuator
Shock Strut
Drag Brace
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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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SCVSM Project Team
Teri Hoenes, Boeing Mike Smith, Messier-Dowty
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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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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
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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
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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
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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
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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
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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
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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
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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
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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”
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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
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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
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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