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Building Lean Supply Chains


                    Lean Shipbuilding & Repair Forum 3
                    Tom Phelps, Altar...
Why Lean Supply Chains?

       A supply chain is a complex system
       The lean philosophy focuses on performance
     ...
Example System: F/A-18 E/F Nose Landing Gear

                                                  Drag
   Retraction        ...
SCVSM Project Team




          Teri Hoenes, Boeing     Mike Smith, Messier-Dowty
Lean Forum 3 2004                      ...
Define Supply Chain

       Select target component
         – First-tier supplier willingness to play
                • S...
Compare: Shipbuilding Supply Chain


                                          Northrop Grumman
                          ...
Building a Value Stream Map

       Develop the value stream map by walking the process
         – Designate one person to...
Top-Level Macro-VSM


                 Built from condensed versions of individual value stream
                 maps
    ...
Macro Timeline Chart

          Shows:
            – What time is spent where and proportion of that time the
            ...
Timeline View Up Close

                    Value-added
                     proportion



                               ...
Example Top-Level View – Future State


                                                                                  ...
Additional Activities

                   Other cost and lead-time reduction activities spawned
                   by the ...
Broad Supply Chain Benefits

       Greater understanding by all parties of each others’ strengths and
       opportunitie...
Air Force Repair Supply Chain


                                                                       Information &
     ...
Lean Supply Chains in Shipbuilding

       Lean supply chain approach is general
         – Not limited to aerospace, new ...
Building Lean Supply Chains


Tom Phelps                          Teri Hoenes
734-302-4650                        314-504-...
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Building Lean Supply Chains

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Transcript of "Building Lean Supply Chains"

  1. 1. Building Lean Supply Chains Lean Shipbuilding & Repair Forum 3 Tom Phelps, Altarum Teri Hoenes, Boeing Integrated Defense Systems May 12, 2004 www.altarum.org Presentation Topics Lean supply chain concept The process and methods – Illustrated by new construction example – Overview of repair example Closing thoughts Lean Forum 3 2004 2 1
  2. 2. 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 3 Lean Supply Chain Concept Information Flow Boundary Supplier 2nd Tier Supplier 1st Tier Supplier Prime Contractor O g O Pl O Pl ng ng rd la in r d an rd a & er nn as & & si si Order Entry & er n e r nn P ha ha En ing h En ing En ing rc Planning rc rc tr Pu tr tr y Pu Pu y y Manufacturing Manufacturing Manufacturing Manufacturing Material Flow Could be major system Orders/Releases Materials & Parts supplier, repair Internal Requisitions/Orders center, or ship Prime to Prime Flow Apply lean methods to supply chain as a system Lean Forum 3 2004 4 2
  3. 3. Example System: F/A-18 E/F Nose Landing Gear Drag Retraction Brace Actuator Shock Strut Lean Forum 3 2004 5 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 Lean Forum 3 2004 6 3
  4. 4. SCVSM Project Team Teri Hoenes, Boeing Mike Smith, Messier-Dowty Lean Forum 3 2004 7 Overall Process Define Supply Chain Assess Current State Develop Macro Future State Select Improvement Projects and Participants Implement Change Measure Improvement Lean Forum 3 2004 8 4
  5. 5. 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 9 Nose Gear Supply Chain Boeing (assembly) Messier-Dowty (assembly and machining) VacAero Cam-Tag Wyman Gordon S&L Aerospace (heat treatment) (machined parts) (forgings) (assembly and machining) Tecnickrome Carpenter Superior Plating (surface treatment) (specialty materials) (surface treatment) Lean Forum 3 2004 10 5
  6. 6. Compare: Shipbuilding Supply Chain Northrop Grumman 525 Navy Newport News Standard Valve From SPANS Supply Chain Dynamics Project SFC Valve Electroplater Forge Machine Shop Heat Treater (Steel Suppliers) Also similar to deck machinery, gearboxes, hydraulics Lean Forum 3 2004 11 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 Lean Forum 3 2004 12 6
  7. 7. 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 Lean Forum 3 2004 13 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 Lean Forum 3 2004 14 7
  8. 8. 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 Lean Forum 3 2004 15 Example Top Level View – Current State Messier- Dowty MRP Deliver y Schedul Carpenter e Technology I Boeing Batch Size: 1 Bldg 67 Ass le le Shifts: 3 du du dule he e he Lead Time: 57 days Sc mbly Sc che e ry liv g 1x gS rin Sch De De edule Sch tu Month turin ac live edu uf an ry fa c le M Batch: 1 Delivery nu Ma Time: 3 days Schedule Batch: 1 I I I I I Time: 1 day Wyman Messier Messier Boeing I Vac Aero Gordon 1x Dowty 1x 1x Dowty 1x Bldg 101 Month Day Day Week Batch Size: 4 Batch Size: 2 Batch Size: 2 Batch Size: 2 Batch Size: 1 Batch: 4 Batch: 2 Batch: 2 Batch: 1 Shifts: 2-3 Shifts: 1-3 Shifts: 1-2 Shifts: 1-3 Shifts: 1 Time: 2 days Time: 1 day Time: 1 day Time: 2 days Lead Time: 13 days Lead Time: 13 days Lead Time: 9 days Lead Time: 61 days Lead Time: 52 days Lean Forum 3 2004 16 8
  9. 9. 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 Lean Forum 3 2004 17 Example Timeline View Long business Long final process up front assembly Parts manufactured in parallel on common timeline Rows sometimes called “swim lanes” Next slide Typical batch size Critical Path Obvious Long raw material procurement Lean Forum 3 2004 18 9
  10. 10. Timeline View Up Close Value-added proportion Chain- Shipping appropriate time time scale Unusual shipping Candidate for Push improvement arrow 4 Unusual ship quantity Unmapped processes Lean Forum 3 2004 19 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 Lean Forum 3 2004 20 10
  11. 11. Example Top-Level View – Future State Messier-Dowty Monthly Forecast Production Monthly Forecast Boeing Carpenter Control Bldg 67 Technology t as ast Batch Size: 1 ec or c Shifts: 3 yF Fore l 57 Lead Time: 40 days th min/max on M ly Month Weekly Ship qty: 1 Time: 1 day Ship qty: 1 Wyman Messier Vac Messier Boeing I Time: 2 days Gordon Dowty Aero Dowty Bldg 101 Batch Size: 4 Batch Size: 2 Ship qty: 2 Batch Size: 2 Ship qty: 2 Batch Size: 2 Batch Size: 1 Batch: 1 Shifts: 2-3 Ship qty.: 2 Shifts: 1-3 Time: 1 day Shifts: 1-2 Time: 1 day Shifts: 1-3 Shifts: 1 Time: 2 days Lead Time: 13 days Time: 2 days Lead Time: 10 days Lead Time: 5 days Lead Time: 61 days Lead Time: 52 days Lean Forum 3 2004 21 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. Lean Forum 3 2004 22 11
  12. 12. 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 Lean Forum 3 2004 23 Nose Gear Supply Chain Improvements 19% Reduction Wyman- Supply chain inventory reduced 2500000 Inventory $$'s Gordon • Sum across chain = 19% 2000000 S&L • Greater savings to come as 1500000 Cam-Tag more changes implemented and 1000000 Messier- inventory bleeds off Dowty 500000 Boeing 0 3rd Qtr. 3rd Qtr. Supply Chain Leadtime Tecnickrome 02 03 Superior 600 Projected Quarter 45% Carpenter 500 Reduction S&L Wyman- 400 Overall lead time has reached 48 Gordon Days Cam-Tag week goal (from 62 weeks) 300 Vac-Aero Messier- 200 Lead time reductions off critical path Dow ty Boeing 100 • reduce costs • improve quality 0 3rd Qtr. '02 3rd Qtr. '03 • prevent new critical path Projection Lean Forum 3 2004 24 12
  13. 13. 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” Lean Forum 3 2004 25 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 Lean Forum 3 2004 26 13
  14. 14. Air Force Repair Supply Chain Information & Carcass Flow Warehouse Repair Shop Warehouse Fighter Wing O g O Pl O Pl O Pl ng ng rd lan g in rd an rd an & r d an in er n s & & si si & er n er n P ha er n s ha ha En ing ha En ing En ing En ing rc rc rc tr rc Pu tr tr tr y Pu Pu Pu y y y Removal & Storage Repair Storage Installation Serviceable Unit & Information Flow Orders/Releases Materials & Parts Internal Requisitions/Orders Flightline to Flightline Flow Lean Forum 3 2004 27 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” Lean Forum 3 2004 28 14
  15. 15. 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 Lean Forum 3 2004 29 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 Lean Forum 3 2004 30 15
  16. 16. Building Lean Supply Chains Tom Phelps Teri Hoenes 734-302-4650 314-504-8419 tom.phelps@altarum.org teri.l.hoenes@boeing.com www.altarum.org www.boeing.com www.altarum.org 16

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