Impact and Value of Lean Six Sigma in Transactional Processes
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Impact and Value of Lean Six Sigma in Transactional Processes

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  • Our customers are government agencies that require advanced technology and systems integration to perform under the most demanding of circumstances to accomplish critically important missions.
  • As a result of the acquisitions of OAO and ACS, Lockheed Martin has grown to more than 130,000 strong (estimate 143,000 at the close of the Titan deal). We employee more than 55,000 scientists and engineers, and 30,000 of these are IT, software, and systems engineers, more than the number employed by Microsoft. Six of our companies have been rated at CMMI (Capability Maturity Model Integration) level-5 or level-4. We have 939 facilities in 457 cities and 45 states throughout the U.S.; Internationally, business locations in 56 nations and territories.
  • Last year I showed you that LM was a $27B enterprise. Out focus on excellence has allowed us to grow to $31B – won JSF and xxx, we have generated cash at $1.5B per year which has allowed us to acquire business in Govt IT, increase our dividend, buy back shares, invest in IRAD and LM21 and reduce our Debt. The starting point of all that good stuff is the reduced need for capital, labor and materials by the application of lean and six sigma thinking.
  • Key Points: You are not alone . There is a Corporate LM21 Program Office with resources to help you. There are also Points of Contact at your Site available to provide support to your LM21 activities. Exercise: Give teams/tables 10 minutes to fill in the blanks on this page and the following page Subject Matter Experts LM21 "SMEs" are Lockheed Martin employees designated as leaders in their field and have been competitively selected to a 2 year leadership-development position. This list provides direct access to the SMEs for any questions/issues concerning their specific subject. Specific example reasons for contacting an SME include: Help with facilitating events (kaizens, value stream mapping, etc...) Help with structuring/refining site/program Operating Excellence deployment plans Help with finding out if someone else within LM (or externally) has solved a lean/six sigma problem that you are dealing with Finding the right external consultant to help you with your deployment issues (currently this is funded out of corporation)
  • Review the responsibilities of Black belts compared to other levels.
  • Developing critical mass of knowledge across the corporation. Participation at all sites
  • Key Points: Remember that both yellow and red are waste and absolute differentiation between the two is not critical The definition of value added is from the perspective of the customer and the customer would be willing to pay twice as much if we did it twice as often When identifying waste, remember to focus on the activities, not the people in the process.
  • The existing process was understood and mapped. Process was analyzed and tasks were moved or reassigned to create a more efficient flow.
  • Same methodology was applied to the change process and was used to evaluate the initial release process.
  • Multi-functional simulation was performed to validate the “To Be” process

Transcript

  • 1. Case Study Impact and Value of Lean Six Sigma in Transactional Processes By Dr. Andrew Parris Lockheed Martin SSC Atlas Program, Improvement Certified LM21 Black Belt
  • 2. Lockheed Martin: Redefining What Is Possible Persistent Surveillance Space Exploration Biometrics Information Fusion Hypersonics A Passion for Invention FUSION Unmanned and Autonomous Systems
  • 3. Our Customers
    • Departments of:
      • Defense
      • Homeland Security
      • Commerce
      • Energy
      • Health & Human Services
      • Housing & Urban Development
      • Justice
      • State
      • Transportation
    • NASA
    • Social Security Administration
    • Environmental Protection Agency
    • U.S. Postal Service
    • Foreign Governments
  • 4. Who We Are
    • Lockheed Martin Corporation…
    • Transmits More Bits of Data Daily Than All U.S. Cable Companies Combined
    • Employs More Software Engineers Than Microsoft
    • Has Delivered More Than 4,000 F-16 Fighters to Customers Worldwide
  • 5. The Men and Women of Lockheed Martin Partners to Help Customers Meet Their Defining Moments
    • 132,500 Employees
    • 55,000 Scientists and Engineers
    • 30,000 Software and Systems Engineers
    • 6 CMMI Level-5 and Level-4 Companies
    • Operations in 45 States and 56 Countries
    5380X.PPT AFM 12/01/2003
  • 6. $32B 2003 Sales 135,000 Employees $5.8B Aeronautics $9.8B $3.2B Integrated Systems and Solutions $3.2B Electronic Systems $9.0B Space Systems Technology Services
  • 7. Advanced TechnologyCenter Missile Defense Systems Commercial Space Launch Systems NASA Space Systems Company                                                                                                                                                             
  • 8. Space Systems Satellites GPS IIR GPS IIR MILSTAR MILSTAR Advanced EHF Advanced EHF SBIRS SBIRS Commercial Remote Commercial Remote Sensing Sensing Telecommunications Telecommunications 2001 Mars Odyssey 2001 Mars Odyssey
  • 9. LM21 Organization
    • LM21 Operating Excellence Corporate Office
      • Mike Joyce, Corporate Vice President
      • Responsible for strategic planning, design, and deployment of LM21 Operating Excellence throughout Corporation
    • Lead Subject Matter Experts (SMEs)
      • LM employees designated as leaders in their field and competitively selected for a 2 year leadership development assignment
        • Internal consultants for Operating Excellence site/program deployments
        • Experts on LM21 tool-set
        • Leverage outside resources
  • 10. LM21 Training Roles Green Belt Black Belt Master Black Belt Who What Level 1 Level 3 Change Agents All Audiences (100%) (100%) (10-50%) (1-1.5%) (.05%) Population Targets All Audiences Executive Management LM21 2 day Leadership Trng. Mid Level Management
    • Learning Principles & applying some tools to a simulation project
    • Able to support and sponsor efforts of teams working to improve a process
    (50%) Participates on improvement projects and are part-time leaders of simple projects/kaizens as part of their job
    • Applying Principles and tools for application in a project
    • Able to lead team in closely scoped sub-project/kaizen
    Leaders of improvement events, projects and teams recommended as full time dedication
    • Knows and applies methods/ principles & can implement in various business processes
    • Able to lead teams and mentor/train Green Belts/ Kaizen coaches
    • Provides training
    Full-time leader that provides training, mentoring and business-wide leadership for improvement activities.
    • Knows methods/ principles & can apply anywhere
    • Able to lead teams, mentor/train Black Belts and advise senior leaders in the competency of continuous improvement
    Level 2 All employees, contractors, suppliers, etc.
    • Learning Principles
    • Recognize waste & be able to question sub-optimal processes and initiate improvement
    General Awareness Web Based Upper Level Management
    • Learning Principles & applying some tools to a “Just Do It” project
    • Able to support and champion efforts of teams working to improve a process
    LM 21 Leadership Training
  • 11. LM21 Operating Excellence Developing Critical Mass of Expertise Actual Plan Expertise and Involvement Imbedded into LM Culture so it Becomes The Rhythm of the Business 0 15,000 30,000 45,000 60,000 00 01 02 03 04 0 10 20 00 01 02 03 04 0 5,000 10,000 00 01 02 03 04 Corporate Experts (SME’s) Leadership Training Implementation Participants 0 1,000 2,000 3,000 00 01 02 03 04 Black Belts
  • 12. LM21 Utilizes Both Lean and Six Sigma Repeatability Reduce Steps/Parts Reduce Defects/Variability Six Sigma Lean (Distribution Shifted +/- 1.5  ) Flow Velocity Lean processes operating at Six Sigma capability # of Process Steps         1 93.32% 99.38% 99.98% 99.999% 7 61.63% 95.73% 99.84% 99.998% 10 50.08% 93.96% 99.77% 99.997% 40 25.08% 77.94% 99.07% 99.986% 100 0.10% 53.64% 97.70% 99.966% 300 - - - 15.43% 93.26% 99.898% 700 - - - 1.28% 84.97% 99.762% 1000 - - - 0.20% 79.24% 99.661% 3000 - - - - - - 50.15% 98.985% 38000 - - - - - - 0.01% 87.880% “ Move North East” LM21 Operating Excellence
  • 13. A Philosophy to maximize producibility and customer value by Specifying Value from the Customer’s Perspective, Analyzing the Value Stream, Adding Flow & Pull and Striving for Perfection Lean/Six Sigma Operating Excellence Operating Excellence LM21 8 Step Process
    • Events to make incremental improvements in manufacturing or transactional processes.
    • Removes waste
    • Reduces cycle time 20 – 60%
    • Applies to all aspects of the business
    Kaizens
    • Lean/Six Sigma Projects
    • Increasing capability with a Black Belt-led team using Quality tools to Define, Measure, Analyze, Improve and Control.
    • Improves yields from 3.5  to 4.5-5 
    • Reactive by nature
    • Applies to all aspects of the business
    • Pre-design Kaizens
    • Events to increase producibility and ensure hardware designs support lean production methods.
    • Required to support lean factory
    • Proactive by nature
    • Applies to product design
    • Design for Six Sigma Process
    • A design approach that optimizes performance and cost while maximizing yield during the design of the hardware
    • Required to improve yields beyond 4.5 
    • Required to meet high system yields
    • Proactive by nature
    • Applies to product design
  • 14. Implement & Validate Implement & Validate Identify & Prioritize Opportunities Identify & Prioritize Opportunities Project Definition Project Definition Document & Measure Current Reality Document & Measure Current Reality Communicate & Acknowledge Success Communicate & Acknowledge Success Measure & Sustain Measure & Sustain Optimize Flow & Reduce Friction Optimize Flow & Reduce Friction Analyze & ID Waste Analyze & ID Waste 1 2 3 4 5 6 7 8 Excellence Excellence LM21 Path To Excellence Lean processes operating at Six Sigma capability
  • 15. Roadmap Value Stream Analysis Value Stream Map Kaizen PDK Project Instant Fix Events Projects Do-Its EVENT TOPIC EVENT TOPIC PRO- JECT PRO- JECT ACTION ITEM EVENT TOPIC EVENT TOPIC PRO- JECT PRO- JECT ACTION ITEM EVENT TOPIC EVENT TOPIC PRO- JECT ACTION ITEM ACTION ITEM ACTION ITEM
  • 16. 30 36 42 48 54 Months for Scope 60 Design & Build RDL Harlingen HIBAY INV PLF MFG Harlingen HIBAY INV PLF MFG San Diego TAB Cape Canaveral LC41 VIF Astrotech ITO Whse ASOC ASOC E&A Hangar K Denver LaBarge Berryville, AK 19 25 10 44 39 Deer Creek FAB INV FAB INV EMF SSB EMF SSB VTF VTF ENG TSB PTF GPL F San Diego RDL Harlingen HIBAY INV PLF MFG Harlingen HIBAY INV PLF MFG San Diego TAB Cape Canaveral LC41 VIF Astrotech ITO Whse ASOC ASOC E&A Hangar K Denver LaBarge Berryville, AK 19 25 10 44 39 Deer Creek FAB INV FAB INV EMF SSB EMF SSB VTF VTF ENG TSB PTF GPL F San Diego Sample Current State Value Stream Map Sample Current State Physical Map Atlas Value Stream Analysis (VSA) Value Stream Analysis Revealed Significant Opportunity Improvement Opportunities Work fragmentation Multiple hand offs High volume of change traffic Redundant processing and approvals Flexibility at a high cost Manual data processing Dispersed resources Long cycle times RDL Harlingen HIBAY INV PLF MFG Harlingen HIBAY INV PLF MFG San Diego TAB Cape Canaveral LC41 VIF Astrotech ITO Whse ASOC ASOC E&A Hangar K Denver LaBarge Berryville, AK 19 25 10 44 39 Deer Creek FAB INV FAB INV EMF SSB EMF SSB VTF VTF ENG TSB PTF GPL F San Diego Cape Canaveral Harlingen Denver Berryville, AK San Diego San Diego Cape Canaveral Cape Canaveral Harlingen Harlingen Denver Berryville, AK Berryville, AK 18 12 6 5 4 3 2 1 Customer Configuration Installation 24 30 36 42 48 54 Months for Scope 60 Design & Build 18 12 6 5 4 3 2 1 Customer Configuration Installation 24 Cape Canaveral Harlingen Denver Berryville, AK San Diego San Diego Cape Canaveral Cape Canaveral Harlingen Harlingen Denver Berryville, AK Berryville, AK 18 12 6 5 4 3 2 1 Customer Configuration Installation 24 30 36 42 48 54 Months for Scope 60 Design & Build 18 12 6 5 4 3 2 1 Customer Configuration Installation 24 Cape Canaveral Harlingen Denver Berryville, AK San Diego San Diego Cape Canaveral Cape Canaveral Harlingen Harlingen Denver Berryville, AK Berryville, AK 18 12 6 5 4 3 2 1 Customer Configuration Installation 24 30 36 42 48 54 Months for Scope 60 Design & Build 18 12 6 5 4 3 2 1 Customer Configuration Installation 24 30 36 42 48 54 Months for Scope 60 Design & Build
  • 17. Definitions: Value-added
    • Value-added Activities
        • Activities which, when asked, the customer is willing to pay twice as much if we did it twice as often and
        • Activities which change the form, fit or function of the product/service and
        • Activities done right the first time.
    • Non Value-added – Required Activities
        • Activities which may be necessary but the Customer will not pay you to do
        • cannot be eliminated (due to non-robustness of process) based on current state of technology
        • Required (regulatory, customer mandate, legal)
    • Non Value-added Activities
        • Activities that consume resources but create no value in the eyes of the customer
        • The customer is not willing to pay
        • Pure waste
  • 18. Examples of Transactional Process Improvement Events
  • 19. LM21 Operating Excellence Results: Business Processes Company Project Description $M Astronautics – Denver Overhead and G&A Restructure 79.0 Missiles & Fire Control SAP Phase I Implementation 2.7 Technology Services Airline Travel Discounts 5.0
  • 20. LM21 Operating Excellence Results: Design and Engineering Company Project Description $M EPI – Owego Integration Framework Architecture 16.1 Missiles & Space Standardized Systems Engr Process 23.0 Aeronautics Company F-22 Sustaining Engr Reduction 21.4
  • 21. New Drawing Release VSM ESTABLISH SIGNATURE REQUIREMENTS
    • CREATE ER
    • HP FILE
    • DNA INFO
    • BACKUP DATA
    • COMPONENTS DATA
    • PL
    CHECKING IN-BOX DETERMINE WHERE CHECKING WILL BE PERFORMED Approval Babysitting Obtain Approvals CHECKING CHECKING COORDINAES DIRECTLY WITH DESIGN OR ENGRG AIDE APPROVE? NO YES Promote Drawing to RELEASE Distribution DATA Start= End= Touch Time = .25 hrs Cycle Time= 2 Days Flow Time= Qty.= People= TOTAL Start= ECR received End= Released Engineering Touch Time = 29 hrs Cycle Time= 26 Days Flow Time= Qty.= People= DATA Start= End= Touch Time = 5 hrs Cycle Time= 2 Days Flow Time= Qty.= People= DATA Start= End= Touch Time = .5 hrs Cycle Time= 1 Days Flow Time= Qty.= People= DATA Start= End= Touch Time = 23 hrs Cycle Time= 20 Days Flow Time= Qty.= People= DATA Start= End= Touch Time = .1 hrs Cycle Time= 1 Days Flow Time= Qty.= People= Drawing Number to Design Requirement PLOT FILE REQUEST Notify ER Is Ready Send to Distribution To Be Reduced Handoffs & Redundant Efforts 33 Days 26 Days Design Engineering Receive HP file from Design INC Parts List Back-up Info Complete Components in DIACS? Approved for program? Enter Data From Drawing Number Assignment Form Transfer Data from PLIT to DIACS Load CADIM Drawing Mask Create ER Determine Where Checking Will Be Performed Priority / Order of Release Approval Babysitting Obtain Approvals CHECKING Determine Action. Re-Insert where Required. Coordinate with Checking (if required) APPROVE? NO YES Send to Release Office. Release Drawing Update Parts List Coordinate with Checking (if required) Distribution DATA Start= End= Touch Time = .25 hrs Cycle Time= 2 Days Flow Time= Qty.= People= DATA Start= End= Touch Time = 4 hrs Cycle Time= 2 Days Flow Time= Qty.= People= DATA Start= End= Touch Time = 1.2 hrs Cycle Time= 1 Days Flow Time= Qty.= People= DATA Start= End= Touch Time = 32 hrs Cycle Time= 25 Days Flow Time= Qty.= People= DATA Start= End= Touch Time = 1.5 hrs Cycle Time= 2 Days Flow Time= Qty.= People= TOTAL Start= ECR received End= Released Engineering Touch Time = 40 hrs Cycle Time= 33 Days Flow Time= Qty.= People= Establish Signature Requirements DATA Start= End= Touch Time = 1 hrs Cycle Time= 1 Days Flow Time= Qty.= People= Drawing Number to Design Requirement PLOT FILE REQUEST As Is Change Control Engineering Aides Savings Benefit of Work Scope Allocation – New Drawings • Assumptions • over 1000 Drawings per Year • Benefits • Liaison Engineering • 4.4 Hrs/ Drwg * Drwgs /Yr • Checking • 4.0 Hrs/ Drwg * Drwgs /Yr • Release/Engineering Aides • 2.7 Hrs/ Drwg * Drwgs /Yr • Total Yearly Benefit: over $ 1M
  • 22.
    • Cycle Time Reduction – 23%
    • Cycle Time Reduction – 8.5 days (37.5 days to 29 days)
    • Reduced Tech Ops Labor – 4 hours
    • Reallocated effort from engineers to aides – 1.5 hours
    • Projected Total Tech Ops Labor Savings – over $1M/ year
    Engineering Change VSM As-Is: To-Be: Reduced Handoffs & Redundant Efforts 37 1/2 Days 29 Days Design Engineering Engineering Change Control Product Data Control Engineering Aides Integrated Product Teams
  • 23. Cross Functional Coordination and Buy-in Achieved Through a Process Simulation Event
    • Design
      • Frank Delisi
      • Ed Booth
    • Prod Ops / Mfg Engr
      • Franz Budel
    • Quality
      • Joe Chenette
    • Checking
      • David Brockman
    • PP&C
      • Susan Granacki
    • Program Management/IPT
      • Al Davidoff
    Each step of the new process was walked through in a simulated manner by a representative SME to ensure all procedural details were effectively addressed
    • Procurement
      • Don Hallum
      • Ted McAfee
      • Jeff Burnett
      • Bobby Thompson
      • Pat Jackson
    • PDC
      • Bill Richardson
      • Tanne Steen
      • Rebecca Jaster
    • Liaison
      • Al Mendez
      • Peter DePaiva
      • Nathan Smith
        Process Validated Quality Matl Acq & Mgt Prod Ops Tech Ops
  • 24. And the Results are In…
    • “ Lockheed Martin is one of nine Fortune 100 companies that have had a positive trend three years in a row (increased productivity), only one of the nine in Aerospace industry – 11% from 2001-2002 .”
    • Del Jones and Barbara Hansen. USA TODAY. McLean, Va.: Aug 13, 2003.  pg. B.01
  • 25. Questions? E-mail: [email_address] Phone: 303-971-7670 Mail: Lockheed Martin Space Systems Company M/S F9902 P O Box 179 Denver CO 80201-0179