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Lean Manufacturing Practices in the Defense Aircraft Industry

by John Christian Hoppes

B.S. Mechanical EngineeringThe Pennsylvania State University, 1989

Submitted to the Sloan School of Management in Partial Fulfillmentof the Requirements for the Degree of

MASTER OF SCIENCE IN MANAGEMENT

at the

Massachusetts Institute of Technology

May 1995

1995 Massachusetts Institute of TechnologyAll rights reserved.

Signature of author ___________ May 12, 1995

Certified by Dr. Stephen Graves

MIT Sloan School of ManagementThesis Supervisor

Certified by ___________ Professor Stanley I. Weiss

Department of Aeronautics and AstronauticsThesis Reader

Accepted by _____________ Jeff A. Barks

Associate Dean, MIT Sloan School of Management

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Lean Manufacturing Practices in the Defense Aircraft Industry

by John Christian Hoppes

Submitted to the Sloan School of Management on May 12, 1995 in the partial fulfillmentof the requirements for the degree ofMaster of Science in Management

Abstract

The defense aircraft industry has changed significantly over the last few years. Companies withinthe industry are under increasing pressure to provide a smaller volume of lower priced aircraft. TheLean Aircraft Initiative was formed to help the industry meet these challenges by shifting fromwhat has been cited as “craft production with mass production mentality” to lean productionpractices.

The following thesis is comprised of five case studies of specific factory operations within portionsof five different companies in the airframe, avionics / electronics, and engine sectors of the defenseaircraft industry. The studies examine the companies’ implementation of lean practices, and detailthe features, enablers, and benefits of these practices. The cases deal with three practice categories:variability reduction, process improvements, and process flow optimization.

The case studies show that the use of lean practices helped the firms:• improve product fit and quality• reduce assembly tooling• empower their workforce to make improvements• eliminate nonvalue-added processing steps, reducing production labor hours• reduce shop cycle times• reduce work in process levels• shift from discontinuous to continuous (and even pull) production flow• and reduce production floor space.

Examples of results experienced by some of the production areas in the cases include:• a reduction of 83% in throughput time and 94% in work in process levels after a restructuring

activity• a reduction in average setup time by 84% after focusing on waste elimination• a reduction in defects per million opportunities quality level of 67% over a seven month period,

by cross training employees and focusing them on making improvements• and an elimination of production tooling by replacing it with inexpensive soft tooling and

fixtures through the use of precision assembly.

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As a result of their efforts, the companies discussed in this thesis have improved their competitiveposition and their ability to meet the challenges of a rapidly changing industry.

Thesis Supervisor: Dr. Steven C. Graves, Sloan School of Management

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Acknowledgments

First and foremost, I would like to thank my wife Angela. Angela, I truly appreciate all of thenights you spent home alone, all of the trips to the airport, and all of the days you spent byyourself, as I typed feverishly at the computer. Without your support and assistance, I could nothave completed a thesis of this size.

Tom Shields was also an important factor in the completion of this thesis. Tom was instrumental inestablishing contact with the case study companies, analyzing the firms we visited, and givingfeedback to my many rough drafts. Using Tom’s own terminology, I would consider him to be akey enabler to the writing of this thesis. Thanks for all of your help, Tom!

I would also like to thank MIT professors Steve Graves, Stan Weiss, and Jan Klein. Their reviewof the case studies and their insightful feedback helped set direction for this thesis.

A Thank You to the Case Study Companiesin order of our visits

Rockwell Tulsa

An especially large thank you goes out to Jim Struss for being the main driver in helping usunderstand the benefits and implementation of precision assembly. Special thanks also to CynthiaBarnett for all of her help. Jim and Cynthia spent a significant amount of time in making sure theprecision assembly story was captured.

I would also like to thank: Bob Emanuel, Andy Dunn, Brian Skelton, Mike Roach, Scott Herzog,Phil Gartside, and Bob Alsup (McAlester Facility).

Finally, I would like to thank all of the fine operators and engineers in the 777 floor beam fab, 777floor beam assembly, 747 beam assembly, and McAlester facilities that gave us tours and providedthe answers to many of our questions (especially Don Hendricks and Tom Collins).

Lockheed Marietta

A special thank you goes out to Don Meadows, for providing stacks of information and severalenlightening conversations about the lean concept. Thanks also goes to Don for all of the help hehas given the Factory Operations group of the LAI and for being one of the key drivers behindMarietta’s Lean Enterprise.I would also like to thank John Kaylor, Chet Richards, Ken Moody, Pat Dishardon, and TomMerritt for taking their valuable time to share their experiences with us.

Martin Marietta Orlando (MEC)

Thanks goes out to George Alexander, Ken Brown, and Charles Hardin for their willingness tofrankly discuss their barriers and gains in overcoming a tough production shut down and startup.

I would also like to give special thanks to my two key contacts, Joe Agosta and Don Williams,along with the rest of the Martin team that provided a wealth of information: Bob Chandler, LyndaKoerber, Tom Tomlinson (and his staff), Margaret Sasser, Carole Amy, Karen Nahikian, Emma,and Nadine. Additional thanks goes out to the rest of the MEC production staff and especially theWafer Fab PMT, for helping us understand that teamwork and operator input is an important partof continuous improvement.

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Texas Instruments McKinney Board Shop

I would especially like to thank Andy Hughes for his hospitality and eagerness in sharingimportant data related to the MBS’s transformation into a continuous flow cellular shop.

Special thanks goes out to Keith Novakovich for his important and insightful input. I would alsolike to thank Jim Swan, Jeff Koon, Mike Boss, Doug Jones, Fernando Vilarreal, Karen Page, andDaphina and Faye, along with the other board area team members that helped us understand thechange process at the MBS. You all have a lot to be proud of!

Pratt & Whitney East Hartford

Thanks to Mike Gorman and Joe Murli for their insight into a company making rapid changes.Their openness was instrumental in capturing the essence of the General Machining transformationstory.

Special thanks goes to Bob Jackson, Hoyt Willis, Marty Hastings, Mark Thurman, Jim Connolly,Eric Albetski, Jim Griffith, Tim Jubach, and Lloyd Tirey for their frank and honest portrayal of theimprovement process in the General Machining area. I would also like to thank: Lloyd Eurto indepartment 106 and Karl in the chemical treat area for their enthusiastic tours of their departments.

All of these individuals, along with their coworkers and employees across the aircraft defenseindustry are (and will continue to be) the largest single factor in the future success of the industry.

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Table of Contents

Page

List of Acronyms 9

Chapter 1 Introduction 1 01.1 Purpose of Case Studies and Thesis 111.2 Changes in the Defense Aircraft Industry 111.3 The Lean Concept 12

1.4 The Lean Aircraft Initiative 141.5 Introduction to the Case Studies 14

SECTION 1 Process Variability Reduction 1 6

Chapter 2 Case Study: Precision Assembly in Floor Beam ManufacturingRockwell International Aircraft Division, Tulsa, Oklahoma 1 72.1 747 Floor Beam Assembly 182.2 The Shift to Precision Assembly - The Boeing 777 Floor Beam 212.3 Precision Assembly in 777 Floor Beam Assembly 232.4 The Results of Using Precision Assembly 282.5 Comparison of the 747 and 777 Floor Beams 292.6 Rockwell Precision Assembly Goals and Future Work 352.7 Enablers of Precision Assembly Implementation 35

SECTION 2 Process Improvements 3 7

Chapter 3 Case Study: Teaming’s Effectiveness in Process ImprovementsMartin Marietta, Microelectronics Center, Orlando, Florida 3 83.1 The Hellfire Missile 393.2 The Hellfire II Missile (startup and current production) 403.3 PMTs (Performance Management Teams) 423.4 Prosims (Process Simplification Teams) 473.5 Other Improvement Programs 483.6 Results of Operator Empowerment 493.7 Enablers 53

SECTION 3 Flow Optimization 5 5

Chapter 4 Case Study: Focused Factories in Component Fabrication 5 6Lockheed Aeronautical Systems Company, Marietta, Georgia4.1 A Plan For Change at LASC 57

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4.2 Implementation of Focused Factories 594.3 An Example of Focused Factory Implementation - The Small Extrusion Focused Factory 644.4 Problems in Implementing the Focused Factories 714.5 Results of Implementing Focused Factories 724.6 Focused Factory Goals and Future Work 784.7 Enablers of Focused Factory Implementation 80

Chapter 5 Case Study: Cellular and Continuous Flow Manufacturing 8 3Texas Instruments Defense Systems & Electronics Group McKinney, Texas5.1 Developing The Industrial Modernization Incentives Program 835.2 Implementing the IMIP 855.3 Continuous Flow Manufacturing 905.4 How Does CFM Work? (the Board Shop Today) 945.5 Other Programs that Supplement the IMIP and CFM 995.6 The Right Tools and Incentives 1015.7 Results of IMIP and CFM 1045.8 The Future of the MBS 1105.9 Enablers of the Shift to Continuous Flow, Cellular Manufacturing

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Chapter 6 Case Study: Cellular Manufacturing in Engine Fabrication 114Pratt & Whitney General Machining, East Hartford, Connecticut6.1 1993 - A New Strategy 1146.2 Planning the Operations Improvement 1166.3 General Machining’s Move to Cellular Manufacturing 1176.4 Other Improvement Efforts 1196.5 The Current Situation 1226.6 Examples of Cell Improvements 1246.7 Results of General Machining’s Improvement Efforts 1286.8 The Future of General Machining 1316.9 Enablers for General Machining’s Improvements 132

Chapter 7 Conclusions 1347.1 Review of the Three Sections: 136 Variability Reduction, Process Improvements, and Flow Optimization7.2 Common Enablers to Implementation 1397.3 Implementing Lean Practices 1427.4 Final Remarks 144

Bibliography 145

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List of Acronyms Used in this Thesis

MRP Materials Requirements PlanningIMVP International Motor Vehicle ProgramJIT Just In TimeBOM Bill of MaterialSPC Statistical Process Control

RockwellFAJ First Assembly JigsMIT Mylar Index TemplatesSUT Setup TemplateDBT Design Build TeamCMM Coordinate Measurement MachineAQS Advanced Quality System

Martin Marietta (MM)MEC Microelectronics CenterHFI, HFII Hellfire I (and II)PMT Performance Management TeamESD Electrostatic Sensitive DevicePPV Production Process Verification

LockheedLASC Lockheed Aeronautical Systems CompanyRISC Reduced Instruction Set CommandADRM Automatic Drill and Route MachineSEFF Small Extrusion Focused FactoryQAD Quality Action Documents

Texas Instruments (T.I.)DSEG Defense Systems & Electronics GroupIMIP Industrial Modernization Incentives ProgramMBS McKinney Board ShopPWB Printed Wiring BoardFCM Flexible Cell ManufacturingCFM Continuous Flow ManufacturingMRB Material Review BoardSMT Supplier Management TeamMIL-STD Military Standard

Pratt & Whitney (P&W)TQM Total Quality ManagementDPM Defects Per Million (Opportunities)FIFO First In First Out

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Chapter 1

Introduction

It was not very many years ago that the defense aircraft industry was booming. Defense spending

was high and aircraft orders were plentiful during the 1980’s. The Reagan era had brought rapid

growth that saw many firms scrambling to add capacity and build high tech processing facilities to

meet the flow of government contracts.

Today, the market for defense aircraft is completely different. The industry has been challenged to

produce more affordable aircraft during a period of rapid decline in the business base. These same

challenges hold true for the industry firms supplying components, systems, and aircraft to the

commercial market.

To meet these challenges, some firms have taken a progressive stance in reducing their operations

costs and time to market, while offering enhanced quality. This thesis tells the story of five firms

that have made significant improvements in cost, cycle time, and quality, by making leaps in new

directions:

• one firm rose to a new level of quality, and switched from using traditional craft production to

lean production techniques

• another firm reduced assembly hours and costs through teaming activities

• and the three other firms significantly reduced their inventory levels and cycle times by

completely restructuring their operations.

Examples of the results include:

• a reduction of 83% in throughput time and 94% in work in process levels after a restructuring

activity

• a reduction in average setup time by 84% after focusing on waste elimination

• a reduction in defects per million opportunities quality level of 67% over a seven month period,

by cross training employees and focusing them on making improvements

• an elimination of production tooling by replacing it with inexpensive soft tooling and fixtures

through the use of precision assembly.

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All five firms have positioned themselves to be more competitive for the future, in an industry that

continues to become more challenging.

1.1 Purpose of Case Studies and Thesis

The concept for this thesis (and its five comparative case studies) was derived from an industry

inventory survey performed by the Factory Operations group of the Lean Aircraft Initiative

research project at the Massachusetts Institute of Technology. This survey showed that, while

some firms in the industry have more efficient operations than others, there was no “Toyota” in the

group. Toyota’s practices were the basis for the lean concept introduced in the International Motor

Vehicle Program’s (IMVP) study of the auto industry, and the resulting book, “The Machine That

Changed the World”. Toyota’s practices were so much more efficient than its competitors, that the

IMVP identified Toyota as the true benchmark in the industry.

Rather than identifying a defense aircraft industry “Toyota” to use as a gauge, the inventory survey

located several pockets of industry leanness. This established a twofold purpose for the

comparative case studies and this thesis. The first purpose was to characterize the features,

benefits, and common enablers of the pockets of leanness in the industry’s factory operations. The

second purpose was to show the Lean Aircraft Initiative’s sponsor companies that they too can

successfully implement lean practices. For this reason, the five case studies represent at least one

company from each of the three major industry sectors within the initiative: airframers, electronics /

avionics, and engines.

1.2 Changes in the Defense Aircraft Industry

The military aircraft industry has changed dramatically in recent years. With the end of the cold

war, defense cuts have forced United States military to close facilities and retire weaponry across

the country and around the globe. These cuts have also forced the military to push aircraft

manufacturers toward producing more multi-purpose planes, at lower production rates and unit

costs. Due to these trends, companies are striving to:

• increase their manufacturing flexibility• reduce costs in an environment of declining production volume

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• while retaining capabilities to increase production rates if required at production facilities

throughout the industry.

Initially, performance and quality were the two main drivers in the defense aircraft industry, with

cost often playing a secondary role. However, with the recent shifts in the defense industry, cost

has joined performance and quality at the top of the list. In other words, today the industry is

expected to do more with less, over a smaller quantity of orders. The government and industry

have realized that the old way of producing aircraft will no longer work. Instead, the industry has

begun to look toward the lean concept to meet these challenges.

1.3 The Lean Concept

As mentioned earlier, the lean concept was introduced during the IMVP study of the automobile

industry. The concept is largely based on the Toyota Production System and was described in the

IMVP book “The Machine that Changed the World”.

Taiichi Ohno, the father of the Toyota Production System states that the system’s goal is to

increase production efficiency by reducing waste. The main features of the lean concept that relate

to factory operations can be found in table 1.1.

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TABLE 1.1

Factory Operations Features of the Lean Concept

• elimination of waste- use empowered work teams and process improvement teams to identify and eliminate waste- reduce floor space- eliminate non-value added production steps- reduce support staff (self-inspection, etc.)- empower floor-level employees (operators) and award on group / company-level performance- empower and give employees the right tools (capable processes, ability to stop line and make suggestions,etc.) to improve quality- eliminate inventory through bottleneck management, kanban systems, and JIT- reduce cycle time- tie design departments closely to manufacturing (concurrent design)

• manufacturing is closely tied to the rest of the value chain (suppliers, distributors, andcustomers)

- foster cooperation and forge relationships with suppliers- help suppliers reduce costs and improve quality- integrate sales and distribution with production so that the customer gets the product quickly andmanufacturing responds to the customers’ demand

• serving the customer- respond quickly to changes in customer demand- work toward continuous improvements affecting quality and cost

• continuous improvement- trace defects quickly to cause and put irreversible corrective actions into place- identify methods to remove waste from the production process- empower and provide incentives for employees to make continuous improvements at all levels of theorganization

• flexibility- use quick changeover tooling (for setup time reduction)- reduce number of job classifications, and cross-train employees (need employees with general job skillsthat can be used broadly)- minimize investment in specific / non-flexible tooling

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1.4 The Lean Aircraft Initiative

The IMVP book “The Machine that Changed the World” spread the message of the lean enterprise

across the world of manufacturing after its publication in 1990. In particular, the book created great

interest within the U.S. Air Force. The lean concept was seen as a potential method for

manufacturers to meet the increasing pressures of reducing aircraft cost, while providing faster

product delivery. In 1992, the Aeronautical Systems Center of the U.S. Air Force at Wright-

Patterson Air Force base approached MIT about beginning a similar study of the defense aircraft

industry. Thus, the Lean Aircraft Initiative was born.

The Lean Aircraft Initiative is a consortium including the U.S. government, MIT, and

approximately 20 industry sponsor companies. Its purpose is to: study the defense aircraft

industry, understand how the lean concept applies to this industry, and make recommendations

and give some direction to the sponsor companies as to how to implement lean practices in the

industry. The program’s mission statement is:

“To define and help implement roadmaps for fundamental change in both industry and government

operations, based on the best “lean” practices, resulting in: greater affordability of systems,

increased efficiency, higher quality, enhanced technology superiority, and a stronger U.S. defense

aircraft industrial base.”

1.5 Introduction to the Case Studies

The Case Study Companies

As mentioned earlier, the defense aircraft industry, like almost all other industries in the U.S., does

not have one company that can be considered a lean enterprise. The companies is this thesis

however,are beginning to implement lean practices within their factory operations. Further industry

internal benchmarking efforts being performed by the Lean Aircraft Initiative’s Factory Operations

group will identify the industry’s best practices, and more examples of companies employing lean

practices.

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The Issue of Cost Reductions

The case studies include vital improvement statistics freely shared with us by the case study

companies. However, readers of this thesis may notice the absence of cost data in the studies. It

was difficult to obtain cost data from the case study companies and in other Lean Aircraft Initiative

studies involving other industry companies, since this is a contract-based industry. As such,

sharing cost data is a sensitive matter.

However, cost reductions in the case studies are real! The improvements discussed have resulted in

dramatic reductions in inventory, labor hours, cycle times, floor space, etc. These reductions have

impacted the profitability and competitiveness of the programs discussed in these case studies.

Lean Production in the Case Studies

The five case studies differ in terms of the lean practices implemented and the improvement themes

(improving quality and reducing costs, inventories, and cycle times). The case studies are divided

into three categories (process variability reduction, process improvements, and flow optimization)

as follows:

• Section 1 - Process Variability ReductionRockwell International Aircraft Division

• Section 2 - Process ImprovementsMartin Marietta Microelectronics Center

• Section 3 - Flow OptimizationLockheed Aeronautical Systems CompanyTexas Instruments Defense Systems & Electronics GroupPratt & Whitney General Machining

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Section 1

Process Variability Reduction

Customers in the defense aircraft industry, like most other industries, keep demanding better fit of

the completed product. One example of this from the auto industry is the recent focus on body

panel fit. The automobile with the tightest fitting body panels is assumed to have the best overall

quality. This is not a spurious argument. Manufacturers that can consistently provide superior

component fit have more control of their processes (smaller process variability) and therefore can

produce products that better meet their customer’s needs. Through variability reduction, firms can

also realize a reduction in: production tooling, rework costs, assembly complexity, and parts

expediting, among other benefits.

The lean concept proposes that the struggle to reduce process variability and meet tighter tolerances

during manufacturing does not start on the factory floor. Rather, achieving tighter tolerances

during fabrication and assembly begins with the product’s design. The keys to reducing process

variability lie in designing a product that can be assembled precisely with the existing

manufacturing assets and continually improving the assets’ processing capabilities.

The following case studies how Rockwell International’s Aircraft Division was able to reduce their

process variability and reach an entirely new level of component fit and quality through the

precision assembly concept.

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Chapter 2

Case Study: Precision Assembly in Floor Beam ManufacturingRockwell International Aircraft Division, Tulsa, Oklahoma

Bob Emanuel, a production manager with Rockwell’s 777 Floor Beam Fabrication Area, likes to

recount the story of how the concept of precision assembly was first proven on Rockwell’s 777

floor beams. It was early 1993 and Rockwell had just shipped its pilot set of 777 floor beams to

Boeing Seattle. Bob was all too familiar with floor unit assembly, since Rockwell Tulsa had built

floors for the Boeing 747 since 1967. Despite this extensive experience, Bob was worried. The

777 floor beams were made of a graphite composite material and were the first primary structural

composites to be used in commercial aircraft. Even more of a concern for Bob was the fact that the

beams had been assembled to stricter tolerances than ever before using precision assembly. No

tools were used to assemble the beams, a fact that also worried most of the other Rockwell and

Boeing veterans.

For the 777, Rockwell was contracted to only ship the beams for a floor unit assembly to Boeing,

rather than ship a completed floor unit, as it had done in the past. Bob nervously paced the metal

platform of Boeing’s three-story floor unit assembly fixture, as the first beam was lowered

vertically into the fixture from above. When the beam reached the proper position, it was slowly

turned 90° to lock its 18 clips into the fixture’s seat-tracks. While there was only a few hundredths

of an inch between each clip and the track, all of the clips turned snugly into place.

The first beam fit, but the employees standing on the platform were quick to comment that it might

have just been luck. As the second, third, fourth, and fifth beams slid easily into place, the skeptics

were dumbfounded. They had never seen floor beams fit like this before, especially not on a first

shipment. When the sixth and seventh beams turned into place as easily as the first, they knew it

was much more than luck. Precision assembly had proven that it is far superior to the assembly

techniques used in the past, and had established itself as the new assembly paradigm.

The following case study analyzes the merits of precision assembly through a comparison of

Rockwell’s assembly of 747 and 777 floor beams. The study focuses on the

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characteristics of and Rockwell’s implementation of precision assembly, and the enablers that

allowed precision assembly to succeed in the floor beam area. A further review of Boeing’s 3-D

design efforts and use of precision assembly in floor unit assembly can be found in James

Koonmen’s 1994 MIT Masters thesis.

2.1 747 Floor Beam Assembly

Floor beams provide structural support to the floor as well as lateral support across an airplane.

During assembly, processing robots follow the floor unit’s dimensions when drilling holes for the

body panels. Therefore, the floor unit serves as a tool in establishing the body shape of the aircraft.

The floor beams are part of the 747 pressure floor unit that is located at the center of the aircraft,

where the wings join the body and the landing gear is located. The pressure floor unit is so named

because it is a load bearing unit that is exposed to substantial weights and forces in a safety-critical

area of the aircraft.

The 747 floor beams are made of aluminum rails fastened together with rivets and bolts. When

completed, the beams are transported down the plant’s aisle way to the floor unit assembly area,

where the beams are combined with panels, stringers, and other subassemblies to build a

completed aircraft floor. In the floor unit assembly area, the beams are fit into place on the

assembly fixture and their undersized holes are drilled to full-size as they are mated with the other

floor components.

Any variation in the beams or other floor unit components that prevent an even fit on the fixture is

corrected through handworking, like grinding or shimming. The workers shim gaps in the floor as

a normal processing step. According to these workers, there are certain areas that are prone to

gaps, but these gaps do not occur consistently. When the floor unit is completed, it is removed

from the fixture and loaded on a customized railcar for final shipment to a Boeing assembly plant in

Seattle.

The 747 Floor Beam Design

The 747 was designed in the mid-1960’s, using the best design teams and tools of the time.

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However, design tools of the 1960’s gave little measure of how stackup in part variability could

affect assembly. Most stackup problems were not detected until the aircraft was actually being

produced. Surprisingly, there are more engineering changes on the 747 today (almost 30 years

later) than on the newly introduced 777. The whole floor panel design is still under examination,

since some design tolerances do not “add up” and components do not fit without shimming. An

average 747 floor beam has 18 shims that are listed on the bill of material, and added during

assembly, to account for the shortcomings of the beam’s design.

Due to its design, the 747 floor beam manufacturing at Rockwell is a craft production process, as

defined by Womack, Jones, and Roos in “The Machine That Changed the World”. The 747 design

calls for processes that involve extensive assembly hand drilling and fastening. These processes

require a large amount of labor content, and thus can lead to high variability. In other words, the

747 beams are handcrafted, with no two beams fitting exactly alike. However, despite limited

design capabilities and the age of the 747 design, design upgrades and the processing expertise of

Boeing, Rockwell, and the other 747 suppliers have made the 747 a quality aircraft that has stood

the test of time.

747 Floor Beam Assembly

The assembly of 747 floor beams has changed little since their introduction. Therefore, Rockwell

uses processing methods that were “state of the art” in 1967. The manufacturing planners wrote

flexible work instructions that allow trimming, drilling, and shimming to account for processing

variability. An I-shaped beam is created during assembly, as a channel is fastened to each end of a

stiffener. The beam is processed through the area, adding fasteners and assembly holes along the

way.

The 747 floor beam assembly area employs three different types of reusable tooling:

• First Assembly Jigs or FAJs - large jigs that secure beam components during processing• Mylar Index Templates or MITs - mylar prints showing where parts are located• Setup Templates or SUTs - to specify drilling locations

The MITs are “soft” tools, while the FAJs and SUTs are “hard” tools. Soft tools are made of

flexible material, are usually less expensive, and specify part locations like a print. Informational

tapes or software for numerically controlled (NC) machines are included in

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this category. Hard tools are used to physically show where a part should be located or a

processing step (like drilling) takes place. They can also be used to secure a part during processing

(like the FAJ). 4 FAJs, 20 MITs, and 10 distinct SUTs are required for each 747 shipset of beams.

A shipset is enough beams to make the floors for one airplane - 10 floor beams for a 747.

The FAJ is the largest and most expensive of the floor beam tools. FAJs are expensive to build and

are hard to change, due to their size,. They are hoisted from a storage bin located in the assembly

area by a 1/2-ton crane, and are lowered onto one of the eight assembly tables. This changeover

process takes approximately 1/2 - 1 hour for the FAJ change and 15 additional minutes to setup

locators on the FAJ. Once in place, however, these fixtures will accommodate a family of parts.

Some FAJ’s build only 2 beams before being changed, but most are used more extensively. FAJs,

like the other tools at Rockwell, need to be dimensionally verified an average of once a year.

The assembly steps in the 747 beam area are:

- Put down channels on FAJ- Place SUT over channel and drill- Deburr- Remove SUT and channels and place on FAJ in the following order: SUT,

channel, stiffeners- Drill holes into the stiffeners- Deburr- Remove SUT and pin channel and stiffeners in place- Mark other part location on channel according to mylar, noting rivet size and

locations and stayout areas (no rivets)- Send to Drivmatic machine for riveting- When returned, place beam on the tool helper board and screw in channels, shims,etc.

Note that all nine major steps (except for riveting) are labor-intensive. Therefore, this assembly

process is very time consuming. Assembly shims are called out on the BOM (bill of material) to

account for shortcomings in the beam design. Additional shims are used occasionally at the tool

helper board to account for variability in detail part fabrication when mating the beam components

to the assembly tools. However, the largest floor beam quality problem occurs when aluminum

burrs from hole drilling get

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trapped between rivets, details, and the beam in the Drivmatic unit. This ruins the detail placement

and requires disassembly and repair.

747 Floor Beam Quality Efforts

Rockwell’s quality department is starting to launch an SPC program for Boeing’s 747 program

(Rockwell makes 747 doors, door frames, part of the floor assembly, and other assemblies).

However, Rockwell has found it difficult to identify the key characteristics and thus, which areas

to measure. This is because most part tolerances were not stressed in the past. Instead, fit to the

assembly tools and fixtures was used as a measure of quality. It is much more difficult to identify

and measure the dimensional key characteristics after assembly processes and tools have been

established than it is during the design stage, prior to manufacturing start-up.

2.2 The Shift to Precision Assembly - The Boeing 777 Floor Beam

The goal of precision assembly is to eliminate hard tools, and instead use locators on a part as an

index point for a mating part. The drive toward precision assembly began when Boeing designed

the 777. Boeing used a computerized 3-dimensional modeling package named CATIA to aid part

and tool designers in visualizing the relationship between a part and other mating parts. CATIA’s

preassembly software can test component fit for interference, misalignment, and gaps due to the

stack-up of variability from tools and parts. This emphasis on fit and dimensioning generated

component tolerances far more stringent than in the past.

Rockwell realized that its conventional assembly techniques could not achieve this level of

precision, since they relied heavily on handworking. Furthermore, Rockwell could not use shims

or grind beams for fit, since they would only be responsible for assembling the floor beams, and

not the entire floor units (as they had for the 747). Instead, poor floor beam fit would be

immediately evident during final assembly at the customer facility.

Finally, the industry trend toward faster launches of new aircraft models required suppliers to be

more flexible. For example, Boeing, like other major aircraft manufacturers, is striving to reduce

aircraft order to delivery cycles to 6 months. This reduction makes it much riskier for Rockwell to

invest in expensive hard tooling, since

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the tooling takes months to make and certify, but changes can come late in the launch cycle.

Therefore, Rockwell needed to develop an assembly technique that would provide parts with

tighter tolerances, using fewer tools than ever before. It found this combination of characteristics in

precision assembly.

The Start of Precision Assembly at Rockwell

Unlike the 747 program, the number of 777 beam variations were high, requiring a large number

of distinct tools to be built. When a Rockwell employee had the idea to avoid the potentially high

cost of tooling by building beams without tooling, some Rockwell and Boeing employees became

extremely uneasy. However, Boeing’s Design Build Teams (DBTs) and Rockwell’s newly formed

departmental work group teams accepted this challenge.

Boeing established DBTs to introduce the 777 floor beam. The team consisted of Boeing design

engineers, and Rockwell tooling and manufacturing engineers that were co-located in Seattle. Early

in the product development cycle, the DBT worked with a Rockwell-based implementation team

consisting of procurement, planning, scheduling, and purchased parts personnel. As the cycle

moved toward production, the DBTs formed a closer relationship with the work group teams to

eliminate tooling for the 777 floor beam program.

Since the DBTs brought together design and manufacturing with the power of CATIA,

manufacturing did not need to interpret the 777’s design to plan processing, instead they were able

to work directly with the design team and a computerized 3-D model of the floor beam. With this

open communication and a computerized means of testing processing ideas and component fit, the

DBTs were able to eliminate process tooling completely.

The Conflict Over Tooless Assembly

Instead of simply improving on the method of using tools that has been a mainstay of the aircraft

industry since its early days, moving toward precision assembly with a low number of tools

signaled a leap toward a completely different method of component production. Therefore,

precision assembly met with heavy initial resistance from both Rockwell and Boeing “dinosaurs”,

or doubting-Thomases. These individuals are so

23

named, because they only believed in proven production methods and are not willing to try

unproven techniques, especially in the risky early period of a new program. Around the same time,

Boeing began asking its suppliers to use SPC for the 777 program. Rockwell formed SPC teams

to find the best way to integrate SPC into their operations. One of these SPC teams found that

Rockwell’s manufacturing processes had too much variability to meet tight clip tolerances of (+/-)

0.010” or less without using tools.

The dinosaurs were in their glory. They didn’t believe an SPC program or manufacturing without

hard tools would work, and early developments seemed to support their case. The situation looked

bad for precision assembly, but the precision assembly team that supported the concept held firm in

their belief that it was the best way to meet Boeing’s needs. Soon after their first study, the SPC

team performed another study to see if they could decrease process variability.

The team understood that without additional control over the assembly process, pursuing precision

assembly would be a waste of Rockwell’s time and money. Ultimately, the team found that, by

making some common-sense process changes, they could reduce variability considerably without

spending much money. For example, the team discovered that the automatic chuck lock on some

machine tools was not locking tightly enough, causing process variability. Therefore, the operators

were instructed to lock the chuck by hand, reducing variability. Due to the efforts of the SPC team,

the processes had become stable enough to proceed with precision assembly.

The dinosaurs could argue with the changes, but could not argue with the team’s SPC data. As a

result of the team’s efforts in reducing variability, the operators could now concentrate on

manufacturing processes that could be held within tenths of thousandths of an inch and produce

parts that met their nominal dimensions, rather than merely worrying about getting within (+/-)

0.030”.

2.3 Precision Assembly in 777 Floor Beam Assembly

The following list identifies the steps in precision assembly of a 777 floor beam. The processing

steps differ considerably from the 747 assembly steps. You will notice that the assembly does not

use tools and that there are five, rather than nine, major processing

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steps. Extensive manual labor is only involved in two of the steps (operator application and final

assembly).

The assembly steps in the 777 floor beam area are:

- Trim & drill: Machine is used to do all drilling and beam trimming. It also records SPCdata by probing hole locations and diameters. Holes are drilled full-size.- Ultrasonic scanning: Immersion scan of beam for surface and internal defects.- Surface abrasion: Helps with adhesion of glued parts (click bonds and grommets).- Operator application: Apply click bonds and grommets.- Final assembly: Beam clamped into mandrel and operators follow mylar print to applyparts.

Three important inspection steps are also required:

- Operator Inspection: Measure web height to check trimming (after trim and drill).- Final clip height measurement (performed after final assembly).- CMM (Coordinate Measurement Machine): Final measurement to check all locations. TheCMM quickly measures hundreds of dimensions on each completed beam.

It should be noted that the 777 floor beam assembly is so precise that all beam components arrive

for beam assembly from other production areas with full-sized mating holes. Therefore, they

require no drilling, trimming, or other assembly adjustments to achieve the proper fit. The 777

floor beam assembly only has 2 types of tools. Both are “soft”: the assembly mylar / print and the

NC tapes at the drill and trim machine and the CMM. These tools work for a complete ship set of

74 parts.

The Use of SPC and Key Characteristics

The shift to precision assembly has also meant a shift in quality metrics to SPC data. The 747

assembly area measures quality per direct labor hour (scrap, rework, and defects / labor hour).

However, these metrics are ineffective for the 777 floor beams, since they involve so much less

assembly labor than the 747.

25

Rockwell combined SPC with key characteristics through its AQS (or Advanced Quality System)

program. A product’s key characteristic is a design attribute where variation has the most adverse

effect. An example of a key characteristic is a critical dimension that must be maintained within a

tight tolerance to ensure the fit of one subassembly to another. Boeing determines the key

characteristics after analyzing component fit and variability stackup, and specifies these

characteristics on the print. Rockwell takes Boeing’s key characteristics and finds which upstream

processing characteristics should be monitored to ensure that Boeing’s characteristics are satisfied.

Each process might have several dimensions that must be consistently met to maintain the higher

level key characteristic. Therefore, key characteristics help Rockwell identify which critical

dimensions need to be monitored using SPC, and which dimensions do not.

Boeing has certified Rockwell to implement sampling plans on certain end-item inspections where

the process is in control and capable. The process capability index is used to measure the product

dimension variability and compare it to the process specifications. A barely capable process (Cpk

of at least 1.0) will produce 2,700 defective parts per million. The 777 floor beam assembly area

has held a Cpk of up to 1.65 for the (+/-) 0.030 detail locations.

The (+/-) 0.030 tolerance detail locations are on a continuous sampling plan based on MIL-STD-

1235C. In most cases, if Rockwell sustains a sufficient process capability for a certain number of

beam inspections, they are permitted to check 1 of every 3 beams, rather than every beam. If they

can reach the next plateau on the sampling matrix, the sampling level is reduced by 50%, down to

the lowest sampling level of 12.5%. However, if at any time a defective beam is identified,

Rockwell must return to a 100% sampling level. Sampling has reduced Rockwell’s CMM time

from an average of 1 hour to 1/2 hour per beam.

Precision Assembly and Suppliers

Rockwell realizes that their floor beams can only be as good as their supplier’s quality levels.

Because of precision assembly, Rockwell finds itself addressing dimensional problems with its

suppliers that did not seem to matter before. In the past, as long as the parts fit into the tooling they

met Rockwell’s needs. However, Rockwell now has to rely on some of the supplied parts to meet

Boeing’s key characteristics. An example is a bolt supplier whose bolt has to be within a tight

dimensional range. Rockwell has had

26

difficulty in maintaining certain tolerances, since some bolt suppliers are not accustomed to meeting

rigorous measurement standards with little variability. Rockwell has tried to work with existing

suppliers, and to identify new suppliers that can help them meet Boeing’s dimensional needs.

Other Examples of Precision Assembly and SPC at Rockwell

Precision assembly is not confined to the 777 floor beam assembly area. The 777 wing slats

manufactured at Rockwell’s McAlester plant also rely on precision assembly. The cost of tooling

has historically been high for producing the slats, but like the floor beams, the 777 slat design

allows the detailed structural parts to locate mating parts, facilitating precision assembly.

Precision assembly has ensured that full-sized holes on the slats and on the leading edge meet

consistently. However, undersized holes are drilled in the sheet metal skin to use as locating holes

(one for each rib), since it’s too expensive to drill all of the web and skin holes individually and it’s

cheaper to make the skin holes undersized. Instead, the skin holes are placed over the structural

web and the operator drills all the way through the skin and the web. This method accounted for

60% fewer assembly hours on the first 777 slat shipset than expected. Because of the tight fit and

lower labor hours for the 777 slats, Rockwell was recently awarded the Boeing 737 slat contract.

The consistency in fit of the skin over the web not only speeds assembly, but also means Rockwell

sheet metal can be quickly interchanged with old skin in the field without grinding or shimming.

When some of the 777 slats were bent during final assembly at Boeing, they were returned to

McAlester for quick interchangeability of parts. While replacing one of the skins, McAlester

employees simply drilled the sheet metal with full-sized holes, fit it into place, and fastened it

down. This speed and part interchangeability would have been impossible without precision

assembly! The 777 slats have already met skin interchangeability standards, whereas the 757 and

767 slats (that do not use precision assembly and still rely on shimming) have not.

SPC is also used on 777 floor beam manufacturing areas outside of the assembly area. The beam

composite buildup area used to log SPC data for 100% of the beams, but now only record data for

1 out of every 5 beams of a particular gage. SPC charts found within the area are updated every 2-

3 days.

Several of the milling machines in the machine shop have probes that record dimensions once the

milling cycle is complete. The dimensions are fed to a computer that generates SPC results after the

run. SPC is also employed to control variability in the assembly of the 777 slats. Since the slats are

built on a fixture, a measurement gage with a radio transmitter is used to get into tight spaces and

take SPC data on approximately 24 key characteristics across the whole slat surface.

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777 Precision Assembly Employee Teams

If precision assembly and SPC were introduced at Rockwell to employees that had worked with

the same product, in the same way, for a number of years, it would have been difficult to convince

them to accept the new concepts. But, since precision assembly and SPC were implemented on a

new product, made of a new material, using a new process (composite bonding), in a new

manufacturing department, it was easier for management to overcome the cultural hurdles that

typically slow change. One way Rockwell involved all of the employees in the new concepts was

by creating work teams.

Departmental work group teams empower the employees to make decisions and solve the

department’s problems. At first, management found it difficult to empower the employees, but then

conceded that no one knows as much about the jobs in the department, or can impact the

improvement efforts as much as the workers themselves. Teams are organized around a process,

or a product, or both. The team members get 20 hours in team training, and all team members are

elected (but are typically the employees in a work area). The teams have appointed facilitators to

help run meetings, so managers do not need to attend meetings, but often do anyway. Members of

the support organizations (engineering, production control, etc.) are “on call” whenever needed,

but do not regularly attend the work group meetings.

Work group meetings are typically held every 1-2 weeks to update outstanding quality concerns,

and brainstorm and use fishbone diagrams to recommend action items for themselves or Quality

Control to pursue. Informal department meetings are held an average of 2-3 times per week (as

needed) to discuss problems. These meetings last approximately 15 minutes and are held in the

production area.

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Some of the work group teams have had considerable success. Because of proactive attempts at

continuous improvement by the work teams in the beam fabrication area, there were only 6-8

bonding failures of the first 3,000 beams shipped out of bonding. This is a very low number when

one considers that the composite beam bonding process was new to the floor beam area and to the

employees involved. SPC data was also used to support processing changes that reduced scrap

material.

2.4 The Results of Using Precision Assembly

In the past, floor beam manufacturing at Rockwell was a craft production process, as defined by

Womack, Jones, and Roos in “The Machine That Changed the World”. Each floor beam was

slowly made by hand, with the dimensions varying by beam. Precision assembly has signaled a

move from craft to lean production at Rockwell. It has provided a controlled, repeatable process,

where every successive unit is the same, without the use of expensive tools. Where it faced the

challenge of producing more beam variations with tighter tolerances than ever before, Rockwell

has proven that precision assembly is the answer to their challenge.

The story of Bob Emanuel watching the installation of Rockwell’s precision assembled beams in

Boeing’s 777 floor unit at the introduction of this case study is real. Precision assembly has

produced beams with function and fit that were never achievable before. When Boeing Seattle

received the pilot set of beams, the locators on the beams were so precise that placement of the

beams took less than 10%, and the beams were in the assembly fixture less than 20% of the

expected time! Rockwell has certainly reaped the benefits of precision assembly, and feels so

strongly about its capabilities, that they include precision assembly on all new contracts.

Results Within the 777 Floor Beam Assembly Area

Precision assembly has preempted the 777 floor beam assembly area from having to use and care

for expensive tooling. Some of the tooling costs avoided include: maintenance, retrieval,

installation, set up, documentation of revisions, modification, verification, etc. Furthermore, the

777 floor beam assembly area’s soft tooling has made engineering changes easy and inexpensive

when compared to changes to the 747’s hard tooling. Precision assembly has helped Boeing avoid

rework costs and build floors with superior

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fit. The only beam defect reported by Boeing was related to an upside down bracket. However,

since the beam’s hole spacing was precise, Boeing was able to turn the bracket around and put it

into place without redrilling.

2.5. Comparison of the 747 and 777 Floor Beams

The contrast between traditional and precision assembly is stark. To summarize, some of the

differences mentioned so far include:

• traditional assembly relies on tools to locate parts and control part-to-part alignment, whileprecision assembly relies on parts to align mating parts

• the traditional fixtures accommodate a family of parts, whereas the precision assembly fixturesaccommodate all parts

• soft tooling is much less expensive to build, store, maintain, and modify

• precision assembled parts:- are consistent and interchangeable- require less human effort (fewer sources of error)- have better dimensional quality- require fewer assembly hours

With all of these benefits, one might question why the manufacture of 747 floor beams has not

shifted to precision assembly. Precision assembly relies on key characteristics defined from a 3-D

computer package. This package ensures accurate part fit without interference or gaps. With this

tight fit, parts can act as locating devices for each other, eliminating the need for tooling. However,

for precision assembly to work, all parts must be designed to fit together with a 3-D design tool.

Transferring the 747 prints to 3-D would be an expensive task that could take years. Therefore, a

program should seriously question whether they should use precision assembly for older

programs, since it can be extremely difficult to implement on older products that were not designed

using 3-dimensional design software.

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Comparative Assembly Data

Table 2.1 provides comparative data for 747 and 777 beams Rockwell personnel identified as

being “average”.

TABLE 2.1

Comparative Assembly Data for the 747 and 777 Floor BeamPrograms

747 777 Beam Components:Unique component part numbers 51 37Total number of components 426 387Total Number of Fasteners 180 158

Actual Assembly Time:Standard Hours x Realization 100% 46.5%(as a percentage of the 747 beam assembly hours)

Table 2.1 shows that while both beams have a similar number of components, the 777 beam takes

considerably less time to assemble. This is due to the lower number of labor steps involved in

assembling the 777 beams.

Table 2.2 compares the tooling and facilities necessary to support both programs.

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TABLE 2.2

Tooling and Facility Data for the 747 and 777 Floor Beam Programs

747 777

Beams per Shipset: 10 74

Tools (for the whole area):Hard Tools (expensive to alter):FAJ 14 0SUT 10 0

Soft Tools:MIT 20 74 *NC tape 0 148 **

Facilities (tooling storage, manipulation items, etc.)FAJ crane 1 0SUT / MIT holders 4 0MIT storage area 1 1FAJ tables 8 0FAJ storage bins 2 0Detail board 1 0Table with mandrel to hold beams 0 5Other assembly tables 0 4

* there are many more 777 mylars due to the much larger variety in beam configurations** the 2 tapes per beam are used in the trim & drill and CMM machines

Since precision assembly’s goal is to eliminate hard tooling, the 747 beam assembly uses more

hard tooling than the 777. As mentioned earlier, hard tooling is expensive to purchase, maintain,

use, and modify. The 777 program has more soft tooling than the 747, since it requires more

mylars for the extra beam variations. The number of 777 mylars are being reduced in the future, as

Rockwell replaces them with an ink jet printing system. This system prints mylar information

directly on the beam for some brackets.

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The 747 assembly area also requires more expensive facilities to support their tooling. For

example, the area needs a crane to move the FAJs, and heavy FAJ tables to support their weight.

The 777 beam assembly area only requires light, inexpensive, and flexible facilities to support

assembly (like wooden tables and storage racks).

747 and 777 Quality Comparison

Table 2.3 lists some of Rockwell’s internal nonconformance data for the 747 and the 777 taken

from quality inspections in the 12 months from October 1993 through September 1994. The

quality data for the beams can be considered comparatively, since table 2.1 showed that the beams

have a similar number of components.

TABLE 2.3

Nonconformance Data (October 1993 - September 1994)

747 777

Total Beams Manufactured 240 1,153Total Beams / Aircraft 10 74Total Nonconformances 62 785Average Nonconformances / Beam .26 .68

Top Defect(s) - (% of Total) Oversized Hole (53%) Mislocated Details (100%)Mislocated Detail (10%)Short Edge Margin (5%)

Gaps (5%)All Others (27%) *

* 40% of “All Others” related to hole drilling process

While the quality data for the 747 program appears to be better than for the 777 program, there are

two additional pieces of information that must be considered:

• The quality inspections are not measuring the same items:- no dimensional inspection is performed for the 747 beams, only fit to the assembly tools- the 777 is measured within 10 thousandths of an inch or less

33

• The maturity level of the programs is different:- the 747 beams have been made since 1967 and are currently on shipset number 1060- the 777 beams have been made for two years and are currently on shipset number 18

Furthermore, Rockwell has found through their corrective action process that the apparently high

number of beam nonconformances are predominantly due to errors in the CMM measurement

process. Through changes in the holding fixtures and measurement process, the total number of

defects have dropped considerably. Average nonconformances per beam are currently 1/4 of their

initial level (since they dropped by 1/2 around shipset 15 and dropped by 1/2 again by shipset 17-

18). Therefore, the year’s average of .68 defects per 777 floor beam is misleading, since

nonconformances have dropped significantly over the past year. See figure 2.1 for a graph of the

nonconformance trend (ship sets 1-3 were not production ship sets, so were not included).

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FIGURE 2.1

777 Floor Beam Detail Nonconformance Trend

Aircraft

Nonconf. per Aircraft

0

10

20

30

40

50

60

70

80

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

This situation reveals how critical advanced inspection tools are to precision assembly. The CMM

provides rapid measurements of a large number of dimensions, enabling Rockwell to ship

precision assembled beams to Boeing. In cases where dimensional specifications are tight,

measurement tool calibration and proper use become extremely important.

Notice in table 2.3 that the majority of the 747 nonconformances were related to hand drilling

problems, while 100% of the 777 beam defects were related to dimensioning problems. If a labor

intensive assembly program had been adopted for the 777 floor beams, the number of mislocations

defects would have undoubtedly been much higher (parts would have been hand drilled) and other

defects, like those seen on the 747

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program, would have surfaced. The fact that the 747 beams have variability in fit and require shims

during assembly, helps point out that the 777 beams have better fit, functionality, and

interchangeability at ship set number 17 than the 747 beams have at ship set 1060.

2.6 Rockwell Precision Assembly Goals and Future Work

Rockwell’s main goals are to continue to decrease processing variability while increasing the

applications of precision assembly. By expanding the use of precision assembly, Rockwell hopes

to reduce costs, while producing parts with superior fit. In particular, the company is looking

toward decreasing variability in other, more complex assemblies. As the assemblies become more

complicated and harder to process, there is a greater opportunity to decrease variability by using

precision assembly.

Since precision assembled parts have exceptional fit, they facilitate the interchangeability of aircraft

parts. For example, changing sheet metal in the past has involved significant hand tailoring of the

replacement parts. While part interchangeability has not been prevalent to date, there is hope that

precision assembled parts will change the way repairs are viewed in the future.

2.7 Enablers of Precision Assembly Implementation

Rockwell implemented precision assembly in their 777 floor beam assembly area to reduce tooling

costs for the 777 program. Precision assembly not only eliminated this cost, it also provided other

benefits. Floor beam assembly became a controlled, repeatable process, where every successive

unit is the same. The product that Rockwell ships to Boeing has superior fit and is assembled at a

lower cost than the 747 beam.

There are four major enablers that are crucial to implementing precision assembly:

• 3-D / CATIA design and modeling

• SPC and capable measurement tools

• A manufacturing process with little variability

• DBTs and work group teams

If index points on parts are to replace tools in establishing a dimensional fit, a 3-D design and

modeling tool like CATIA is a necessity in determining how components fit together. These

programs analyze the variability stack-up between parts to establish the tolerances that must be met

36

in maintaining the integrity of a design. Suppliers like Rockwell are issued the tolerances and key

characteristics from the design that are necessary for precision assembly.

SPC data collected by quick and accurate measurement tools is also essential to precision

assembly. This data verifies that the key characteristics are being satisfied, alerts operators when

they are not, and shows trends that affect processing. Measurement tools must be fast and easy to

use, since dimensions on tooless assembly are critical (there is no tool to ensure part location). For

example, without a rapid inspection machine like the CMM, checking beam dimensions would take

too long, slowing the flow of precision assembly, negating some of its positive benefits.

A controlled, repeatable process is a necessity for implementing precision assembly and tooless

assembly. If a process or components are variable, parts will not properly act as locators for

mating components. Variability stack up will not permit the completed assembly to meet the

customer’s key characteristics and will require hand processing (shimming, trimming, etc.) to

ensure fit during final assembly. Therefore, a fabricator or assembler must minimize variability to

eliminate tools.

Employees and teams dedicated to the precision assembly concept are also necessary for its

implementation. Rockwell’s engineers and managers held firmly to the idea that there would be no

tooling used in floor beam assembly, in the face of heavy resistance and criticism from their

coworkers. They included the departmental workers in their vision by eliciting input through work

groups and providing training in SPC.

While Rockwell’s teams brought about precision assembly, it was the DBTs that gave them the

ability. The DBTs accepted the tooless assembly challenge and provided the conduit for the vital

flow of information between designers and manufacturing engineers. Without teamwork within

Rockwell and between Rockwell and Boeing, precision assembly would still be an unrealized

concept.

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Section 2

Process Improvements

In the operations world, process improvements refer to the continuous improvement of the

processing steps used to manufacture a given product. Process improvements reduce waste by

identifying nonvalue-added steps within a process (or a group of processes). Making these

improvements is difficult without the input and experience of the floor level operators.

Another improvement method will also be referred to in the following case, process restructuring /

reengineering. The goal of restructuring is also to reduce waste in the production process, but its

direction in achieving improvements is markedly different. While individual process improvements

typically optimize one process (or a group of processes) at a time, process restructuring strives to

optimize the entire span of production process. Once waste is identified, the production facilities

are typically reorganized, with nonvalue-added or redundant steps being removed. The end result

is typically an entirely different, more efficient process flow that operates faster, using fewer

resources, in a smaller production area.

This case is not meant to portray one improvement method as being more important than the other.

As a matter of fact, companies that have used restructuring followed by continuous process

improvements have had the most significant results. The goal of this case is to show how

employee input can have a significant effect on improving the production process, helping

companies reposition their production processes to become more lean.

In the startup of its Hellfire II detector stack program, Martin Marietta’s Microelectronics Center

found that using teams to initiate process improvements is an effective means to realizing

significant process improvements. The following case reviews their teaming, employee

empowerment, and improvement efforts.

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Chapter 3

Case Study: Teaming’s Effectiveness in Process ImprovementsMartin Marietta, Microelectronics Center, Orlando, Florida

Much has been written about the advantages of using teams for problem solving and

communication. When properly applied, teaming empowers the group of employees that have the

most experience and exposure in building a product to make improvements to the process. These

teams are typically made up of employees from all levels of the production organization, with a

heavier representation of engineers and operators that work on the floor. This concept differs from

the problem solving methods of traditional management, where floor-level employees had little

input into the decision process.

The following case study highlights the process improvements of teams at Martin Marietta

Microelectronics in Orlando, Florida. This facility built the electronic detector stack for the Hellfire

I missile in the 1980’s. When the company lost the Hellfire I contract in 1989, they were forced to

shut down the stack assembly operation. However, when Martin Marietta won the contract for the

upgraded Hellfire II missile in 1993, the program contracted to reuse the remaining work in

process from the Hellfire I program. They basically restarted stack production using the same

processes, equipment, and even operators and work in process (WIP) inventory that were used

four years earlier to produce the Hellfire I.

There are many commonalities between the two Hellfire stack programs. However, the largest

single difference between the Hellfire I (HFI) and Hellfire II (HFII) missile detector stack

production was that MEC had begun to use Performance Management Teams (PMTs) to make

process improvements between the end of HFI production and the start of the HFII program.

Therefore, most improvements between HFI and HFII can be attributed to employee work teams.

Due to the similarity of the two programs, the effect of using process improvement teams is

virtually isolated in this case.

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3.1 The Hellfire Missile

Orlando has been the home to Martin Marietta’s (MM’s) microelectronics facilities since 1968. The

microelectronics area (or MEC) produces military microelectronics and hybrids for missile and

night-vision systems. For example, MEC produces electronics for: the Comanche helicopter, the

Stingray and Lantirn programs, the Hellfire missile, navigation and targeting systems for the F-15

and F-16, and the TADS night-vision system used on the Apache helicopter.

MEC produces approximately 3,600-4,000 Hellfire missile detector stacks per year. The stack fits

in a missile’s nose-cone and detects the reflected laser beam energy from the target and provides

signals to the missile’s flight control system. Each stack is made up of a sealed detector unit, a

nickel-plated ceramic coupling board, a single-chip preamplifier, a cover, and a housing unit.

Stack History

Table 3.1 summarizes the history of the Hellfire program at MEC. MEC began making detector

stacks for the HFI missile in 1982. In ‘82-83, MEC produced stacks for Hellfire buys 1 and 2. By

1984, the government had begun split contracting, where the contract’s winner was given a certain

percentage of the business, while the second place finisher was given a smaller percentage. Martin

Marietta faired well against their competitor, Rockwell, in the five contracted buys between 1/84

and 8/89 (buys 3-7). In 1989, MM granted a stack production continuation to continue stack

production between the end of buy 7 production and the start of buy 8. Continuation was a tactical

decision meant to keep detector stack facilities and operators working, based on MM’s previous

contracting successes. This strategy left MEC with a fair amount of WIP when they lost the buy 8-

10 contract in August of 1989.

By December of 1989, the program office directed MEC (as well as the other HFI production

areas) to stop production in place. MEC was instructed to pack up the HFI production WIP and

tools in an “as-is” condition. Rather than completing the boards that were in production, MEC was

directed by the program to pack up the WIP in appropriate containers for storage. The Hellfire

facilities were shutdown and the operators were reassigned or placed on layoff, based on seniority.

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TABLE 3.1

Hellfire Missile History at the Orlando Microelectronics Facility

DATE EVENT

1/82 HFI missile buy 1Start of detector stack production.

1983 HFI missile buy 2

1984-1989 HFI missile buys 3-7Competitive bidding between Rockwell and Martin Marietta.

8/89 HFI missile bidding for buys 8-10Martin Marietta loses contract bid.

12/89 Production shutdownMEC is instructed to pack up all WIP and tooling in boxes for storage. WIP is pulled out of production “as-is”.

1/93 HFII IPF contract awarded

6/93 HFII production contract awarded

12/93 First HFII production stacks delivered to Hellfire program

3.2 The Hellfire II Missile (startup and current production)

During 1992, Martin Marietta bid to restart production of the Hellfire missile. Their new version,

the Hellfire II, used a detector stack similar to the HFI stack. The only major difference affected thedetector wafer’s anti-reflective coating, changing it from SiO to TiO2. The wafer is a thin detection

board that is difficult to produce, and is an important component of the stack. The change in

coating was meant to improve the optical quality of the detector.

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HFII Startup

Rather than benefiting from the HFI program, prior stack production complicated the HFII startup.

The most difficult part of the startup was the reinsertion of HFI WIP and tooling (that had sat in

storage for four years) back into production. Manufacturing had to transfer the WIP from HFI to

HFII process plans, figure out exactly where each assembly and subassembly was in the

production sequence prior to shutdown, and get the WIP to fit back on the production line. These

problems were unforeseen by MEC, since they had no experience in shutting down and restarting a

production line by reinserting WIP. The WIP reinsertion was so difficult, that in hindsight it is felt

MEC would have been much further down the learning and cost curves if it had not attempted to

reuse components from the HFI program.

The situation was further complicated by the stripping and recoating of the wafer’s anti-reflectivecoating. The Hellfire program office had changed the Hellfire wafer’s coating from SiO to TiO2, as

discussed above. All of the HFI work in process wafers had to have their coating stripped and

reapplied. This strip and recoat was a difficult process to perform in a production environment,

especially on the packaged units (since they needed to be masked to protect the outer package).

Once the wafers were stripped and recoated, they had to be relogged with a new part number.

Packaged units had to have their part number manually removed from the package and reapplied.

Program changes to the stack assembly required part number marking changes on the stack,

detector, and preamplifier assemblies also.

Restarting the Wafer Fab Area

The wafer fab area had difficulty restarting Hellfire wafer production and meeting the required

process parameters. While MEC was fortunate to have many of the original microelectronics

operators return from layoff (a four year period for most of them) into wafer fab, it was obvious

that there was a large loss in operator skill. The area also had quality problems initially with the

wafers sent to other shops for sawing and polishing. These operations had been performed by

MEC during HFI production.

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Current Situation

While the stack assembly startup was difficult, MEC has made significant improvements in a little

over a year since HFII production began. The yields are currently the same as they were when HFI

was shutdown, and the labor hours per stack have fallen dramatically. Since MEC did not

significantly change its production processes, tools, or equipment between the HFI and HFII

programs, this rapid improvement can be attributed to the efforts of MEC’s employee teams to

improve the process.

Since HFI, MEC has been able to combine the three operator job classifications into one. This

general touch labor classification has replaced separate wafer, test, and assembly classifications.

Originally, employees could only be cross trained within one of the three classifications. This

reduced flexibility, especially in times of low or high production schedules. Now operators can be

reassigned to production areas where they are needed. The production supervisor have become

more flexible also. MEC’s floor support organizations have “thinned out”, leaving much of the

supervision to personnel with an engineering background. The supervisor is expected to provide

his / her own support, but additional support is available if the problem is beyond the supervisor’s

capability.

3.3 PMTs (Performance Management Teams)

PMTs (or Performance Management Teams) started on the missile side of Martin Marietta. The

inspiration for PMTs came from MM’s desire to improve performance. The PMT mission is to:

continuously improve product and service quality and reliability, reduce cost and cycle times, and

increase productivity and schedule compliance to maximize customer satisfaction. Since the PMT

concept needs management commitment to be successful, their use has become part of the appraisal

process for managers.

The Start of PMTs at MEC

MEC first attempted to increase employee involvement through quality circles. But the circles were

unsuccessful, since there was no employee buy-in, little feedback to the production departments,

and meetings often turned into complaint sessions. When PMTs were introduced, the stigma the

quality circles had created had to be overcome. The

43

operators felt that meetings would be a waste and that their time would be spent more productively

on the production floor.

What is the difference between PMTs and quality circles? The quality circle meetings were attended

by one representative from each production area. Input and feedback was given from the area’s

representative, excluding different perspectives and ideas. Since attendance was voluntary, and the

operators did not feel a part of the quality circle effort, meeting attendance quickly fell.

PMTs are more structured than the quality circles were. The teams are workgroups meant to

contain all of the necessary resources to make significant improvements, and therefore function as

“a company within a company.” They are comprised of the operators and supervisor for the

production area, as well as support engineers and a program management representative. Meeting

attendance is mandatory for operators, and each individual’s input is elicited.

The goal of the PMTs is not to address personal and union problems. At first, the employees tested

the PMT concept and management commitment to the program by focusing on small issues

(whether their water fountain had cold water, etc). Management had to deliver on these small

issues to show team members that the teams were there to help, while refocusing the teams on

making constructive improvements.

How Do PMTs Work?

All MM employees are on PMT teams. There are 116 PMT teams in Orlando alone, organized into

production, production support program, and technical support areas. In the production areas,

PMTs are made up of operators and support people, as well as the area supervisor, who acts as the

PMT facilitator, and a program management representative, who present the latest performance

metrics.

To kickoff the PMT process, the Vice President, Director, Manager, Facilitator, and Team Leaders

received formalized training. All managers and PMT facilitators and team leaders were trained for

40 hours in team skills at Mid-Florida Tech and 16 hours in process training onsite. The team

leaders provided training to the operators in brainstorming, working in teams, and other PMT

skills.

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The teams meet weekly during working hours to discuss actions items and ways to improve their

area’s operations. PMT metric charts are used to give feedback to the team’s effectiveness. These

charts are standardized, so all PMTs use the same metrics. The team’s action items are usually

solved within the team, by using available resources. However, any PMT action items that has

taken longer than 30 days to resolve or needs higher level management assistance are referred to a

senior PMT representative.

The true value of PMTs lies in the feedback operators receive. In the past, there was no formal

feedback to the operators with regard to their performance and how it related to cost. PMT

feedback helps the operators understand in which areas improvements are necessary. PMTs also

receive good feedback on product quality. The teams review their area’s scrap and rework totals

weekly.

The Wafer Fab PMT Meeting

To give you a good sense for how PMTs function, I would like to share our perceptions of the

wafer fab area’s PMT meeting we attended. Emma, the area supervisor facilitated the meeting,

which started with a review of the area’s metrics: scrap dollars, rework, overtime, lost time,

quality yield, and performance. These are common metrics used by all PMTs, and tracked by the

area’s industrial engineers. The program management representative reviewed the program’s

metrics: hours for wafer fab, detector stack assembly, preamp board, preamp assembly, and

completed stack hours.

The PMT quickly moved into addressing team action items. Two of the area’s action items related

to a change in ESD packaging and the tracking of D.I. water usage to reduce cost (the area had

already cut their use by around 70% just by concentrating on usage).

During the meeting, the operators made many suggestions at a high level of understanding. The

support people also contributed and took responsibility to follow through on some of the team’s

action items. Before the meeting closed, each operator was asked what cost saving / general

improvement items they would like to pursue. Some suggestions were: fix damaged O-rings and

examine floor grate cleaning (improper cleaning could keep particles floating in the fab area,

potentially causing quality problems). A final suggestion came from an operator that had developed

a unique catching cup in the spinning machine to improve quality. She had ingeniously developed

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the catcher out of the bottom of a 2-liter bottle! The catcher had worked extremely well, and helped

solve a complicated processing problem.

PMT Measurements and Awards

Management rates the PMT teams monthly on their performance to the metrics and their action item

savings. The teams are also rated against the goals they established at the start of the year. These

goals have to aim for an improvement in performance, and not restate the previous year’s goals.

Teams can also get better ratings if they take advantage of the suggestion program (discussed later

in the case).

Based on these criterion, the teams receive a red, yellow, green, or purple rating (red is poor,

yellow means needs improvement, green is good, and purple is excellent). PMTs that are not green

or purple in any given month have to create a corrective action plan to get back on track. MM’s

upper management also see the monthly ratings and call the team contact for an explanation if a

team in their area is rated red or yellow. The teams with the highest ratings give competing

presentations in front of a management review board to determine which team will be named the

“team of the month”. Team of the month honorees receive a winner’s breakfast and a plaque.

At the end of the year, teams with the highest ratings put together a presentation of their

accomplishments to compete for “team of the year” honors. Team of the year winners receive a

winner’s banquet where they are awarded watches. MM’s management judges the competition at

the following levels:

• first round - directors• semi finals - VP• finals - president and staff

The PMTs receive feedback after each competition round and the winners presentations are viewed

as a source of great pride for the entire winning production area. This year, MEC’s test team won

“team of the year” honors after making the final round in three of the last four years. The team had

98 action items and $140,000 in teamwork counts savings for the year (teamwork counts is a team

suggestion program that will be explained later in the case). To win the competition, the test team

was rated purple almost the entire year. The projects that they presented for judging were:

1. placing the detector test set and stack test set in the same room, since previouslyseparate, to be run simultaneously by one operator (to save testing labor hours)

2. automated the Lantirn noise test (reduced test time from 5 to 2 minutes)

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3. automated the HFII preamp noise and resistance test (reduced test times from 13 to 8minutes)

According to a test area operator, winning this award took the joint effort of the support people

with the operators. This is representative of the PMT concept in action.

PMT Results

The following section discusses some of the projects and results of the MEC PMTs. Examples will

be used to explain how PMTs have: removed waste from process steps, eliminated non-value-

added steps, consolidated processes, and improved product quality. Labor hour savings for these,

and other team improvements can be found in section 3.3 of this chapter.

As a result of the PMT process, there has been a more interactive sharing of opinions and the

generation of peer pressure among members to work toward the team goals. For example, all areas

have experienced a reduction in rework as a result of PMT efforts.

The wafer fab area improved performance by examining the amount of cosmetic work performed

on the wafers. The PMTs shifted the focus from appearance toward wafer functionality,

eliminating wasted effort and labor dollars. They also identified wasted time in setting up the etch

stripping process. Operators were waiting too long for the stripper to reach the proper temperature,

so the team found a way to run the stripping process at room temperature. The stack assembly

PMT deleted one resistance test and changed to “fail only” recording in the other resistance test.

The test PMT team (as mentioned above) found that one operator could run three test systems

simultaneously. This testing originally required three operators. In the past, the equipment was too

far apart to run more than one at a time. Collocating the testing systems reduced nonproductive idle

time during testing and gave two of the operators the

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ability to perform other tasks. The test PMT has also automated some of the test equipment,

allowing for faster and more consistent testing, as well as letting the operators work on multiple

tasks at the same time.

The preamplifier board subassembly PMT was able to improve product quality. Production could

not consistently meet 500 milliohm capacitor termination resistance tolerances on the circuit boards.

So, the team took SPC data on the epoxy to board interface and found that there was oxide on the

nickel trace. The PMT solved this problem by introducing a plasma clean process, avoiding rework

cost. The team also found that circuit boards that should have been stored in dry nitrogen were not.

Immediate changes were made in storage specifications for the boards.

3.4 Prosims (Process Simplification Teams)

Prosims (or Process Simplification Teams) were introduced at MM in the late 1980’s. They are

self-contained teams (have all the key resource people) that are formed and driven by management

to reduce processing steps. In most cases, these teams are comprised primarily of salaried

employees (engineers, planners, and supervisors) to take a higher-level look at a problem.

Each area is required by upper management to have a certain number of Prosim activities per year.

The teams define the areas in which they plan to work and set net savings goals on a dollar basis

and a schedule to meet these goals. Initially, the teams meet every week, and on an as-needed basis

afterward. Prosims give management monthly progress updates and may be called upon to give a

presentation at the Vice-President level. Prosim teams typically complete their analysis within 6

months to a year. At end of each Prosim event, the teams submit a teamwork counts suggestion

based on their work.

Prosim Team Results

The MEC Prosims have been effective in bringing about process improvements. Examples of some

MEC Prosim improvements include: eliminating some of the test procedures, changing from ink

marking to engraving of identification information on the preamp and the stack housings,

changing the microelectronics board substrate to reduce cost, and transitioning from epoxy to

eutectic substrate bonding.

The move to eutectic bonding reduced the amount of bonding labor required (eutectic bonding can

be run in batches, allowing the operator to perform more than one task at a time) and making the

substrate attachment process more consistent. While one batch of 30 parts is being bonded, the

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operator can now apply epoxy to 30 other parts and visually inspect 30 more. The eutectic process

also allowed the HF II program to switch from a plated ceramic to a cofired substrate material,

reducing the substrate cost from $20 to $1 per substrate. The resulting labor savings are reflected

in section 3.6.

3.5 Other Improvement Programs

MEC has used other programs along with PMTs and Prosims to reduce waste and lower costs.

The following section reviews two of these programs: teamwork counts (suggestion program), and

PPV (operator self inspection).

Teamwork Counts Program

The Teamwork Counts Program is a suggestion program whereby teams can earn money for

implemented and documented net cost savings or avoidances. This program is consistent with

MEC’s efforts to promote teaming and gives the teams incentive to work well together. Both the

PMTs and the Prosim teams are encouraged to submit teamwork counts applications upon

completing successful projects. The employees are given cash rewards based on the success of

their suggestion. The minimum teamwork counts reward is $25, while the maximum is $2,500, to

be divided among the team members.

PPV (Production Process Verification) Program

Production Process Verification (or PPV) is MM’s operator self inspection program initiated in the

early 1990’s. Seven of MEC’s production areas currently use the PPV program to increase

operator responsibility. PPV operators use the same criterion to inspect their own work that the

quality inspectors use. The inspectors have moved from a 100% inspection to a PPV area auditing

capacity.

The seven current PPV areas originally had 99-100% quality, which made it easy to implement the

PPV program. During PPV training, the quality representative will train all

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of the operators in the area at a time and then inspect individual operators’ work. This

representative determines when the operators are ready to be certified, based on the inspection

results. Once certified, follow-up checks are performed periodically.

If the operators have an inspection question, they speak to their supervisor first and then approach

their area quality representative if they need further clarification. When quality problems surface in

an area, the quality representative works with the operators until they develop a solution.

The PPV review team decides whether to retrain operators with frequent errors, or to decertify

them. Once decertified, the operator must be retrained prior to recertification. The members of this

review team include: a quality inspector, general foreman, and a mechanical and quality engineer.

Only one operator has required retraining due to quality problems so far.

Like the PMTs, PPV is meant to empower the floor employees and give them more responsibility,

since they can have the largest impact on cost and quality. As a result of the PPV program,

operators are doing things now that they did not do before, like working to engineering drawings.

They also trade work amongst themselves occasionally, to check each other’s work. The goal is to

have PPVs in 100% of the production areas by the end of 1995.

3.6 Results of Operator Empowerment

The Performance Management and Prosim teams have been effective in process improvement

activities. The teams see their major accomplishment as being an elimination of redundant

activities. Table 3.2 lists the labor reductions that have been attributed to process improvement

teams (PMTs and Prosims) at MEC. Notice that the teams’ efforts have resulted in a 32.4% labor

hour reduction for the preamplifier assembly and a 26.9% reduction for the stack assembly!

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TABLE 3.2

Process Improvement Team Labor Reductions(as a percentage of preamplifier and stack assembly labor costs)

Preamplifier- Eliminate unnecessary cleaning and visual inspection 3.1%- Eliminate stabilization bake 1.3- Change from ink marking to engraving 1.3- Automate noise and resistance tests 1.0- Convert from epoxy to eutectic bonding 25.7

% OF PREAMP ASSY LABOR COST REDUCED 32.4%

Stack Assembly- Change from ink marking to engraving 1.3%- Combine operator testing of stack and detector 6.8- Eliminate preseal resistance test 7.9- Record fail only data 1.0- Change etch stripping temperature to room temp 7.0- Eliminate serializing the detector 2.9

TOTAL OF STACK ASSY LABOR COST REDUCED 26.9%

The labor hour reductions in table 3.2 have meant MEC can build the same amount of product with

fewer operators. These labor reductions, along with the typical employee learning curve have put

MEC well ahead of its expected labor hour per stack. Figure 3.1 shows the learning curve for the

HFI program (buys 2-8) and the startup of HFI (normalized as a percentage of HFI buy 2’s labor

hours per stack). Notice that by buy 8 of HFI, the labor hours were 64% of their initial level. At

the start of the HFII program, the buy 1 labor hours are at 72% of the original HFI hours, well

below the expected 78%.

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FIGURE 3.1

HFI and HFII Labor Hours Per Stack(normalized against the HFI buy 2 labor hours)

Hellfire Buy

% of HFI Buy 2Labor Hrs /

Stack

50

55

60

65

70

75

80

85

90

95

100

Buy2

Buy3-5

Buy6

Buy7

Buy8

HFIIBuy

1

Buy2

Buy3

69.9

64.6 63.865.5

61.1

100

91.3

77.8

71.9

- - - - HFI Actual Labor Hrs ∆ HFII Actual Labor Hrs ----------- HFII Expected LaborHrs

The HFII program has experienced its own rapid learning curve as can be seen in figure 3.2.

Figure 3.2 shows the monthly average number of assembly labor hours per stack, normalized

against the HFII production startup (October of 1993). Notice that in the last three months of 1994,

the labor hours dropped to 50% or less of the initial startup hours.

The buy 1 data point in figure 3.1 is an average of the HFII labor hours to date (since MEC is still

working on buy 1). Therefore, since the number of assembly hours per stack fell dramatically in

1994, the current actual assembly hours in figure 3.1 are much lower than the average of 71.9%

pictured. The rise in hours in July of 1994 was due to a design change that required rework on the

floor, increasing the month’s labor hours.

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FIGURE 3.2

HFII Average Labor Hours Per Stack on a Monthly Basis(normalized against the labor hours per stack for October of 1993)

Month

% of Oct. '93Labor Hrs /

Stack

40

50

60

70

80

90

100

110

120

Oct

'93

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

As a result of the teams’ reductions in labor hours since the HFII startup a year and a half ago,

detector assembly labor hours are currently 17% below their level at the conclusion of the HFI

program. Therefore, within a year and a half span, MEC has been able to restart manufacturing of

Hellfire detector stacks and dramatically reduce the number of production labor hours below the

level that existed after seven years of HFI production.

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3.7 Enablers

Martin Marietta was able to restart Hellfire production, overcoming some major obstacles in a short

time period. The story was clear when we visited MEC ..... these improvements and Hellfire II’s

success would not have been possible without operator involvement and teaming for continuous

improvement. MEC employees cited the following enablers as being key to the program’s success:

• increased operator involvement in cost issues

• and teams of employees working together to bring about change.

It is difficult for some organizations to even consider bringing floor-level employees together to

discuss cost issues, let alone allowing them to work together to reduce costs. Traditional

management practices do not involve operators in decision making. Instead, the traditional manager

relies on a host of support personnel to cut costs and make process improvements. This approach

certainly works for higher-level decision making that is beyond the floor environment. But, when

it comes to making process improvements on the floor, a combination of operators and support

personnel typically have the best perspective and experience in how to reduce waste.

Operator involvement in cost issues does not imply operator teams should pour over executive-

level financial reports. However, it does charge management with making the operators

accountable for the costs on the floor (for example, rework levels and how much D.I. water they

use), and does empower the operators to make improvements in areas where they (and usually

only they) can see the opportunity.

Using teams for the sake of teaming is not a valid method to reduce waste and cost. Instead, this

sort of teaming only adds additional waste and cost to the production area. Focused, value-added

teams, however, can have a dramatic impact on the production processes. MEC saw that the

quality circle concept was a step in right direction, but it did not include all of the operators,

provided only a one-sided perspective, and did not fully achieve acceptance on the floor. The

PMTs have been effective in generating operator feedback both inside and outside of team meetings

to make improvements. As one operator stated, “One of the biggest assets in wafer fab is that we

all talk to each other.” While PMTs have proven successful in MEC’s production environment,

they have found equal success in the rest of Martin Marietta’s production and engineering areas.

While MEC’s PMT and Prosim efforts have achieved significant results in a short period of time,

the payoff is just beginning. The operator’s responsibility for cost and quality improvements will

help Martin Marietta remain competitive in the future.

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Section 3

Flow Optimization

The final three case studies focus on flow optimization within a production operation. Flow

optimization refers to the reduction of unnecessary processing steps and elimination of other

sources of waste during production. It also refers to the shift from a discontinuous flow (different

part orders bounce from machine to machine in a unique flow path, as in a job shop) to a

continuous flow (parts follow a smooth flow through a single production area, as in an assembly

line). Unlike the process improvements discussed in section 2, flow optimization often requires a

complete restructuring of the production process to reduce waste and move toward continuous

flow production.

The ultimate goal of flow optimization is to reduce production costs, work in process, and cycle

times (or the time it takes to process one part or assembly). An optimized flow means only

producing what the next processing step can work on, eliminating work in process between the

steps. Cycle time reductions allow the firm to respond more quickly to customer demand and are a

clear indicator of how much control a shop has over its operations.

The Toyota Motor Corporation had little money and a low production volume after the war, so they

focused closely on eliminating waste and only performing value added activities. According to

Taiichi Ohno (the father of the Toyota Production System) “the greatest waste of all is excess

inventory.” Work in process not only commands an inventory holding cost, but also includes other

costs like: moving, storing, maintaining, and parts inventorying costs.

The next three cases (Lockheed Aeronautical Systems Company, Texas Instruments Defense

Systems and Electronics Group, and Pratt & Whitney General Machining) concentrate on flow

optimization. The cases are particularly interesting, since they focus on the efforts of aircraft

component manufacturers to optimize their flow in a low volume, high part number mix

environment.

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Chapter 4

Case Study: Focused Factories in Component FabricationLockheed Aeronautical Systems Company,

Marietta, Georgia

For Lockheed Aeronautical Systems Company (or LASC) and the rest of the military aircraft

industry, cutting costs and gaining flexibility are significant challenges, since their manufacturing

environment is more complex than it is in most other industries. While low production volumes

have recently shifted even lower, airplanes still have a large number of parts and thus, a high

number of part flows. For example, production volume of a typical plane may be 30 units per year.

Each plane has approximately 100 thousand part numbers and 1 million individual parts.

Components in LASC’s parts fabrication shops flow discontinuously among many machines on

one of approximately 5 thousand flow paths. There is little repetition, since operators do not

perform the same task on the same part very frequently. If we consider the automobile industry for

the sake of comparison, the differences are revealing. Several hundred thousand units of one car

model may be produced per year. Automobiles have approximately 4 thousand parts and

components typically flow over several distinct and continuous paths, where workers perform the

same task repeatedly.

With a large number of flows and a small number of units produced, the lack of processing and

flow repetition make it difficult for component producers to maintain low levels of work in process

(WIP) and to produce parts quickly and flexibly at a low cost. Merely tracking and managing the

numerous part flows can be a confusing and expensive process. However, carrying high levels of

WIP is inefficient and costly. The capital cost tied up in inventory alone is expensive, but is only

one of the costs associated with WIP. Some (but certainly not all) of the other costs of holding

excessive inventory include: warehousing, expediting, and material handling costs, as well as

control systems and factory space, and damage, obsolescence, and rework costs.

LASC adopted the concept of focused factories to answer these issues. The following case study

will focus on the key features, benefits, and enablers of implementing focused factories as

experienced by LASC at its Marietta, Georgia facilities.

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4.1 A Plan For Change at LASC

During the late 1980’s LASC established the Lean Enterprise program to help the company

improve its performance. This program centered around implementing lean practices throughout

the organization to eliminate waste. As a first step, the potential sources of waste were identified

and graphed to determine where the use of lean practices could have the most impact. This graph

can be found in figure 4.1.

The sources of waste identified were:

• product design - poor designs and long development cycles

• product control - production, material, and management control

• methods of making the product - machines, processes, planning, and tooling

• personnel obstacles - contracted labor regulations and individual employee work practices

• systematic and random errors - processing errors that affect product quality

LASC identified the first three items in figure 4.1 (product design, product control, and methods of

making the product) as the largest sources of waste. The intent was to focus on these three items

first, since they promised the greatest opportunity for waste reduction. It was felt that personnel

obstacles and systematic and random errors were small compared to the other sources of waste and

therefore should be addressed over the long term through contract negotiations, employee training,

and process improvement efforts.

The largest manufacturing sources of waste were product control and the methods of making the

product. When searching for lean practices to reduce waste, members of Lockheed’s Lean

Enterprise team decided that the primary goal should be to eliminate WIP waste by optimizing the

process flow. It was obvious that some of the lean practices could not work at LASC. For

example, there are too many complicated process flows to employ a kanban system in the

fabrication area. Eventually, the focused factory concept was adopted since it embodied many of

the lean practices while meeting LASC’s production needs.

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FIGURE 4.1

Sources of Waste

58

Focused Factories

Lockheed defines the focused factory as a matching of authority with responsibility, providing the

right production tools, materials, and plans at the right place and time. The focused factory

redefines management responsibility from a single process to an entire product family flow.

Therefore, the goal of the focused factory is to place all processes involved in producing a family

of parts into one area under the control of one manager. The focused factories use a computer flow

simulation run nightly to determine the build needs, providing better control of the process flow

and the opportunity to make faster scheduling adjustments.

Shifting from LASC’s traditional process-focused (or functional) cost centers to focused factories

involves a reengineering of each production area. LASC management and engineers are

responsible for generating gains from this reengineering. However, waste reduction is not limited

to reengineering activities. Once the focused factories are in place, management and line employees

are responsible for continuous improvement within the focused factory.

4.2. Implementation of Focused Factories

LASC has historically organized machinery by process-type (or function) into cost centers. An

example of a cost center is the standard mill shop, where only milling operations take place. As

focused factories are proliferated, management and engineering are responsible for combining cost

centers into focused factories. Typically, this reengineering team identifies potential focused

factories from existing cost centers and component families. Managers are realigned from

geographic and process-specific assignments (like stores, tool room, first cut area, etc.) to focused

factory assignments (where they control their own store, tooling, first cut, etc). Figure 4.2 shows

a diagram of this organizational shift.

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FIGURE 4.2

Focused Factory Change in Organizational Structure

Process A Process B Process C

Manager 1 Manager 2 Manager 3

Process A Process B Process C

Manager 1: Product Family 1

Manager 2: Product Family 2

Manager 3: Product Family 3

Before: Each Manager Controls One Process

After: Each Manager Controls One Product Family

The reengineering activity is completed when the processing equipment is consolidated into the

area and a computer simulation program is added for scheduling. An example of a focused factory

implementation (the small extrusion focused factory) is found in section 4.3 of this chapter. Before

moving to the example however, the following section will describe the steps taken to implement

focused factories, including: the focused factory layout, the development and use of computer

simulation as a scheduling tool, and other programs that are being implemented as part of the

focused factory effort.

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Focused Factory Layout

Before focused factories are laid out, engineering selects the equipment required to support the area.

Common component processing flows between this equipment are identified and the layout of the

focused factory is optimized around the most frequent flows. The area is organized so part movement is

not restricted by barriers and the work areas within the focused factory are visible and accessible. All

machinery is placed close to aisle ways, so parts can be easily transferred between machines. For

example, the sheet metal and large extrusion focused factories have an aisle down the center of the area

to facilitate WIP flow. Depending on the machinery identified to build the focused factory, some of the

equipment is added from other LASC processing areas outside of the fabrication plant, but most of the

machinery comes directly from the fabrication cost centers within the plant. As the machinery is moved,

older equipment is rebuilt, while some is replaced with newer machines.

As the equipment begins to be relocated and the cost centers are transformed into focused factories,

improvements are made to the production areas. Additional lighting is added, the machines are

painted white and the floors are painted light gray to provide a clean and well-lit work

environment. Power and air supplies are added to all support columns (even if a machine is not

planned to be installed close by), to give the focused factory flexibility if later equipment relocation

is required.

Implementation of the Focused Factory Scheduling System

Each of the focused factories has its own computer that runs daily finite capacity (utilizing the

levels of focused factory capacity, labor, overtime, etc.) simulations to schedule the focused

factory’s production. Since the simulation is advanced enough to understand the focused factory’s

capacity, it schedules orders by priority and machine availability. If one machine is loaded for the

day, the computer begins to schedule other jobs that don’t need that machine. The simulation

optimizes the flow of orders, so they move quickly through the area once released. The computers

running the focused factory simulations are tied to LASC’s legacy computer programs, that control

and update: tooling, material, bill of material, inventory kitting, routing, current location, and

expediting data.

The initial focused factory implementation plan required the relatively rapid development and

installation of a scheduling system. At first, LASC considered using off-the-shelf

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finite capacity software programs to combine data from the different systems and run a production

simulation for the individual focused factories. Unfortunately, though, the software selection was

limited, and none of the offerings were robust enough to handle the data load. Of the available

programs, the LASC engineers chose to test the software program that best met their needs. This

program had to be shut off after it ran for approximately 15 hours, however, since it was so slow,

it had only been able to run a simulation of 1/3 of a focused factory!

As a next step, LASC asked this same software company to modify their software to perform

faster simulations. The company accepted the challenge, but when it appeared that they would not

meet the required software roll out date, LASC decided to hire the necessary people to write their

own software. As the roll out deadline arrived, the newly formed LASC development team had

created a UNIX-based RISC software that could run a simulation in 15 minutes, while the

development company still could not get their program to run!

LASC’s development team’s scheduling system works in the following way:

• LASC’s main scheduling system downloads data to the individual focused factory computers• these computers sort through and find their area’s production requirements• the software calculates a critical ratio that tells what work is needed soon• if these parts need processing work completed outside of the focused factory, the computer

automatically compensates and moves them ahead on the schedule.

Code changes are written 2-3 times per month, providing a quick and cheap method of

continuously improving the software.

In the past, it took up to 2 weeks to alter the shop orders, but since each focused factory runs its

own scheduling simulation every night, the focused factories can quickly change the priorities of

orders. Priority work is easily identified, since hot (late or almost late) orders are placed at the top

of the order list. The system reports make it more obvious than ever before if these orders are not

worked on, providing additional incentive for the focused factories to work on priority orders first.

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Witnesses to the development team’s efforts feel that the team’s small size, extensive software

development skills, and strong dedication to the success of the software in production were the

primary reason that the development efforts succeeded. A larger group of developers would have

been harder to manage, and would probably not have met the software roll out date.

To speed the implementation of the scheduling system into the focused factories, computer

terminals were installed with radio transmitters, rather than wires, tying them together. The LASC

engineers chose to use transmitters, since installation of dedicated terminal connection lines could

have taken over a year. It turns out that this was smart in a number of ways, since the transmitters

have actually been more reliable than dedicated lines.

Other Lean Programs Implemented Simultaneously with Focused Factories

LASC’s management has used the focused factories implementation in the fabrication areas as an

opportunity to launch other lean programs. These programs include: supplier JIT, employee

suggestion, and setup reduction programs.

The supplier Just In Time (or JIT) program was introduced to reduce raw material inventory at

both LASC and the supplier site. Rather than making large order deliveries once every few days,

or once a week, suppliers make daily deliveries of the material the focused factory needs for only

that day. The supplier JIT program currently involves just one supplier in the small and large

extrusion areas, but is scheduled to grow rapidly.

LASC chose Tiernay Metals, a supplier of raw materials for the extrusion area as a first candidate

for the supplier JIT program. LASC made Tiernay a certified supplier after they demonstrated the

ability to consistently deliver quality service and materials. Tiernay receives LASC’s orders and

loads color-coded Lockheed dollies with raw material. The dollies are transported to LASC and the

dolly color tells production control which focused factory will use the material. Since Tiernay is a

certified supplier, their parts automatically pass through incoming inspection and they receive

payment. The old method of parts delivery needed 13 department handoffs, requiring 9 managers,

and 25 steps, while the JIT program involves 5 handoffs, 5 managers, and 12 steps.

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LASC’s suggestion program is an informal program that provides employees with the opportunity

to give input related to: the bill of materials, orders, work station layouts, tool callouts, time

standards, and other aspects of the work environment. The operators make their suggestions to the

area’s representative (typically a fellow hourly employee or the supervisor), who carries the

suggestion to the hourly part build planner, manufacturing engineer, or focused factory support

team. The planner is co-located with the manufacturing operations and is responsible for evaluating

and implementing suggestions related to the routing sheets (specific operator instructions, tooling,

and operations illustrations). The manufacturing engineers and support teams handle suggestions

related to layout and equipment changes, and redesigning of the production process.

This method of employee input has had a tremendous response in the focused factories. The many

suggestions have brought about rapid corrections and improvements to worker and system

problems. They have also helped improve communication between management and workers and

have given the employees direct input into their work environment.

Another program that has helped spread lean practices through the focused factories is the setup

reduction program. Each focused factory has at least one setup reduction team comprised of

industrial and manufacturing engineers, operators, and in some cases manufacturing supervision.

These teams have actively attempted to shorten machine setup times as a means of reducing labor

hours. The focused factories have benefited greatly from the reduction teams’ efforts, since short

setups are necessary when dealing with the small production lot sizes that the scheduling system

calls for, and since the original setup times are as long as run times on some pieces of machinery.

Setup reduction teams often look to eliminate dedicated tooling to reduce setup times. For example,

the small extrusion focused factory’s ADRM (or automatic drill and route machine) has automated,

flexible fixturing (rather than rigid, specific tooling) that eliminates the need to setup processing

tools. Instead, the machine can start milling or drilling almost immediately.

4.3 An Example of Focused Factory Implementation - The Small Extrusion Focused Factory

The first of LASC’s focused factories was the small extrusion focused factory (or SEFF). Small

extrusions are any extrusions of less than 28 inches in length. These extrusions are

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components of the C-130 cargo plane and P-3 Maritime Patrol Aircraft that are assembled in the

same plant as the SEFF. Most of the extrusions in the small extrusion focused factory are

aluminum and some of the focused factory’s processes include: sawing, milling, routing, sanding,

and deburring.

The SEFF was formed from part of the original extrusion cost centers. These cost centers had

some of the most complex processing in the plant. Combined, the extrusion cost centers accounted

for approximately 20 thousand part numbers, and had some of the highest costs and the lowest

efficiencies. The small extrusion area was selected as the first focused factory due to its low risk

and high potential for successful cost reduction. The risk was low, since management could exert

complete control over the processing flows through the automated material delivery system

discussed below. Furthermore, LASC’s management calculated that a small extrusion focused

factory would pay for itself within a period of three years or less.

During the planning stage for the SEFF, parts were separated into small and large extrusion

categories. These categories were selected because of the similar material handling characteristics

of like-sized parts. Once the parts were separated, common processing flows were identified.

Common flows helped the engineers optimize the location of existing machinery and equipment

added to the focused factory from other areas.

Figure 4.3 shows some of the common flows for the trimming portion of the extrusion area. The

trimming areas performed drilling, cutting, milling, blending, and deburring processes. Before

focused factories were established, cost center 67 processed small and large extrusions, sheet

metal, tubing, and wire cable. Figure 4.3 shows the most common flow patterns for the cost

center. Even though only the most common flow patterns are shown, notice that many different

material movements are depicted. There are 21 different flow patterns in the drawing, with an

average of 66 part numbers per pattern (the flows for approximately 1,400 part numbers are

shown).

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FIGURE 4.3

Part Flows In Cost Center 67 (prior to SEFF)

Cost Center 67 - Trimming

Engineering found that the small extrusion focused factory had such a large number of distinct

flow paths, that it was not possible to develop a conventional floor plan with an aisle way to move

parts around the area. Instead they began to research automated material movement systems that

could efficiently move the components to the proper processing stations. Two systems were

identified: one was a system of conveyors running between work stations and the other was a

totestacker system, using a crane-operated material storage and delivery system. As the two

systems were evaluated, the engineers

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found that the totestacker system better met their needs. The conveyor system was unsafe and

prevented employees from freely moving around the production area, while the totestacker system

could easily move parts between work stations without affecting the operator.

The SEFF Totestacker System

LASC purchased a double totestacker system from Litton Unit Handling Systems in Kentucky for

the small extrusion focused factory. The totestacker is a 3-dimensional random access delivery

system that functions like a “black box”. Components and tools are stored in the totestacker and

delivered where they are needed, when they are needed, regardless of processing equipment

location. This “black box” facilitates a random routing of parts and effectively turns the many

discontinuous flows into continuous flows. Figure 4.4 shows how the totestacker creates a

continuous flow through the production area, and an exploded view of the totestacker in the

extrusion trim cell (the SEFF) can be found in figure 4.5.

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FIGURE 4.4

The Totestacker Creates a Continuous Flow

Work Centers

Work Centers

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FIGURE 4.5

Exploded View of Totestacker System in the SEFF

The totestackers are both two stories tall and are located directly across from each other. Machinery

and work stations were installed between the totestackers on both floors. The WIP and tools are

stored and delivered between work stations in totepans. As a component or tool is put into the

totestacker system, a bar code ties it to a totepan. The bar code is also used to tie the component to

a job. The totestacker system understands each job’s processing sequence and automatically

follows the production schedule to move the pans to the proper processing stations. The crane

pushes pans through ports located in the sides of the totestacker, into the processing area. Close

examination of figure 4.5 reveals the roller racks that transport material from the totestacker into the

work areas (like sawing, vibratory and hand deburr, etc.) and back. Pan storage within the

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totestacker is optimized based on crane travel time and usage (the more frequently run parts are

closer to processing areas) and on grouping of processes.

The totestacker has other benefits beyond solving the SEFF’s multiple flow delivery problems. It

helps the paint department by storing components (completed in the SEFF) with the same painting

combinations together and shipping them to the paint department as a batch. The totestacker also

stores approximately 85% of the SEFF’s 10 thousands tools (drill and layout templates, router

blocks, etc.). This gives the SEFF quicker access and better control of its tools than it had in the

past, since the majority of these tools were originally located in the tool crib outside of the small

extrusion focused factory. Finally, the totestacker minimizes future layout changes, since no layout

changes are required if processing flows change in the future.

The SEFF’s Computer Scheduling System

While the totestacker system gets the right materials and tools to the right places, at the right time,

the SEFF’s scheduling system is the true driver behind optimization of the area’s production flow,

and the resulting reduction in work in process and throughput time.

The focused factory simulation scheduling system that was described earlier was first used in the

SEFF. The system has successfully scheduled the SEFF production since 1991. Every work day,

the data begins to flow from LASC’s legacy systems to the main focused factory system at around

12:30 AM, and continues until 2 or 3 in the morning. The system makes corrections for

approximately 1/2 hour and then starts running simulations on the SEFF computer. The shop

orders are combined with the simulation data and a matrix is produced that shows what material to

release over the next 50 days. The computer starts ordering tooling and material (at vendors) and

the shop orders are printed for the day.

All of the focused factory scheduling systems have an expediting / shortage listing online that is

printed daily. By using this list along with the daily schedule, the SEFF can tell which orders are

actually due soon and which cannot be worked on yet.

In the past, shop order papers were printed 80 days before the parts were needed. The orders were

placed in a file so production control could release them to the floor early if necessary, to load

balance the shop. This practice helped level the shop orders but was not as effective as the current

system. Now the orders are released one day before they are needed and the focused factories are

responsible for building the orders that are due first and then can select to run other scheduled

orders that have not been printed, to level production. Since only required orders are printed, and

the focused factories have their own expediting / shortage list, employees only work on the “right”

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jobs, rather than “cherry picking” (bypassing work to get to an easier job that will help the cost

center reach production goals) from a number of printed shop orders. This means a more proactive

handling of orders, where parts are processed before their orders become hot.

The expediting / shortage list has eliminated the need for the one foot thick expediting list that

production control printed once a week and used to track orders in the past. This makes order

tracking much easier and gives the focused factory supervisor immediate information about which

orders are past due. There was initial resistance to the use of this new list, since it took control of

tracking orders away from the expediters and gave it to the focused factories. However, list usage

grew quickly as the expediters found that orders did not get worked on if they were not on the new

list used by the focused factories. While this list has reduced the need for expediters dramatically,

they still handle special material movement problems as they arise.

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4.4 Problems in Implementing the Focused Factories

The Lean Enterprise personnel “paced” the implementation of focused factories to minimize

mistakes, risk, and cost, while establishing credibility. Despite this deliberate approach, they still

encountered considerable resistance. Two examples of resistance to focused factory

implementation come from the use of the totestacker and the reduction of WIP on the floor.

Implementation of the focused factories confirms industrial experience that middle management

reluctance can be a powerful impediment to change. Initially, management resisted the totestacker

system, since it was “new”. However, once the SEFF management realized that the totestacker

created little change in the manner that work was completed (it did not significantly affect the

worker’s day-to-day tasks), the totestacker was accepted. It helped bring about a cultural change

since it took absolute control of the parts flow away from the workers and management and gave

most of it to a computer-based system.

Focused factory management stated that their biggest challenge was to change the way people

thought. They began the change process by “selling” the salaried employees on the focused factory

concept first. Next, the supervisors were responsible for convincing the hourly employees that 2

months worth of WIP stacked in the department was not a good thing. The supervisors were able

to transfer this idea to their people, even though the workers felt that a reduction in inventory meant

that they might be working themselves out of a job. However, once the workers saw the focused

factory concept work, they felt better, and now complain if there is too much WIP in the area!

Management has also become supportive of focused factories. New focused factory managers

want to succeed in successfully implementing the concept in their cost centers, since other

managers have already met the challenge.

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4.5 Results of Implementing Focused Factories

To date, the small extrusion focused factory is one of eight LASC fabrication focused factories that

have been implemented. These focused factories listed in order of establishment date are: small

extrusions, large extrusions, tubing, large machined parts, sheet metal, composites, welding, and

wiring. The remaining fabrication cost centers are scheduled to be combined into four focused

factories by the end of 1996. The four planned focused factories are: the fiberglass / honeycomb,

subassembly, small machined parts, and medium machined parts focused factories. A fifth focused

factory, the paint and chemical process focused factory, is scheduled to be established once the

others are completed. The paint and chemical treatment resources are currently shared among the

other focused factories.

Focused factories have allowed the employees (especially management) to concentrate on

improving one production area to bring about real change. They have reduced: throughput time,

shortages, inventory, scrap and rework, manpower, floor space, setup time, and tooling.

Shifting Metrics

In the past, the cost centers were measured on metrics like schedule conformance, cost (actual

versus standard hours), and quality action documents. For the most part, these metrics were

ineffective in bringing about improvements and often led to poor work practices. For example, cost

as a metric encouraged cost center managers to work on easy jobs to meet their production

standards.

Since the focused factories have been implemented, schedules are met consistently. The new

metrics regularly used in the focused factories are throughput, conformance to forecasted loads and

schedule, and employee suggestions. Other metrics are charted, but most are only used

occasionally for specialty reasons (to track lost tools, etc.).

Throughput Time Reduction

Store to stock throughput measures the time period from when a shop order is released, to when

the completed part closes to stock. According to focused factory manager Ken Moody,

“Throughput has to be everybodies priority, including the whole factory and the outside vendors.”

By leveraging the ability to control their own processes, do their own scheduling, and concentrate

on one family of products, the focused factories have been able to significantly reduce throughput

times and levels of WIP between the initial focused factory implementation and the present (see

table 4.1).

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TABLE 4.1

Focused Factory Throughput and WIP

Focused Factory Store to StockThroughput

WIP (days of inventory)

Init ial Current %Reduc.

Init ial Current %Reduc.

Small Extrusions 65 days 11 days 83 % 35 day 2 days 94 %Large Extrusions 48 21 56 % 8 2 75 %Tubing 45 11 76 % 9 3 66 %Lg Machined Parts 100 50 50 % 25 11 56 %Sheet Metal 50 17 66 % 5 2 60 %Welding 41 18 56 % 8 7 13 %

Note: all WIP numbers are averages from the cost centers that make up the focused factory.

Information in table 4.1 is only given for focused factories that have data. The bottom three

focused factories in the table have been running less than a year, so their improvements have not

been as dramatic as the first three focused factories. The inventory level for the entire fabrication

area has dropped to 50% of the level prior to the start of focused factories (end of ‘91) and is

estimated to drop to 25% of the original level by the end of 1996, once all of the focused factories

are in place and running. As the aircraft assembly cost centers eventually move toward focused

factories, inventory levels across the plant should drop even more significantly, since fabrication

and assembly will become more integrated.

As mentioned earlier, the introduction of the focused factory scheduling system along with the

reduction in throughput has reduced expediting significantly. For example, in the large extrusion

focused factory, four people followed and tracked the orders initially, with poor results. Now, one

person working half their shift can handle this task.

Other Results and Findings

The focused factories have given the production area more power. Aside from the improved

control of tools and scheduling mentioned earlier, the focused factories have

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provided better control over maintenance and processing. Most of the focused factories have a

“dedicated” maintenance person who answers all of their calls (as well as calls in other areas too),

providing better response and consistent machinery repair.

Since much of the necessary processing equipment is found within the focused factories, WIP

does not usually need to be moved across LASC for processing. When parts leave the focused

factory for processing in other cost centers, they have to be handled multiple the focused factory

for processing in other cost centers, they have to be handled multiple times as they move between

factories and across docks. Even large parts get lost, and the cost centers often concentrate on hot

orders, neglecting the focused factory orders until they become hot. By the time these orders return

to the focused factory, they are far behind schedule. When the focused factories were first

implemented, moving parts to other areas for processing accounted for 25% of the flows. It

currently accounts for 10% of the flows, with the goal being 0%.

LASC management experimented with a lot size reduction program, but found that their lot sizes were

already significantly low. Instead of focusing on lot size reduction, the focused factories have concentrated

on reducing throughput times, which has driven inventory reduction.

Small Extrusion Focused Factory Results

As mentioned earlier, the SEFF was the first focused factory at LASC. The SEFF has been in

place for approximately three years and has had time to make dramatic improvement. For example,

the data from table 4.1 shows that throughput time is currently 83% less than the original level, and

has almost reached its goal of 10 days. Also, the work in process fell from an initial level of 35

days worth of supply down to 2 days worth, a 94% reduction. Another measure that shows the

success of the SEFF is inventory turns, or how often you turn over your inventory in a year (# of

work days in a year / focused factory throughput time). Initially, the SEFF had 3.8 inventory

turns. This number had grown six times larger, to 23 turns by the end of 1994.

Much of these inventory reductions can be attributed to the manner in which orders are processed.

Originally, large numbers of shop orders were “dumped” on the extrusion cost centers at one time.

It was not uncommon for the number of orders to fluctuate between 600 to 6000 orders (at an

average of 30 parts per order)! Without fully understanding the shop order release trends, and

having little idea of what orders took priority or which

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FIGURE 4.6

JIT Inventory Trend

LockheedBefore JIT

Tiernay Before

Tiernay atJIT Startup

Tiernay Now Tiernay in

Future

The setup reduction program has reduced the time to build a part within the SEFF by an estimated

9%. Wherever automation has been used to reduce setups, the focused factory managers have

found that the reduction in sources for human error have increased quality. For example, the SEFF

chop sawing process has moved from three sigma to six sigma quality, since no setup is involved,

making initial saw settings more precise. Furthermore, wherever tooling has been reduced or hard

tooling has been shifted to soft tooling, processing problems have been reduced significantly.

Finally, the suggestion program has logged over 20 suggestions per employee per year, with 94%

of the suggestions being implemented. The program has accounted for over 2,600 documented

planning changes in the SEFF alone!

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4.6 Focused Factory Goals and Future Work

LASC’s fabrication area has pursued an ambitious schedule, by successfully launching the focused

factory concept and putting eight focused factories in place over the last three years. The next two

years calls for the remaining four fabrication focused factories to start up, before the concept is

shifted to other areas of LASC (current plans specify that the fabrication paint and chemical

treatment areas and the aircraft assembly areas will become focused factories). Other goals have

also been suggested and will be discussed below to show the direction in which the focused

factories are moving.

Direct Changes to the Focused Factories

LASC management has several direct changes planned for the focused factories in the future. Some

of these changes relate to the scheduling system. The focused factory computers are essentially

autonomous currently, but are designed to provide an upward feed to the proposed enterprise data

system. This system will be an open system that will tie together the orders and shop activities

much better.

Another scheduling system goal is to speed the scheduling simulations and eventually be able to

resimulate the production schedule in real time. In other words, whenever an employee completes a

job and looks for more work, they will be choosing the next job from a schedule that was just

generated.

The future direction for the focused factories is to continually improve the existing operations.

Examples of ongoing improvement efforts are the setup reduction efforts, improvements in the

shop order system, and the move toward paperless manufacturing. Frequent changes are made to

the shop orders to ensure that employees have the correct work instructions and tools to perform

their jobs. Eventually, the fabrication areas will move to a paperless system (as the aircraft

assembly areas have), to replace sample parts with computer-based 3-D exploded views and to

clarify questions on production prints.

Focused factory management is also attempting to improve the existing operations by continuing to

add essential processes from other cost centers. As was mentioned earlier, while the focused

factories have had excellent success in scheduling and controlling the flows within their area,

problems often arise when parts must travel to other processing areas. For example, the SEFF

recently bought and installed a strippet punch machine in their area, since they had problems

getting rapid turnaround on this process in the past. By studying cost data, the focused factories

can see what it will take to effectively perform each processing step “inhouse”, rather than outside

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the area. The long term goal is to understand how to be the best at all processes, so the focused

factories can perform all processing in their area.

A final plan to improve focused factory efficiency relates to the number of employee job

classifications. Any more than one job classification is considered to be a bottleneck, since

management needs to schedule shop order work among several worker classifications. Therefore,

the focused factories are moving toward one or two classifications handling a whole order from

start to finish.

Another problem with a large number of classifications is that it provides a greater opportunity for

employees from the other cost centers with higher seniority to “bump” out the focused factory

employees. This scenario has repeated itself frequently at LASC, since headcount reductions have

been high in some production areas, forcing the employees to find jobs in other departments.

Historically, fabrication has often had 2-3 turnover cycles in personnel per year! It is estimated that

this rapid turnover causes fabrication to carry several extra days of inventory, since more employee

turnover has meant constant employee training and a slower work pace. The focused factories have

helped stabilize the pool of employees, since their level schedules have meant fewer layoffs and

recalls.

As all employees eventually become focused factory employees, the goal is to have each operator

become proficient on as many of the processes and machines in their focused factory as possible.

The ultimate goal is to reduce the number of focused factories labor classifications to one or two.

Two classifications could be used designate the employees’ skill levels. The focused factories

could maintain a classification for experienced employees and one for the less experienced

employees. Since certain skills would be required to hold the experienced job classification, LASC

could better protect their skilled focused factory employees from being bumped by employees from

other areas that have not acquired the skills. For example, this would keep skilled Extrusion

Focused Factory workers from being bumped by skilled Welding Focused Factory workers, and

vice versa. If additional workers are needed in a particular focused factory, new workers would

start on the bottom in that focused factory and work their way up as they developed their skills.

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Other Future Focused Factory Work

Focused factory managers also have plans to make changes to the supplier JIT program and to the

metrics used to evaluate quality. The next phase in the JIT program is to eliminate internal

transportation by delivering raw material directly to the cost center where it is used. This change in

delivery would further reduce the delivery of raw materials to 4 department handoffs and 8 steps,

versus the current 5 handoffs and 12 steps mentioned earlier.

In the past, the metrics used to measure quality and the methods used to scrap parts did not give

focused factory managers the proper incentive to improve their quality. QAD’s (or quality action

documents) are currently used to collect data. Unfortunately, these reports are easy to manipulate

and tend to mask quality problems. Furthermore, the production areas were not charged for scrap

in the past, so a worker could work on a part, make a mistake, scrap out the part, and begin to

work on the part again and the department would be paid for working on the part twice.

To close these quality loopholes and give focused factory managers additional incentive to improve

quality, LASC management has proposed adoption of a new metric, the cost of nonquality. The

cost of nonquality would measure how much labor and material was invested in a part before it

was scrapped. This metric gets the costing down to the process level, allowing focused factories to

chase quality problems to their source. The cost of nonquality would be charged to the last area

where work was performed. If this area did not create the defect, it would still be charged, since it

passed on the defect. This policy gives departments the incentive to check processing quality

closely and not accept bad parts. The cost of nonquality would probably be used in conjunction

with another cost measure that calculates the total and average costs and compares them to the best-

ever cost for a part.

4.7 Enablers of Focused Factory Implementation

LASC has been successful in transforming its old process specific cost centers into product family

specific focused factories. As table 4.1 shows, these changes have brought about dramatic

reductions in WIP levels and throughput time. While it is likely that the implementation of focused

factories would follow different paths and encounter different problems at other companies, there

are four major enablers that must exist if a company is to obtain a similar level of implementation

success as LASC:

• a deliberate, well planned approach

• the scheduling / information system

• the change in organizational structure

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• the cultural means to bring about implementation changes

• and the managers trained in bringing about change.

The Lean Enterprise department spent years analyzing whether the focused factory concept was

right for LASC and developing a plan for its implementation. Their introduction of the concept was

slow and deliberate to minimize errors and remove the issue of focused factory cost, while building

credibility. Errors and cost issues could easily have been pointed to as reasons to “kill” the project.

Instead, having a deliberate, well planned approach for implementation gave the focused factory

concept the opportunity to be successful in the face of resistance.

The information system brings together data from separate systems to provide a daily schedule for

each focused factory. This schedule pulls required orders through the area, keeping employees

working on the right orders, calls attention to and allows correction of scheduling errors faster, and

closely tracks shop order status, giving the areas the power to perform their own expediting. A

small, internal, dedicated software development team enabled LASC to create the custom

scheduling system it required.

Focused factories required a change in organizational structure from individual process to product

family management. The focused factories could not have been implemented without this

organizational shift, since the concept makes one manager responsible for the entire product line,

allowing them to concentrate on optimizing the process flow. Bringing the processing equipment

together into one area while maintaining the old management structure would have spread the

machinery location and the management responsibility even further than the old cost centers and

would only have caused confusion.

While corporate cultural change was not the goal or necessarily a byproduct of the focused factory

implementation, an acceptance of change needs to be present within the culture for a successful

implementation. While some of LASC’s management had to fight hard to implement the focused

factories, Lockheed’s culture was not so impervious to

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change that they were fighting a losing battle. Some feel that the defense aircraft industry is

comprised of companies with cultures that discourage change. However, the implementation of

focused factories at LASC has proven that dramatic change can be brought about within this

industry if management is determined to succeed and knows how to achieve change within their

firm’s culture.

Which brings us to the final enabler. LASC’s Lean Enterprise management, along with the

engineering and production managers responsible for putting the focused factories in place, were

the most important enabler to focused factory implementation. These managers brought about

sweeping organizational and processing changes in the face of significant resistance. Without their

vision, drive, and management skills, implementation of the focused factory concept would surely

have failed.

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Chapter 5

Case Study: Cellular and Continuous Flow ManufacturingTexas Instruments Defense Systems & Electronics Group, McKinney,

Texas

The year was 1989 and Texas Instruments (T.I.) Defense Systems & Electronics Group’s

(DSEG’s) McKinney board shop was facing some formidable problems. Board orders were

falling, the product mix was growing, and customers were becoming more demanding (cost and

cycle time were expected to drop, quality rise). While the board shop had taken steps to improve

the situation, there were still approximately 14,000 work in process (WIP) boards, cycle times

were hovering around 8 or 9 weeks, and attempts to achieve further improvements had stalled. The

board shop management knew that if they were to become more competitive, they would have to

take dramatic steps to reduce costs. Out of this need, T.I decided to pursue improvement funding

through the Air Force Industrial Modernization Incentives (or IMIP).

The following case will describe the McKinney board shop’s (or MBS) reduction in WIP and

improvements in cycle time through the IMIP. It will focus on the features and enablers of the

program and the results MBS received by moving toward cellular manufacturing and a pull

operating system.

5.1 Developing The Industrial Modernization Incentives Program

Enhancing the MBS’s performance in the late 1980’s was a gradual process of incremental

improvements. Manufacturing pursued improvement projects as they identified opportunities. For

example, work in process awaiting processing was consolidated into automated carousel storage

racks to eliminate some of the parts chasing performed by production control. The carousels helped

manufacturing gain control of the flow of parts, and as the board area’s WIP was reduced further,

the carousels were systematically eliminated.

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Eventually, the MBS reached a point where improvement efforts stalled. It was clear that an

aggressive improvement program would be necessary to leap to the next level of WIP reductions

and cycle time improvements. As a response to this need, management launched the IMIP in late

1990.

The IMIP was a cost share program where T.I. split the cost for development and implementation

with the government. The goals of IMIP were simple: become more competitive by reducing costs,

cycle time, and WIP, while improving product quality. A 10-12 person management steering team

developed the comprehensive IMIP plan that addressed the project’s goals.

The first steps toward achieving these goals was an identification of internal cost drivers and

improvement opportunities, while benchmarking other board shops to find best practices. The

IMIP team identified cost drivers and consolidated the results into seven distinct projects.

Opportunities to decrease the cycle time and WIP were also identified and ranked based on the

program’s ability to bring about improvement and on the perceived cost significance of the

opportunity.

The benchmarking activities involved studies of 10 PWB (printed wiring board) shops. Six of

these shops were owned by other companies, while four belonged to T.I. The benchmarking

results showed that Honeywell had great success by switching to cellular work units. A work cell

is a self-contained manufacturing unit, where the operators concentrate on building a specified

series of products and possess the skills and equipment to perform the majority of the processing.

The entire production process is divided into a series of work cells that process their own parts.

By studying their benchmarking results, and analyzing their current work practices, MBS was able

to complete their list of opportunities for internal improvement. Examples of some of the

opportunities listed include: more operator training, reduction of cycle times, destroying functional

silos in the organization, etc. Before taking any actions, the IMIP steering team completed their

comprehensive plan for the project. The plan included establishing estimated costs along with

implementation steps and dates. The detailed implementation plans specified instructions for:

training, relocation of layout, equipment purchases, and changes in processes, in addition to other

important steps.

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5.2 Implementing the IMIP

After studying the results of their benchmarking efforts, the IMIP steering team decided that they

would pursue cellular manufacturing, and self-directed operator work teams. Their plan was to

transform MBS into a flexible cell manufacturing (FCM) shop, where floor level production

supervisors would be replaced by the cell work teams. Business unit managers would oversee the

activities of several cells, but the routine daily production decisions would be made by the

operators in the cells. Facilitators would help the cell teams hold meetings and work through their

problems.

Before implementing the FCM concept, it was acknowledged that MBS should create and study a

pilot cell, and that extensive operator training would be required to make the transition to work

cells. The pilot module was comprised of a 2-cell self-managed work area that shared a common

component preparation area (component prep is where capacitor and resistor leads are trimmed to

the correct length, and other components are also prepared for use). The prototype module ran

from June to November of 1991. At the end of this period, it was found that cycle time within the

cells had dropped from 5 weeks to 7 days! Furthermore, production control transport and queuing

was greatly reduced, and first pass yields had grown from 73 to 88%, since the cells were

dedicated to one program. The pilot also proved that a shared component prep area was feasible.

Before the entire board shop was transformed into a self-managed work team cellular environment,

MBS management ran simulations to determine the ideal number of cells and labor levels on each

shift. MBS also trained the operators in cellular manufacturing and team building skills. All classes

were taught by T.I.’s internal certified instructors, using an outside firm’s training materials. The

classes were short courses tailored to the teams’ needs. Operators completed courses in: team

work, cell skills, problem solving, SPC, holding effective meetings, and conflict resolution,

among other topics. Meanwhile, manufacturing management and the facilitators took classes in

change management, coaching, and leading problem solving activities.

According to some of the operators that made the successful transition to work cells, there were

growing pains associated with the change to self-directed teams. The most difficult part of the

transition for the operators (who were used to accepting orders from a single supervisor) was

putting personality differences aside, becoming business-minded, and running their own cell. The

operators were now responsible for maintaining a team relationship, where they jointly developed

solutions to problems, rather than accepting their direction from a management representative.

Some of the cells were more successful in transitioning into self-directed teams than others.

However, the majority of the teams required a significant amount of time to become accomplished

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decision makers. It took 6-9 months for all of the areas to fully transition into functional self-

directed cells. While the operators were charged with making their own decisions, they did not feel

like they were on their own. The managers could still be approached for guidance and it was

important for the operators to know that the managers were there to fall back on. The four MBS

facilitators also attended team meetings (and still do) to help provide cell direction. This combined

support has helped the teams become confident in their own teaming skills, while providing

feedback to the decision-making process.

Reducing Other Sources of Waste

Once the cells were in place, the IMIP steering team decided that they would look to reduce other

sources of waste. Three examples of wastes that were identified and eliminated include: combining

the procurement and production control functions, increasing the board shop’s ownership of the

external processes it relied on, and reducing processing times.

Traditionally, the production board areas in McKinney relied on a separate procurement group to

order their parts. Beginning in 1992 (and completed by 1994, with the Forest Lane move),

procurement was integrated into the manufacturing area, to improve communication, reduce the

number of people required to order parts and give feedback to the customers, and to give

production more control over the vendor relationship. Now manufacturing controls the buying and

scheduling functions. A manufacturing representative works directly with the vendors, giving

faster response and better followup to quality problems. This responsiveness is important, since

the board area’s largest defect problem is supplied component failure at in-circuit test. With

manufacturing becoming a larger part of the supplier relationship, the MBS has gotten much closer

to its vendors. The MBS provides help to suppliers through T.I.’s Supplier Management Team

(SMT) in implementing continuous flow manufacturing, using design of experiments, and learning

six sigma quality concepts to improve quality and lower prices.

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In 1990, the board area had little ownership of the production process. The shop only had control

of component prep, component stuff, flow solder, and the board QC functions. The individual

board programs controlled procurement, the warehouse kitted the components, and final assembly

added parts, and tested, inspected, and coated the boards. Figure 5.1 shows how the MBS

increased their control of the production processes. In 1991 and 1992, the shop integrated parts

addition and incircuit test from final assembly. By 1993, the shop had picked up the functional test

and coating processes from assembly as well as procurement (as discussed earlier). To date, the

only processing step the MBS does not perform is kitting. The warehouse still kits the boards, but

the warehouse personnel are now active members of the MBS team.

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FIGURE 5.1

The Board Shop’s Increasing Process Ownership

1990 1991 1992 1993Plan. & Sched.Proc. & Fab.

Kitting

Prep

Comp. Stuff

Flow Solder

Board QC

Add Parts

QC

Incircuit Test

Functional Test

Encapsulation

Plan. & Sched.Proc. & Fab.

Plan. & Sched.Proc. & Fab.

Kitting Kitting Kitting

Plan. & Sched.Proc. & Fab.

Prep

Comp. Stuff

Flow Solder

Board QC

Add Parts

QC

Incircuit Test

Functional Test

Encapsulation

Prep

Comp. Stuff

Flow Solder

Board QC

Add Parts

QC

Incircuit Test

Functional Test

Encapsulation

Prep

Comp. Stuff

Flow Solder

Board QC

Add Parts

QC

Incircuit Test

Functional Test

Encapsulation

McKinney Board ShopProgram - Mfg

Warehouse Final Assembly

In the past, boards were shipped to a centralized final assembly area for completion (along with

boards from other areas). There was less ownership and final assembly would work on orders that

were late first. Boards sat in assembly until they became “hot”. By owning the processes, the MBS

controls the process flows in one area and one manager has responsibility for the entire production

cycle (except for kitting).

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The final example of IMIP waste reduction involves reduction of processing times. The MBS

initially decided to remove the board baking step before flow solder. All of the boards were baked

for 8 hours in the past. When the MBS ran a pilot test without baking the boards, moisture in some

of the boards caused bubbles in the coating laminants. Rather than canceling the no-bake concept,

the MBS engineers setup a database to determine which boards did not need to be baked and which

could be baked for a shorter cycle without affecting quality. This common database shares bake

information between the MBS and T.I.’s Austin board shop. As a result, boards that do not need a

full eight hour bake cycle are baked within a few hours, and in some cases are not baked at all.

Additional Cellular Manufacturing Improvements

Before the IMIP, the production areas were organized functionally, creating a lack of ownership.

For example, board mask and demask prior to, and following the conformal coating process

involved different operators. Board masking protects areas of the board from being coated that

should not be coated. Typically, the operators that demasked the boards in the past cleaned off

areas of the boards that should have been masked better, rather than communicating the problems

with the masking area. No joint problem solving existed, and the demaskers took it for granted that

they would be cleaning certain areas of the board that were not masked properly. With cells, the

same operators that mask also demask, and communication as well as corrections are immediate.

While working with one board program has helped the operators become familiar with reoccurring

problems and has helped them make more program improvements, cellularization also has

provided more variety in the work that operators perform. It has empowered the operators by

allowing them to understand, and giving them responsibility for the whole operation, not just one

processing area.

The cells also transformed the way that production handled manufacturing nonconformances.

Rework areas were eliminated and defects were returned from test (or the customer) directly to the

appropriate work cell for corrective action. With this immediate feedback, operators became a large

force in eliminating sources of defects. This feedback, along with the additional operator planning

responsibilities has given operators much more pride in their work.

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The IMIP also placed computer terminals within each cell to provide a built-in support network for

the cell teams. Terminals are used to: log inspection reports, check “how to” assembly instructions

and assembly drawings that the operator can zoom in on, list rework / repair procedures, order

replacement parts, and to keep track of worker labor hours and board traceability. These are all

services that were provided by numerous support employees in the past.

The move to cellular manufacturing has eliminated the board shop’s reliance on production control

employees. In the past, incomplete component kits were released to the board shop. Boards built

from incomplete kits could not make it through the area and had to sit in a delay pile. Once the

proper parts arrived, production control had to locate the incomplete board kits and add the missing

components. Through IMIP, kits that are shorted components are not released to production,

reducing delay board WIP and eliminating incomplete kit tracking. Cellularization has also meant

less part travel, reducing the need for production control to track and move parts. Combined with

the IMIP concentration on process flow bottlenecks, cellularization has reduced in-process queues.

5.3 Continuous Flow Manufacturing

While the IMIP significantly enhanced the MBS’s performance, the area’s Continuous Flow

Manufacturing (or CFM) efforts show that there is always room for additional improvements. The

CFM program was recommended to the McKinney Board Shop from T.I.’s upper management in

early 1994. DSEG’s management had seen the concept experience great success at another T.I.

facility and selected the board shop as the next implementation site, due to its manufacturing

importance.

CFM is a pull system, where visual displays (such as flags, WIP storage racks, color-coded

labels, and kanban cards) are used to help the operators prioritize their work and to speed the flow

of work through the shop. T.I. licensed the CFM philosophy and key concepts from IBM.

Many changes occurred in the McKinney Board Shop during the early part of 1994. Along with

the CFM program startup, an operator self-inspection program was launched and the employee

incentive system was dramatically altered (these other changes will be discussed further later in the

case). MBS feels they were successful in handling these significant and simultaneous changes for

three reasons: T.I.’s management not only supported, but pushed the changes, internal champions

for each project kept the area focused on all three changes, and the employees were committed to

improving the area’s performance (after seeing the dramatic results of the IMIP).

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In March of 1994, a eight person CFM core team was formed to plan and implement the board

shop’s transition to a CFM system. The core team consisted of: a methods engineer, two internal

consultants, an operator, a facilitator, a board shop manager (who served as the core team leader),

a customer, and a quality / test engineer. The two consultants were not new to T.I. and had served

on the initial T.I. CFM implementation.

At first, there was some resentment towards the consultants among the floor personnel. They

wondered why “outsiders” were called in and why they couldn’t bring about the improvements

themselves. However, once the CFM program was explained and the consultants proved to the

operators that it would work, the mood shifted to one of acceptance. The consultants became

viewed not as outsiders, but as fellow T.I. employees who had a lot of credibility, since they had

been successful in using CFM to transform other areas of the company.

The core team’s CFM development and implementation methodology developed as follows:

1. create proposal2. engagement preparation - project kickoff3. line analysis to understand process4. work plan - list opportunities (as stated by operators and team members)5. simplification - implementation teams execute improvement work plan for eight weeks6. pull system - design, develop, and start system

The core team was surprised during the line analysis. Team members thought they knew how the

operators performed their jobs, but during step three (line analysis to understand the process) they

realized that they didn’t really know what the operators did during the day. As the team tackled step

four (developing a work plan), the opportunities were organized by problem type (operator,

equipment, personnel, etc.). For step five (simplification), the work plan was divided into six

categories to be addressed by six different implementation teams:

Implementation Team Team Issue1. component prep prep consolidation2. test downtime3. conformal coat cure time4. documentation eliminate non-value added documents5. release shop loading6. parts parts shortage

Each team was made up of 3-6 people (with at least one operator and one of the core team members

on each team). Some examples of team actions are:

- the conformal coat team cut average board coating cure time by 50% by establishing

cure times based on thickness rather than using a blanket cure time

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- the conformal coat team also installed an environmentally friendly seal and peal machine that

allowed instant masking of the board, eliminating masking cure times

- the test team started a preventative maintenance program

- the parts team setup the ordering process so any operator can order any part, the system checks

the part, and the part is pulled within 2 hours.

An example of an implementation team action is the reduction of conformal coating time. Prior to

immersion in the coating fluid, certain areas of the boards are masked for protection. The

traditional masking compound took 8 hours to dry onto the boards, leaving the boards sitting in

storage for at least a shift before they could be coated. Once coated, the compound did not peel off

easily, and an operator had to “touch up” the board by removing the excess compound. The

conformal coating implementation team replaced this traditional masking compound with a new

seal and peal compound that allows boards to enter the coating process within moments of

application. The seal and peal can also be applied and removed much easier than the traditional

compound and does not require any board touch up.

The conformal coating implementation team also changed the board coating policy. In the past, a

standard board cure time was prescribed once the board left the conformal coating tank. The team

changed the conformal coating policy so the cure times varied, based on board thickness. This cut

the average cure time in half. The new curing policy, along with the seal and peal application

reduced the average board processing time in the conformal coating area from an average of 52

hours down to an average of 22-25 hours. The area used to have over 1,000 boards in process, but

this number has fallen to the 100-200 board range.

Step 6: Pull System Training and Startup

The core team’s planning step 6 involved the design, development, and startup of a pull system.

This system was designed to allow visual controls to tell the operators what the next production

process needed. For example, a kanban system was designed to set the flow through the shop

governed by a set of shop procedures (or run rules).

Employee training was viewed as an essential component of the CFM implementation.

Management stated that “the transfer of knowledge is critical to the success of the CFM effort

within MBS.” Employees were trained on a “just as needed” basis. This meant that the training

occurred just before the skills were required, so the concepts were fresh in the operators’ minds

and they could apply their new knowledge soon after training, making the training lessons more

concrete. The training was also interactive. For example, management improved the operators’

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goal setting skills using hands-on spreadsheet scenarios that could be manipulated and learned

from, without risking the consequences of an “on the job” training mistake.

Each operator received four hours of CFM and two hours of pull system training. Those on the

implementation team received eight additional hours of training, while the business unit managers

and facilitators received eight hours of training on CFM principles, flow management, and pull

systems. The training seemed to be well received and CFM was viewed as a positive step by the

operators. One of the training feedback sheets had the operator statement that, “we’ve been trying

to tell management these things for years and no one ever listened.”

On the Friday prior to the Monday pull system startup, the last pull system training session was

held. The core team stayed after the shift’s end to setup the kanban boards and arrange the WIP in

the production areas by color code.

It took the shop a full 7-8 days to completely transition to the pull system. Core team members

were available on the floor to answer questions, give direction, and ensure a smooth startup. The

CFM pull system was put into place in August, and stabilized between October and December of

1994.

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5.4 How Does CFM Work? (the Board Shop Today)

CFM has proven to be a valuable tool for the MBS. The following section outlines how the board

shop is currently using and benefiting from the program.

Pulling Kits into Production

The first step in material flow through the MBS is the MRP scheduling system. While MRP is an

infinite capacity model and is too cumbersome to plan a dynamic pull system, MBS uses it to order

components and give the shop the authority to work on orders. The shop has used a 4 week

ordering cushion to level loads, but realizes this is not optimal, and would like to reduce the

cushion further.

The MRP system gives a release date for a kit of board components. Once an order falls into a

prespecified release window (a certain number of days before being due), it is “fair game” to be

kitted and released to the floor. The warehousing personnel pull the kit on demand. They do not

pull partial kits (to keep incomplete boards from sitting in production) and only pull parts for one

kit at a time in the store (to keep parts from being mixed between kits).

Having the ability to pull its own kits has been crucial in the reduction of WIP for the MBS. In the

past, the programs pulled the kits, so work just “showed up” on the floor. Now, kit pullers are

used to control the introduction of orders to the floor. Kit pullers are operators that order the kits

from the warehouse personnel. The pullers know the complexity of each board and the production

time from experience, and combine this knowledge with the cell requests for work, kanban data,

and MRP release window to select when and which work to pull into production.

Lot sizes are set as small as possible while remaining efficient. The largest lot size is 20 boards,

but most lot sizes are in the 4-8 board range. This average lot size signals a large reduction from lot

sizes ranging from 50-100 boards in the past. A lot size of 1 is typically too small for the

warehouse to kit, but the board area is currently considering storing some common parts in the

production area to provide a self-kitting option, where applicable.

The importance of the kit puller in the overall flow of shop work cannot be overstated. They

control the flow of work onto the floor based on capacity and availability. A poor kit puller could

starve the shop by underpulling, or flood it by overpulling, while an accomplished puller can

maintain low WIP levels and keep material flowing smoothly through the shop.

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Each business unit has its own kit pullers that are familiar with a family of boards and are linked to

certain cells. The pullers work together to keep the cells busy, while dividing the efforts of the

common component prep area. Component prep involves breaking up kits and loading components

into processing trays, cutting through-hole leads to the proper length, and delivering the kits to the

production cells.

Consolidation of Component Prep

The IMIP setup each cell with its own component prep to give the operators complete control of the

production flow. Prep was consolidated into one area during CFM, since the CFM component

prep implementation team performed a line analysis that showed distributed component prep was

creating waste. However, there were too many prep processes for the cell operators to learn, too

much equipment to spread into cells, and not enough “like” runs within the cells. Including

component prep within each individual cell during the IMIP was not a complete mistake however,

since it taught the operators prep skills and gave them additional ownership.

To maintain cell ownership of component prep, the consolidated prep area is staffed by operators

from the business units. One person from each business unit works in component prep in the

morning, preparing production material for their cells. This provides better feedback to the prep

area from the cells. Within the prep area, only a few people are assigned to each prep task to

minimize the number of hands that work on each process. The kits are tracked in and out of the

prep area on a centralized chart, providing instant visibility of the shift’s progress and the work

released to the floor.

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WIP Flow Through the Rest of the Shop (a Visual System)

The remainder of the flow through the production area relies on visual and operator control of the

system. The production control people have been removed and operators move boards and control

the flow of material. Production control used to try to balance the line, but this became too hard

and time consuming. Now it is very simple to balance the shop due to visibility and the operator

control of production.

The cells use flags as kanbans to get work from component prep. They raise their cell’s flag when

they need more work and the flags can be seen throughout the area. This provides instant visibility

of whether the shop is over or under loaded.

As the cells complete a board, they carry the order (in a tote pan) to the next processing area and

place it on the incoming rack. After the flow solder process, the tote pans are given color-coded

labels that tell which day of the week the board was released to the floor. Since the floor operates

on a first in, first out basis, this system instantly tells the operator at the next station which boards

to work on first. The board area tries to maintain less than three days worth of inventory at any

point in the area (no more than three tote label colors on any shelf).

In the rare case of “rush” boards, red labels are used to denote priority work. The board area has a

policy that no more than 6% of the boards in the area should be rush boards. The number of red

labels is reviewed daily to ensure this policy is being met. Delay boards are also reviewed daily.

These are boards that have damaged or missing components (due to a test failure or processing /

supplier defect) or are waiting for engineering disposition. Delay boards are kept on special shelves

at each cell. The area’s policy is to keep less than 5% of the boards on the delay shelves. There are

currently approximately 50 delay boards in the area versus 300 in the past.

If an operator mistakenly picked up a fresh delivery from their incoming rack and worked on it for

the entire shift, they would miss working on the oldest order. Therefore, the board shop

management has stressed to the cell operators that they should only be taking 2 hours or less of

work from their WIP rack at a time. Frequently rechecking the WIP ensures that the operators are

working on the right orders.

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As the WIP reaches the bottlenecks within the production area, flow is controlled with kanban

boards. The kanban system helps manage the flow through the bottleneck areas and keeps

operators working on the right boards. There are two kanban boards in the area, one at the flow

solder area and one at the water wash prior to masking and conformal coat. Figure 5.2 shows an

example of a kanban board. The kanban boards have a maximum WIP level for each family of

production boards and the operators change the actual WIP numbers as they deliver or remove a

board. The kanban targets were set at the start of the pull system planning stage, using a WIP

computer model. This model is used by management to make infrequently updates, but the kanban

levels have remained fairly steady since their introduction.

FIGURE 5.2

Typical Kanban Board

Business Unit 1 B.U. 2 B.U. 3 B.U. 4

Maximum

Actual

10 24 18 38

8 21 12 28

Flow Solder Kanban

On our tour through the board shop, we noticed only 1-2 different color labels on all racks and

very few boards on the delay racks. The operators were checking the kanban boards and the tote

label colors to select their next set of work. It was immediately clear to us as outsiders, which cells

needed more work (their flags were up) and that the bottlenecks were not being starved (the kanban

boards were around their target levels).

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While some may dispute that this is a true pull system, it is by far the closest to a pull system that

we have seen in our travels through the aerospace industry.

The Focus on Quality

Since WIP has notably been reduced, rework has had a significant effect on cycle time. Rework

was not a concern in the past, since the large WIP kept the processing areas full of work. Now, if

several boards are returned from a testing area to a cell for rework, the processing step following

the test area will be starved for work. Furthermore, the WIP in front of the cell will begin to grow

(raising the WIP’s queue time, and thus cycle time). Therefore, the reduction in WIP has

necessitated a high level of quality to keep the cells busy and achieve a low cycle time.

WIP is so low now, that one quality problem can easily affect the entire area’s performance. A

quality concern affecting 100 boards (this is not unthinkable) would practically shut down

production until the appropriate cell could fix the problem. In the past, a quality problem of this

size did not threaten to shut down the board area. The operators could continue to work on other

boards in WIP and repair the damaged boards as time allowed.

Considering these issues, it is easy to understand why the MBS currently strives to focus on, and

solve quality problems immediately. The production area cannot afford to allow nonconformances

to spread to the rest of the WIP. The MBS is also less reluctant to scrap defective boards than in

the past, since the shorter cycle time allows production to get a replacement board into the system

quickly.

The board area has shifted to focusing on processing defects, rather than individual part number

defects. The business unit managers track this data and organize teams to attack common

processing problems. Managers review this data rather than operators, since floor level review of

too many metrics is considered a non-value-added step.

In the past, the MBS’s quality data took a long time to process and was harder to interpret and use.

Running a data query required an experienced, patient systems operator. The data that the system

spit out was not in a usable form, and took additional time to decipher. Recent software revisions

have made data more accessible and easier to use.

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The MBS is also focused on shifting the database from the mainframe to the local site to gain better

access to the data more cheaply than from the mainframe.

The Shop Today

The CFM program has helped MBS reduce their WIP and cycle time, while breaking up the

slowing level of cell improvements. It also made the cells work closer together, optimizing the

entire production flow. It reinforced the team concept, forcing cell team members to share the

work.

Since CFM was still stabilizing in some cells as late as December, not all of the “bugs” are out of

the system yet. The system has been vulnerable to operator mistakes, and requires a disciplined

approach still not realized consistently among all of the operators. Furthermore, the cross-training

operators received as they transitioned to cells caused an initial decrease in yields, since the

operators were slower at the new tasks. This situation is currently improving and there is potential

for improvement well beyond the original yield level. As operators become good at a variety of

tasks, they can understand the concerns and be more sensitive to the quality needs of the other

operators working on other processes. This understanding should translate into overall better

quality, and the potential to move operators throughout the cell will aid in production flexibility.

The CFM core team still meets regularly to work on continuous improvement issues. At the

conclusion of the CFM startup, the team put together recommendations for future improvements,

since CFM is viewed as “a methodology for continuous improvement.”

5.5 Other Programs that Supplement the IMIP and CFM

Takt - An Even Rhythm

Takt is the German word for rhythm. The term has begun to emerge in production environments to

connote a synchronous flow. In a pull system, it is important to maintain an even flow of material

through the area and that the production of each cell is tied to its neighboring cells to minimize WIP

buildup between processes. To maintain a good takt, an area needs to be integrated enough that

processes produce, and only produce what is needed at the next stage.

The board shop holds takt meetings every morning to focus on the flow of orders through the

shop. The meeting participants include representatives from: each cell, process engineering, the

warehouse, test, and procurement, as well as the business unit managers. During the meeting,

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active problem solving takes place, with input from most of the participants. Much of the kit

pullers’ information comes from the takt meeting, helping them properly load the shop.

The meeting begins with a review of which equipment is out of order and how it will affect the

takt. Repair responsibilities are assigned on the spot (if they haven’t been already). The output,

WIP levels, and trends in each cell (and at the business unit and work area level) are discussed,

along with the shop’s cycle time (over a five day running average). The takt goals for WIP and

output are set by the cells and are consolidated by the business unit leader to meet customer needs.

The current cycle time (kit pull to completed board) goal is two times the theoretical flow time,

where the theoretical is the minimum possible flow time (sum of all processing times). Since the

theoretical cycle time is currently 3-4 days, the goal is a 7.5 day cycle time.

Before adjourning the meeting, there’s a discussion of the general problems that have surfaced.

Also, a plan for how the shop will meet its schedules is developed. If a cell is two days behind

their output goal, they need to develop and present a recovery plan. Rock teams meet weekly to

resolve items that cannot be solved in the takt meeting. The name rock came from the concept that

rocks (problems) are exposed as the level of WIP falls.

Operator Self Inspection

The operator self inspection program has been used since April of 1994 to reduce the shop’s

reliance on inspectors, and to build, rather than inspect quality into the boards. A pilot class was

trained first, followed by other areas as the trainers had time. Training involved 20 hours of

operator certification quality training, along with 40 hours of solder MIL-STD 2000 certification.

The training sessions were followed by a period of daily audits. Audits for experienced areas have

fallen to once every two weeks. The operators are recertified yearly after 16 hours of mandatory

annual military standard 2000 training.

Operators with habitual problems have their stamps removed and have to go through additional

audits. If quality problems continue, the operator has to be trained again. MBS has removed

stamps from some operators, but has not had to retrain any yet.

When the certification program was first put into place, identification of board defects increased.

The operators were being more critical than necessary and they did not have enough experience in

identifying defects. They were afraid to miss a defect and risk being removed from the program.

While this problem has improved, further training is planned for the future.

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5.6 The Right Tools and Incentives

All of the McKinney Board Shop employees are part of the production planning and flow process

and many perform work that was previously handled by management personnel. How do you

move toward a successful implementation of cellular manufacturing where employees are

empowered? A large part of MBS’s success has been a result of their emphasis on giving their

employees the right tools and incentives. The tools include training in skills that are essential to

operating a cellular business and accepting more ownership. They also include the support that’s

imperative to giving the employees power and acting as a resource when they need help.

Employee Incentive Program

Before 1993, the Defense Systems & Electronics Group (DSEG) had a fairly standard

compensation program for its MBS employees. The compensation included a base salary, non-

periodic raises (DSEG merit bonuses and base pay increases), and profit sharing. During 1993-

1994, a new compensation program was introduced to give the operators the incentive to improve

their knowledge level and optimize their cell’s operations.

The new incentive program was a pay for knowledge and pay for performance based program,

piloted in 30% of the shop. Its two components were named PRIDE (Process for Investing in

Development) and SHARE (Shared Achievement and Reward). PRIDE is a pay for knowledge

program intended to provide the employee additional knowledge in planning, process / quality

improvement, administration / supervision, etc. SHARE is a pay for performance program

involving quarterly payouts based on a cell’s performance versus their SHARE goals.

While pay for knowledge and performance sounds like reasonable incentives, both of these

programs were a failure in this situation,. PRIDE involved high training costs and the MBS found

it difficult to give employees the opportunity to use the skills they were taught, and to measure their

success. For SHARE, the operators set very aggressive goals they could not be reached, since they

had little experience in goal setting. Furthermore, they could not completely control their

performance, since they relied on the responsiveness of other cells where parts were shipped for

outside cell processing. To help remedy this situation, management actually told the 70% of the

production shop that was not part of the pilot compensation plan not to interfere with the 30% that

was, since they were being paid based on their cell’s performance. This led to suboptimization

across the production area. In April of 1994, during the CFM development and after months of

poor pilot results, management realized that the incentives would hurt CFM, and canceled the

PRIDE and SHARE compensation program.

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By June, management introduced a new shop-wide SHARE program. The goal of this new

program was to reduce cost and cycle time for the entire board area, and not just individual cells.

Performance was now measured on labor dollars per component inserted and dynamic cycle time

(the ratio of WIP / throughput time).

The old incentive scheme optimized the individual cells at the expensive of the whole area, not

encouraging cells to work together. Since CFM stressed close ties among the cells and optimization

of the entire shop, this old plan would have been a barrier. However, the new compensation

program provided the right incentives for the newly-launched CFM program.

The new SHARE program was not only meant to give incentive to operators, but also included the

quality control, test, and the administrative support personnel (facilitators, business unit managers,

engineering, etc.). Therefore, all of the employees that had a stake in the success of the shop floor

became part of the new compensation program, adding incentive for the board shop to work

together.

SHARE was funded by combining T.I.’s merit, non-periodic raise, and team bonus awards for the

entire area. A sliding scale of goals and payouts was established with the agreement that any

leftover money from unrealized goals would be turned back to the company. The other areas of

T.I. were still being paid based on individual teams making their goals. Since the board area was

putting all of its non-base salary compensation at risk, they were able to negotiate with

management to double the dollars at stake.

During the first year of the new SHARE program, the shop set goals to reduce the overall labor

cost and cycle time. They adopted a new metric, labor cost divided by number of board

components, to measure their progress. At the end of the first year of this program, the board area

surpassed their cost goal by dropping labor cost per component from $0.70 to $0.58! The average

cycle time goal was 10 days, and the area had fallen to an 11 day cycle time by the end of the year.

Due to this success, DSEG’s management decided to institute a DSEG-wide interdependent team

shop bonus plan for 1995 that is similar to MBS’s SHARE program.

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Too Many Metrics, Too Many Meetings

As I mentioned earlier, the right tools and support are also necessary to be successful. In 1992,

Hank Hays (DSEG President at the time) stated that too many metrics were being used and

established 4 metrics to concentrate on:

1. cycle time2. quality3. employee training4. on-time delivery

The cycle time goal established was the one mentioned earlier, two times theoretical. Six sigma

was the quality goal and employee training became tied to the managers’ bonuses.

Prior to the concentration on these metrics, the managers relied on the “management of the month”

(whatever management concepts that the managers had read in books and articles most recently).

This not only meant constantly shifting and adding metrics, but also was the source of lost focus

on the part of the managers and operators. Consequently, the shop used the four metrics above

along with a long list of other measures, such as: on time production starts, kit pulls, schedule

conformance, defects per million opportunities, cost of nonconformances, etc. Collecting too much

data was not helpful and only added confusion to the shop.

Now, the operators and management personnel concentrate together on the four metrics. Notice

that none of these metrics capture the cost of nonconformances (the quality metric only measures

defects per million opportunities, not additional costs due to poor quality). DSEG believes that if

your cycle times and WIP are low, your quality must be high. Therefore, they let time reductions

drive quality higher.

Another valuable tool for the MBS employees is meetings for communication and problem solving.

I have already discussed the value of the takt and rock meetings. Operators frequently hold cell

meetings to resolve problems, too. However, as recently as a year ago, there were too many teams

at the MBS. According to some of the MBS employees, it seemed that teams were formed and

meetings were held simply for the sake of meeting. After reviewing this situation, many of the

teams were identified as not adding value and were eliminated. Therefore, it is important to note

that teams can provide much needed communication, but if they are not adding value, then they are

a source of waste.

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Interactive Goal Setting

In 1992, MBS started setting its own strategic goals for the year. The planning team consisted of:

customers, warehouse and test representatives, the production manager, operators, the business

unit managers, board shop employees from other T.I. locations (to give an outsider’s perspective),

and engineering. This yearly strategic plan is an indepth effort complete with action items and

dates. Facilitators and champions are established to represent various strategic topics, to ensure that

nothing significant is left out of the plan. Once the plan is completed, it is presented to DSEG’s

management, who make suggestions and approve the completed plan. Serious revisions are rare at

this stage. The yearly plan is a tool that has helped bring long range planning down from the high

levels of the organization and give floor-level employees input into the goal setting process.

5.7 Results of IMIP and CFM

Both operators and support personnel within the McKinney Board Shop claim that change has

become a way of life for the board area and is part of the culture. The following sections will

review the results of the IMIP and CFM programs to date.

Before I discuss the results, it is important to calibrate the improvements versus MBS order

diversity. The volume of MBS part numbers has increased steadily since the early 1990’s. Figure

5.3 shows the increase in distinct part numbers and the timing of additions to the board area.

Forest Lane, the Harpoon program, Abilene, and Colorado Springs designate additions from other

T.I. board facilities that were downsized, or closed. Board testing and conformal coating were also

added to the shop during this period (from other areas of McKinney). It is significant that MBS

was able to make dramatic improvements in the face of product proliferation.

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FIGURE 5.3

Part Number Proliferation and Board Shop Consolidation

1988 1989 1990 1991 1992 1993 1994

April '90

Forest Lane Consolidation #1

Mid '91

Harpoon Business Added

October '92

Forest Lane Consolidation #2

1st Quarter '93

Abilene Consolidation

Mid '93

Colorado Springs Consolidation

500 Part Numbers

720

840885

1115

1205

1255 Part Numbers

YEAR

MBS PART NUMBERS

There are currently 6-700 different part numbers in the board shop at any given time. 3-400 of

these part numbers switch monthly and MBS has quite a few low volume part numbers. Therefore,

the operators need flexibility and skill along with flexible production tools to run a variety of

boards.

WIP, Cycle Time, and Lot Sizes

The most significant improvements due to the IMIP program came from cycle time reductions.

These reductions have allowed MBS to cut the entire program cycle time. The government has

been pushing for program reduction, in an effort to reduce expensive overhead costs. Cycle time

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reductions have also “created” additional capacity, since a larger volume of parts and part numbers

can now move through the board shop. This is also a significant benefit, since board shop capacity

is expensive.

Figure 5.4 displays the output, backlog (WIP), and days (cycle time) trends for the MBS. You will

note that the WIP levels and cycle times have fluctuated wildly since 1988. However, when figure

5.4 is cross-referenced with figure 5.3, it can be determined that most of the fluctuations are

attributable to the addition of boards to MBS from other facilities. An additional spike in cycle time

and WIP occurs around June of 1993. Shortly before June, testing and conformal coating were

consolidated into the board shop, adding to the cycle time and WIP base.

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FIGURE 5.4

Output, Backlog (WIP), and Days (Cycle Time) versus Time

Boards Days

Date

Output (boards) Backlog (boards) Cycle Time (days)

Before IMIP, the cycle times were typically over 50 days. An average of 62% of the board’s cycle

time was spent sitting in queues, while 31% was spent in delays. This means that value was being

added to the WIP less than 7% of the time. Figure 5.4 shows

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that cycle times are currently averaging approximately 12-15 days, or three to four times the

theoretical processing time. Therefore, value is being added to the boards around 25-30% of the

time. Since one of the MBS goals is to improve the processes and remove waste, the theoretical

cycle time should keep falling, so it is important for the shop to continue to reduce their cycle time.

From figure 5.4 we can see that WIP was over 14,000 boards in ‘89. This level has fallen to

around 1,700 boards with approximately the same level of product shipments. It is clear that the

that the cost impact of carrying 12,000 too many boards alone is staggering! In the effort of

continuous improvement, the MBS is targeting the remaining 1,700 boards for reductions.

Figure 5.5 shows that the average and the variability in cycle times over the last year and a half.

Reductions in the cycle time average and variability shows that the CFM program and its visual

systems have helped the board shop gain better control of the process flows. Remember that CFM

was launched in August and stabilized in the October to December time frame. It is clear from

figure 5.5 that the CFM program has been an important contributor in lowering and stabilizing the

production cycle times.

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FIGURE 5.5

McKinney Board Shop Cycle Time (June ‘93 - January ‘95)

Cycle Time (days)

Date

0

10

20

30

40

50

60

70

80

JUN '93

JUL AUG SEP OCT NOV DECJAN '94

FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECJAN '95

Avg + 1 Stand. Dev.

Avg Cycle TimeAvg - 1 Stand. Dev.

Overhead Reduction

MBS has been able to dramatically reduce support employees through the IMIP and operator

certification programs. In 1990 (prior to IMIP) there were 13 production control, 16 quality

assurance, and 9 floor-level management employees. There are currently 0 production control, 3

quality assurance (all auditors), and 4 floor-level management employees (all business unit

managers). Four full time cell facilitators are also currently required to help the cells run the shop.

The employee empowerment has been so significant, that the manager of the board area did not

replace himself when he took a higher post within T.I.!

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Quality Results

Because of the proactive problem solving attempts and the fall in reluctance to scrap poor boards

mentioned earlier, the board shop’s MRB (or Material Review Board) have almost been eliminated.

Since the board area concentrates on making the product right the first time, it has been

approximately a year since the last official MRB. An internal board shop MRB is used to decide if

parts should be scrapped, returned to the supplier, or repaired.

Not only have the IMIP and CFM programs reduced WIP and lot size, while placing a greater

emphasis on quality, they have also been very beneficial from the operator’s perspective. The

operators we spoke with cited an increase in job satisfaction, additional education, more decision-

making, and the gratification of getting the job done (that did not exist when production did not

assemble or test the boards) as the largest advantages of these programs. In addition to these

benefits, it should be reemphasized that IMIP and CFM have given the MBS the experience and

potential to change and to make large scale improvements in the future.

5.8 The Future of the MBS

The MBS management see the future of the board shop providing several tough challenges. The

emphasis in electronics as well as the defense business is shifting away from performance toward

cost balanced with performance and quality. The competitive electronics firm of the future needs a

highly skilled workforce with flexibility in production. Furthermore, the significance of keeping

costs low will drive firms to forge better, and more integrative relationships with their suppliers.

The board shop management feels that in order to succeed, they must be able to match the best

commercial practices, by keeping a close eye on the best and setting goals to achieve internally.

Even though all of MBS’s production is for defense-related customers, the commercial market is

the most competitive environment, so it serves as MBS’s benchmark. Management has the attitude

that if they fail to be the best, they will not survive and should exit the business.

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5.9 Enablers of the Shift to Continuous Flow, Cellular Manufacturing

The Industrial Modernization Incentives Program and Continuous Flow Manufacturing programs

have certainly been instrumental in helping the MBS reduce work in process to a fraction of its

original level, while reducing cycle times and cutting waste from production. While the changes

took several years to develop and implement, they have changed the complexion of the board area.

Operators do their own scheduling, control the flow of material, order replacement parts, are more

responsible for quality, and have input into long term planning! The shop environment has shifted

from dreading change to embracing it and pushing for continuous improvements.

What enabled this change within the McKinney Board Shop? The managers, support staff, and

operators we spoke with stressed that the following enablers were key to their success:

• management commitment

• communication

• the establishment of a plan with key, measurable goals

• and having the right people on the floor with the right attitude

Management needs to be fully committed to making improvements if real change is to occur. This

commitment at T.I. not only meant approving the major plans for change, but also meant

supporting the implementation and running of the new programs completely. For the CFM

program, management introduced the plan and ensured that it would work. They established a key

team of 5-6 full time employees, kept them concentrated on an aggressive planning and

implementation schedule, and even made sure that the team staffing was not disrupted by layoffs in

the hourly workforce.

The majority of the MBS staff that we spoke with listed good communication as an enabler to

MBS’s improvement. Since the move to cells and CFM would have a major impact on the way

employees did their job, the shop floor managers were extremely open with the operators about

what the program would mean to them. In return, the operators were expected to give constructive

input that would help ensure the new program’s success. I have not seen many companies where

operator input is more valued and management is more open with the employees. This openness

sends the message that to continuously improve and remain competitive in the future, everyone

needs to work together.

The fact that the IMIP and CFM programs were well planned and had distinct goals was also

viewed as an enabler. Much thought was given to the initial IMIP, since it involved investing a

considerable amount of money into facilities relocation and training, and involved a certain amount

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of risk (there were no guaranteed results). The CFM program had been successful at other

locations. The MBS realized it was important to leverage this success and used the experience of

CFM consultants (that had proven the effectiveness of the program elsewhere) to plan the

implementation. It was also important that the planning team was made up of the consultants

teaming with MBS employees. This involvement gave the program additional credibility with the

shop and sped its implementation.

The core project teams for both programs were flexible enough to change course as needed and did

not cling blindly to their initial plans. However, creating a plan before the program launch

polarized those involved around a common direction, provided a first look at the costs and benefits

involved, and established key goals that would be used to measure team progress. Once

completed, the plans were used as a lightning rod to give direction to the entire production area,

and as templates for individual team goals.

A final enabler was the fact that the MBS had the right people on the floor with the right attitude.

The operators had to look no farther than their own shop to realize that other T.I. board areas were

shutting down and consolidating into the MBS. These closings proved the competitive nature of

the market and the need to improve. The operators were also frustrated with their current work and

were ready for a change. Therefore, once positive changes began to occur in the MBS, the

operators quickly became proactive and were part of the solution, rather than part of the problem.

Their input and cooperation were an important component of the rapid improvements within the

board shop.

Continuous improvement was the idea behind the IMIP and CFM programs, and will undoubtedly

drive future programs at the MBS. Even though the CFM program was relatively cheap to put into

place (the highest costs involved operator training and team planning time), the McKinney Board

Shop had to be willing to take the risk of trying the program. The risk paid off for the shop, while

showing the value of cellular and continuous flow manufacturing in the aerospace defense

industry. WIP levels and cycle times have plummeted, bringing board costs down and

responsiveness up. The operators plan and run a pull-type shop and solve their own problems

without relying on costly support personnel. The MBS was able to achieve these results as their

board volume remained the same, while unique part numbers grew from 500 to over 1,200. The

experiences at MBS have proven that thinking creatively and taking the risk to change are key

components of the continuous improvements necessary to remain competitive in the future.

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Chapter 6

Case Study: Cellular Manufacturing in Engine FabricationPratt & Whitney General Machining, East Hartford, Connecticut

During 1991, life at Pratt & Whitney was good. The company was extremely profitable and had

one of the largest backlogs of aircraft engine orders in the firm’s 70 year history. By late 1992,

however, the picture had changed dramatically. Defense orders began to fall quickly and the

company lost its Japan Airlines business, one of its key commercial accounts. Suddenly, the

backlog of orders had vanished. With no order volume increases in the foreseeable future, Pratt &

Whitney (or P&W) realized it was saddled with too much production capacity. Discussions at

headquarters changed from how to reinvest P&W’s large profits, to which facilities to close first.

By the end of 1993, P&W had refocused its energies to creating lean, world class operations,

reducing costs and increasing competitiveness significantly. Many of the facilities began using

kaizen events to make large-scale operational improvements. A videotape taken during this period

from the General Machining facility in East Hartford, Connecticut shows equipment being

removed and bulldozers tearing the old wooden block floor from the plant. The block floor was

replaced with concrete and the equipment was quickly replaced in new cell configurations. Like the

bulldozer in the video, General Machining had destroyed its old way of running the plant and

began replacing it with a new, lean operation.

The following case study focuses on P&W’s General Machining area, and the changes it has made

since 1993. In particular, the study will focus on the features, benefits, and enablers of moving

toward lean manufacturing.

6.1 1993 - A New Strategy

Faced with a dire business situation in 1992, the management of Pratt & Whitney’s General

Machining area decided that it needed to make quantum leaps in a short period of time. To achieve

these improvements, P&W’s old strategies would no longer work.

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Instead, General Machining established a new strategy to become a world class manufacturing

business.

To successfully become a world class manufacturer, General Machining established a three-legged

stool strategy. The three legs that support the stool involve operations, new work, and technical

strategies. In operations, the strategy was forged in the shape of a horseshoe. This horseshoe is

divided into six distinct areas, with cellular manufacturing, JIT, MRP, TQM, and standardization

revolving around employee empowerment.

Once operations improvements are realized and the production areas become more efficient, the

new work strategy is to keep experienced employees and equipment working by growing the

business. Since operations have become more efficient, the business units can competitively bid on

some of the work they have outsourced to vendors in the past. The technical strategy involves

breaking down the barriers between engineering and manufacturing, and bringing integrated

designs to production quickly. Like a three-legged stool, the strategy cannot stand very well on its

own if one leg is too weak. Instead, the three legs should work together to support the new world

class shop.

General Machining’s management turned this strategy into a vision and mission statement with the

help of the business unit employees (both salaried and hourly). The manager of General Machining

reviews the mission with all of the employees quarterly, while the business unit managers review it

with their entire business unit monthly. Individual cells measure their strategic progress along the

horseshoe by using the ten commandments (described later in this study).

If P&W was to make dramatic improvements in a short period of time, it needed managers

experienced in change management and a staff whose strengths complement the new business

strategies. The company was not hesitant to look outside the corporation (where necessary) to find

these managers. Karl Krapek, a non-aerospace executive, was hired as P&W’s president and

General Machining’s change leadership has come from hiring non-P&W employees experienced in

the aircraft industry. P&W also hired a Japanese consulting firm to help them make the transition to

world class manufacturing. These consultants were brought in to give an outsider’s perspective to

P&W’s change efforts. They have been particularly effective, since they constantly push for

change, are very demanding of P&W’s employees, and represent the wishes of the firm’s upper

management. To stand in their way is to reject management’s desires to change.

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6.2 Planning the Operations Improvement

General Machining’s operations improvement was scheduled to proceed in three steps:

rearrangement, reprocessing, and continuous improvement. The improvement plan was initiated

three and a half years ago with a cross-functional team (the plant manager, financial manager,

operations managers, and materials and purchasing representatives) performing a commodity study

of how to source P&W components and final assembly (what to move where, what to close down,

etc.). After the study was completed, the plants were reorganized into seven product centers:

Product Delivery (E. Hartford and Middletown, CT), Compressor Stators (East Berwick, ME),

Rotors and Shafts (Southington and North Haven, CT and Columbus, GA), Cases and

Combustion Chambers (Middletown), Externals, Nacelles, and Composites (E. Hartford and

Middletown), and General Machining (E.Hartford).

The commodity study not only reorganized Pratt and Whitney’s operations, but also provided

incentive for improvement. East Hartford’s General Machining product center produces

approximately a thousand different part numbers, ranging from simple machinings to complex

structures. General Machining study of small machine shops in the Hartford revealed that these

shops had the equipment, quality and cost structures required to competitively produce the same

products. Coupled with P&W’s changing business climate, this study provided incentive for the

employees to make dramatic improvements.

From this incentive, General Machining formulated their World Class General Machining Strategy

in the fall of 1993. This high-level plan was developed by 9-11 employees in a three day offsite

planning session. The plan was detailed, yet had enough flexibility to be modified as the company

ran into unforeseen implementation barriers. It called for 50% cost reductions by the end of 1995.

When the plan was completed, it was passed internally through General Machining in the form of a

mission statement.

As part of their plan, General Machining used kaizen events to movefrom funtionally organized

facilities to production cells. Kaizen events begin with an assessment period, where team members

(operators and cell leaders, as well as business unit managers and other salaried employees) study

a process to eliminate waste. Once they have identified nonvalue-added steps, the team rearranges

the process to remove the waste. P&W’s kaizen events focus on lead time, worker and part travel

distance, inventory, and space measurements to drive improvements. The events typically last two

weeks. During the first week, the teams of 10-12 employees spend half their time training in kaizen

principles (the cellular concept, setup reductions, visual control, predictive quality, etc.) and the

other half analyzing the production area. During the second week, the teams rearrange the area’s

layout. The kaizen teams do not aim to achieve perfection during the events, but rather try to

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acquire a 50-60% improvement in the short two week period. The use of kaizen teams will be

discussed in the following section.

6.3 General Machining’s Move to Cellular Manufacturing

By the end of 1993, the General Machining area was ready to move from functional processing

areas to product-oriented production cells. As the plant’s wooden block floor was dug up and

replaced with concrete, a team of manufacturing engineers and technical managers were dividing

the machining products into families to be placed into separate cells.

Combining General Machining’s more than 300 part numbers into cells was no easy feat. At first,

the planners tried to combine common flows and part sizes on paper, but this quickly became too

complicated. After numerous attempts at assigning part numbers to cells, the planners used a

simple planning technique. They assigned color codes to each production process, and mapped the

complete process flow for each part number in colors on a wall. This made it easier to locate

common flows by combining common color combinations, and place parts with the same

processing flows into the same cells.

Following the cell / part number assignment, floor space was allocated for each cell and kaizen

events were held to locate where the machinery should be placed to ensure the best production

flow. Before any equipment was moved, the teams placed cardboard squares (shaped like the cell’s

machinery) on the plant floor to plan the optimal movement of parts through the area. When space

in the plant was limited, the teams performed the cardboard kaizens in the plant parking lot. This

allowed the teams to refine their layout without moving any equipment.

Rearrangement speed was crucial, since it was difficult to meet production schedules during the

moves. In the past, equipment relocations were written up, presented to the facilities department,

scheduled, and started as facilities labor allowed. On average, these moves took approximately 12

weeks to complete. If equipment had taken this long to move during the relocation, General

Machining would still be moving machinery today. Instead, tiger teams were established to

expedite the move process.

Tiger teams are cross-functional teams comprised of skilled trades employees (plumbers,

electricians, millwrights, etc.) along with manufacturing engineers. These teams were assigned full

time to the relocation process. They were able to virtually rebuild General Machining’s L

manufacturing facilities within a one and a half to two years period (80% of the activity took place

within an eight month span). During this time period, 1,200 pieces of equipment were moved and

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approximately 790 pieces were cleaned and reinstalled. The balance of equipment was sold or put

into storage. To move equipment at this speed, two or three machines were typically moved down

the main aisle at a time, 24 hours a day!

The tiger teams cut this relocation time down to three days, thanks to some creative thinking and

input from the employees. These teams were open to trying new movement ideas, since the worst

that could happen was that the idea did not work, and the equipment was moved using the old

methods. For example, machines were placed on wheels to be rolled down the aisle and parts of

equipment that would normally have fallen off during relocation were attached before movement.

In one situation, an operator convinced the movers to strap separate parts of his machine together

before moving it, saving a considerable amount of disassembly, unwiring, reassembly, and

rewiring time.

Moves were made with the idea that cells should be kept flexible and simple. When installing

heavy equipment, the tiger teams tried to keep this in mind. For heavy equipment requiring deep,

solid foundations, the machinery was placed on large metal plates with an insulation layer

underneath instead. This provided move flexibility, speed, and cost reduction. The foundations

would have cost $2 million to install, taken a long time to dig, and been virtually permanent,

whereas the plates cost only $200 thousand, and could be put into place quickly and easily

removed in the future. All of the plant’s air, water, and electrical drops were also flexible, in the

event of unforeseen equipment moves.

Reprocessing

Once a cell’s layout and installation were completed, production was launched. While the

production areas were now organized into cells, parts still flowed through the area along the old

functional lines. Rather than moving in a line through the area, stopping for processing on each

piece of equipment, parts infrequently jumped between machines, as they had with the old layout.

At this point, the cell were ready for the reprocessing stage.

Reprocessing is a means to “fine tune” the cell and realize the optimized flow designed during the

planning stage. It accomplishes this by reordering part number flows on equipment, changing cell

assignments for some part numbers, and moving equipment where necessary. The absence of

significant changes during reprocessing in most areas reconfirmed that the original part number

assignment activities and layout kaizen events were successful. In other words, parts flowed

smoothly through the area (without jumping between machines) at the startup of cell production.

Eighty percent of the cells have completed the reprocessing phase and the remaining twenty percent

should reprocess in the near future.

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Continuous Improvement Efforts

General Machining’s continuous improvement program helps cells make further improvements

once the rearrangement and reprocessing stages are completed. Each business unit has its own

continuous improvement leader who is typically a technical manager. The leaders meet regularly to

plan continuous improvement events and choose the department and type of improvement activity

that they want to pursue. Continuous improvement leaders usually “shadow” the firm’s hired

consultants during kaizen events to learn improvement strategies in a hands-on environment.

6.4 Other Improvement Efforts

Operator Involvement

The General Machining area strives to empower the employees at all levels. However,

empowerment is not merely used as the latest buzz word that has little meaning in the shop. It is

not meant to turn the operators loose, giving them the right to make any, and all decisions as an

individual. Rather, empowerment in General Machining has focused on giving the operators the

necessary tools and education to become involved in the decision making process.

General Machining attempts to leverage its employee’s skills in making improvements by

communicating with and involving the operators in the cell’s operation. According to one of the

business unit managers, “The key is to share the information with the people”, and the business

unit managers do. Business unit metrics related to delivery, cost, and quality are updated weekly

and are posted in the cell. These metrics include:

- cost of capital (used to measure inventory)- shop consumable usage- vendor assistance (cost of outsourcing part orders)- maintenance and repair- durable tooling- and direct labor overtime.

The point of use financial data on actual versus budgeted consumables, sundry items, and overtime

costs, have helped the cells gain better control of their costs. The entire business unit meets

monthly to discuss performance on a cell and business unit level.

As mentioned earlier, operators became an important part of the rearrangement efforts by

participating in the kaizen events that setup the cells. These events were an important first step in

the empowerment process and helped the employees understand the importance of their input and

participation in improvement activities. While the kaizen teams were highly successful, one

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situation did occur where empowerment went awry. In department 108, the employees moved

their equipment into cells along the old functional lines, by clumping all similar processing

equipment together as it was in the old production area. Since the area did not have enough money

to move the equipment again, manufacturing made the best of the situation by basically turning the

one cell into three different cells.

Operator self-inspections have practically replaced the final inspection quality audits in General

Machining. The few inspectors that are left in the cells still perform two types of inspections, detail

and visual inspections. Detail inspections verify that the operators performed all of the required

inspection steps, and have become a rarity. Visual standards have not been turned over to the

operators yet, since they are subject to interpretation subjectivity. The inspectors audit an

operator’s work based on their past performance. Operators with few inspection failures in the

past follow a minimal inspection schedule.

Employee Training

The General Machining training department was always an autonomous support arm, completely

insulated from the activities taking place in production. This group was not tied to operation’s

business strategies, and other than training tooling apprentices, was not perceived to add value to

the manufacturing environment.

As General Machining reorganized its operations into product centers in 1993, this situation

changed. Trainers were broken out of the training department and were reassigned to product

centers. General Machining’s trainers became directly tied to the business strategy and the

operations “horseshoe”. This allowed the training personnel to develop their own strategies based

on the product center strategy and the employees’ ranking of their own skill needs.

Training to date has focused on giving the managers the tools required to realize the new business

strategy, while generating an understanding of the strategic concepts. Managers were provided

courses in leadership through values, building partnerships, and coaching, to help them work with

the operators in achieving improvements.

The trainers have also created a comprehensive training program for the operators. However,

demanding production schedules and cell rearrangement and reprocessing activities have made it

difficult to complete this training. The trainers have provided an average of 60 hours training per

employee in 1994, an increase from the 40 hours provided in 1993. However, these totals are still

below the General Machining targets, due to the lack of available training hours.

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Supplier Improvement Efforts

General Machining has been instrumental in helping its suppliers improve their performance. To

date, the business units and purchasing personnel have led kaizen events at eight supplier

locations. Supplier personnel have also been included in P&W events, to help them gain a better

understanding of how kaizens are effectively performed, and how their customer (the cell) uses

their material. To improve relationships with General Machining’s key suppliers, each business

unit manager has been designated as a centralized supplier contact. The managers become the

contact representing all P&W customers affiliated with a certain supplier in quality, delivery, and

other matters.

V. The Current Situation

After the restructuring, the General Machining facility was reorganized into 36 different cells,

grouped by product types. These cells are organized into seven separate business units. All of the

cells are housed under one roof in the L building plant, except for the chemical treat and hollow fan

blade cells. The chemical treat facility has too many dedicated assets to move, yet is still located

close to the other cells. The hollow fan blade department employs new processing technologies,

making the cell part of a developmental environment management would rather keep separate from

the main production areas.

Rather than reporting to their traditional functional areas (engineering, quality, manufacturing, and

production control), cell members act as a product-centered team. Cell unit leaders were selected to

head this team from the old supervisory ranks, other employees that were interested, and through

recruiting. The difference between the old supervisory and cell unit leader positions is that the

leaders act as the head of a business, rather than acting as just a job assignor. The cell unit leaders

are considered to be one of the key links in realizing change. They control the level of operator

involvement and are instrumental in the cell’s performance. These leaders had to pass written tests

and a series of structured interviews to determine if they could perform the required duties. Some

of the supervisors and the early leaders had to be reassigned or let go, since they were not flexible,

business-minded, or team oriented enough to hold the position.

The operators are cross trained to perform different activities within the cell. The intent of cross

training within General Machining is to drive cell flexibility, quality, and increase employee

empowerment. The employees virtually become their own customers by working and

understanding a process that is upstream from the process they typically operate. The unit leader

decides who will be cross trained on which process equipment, based on the cells needs. Cross

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training involves one operator training another on the piece of equipment they are most familiar

with. It is not common for the operators to be cross trained on all of the cell’s machinery, since it

is not practical for operators to run all of the equipment in the cell frequently.

The cells measure themselves in four key areas: quality (DPM - or defects per million

opportunities), cost (overtime hours and usage of consumables), schedule performance (on time

delivery percentage), and speed through the area (a cycle time figure). The cells also measure their

progress against the operations strategy. Ten important strategic characteristics were identified

from the operations horseshoe to be tracked on a cellular level. These ten commandments (as they

are referred to in General Machining) are:

1. Balanced production2. Setups / changeovers3. Standard work4. Pull production5. Total productive maintenance6. Mistake proofing7. The 5 S’s rating (sort, straighten, shine, standardize, and self discipline)8. Visual controls9. Employee skills10. Improvement planning

The cells rate themselves against a detailed rating grid that specifies whether a cell ranks at level 1

(worst) through level 5 (best) in each of the ten categories. This gives the cells a gage of their

progress and sight to their goal of completing General Machining’s horseshoe strategy for cell

evolution.

The Financial System

Like most other firms, P&W relies on a traditional financial system that aggregates cost on a high

level. The General Machining area receives its financial information from a system that was mostly

assembled in the early 1970’s. The system is not user friendly and does not provide meaningful

measures. To get four pages of General Machining information from the system often means

manually sorting through a stack of 1,000 papers.

The system also restricts the floor’s visibility to costs. As one employee commented, “To make

quantum improvements, we need visibility to what’s going on.” Therefore, the current system is

viewed as one of the largest barriers to moving forward. Operations needs visibility to run the

business, and a financial system that compliments the world class manufacturing strategy should

show where to attack costs and how much is being saved.

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To remedy this situation, P&W is driving to replace their financial system with an updated version.

While a new system is expensive and requires training in new skills, dissatisfaction with the

current system at all levels of the organization has fostered support for system change.

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6.6 Examples of Cell Improvements

The following examples from three different cells are provided to give a sense of the current state

of the cellular production environment within General Machining. This section discusses the

changes in cell 109, the chemical treat area, and cell 106.

Cell 109 - Fusion Welding

Cell 109 is the fusion welding cell for the turbine exhaust cases and inlets. Since the

rearrangement, the number of welders has dropped from 50 to 9. This reduction is partially due to

the drop in production volume and partially to the increased operating efficiency within the area.

Since there are fewer welders, and the individual operators completely process a part number

through the cell, each welder needs to be more skilled in running all of the area’s processes. This

cross training has helped the cell make dramatic process improvements. Since each operator

completely understands all of the processes in the cell, they realize how the quality of their work on

one process will affect a downstream process. This understanding also helps them make more

process improvement suggestions. As a result, defects per million opportunities dropped by 67%

during a seven month period last year, and first pass yields for x-ray inspections on inlets have

risen to almost 99%. In the past, it was uncommon for parts to pass this inspection on the first try.

Cell 109’s operators are deeply involved in the area’s quality and cost tracking efforts. The cell’s

sophisticated quality tracking system was replaced by operator updated SPC data. This has

provided real-time quality feedback. The operators also track consumable, sundry item, and

overtime costs versus their budget. An example is the tooling budget. In the past, a computer

system was used to track tool orders and costs. As a result, the cell would constantly run out of

tools and exceed their tooling budget. When the tooling information was taken off of the system

and put into the operators’ hands, the area realized a dramatic improvement in tool availability and

costs.

Since restructuring, the scheduling within cell 109 has become more simplistic. The heavy (and

often outdated) production control scheduling manuals have been replaced with white boards

showing the area’s production volume for each part number and its backlog based on data from the

MRP system. Squares on the floor outside of the production area act as kanban locations to show

when the area needs more supplies. Within the area, operators assemble their own production kits

from supply bins. When these bins are emptied, yellow kanban cards are used to reorder their

contents. Tools and boards are color-coded by part number, to help keep the area organized. This

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visibility to production flow has enabled cell 109 to get all three of its inlet programs back on

schedule for the first time in recent years.

As a result of their efforts, cell 109 have taken the lead in General Machining for one-piece flow.

This control of production has helped the area deal with late supplier deliveries. If supplier material

enters the area after the production launch date, one-piece flow means cell 109 can quickly flow the

order through the area, without the use of expediters and without compromising the schedule

performance of other orders already in production.

The Chemical Treat Area

In the chemical treat (or wet chemical) cell, scheduling has changed dramatically, also. Scheduling

in this area is extremely important, since much of the plant (as well as some external areas) rely on

chemical treatment of parts. In the past, this cell used to schedule by the “bleeding heart” method

... whoever could tell the best story of why they needed their parts completed first got the fastest

response. This technique rewarded the areas that were behind and got everyone else behind, too.

After replacing the “bleeding heart” scheduling with a strict FIFO (first in, first out) system,

scheduling today has migrated to a modified FIFO. A cell can only get their order ahead in the

FIFO line by having it added to the critical parts list, or by swapping with another of the cell’s

orders that’s closer to the front of the line. Since it’s difficult to put a part on the critical list, the

chemical treat cell has forced the other cells to become more responsible for their actions and is no

longer the bottleneck it used to be.

The chemical treat area tries to win external business as capacity allows. This helps to keep their

costs in perspective, by forcing the cell to compete with the low cost local shops, giving the area

incentive to keep their costs low, too.

Cell 106 - Nuts and Hubs

Cell 106 produces engine nuts and hubs. It was the first of General Machining’s cells, and while

some cells are still moving equipment, department 106 has made the most advances along the

operations horseshoe. It has visual controls, problem solving teams, line of balance scheduling,

and some standardization. Department 106 has completed three kaizen events to date. These events

centered around layout, setup time reduction, and one piece flow of parts through the area.

According to the operator who showed us around cell 106, “everything is a move toward being

faster and better.”

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Cell 106 has significantly reduced its processing time. Some of the largest reductions have come

from the cell’s concentration on standardization. In particular, the cell has focused on standardizing

their fixtures, precision pins to locate parts, tools, and budd locks. They have also developed self-

contained setup kits that contain all of the required setup tools for one machine and quick connect

tooling that fits right into place. For example, it used to take 6 hours to setup the buffing machine.

Through standardization of the machine’s fixtures, the setup time has dropped to 10 minutes.

Another machine uses setup probing to check tool and fixture setup, dropping the machine’s setup

time from 8 hours to 30-45 minutes!

All production tooling is kept in the area in racks. In the past, this tooling was kept in a centralized

crib. The crib attendant pulled by priority, requiring the departments to request the tools days in

advance. Now, each set of tools required to run a job are combined on a large tray. The tray has a

thick layer of foam on top that has a spot for each tool cutout in its shape. This visual control

makes it simple to see if an operator forgot to return one of the tools, or if a tool is missing from

the tray. The trays are easily moved in and out of the work centers on a rolling cart and have their

kit number inscribed on the outside. It was obvious to us that the area had spent a significant

amount of time making sure that there was a place for everything, and everything was in its place.

This is especially important (particularly for tools that can get mixed up or lost easily), since the

operators are responsible for stocking and retrieving their own tools.

Work in process is tracked on a huge white board in the area, similar to the one used in cell 109.

The board noted the number of parts at each processing step and area action items that needed to be

addressed. Cell 106 does its own production loading based on the MRP schedule. However, the

cells are moving away from an MRP-driven shop to a daily production assembly-driven shop. The

departments used to measure their performance against MRP, but now they measure deliveries

versus final assembly and spare parts needs. The ultimate goal is to quickly respond to customer

orders through one piece production flow. In the past, work was released in two to four week

batches. Now releases are made weekly.

106 also helped some of the areas outside of the cell that they relied on for processing make

improvements by “kaizening them.” In the spirit of continuous improvement, the cell was getting

ready to go back through the area and look for improvements again at the time of our tour.

Everyone in the area will ask why they are performing every processing step, in an effort to

eliminate nonvalue-added work.

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Cell 106 Improvements

As a result of their efforts, cell 106 has been able to make some impressive improvements (these

improvements are consolidated in table 6.1). The number of machines used dropped from 47 to 19

during and after the rearrangement. Standardization has reduced the number of gages from 900 to

360 and the tool varieties from 56 to 26. This standardization has reduced the costs required to

maintain expensive gages and tooling as well as helping reduce the average time per setup from

360 to 30 minutes.

Work in process levels within the area have fallen from 273 to 77 pieces and lead times have been

reduced from an average of eight to three weeks. The cell also requires less space, due to the

rearrangement layout and reduction in equipment. Floor space has dropped from 10,200 to 4,000

square feet and travel distance on a typical flow path has been reduced from 13,670 to 5,800 feet.

Quality within the area has also improved, due to the cells product focus and continuous

improvement efforts. Defects per million have dropped from 1,200 to 269.

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TABLE 6.1

Department 106 Improvements

Before After

Machines Used (number) 47 19Gages (number) 900 360Average Time / Setup (minutes) 360 30Work in Process (pieces) 273 77Lead Time (weeks) 8 3Floor Space (square feet) 10,200 4,000Travel Distance (feet) 13,670 5,800Quality Level (DPM) 1,200 269

6.7 Results of General Machining’s Improvement Efforts

General Machining has been able to reduce waste and its cost base considerably since the inception

of its improvement program in 1993. The following section discusses the benefits that this

program has had, by comparing the current operations with those of 1992-1993 (before the move

to cellular manufacturing). Keep in mind that General Machining’s shop load fell 50% between

1992 and 1994 (with most of the drop occurring between ‘92 and ‘93) and has held fairly steady

since then.

Changes in the Materials Organization

The materials organization has shrunken considerably since 1992. In ‘92, the organization had 126

people on its headcount (including crib attendants, drivers, etc.). In ‘93, this total dropped to 69,

and hit a low of 21 by the first quarter of 1995. Why such a dramatic drop? The most logical

answer would be to consider the reduction in the business base. However, several other factors

also contributed to the headcount reduction.

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General Machining had 21 stocking locations (cribs and mini-cribs) in 1992 requiring 400

thousand square feet of floor space. Now there is only one crib, and it is 61 thousand square feet

in size. The large reduction in stocking locations was a result of the move of raw materials and

tooling into the cells. This gives the cells better control of their own production and the incentive to

reduce inventories of raw materials and the number of tools used in the area.

The materials organization has also seen a reduction in job functions. Originally, materials had a

representative that dealt with floor level materials concerns. It also had two shop assist employees that

controlled the relationship with outside vendors hired to build excess orders the shop could not handle.

Cells currently perform their own outsourcing and materials planners are decentralized to work more

closely with the business units.

Changes in the Quality Organization

The number of inspectors (for quality review, inspection, testing, and gage standards) and other

quality employees has dropped significantly. At the start of 1992, there were 463 quality employees.

Within one year, this number had fallen to 255. Currently, General Machining’s quality organization

has 71 employees, 43 of which serve as inspectors for the 36 cells (on all three shifts). These

inspectors report directly to the cell’s business unit.

Operator self inspections have thinned the quality organization. Operators perform the mechanical

inspections specified during fabrication, and the inspectors serve as the absolute “last line of

defense”, performing visual inspections at the end of the cell.

Product Center Improvements

Improvements for General Machining as a product center have also been dramatic. These

improvements are discussed below and summarized in table 6.2.

General Machining’s headcount has fallen from 1,224 people in September of 1993 to 690

employees currently. Sales per employee have experienced a 137% increase during the same

period, due to these headcount reductions and productivity gains. Keeping employee morale high

during periods of layoff, has been difficult, and management has been more successful in

maintaining morale in some parts of the product center than others.

The cellular environment and continuous improvement programs have been conducive to quality

improvements. Defects per million opportunities (DPM) have seen over a 38% improvement since

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September of ‘93. Scrap levels have also fallen and customer complaints (from internal and

external customers) are down 29% from 1993 through 1994.

Standard hours per employee have grown since 1993. As the headcount has fallen, and cells have

become more efficient, General Machining has experienced an estimated 24% total cost per

standard hour reduction since 1993.

Finally, through the reorganization, the production plant space has dropped from 1.6 million to

656 thousand square feet. The lead time for General Machined parts has dropped from well over

20 weeks to an average of less than four.

TABLE 6.2

Changes in General Machining (1992 - present)

Before After

Employees (Sept. ‘93 to present) 1,224 690Materials Employees 126 21Quality Employees 463 71Plant space (square feet) 1.6 million 656 thousandStocking Locations (cribs and minicribs) 21 1Average lead time (weeks) 20 4Sales per employee (Sept. ‘93 to present) 137% increaseDefects Per Million Opport. (Sept. ‘93 to present) 38% reductionCustomer complaints (start ‘93 to present) 29% reductionCost per stand. labor hour (start ‘93 to present) 24% reduction

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6.8 The Future of General Machining

As table 6.1 and 6.2 show, great improvements have been made within General Machining in the

last two years. With this level of success, it is obvious that General Machining has been able to

overcome its largest barriers to implementation, by convincing non-believers that the improvement

programs were the right thing to do and by shattering the preconceived notions of how a machining

shop should operate.

What will the future hold for General Machining? The answer is not clear. The improvement

efforts have only partially been completed and the area still has a long journey ahead of itself before

it reaches its goals. The changes to date have required a high level of physical energy from the

employees and pressing forward will demand determination and endurance. If the success of the

present efforts are any indicator, however, the employees are ready to accept the challenge, and I

would be very interested in comparing general machining in 1995 with general machining in 1997

or 1998.

The vision and goals for general machining are clear ... world class manufacturing driven by an

empowered workforce to give the customer a quality product fast, at the lowest price. To achieve

these goals, the cells must evolve along the operations horseshoe and coordinate their activities to

create a world class machining facility. The intent is to move beyond kanban systems to a JIT

plant, where cells order their own parts and the plant ships completed kits to the engine final

assembly facility. The workforce will also continue to streamline in the future. For example, the

purchasing and materials functions should combine into one group that can provide “cradle to

grave” materials coverage.

General Machining has been successful in growing their business since the start of 1995. As

process improvements lead to cost savings, another of General Machining’s goals is to keep their

cost structure level under this growing shop load.

No matter what direction General Machining travels, it has positioned itself and its workforce for

continuous improvement in the future.

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6.9 Enablers for General Machining’s Improvements

What are the elements of the General Machining effort that have allowed it to progress so far, so

fast? During discussions with some of the group’s employees, four main enablers were mentioned

as being essential:

• a crisis situation

• support from the top of the organization down

• a common focus and strategy

• and the resources in place to realize the vision.

Pratt & Whitney’s crisis situation was instrumental in making rapid and dramatic changes to the

General Machining business. The possibility of plant closures focused the employees on the need

to change and made them more willing to embrace new ideas. It is hard to imagine that General

Machining would have moved quickly toward a world class manufacturing strategy involving cells

and operator empowerment during the “good times” of the early 1990’s.

Without upper management support of the changes in General Machining, the area could not have

moved toward its strategy. Cellularization and employee empowerment would not have been

possible without commitment at the highest levels of the firm. It is also important for support to flow

from middle and floor level management down to the operators. General Machining’s management

has taken the stance that swift action that shows commitment to the improvement initiatives is

important in convincing the operators that they are serious about empowerment and making

improvements. For example, at the start of one kaizen event, operators complained how one machine

was sticking out in aisle, getting in their way. The managers had the machine moved immediately,

setting the tone for the rest of the event that management was committed to listening, acting on the

operator’s behalf, and making sure the right changes would be made for the cell.

Upper management has also used outside consultants to show their support and willingness to

change the rest of the organization. The consultants represent upper management and have

provided the focus and energy to make dramatic improvements. Employees at all levels of the

organization understand that the presence of the consultants represent upper managment’s support

of, and commitment to moving the firm in a positive direction.

The first step in General Machining’s improvement program was to formulate a strategy for the

business to focus on. This strategy gave the business direction and a vision for making

improvements. Today, the business units and individual cells use this strategy to provide a basis

and measure for their actions. Without this focus and strategy, it would have been very simple for

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the employees to lose sight of the larger picture and the General Machining vision, rather than

working toward making rapid improvements.

General Machining also needed the resources to bring about improvements and realize their vision.

Their main resource is employees capable of initiating and accepting change. This required

generalists who were not stuck on providing specific skills. Only two of the original business unit

managers are still with General Machining, and staffing of some of the support organizations have

also changed dramatically. General Machining was not afraid to go outside of the company in some

cases, to hire managers who could initiate rapid change, while keeping employee morale high. The

main idea was not to perpetuate P&W ideals, but to get the right employees (wherever they may

come from) in the right positions to make improvements quickly. Management is also committed to

educating and training the workforce to empower and add to the pool of resources.

It is amazing how quickly P&W’s General Machining product center has changed since 1992.

When one considers that this area is one of seven product centers within P&W that are making

rapid changes to reach the firm’s world class manufacturing goals, dynamic improvement becomes

a descriptive phrase for the state of the firm. Whatever the future brings for Pratt & Whitney, its

moves toward lean production through employee empowerment and continuous improvement will

help the firm remain competitive and flexible to meet the challenges of a changing marketplace.

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Chapter 7

Conclusions

From the introduction to this thesis and table 1.1 in the introduction, the operations portion of the

lean concept involves:

• closely tying manufacturing to the rest of the value chain (suppliers, distributors, andcustomers)

• eliminating waste• focusing on serving the customer• improving continuously• and creating a flexible manufacturing environment.

It is clear that not all of the case studies discussed progress in all of these areas. Success has not

been achieved in these five areas in all cases, since the case companies are currently moving

toward, and have not completely achieved lean operations. Where the companies were successful,

a discussion of the success was not always possible, since improvements in some of these areas

are difficult to characterize and measure.

However, the case studies show that the use of lean practices helped the firms:

• improve product fit and quality• reduce assembly tooling• empower their workforce to make improvements• eliminate nonvalue-added processing steps, reducing production labor hours• reduce shop cycle times• reduce work in process levels• shift from discontinuous to continuous (and even pull) production flow• and reduce production floor space.

The following is an example that will help characterize and summarize the improvements achieved

in the cases. The example comes from the book Dynamic Manufacturing by Hayes, Wheelwright,

and Clark.

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In Dynamic Manufacturing, Hayes, Wheelwright, and Clark introduce a comparison of two

companies, company A and company B. These two companies are based on the authors’ analysis

of two manufacturers of industrial equipment, where the finished product had over a thousand

components that could be combined in “an almost infinite array of combinations.”

Company A has traditional operations characterized by: fire fighting (management by overdue

work), large batch production, organization by processing stages, a large and powerful materials

management group in the factory (operations rely heavily on them), a sophisticated centralized

scheduling system, slow improvements, no attention to inventory levels, and the use of many

support people.

Company B, on the other hand, found themselves short of capital in the past, due to the effects of a

dramatic event in the marketplace. This internal financial crisis focused company B on reducing

inventory levels and other sources of waste. Company B’s operations are characterized by: an

MRP system used only for master scheduling (found it to be too tedious to use for process flow),

component (not functional) organization of production areas, material and production employees

working closely together and reporting to the same person, decentralized decisions, a broader

employee skill set, disciplined common view of production commitments driving production,

continuous improvement efforts, low setup times, visual production systems, simple layout and

production flows (don’t need a complex information system to run the shop), and high flexibility.

Both of these companies should sound familiar to you after reading the case studies. Company A is

similar to the case study companies before their improvement efforts and company B is similar to

the companies after. It should come as no surprise that company B has a substantially lower WIP

and cycle time than company A. Furthermore, company B’s employees are accustomed to working

together in teams. They do not operate in a fire-fighting mode, and are relied on to think about how

to reduce waste and bring about improvements. Therefore, company B is better poised to make

more dramatic improvements in the future.

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7.1 Review of the Three Sections: Variability Reduction, ProcessImprovements, and Flow Optimization

The five case studies describe the efforts and results of the companies improving their operations.

The following section revisits the three case study themes: variability reduction, process

improvements, and flow optimization.

Variability Reduction

Precision assembly is an effective means to reduce process variability. This allowed Rockwell to:• achieve new levels of floor beam fit and quality• reduce hand processing steps• and reduce / eliminate expensive tooling.

As a result, Rockwell has been able to move from the traditional craft production (hand assembly,

with inconsistent product fit), to lean production (where design and manufacturing representatives

work together to ensure low production variability).

Process Improvements

The shutdown and restart of the Hellfire detector stack production, using similar production

processes and the same inventory and operators made the Martin Marietta case a good opportunity

to isolate the effects of process improvement teams. Continuous improvement and an eye toward

elimination of nonvalue-added activities can be the source of significant improvements in the

production environment. The Martin Marietta case reemphasized that to get the most out of process

improvement efforts, it is vital to include the production operators. As a result, the team efforts at

MEC were instrumental in the firm’s reduction of labor hours.

Flow Optimization

The three companies featured in the flow optimization section discovered an effective method to

gain scheduling control in a low volume, high product mix environment. They used a restructuring

from process-centered discontinuous flow paths, to product-centered flow paths.

Figure 7.1 is a notional graph showing the traditional flow techniques for manufacturing. When

the number of distinct flow paths are high and the production volume is low (on the upper left side

of the chart), a discontinuous flow path results. Manufacturing has trouble organizing the

numerous flow paths, and a job shop environment is established. Production in the aircraft defense

industry often fits this scenario. In cases where the number of flow paths are low and the

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production volume is high (the lower right side of the chart), manufacturers are able to move

toward the one piece flow concept. A good example of this is in final assembly in the automobile

industry.

FIGURE 7.1

The Move from Discontinuous to Continuous Flows

Process Flow Paths

Volume

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The line in figure 7.1 shows how the reduction in flow paths can lead from a typical job shop

environment with discontinuous (or jumbled) flows toward a continuous flow using finite capacity

scheduling, kanban, or single piece flow techniques. This move was portrayed in the last three

case studies. Restructuring moved production from process-focused departments to focused

factories or cells that contained all of the equipment required to manufacture a set of parts. With a

smaller number of flow paths, and more control of the necessary processing resources, the

operators are able to focus on one set of products. This focus gives better visibility to meeting

schedules and improving the quality of the area’s products. Inventory no longer sits in piles

between processing steps, requiring expediters to locate parts and push them through the factory.

Instead, they are released and processed through the area quickly by operators highly experienced

in their production.

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7.2 Common Enablers to Implementation

Each company that makes moves toward the lean enterprise will require a slightly different set of

enablers to succeed based on their environment and the situation. However, some enablers should

be common to most lean implementation efforts. The following is a list of common enablers that

were essential for several, or all five of the case study companies to achieve dramatic

improvements.

RESOURCES:

• management change agents, trained / skilled employees, modeling and simulation tools, etc.

If your firm does not possess the resources for change within your organization, do not be afraid

to look outside. Examples from the cases were the use of external training materials and the hiring

of managers experienced in bringing about rapid improvements.

TEAMS:

• using teams of operators to improve production processes, teams of design and manufacturing

engineers to design for manufacturability, and involving employees in the operations

improvements process

One of the key features of the lean concept is to drive responsibility and change down to the floor

level. According to Taiichi Ohno, “In industry, it is important to enable production people to cope

with change and think flexibly.” To be effective, these teams must have good information and

training, the power to make improvements, and good communication with each other and

management. To ensure that teams were not suboptimizing the factory, it was important for

management to give them the right incentives (their goals came from the macro, and not micro-

level).

It is very important to know when to use teams of operators. Before teams mature, they often do

not understand the “big picture view” of operations. Therefore, it makes more sense to limit

operator planning to floor-level process improvements, until the teams mature. In the case studies,

restructuring plans were initiated from support employees with little to no input from the floor.

However, operators teams provided significant insight in floor layout and process improvements

activities.

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MANAGEMENT COMMITMENT:

• a committed effort to ensuring the success of the improvement programs

Management commitment does not simply refer to a financial commitment to a program. It is more

important for a manager to consistently show that they are behind a project and are willing to take

whatever steps are required to ensure the program’s success. Commitment from the top ensures

that the proper resources are available and emphasis and pressure are being applied to successfully

implement an improvement program.

Management commitment keeps the implementation of improvement programs from becoming just

another set of buzzwords, or the latest program that will soon vanish. This commitment sends the

right signal to the workforce that the program is important and is a vital part of the company’s

future.

A GOOD PLAN, A COMMON FOCUS / STRATEGY:

• a plan to provide all of the employees with a goal, a direction, and a path to get there

Even in situations that call for rapid changes, taking the time to formulate a plan lends a program a

focus that employees can rally around. Especially in the case of restructuring where the risks of

mistakes are high, the employees pointed to their common focus (as established by a planning

group) as being essential to success. For situations in the cases that required fast planning, it was

clear that a dedicated planning team was able to set a course of action quickly.

No matter how fast or slow a plan was created, the companies emphasized that planning had to be

flexible enough to change as the plan’s implementation hit barriers. These unforeseen barriers

make planning to the most minute details a waste of time and effort. Instead, the case companies

learned to, “avoid analysis paralysis ... continuous improvement beats postponed perfection.”

A CRISIS SITUATION:

• a dramatic change in the current situation due to a cost, competitive, or a customer requirements

challenge

Most of the case companies pointed to one crisis (or a crisis atmosphere) as an enabler to their

success. A crisis provides instant (and often sustained) motivation for employees to make dramatic

improvements, and in most cases, quickly. Toyota provides a good example of this enabler. A lack

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of capital and competitive pressure in its early days forced the company to creatively reduce

sources of waste. Without this crisis situation, Toyota may have accepted traditional western mass

production techniques, and may not have become the truly lean organization it is today.

CONTROL / DISCIPLINE:

• control of the production environment (process, quality, and scheduling control)

One of the keys to precision assembly was process control. Without it, Rockwell would have been

wasting money. Similarly, some of the other companies cited control of their quality as a

prerequisite to reducing inventory levels, and moving toward a continuous flow. Finally, some

control of the scheduling function by production certainly helps manufacturing control their

operations and make more educated production decisions.

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7.3 Implementing Lean Practices

The order of implementation steps and speed of progress is different for different firms and the

implementation plan that works for one company won’t necessarily work in the culture and

environment of another. Therefore, no “cookie cutter” approach to implementation of operations

improvement should be devised. However, there are some important lessons that should be kept in

mind when implementing lean practices. The following section takes a look at the implementation

lessons and barriers as identified by the case companies.

Barriers to Implementing Lean Practices

The case companies each identified a different set of barriers to their progress in implementing lean

practices. However, there were two main barriers that seemed to be mentioned by more than one of

the companies.

The first of these barriers is related to cost. Companies found it expensive to restructure their

operations or change their costs systems to gain visibility to where to pursue future cost savings.

They found it difficult to even extract meaningful cost savings for their restructuring from their

current financial system. Without proving the savings of their efforts, it was difficult to get

additional funding for improvements in some of the cases.

The other major barrier that needs to be overcome is the employees’ preconceived beliefs and

unwillingness to consider different ways of doing things. The companies that comprise the defense

aircraft industry have faced a similar business climate for a number of years. The new industry

environment requires a different outlook and a willingness to change. For companies that cannot

overcome it, this barrier can be extremely dangerous.

An awareness of these barriers and a willingness to work hard to overcome them was important to

the case study companies. Persistence and commitment in the face of cost barriers and employee

unwillingness to change was essential to their success.

Implementation Lessons

There are three implementation lessons that were observed from the case companies that I would

like to discuss. The first of these lessons is that a company can get bogged down by trying to

make all the improvements they have identified at one time. There are no quick fixes. Establishing

lean operations involves dramatically changing the way employees think and perform their jobs.

This level of change cannot happen overnight. Instead, patient, gradual steps focusing on one or

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two areas of improvement allow companies to see their efforts through to the end and lowers the

risk of the efforts receiving a poor reputation.

An example of this is Texas Instruments’ McKinney Board Shop. The shop took methodical

improvement steps by using inventory carousels to organize and draw attention to their inventory

levels before reorganizing into cells. Their scheduling system also moved to MRP before becoming

a pull system. MRP helped the shop gain the scheduling discipline it needed before it could

implement a pull system. To establish teaming efforts, MBS went from no teams to too many

teams and meetings, before it settled on the focused / value-added teaming it uses today.

Pratt & Whitney provides another good example of this lesson. General Machining separated

progress into three distinct steps: rearrangement, reprocessing, and continuous improvement,

before they made any changes. Progress has been rapid, but focused within each area. Today,

different cells are at different stages of progress, based on the resources the organization has been

able to devote, and the area’s speed of improvements.

Another major lesson for lean implementation is that a company has to be committed and diligent in

its efforts if it is to succeed. Companies that are:

• not patient enough, expecting results too rapidly• not willing to accept mistakes (and view mistakes as a sign of lean implementation failure and

not of learning)• not fully committed at the upper and middle management levels• and that are not proactive in establishing floor level commitment and buy-in

cannot be truly effective in their lean implementation efforts. These hurdles are difficult to

overcome. However, they are key to the corporation’s success.

Finally, companies must tailor implementation of lean practices to their own organization. This is

especially true when deciding which practices are relevant for the corporation to implement at any

given time. A firm should assess its capabilities and understand what areas need to be addressed

before lean practices can be implemented.

For example, a company considering the use of precision assembly will find that it is extremely

expensive to implement in programs without 3-D designs already in place, and that precision

assembly should not even be attempted if the production processes are incapable of holding tight

tolerances. Another example is cell and focused factory implementation. These two concepts may

not add much value for facilities that have an extremely low volume, high part number mix facility

with rapid order turnover (or basically, a true job shop environment). However, these two

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concepts are valuable in situations where the volume is low and the mix is high, but stable, or even

in high volume, low mix lines.

7.4 Final Remarks

The lean enterprise is not based on lean operations alone. Therefore, while this thesis focused on

operational progress toward the lean enterprise, I would like to stress that it is important for the

operations efforts to be closely tied to human resources, product development, and supplier

relations activities within the firm. This thesis is a product of the Lean Aircraft Initiative’s efforts to

understand the level of lean implementation and its effects on the industry. Ongoing work in this

area from the Lean Aircraft Initiative’s Factory Operations group includes industry benchmarking

activities. Future case studies from the group are planned to focus more deeply on specific areas of

importance that surface from these benchmarking activities.

The five case studies in this thesis have shown that moving toward lean operations can have a large

impact on reducing waste, speeding delivery, and meeting changing customer requirements. These

studies represent companies from each sector of the defense aircraft industry, proving that

improvement can and has been seen in all three sectors. The companies in the case studies feel that

their move toward lean operations can and must be performed to remain competitive in their

business in the future.

I would like to conclude the thesis by posing a question. If you work in a manufacturing

environment, is your firm moving quickly to make improvements in its operations? If your

employer is part of the defense aircraft industry, your competitors are, and your customer expects

that you will, too!

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Goldratt, E., and J. Cox, The Goal, North River Press, Croton-on-Hudson, NY, 1992.

Manganelli, R. and M. Klein, The Reengineering Handbook, American Management Association,Boston, MA, 1994.

Hammer, M. and J. Champy, Reengineering the Corporation, HarperCollins Publishers, NewYork, NY, 1993.

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were hot, the supervisors would try to work ahead if they anticipated a growth in future orders.

Working ahead often meant making inefficient near-sighted decisions, like working overtime and

borrowing employees from other production areas. Since the focused factory scheduling gave the

supervisors greater understanding of scheduling trends and more leverage to smooth schedule

fluctuations, the number of shop orders in the SEFF has dropped to a steady 500 jobs at a time.

In addition to the dramatic reduction of shop orders on the floor, the focused factory scheduling

system has virtually eliminated hot jobs. Because of the more proactive scheduling of work and the

close attention to the expediting / shortage list, the SEFF usually only has hot jobs now if late

engineering changes force the SEFF to remake an order. The cost center’s emphasis on cost in the

past led to the practice of cherry picking (mentioned earlier), which resulted in even more hot jobs.

However, the new system has integrity, and the use of practices like cherry picking become

obvious almost immediately.

The other lean programs have also had good results in the small extrusion focused factory. SEFF’s

supplier JIT program has been extremely successful due to the responsiveness of the supplier. The

small extrusion focused factory currently carries one day or less of raw material, where up to 500

days worth of material was stored in the past. Orders are submitted every morning and are

delivered in time for the afternoon shift to use them. The supplier facilities are 5 miles away, and a

replacement part can be sent within an hour if the supplier’s raw material is defective, or if the

small extrusion area turns it into scrap. Over 10 thousand JIT deliveries have been made to the

small and large extrusion areas without error. The JIT program has dropped the SEFF raw material

inventory from a range of 150-500 days to less than 1 day’s worth of inventory.

Lockheed and Tiernay (the JIT supplier) decided that the JIT startup approach with the minimum

impact would be to initially transfer all raw materials to the supplier’s local warehouse and then

systematically reduce this inventory. After one year of JIT operation, the excess Lockheed

inventory that was transferred to the supplier was eliminated, leaving the original inventory level

(figure 4.6 shows the JIT inventory trend). The goal is to reduce the remaining inventory in the

future.