Deborah Nightingale - 1 ? 2002 Massachusetts Institute of Technology Examples of Commonality in Lifecycle Operations  Commercial Airline: – Main engine starter is common across 747-400, 767, and 767- 300ER – 26 airports service these aircraft (11 common) – Airline only has to stock 14 spares, as opposed to 25 if they were not common  PMA-276 – UH-1Y and AH-1Z deploy together on the same MEU, relying on the same mobility, maintenance, training, and sustainment infrastructure – 85% commonality between UH-1Y (utility) and AH-1Z (attack) reduces the detachment maintenance personnel requirement from between 4 and 14 people (3 to 12%) – Nearly $1.5 billion in savings from commonality over 20 year lifecycle of program Deborah Nightingale - 2 ? 2002 Massachusetts Institute of Technology Timeline of Commonality Benefits Illustrates Linkage to Multi-Stakeholder Enterprises Reduced time for source selection Reduce training time Reduced support equipment Reduced training equipment Higher spares availability Reduced complexity in supply Reduced downtime Greater interoperability Faster solutions to problems Reduced rework Reduced testing Increased operator competency Design reuse Shared development costs Fewer maintenance hours Reduced DMS Reduced spares inventory Reduced tooling Process reuse Reduced documentation Lower risk Economies of scale Reduced inventory Higher reliability Reduced cycle time Higher productivity 0 II III I Deborah Nightingale - 3 ? 2002 Massachusetts Institute of Technology SYSTEM INTEGRATOR SUPPLIER Strategic/business relationships Source selection; requirements; order placement Coordinated methods, procedures & solutions – Common technical databases & ools – Integrated product teams (IPTs) – Technical data exchange – Flowdown of key characteristics – Configuration control – Engineering change process management IT Solutions; training & Implementation; plans & technical requirements Requirements Capabilities General Management General Management Procurement Customer Liaison Manager IT Dept. Engineering Engineering IT Dept. Program Manager Source: Adapted from William R. Neill, “Design Chain Engineering: Implementing Integrated Supply Chain Product Development , ” Presentation at an MIT Workshop (06/24/1999) System Integrator-Supplier Communications Involve Interactions at Different Levels t Deborah Nightingale - 4 ? 2002 Massachusetts Institute of Technology Arm’s length; interfaces totally defined and controlled Collaborative; prior worksharearrangements Collaborative and seamlessly I integrated; architectural innovation Virtual Team w/o boundaries Prime Key Suppliers Subtiers “Old” Approach “Emerging” Lean Prime Key Suppliers Subtiers “Current” Lean Collaborative with rigid organizational interfaces Prime Key Suppliers Subtiers Rigid vertical FFF interfaces and control ARCHITECTURAL INNOVATION:Major modification of how components in a system/product are linked together ? Significant improvement in system/product architecture through changes in form/structure, functional interfaces or system configuration ? Knowledge integration over the supplier network (value stream perspective ; prime-key suppliers- subtiers; tapping supplier technology base) Early Supplier Integration Results in Significant Benefits through Architectural Innovation but constrained by Deborah Nightingale - 5 ? 2002 Massachusetts Institute of Technology Observations on Architectural Integration Approaches  Senior leadership plays a pivotal role by enabling lifecycle analysis and integration of multiple enterprise perspectives  Much of the challenge may be organizational rather than technical  Portfolio strategies and processes are necessary to obtain full benefits  Metrics and incentives that measure and reward lifecycle value creation a key enabler  Customer enterprise structure and demand determine applicability of this approach Deborah Nightingale - 6 ? 2002 Massachusetts Institute of Technology Influence Standards when Key Stakeholders Lie outside Direct Hierarchical Control  Standards allow decentralize collective action across enterprise boundaries  With limited control over stakeholders and product design, emphasis shifts to “control points” in product architecture  Standards foster innovation in the supply base by enabling modular decoupled designs  Standards are often a strategic battleground—high- stakes winner-take-all contests encourage some enterprises to push proprietary standards at the expense of a broader spectrum of stakeholders  Several models of collaborative forums exist that successfully develop open standards Deborah Nightingale - 7 ? 2002 Massachusetts Institute of Technology Common Large Area Display Illustrates the Value Delivered through the Creation and Use of Standards  500 displays for AWACs – But 15,000 displays for DoD  Standardized on commercial display for all of DoD – 60% less weight – 90% less maintenance cost – 11 fold increase in MTBF – 30% power reduction – Better resolution  Up to $100M in DoD savings Deborah Nightingale - 8 ? 2002 Massachusetts Institute of Technology Observations on Using Standards to Achieve Enterprise Integration  Important to establish neutral forum or broker to define standards that prevent bias towards one solution  Use open architecture where possible  Consider technology clockspeed; look to industries or sectors that more closely match that of the system in question  Establish a common syntax to facilitate knowledge sharing Deborah Nightingale - 9 ? 2002 Massachusetts Institute of Technology Northrop Grumman El Segundo, CA Lockheed Martin Ft Worth, TX Other Partners & Suppliers Customers BAES Samlesbury UK BAES Database “mirror” Master Database NGC Database “mirror” ? Virtual Enterprise System (VES) provides the backbone for the digital design and manufacturing environment ? All product data available real-time worldwide ? Enables collaborative development Adapted from Burbage, T. Lockheed Martin, “JSF - A Winning Environment” Presentation at MIT, March 6, 2002. Information Technology is Vital to Enterprise Integration Lean Deborah Nightingale - 10 ? 2002 Massachusetts Institute of Technology Enterprise Process Architecture Life Cycle Processes ? Business Acquisition and Program Management ? Requirements Definition ? Product/Process Development ? Supply Chain Management ? Production ? Distribution and Support Enabling Infrastructure Processes ? Finance ? Information Technology ? Human Resources ? Quality Assurance ? Facilities and Services ? Environment, Health, and Safety Enterprise Leadership Processes ? Strategic Planning ? Business Models ? Managing Business Growth ? Strategic Partnering ? Organizational Structure and Integration ? Transformation Management Process standardization is a key enterprise strategy Deborah Nightingale - 11 ? 2002 Massachusetts Institute of Technology Market- Focused IPTs Lean: Shop Floor & Above Optimized Assets & Technology Deployment A Fully Integrated Enterprise With a Shared Infrastructure Providing Distinct Competitive Advantages Air Combat Systems Airborne Early Warning & Elect. Warfare Systems Airborne Ground Surveil. & Battle Mgmt. Systems Human Resources & Admin. Materiel Transaction Accounting Information Services Sector HQ Staff Functions Human Resources Procurement Payroll Finance Define Value Map Value Stream Establish Flow Implement Pull Strive for Perfection Common Systems Shared Services Leadership Culture Rationalized Assets Shared Centers of Excellence Distributed Product- Specific Capabilities Joint Synergy Programs Shareholder Value Education Incentivized Mgmt. Perf. Weighted Financial Goals Measuring Underpining S/T & L/T Actions Source: Cool, C. Northrop Grumman, “Journey to a Lean Enterprise” Presentation at MIT, Oct 31, 2001. Integrated Systems Operating Concept Deborah Nightingale - 12 ? 2002 Massachusetts Institute of Technology Simple Financial Metrics can Misrepresent the Value of Enterprise “Infrastructure” Investments  Research found that a military customer valued systems engineering analyses enough to pay for them in a military program but corporate would not in a comparable commercial program  Spacecraft testing research also showed commercial programs more likely to have infrastructure-related failures  Financial results-based decisions may inhibit capabilities development that pays dividends in the long-term Deborah Nightingale - 13 ? 2002 Massachusetts Institute of Technology Parallels In Building Products and Enterprises ACHIEVING MULTIPLE REQUIREMENTS TAKES BOTH ENTERPRISE LM Aero – the Company PRODUCT F-22 Tail #5005 ENTERPRISE DEFINITION Enterprise Architecture PRODUCT DEFINITION F-22 Definition Data Package = = BALANCE E = CUSTOMER REQUIRES PRODUCT ENTERPRISE DESIGN METHODOLOGYDESIGN METHODOLOGY ?Capability ?Affordability ?Responsiveness ? Performance ? “Ilities” ? Efficiency ? Fitness Systems Engineering “Enterprise Engineering” Multiple Products, Services Different Life Cycle Phases ?ProcessesProcesses ?ToolsTools ?SkillsSkills ?EtcEtc Source: er, Lockheed Martin, 2001 Kessl