Lean Enterprise Value Phase I

Phase I of the Lean Aircraft Initiative, now the Lean Advancement Initiative (LAI), started with the "Fabrication and Assembly Focus Team." LAI was initiated based on findings from the International Motor Vehicle Program (IMVP) and so LAI's first research effort was directed at an area highlighted in IMVP research, namely, how the level of inventory serves as an important barometer to the "lean" health of the industry. LAI's first major team effort was to develop an inventory survey. Findings revealed that more than one-third of inventory was located "up front" in receiving and storage and that nearly half of inventory on military contracts was government owned. As a result, LAI made two inventory recommendations to the government:

• Speed up the process for disposing of excess material at the end of the contract and;
• Allow comingling of similar inventory among different contracts. The research also revealed additional areas that warranted investigation. Shortly after the inventory survey was completed and reported, the focus team decided that its name was too restrictive and was changed to the "Factory Operations Focus Team."

Although LAI recognized that there was no entity comparable to Toyota in the defense aircraft industry, it did see indications that there were "pockets" of lean activity. Therefore, LAI embarked on a course of case studies to highlight the enablers, barriers, and results from these pockets. This resulted in a set of five case studies highlighting some lean changes, a detailed case study on precision fabrication, and one on operator certification. Each of these case studies served as an example of what was possible and explained the enabling factors that allowed success with lean practices.

For example, LAI's comparative case studies established that concentration on flow optimization led to flow time reductions of up to 85% and work-in-process reductions of about 85%. Also observed was that cycle time reductions always reduced the variability of the cycle time and made factory output more predictable. Another outcome revealed that variability reduction, and process control were key to system improvements as exemplified by an example of toolless assembly, which reduced assembly time by half, and standardized work methods which reduced variation by 75%.

In conjunction with MIT's research, a focus team under the leadership of one of LAI's industry members organized and led several non-member benchmarking trips. Each of the sites visited had accomplished a lean transition, and the benchmarking team was responsible for collecting information on how the transformation was achieved, its results, and its applicability to the defense aircraft industry. A report was completed on each visit and subsequently reported to the team and LAI. In at least one case, these visits motivated a member to initiate a modernization effort at its facility to incorporate the lean practices he had observed.

Because flow optimization was highlighted in the case study research as a valuable concept in lean improvements, the team decided to benchmark flow in each sector. With the assistance of the focus team, LAI determined the products to benchmark in each sector -- airframes, engines, and electronics -- that were representative of the sector and manageable for research. With a survey and extensive validation, LAI discovered that flow efficiencies (similar to value added time) in the fabrication of parts in the aircraft industry was dismally low: airframe sector less than 1%, electronic sector from 1%-18%, and the engine sector from 1%-13%. Research indicated that flow efficiencies of 66% had been recorded in lean commercial environments.

Similarly, of the total cycle time, most of it was spent waiting (three delay types: storage, lot processing, and transportation). For the airframe sector the figure was 96%, in the electronic sector from 25% to 98%, and in the engine sector 87%. In all cases, less than 3% was lot processing delay, and transportation delay did not appear to be a major factor in the parts studied. These findings contributed to a major thrust by the USAF ManTech office in funding lean projects on the theme of flow optimization.

In the last year of Phase I, the focus team was interested in obtaining research that would assist them in understanding implementation. Although it did not have enough information or resources to develop implementation research, the team was able to develop a hypothesized model of lean implementation and test this model with case studies that already had been completed, new case studies specifically started to test the model, and a literature review. However, the results were not conclusive.