Coupling Lean Thinking and Systems Thinking at the Enterprise Level

Coupling Lean Thinking and Systems Thinking at the Enterprise Level Prof. Deborah Nightingale Dr. Ricardo Valerdi Lean Aerospace Initiative Massachusetts Institute of Technology IERC Orlando, FL May 22, 2006 The 21st Century Enterprise Challenge web.mit.edu/lean Aerospace has four core missions: • Enabling the global movement of people and goods • Enabling the global acquisition and dissemination of information and data • Advancing national security interests • Providing a source of inspiration by pushing the boundaries of exploration and innovation These missions will never be routine and require the best technology and the best organizations These enterprise level capabilities are at the intersection of lean thinking and systems thinking. Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 2 web.mit.edu/lean Lean Aerospace Initiative Formed in 1993 • Industry • Airframe, engine, avionics, missile and space companies • Government • • • Air Force agencies, system program offices, and headquarters NASA, Army, Navy Department of Defense • • MIT - Schools of Engineering and Management Educational Network (2003) • Academia A national consortium for research, implementation and diffusion of lean practices Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 3 web.mit.edu/lean Four Grand Questions Derived from the Transformation Imperative 1. How can I underst and how m y organizat ion/ ent erprise cur r e nt ly operat es wit hin it s larger cont ext ? 2. How can I define and evaluat e t he fut ur e possibilit ies for a m ore efficient and effect ive ent erprise? 4. 3. How can I best m anage t he ent erprise cha nge process? What are t he m ost effect ive st r a t e gie s and t act ics t o achieve t hese fut ure possibilit ies for m y ent erprise? Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 4 Seven Research Clusters to Answer the Four Grand Questions web.mit.edu/lean Ent erprise Product Developm ent Ent erprise & Cost Met rics Ent erprise Modeling & Design 1. 2. How can I underst and how m y organizat ion/ ent erprise cu r r e n t ly operat es wit hin it s larger cont ext ? How can I define and evaluat e t he fu t u r e possibilit ies for a m ore efficient and effect ive ent erprise? 4. 3. How can I best m anage t he ent erprise ch a n ge process? What are t he m ost effect ive st r a t e gie s and t act ics t o achieve t hese fut ure possibilit ies for m y ent erprise? Ent erprise Change Processes St rat egies for High Perform ance Ent erprises I T- Enabled Ent erprise I nt egrat ion Value- Based Archit ect ing Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 5 web.mit.edu/lean • • • Lean Engineering: Doing the Right Thing Right Creating the right products… • Creating product architectures, families, and designs that increase value for all enterprise stakeholders. With effective lifecycle & enterprise integration… • Using lean engineering to create value throughout the product lifecycle and the enterprise. Using efficient engineering processes. • Applying lean thinking to eliminate wastes and improve cycle time and quality in engineering. Source: McManus, H.L. “Product Development Value Stream Mapping Manual”, LAI Release Beta, April 2004 Framework based upon a decade of Lean Aerospace Initiative research & industry/government implementation Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 6 Engineering Drives Cost web.mit.edu/lean LCC committed 100% 80% Cost Incurred “Fuzzy Front End” Challenges Understanding what the customer values 66% Ease of Change Conceptual/ preliminary Design Detail design/ development Production and/or construction Source: Fabrycky & Blanchard Product use/ support/ phaseout/dispos al Deciding which product to pursue from amongst many opportunities Selecting the right product concept Early decisions are critical - Disciplined lean systems engineering process is essential Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 7 web.mit.edu/lean Simplified Systems Engineering Process Production, Delivery & Operation Stakeholder’s Needs: •End user •Customer •Enterprise •Regulatory Validation Verification Requirements Functional Analysis Synthesis/ Architecture development Systems engineering process is applied at multiple levels: system, subsystem, component. Sour ce: Adapted f r om J ackson, S. Systems Engineering for Commercial Aircraft Source: “Lean Engineering”, LAI Lean Academy™, V3, 2005 Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 8 Lean Engineering Reduces Manufacturing Labor web.mit.edu/lean Additional Reduction in T1 via Virtual Mfg. of Approx. 9 Units Before Lean Engineering After Lean Engineering Mfg. Labor (hrs) Reduction in Work Content via Improved Design 76% Slope 48% Savings 83% Slope 0 -10 -5 1 5 10 15 20 25 30 35 Production Units Source: “Lean Engineering ”, John Coyle (Boeing), LAI Executive Board Presentation, Jun 2000 Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 9 Waste Exists in Engineering web.mit.edu/lean pure waste value added • Effort is wasted • 40% of PD effort “pure waste”, 29% “necessary waste” (workshop opinion survey) necessary waste • 30% of PD charged time “setup and waiting” (aero and auto industry survey) • task idle task active Time is wasted • 62% of tasks idle at any given time (detailed member company study) • 50-90% task idle time found in Kaizentype events Source: McManus, H.L. “Product Development Value Stream Mapping Manual”, LAI Release Beta, April 2004 Source: “Lean Engineering”, LAI Lean Academy™, V3, 2005 Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 10 Applying Lean Fundamentals to Engineering web.mit.edu/lean Lean Thinking Steps Value Flow Manufacturing Visible at each step Goal is defined Parts and materials flows Iterations are waste Pull Driven by takt time Perfection Process repeatable without errors Value Stream Engineering Harder to see Goal is emergent Information and knowledge flows Planned iterations OK Must be efficient Driven by enterprise needs Process enables enterprise improvement Source: McManus, H.L. ŅProduct Development Value Stream Mapping ManualÓ, LAI Release Beta, April 2004 Key step to application of lean thinking is the Product Development Value Stream Mapping- PDVSM Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 11 web.mit.edu/lean Results of Applying Lean to Engineering Release Process  Value stream mapped and bottlenecks found Cycle Time  Process rearranged for sequential flow Time Std Dev  Waiting and delays removed Traditional Lean  Reduced Cycle time by 73%  Reduced Rework of Released Engr. from 66% to <3%  Reduced Number of Signatures 63% Source: Lean Aerospace Initiative Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 12 web.mit.edu/lean Lean Applies to Development of Many Types of Products Value-stream based rationalization of processes yields impressive results across a range of environments: • Aircraft structure drawing release: 75% cycle time, 90% cycle time variation, and 95% rework rate reductions • Satellite environmental testing: 41% cycle time, 58% labor, 76% material, and 92% travel reductions • • Printed circuits: 23% design cycle time reduction Avionics: 74% change order cycle time reduction Combined with technological changes at bottleneck processes, results can be even more dramatic: • • Electronic modules: increase yield from 10% to 90% IC design: 70% cycle time, 80% cost reductions Sources:Lockheed Martin, Rockwell Collins, ITT Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 13 web.mit.edu/lean • Systems Engineering and Lean Thinking Systems Engineering grew out of the space industry in response to the need to deliver technically complex systems that worked flawlessly upon first use • SE has emphasized technical performance and risk management of complex systems. • Lean Thinking grew out of the Japanese automobile industry in response to the need to deliver quality products with minimum use of resources. • Lean has emphasized waste minimization and flexibility in the production of high quality affordable products with short development and production lead times. Apparent differences overcome by common objectives, emerging vision of lean enterprise Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 14 Lean and SE Commonalities web.mit.edu/lean • Lean and Systems Engineering: processes that evolved through experience and practice • Shaped by different contexts with different areas of emphasis • Bodies of Knowledge (BOKs) based upon observed best practices • • Both emphasize process as a key enabler Both have the objective of better delivering best lifecycle value to the customer (end user) • Lean: right product at the right time and cost • SE: right product that meets customer requirements on schedule and budget Can the combination of Lean and SE BOKs lead to a more effective and efficient SE approach? Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 15 web.mit.edu/lean F/A-18E/F Systems Engineering • Rigorous Requirements Flowdown • Disciplined Technical Reviews • Configuration / Data Mgt. • Systems Cost-effectiveness/ • LCC Trade studies • Producibility / DFMA • Risk Management / TPM • Program Independent Audits • Reliability/ Maintainability/Safety • Human factors engineering • Integrated Logistics IPPD Environment Source: Al Haggerty, “The F/A-18E/F Super Hornet as a Case Study in Value Based Systems Engineering”, INCOSE Panel on Lean Systems Engineering, June 2004 Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 16 The Process web.mit.edu/lean HAND PICKED LEADERS INTEGRATED MANAGEMENT CONTROL SYSTEM INTEGRATED PRODUCT DEFINITION SYSTEMS ENGINEERING CONFIGURATION CONTROL LEADERSHIP PRINCIPLES RISK MANAGEMENT WEIGHT MANAGEMENT •CUSTOMER SATISFACTION CO-LOCATED TEAMS •OPEN, HONEST COMMUNICATION •SUPPLIERS AS PARTNERS •TEAMWORK •PERFORMANCE TO PLAN EARNED VALUE MGT. SUPPLIER INTEGRATION Source: Al Haggerty, “The F/A-18E/F Super Hornet as a Case Study in Value Based Systems Engineering”, INCOSE Panel on Lean Systems Engineering, June 2004 Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 17 web.mit.edu/lean • • • • • • • Lean Enterprise Principles Applied to F-18E/F Continuous Improvement Optimal First -Unit Delivered Quality Metrics Tracked Weekly Across the Extended Enterprise Seamless Information Flow (USN, NGC, GE Engines, Suppliers) Decisions Made at the Lowest Level of WBS Via “Delegated” RAA Joint Configuration Change Board Disciplined Weekly Earned Value Mgt. & Reporting Performance To Plan! Source: Al Haggerty, “The F/A-18E/F Super Hornet as a Case Study in Value Based Systems Engineering”, INCOSE Panel on Lean Systems Engineering, June 2004 Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 18 THE PROCESS WORKS! web.mit.edu/lean • • • • • • 42% Fewer Structural Parts The Parts Fit the First Time 1029 Lbs. Below Specification Weight Reduced Engineering Change Activity Development Completed On Budget- $4.9B 1ST Flight Ahead of Schedule! Achievement Recognized:1999 Collier Trophy! Source: Al Haggerty, “The F/A-18E/F Super Hornet as a Case Study in Value Based Systems Engineering”, INCOSE Panel on Lean Systems Engineering, June 2004 Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 19 LAI EdNet Lean SE Working Group web.mit.edu/lean • SE processes recognized as sound, but • • • not always applied effectively “Lean” provides an approach to maximize value while minimizing wasted effort Synergies of lean practices and SE practices are being explored Working name is “Value Based SE” Stevens Stanford LMU USC U MO-Rolla AFIT MIT Possible WG outputs • Lean SE Learning community • Value based Systems GA Tech UNO + Syst e m s Engine e ring • • Engineering Framework Course materials Research Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 20 Value Based Systems Engineering web.mit.edu/lean • Emphasize common objectives for Lean and SE: Value • Overarching objective of value based systems engineering is to deliver the expected value to the system stakeholders • Critical functions are those that create/deliver that value • Measures of success are based on value created/delivered to stakeholders • • Value based SE is an enterprise level function • Software Engineering community is already making progress Value based SE must be scaleable, from systems of systems to major subsystems • “Value-Based Software Engineering” by Biffl, S., Aurum, A., Boehm, B., Erdogmus, H., Grunbacher, P., (Eds.), Springer, 2005. Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 21 Lean Enterprise Model A Tool for Benchmarking Lean Enterprises web.mit.edu/lean Meta-Principles Responsiveness to Change Waste Minimization Enterprise Principles Right thing, in the right place, at the right time, in the right quantity Effective relationships in the value chain Continuous improvement Optimal first unit delivered quality Overarching Practices Human Oriented Practices Process Oriented Practices Promote Lean Leadership at all Levels Optimize Capability & Utilization of People Assure Seamless Information Flow Maintain Challenge of Existing Processes Develop Relationships Based on Mutual Trust & Commitment Continuously Focus on the Customer Implement Integrated Product & Process Development Identify & Optimize Enterprise Flow Make Decisions at Lowest Possible Level Nurture a Learning Environment Ensure Process Capability and Maturation Maximize Stability in a Changing Environment Enabling and Supporting Practices Source: web.mit.edu/lean Nightingale & Valerdi, IERC - May 2006 © 2006 Massachusetts Institute of Technology - 22 Lean SE Tool: Draft Value Based Systems Engineering Model web.mit.edu/lean Meta Principles Job Right Right Job Metrics: SE Enterprise Principles Leadership & Organizational Effectiveness Engineering Excellence Programmatic Success Efficient Process Execution Overarching Practices ? ? ? ? ? ? ? ? ? ? ? ? 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