transforming the dod using lean six sigma: the next big ... · cpi has a set of tools (e.g. lean...

© 2006 George Group Consulting, L.P.

Transforming the DoD Using Lean Six Sigma:The Next Big Return on Investment

Michael L. George


Where does Continuous Process Improvement (CPI) stand in the DoD today?

� Army, Navy and Air Force have launched enterprise wide CPI

Why will it succeed? Why different from TQM?

� Senior Leadership Engagement: Admirals, Generals and SES are being trained to use the process( 2 day class), many becoming Executive Green Belts (5 day class plus 2 projects)

� Critical Mass: Upwards of 1% of personnel are trained as Black Belts and assigned full time to CPI projects

� Sustained effort: Training and Coaching are being internalized creation of Master Black Belts who replace external consultants

� Results: Thousands of local projects have been completed with an average 4 times Return On Investment assuring support


Key Insight of CPI: Long Lead time = High Cost

� All processes within the DoD thus far studied contain approximately 50% cost of no value to the user

� Non value add cost causes long lead time in a process

� CPI has a set of tools (e.g. Lean & Six Sigma) to reduce lead time by >60%, increasing flexibility, reducing non value add cost

� Resulting in a reduction in total cost of > 20%

Typical Example: Foreign Military Sales* proposal lead time was reduced 63% and resulted in a 36% cost reduction as rework was cut from 91% to 8%

*Transforming Government using Lean Six Sigma, George, Price, et al , page 12


What is the next big Return on Investment?

� Present: Most current projects are locally selected within a “silo” and may reduce cost but not address warfighter needs. This phase was necessary to build capability and return.

� Future: A horizontal view across silos to the warfighter, operator, and threat, creating a “pull” signal and metric to:

� Identify a relevant gap or excessive infrastructure

� Focus CPI projects within the silo that is:

� Causing the performance gap, or

� Has excess cost and infrastructure capacity beyond “pull”

� Result: Projects with greater than 10 times Return on Investment, more effective defense at 20% less cost DoD wide


Why does the biggest return on investmentcome from a horizontal view to the operator/warfighter?

� “Improving a process that is irrelevant is a waste”Wally Massenburg, VADM, USN (ret.)

� Example of the Opportunity

� An aircraft system’s reliability increased nearly 10 fold due to improvement projects

� Demand for spare parts decreased 10 fold

� Organization which provided spares complained because obligation authority was based on parts per year transactions

� The “pull” demand from the user/warfighter must size the supporting infrastructure capacity and related cost. Lean Six Sigma cost reduction should then be applied.

� Goal must be to reduce cost and return funds, not spend TOA


What Are Prime Value Chains?

� Prime Value Chains (PVC) are interrelated value streams that –when combined – deliver war fighter capability

� They seek to clarify the relationship between:

� Strategy

� Mission

� Policy

� Processes

� Organizations

� They cut across functions, organizations and command structures to define “pull” demand metrics. AKA High Impact Core Value Streams (HICVS) and Enterprise Value Stream Maps (EVSM)

Developing a common understanding of the PVC provides the foundation for strategic transformation


Strategic Performance Gap Examples

� Inaccuracy of stockpile requirements process causes downstream planning and performance shortfalls in acquisition and logistics processes

� Failure to provide smoke grenades to Army and Marines, precision weapons to Naval aviation

� Failure to match munitions outload capacity to COCOMs’ 16 week war scenario

� Failure to deliver a specific ACAT-I weapon systems on-time & within budget

� Lack of an integrated Depot/Network strategy forces workload and positioning decisions to be highly reactive and suboptimal


The 7 Step PVC Approachto Generate Strategically Important Results

1.1.Define the perspective (e.g. AMMO supply chain, Army Force Generation, Navy Weapons Procurement System)

2.2.Create the PVCs to align leadership on a common view

3.3. Identify strategic metrics, gaps & priorities

4.4.Align leadership on strategic gap metrics and order of attack

5.5.Perform deep-dive PVC assessments on the “vital few”

6.6.Translate & deploy assessment recommendations, implement Strategic, Organizational, Policy, Lean Six Sigma, and strategicprojects

7.7.Design & deploy metrics that monitor performance vs. strategy at various levels/organizations

Deep-diveassessment

Translate& deploy

Monitor performance

3Define perspective ID strategic gaps

Align on common view Align on gaps & order2

1

4

5 6 7


Prime Value Chains Bring Clarityand Focus to Enable Strategic Transformation

TRANSCOM

ArmyG3

G8JMCPEO

TRADOCFORSCOM

AMCOM

CO

CO

Ms

Non-JMCinstallations

JMC

AMCG4G3G8

Army G3 TRA PEO AMMOJoint Munitions

Command (JMC)

ArmyPEO

AMMO

AMCOMARDECTACOM

G8G3

JMC

Pro

du

ction

Base

S-1

S-2

S-3

S-4

S-5

CO

CO

Ms

CO

CO

Ms

JMC

/G4

/T

RA

NS

CO

M

B-$ B-$ B-$ B-$ B-$

S-1

S-2

S-3

S-4

S-5

B-$ B-$ B-$ B-$ B-$

S-1

S-2

S-3

S-4

S-5

B-$ B-$ B-$ B-$ B-$

S-1

S-2

S-3

S-4

S-5

B-$ B-$ B-$ B-$ B-$

In the PVC approach, the anchor organization actively works with

stakeholders across the PVC to develop an integrated strategy and transformation roadmap

Production/ stockpile

Army G3Stockpile

Req.

AMCOM

CO

CO

Ms

AirForce

Navy

Marines

Outload(time phased)

Non-JMCinstallations

JMC Integrated Logistics Strategy

• Capability, production/stockpile, and COCOM time-phased outload requirements

Integrated Supply Chain Strategy

AllClass V

JRO

C/JC

IDS

Arm

yU

SA

FO

PN

AV

US

MC

Requirements

Capability

• Development and sourcing of assets to meet capability and stockpile requirements

Technology/ Development

Production

Acquisition

ARDEC

AMCOM

AirForce

Navy

Marines

COCO

GOCO

GOGO

Acquisition

Logistics(CONUS)

Stockpile management

Outload(distribution)

Stockpile management

Outload(distribution)

Power Projection(into theater)

• Receipt, storage, maint., dist., and demil of assets

• Movement of all assets OCONUS (training, current operations, pre-positioning, contingency)

SMCAitems

Air Force(service unique)

Navy(service unique)

Marines(service unique)

COCO

= Completed projects

= Other potential focus areas

= Dependencies

= JM&L LCMC

Joint Service Munitions High Impact Core value Stream

The historical approach to improvement was to focus project activities within individual command and/or process boundaries…the typical outcome was sub-optimization of results

10© 2006 George Group Consulting, L.P.

RRMC

LEMC

HWAD

ANMC

TEAD

BGAD

CAAA

MCAAP

Not on-hand

Unserviceable

Wrong location

Right location

Outload requirement

by depot

Current state

of stockpile

765K tons 765K tons

0

20

40

60

80

100%

Stockpile

Note: WARS weight information augmented by weight file obtained from Jim HumphreySource: Outloading requirement – “Depot-Week Summary” file (Kurt Wheat); Current stockpile from WARS, March 30 (Lana Coleman)

• ~70% Bombs and Missiles (?)

• Spread over 260 DODICs

• Actual On hand quantities 3x of requirement for these DODICs

• Only includes CC’s A-C

Example: Joint Munitions Command Unable to Meetthe COCOM 16-Week Time-Phased Out-Loading Quantity and Variety Requirement

11© 2006 George Group Consulting, L.P.

Value Stream Mapping the Process Showed That a Cross-function, Cross-Command Solution Was Necessary: Drove Many Black Belt Projects Focused on a Few High Lever Points Such as Schedule Demand Discrepancy Between JMC/COCOM

StocksOn Hand

Reqt's Notin Synch

ProductionIssues

Reqt'sUnfunded

Total Req't

400K

?

?

? 765K

Not on-hand

Unserv iceable

Wrong location

R ight location

Current s tate of stockpile

765,000

0

20

40

60

80

100%

Addressing the requirements issues should decrease the readiness gap at lower cost

Readiness gap exists – approximately 50% of stocks of the outload requirement are on-hand and serviceable

COCOM/ stockpile synch-up

SourcingStrategy

If consistently under funded, maybe decrease requirements

Note: This project will bring JMC into alignment with COCOM requirements. It does not address sudden changes in COCOM requirements which is another project.


The Munitions PVC Strategic Priority AssessmentLed to a Mix of Lean Six Sigma and Strategic Projects

Input variability

Feedback loops

Org R&R alignment

Focused strategies

2Establish common requirements & prioritization definitions Execute 1 X X 2 mos G3 G3

12Further integrate Critical Requirements and DA G3 priorities into acquisition & programming process Kaizen 2 X 3 mos G3 G3

8Improve execution of ammo management responsibilities in Units Execute 3 X X 9 mos G3 CASCOM

23 Improve DODIC integration planning Execute 4 X X 5 mos G3 G3

13Define QWARRM add-ons and revalidate add-on combat loads QH 5 X X 2 mos G3 CAA

24Establish a process to capture, coordinate and track New Equipment Training (NET) requirements LSS 5 X 9 mos TRADOC TRADOC

14 Improve identification of Industrial Base requirements Execute 7 X 4 mos G3ASAALT (PEOs)

36Develop process to alert G3 of significant production problems potentially impacting Army readiness Kaizen 8 X 5 mos G3 JMC

39Develop Ammo Enterprise strategy deployment process Strategy 9 X 6 mos G3 G3

42Develop simple focused strategies to account for demand uncertainty & supply chain risk Strategy 9 X 6 mos G3 AMC (JMC)

7Develop the Ammo Value Chain performance scorecard structure & process Strategy 10 X 6 mos G3 G3

31 Improve database integration PISW 10 X 9 mos G3ASAALT

(PEO Ammo)

41Improve CL accuracy & applicability to QWARRM process & theatre planning Execute 10 X X 9 mos G3 G3

43Reduce the number of DODIC's with low mission alignment & high total risk adj. cost Strategy 10 X 9 mos G3 G3

22 Enable early notification of operational changes Execute Complete X 5 mos G3/G4 G43 Develop the stockage objective setting process Kaizen Underway X 6 mos G4 G4

11 Improve POI requirements accuracy LSS Underway X 6 mos G3 G3

19 Enable range availability database use for forecasting LSS Underway X X 6 mos G3 TRS G3 TRS21 Validate STRAC requirements LSS Underway X X 6 mos G3 G3

Est. duration

Proposed sponsor

Proposed lead

Project focusProject

Project type

Name Priority

Assessment projects span the continuum from “execute” to strategic and address the key stockpile requirements strategic levers

Deep-diveassessment

Translate& deploy

Monitor performance

Define perspective ID strategic gaps

Align on common view Align on gaps & order

3

2

1

4

5 6 7


Priorities and Interactions: PVC analysis identifies the “vital few” Organizational and Lean Six Sigma projects that will close the strategic performance gap

Planning Units Reset/Trained Units Made ReadyUnits Made Available

Determine what and how many resources are needed over time

Develop unit capability level by reconstituting personnel, re-equipping and retraining them.

Army Force Generation Prime Value Chain – Draft Only

Assess units and make ready for missions, including collective training with other operational headquarters.

Keep units ready for action and source against operational or contingency requirements.

Prepare Initial Outfitting Conduct Core Training

Ho

me S

tation

Ind

ividu

al & C

ollective

Trainin

g E

qu

ipm

ent (T

emp

orary

Eq

uip

men

t for C

ollective T

rainin

g)

Conduct Mission Training

Dep

loym

ent E

qu

ipm

ent S

et

AC/RC HQ, BCT

& Support Brigade:

Core Training

Manning & Training

Equipping

Evaluate Strategic Direction

Committee or Conference

Army Organizationor Operation

Joint Organizationor Operation

Incompletely Defined

Training at Discretion ofCombatant Commander with Guidance

Prepare for DeploymentR-Day

Develop Army Requirements

Determine Resources& Timing

Training Support &

ResourcingConference

AR2B & AWPB Conferences

ARFORGENSynchroni-

zationConference

Combatant Commander,

JFCOM & HQDA

Priorities (including long

term capabilities via

AROC)

Require-mentsIntegration &

Sourcing Conference

Guided by G3 Analysis Army

Equipping and Reuse

Conferences

IRPL and DARPL and

related priorities set by G3

POM Funding POM Funding

Arm

y AC

Arm

y R

eserves

Arm

y N

ation

al G

uard

Rep

ositio

nin

g (R

esou

rce &

Cro

ss-Level)

Reset &

Train

ed in

clud

ing

Call

UP

s(E

x-AC

& N

ew)

Reset &

Train

ed

Recru

its

Rep

ositio

nin

gBaselin

e Eq

uip

men

t Set

POM Funding

Missio

n T

raining

includ

ing M

RX

and

CT

C

HQDA

Arm

y Syn

chro

nizatio

nO

rder

Institutional Training & Doctrine (TRADOC)Facilities (IMCOM)

Foundation

CE

F M

RE

/MR

X

ONS ProcessShort Term Capabilities

Materiel and Logistics (AMC)

Unit Training & Readiness (FORSCOM)

LAD

Supplemental Funding Supplemental FundingSupplemental Funding

Requirements Fielding

Combatant Commander Requests

Current to Future

Tasking

IRP

L








Ho

me S

tation

Ind

ividu

al & C

ollective

Trainin

g E

qu

ipm

ent (T

emp

orary

Eq

uip

men

t for C

ollective T

rainin

g)


Dep

loym

ent E

qu

ipm

ent S

et

AC/RC HQ, BCT

& Support Brigade:

Core Training

Manning & Training

Equipping










Training Support &



ARFORGENSynchroni-

zationConference


JFCOM & HQDA



AROC)


Sourcing Conference


Equipping and Reuse

Conferences

IRPL and DARPL and



Arm

y AC

Arm

y R

eserves

Arm

y N

ation

al G

uard

Rep

ositio

nin

g (R

esou

rce &

Cro

ss-Level)

Reset &

Train

ed in

clud

ing

Call

UP

s(E

x-AC

& N

ew)

Reset &

Train

ed

Recru

its

Rep

ositio

nin

gBaselin

e Eq

uip

men

t Set

POM Funding

Missio

n T

raining

includ

ing M

RX

and

CT

C

HQDA

Arm

y Syn

chro

nizatio

nO

rder


Foundation

CE

F M

RE

/MR

X




LAD




Current to Future

Tasking








Ho

me S

tation

Ind

ividu

al & C

ollective

Trainin

g E

qu

ipm

ent (T

emp

orary

Eq

uip

men

t for C

ollective T

rainin

g)


Dep

loym

ent E

qu

ipm

ent S

et

AC/RC HQ, BCT

& Support Brigade:

Core Training

Manning & Training

Equipping










Training Support &



ARFORGENSynchroni-

zationConference


JFCOM & HQDA



AROC)


Sourcing Conference


Equipping and Reuse

Conferences

IRPL and DARPL and



Arm

y AC

Arm

y R

eserves

Arm

y N

ation

al G

uard

Rep

ositio

nin

g (R

esou

rce &

Cro

ss-Level)

Reset &

Train

ed in

clud

ing

Call

UP

s(E

x-AC

& N

ew)

Reset &

Train

ed

Recru

its

Rep

ositio

nin

gBaselin

e Eq

uip

men

t Set

POM Funding

Missio

n T

raining

includ

ing M

RX

and

CT

C

HQDA

Arm

y Syn

chro

nizatio

nO

rder


Foundation

CE

F M

RE

/MR

X




LAD




Current to Future

Tasking

IRP

L

A3

Roles & responsibilities within processes

A4

Measurement & tracking of success

A2

Establishment of priorities

A1

Integration and coordination of ARFORGEN

A7 A7 A7

Strategy to address constrained resources resulting from ARFORGEN requirements

A6

Clear, complete and timely ARFORGEN Synch. Order

A10

Clarity between ARFORGEN requirements and capabilities

A8 A9

Command and control relationships related to BCT deployment

Shortages and planning for CS and CSS units

A5

Validation of ARFORGEN ratio assumptions (e.g., 1:3 for AC) and formally re-plan for lower ratios

A11

ARFORGEN information technology support strategy

Integration between Army AC and RC

A11

A12

Common AC and RC HR and asset tracking systems

A13

A14

ARFORGEN integration with Institutional Support

FoundationOpportunities


PVC examines policy impact: MRAP exists in a complex ‘ecosystem’...upstream policies and activities profoundly impactdownstream processes and deliverables performance

JROC

Requirements Spec

GFE Vendors

INTEL

COMMS

JAMMER

FLIR OTHER HARDWARE

BFT

TURRET

GPS

BAE

FPI

GDLS

PVI

OTC

IMG

BAE/TVS

Vehicle OEMs

Manufacturing DistributionOperations, Training, &

Sustainment

CO

CO

Ms

ARCENT

NAV-CENT

MAR-CENT

MR

AP

JP

MO

CENTAF

SOF-CENT

GF

E P

MO

s

CE

NT

CO

M

TR

NG

, TE

ST

, &

OT

HE

R

KU

WA

IT

AIR

AIR

SEA

OIF

OE

F

ABERDEEN PG

NTC FT IRWIN

29 PALMS

YUMA PG

NCBC GULFPORT

Integration

SP

AW

AR

Cha

rlest

on

LAND

LAND

AF

GH

AN

IST

AN

DE

PR

OC

ES

SIN

GD

EP

RO

CE

SS

ING

DE

PR

OC

ES

SIN

G

IRA

Q

JDA

B

Contracting

InspectionPoint

~ 26 days(+3 days

interCONUS)

Air: 2 + 4 daysSea: 2 + 31 daysIn-theater Land: 7 daysDeprocessing: 3 days

Data Current as of 10 SEP 07

MaterialFlow

Decisions/Order Flow Coordination

TR

AN

SC

OM

DRAFT


Contractor IT & Weapons Development

� Many IT and weapons systems are over budget and late to contracted delivery lead time, compromising national security

� The origin of Lean Six Sigma was to drive 60% faster lead times,greater flexibility, and 20% lower unit cost at lower volumes, in both design1 and manufacturing

� Current industrial infrastructure talks-the-talk but with few exceptions does not walk-the-walk and must eliminate waste. Retraining needs to begin with their Leadership.

� Systems Engineering lessons2 must be re-focused and applied independently with the incorporation of CPI. Goal: to make programs schedule and cost wise effective through a system wide government industry partnership. 1.Fast Innovation, George et al, 2The Business of Science, Simon Ramo, pp 91-93


Conclusion

� The DoD is presently building a firm foundation of CPI using proven industry best practices.

� Now the DoD must apply CPI horizontally using Prime Value Chain analysis to define user/operator/demand pull metrics

� Infrastructure cost and capacity must be resized up or down to meet demand pull ….and no more. Total cost should be reduced 20%

� Incentives should be aligned such that Moneys saved must be returned to the Department or OSD, not spent to preserve TOA and existing infrastructure cost and capacity

� The DoD must increase effectiveness of programs through the establishment of independent Systems Engineering with CPI.

transforming the dod using lean six sigma: the next big ... · cpi has a set of tools (e.g. lean...

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