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Value Creation
Lean Enterprise
Transformation Issues
Why do many lean transformation activities fail?
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model?
company) boundaries?
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Integrated Enterprise
Customer
Product Support
Manufacturing
Operations
Finance, H/R,
Legal, etc...
Product
Development
Supplier Network
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Processes
People / Organization
Information
Technology
Products
Holistic View
Enterprise as a System
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Integration
Within and across enterprise boundaries
Leadership
Required for complex transformation
Enterprise Engineering
New expanded tool set required
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Leadership Issues
Optimization across multiple stakeholder
objectives
Global communication and seamless information
flow
Change management and enterprise
transformation
Enterprise value metrics
Organizational effectiveness
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C-130
F-22
Intl
J
Govt
Govt
JSF
F-117
ADP
Matl. Mgmt.
Customer Supt.
Aero Mfg.
Bus. Devel.
Engineering
Product
Support
Program Mgmt.
Matl. Mgmt.
Customer Supt.
Aero Mfg.
Bus. Devel.
Program Mgmt.
Matl. Mgmt.
Aero Mfg.
Customer Supt.
Engineering
Product
Build & Deliv.
Bus. Devel.
Matl. Mgmt.
Customer Supt.
Product
Development
Engineering
Standardize Engineering
F-16
Aero Mfg.
Engineering
Bus. Devel.
Program Mgmt.
New
Business
Program Mgmt.
F-16
Customers
C-130
Customers
F-22
Customers
JSF
Customers
F-117
Customers
ADP
Customers
Enabling Processes
Financial Integrity
Staffing, On-Boarding & Retention
Information Management,
ESD.61J / 16.852J: Integrating the Lean Enterprise
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3 Approaches to Enterprise
Integration
Directive control: prescribe enterprise
behavior by policies, rules, and resources
Managing the architecture: direct
enterprise behavior when a few but not all
stakeholders are under direct control
Collaboration: influence key stakeholders
behavior when they are outside direct
control
Source: Lean Enterprise Value, Murman et al., Palgrave, 2002
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Requirements
Identification
Initial
Screening
Concept
Development
Process Flow
Feedback
Process Enabler
Process Enabler
Business
Case
Development
Source: Wirthlin, J.R., Best Practices in User Needs/Requirements, Masters Thesis, MIT, 2000
ESD.61J / 16.852J: Integrating the Lean Enterprise
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Characteristics
Strategic Characteristics
PLE goals and metrics focus behavior;
resource and technology sharing designed
into organization and product architecture
ESD.61J / 16.852J: Integrating the Lean Enterprise
Enterprise leadership
plays a key role in
defining responsibilities
and incentives;
consistency and followthrough on PLE strategy
execution
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Co-Location Improves
Integration
Scope: Class II , ECP Supplemental, Production Improvements,
Category
% Reduction
Cycle-Time
Process Steps
Number of Handoffs
Travel Distance
ESD.61J / 16.852J: Integrating the Lean Enterprise
75%
40%
75%
90%
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Staffing
Level
Prototype
3D Solid
Release - 2000 *
Daily VR Reviews
Virtual Manufacturing
Improved Supplier
Coordination and Concurrent
Procurement
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Implementation of Shared
Services
Source: Ellis, R. Northrop Grumman, Lean Enabled HR&A Presentation at LAI Executive Rountable, Dec 13, 2001.
ESD.61J / 16.852J: Integrating the Lean Enterprise
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Eng. Hours
Develop.
Cost
Lead Time
No. of
Prototypes
Cusumano and Nobeoka, Thinking Beyond Lean, 1998 Data based on 6-year MIT IMVP study of
17 auto manufacturers, 103 new programs .
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Examples of Commonality in
Lifecycle Operations
Commercial Airline:
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
ESD.61J / 16.852J: Integrating the Lean Enterprise
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Design
reuse
Reduced
tooling
Reduced
rework
II
Reduced Greater
Higher
complexity interoperability
spares
in supply
availability
Reduced
Fewer
Reduced
Higher
spares
maintenance
downtime
reliability
inventory
hours
Higher
productivity
Reduced
cycle time
III
Reduced DMS
Process
reuse
Lower
risk
Reduced
testing
Reduced
time for Faster
source solutions to
selection problems
Reduced
training
equipment
Economies
of scale
Reduced
inventory
Reduce
training
time
Reduced
support
equipment
Increased
operator
competency
Reduced
documentation
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SUPPLIER
Strategic/business
relationships
Program
Manager
Capabilities
Requirements
Procurement
IT Dept.
Source selection;
requirements;
order placement
Coordinated methods,
procedures & solutions
Engineering
General
Management
Customer
Liaison Manager
IT Dept.
Engineering
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Current
Lean
Rigid vertical
FFF interfaces
and control
Prime
Emerging
Lean
Virtual Team
w/o boundaries
Prime
Key Suppliers
Key Suppliers
Subtiers
Key Suppliers
Subtiers
Subtiers
ARCHITECTURAL
Majormodification
modificationof
ofhow
howcomponents
componentsin
inaa
ARCHITECTURALINNOVATION:
INNOVATION:Major
system/product
system/productare
arelinked
linkedtogether
together
Significant
Significantimprovement
improvementininsystem/product
system/productarchitecture
architecturethrough
throughchanges
changesininform/structure,
form/structure,
functional
interfaces
or
system
configuration
functional interfaces or system configuration
Knowledge
Knowledgeintegration
integrationover
overthe
thesupplier
suppliernetwork
network(value
(valuestream
streamperspective
perspective; ;prime-key
prime-key
subtiers
;
tapping
supplier
technology
base)
supplierssubtiers
;
tapping
supplier
technology
base)
suppliersESD.61J / 16.852J: Integrating the Lean Enterprise
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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
ESD.61J / 16.852J: Integrating the Lean Enterprise
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Customers
Northrop
Grumman
Other Partners
& Suppliers
Lockheed Martin
Ft Worth, TX
BAES
Samlesbury
UK
El Segundo,
CA
NGC Database
mirror
Master Database
BAES Database
mirror
Adapted from Burbage, T. Lockheed Martin, JSF - A Winning Environment Presentation at MIT, March 6, 2002.
ESD.61J / 16.852J: Integrating the Lean Enterprise
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Process standardization
is a
key enterprise strategy
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Shared
Services
Human
Airborne Ground
Surveil. & Battle Resources &
Admin.
Mgmt. Systems
Common
Systems
Human
Resources
Materiel
Airborne Early
Warning & Elect.
Warfare Systems
Air Combat
Systems
Transaction
Accounting
Information
Services
Sector HQ
Staff
Functions
Procurement
Payroll
Finance
Lean: Shop
Floor & Above
Define Value
Map Value
Stream
Establish
Flow
Implement
Pull
Strive for
Perfection
Optimized Assets
& Technology
Deployment
Leadership
Culture
Shareholder
Value
Education
Rationalized
Assets
Shared
Centers of
Excellence
Incentivized
Mgmt. Perf.
Weighted
Financial
Goals
Distributed
ProductSpecific
Capabilities
Measuring
Underpining
S/T & L/T
Actions
Joint
Synergy
Programs
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Parallels in Creating
Products and Enterprises
CUSTOMER REQUIRES
Capability
Capability
Affordability
Affordability
Responsiveness
Responsiveness
ENTERPRISE
ENTERPRISE
PRODUCT
Performance
Ilities
Organizational
Performance
BALANCE
Value
PRODUCT ARCHITECTING
ENTERPRISE ARCHITECTING
PRODUCT ENGINEERING
ENTERPRISE ENGINEERING
PRODUCT
ENTERPRISE
ACHIEVING
REQUIREMENTS
TAKES BOTH
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PAST
(hierarchical) Enterprise
ESD.61J / 16.852J: Integrating the Lean Enterprise
FUTURE
(networked) Enterprise
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What enterprise architecture could maximize the long term stability of the
enterprise?
What architecture would maximize the flexibility of the enterprise in regard
to its ability to design innovative new products?
Can a single enterprise model be optimized for both such properties, or do
we need to select for one over another?
A far-reaching goal would be to develop the knowledge that is needed to be
able to model enterprises in such as way that we can predict enterprise
behaviors and outcomes to optimize around various properties, and provide
the flexibility that will enable ease of change to the enterprise system in the
future.
ESD.61J / 16.852J: Integrating the Lean Enterprise
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Research Questions
Our research has a goal of predictability of enterprises
properties?
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Summary
Enterprises, much like products, must be architected as
We see the current field as too limited, and that a more holistic
systems approach to architecting enterprises is needed
Complex enterprises exhibit systems properties, as well as
dimension
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