The aerospace and defense industry is a small manufacturing community. Most OEMs (Original Equipment Manufacturers) rely on the same suppliers. In many cases, suppliers to multiple OEMs are wholly owned subsidiaries of one OEM. It is quite common to see multiple product teams from various OEMs at the same time, but in general, they all work well together.

 

According to Brad Campling, Aerospace and Defense Program Development Manager with TechSolve, “The big push over the past several years is to drive suppliers to add more value (design and manufacturing), while the OEMs assemble larger subassemblies together. The idea is to focus on core competencies.” OEMs focus on systems integration and large-scale design, while suppliers work either as contract manufacturers or system design and manufacturing specialists. The result according to Campling is, “Sixty to eighty percent of production costs and lead times reside in the supply chain.”

 

Most Aerospace and Defense OEMs are driving value to the supply base; there has been an increased emphasis on supplier partnership programs. These partnerships have caused OEMs to invest in supplier development teams. They work with the suppliers on their production systems to develop production capacities to meet demand and cost targets. Lean and Six Sigma are the leading tool sets preferred by the Aerospace and Defense OEMs.

 

“Lean manufacturing techniques are often a good fit for Aerospace and Defense programs for many reasons,” according to Campling. Production numbers for these programs are low, relative to automotive and consumer goods. Manufacturing equipment and facilities must be sufficiently flexible to handle low volume of mission-critical hardware. Military grade equipment and components are very expensive, requiring that inventory management systems are effective in keeping carrying costs low. Many of the Aerospace and Defense suppliers in the field are outstanding engineering firms on the cutting edge of technology. These brilliant design engineers are geared more toward innovation and product development. Production improvements such as Lean and Six Sigma require a different mind-set. Often, these capabilities do not exist or are not emphasized in these firms. This is where OEM supplier development programs and TechSolve can assist these companies, to provide an expertise that does not currently exist internally. 

Kanban systems work well to create demand triggers to suppliers, limiting inventory while providing enough material to keep producing. 

 

According to Matthew Marotta, founder of Datacraft Solutions, “Digital kanban in the Aerospace and Defense sector is critical because the success of any military operation lies in the ability to get the right supplies to the right location at the right time.   Taking full advantage of a consumption based replenishment system, such as digital kanban, will eliminate excess spending on expedites, as well as the lack of proper supplies due to incorrect order quantities and misplaced items.” The Aerospace and Defense sector gain real-time visibility into their consumption from the field all the way back to their raw material suppliers achieved through implementation of an effective digital kanban solution. 

 

 

Value stream analysis is instrumental in developing an improvement plan designed to eliminate waste and produce to the required rate. Waste elimination using lean tools will almost always reduce lead time and cost. Thinking back to the military’s initiatives in system affordability and readiness, these efforts have a direct impact.

 

Value stream analysis is the foundation of process improvement. By looking at the current state map (the way business is currently conducted) it is easier to identify what needs to be improved in order to meet the demands of the customer. It becomes evident if the processes are unbalanced, unable to meet customer demand (Takt Time), operating with too much WIP (work-in-progress), lack of communication, lack of process flow, low yield, and excessive setup times.

 

VSA allows companies to recognize which objectives to implement based on the current condition of the given system. A combination of Lean and Six Sigma tools can solve the problems listed above. Mostly, Six Sigma works well at solving the low yield issues by focusing on variation elimination within the processes (discover changes from operation to operation and eliminate the variance). Lean tools also help improve quality.

 

VSA directs what must be improved in order to satisfy customer demands and requirements. As process improvement engineers, decisions must be made regarding which set of tools should be utilized to solve the given problem.

 

 

Campling argues, “Military contracts are also driving this partnership behavior. Most contracts are fixed price or cost plus (some pre-determined profit margin). In the case of fixed price, it only makes good business sense to work on lowering the production cost. The cost plus model is typically used on higher-priced weapon systems and vehicles. These contracts usually add another level of complexity. The wars in Iraq and Afghanistan have created new directions for military spending. Emphasis has been placed on system costs and readiness.” 

 

 

Military budgets are tight that if a system is too costly to produce, the military can afford fewer systems. Some programs can even be eliminated all together if the funding is needed on other important systems. Funding in affordability programs bring system costs down and allow for more systems to be fielded to the warfighters. 

 

Depot maintenance has become a large source of spending. In addition to building new systems, OEMs and suppliers are being tasked to produce spares so systems in the field can be overhauled and send back out into service. The harsh environments where we are fighting in right now are taking their toll on systems. Lead times for depot maintenance and new system production are affecting readiness capabilities.

 

 

TechSolve has become a key player in supplier development programs backed by OEMs and the military Services. TechSolve was involved with a pilot supplier development program in a partnership with an OEM and the Air Force. The long-term goal of this 3 year project was to increase production by 400% and help reduce system production costs. The program was a success by meeting the production goals and realizing $38MM in total cost savings. The success of this project led to an increase in Air Force backing and funding of other supplier development programs. A follow-on project for a different system yielded an increase in monthly production from 25 to 500 in two years. 

 

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