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,50,C|M|T|C,800-300-CMTC,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Los Angeles,Orange County,Inland Empire,San Diego,San Fernando Valley/San Gabriel Valley San,Joaquin Valley,Ventura/Santa Barbara,.andSupplyChainIntegration,Presentedby:,JerryB.Khoury,CaliforniaManufacturingTechnologyCenter(CMTC),LeanManufacturing,LAIPlenaryConference,Overview,Historical Perspective,Industry Consolidation,View from OEMs,Current trends,DoD & R&D Budgets remain flat,Employment,Future Technology Trends,The power of the internet,Resources,Summary and Ultimate Goal,Q&A,Historical PerspectiveIndustry Consolidations & MergersContinues at a Lessor Pace,Mid 80s to mid 90s 37 became 4,Mid 90s to present noticeable increase in M&A activity within supply chains,As the Consolidation Continues Primes & OEMs Have new Challenges,Not all suppliers possess resources and capabilities to undertake major improvements (six sigma, lean manufacturing, continuous improvement),Not all suppliers have ability to attract & retain high caliber people who understand process control (CpK & 6 Sigma),Demographics, the aging work force creates “Knowledge Management” challenges,Effective Communication links between sub-tier suppliers and end users become increasingly important,Early involvement in the design & development phases, and teaming “beyond” the shop floor become more crucial,Current Trends,Defense budget will grow at about 4%, with ammunition and aircraft leading the increase,R&D Budgets will remain flat forcing more Prime/Supplier collaboration,Supplier consolidation will continue as a result of mergers,As primes shift to “lean” practices, suppliers will be asked to manufacture more major sub-assemblies and less piece parts,Current Trends,Continued,OEMs will continue to out source manufacturing,JIT deliveries in support of POU demand will become more prevalent in order to reduce inventory and carrying costs,OEMs will shift to “assemble, test, and ship” model,Suppliers and customers will team “beyond” the shop floor to design and develop next generation products using the Internet to create Virtual Product Design and Innovation,DoD Procurement Growing at 4%,($Mil),Aerospace R&D Funding Remains Flat,Less R&D will create more collaboration between primes and suppliers,Aerospace is Important to the US,Accounts for Majority of Exports,$Billion,Data Source: California Employment Development Department.,Employment In Southern California,Importance to the State of California,Excludes services estimates based on SIC code information & coverage compensation. Includes all industry segments, both product-and service-oriented. Approximately 138,000 jobs in primary A&D SIC codes, plus an estimated 50,000 jobs for “mixed suppliers” that serve multiple industries in addition to A&D.,Aerospace is 2nd Largest Employer,1996 ($Million),Southern California Payrolls,By Industry,Entertainment,Lean Migration Throughout the Supply Chain,Economics are forcing OEMs (Primes) to adopted “lean” as an enabling technology to reduce manufacturing costs and eliminate waste,Tier one suppliers are well on their way to implementing lean based in part on encouragement from their customers,“Sub-Tier” suppliers still resist implementation of lean without a “Business Case” and payback analysis (ROI),The Aerospace Supply Chain Needs to Accelerate the Shift to “World Class” Status,Phase I,Approved Supplier,Capacity planning,Scheduling systems,Quality systems,Computerized information,systems,Internal assessments,Phase II,Preferred Supplier,Lean manufacturing,Advanced quality systems,Electronic commerce,Strategic planning,Phase III,Strategic Partners,Integrated customer teams,Total quality,Sub-contractor teams,Functional procurement specifications,“Best practices”,Lean Manufacturing,Virtual Product Development,E-Enabled transactions,World Class,The New Realities,Primes (OEMs) will continue to “out source” at an increased pace,More emphasis will be placed on “sub-assembly” a higher (BOM) level,Primes will focus on “engineering & design excellence” not on manufacturing,Primes will use the Internet to improve design, cost, schedule, quality and planning synergies,A good starting point,Hosted by:,Will impact up to 37,000 suppliers .,Hundreds of Airlines,Total combined procurement outlay of $71 billion,92%,99%,41%,Projected Business-to-Business E-Commerce Transactions,Organizations are increasingly turning to the internet to source indirect goods and services - those goods and services which are not a part of cost of goods sold. This typically includes such items as office supplies, travel, temporary services and desktop computers.,C|M|T|C,800) 300-CMTC,Los Angeles Orange County Inland Empire Greater Sacramento San Fernando Valley/San Gabriel Valley San Joaquin Valley Ventura/Santa Barbara,4-Year Est. Growth,Current Est. $7 Tril. By 2004,General Electric & E-Commerce,Jack Welch, CEO,“This company , like every company in the world today, is in the midst of the biggest, most transformational revolution in the past century, brought on by the Internet.”,“Where does the Internet rank in priority ? Its number ONE, TWO, THREE and FOUR.”,OEMs & Primes want “World Class” suppliers,Some Technology Facts, IBM,“Bandwith” will leapfrog,Grew by a factor of 10 X over the past 15 years,Will grow by a factor of 150 X over the next 15 years,In 1995, 1 Tera Flop computer played chess,comparable brain power of a lizard,By 2010, 100 Tera Flop computer,will work on Gene folding projects,Before the end of the decade there will be 1 to 10 Peta Flop computers,12 to 15 PF approximate human brain,Additional Technology Trends,Wave Division Multiplexing (WDM) will become commonplace with Fiber Optic cable to the house and office,Wireless interconnection will be global, now available in L.A.,Internet will be integrated into common appliances, at low or no cost to the consumer,Internet technology will be integrated into machines and other hardware products for 7/24 monitoring capabilities,Virtual teams will be formed to design “virtual products” on-line 7/24 on a global basis. These “virtual teams” will be “unformed” until the next project,The Internet Presents Threats and Opportunities,OPPORTUNITIES,Competitive advantage, levels the playing field,A way to expand market reach,Accelerates time to market and lowers costs,Enhances customer relations,Empowers employees and creates what Bill Gates calls “Knowledge Workers”,Streamlines processes & reduces cost,Allows for 7/24 global product design,Allows for rapid “product morphing” to meet changing customer needs,Allows for global trading partners,Allows for “virtual teams” to be formed and unformed based on need,Threats,Creates International competition on a massive scale,Allows for 7/24 global product design reducing reliance on domestic labor,Challenges traditional thinking and traditional business models,Tangible BenefitsReduction in Transaction Costs,Banking industry reduces transaction costs from $1.07 to $0.01,Travel agent bookings go from $10.00 to $2.00,Trade (procurements) transaction costs go from $150.00 to $6.00,Example: Raytheon reduces processing cost from $100 to $3,Industrial Age E-Commerce,The next revolution will be B2G (Business to Government)Web Enabled Trading Site,Federal, State and Local Governments spend $1.6 Trillion on goods and services,Texas web site has reduced transaction costs by 83% from $120 to $20,California is currently evaluating and testing E-Commerce solutions,Integrating the Supply Chain,Suppliers will need to be able to respond to electronic “pull signals” with first time quality to support virtual “Kanbans”,Suppliers will need to be “E” enabled to reduce administrative costs while reducing cycle times for specification changes, quantity changes, and schedule changes,Customers will continue to demand quality, price, delivery, and design and integration support,ASSEMBLER,22%,SUPPLIERS - 35%,1ST TIER,22%,2ND TIER,10%,3/4TH TIER,3%,Why Is There a Concern With the Aerospace and Defense Supply Chain and Supply Chain Management ?,RAW MATL,43%,Value Stream Cost Distribution,Recent USAF and MIT Estimates Indicate,70-80% of Value is in supply chain,Other Factors to Consider,As OEMs use lean to reduce “direct labor” and “inventory” overhead costs become a larger percentage of total cost,One prime indicated that “direct” manufacturing costs are 20% of total costs,This will force “lean” beyond the shop floor. Leveraging the power of the Internet can help reduce overhead costs,CMTC is Working on Lean Beyond the Shop Floor,Course work and training materials are being developed through a cooperative grant, including a Knowledge Management module,Working with IBM & Others to identify opportunities to leverage technology,One client has demonstrated significant savings and time in the procurement area and in the quality records area,Lean = Eliminating the Wastes,Typically 95% of Total Lead Time is,Non-Value Added!,RUN,TIME,Order Processing, Transport, Storage, Waiting, Rework, Machine Setup, Inspection, Machine Breakdowns, etc.,Total Lead Time,Definition of Value Added,Value Added,Any activity that increases the market form or function of the product or service. These are things the customer is willing to pay for.,Non-Value Added,Any activity that does not add market form or function or is not necessary. (These activities should be eliminated, simplified, reduced or integrated.) Things the customer is not willing to pay for.,8 Wastes of LEAN,Overproduction,motion,Extra Processing,Transportation,Inventory,defects,Waiting,Underutilized People,Lean Building BlocksWhat a lean factory looks like,Workplace Organization,Visual,Lean Factory,Standardized,Work,Plant Layout,Quick Changeover,POUS,Teams,Batch Reduction,Quality Source,Pull/Kanban,One Piece Flow,Cellular,Takt Time,Keys to Success,Prepare and Motivate People,Widespread orientation to CI, quality, training and recruiting workers with appropriate skills,Create common understanding of need to change to lean,Employee Involvement,Push decision making and system development down to the “lowest levels”,Train and truly empower people,Share information and manage expectations,Identify & empower champions, particularly operations managers,Remove roadblocks (i.e., people, layout, systems),Make it both directive yet empowering,Keys to Success,Atmosphere of Experimentation,Tolerate mistakes, have patience, etc.,Willingness to take risks (Safety nets),Install “enlightened” and realistic performance measures, evaluation, and reward systems,Do away with rigid performance goals during implementation,Do measure results and not number activities/events,Tie improvements, long term, to key macro level performance targets. (i.e. inventory turns, quality, delivery, overall cost reductions).,Execute “pilot” projects prior to rolling out across entire enterprise (e.g., model lines, kaizen blitzes),After early wins in operations, extend across ENTIRE organization,Implementation Success Factors,Implementation,People need to understand their new roles before change is implemented,Establish timelines and targets, establish some easy to achieve near term goals,CI - Continuous Improvement,Track impacts associated with changes made. Communicate them.,Monitor, “enforce,” and improve the system,Improvement Leaps,Avoid mentality of collapsing over the finish line.,Implementation Success Factors,Unyielding Leadership,Strategic vision based on lean enterprise,as part of overall business strategy!,Observe outside successes and failures,Ability to question EVERYTHING, ask,“why” at least 6 times,Deep commitment to EXCELLENCE,Case Studies Demonstrate Results“You dont understand, our business is different . . . .”,Lean Supplier Case Studies Demonstrate Impact,Client 1 - 65 Employees, Family owned business:,Annual savings of over $37.3 K as a result of streamlining paper flow, streamlining the Shipping/Receiving processes, and floor space reduction.,Client 2 - 230 Employees, Corporation:,Realized immediate cost savings of $25.8 K due to a 72% reduction in WIP and inventory.,Annual savings of $16.9 K due to floor-space reduction, labor reduction, and setup reduction.,Client 3- 368 Employees, Corporation:,Realized savings of over $30 K due to a 63% reduction in WIP and inventory.,Annual savings of $19.3 K due to floor space reduction, labor reduction, and paper flow reduction.,Client 4- 186 Employees Corporation:,Goal of a 50% actual 70%. reduction in paper work documentation process,Goal of 50% actual 47% reduction in data package build time,Goal 25% actual 20% reduction in data storage space by Using 5S methodology,Delivery lead time reduction over 7 days,Annual savings of $480K,Lean Case Studies Demonstrate Results, Expect Double Digit Impact,72% reduction in WIP and inventory,63% reduction in WIP and inventory,70% reduction in documentation process,47% reduction in data package build time,20% reduction in floor space,Boeing Aircraft, Rocketdyne Division,Decreased manufacturing costs by 97%,Cut the development cycle by 50%, from 2 years to 1,Reduced manufacturing cycle time by 63%, from 2 years to 9 months,Reduced number of partsfrom hundreds to 6,Created a knowledge depository for re-use on subsequent projects,Lean Manufacturing is Not New,“One of the most noteworthy accomplishments in keeping the price of Ford products low is the gradual shortening of the production cycle. The longer an article is in the process of manufacture and the more it is moved about, the greater is its ultimate cost.”,Henry Ford, 1926,Lesson Learned: Created assembly lines but didnt empower workers to achieve continuous and sustained improvements,How Can You Get Help to Prepare for the Future?,CMTC, Our Objective -,“to help small and medium size manufacturers increase their competitive advantage by adopting and implementing improved methods of management and manufacturing ”,Never underestimate the “power” of an external change agent.,CMTC Introduction,A 501 c 3 Private, Non-Profit, Corporation,Provide consulting services to Californias small to medium-sized,manufacturers ensuring global competitiveness,Information Technology Services,System Selection,Systems Implementation,e-Business,Lean Enterprises Services,Lean Assessment,Enterprise Process Improvement,Inventory and Production Management,Strategic Business Services,Strategic Management,Human Resources Strategies,Workforce Development,Organization and Management,Quality Management Services,Quality Systems Implementation,Product Assurance,Environmental and Safety,Over 140 Professionals in Seven Regional Centers with an average of over 20 years professional experience,We Partner with Government Agencies, Trade Associations, Educational Institutions & Aerospace Primes,Government,California Trade & Commerce Agency,US Air Force,NASA/JPL,Employment Training Panel,Associations,Aerospace Industries Association (AIA),Society of Automotive Engineers (SAE),American Institute of Aeronautics & Astronautics (AIAA),Educational Institutions,Community College Centers for Applied Competitive Technologies (CACT),MIT / LAI,Corporations,Aerojet (Gencorp),Boeing,Hughes (Boeing),Lockheed Martin,Northrop Grumman,Raytheon,TRW,CMTC Provides Tangible Benefits,Reduce costs not just selling price,Reduce delivery time, cycle time, set-up time,Eliminate waste,Seek continuous improvement,Improve quality,Improve customer ratings and perceptions,Increase overall customer satisfaction,Improve employee involvement, moral, and company culture,Help “transform” manufacturers,Additional Resources,Manufacturing Extension Partnership (MEP), Nationwide network with over 92 centers www.mepcenters.nist.gov,CMTC at ,Productivity Press, Lean Materials & Books,Educational Institutions,MIT at www.mit.edu,University of Tennessee,San Diego State University,NIST/MEP Centers are Located Near Your Supply Chains,We can reach any manufacturer in the country within two hours !,MEP Centers,Deploying Lean, a Four Phase Approach,Gain top Management “Buy In” and Support,Perform overall company assessment tied to company strategic, operational, and marketing plans,Develop strategic lean deployment plan,Integrate customized training with lean to improve specific skill sets, leverage training resources,Team Building, Communications, Problem Solving, Change Management, Lean Manufacturing Tools,Conduct “Kaizen blitz” high impact events,5S, Manufacturing Cell, Set-Up Reductions, Inventory Reductions, Work Standardization,Use an enterprise wide approach to help “Transform” a clients culture and the way they do business.,“Lean” is Not Just a Shop Floor Improvement Process,Lean is not a “point” solution but a continuous improvement process,Lean practices and principles are not just “shop floor” improvements,OEMs are recognizing the importance of deploying lean “beyond the shop floor” in Marketing, Design, Engineering, Finance, Procurement, Contracts, Quality, and other administrative areas,CMTC has several clients who are migrating lean “beyond the shop floor”,Summary, Future Trends,Government/industry business practices will continue reforms and a move closer to “commercialization”,Supply chains will become partners in “design and development” possibly on a global basis with 7/24 availability to data,Companies will need to be “e-ready” to take advantage of the Internet,Access to the global economy by U.S. industry will assure continuing major exports,Supply chains implementing “best practices” will lower overall “costs” not just selling price and will be more responsive to customer needs,Companies will need to train and develop employees to attract and retain the best people, as there will continue to be a shortage of qualified people.,Ultimate Goals,Ensure an Americas leadership role in the 21st Century while adopting “best practices” to thwart foreign competition,Help increase jobs that add substantially to local, state and national economies,Q & AThank you for your time and attention,khouryPhone: 310-965-4831WWW.CMTC.COM,
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