Lockheed Martin Missiles/Fire Control, Camden Operations: IW Best Plants Profile 2006
Where Lean Is On Target: Lockheed Martin's Camden operations, which produces complex weapons systems for the military, is itself a lean and mean machine.

Sunday, October 01, 2006
By John S. McClenahen

Lockheed Martin Missiles/Fire Control, Camden, Ark.

Employees: 432, non-union

Total square footage: 1.5 million

Primary product: Military rockets, missiles and rocket launchers

Start-up: 1978

Achievements: ISO 9001; ISO 14001; National Environmental Performance Track Award; 10-time winner of Employee Involvement Association's Performance Excellence Award.

Normally, Lockheed Martin Corp.'s Missiles and Fire Control Operations in Camden, Ark., doesn't keep any finished goods inventory. The rockets, missiles and launch systems made at the 1.5-million- square-foot facility among southern Arkansas' pines become the property of its customers upon completion and formal acceptance.

However, the absence of finished-goods inventory is not the only surprise -- or even the major surprise -- among the facility's 532,679 square feet of manufacturing area. That distinction, which is a great source of pride to management and production people alike, is that Lockheed Martin's Camden Operations excels at lean manufacturing in the building of such complex systems as the Patriot advanced-capability interceptor missile for the U.S. Army.

For example, tools, parts and fixtures are shadowboxed so that workers can tell at a glance whether anything is missing. Materials are organized in convenient-to-use assembly kits -- again a glance is all that's needed to determine if something is missing. Also at work is 6S, Lockheed Martin's variation of 5S, which adds safety to sort, straighten, shine, systemize and sustain.

Among other achievements, implementing lean techniques has reduced production lead times for Patriot missile and launcher components by about six months, from 18 months down to approximately 12 months.

Six Sigma, a quality improvement program, is combined with lean manufacturing at Lockheed Martin's Camden Operations to improve production processes and reduce costs. Among Camden's 432 employees are half a dozen Six Sigma Black Belts, whose in-depth Lean Six Sigma knowledge allows them, among other things, to facilitate efforts that identify and remove production steps and processes that don't create value for customers.

http://www.industryweek.com/media/NewsItems/12671lockheed.jpg
Launcher final integration cells feature lean flow.

Camden also has 121 Six Sigma Green Belts trained in the basic tools of Lean Six Sigma. The Green Belts help implement and sustain Camden's process improvement initiatives. By the facility's calculations, 91 Lean Six Sigma activities have saved more than $23 million since 2001.

Lean Six Sigma and other process improvement efforts are designed to provide the best value to the customer, emphasizes Norman Anderson, general manager of the Camden Operations. They also belie the notion that a defense industry plant can't be a lean and mean manufacturing machine. Yes, specialized components, contract technical requirements and mandated product testing somewhat limit process improvement activities, acknowledges Anderson. But he speaks of a "moral and patriotic desire to improve product quality and reliability." Process improvement, he asserts, is "a life and death matter."

Strategic planning, which links the facility's goals and objectives to Lockheed Martin corporate objectives, an aggressive Lean Six Sigma program, state-of-the-art technology, and manufacturing flexibility and agility help set Camden Operations apart from other manufacturing plants that practice continuous improvement, says Anderson. But the "bottom line" at Camden is the facility's "patriotic and proud employee culture."

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Bring In The Animals

An easy-to-implement lean manufacturing technique is to color code tools, fixtures and machines. Match the color of the tool or of the fixture to the color of the machine and neither should end up in the wrong place.

But what if some of your employees have trouble distinguishing between colors? Bring in the animals.

At least that's what Lockheed Martin successfully did at its Critical Machining Center at its Camden, Ark., operations. Lockheed Martin builds military missiles, rockets and launchers at the facility, and the Critical Machining Center is where tooling, fixtures and machines come together to produce complex components. There's no room for error, specifically installing the wrong tooling or fixture on a precision machine.

To meet the needs of several skilled employees whose vision made it difficult to distinguish between colors, each machining center and corresponding piece of tooling now bears a unique and large animal picture to precisely identify the specific piece of tooling that can be used on a specific machine. This animal coding system also allows for an at-a-glance check of stored tooling that is available for use.

©2006 IndustryWeek. All Rights Reserved.

Flexibility Equals Opportunity: General Cable de Latinoamerica finds winning combination in Six Sigma and Lean.

Sunday, October 01, 2006
By Jill Jusko

General Cable de Latinoamerica S.A. de C.V. Tetla, Tlaxcala, Mexico

Employees: 301, union

Total square footage: 1,152,707

Primary products: Telecommunications exchange cable and service wire

Start-up: 1981

Achievements: Named Best Plant of the Year in North America (an internal award among General Cable Corp. facilities) in 2001, 2004 and 2005; improved productivity (annual sales per employee) by 103% in past three years

Root cause: volcano. Not a likely source of problems in most manufacturing plants certainly, but plausible at General Cable de Latinoamerica S.A. de C.V. The telecommunications wire and cable manufacturer is located in Tetla, Tlaxcala, a high-altitude region of Mexico landscaped with volcanoes.

In fact, Hector Arronte Vicario, quality assurance manager, determined during the course of a project to earn his Six Sigma black belt certification that corrosion of certain aluminum doors could be traced to two water sources -- one being the local water supply, which contains sulphur from nearby volcanoes. The sulphur, Arronte discovered, reacted with copper dust at the plant and provoked the corrosion. Given that the doors cost $28,000 each, Arronte says, finding and resolving the problem offers an obvious opportunity for savings.

Today, Six Sigma and lean manufacturing provide the foundation of General Cable Tetla's drive for manufacturing excellence. Five employees are certified Six Sigma black belts and 26 are green belts. And while some manufacturing literature suggests that lean and process industries aren't an easy fit, the Tetla plant says that lean, in combination with a strong focus on process variation reduction, has helped it achieve performances that include a first-pass yield of 99.97% across all finished products.

Where is lean at work? All over, but examples include comprehensive deployment of visual management systems, as well as a pull system on the shop floor in the service wire product group. (Service wire connects a communications network to a subscriber's location. Its basic configuration is an insulated copper conductor.) Customer orders there are translated into color-coded kanban cards that identify product type, quantity and package configuration for a value stream.

Martin Luna moves a reel to a kanban rack in preparation for the next process.
To control the production sequence, heijunka (or leveling) boards have been developed to schedule and maintain balanced production progress. The leveling boards, which contain multiple kanban card slots for each day of the week, are placed at the bottleneck process. Upstream from the bottleneck process, kanban signals trigger machine operators to start and stop the preceding process.

And rather than warehousing finished goods, product in this area is loaded directly onto trucks for customer delivery.

"Over the last several years we have been walking and living the lean culture," Arronte says.

Indeed, the lean focus extends beyond the factory floor. For instance, nearly 85% of the plant's incoming purchased materials no longer require incoming inspection, freeing up resources for other activities. And about three-quarters of key suppliers provide just-in-time delivery, reducing raw material inventory.

General Cable Tetla has grown increasingly flexible as a result of its continuous improvement efforts. For instance, a production schedule that previously was revised monthly now gets updated weekly. The plant also swiftly reacted to an opportunity for additional business that doubled production in three months.

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Benchmarking Is Family Affair

Like other manufacturing facilities that comprise General Cable Corp., the manufacturing plant in Tetla, Tlaxcala, Mexico, benefits from a strong corporate focus on cross-plant benchmarking. Indeed, General Cable de Latinoamerica explains that all General Cable plants are assessed annually about their performance against the 12 manufacturing principles by which General Cable operates. (Those 12 principles are safety, housekeeping (5s), use of formal systems, preventive and predictive maintenance, product quality, process capability, work order delivery, visual factory, productivity, communications, training of associates and operator led process control.) Specific metrics are assigned to each principle.

The assessments, formally called Manufacturing Excellent Audits (MEA), are performed in a cross-plant fashion. For example, General Cable Tetla plant manager Luis Rosete Gonzalez was slated to join his plant's finance manager in a trip to General Cable's manufacturing facility in Moose Jaw, Saskatchewan, Canada (a 2005 IW Best Plants winner), in late September to perform an MEA of that facility. Similarly, the Tetla plant was audited in mid-September by another General Cable Corp. plant. The audit took two full days and included three auditors.

Plants receive multiple benefits from these audits, explains Rosete, including the most basic -- sharing best practices and learning. "We learn about other processes and other work cultures and take the best," he says. Additionally, the audits foster better communications between plants, which speeds problem-solving of common issues across facilities. Further, the metrics that comprise the audits grow more challenging each year, Rosete explains, which motives continuous improvement.

©2006 IndustryWeek. All Rights Reserved.

Employees at Mercury Marine in late August completed their 1,000th project using the company's Lean Six Sigma continuous improvement process, which has helped the company improve product quality, enhance customer service and lower costs.

Since 2003, thousands of Mercury employees around the world have helped improve the company's business processes through the implementation of Lean Six Sigma. The improvement methods are based on lean processes, which improve speed and eliminate waste, and Six Sigma methods, which reduce process variation. The company has focused on improving processes in everything from product design to manufacturing, including planning, sales, distribution and service.

"I am most proud that Lean Six Sigma has become a way of doing business for Mercury Marine, providing the foundation for the continuous improvement which will drive our customer satisfaction," said Mercury President Patrick C. Mackey. "We know it's working because our OptiMax and MerCruiser customers ranked us highest in customer satisfaction in this year's J.D. Power surveys."

Since Mackey launched the cultural transformation of Mercury three years ago, nearly 700 management and production employees have been formally trained in Lean Six Sigma methods, with dozens more attending training every quarter. The company has also worked with its suppliers and customers to create a lean supply chain to ensure the highest-quality products are manufactured and available for consumers.

GE has learned that Six Sigma and Lean share a single over-arching goal: to create incremental value based on end customer requirements.

By Howard Mikytuck, Access GE Leader, Master Black Belt, and Dan Moscone, Master Black Belt, GE Commercial Finance
Sept. 6, 2006 -- Imagine if the local weather person was right every day -- for 2,739 years straight. What if the cable company offered a lifetime of free services if your technician didn't arrive within 0.000034 seconds of their scheduled arrival? Of course, we'd all love the lottery ticket that pays out 99.9999% of the time.

In the manufacturing world, this level of near-perfection consistency is a quality mandate required to compete effectively in today's marketplace. Now an industry standard, Six Sigma has galvanized the concept that if a process lies within six standard deviations of the mean, production quality is all but guaranteed (3.4 DPMO). However, quality alone is no longer enough.The ability to eliminate process waste in the supply chain while delivering Six Sigma levels of quality will win the new end game.


GE, an early adopter of Six Sigma, has been working to combine Six Sigma's core principles with that of Lean, a methodology focused on waste reduction (as opposed to defect reduction). GE's hybrid approach to Lean Six Sigma is in part based on the venerable Toyota Production System (TPS), which seeks to compress the timeline from order receipt to payment received by removing waste. GE's Lean Six Sigma mode is guided by four key principles:

Define what the customer perceives as value in the product or service.

Map the value stream of all steps (value and non-value added).

Establish the flow of products, services and related knowledge from supplier to customer.

Continuously improve the process to perfection.

Thanks to the sheer diversity of GE (six key businesses -- Infrastructure, Industrial, Commercial Finance, NBC Universal, Healthcare and Consumer Finance), we learned that Six Sigma and Lean share a single over-arching goal regardless of industry: to create incremental value based on end customer requirements. Through our internal experience, we found that the combination of defect reduction and waste elimination into a single methodology created a more comprehensive approach, one not limited to GE's manufacturing quarters.

While Toyota and Dell quickly come to mind as industry leaders in floor efficiency, companies like Wal-Mart and Microsoft are applying these principles to streamline distribution chains and software engineering. A clear differentiator for GE's manufacturing business, we've begun to make great strides in applying Lean Six Sigma to our Commercial Finance organization. Just as a manufacturing or distribution process will rely on key notes from supply to delivery, a financial services organization relies heavily on key touch points to fund a loan transaction, from proposal through commitment to closing.

During a two-week Lean Six Sigma Workout held recently for Commercial Finance's lending business, our teams identified nearly a dozen immediate actions projected to reduce our total cycle time by 45%. With speed of execution a key customer requirement, this is a major win for the business.

As we continue to gain deeper levels of expertise from the internal application of Lean Six Sigma, GE is also working to share its knowledge with our customers. When Jeff Immelt became CEO in September, 2001 he initiated a program that we call At the Customer, For the Customers (ACFC). Delivered at no cost, the program is an effort to share with customers what GE has learned through 114 years of doing business across diverse operational segments. In return, our efforts to deliver incremental value for our customers helps deepen the relationship to facilitate future business opportunities, creating a win-win.

A large portion of our knowledge sharing through ACFC is driven by our expertise in Lean Six Sigma.Typically, an assignment begins with an overview followed by discussions with executives and managers. Why do they perceive to be the problems? Is overtime pay excessive? Are delivery dates chronically missed? Is unit production cost too high? Are lead times flat or increasing compared to competitors? The engagement can take the form of introductory sessions and corporate management training to joint working sessions on-site with our customers.

For Cequent Trailer Products, a Commercial Finance customer and maker of commercial grade jacks headquartered in Wisconsin, the teams thoroughly mapped their value stream as part of a Lean Six Sigma workout. From order entry to shipment, the teams walked up and down the production lines, measuring time intervals, gauging value-added inputs and non-value-added waste. Likewise, we spent days analyzing material and information flow looking for ways to reduce waste without losing knowledge to increase efficiencies. As a result, Cequent manufacturing lead times were reduced by three weeks, saving approximately $1 million in excess inventory. Together, we also simplified the company's materials by creating families of products that share common components rather than unique parts.

The combination of Lean and Six Sigma is proving to be a powerful answer to a familiar question -- amidst growing competition and a constant pursuit of efficiency, how can we get better at what we do to help our customers win? For GE, that means pursuing perfection in our own processes while sharing what we've learned with customers through the ACFC program. Akin to Six Sigma, it's a hybrid approach to continuous improvement that we believe is absolutely critical to creating meaningful long-term value.

Howard Mikytuck, is an Access GE Leader, Master Black Belt and Dan Moscone is a Master Black Belt at GE Commercial Finance. GE Commercial Finance Corporate Lending (gelending.com) is one of North America’s largest providers of asset-based, cash flow, structured finance and other complimentary solutions for mid-size and large companies seeking $10 million and more.

Wednesday, 30 August 2006
Company news:

Employees at Mercury Marine last week completed their 1,000th project using the company's Lean Six Sigma continuous improvement process, which has helped the company improve product quality, enhance customer service and lower costs.

Since 2003, thousands of Mercury employees around the world have helped improve the company's business processes through the implementation of Lean Six Sigma. The improvement methods are based on Lean processes, which improve speed and eliminate waste, and Six Sigma methods, which reduce process variation. The company has focused on improving processes in everything from product design to manufacturing, including planning, sales, distribution and service.

"I am most proud that Lean Six Sigma has become a way of doing business for Mercury Marine, providing the foundation for the continuous improvement which will drive our customer satisfaction," Mercury President Patrick C.

Mackey told employees Friday. "We know it's working because our OptiMax and MerCruiser customers ranked us highest in customer satisfaction in this year's J.D. Power surveys."

Since Mr. Mackey launched the cultural transformation of Mercury three years ago, nearly 700 management and production employees have been formally trained in Lean Six Sigma methods, with dozens more attending training every quarter. The company has also worked with its suppliers and customers to create a lean supply chain to ensure the highest quality products are manufactured and available for consumers.

Last Updated ( Wednesday, 30 August 2006 )

Blackanthem Military News, LANGLEY AIR FORCE BASE, Va., July 24, 2006

I know what you're thinking. "Here it comes again - a new fad." And I've been in the Air Force long enough to have seen my share too. Lean, Six Sigma, Action Workout, Re-engineering, and Quality Air Force - we just never seemed to get them right across the Air Force. Either we improved in a scatter-shot pattern at the local level, or descended into a full-time program of education with no output, or couldn't get the policy level of the Air Force interested in kicking over the hurdles that really were holding up progress. But each time, within each effort, there were seeds of success: money saved, process time saved, quality improved. But we never got those seeds to sprout so we could harvest across our Air Force. AFSO21 is an approach to finally do it right - not a bunch of training, not a bunch of AFSO21 offices to stand up and drain manpower from an already stressed force.

The point of all this is that it is time for us to do some hard reviewing of our organizations and the processes within them. Soon we are going to be about 40,000 full-time equivalents smaller across the active, Guard, Reserve, and civilian force. That means we have to stop doing things that don't really add value to our force anymore - even if we do them very well. And we need to start looking at all of our processes to understand where the value-added steps are, and where is the waste and delay that can be carved out. Last December I asked everyone for some suggestions on where we start. I got 428 ideas - 122 on improvements and 304 that challenged the rules that impeded smart operations. The tenet is this: If today we started doing whatever it is we are doing - would we do it at all, and if so, would we do it the same way? If we started with a clean sheet of paper, what is the better, faster, cheaper way to do what needs to be done? So you have to start with your process and that really has to start with your customer. Who is demanding your product or service and why are you producing it in the first place? Once you get past that, then you take whatever it is that you make, improve, provide, and map out how you actually do that from the moment you start until you finish.

To look at it another way, I spend a lot of time talking with many of you when I visit your units. Most of the time I shake your hand and ask you, "How are you doing?" I haven't had anyone yet answer anything but an enthusiastic, "Great!" What would you do if I followed that up with one more question, "How do you know?" I'd be impressed if you said, "Well, here is what I am tasked to do, here is who I do it for, and here is how I know how fast I do it, how good the quality is, and how costly it is. And, I watch these metrics to compare how well I am doing against how well I should be doing - and they tell me I'm doing great!"

Some of you have done some great work already - mapping out the routine things you do, cutting out extraneous steps, reflowing your work, and making sure that each step that remains adds value, or if it doesn't add value per se, is it still required for safety, or legal safeguards, or other policy rules - and challenging the rules if they don't make sense for today's world. One unit found out they could save 5,000 hours per year by just changing where the entry point was on their parking ramp. That means 5,000 hours more spent on their jets. Another unit has succeeded in reordering how inspections are done so they only open jets up twice instead of four times to get things done, and that gets us 15 days more flying on each of their jets. There are countless examples out there of innovative thinking. So I encourage you all to get that big roll of wrapping paper, a basket-full of yellow-stickies, get your process buddies together and start sticking the steps on the paper. I think you'll be amazed at what you find out. Here are some things to consider as you do it: if the customer knew you were doing all the things you do to their product, would they want to pay for all of those things (a good judgment of value-added)? If not, why are you doing them? If the product is waiting for something or someone, why? If one of the steps is "inspecting," see how many times the inspector finds something. Can you design that fault out? Or, if the fault doesn't rise to the level of "fatal," can we accept the consequences, and skip "wasting time" looking for it? And by the way, it helps to have a couple of folks on your team who know nothing about the process. They can ask those embarrassing, "Why do you do that, and why do you put that there?" questions that you're too close to the process to see.

Remember, the output is mission accomplishment. "Faster, better, cheaper" is the filter for our measures of merit. If we can accomplish the mission faster, maybe we can reduce our shift time, or maybe we will have more capability available without more equipment. If we can do it better, maybe it will last longer and we will save on repair or rework time. If we can do it cheaper, maybe we can take that money and fix something that takes money to fix. In any case, we're looking for ways to do the right things in the right way.

My challenge is to take all of your good ideas and institutionalize them across Air Combat Command. My vision is that if you are doing this better than anyone in the Air Force, why, in this plug and play force, isn't everyone using your process and why isn't it the standard? Part of my job is to insure that we don't have a dozen units re-inventing the same wheel but coming up with different rims and tires. Our intent is to take shiny new efficient processes, institutionalize them across the command, and move on to other processes. That will also include all of those IG "Best Seen To Dates," and "Benchmark Programs" to jump-start improved process work. I'm the project officer on this, and Maj. Gen. Kenneth DeCuir, the ACC Vice commander, is our champion. We're in the midst of standing up analytical experts in ACC/A-9 to be able to help you set up your first few reviews if you need help, or show you how you can use data to ensure your process is in control and staying fixed. Plug in with them as you have questions. To get started though, I need you to pull out the paper, the stickies, and your ideas on how to put our processes together faster, cheaper, and better - and make them last. Keep asking, "What if?" and keep your ideas coming.

By Gen. Ronald E. Keys
Air Combat Command commander

MYSTIC, Conn., July 18 /PRNewswire/ -- "Talent Wars" and "Brain Drain"
are not the latest must-see horror movies due out this summer -- rather,
they are emerging crises that could play out to frightening results for
businesses in the coming decade. According to The Avery Point Group, a
leading national executive search firm, U.S. business leaders might want to
sit up and take notice.

As 77 million U.S. Baby Boomers begin to retire over the next decade,
there are only 46 million Gen-X'ers available to backfill the Boomers'
retiring ranks. Even with a modest two percent economic growth rate over
the next 15 years, demand for critical talent could increase by as much as
a third, creating a "war" for critical talent. For some companies the
crisis may be even more immediate. One recent study of the nation's 500
largest companies reported that they expect to lose half of their senior
management over the next five years. Additional studies suggest that up to
85 percent of major companies surveyed have no formal program or process in
place to deal with this impending crisis.

In the past few years companies have been so transfixed on downsizing
to contain costs that they have largely neglected this looming threat to
their competitiveness. "There is no doubt that over the next decade or so,
demand for talent will ebb and flow with the economy, and there is no
denying the demographic shift that will take place in the coming decade,"
says Tim Noble, managing principal of The Avery Point Group. "Too many
companies continue to drive their human resource processes blindly,
assuming the road ahead has not changed. These companies will be in for a
rude awakening when they are unable to achieve even the most modest of
business goals due to drastic staffing and talent shortfalls."

A less visible but no less dangerous problem is the loss of knowledge,
or "brain drain," resulting from senior workers departing the organization
without passing on their expertise to others. This lack of knowledge
management will place many companies in a position to repeat prior mistakes
and expose businesses to additional financial and operational risks. Worse
yet, if no action is taken, some organizations could be headed for a point
of no return with the complete loss of process knowledge in a few years.

Companies that rely solely on a strategy of outsourcing as a potential
solution may be in for a shock as well, as existing sources of talent from
offshore labor pools, such as India, Mexico and China, dry up as these
countries recognize their own needs and provide incentives to retain talent
in order to support their own local economic business objectives.

Given this looming demographic shift, the time for corporate leaders to
act is now; however, companies must resist the urge to rush ahead without a
well-balanced and deliberate approach to managing and leveraging their
human capital. Part of the solution may lie with such tools as Six Sigma
and Lean. With their focus on process discipline, variation reduction and
waste elimination, these tools are well-suited to help companies address
this impending crisis.

Six Sigma has long been utilized by organizations to transform
manufacturing and transactional processes from art to science by defining
and validating key process variables to gain process control and eliminate
variation. A key part of this methodology is the capture, transfer and
validation of knowledge from process owners, thus making Six Sigma an
essential part of any action plan to deal with the dangers of
organizational "brain drain." "Companies need to not only view Six Sigma as
a tool to drive productivity and service, but also as an essential
methodology for critical knowledge management within their organizations,"
says Noble. "Six Sigma has a built-in tool set that lends itself very
nicely to capturing and validating critical process knowledge that may
otherwise be lost when key talent departs an organization."

The Lean tool kit can also play an important role in aiding
organizations as they deal with this imminent crisis. Lean has a built-in
methodology with such tools as "value-stream-mapping" and "standardized
work" that can help organizations identify and eliminate non-value-added
processes that waste human capital. "Lean, with its focus on waste
elimination, is ideal for helping organizations to free up human capital
for redeployment," says Noble. "However, Lean will need to move beyond its
stereotype as a tool set for only manufacturing and be accepted and applied
to transactional processes in order to be an effective tool to mitigate the
effects of this impending crisis."

Six Sigma and Lean are only part of the potential solution, providing a
proven set of tools that can be part of a broader business talent
management strategy. Business leaders will first need to recognize that the
short-term solutions of the past will not work and accept that the
landscape for talent management will dramatically change, requiring a more
balanced and comprehensive solution in order to remain competitive in the
coming decades.

By Beth Reece

WASHINGTON (Army News Service, July 20, 2006) – As commanders throughout the Army look for ways to cut operating costs, business practices of Lean Six Sigma are reducing expenses and improving productivity throughout manufacturing, contracting, administrative services and even recruiting.

“People will say: we’re in the army; we’re not a business,” said Col. Mike Petrash, deputy commander for the 96th Regional Readiness Command in Utah. “I would counter that and say every time we do a transaction, every time we promote a Soldier, pay a Soldier, supply a Soldier or move that Soldier from point A to point B, that is a business transaction.”

Lean Six Sigma is a combination of two business-improvement systems, Lean and Six Sigma. Lean refers to the reduction of waste, or the elimination of unnecessary steps to increase speed and productivity. Six Sigma is the reduction of variance to improve system performance. Together, they free up resources and help ensure quality equipment and services are quickly provided to Soldiers.

Strides made through LSS practices may best be seen on manufacturing and repair floors such as at Red River Army Depot, Texas.

“We’re getting tremendous payback because of Lean Six Sigma .We saved, last year alone, $30 million on our Humvee line,” said Col. Douglas J. Evans, depot commander. “It’s not only in dollars but also in the number of vehicles that we can get to the Soldiers who need them.”

The facility can now turn out 32 mission-ready Humvees a day, compared to 3 a week in 2004.

LSS is also reforming administrative services and human resources.

“When our team took a look at awards processing, we found that on average it was taking 90 days from when we got a request for an award in to when the award was published. By taking a look at our process and reducing our cycle time, we’ve been able to reduce that to 21 days,” said Col. Lori M. Dupuis, chief of staff for the 96th Regional Readiness Command in Utah.

In charge of nearly 6,500 Soldiers in 65 units throughout six states, the 96th RRC has used Lean Six Sigma to also reduce the deployment preparation time for a battle-rostered unit from 30 days down to just three.

“Using the Lean Six Sigma approach, we went directly from defining the process to improving it,” said Petrash.

At the U.S. Army Recruiting Command, Lean Six Sigma has improved the LEADS system, through which recruiters receive prospective recruits and direct them through the enlistment process.

Of 32 steps taken to recruit new enlistees, subject matter experts from the Recruiting and Accessions Command determined that only 11 were value added. And by reducing the steps by 66 percent, USAREC officials also decreased by 40 percent the time it takes to get applicants through the process.

“We had the immediate return on the investment, which was to cut time and put people in the schools quicker. We were able to eliminate a lot of waste,” said Chief Warrant Officer 4 Jack Bailey, chief of USAREC’s Special Missions Recruiting Division.

“But it’s the intangibles, the impact it had on the Soldier in the field that was more customer centric. The benefit was so much more than what we realized inside our four walls. It was just a huge success story,” Bailey said.

Where Lean Six Sigma has been implemented, it’s been successful, said Mike Kirby, deputy undersecretary of the Army for business transformation.

“This is all in a backdrop of severe fiscal-year constraints, so we have to do business differently,” said Kirby.

“Lean Six Sigma is a lot different from the programs we tried to implement before. It gives give you a set of tools that even the most inexperienced person can use,” said George E. Kunkle III, process optimization manager at Corpus Christi Army Depot, Texas. “Initial response to Lean Six Sigma may be resistance, but it only takes one event for people to see right away that this is the right direction.”

At Kunke’s depot, employees decreased the time it took to rebuild the UH-60 Blackhawk from 256 days to an average of 70.

“Lean was the vehicle that we needed,” said Clarence L. Dean, chief of UH-60 Blackhawk Assembly Branch #2. “It helped us to really sit down and think about how we do our job.”

During fiscal 2005, the Army Material Command saw $110 million in savings and cost avoidance by implementing Lean Six Sigma practices. By removing waste and better controlling output, for example, Letterkenny Army Depot, Pa., reduced costs by $11.9 million in Patriot air defense missile system recapitalization. And Pine Bluff Arsenal, Ark., reduced repair cycle time by 90 percent and increased its production of M-40 protective masks by 50 percent.

“We are turning things around faster for the warfighter,” said Gen. Benjamin Griffin, commanding general of Army Material Command. “This is showing significant savings and improvement wherever it has been implemented.”

But using Lean Six Sigma principles to redefine principles and improve speed, quality and cost requires the collaboration of both management and employees.

“The workers have to be enfranchised, because they understand the processes. We have to solicit their input on how to make their processes more lean and more efficient,” said Kirby.

Marc Higgs, process improvement specialist at Red River Army Depot, used his experience and knowledge to influence how Lean Six Sigma practices would create improvements at the depot.

“Lean Six Sigma is good for the Soldier, it’s good for the employee, it’s good for Red River Army Depot, it’s good for the Army,” he said.

In a dramatic experiment, the army is remaking itself using theories perfected by business. Can Lean Six Sigma build a better, faster force?
By SALLY B. DONNELLY

Colonel Douglas Evans sits in his modest office at Red River Army Depot, tracking the dozens of war-battered humvees from Iraq that arrive every week to be repaired. Spread across 36,000 acres in Texarkana, Texas, the World War II--era Red River facility is one of the Army's oldest and most important maintenance and storage bases. But Evans, a 24-year Army vet with combat tours in the Balkans and Iraq, says what soldiers need to understand these days is not only bombs and bullets but also diapers.

Changing babies, Evans tells everyone at Red River, is the best model for thinking about how the facility can best help the Army. The faster you can fix a beat-up humvee, the sooner you can get it back into the fight. "You have to be organized," says Evans, who has an M.B.A. from Babson College. "You can't put the baby one place, the wipes another, the baby powder still another. If you fail to streamline the process, you might never get that clean diaper on. It's all about eliminating the 'waste' in the process." He smiles at his play on words.

Evans is the tip of the spear on what may be the most ambitious business effort in the 231-year history of the U.S. Army: an attempt to adopt a management theory, Lean Six Sigma, across the entire service. More comprehensive than the attempt in the 1960s by Defense Secretary Robert McNamara to introduce the highly quantitative "system analysis" to the Pentagon, this is an enormous experiment: the Army has an annual budget of $160 billion, with 1.1 million men and women in uniform, and it employs an additional 230,000 civilians. "This is the largest deployment of management science since the beginning of the discipline," says Mike Kirby, who holds the newly created position of deputy under secretary of the Army for business transformation.

Why shake up the Army now, in the midst of a difficult war? The U.S. defense budget has increased some 40% since 2001, to almost half a trillion dollars, but military experts expect the funding to slow. Secretary of the Army Francis Harvey, who signed the order last March to implement the effort, says the need for it is obvious: "We need to free up resources so we can apply them to the operating side of the Army. We need to equip our soldiers better and faster." Optimistic projections claim the Army could be saving billions of dollars each year in a decade.

The two concepts of Lean and Six Sigma have been around the private sector for decades, and some parts of the Army have been using them since 2002. Lean is an outgrowth of the Toyota production system, developed in the 1930s, which focuses on increasing efficiency and reducing cycle time by eliminating waste. Six Sigma was first used on a wide scale by Motorola in the 1980s as an approach to improving quality through statistical measurements and benchmarking, Evans explains. Six Sigma entered the U.S. business lexicon in a big way in the 1990s when CEO Jack Welch embraced it at General Electric.

Today on the bookshelves of nearly every Army office in the Pentagon, alongside military-history tomes, sits a stack of business books that try to decipher what Lean Six Sigma means. Harvey, the spiritual godfather of the Army's transformation, tries to cut through the jargon. "We used to call it 'quality and productivity improvement' or 'total quality management,'" says Harvey, who worked for Westinghouse for nearly three decades. "The bottom line is, you take the extra steps out of the system, and improvement should be ongoing and forever."

While Lean and Six Sigma have traditionally been applied to manufacturing, the Army is using them in administrative offices as well. Last year for the first time, Harvey began requiring precise monthly figures on how many employees the service had. Then he gave commanders the responsibility of scrutinizing every new hire. Largely through attrition, the Army recorded a mere 2.6% increase in civilian employees in 2005. And Harvey did his part: his office now has 30% fewer than when he took the job in 2004.

His officers are doing the same. General Ben Griffin, the head of Army Matériel Command--the service's central procurement organization for equipment--has dramatically cut the number of meetings, reports and briefings. He installed seven senior officers around the world, in part to track progress on Lean Six Sigma, and gets Army-wide operational updates every week by videoconference rather than in-person meetings. Griffin says his command alone saved $110 million last year, and military sources expect that to be doubled this year.

But it is on shop floors like Red River's where the changes are starting to show the most impressive results. Worn-out humvees used to be brought into a poorly lit, dirty and disorganized loading bay; now the vehicles move through a bright, gleaming shop floor--with American flags draped from the ceiling--in an assembly-line method, complete with a horn that blares every 23 min. to signal a move to a new station. Workers called waterspiders (named for the bugs that flit across the top of ponds) scurry back and forth to fetch tools and equipment for higher-skilled mechanics, who stay close to the humvees. Evans tracks the slightest delays. When an employee missed work for a family emergency last December and slowed the entire line, Evans realized that he had not cross-trained enough workers to fill in. Now he has at least one backup for every critical spot. Red River is also stocking more parts and requiring better quality from suppliers. The changes are paying off: the facility can turn out 32 mission-ready humvees a day, compared with three a week in 2004; the Lean process has lowered the cost of repair for one vehicle from $89,000 to $48,000.

And employees are part of the equation. At Red River, for example, broken vehicle hub gears used to be carted off to an area where several mechanics worked on them at three different tables. Workers came up with the idea of building one long table with an oval track on it that could slide the parts smoothly and quickly to each of the mechanics, whose tools were within easy reach. Evans is also taking some employees on site visits to efficient private-sector plants, like the British company BAE Systems' facility in York, Pa., where Bradley Fighting Vehicles are built. John Moore, a Bradley repair manager who has worked at Red River for 30 years, says he was skeptical of the new management regime at first. "I thought it was just going to put me out of a job," Moore says. "But I've turned around 180 degrees--I can see what an efficient shop can do."

Other Army facilities have seen similar results. Arkansas' Pine Bluff Arsenal reduced repair recycle time 90% and increased its production rate 50% on M-40 protective gas masks. Letterkenny Army Depot in Pennsylvania has saved $11.9 million in the cost of building the Patriot air-defense missile system.

In many cases, the Army is turning to the private sector for help. The service lets 200,000 contracts each year, and some companies, like Honeywell, Northrop Grumman and BAE Systems, work hand in hand with Army staff on the factory floor. At Red River, for example, BAE spent thousands of dollars for new equipment and physical improvements to the plant. The company has also posted an on-site representative at Red River to oversee repair work on transmissions for BAE's Bradley. Working together, the BAE--Red River team increased output from 1.5 to 4 units per shift. In many Army facilities, the physical work, or "touch labor," is done by military staff, "but the crucial technical support is private industry," says Griffin of the Army Matériel Command. There are more than 300 such partnerships throughout the Army, and Griffin says they accounted for $225 million in cost savings last year alone.

But two large questions loom over the Army's efforts: Is Lean Six Sigma just a management fad? And can a system designed to maximize profits and market share work in an enterprise whose goal is national security? Says an analyst who studies government procurement: "How is the Army going to judge success? Cutting people or saving money is useful, but the challenge will be making sure all the changes are not only relevant to the soldier in the field but that there aren't negative impacts for war fighting." Some outside experts have also raised doubts about the Army's ability to systematically track processes in minute detail as Six Sigma requires.

Even advocates of the Army effort recognize the challenge. Employees at all levels must adopt a new work ethic, learn new systems and often work harder, with no immediate rewards. At Red River, Evans asked his 300 supervisors to volunteer for intensive Lean Six Sigma training but felt that not enough embraced it, so last month he required attendance. "Ninety-nine percent of my folks are onboard, but a few have said they will retire rather than adopt the concept of Lean Six Sigma," Evans says.

Of course, what works in a humvee repair shop may not translate to an air-conditioned cubicle. "While cost savings are easier to achieve and see in a production facility, how do we measure success in the legal department?" asks Ron Davis, a civilian executive at the Army Matériel Command. "We can't use 'cases lost.' But we could look at speeding up how long it takes to produce a paper. Or how we might be able to get a recruit into the system faster."

For Evans, the Army's efforts are much more than a business-school exercise. "This is not only an economic transformation but a huge cultural change," he says. In the corner of every office at Red River, and on all the shop floors, stands a black cutout figure of a soldier with a helmet and rifle at the ready as a constant reminder of who the customer is and that the smallest errors can have the most serious consequences on the battlefield. A sign affixed to the front of the silhouette soldier says, WE BUILD IT AS IF OUR LIVES DEPEND ON IT. THEIRS DO!

Electronics companies have used Lean Six to trim down, but can it help them pump up?

By Tam Harbert -- Electronic Business, 6/1/2006

In the depths of the dot-com bust of 2001, the high-tech industry went on a diet—cutting costs, downsizing, scaling back. There were many different types of diets, but some electronics companies embraced a particular approach called Lean Six Sigma as their salvation.

Lean Six is much more than a diet, proponents say. Rather, it is a prescription for regaining business health and transforming a company, a way to cut waste from its operations and of increasing productivity and improving quality.

ELECTRONIC BUSINESS interviewed four electronics companies in various phases of deploying Lean Six: Celestica, ON Semiconductor, Solectron and Xerox. Without exception, each company is healthier now than it was five years ago. Three of them have turned profitable, and the fourth—Celestica—is close to turning the corner (see table, page 41). The question is how much credit for their progress goes to Lean Six. Most of the companies claim that their improved business results are a direct result of Lean Six, and they are looking to increase those results by applying Lean Six beyond their manufacturing divisions and even beyond their companies to customers and suppliers. And the evidence appears to strongly support the claim.

A merging of trends
Lean Six is a blend of two methodologies. In general, the lean approach focuses on eliminating all types of waste, including overproduction, waiting time, transportation, processing, inventory, motion and scrap. Originally developed by Toyota in the 1980s, lean improves quality and reduces production time and cost. Six Sigma—pioneered by Motorola in the 1980s—is a set of tools that use statistical analysis to identify and eliminate defects. General Electric was one of the first companies to blend the two approaches and is credited for popularizing the mix.

With their own jargon and complex frameworks, each methodology alone is hard to understand (see "Lean Six Sigma lingo," page 40). Put them together and add each company's own unique recipe, and identifying the exact ingredients is next to impossible. However, a typical implementation begins with mapping the value stream, which means listing how each process or operation is performed, step by step. Once the value stream is mapped, each step is evaluated. If it adds value—meaning that it's something the customer would pay for—it's kept. If it does not add value, the goal is to eliminate it.

Perhaps because they consider it such a competitive advantage, most companies won't say exactly how much they've spent or saved, making any return-on-investment calculations difficult. Xerox uses an internal measure called "economic profit," which is project value minus cost, says Bob Shea, communications manager for corporate Lean Six Sigma. Those internal figures (which Xerox doesn't release) are then rolled into the company's overall financial numbers.

"We don't try to separate out the monetary gain we get with Lean Six, because it's incorporated into the management process," says Arthur C. Fornari, vice president and corporate deployment officer for Xerox Lean Six Sigma.

Nevertheless, Lean Six projects have contributed hundreds of millions of dollars in cost savings, cost avoidance and revenue to Xerox, says Shea.

Solectron also declines to cite numbers, other than to point to its bottom line as proof of Lean Six's benefits.

"Three years ago, we had 16 quarters of losses, but we now have nine quarters of gain behind us," says Marc Onetto, Solectron's executive vice president, worldwide operations. "There are many other factors, but Lean Six Sigma is a big contributor."


Arthur C. Fornari, vice president and corporate deployment officer, Xerox Lean Six Sigma

Typically a company can get a tenfold return on investment within two years after implementing Lean Six, says Bill Kastle, a senior vice president at George Group, a Lean Six consulting firm that counts ON Semiconductor, Solectron and Xerox among its clients.

Savings fall into the three categories to which Xerox refers. Type 1 is hard dollar savings, which are directly measurable. Type 2 is cost-avoidance savings—expenses the company did not incur, because of fewer process steps and/or increased productivity. Type 3, the most difficult to measure, is growth in revenue that results from process improvement such as shorter lead times.

Manufacturing and beyond
The most obvious and usually the first application of Lean Six is manufacturing, where workers are comfortable using metrics and results are easily measured. "We recommend that companies initially target their Lean Six projects at Type 1 savings," says Kastle. "No one will debate those savings, and you'll gain the confidence of the organization."

One easy-to-understand manufacturing application of Lean reduces the number of steps workers must take to accomplish a particular task. The Lean Six team follows a worker, tracing the exact steps the worker walks, which often results in a "spaghetti chart," says Onetto. Working from there, the team and factory workers start rearranging things such as bins of components to straighten out the spaghetti, creating a more efficient path for workers.

Although companies tend to shield overall ROI figures, most of them can easily point to specific, dramatic improvements in manufacturing operations. For example, Celestica cites a string of improvements at its Monterrey, Mexico, plant. Over the course of 18 months, workers reduced equipment setup time by 85 percent, shortened time between receiving an order and shipping it by 71 percent, reduced floor space used by 34 percent, reduced consumables by 25 percent, reduced scrap by 66 percent and reduced the investment in surface-mount technology (SMT) lines by 49 percent.

Lean Six experts tend to eat, sleep and breathe this type of approach. Dave Cooper, vice president of supply chain solutions at Solectron, has rearranged all his clothes at home to improve his system for getting dressed, he notes.

"I can get dressed within fewer than eight feet," he boasts.

The staff at Solectron's Guadalahara, Mexico, plant also applied Lean Six to wardrobes, specifically to the process of providing uniforms and electrostatic shoes to factory workers. By limiting the number of available sizes to four, they reduced the time it takes to assign them to workers by 70 percent.

"We had something like 25 sizes of shoes," says Onetto. "We could have employed a dwarf and a giant."

Indeed, Lean Six can be contagious in many respects. Some companies are finding that Lean Six is spreading organically from manufacturing operations to other areas of the company.



"People start seeing the results and want to apply it to their own processes," says Robert Hemmant, global lean architect at Celestica, which adopted Lean Six in 2001. "We see that as we improve manufacturing, a lot of other processes will need to change; otherwise, they'll limit the rate of improvement." The company has Lean Six projects in human resources, finance and purchasing, he says.

ON Semiconductor is using Lean Six on a more limited scale but nevertheless is experimenting in areas besides manufacturing. About a year ago, the company started training 24 people to be Lean Six "black belts" —12 in manufacturing and 12 in other areas of the company, says John Mallon, director of supply chain management at ON Semiconductor. Among the nonmanufacturing projects is one involving forecasting.

By applying Lean Six, ON Semiconductor is identifying places in its communications process where information gets lost, Mallon says. The company is still debating the merits of using Lean Six throughout the corporation. "We want to deploy some projects and see what results we get," says Mallon.

Companies that apply the discipline across the entire corporation stand to net the greatest benefits from Lean Six, contends Kastle. "If a company wants to do this in just one area, it is going to leave some 70 percent of the savings on the table," he says.

Achieving maximum benefit is the hope at Xerox, which has applied Lean Six across the entire company all at once, says Fornari. Starting in early 2003, Fornari was charged with incorporating Lean Six into every function in the company. He appointed 33 Lean Six Sigma "champions," each responsible for deployment in their respective areas. The company now has about 633 black belts and master black belts, 3,500 green belts (an intermediate level) and 30,000 yellow belts (a basic level) out of 55,200 employees.

Revenue stalled
And yet Xerox has not been able to parlay this commitment into growth in its revenue, which has remained stuck at $15.7 billion for the last three years. Likewise for the other Lean Six proponents: They may have cut enough waste from their operations to reduce their costs, but they aren't seeing revenue growth yet.

The next step for Xerox is to leverage Lean Six as a platform for services. The company is beginning to show customers how to apply Lean Six to improve their business operations.

One example is how Xerox helped the Monroe County, New York, sheriff's office improve its accident-report-filing system. Xerox studied the path of those accident reports and designed an electronic system in which an officer would scan a driver's license and registration, after which report forms would be automatically populated with the data.

In the case of the sheriff's office, Xerox did not charge for its consulting services, but it is charging customers today. "The great thing is that you're cleaning your own company's processes and you can do it for your customers, too," says Fornari.

Such techniques come directly out of the playbook of Lean Six pioneer GE, says Kastle. Working directly with a customer at its own facility gives a company an ideal way to see customer problems firsthand and then design a solution to sell to it, he notes.

Indeed, Solectron is following this path with its Supply Chain Solutions (SCS) group, which works with customers to improve their operational model through Lean Six Sigma, according to Cooper. (This isn't surprising, because Onetto and at least one other Lean Six executive at Solectron—Ravi S. Ramanan, vice president of functional excellence, hail from GE Medical Systems.) In one case, SCS helped a customer reduce order delivery time from 12 to six weeks, Cooper says, with a target of further reducing it to two weeks.

"Supply Chain Solutions is not a profit center, but it certainly is garnering more business for Solectron," says Cooper. "We're helping customers change the way they compete in the marketplace. When their business goes up, our revenues go up."

That's the goal, anyway. Solectron's 2005 revenue fell by $1 billion, but sales for the first half of 2006 were running about 2 percent higher than in 2005.Do you have a "lean" story to share? Send your comments to feedback@eb.reedbusiness.com.

Tam Harbert is a freelance journalist specializing in technology and business.


Lean Six Sigma lingo
Six Sigma: A means of progressively improving operational performance through process and design optimization. The term specifically refers to a quality standard equivalent to 3.4 defects per million opportunities

Master black belts: Black belts who consistently deliver high performance. They lead complex projects and deliver internal training and mentoring.

Black belts: Team members who have implemented at least one project and have demonstrated mastery of Six Sigma methods and tools.

Green belts: Team members trained in basic Six Sigma techniques who support black belt projects or run their own.

Yellow belts: Team members with basic Six Sigma training.

DMAIC: Abbreviation for a framework for improving processes. The steps are define, measure, analyze, improve and control.

DMEDI: Abbreviation for a framework for creating and optimizing new processes. The steps are define, measure, explore, develop and implement.

Jidoka: A quality control process that involves stopping the manufacturing line when a defect or abnormality is detected.

Kaizen: Japanese for continuous improvement.

Kanban: Used in a "pull" system of manufacturing precisely driven by demand, as opposed to the traditional "push" manufacturing philosophy, in which inventories can pile up. A Kanban is a bin or container that can hold only the amount needed by the customer.