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Battle Ready

Revolutionizing major weapon system production for a major global aerospace and Defense Company


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Abstract

When this aerospace and defense company landed a major military contract, it needed to develop a global production model to deliver the weapon system faster, and more efficiently. Deloitte helped the company in its efforts to find a way to increase throughput by a factor of 20 in less than four years and potentially generate billions of dollars in benefits. These improvements were crucial for the company to meet its customer's targets for affordability, quality and schedule.

The Challenge

Every manufacturer wrestles with challenges of production scale. When your product is one of the most advanced weapon systems in the world, and you've committed to delivering up to 20 times more of them than you do today, the challenges are amplified significantly.

Scale was just one of the obstacles facing this global aerospace and defense company. While the company had plenty of experience managing complex supply chains, it had infrequently faced the level of complexity and risk introduced by this program, with so many suppliers spread around the world. Success required moving from a push model to a pull operating model in order to address problems ranging from lack of visibility and frequent parts shortages to long lead times and excessive inventory.

The company realized that tweaking its existing model was not the answer. It needed to rethink its production approach from strategy through execution.

How We Helped

Working side by side with executives, suppliers and production team members, we helped them develop a pilot program to demonstrate it was possible to build one weapon system per day. The success of this pilot provided the momentum necessary to extend the improvement efforts throughout the entire production system. Deloitte continues to provide technical assistance and implementation support in some of the most complex operational areas. To make the transition, the company is in the process of transforming its production and supply chain practices, developing a next-generation workforce and leadership team, and overhauling its information infrastructure.

Deloitte helped the company define the overall production system, the governance needed to make it work, and a detailed implementation roadmap for managing the transition to full-rate production. This required a range of capabilities from strategy, technology and human capital. Our industry knowledge, deep experience in supply chain transformation and manufacturing and global reach were important factors in our ability to support this project. As a production system leader at this major A&D company said, “Deloitte is different from other consulting firms because they roll up their sleeves and make things happen.”

Here are a few major activities completed to date:

Development of the Production System. We helped the company define the capabilities for the overall production system. Specific activities were to:

  • Develop the future-state operating model
  • Create a plan for implementing the production architecture, including leadership alignment
  • Define the governance structure required to manage the transition to the new production model
  • Institute risk management, decision tracking and other management processes
  • Implement information management tools and processes to help ensure that everyone — suppliers included — is working with the same accurate information

Manufacturing and Warehouse Operations. The company needed to dramatically improve production speed by improving plant and warehouse operations. Specific activities were to:

  • Assess the efficiency of production and warehouse operations
  • Reconfigure and drive lean transformation in the major production areas
  • Demonstrate capabilities when operating at full-rate production
  • Develop a warehouse operations strategy and establish warehouse flow centers
  • Transition from a push model to a consumption-based replenishment model
  • Use an ERP implementation to drive plant and warehouse capabilities

Supply Chain Improvement. This program relied on hundreds of suppliers around the world. Improving collaboration and integration with these suppliers was a must. Specific activities were to:

  • Establish a collaboration strategy and prioritize key global suppliers
  • Extend plant and warehouse lean transformation concepts into the supply base Develop a repeatable process playbook to guide execution of efforts across the supply base
  • Conduct supply chain integration engagements with more than 20 major suppliers
  • Evaluate supplier constraints and recommend how to achieve full-rate production targets
  • Integrate suppliers into the consumption-based replenishment model by linking material requirements on the plant floor to supplier replenishment signals
  • Use an ERP implementation to drive supplier capabilities and improve integration
  • Implement supply chain integration improvements to capture benefits

Human Capital Development. Establishing a new production system will require the entire production team to evolve to meet new challenges. We continue to help this company in its efforts to develop the workforce it needs to deliver the weapons system, while still meeting aggressive scheduling and quality milestones well into the future. Some of the areas where we're helping now include:

  • Organization and job design
  • Workforce planning
  • Leadership development
  • Recruitment
  • Employee engagement
  • Performance management

Solution

With our broad pilot program as a model, this company is moving forward with an aggressive transformation plan supporting the goal of producing one weapon system per day. Just as important, the new production system is designed to meet key requirements for affordability, quality and safety. Results across multiple production areas consistently show 40-60 percent productivity improvements. Improvements based on the new production system alone are projected to generate hundreds of millions dollars' worth of benefits. Overall, the company is looking to save billions over the life of the program. Identified supply chain improvements will help slash lead times and required warehouse space by an average of 90 percent, cut inventory levels by 60 percent and trim direct labor costs by enhancing the value-added services from suppliers. The resulting supply chain will include supply and production of components and major sub-assembly from a number of countries, with final assembly done in the U.S. and Europe.

Also, the project helped remove deeply entrenched cultural barriers that had been standing in the way of success. Many employees and managers had worked on similar projects for years or decades and were resistant to change. A unionized environment only added to this challenge. Our project approach helped the company engage key stakeholders from the start, include them in strategy development and share the results so everyone was working from the same playbook. An emphasis on knowledge transfer helped position the company to sustain the project's success for years to come.

This project is revolutionizing the way complex weapon systems are built. It has generated production innovations relevant for manufacturers in other industries with highly engineered products.

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