A roadmap to greater efficiency in aerospace operations through the application of Six Sigma and lean manufacturing techniques

Citation

Fitzpatrick, D. and Looney, M. (2003), "A roadmap to greater efficiency in aerospace operations through the application of Six Sigma and lean manufacturing techniques", Aircraft Engineering and Aerospace Technology, Vol. 75 No. 3. https://doi.org/10.1108/aeat.2003.12775caf.002

A roadmap to greater efficiency in aerospace operations through the application of Six Sigma and lean manufacturing techniques

The aerospace industry is facing several challenges which have been brought to the fore by recent news developments. The UK's Ministry of Defence (MoD) announced in February 2003, its decision to share¸ out the £3bn contract for two new aircraft carriers between BAE and Thales. The "split" contract means the British and the French will have to collaborate on the $15 billion programme and develop a close working partnership.

This news was closely followed by a call from British Prime Minister Tony Blair and French President Jaques Chirac for the establishment of a new agency to coordinate defence acquisitions. The aim is to match "the aspirations that we have in European defence with capability and efficient procurement". Blair went on to describe the collaboration between Thales and BAE as "an important step" providing "much hope for the future". But what will increased co-operation on programmes mean for the aerospace industry?

As cross-border collaboration and operations are encouraged on a political level, industry participants need to improve productivity and strengthen operational performance in order to look attractive to potential foreign partners. Ultimately those who make their business more effective through the application of improvement programmes and processes will weather the storm and reap the benefits.

Industrial collaboration in the aerospace industry requires close operational co-operation and more specifically synchronisation across activity cycles and training. The use of improvement programmes which originate from the world of manufacturing such as Six Sigma and lean processes can help organisations in these types of situations achieve harmonisation and effective processes.

What are Six Sigma and lean?

Six Sigma and lean manufacturing are verified improvement techniques that have helped aerospace organisations to improve capability, increase shareholder value, achieve on-time delivery, reduce costs and compete for contracts. These methods and the philosophy behind them are widely endorsed by major aerospace players including Honeywell, Northrop Grumman, certain components of BAE systems and EADS, Boeing and Lockheed Martin.

But where did these techniques originate and what can they offer the aerospace industry? Lean manufacturing minimises resources employed while maximising the creation and flow of value through operations to customers. Simply putting a lean approach is about making products right on the first pass with the least resources, in the shortest time, with the least waste to ensure there is no surplus drain on resources. Six Sigma is a finite set of problem solving tools and techniques to measure costs, quality, process speed and invested capital. It uses measurement to identify wastage and defects to drive process improvement.

The combination of lean and Six Sigma works well because lean on its own does not typically bring statistical control to operational processes. Equally Six Sigma cannot dramatically improve velocity of processes. These methods both compliment and reinforce each other to help impact the bottom line. Bringing the two together creates a powerful vehicle for value creation.

More broadly, Six Sigma and lean approaches are about getting things right first time and doing them as effectively as possible. It encourages companies to look for flaws and attack the problem head-on. Instead of simply plugging a leak, it involves attacking the problem at its source. Re-working or re-designing operational processes to be as flawless as possible is pivotal to achieving quality with minimum resources. Improvements in these areas usually represent dramatic cost savings that can help to retain customers, capture new markets and build a strong reputation.

The history of Six Sigma and lean – lessons learned from the automotive and electronics industries

The Six Sigma approach was born out of Edward Deming's work with Japanese automotive companies between the 1950s and 1970s. With a background in statistics, his work strongly influenced strategies of analysing the variations of the processes that resulted in world-class production. Measurement of variations was an indicator of how well the process performed and this was represented, in terms of standard deviations, by the Greek symbol Sigma. Measuring processes against an ideal using a problem solving tool kit created an objective for Japanese companies to strive for operational perfection.

In the 1990s an engineer at Motorola, Mikel Harry, began working with Deming's concept of variation and took it a step further. Mikel encouraged his organisation to study variation as a way of improving performance. He made statistical process control and design of experiments practical quality tools. The Six Sigma approach became the focal point of Motorola's quality effort. Bob Glavin, Motorola's CEO introduced Six Sigma as a way of doing business in everything that they did. As a result, Motorola achieved between 1987 and 1994 reduced in-process defect levels by a factor of 200, reduced manufacturing costs by $1.4 billion, and increased shareholder value fourfold.

Similar success stories are well documented throughout the 1990s. Particular examples of note include: AlliedSignal who between 1992 and 1996 achieved $1.4 billion cost savings, 520 per cent share growth and reduced new product introduction time by 16 per cent. Also Jack Welch, CEO at GE claimed that Six Sigma saved the company more than $2 billion.

Lean manufacturing on the other hand emerged from the efforts of Taiichi Ohno. At Toyota, after the Second World War, Ohno began to develop the set of industrial practices on which the Toyota production system is based. Toyota applied the concept of lean to all processes and placed emphasis on increasing the velocity of processes that produced an alternative method of manufacturing. Integration of different production systems as a whole, allowed the Japanese to steal a march in the automotive industry. Meanwhile much of the western world affected by the oil crisis, increasingly looked to Toyota and their lean enterprise for inspiration.

Why apply lean and Six Sigma to aerospace manufacturing?

The underlying issues eroding profit in aerospace are industry wide and associated with historic pressures. On the commercial side of jet travel over the past few decades revenue per available-seat-mile has decreased. Capacity for air travel has grown tremendously. Fierce competition and de-regulation around the world has concentrated the pressure. In this environment, each aerospace manufacturer needs to continually increase productivity and reduce costs in order to be competitive. Boeing and Airbus have become formidable competitors. With 50 per cent marketshare each the race around every sale is fierce.

Fewer key industry players following the flurry of mergers results in fewer organisations chasing contracts. Acquisitions and mergers often proliferate complicated operational processes. Many aerospace companies have production systems that are accrued as a result of decades of decisions to organise and expand operations. A rigorous understanding and approach to ameliorating structural and operational inefficiencies is essential.

On the military side, the pressures are different however. The focus is on developing sophisticated aircraft with more capability. Increasing cost pressures, decrease in defence spend coupled with the high-unit price of the aircraft will mean less aircrafts are made. The key differentiator for industry players lies in driving process innovation and efficiency gains while eliminating excess resources.

Slow processes are expensive processes. Aerospace manufacturers who employ Six Sigma and lean techniques can build on existing development capabilities and provide design teams with the knowledge and tools to help generate more profitable products to grow the business. But where to start?

Given the industry wide pressures on the aerospace manufacturers, it is likely that executives will make the leap from the great potential of lean and Six Sigma to a belief that implementing those ideas simply means creating broad awareness of them and mastering the techniques. Such an approach creates two sources of frustration. First, it encourages the pursuit of efficiency through distributed efforts that are tactical in scope and duration. Second, it blinds a company to the need for holistic structural improvement. Short-duration, tactical efficiency improvements often come to be regarded as the only progress required for strategic improvement.

It is also important to note that these improvement techniques can and have been applied not only to manufacturing and supply chain processes but also to engineering design and even overhead processes such as finance with significant results. However, for an improvement programme to take root and have the greatest impact it requires management involvement and "buy-in". This forms the first stage of adopting lean and Six Sigma into an organisation.

Getting started

By securing involvement from the most senior business and operating executives aerospace manufacturers will take the first step towards creating the lean and Six Sigma "culture". This "culture" change requires a leader to drive the adoption through the hearts and minds of the workforce and to make lean and Six Sigma a "way of life". The success of initiative will be dependant on the strong links between the business strategy and the continuous improvement strategy.

Selecting key management staff will go a long way to drive the initiative through training of the workforce and ultimately support the CEO's goals. It is also important to keep the business and operating executives engaged, as active agents in the structural improvement and as program managers of the tactical efforts. Regular communication between the executives and the workforce will also help to keep up momentum.

Beginning with a specific business objective in the mind of the executive team will help to formulate the lean or Six Sigma deployment from the top down and from the outside in. Ensuring that the executives involved will help to define a structurally superior operating condition and then deploy the common tactical events and tools to provide important supporting detail. Focus on structural optimisation first followed by efficiency improvements will inevitably compliment and amplify each other.

It is important to select the value streams that will be targeted for improvement. These can be chosen by identifying the value streams with the highest potential increase in shareholder value. Find streams that will have most impact on revenue and costs, which involve reoccurring activity and repetitive cycles.

Lean and Six Sigma can provide aerospace manufacturers with specific tools for process improvement, process design and redesign. Execution involves four main steps: definition, measurement, analysis, and controlled improvement. During implementation it is essential to document the key information on the project and ensure regular measurement is carried out to monitor progress.

Avoid institutionalising a permanent staff function to promulgate lean or Six Sigma. Temporary organisational apparatus are useful, but long term, lean and Six Sigma should be COO and CEO responsibility.

Adopting lean and Six Sigma into any organisation is no mean feat. It requires regular validation of the key measures of effectiveness and efficiency, collection of data and continual assessment. Key to this new way of working is the management "muscle" behind it used to drive and help achieve the strategic goals of the organisation.

Conclusion

Every aerospace executive is under pressure to improve profits, cut costs and increase shareholder value while delivering quality. Lean manufacturing and Six Sigma offer aerospace manufacturers a roadmap to competitive advantage that is critical in today's market. These techniques equip aerospace organisations with the business efficiency and operational excellence to respond to opportunities more quickly. It takes time to develop and enforce improvements to operation processes and those that aggressively pursue lean and Six Sigma and secure CEO "buy-in" are more likely to steal a march in the fiercely competitive marketplace and take their place in the sun.

David Fitzpatrick and Mike LooneyGlobal and UK leads of enterprise operations excellence, Deloitte Consulting