Case Study

Impact and Value

of Lean Six Sigma
in Transactional Processes

By Dr. Andrew Parris

Lockheed Martin SSC
Atlas Program, Improvement
Certified LM21 Black Belt
 Lockheed Martin:
Redefining What Is Possible
Hypersonics
Biometrics Space Exploration

Persistent Surveillance
Information
Fusion
FUSION

Unmanned and
Autonomous
Systems

A Passion for Invention

Our Customers
• Departments of:
– Defense
– Homeland Security
– Commerce
– Energy
– Health & Human Services
– Housing & Urban Development
– Justice
– State
– Transportation
• NASA
• Social Security
Administration
• Environmental Protection
Agency
• U.S. Postal Service
• Foreign Governments
 Who We Are
Lockheed Martin Corporation…
 Transmits More Bits of Data Daily
Than All U.S. Cable Companies
Combined
 Employs More Software Engineers
Than Microsoft
 Has Delivered More Than 4,000 F-16
Fighters to Customers Worldwide
 The Men and Women of
Lockheed Martin
• 132,500 Employees
• 55,000 Scientists and Engineers
• 30,000 Software and Systems
Engineers
• 6 CMMI Level-5 and Level-4
Companies
• Operations in 45 States and 56
Countries
Partners to Help Customers Meet Their Defining Moments
5380X.PPT AFM 12/01/2003 5
 $32B 2003 Sales
135,000 Employees

Electronic Space Aeronautics Technology Integrated

Systems Systems Services Systems
and
Solutions

$9.0B $5.8B $9.8B $3.2B $3.2B

 Space Systems Company
Launch
Systems

Commercial
Space
NASA
Advanced
Technology
Center Missile
Defense
Systems
 Space Systems
Strategic & Defensive Missile Systems
Space Systems
• Launch Services

Trident Airborne Laser THAAD • Satellites

• Strategic & Defensive

Missile Systems
Targets &
Interceptors
BV+ MKV
Space Systems
Satellites
Space Systems
Launch Services

Advanced EHF SBIRS Telecommunications

Commercial Remote MILSTAR 2001 Mars Odyssey GPS IIR

Sensing
Shuttle Titan IV Atlas V Proton
 LM21 Organization
• LM21 Operating Excellence
Corporate Office
– Mike Joyce, Corporate Vice President
– Responsible for strategic planning, design,
and deployment of LM21 Operating
Excellence throughout Corporation

• Lead Subject Matter Experts

(SMEs)
– LM employees designated as leaders in
their field and competitively selected for a 2
year leadership development assignment
• Internal consultants for Operating Excellence
site/program deployments
• Experts on LM21 tool-set
• Leverage outside resources
 LM21 Training Roles
All Audiences Executive Management
All Audiences Change Agents

Green Belt Black Belt Master Black Belt

General Awareness LM 21 LM21 2 day
Web Based Leadership Training Leadership Trng. Level 1 Level 2 Level 3
All employees, Upper Level Mid Level Participates on Leaders of Full-time leader
contractors, Management Management improvement projects improvement events, that provides
suppliers, etc. and are part-time projects and teams training, mentoring
Who

leaders of simple recommended as full and business-wide

projects/kaizens as part time dedication leadership for
of their job improvement
activities.

• Learning • Learning • Learning • Applying Principles • Knows and applies • Knows methods/
Principles Principles & Principles & and tools for methods/ principles principles & can
applying some applying some application in a & can implement apply anywhere
• Recognize tools to a “Just tools to a project in various business
waste & be able Do It” project simulation processes • Able to lead
to question sub- project • Able to lead team in teams,
optimal • Able to closely scoped sub- • Able to lead teams mentor/train Black
What

processes and support and • Able to support project/kaizen and mentor/train Belts and advise
initiate champion Green Belts/ senior leaders in
and sponsor
improvement efforts of Kaizen coaches the competency of
efforts of teams
teams working continuous
working to
to improve a • Provides training improvement
improve a
process process

Population
(100%) (100%) (50%) (10-50%) (1-1.5%) (.05%)
Targets
 LM21 Operating Excellence
Developing Critical Mass of Expertise
Corporate Experts (SME’s) Black Belts
3,000
20
2,000
10 1,000
0 0
00 01 02 03 04 00 01 02 03 04

Leadership Training Implementation Participants

10,000 60,000
45,000
5,000 30,000
15,000
0 0
00 01 02 03 04 00 01 02 03 04

Actual Plan
Expertise and Involvement Imbedded into LM Culture
so it Becomes The Rhythm of the Business
LM21 Utilizes Both Lean and Six Sigma
“Move
(Distribution Shifted +/- 1.5 North East”
# of Process +3σσ) +4σ +5σ +6σ
Reduce
Steps
Steps/Parts 1 93.32% 99.38% 99.98% 99.999%
ce
7 61.63% 95.73%
l en 99.84% 99.998%
l
e 99.77%
10 50.08% 93.96%
c
x 99.07%
99.997%
40 25.08%
g
77.94%E 99.986%
t i n
100 0.10%
ra 53.64% 97.70% 99.966%
Flow Velocity

300 - - -Op
e 15.43% 93.26% 99.898%
2 1- -
700
L M - 1.28% 84.97% 99.762%
1000 --- 0.20% 79.24% 99.661%
3000 --- --- 50.15% 98.985%
Lean 38000 --- --- 0.01% 87.880%

Reduce
Six Sigma Repeatability
Defects/Variability

Lean processes operating at Six Sigma capability

 Lean/Six Sigma
Operating Excellence

Operating Excellence
Kaizens A Philosophy to maximize Lean/Six Sigma Projects
producibility and customer
Events to make incremental value by Specifying Value from Increasing capability with a Black
improvements in the Customer’s Perspective, Belt-led team using Quality tools
manufacturing or transactional Analyzing the Value Stream, to Define, Measure, Analyze,
processes. Adding Flow & Pull and Striving Improve and Control.
• Removes waste for Perfection • Improves yields from 3.5σ to
• Reduces cycle time 20 – 60% Design for Six Sigma Process
4.5-5σ
Pre-design Kaizens
• Applies to all aspects of the • Reactive by nature
business A design approach that•optimizes
Applies to all aspects of the
Events to increase producibility performance and cost while
and ensure hardware designs business
maximizing yield during the design of
support lean production methods. the hardware
• Required to support lean factory • Required to improve yields beyond
• Proactive by nature 4.5σ
• Applies to product design • Required to meet high system yields
• Proactive by nature
• Applies to product design

LM21 8 Step Process

 LM21 Path To Excellence
Document
Document&&
Identify
Identify&& Project
Project Measure
Measure Analyze
Analyze&&ID
ID
Prioritize
Prioritize Definition
Definition Current
Current Waste
Waste
Opportunities
Opportunities Reality
Reality
1 2 3 4

Excellence
Excellence

Optimize
OptimizeFlow
Flow
Communicate
Communicate&& Implement
Implement
Measure
Measure&& &&
Acknowledge
Acknowledge &&
Sustain
Sustain Reduce
Reduce
Success
Success Validate
Validate Friction
Friction
8 7 6 5

Lean processes operating at Six Sigma capability

 Roadmap
Value Stream Analysis
Customer Marketing Systems Eng Engineering Procurement Manufacturing Test Integration Launch Customer

Engineering
Value Stream
Process Process
Map Level Level
Process
Level
Process
Level
Rqmts. Stress
Inputs Design Release Outputs
Definition Analysis

Kaizen Events Projects Do-Its

PDK EVENT TOPIC EVENT TOPIC

PRO-
JECT
PRO-
JECT
ACTION
ITEM
ACTION
ITEM

Project EVENT TOPIC EVENT TOPIC

PRO-
JECT
PRO-
JECT
ACTION
ITEM
ACTION
ITEM

Instant Fix EVENT TOPIC EVENT TOPIC

PRO-
JECT
ACTION
ITEM
 Atlas Value Stream Analysis (VSA)
Sample Current State Value Stream Map TRMS Eng - Design

Program ProE
CSC Harlingen
Office
Buyer -Labarge CODS
Eng - TSO ELC EDE
Purchasing - MAC Labarge Drafter -Centaur
Planning PAC Drafter -Booster
Sup
Live port

Improvement Opportunities
Eng -Structures Eng -Fluids
Eutelsat
Link Eng -Avionics
Cape Receiving CODS Eng - Checking

Mission Integration ProE

Truck Driver
Eng- Mission Int
Eng-Mission
Receiving
Quality Inspection Eng- Software

Work fragmentation
Receiving - Sup
Data port Supplier Data

Receiving - Sup CODS Eng -Chief

Asset Specialist port
Sup Configuration
CODS CVS PADR
Receiving port Management

Multiple hand offs

Repro -Distribution ProE CODS Admin

Repro - Copy
Safety

Reproduction -
Photographer Eng- Systems

Repro - CADS ProE

PADR Model Control
Lead

High volume of change

Repro - CADS TSO
Data Entry CODS
PADR
CADS Mission Release
Reproduction Success
Sup
Product Assurance Order Control
port
Production Planning Sup

traffic
port Quality
Eng -Test Sup
DM

Reflec MAC port Contracts

Eng - Mechanical
tions PAC
EMAS CODS
Machinist - MAC MPPS
CODS
Tool KSA MAC
Print Crib MPPS PAC
Asset Specialists Process PAC Sup Subcontract -
FMP Planning MPPS port Admin
ELC Material
PADR

Redundant processing and

CVS Planning0
Eng -QA CODS
Eng -Production
PODS PIRS

Sample Current State Physical Map approvals

Deer Creek
SSB
25
Flexibility at a high cost
Denver TSB
GPL RDL

Manual data processing

EMF
VTF
F ENG
Denver

44
39

San
SanDiego
Diego Berryville, AK

Dispersed resources
10 FAB INV

Harlingen Cape Canaveral

PTF
San Diego Harlingen
ITOWhse

Long cycle times

Astrotech
HIBAY MFG PLF
19
LaBarge TAB
Cape Canaveral ASOC INV
E&A LC41
Berryville,
VIF
Hangar K AK
Design
Design &
& Build
Build
Customer Configuration Installation
60
60 54
54 48
48 42
42 36
36 30
30 24 18 12 6 5 4 3 2 1 Months
Months for
for
Scope
Scope

Value Stream Analysis Revealed Significant Opportunity

 Definitions: Value-added
Value-added Activities
• Activities which, when asked, the customer is willing to pay twice
as much if we did it twice as often and
• Activities which change the form, fit or function of the
product/service and
• Activities done right the first time.

Non Value-added – Required Activities

• Activities which may be necessary but the Customer will not pay
you to do
• cannot be eliminated (due to non-robustness of process) based on
current state of technology
• Required (regulatory, customer mandate, legal)

Non Value-added Activities

• Activities that consume resources but create no value in the eyes
of the customer
• The customer is not willing to pay
• Pure waste
 Examples of Transactional
Process Improvement Events
LM21 Operating Excellence
Results: Business Processes

Company Project Description $M

Astronautics – Denver Overhead and G&A Restructure 79.0
Missiles & Fire Control SAP Phase I Implementation 2.7
Technology Services Airline Travel Discounts 5.0
LM21 Operating Excellence
Results: Design and Engineering

Company Project Description $M

EPI – Owego Integration Framework Architecture 16.1
Missiles & Space Standardized Systems Engr Process 23.0
Aeronautics Company F-22 Sustaining Engr Reduction 21.4
 New Drawing Release VSM
Touch Time Savings of Revised
Process – New Drawings
Drawing Receive Enter Load YES
Approval
Number HP file Data CADIM Release
Drawing Babysitti
to from From ng APPROVE? Send to Drawing Distribution
Design Design Drawing Mask Obtain Release
INC Create Update
Require Number Approval Office.
PLOT Parts ER NO Parts
ment Establish
Was Now
Back-up Assignm s
FILE List Transfer Signatur CHECKI List
Info ent Form
REQUE Data e NG Determin Coordin
ST Complet from e Action. ate with
Compon
e Require
PLIT to Determin
ments Re- Checkin
ents in
DIACS e Where Insert g (if

Change Control
DIACS?

As
Checkin where required)
Approve Coordina
Required
Liaison/Eng 6.25 Hours 1.85 Hours
g Will Be
te with

Design Engineering
d for Perform .
program Priority
ed / Checkin
? Order of g (if
Release required)
Engineering Aides
Is
Start=
End=
DATA

Touch Time = .
Start=
End=
DATA

Touch Time = 4
Start=
End=
DATA

Touch Time =
Start=
End=
DATA

Touch Time = 1
Start=
End=
DATA

Touch Time = 32
Start=
End=
DATA

Touch Time =
TOTAL
Start= ECR received
End= Released
Checking 24 Hours 20 Hours
1.2 hrs 1.5 hrs Engineering
25 hrs hrs hrs hrs
Cycle Time= 1 Cycle Time= 2 Touch Time = 40 hrs
Cycle Time= 2 Cycle Time= 2 Cycle Time= 1 Cycle Time= 25
Days Cycle Time= 33 Days
Days
Flow Time=
Qty.=
Days
Flow Time=
Qty.=
Days
Flow Time=
Qty.=
Days
Flow Time=
Qty.=
Days
Flow Time=
Qty.=
Flow Time=
Qty.=
Flow Time=
Qty.=
Release/Eng 9.7 Hours 7 Hours
People=
Aides
People= People=
People= People= People= People=

Total 40 Hours 29 Hours

(Rounded Up)

Drawing

Savings Benefit of Work Scope

CREATE ER ESTABLISH Approval
Number to CHECKIN Distribution
• HP FILE SIGNATURE Babysitting YES
Design G IN-BOX APPROVE? Promote
REQUIREME
Requireme • DNA INFO Obtain Drawing to
NTS
nt DETERMINE Approvals RELEASE
PLOT • BACKUP NO
WHERE
CHECKIN

Allocation – New Drawings

FILE DATA CHECKING
REQUES G
• COMPONE WILL BE
T
NTS DATA PERFORME

To
D CHECKIN
•Notify
PL ER Is G
Ready COORDIN
Send to AES
Distribution DIRECTL
Y WITH
• Assumptions
Be
DESIGN

DATA DATA DATA

OR
ENGRG
DATA DATA
• over 1000 Drawings per Year
Start=
End=
Start=
End=
Start=
End=
Start= AIDE
End=
Start=
End=
TOTAL • Benefits
Start= ECR received
Touch Time = .25 Touch Time = 5 Touch Time = .5 Touch Time = 23 Touch Time = .1
End= Released Engineering
hrs
Cycle Time= 2
hrs
Cycle Time= 2
hrs
Cycle Time= 1
hrs
Cycle Time= 20
hrs
Cycle Time= 1
Touch Time = 29 hrs
Cycle Time= 26 Days
• Liaison Engineering
Days Days Days Days Days
Flow Time=
Qty.=
Flow Time=
Qty.=
Flow Time=
Qty.=
Flow Time=
Qty.=
Flow Time=
Qty.=
Flow Time=
Qty.=
People=
• 4.4 Hrs/Drwg *Drwgs /Yr
People= People= People= People=
• Checking
People=

• 4.0 Hrs/Drwg *Drwgs /Yr

Reduced 33 Days 26 Days • Release/Engineering Aides
Handoffs & • 2.7 Hrs/Drwg *Drwgs /Yr
• Total Yearly Benefit: over $ 1M
Redundant
Efforts
 Engineering Change VSM
Problem Statement
COPY TO
ORIGINATOR
with Backup Data

DESIGN
ENGINEERING FORMULATE AN ANSWER
• Define the nature of the changes.
• Collect additional information.
• Determine the Design
DATA Configuration.
• Determine all affected items.

TOTAL
Start=
End= • Determine if change is in scope
• Determine if formal Lesson Learned
Touch Time = 5 hrs submittal is appropriate. Start= ECR received
Cycle Time= 11 Days • Complete Informal Actions End= Released Engineering
Flow Time= • Initiate Change Order (Form U- Touch Time = 21 hrs

Design Engineering
Qty.= 5024), If Required
People= • Initiate Drawing Revision, If Cycle Time= 37.5 Days
Required Flow Time=
Qty.=
People=
Terminate / * = APPROVAL BABYSITTING REQUIRED
Reference

Engineering
Only

NO
Receive ECR

Change Control
DATA
ENGINEERING Start=
Log In Access DataBase Review Answer for YES
CHANGE Action? End=

As-Is:
Completeness
CONTROL REVIEW PROBLEM Touch Time = 2 hrs
• Verify that a problem exists Cycle Time= 5 Days UPDATE
SEND TO
UPDATE COORDINATE

Product Data
• Determine cause. CREATE ER Flow Time= RELEASE
NO CLOSE ECR DATABASE If not approved,
• Determine condition of prior Qty.= DATABASE OFFICE
O.K. IN PDM PREPARE NORs •Prioritize determine action
units built. People= and reinsert as
• Establish a need date based ESTABLISH •Fix Errors
required.
on the production schedule. YES APPROVAL RECORD UPDATE

Control
REQUIREMENTS APPROVALS DATABASE
Assign to Liaison or Design

PRODUCT
If not approved, DATA

Engineering
determine action CONTROL “B” BRD “A” BRD
and reinsert as
DISTRIBUTE DISTRIBUTE APPROVAL APPROVAL
required.
* *

• Cycle Time Reduction – 23%

ECR FOR CHANGE PACKAGE
REVIEW FOR REVIEW
If not approved,

Aides
ECP
determine action (IF REQUIRED)
and reinsert as If not approved,
required. determine action
and reinsert as ENGINEERING AIDES
required.

Integrated Product
If not approved, (HOURLY PEOPLE)
determine action RELEASE IN PDM
and reinsert as If not approved,
CHECKING DATA determine action REVISE DIACS PARTS LIST
required.
Start= and reinsert as

• Cycle Time Reduction – 8.5 days (37.5 days to 29 days)

End= RELEASE IN DIACS

Teams
required.
Touch Time = 5 hrs
DATA DATA
Cycle Time= 21 Days
Start= Start=
End= Flow Time=
End=
Qty.=
Touch Time = 1 hrs People= Touch Time = 1.5 hrs
INTEGREATED PRODUCT TEAM (IPT) CHECKING REVIEW ECR & CHANGE
Cycle Time= 2.5 Days ENGINEERING Cycle Time= 2 Days
DATA PACKAGE *
(INCLUDES CHECKING) Flow Time= SCREENING YES Flow Time=
TECH Start= Obtain:
Qty.= BOARD REVIEW / O.K. • Implementation Qty.=
REVIEW OF End=
People= APPROVAL * • Cost People=
CHANGE
NO Touch Time = 2 hrs
PACKAGE *

• Reduced Tech Ops Labor – 4 hours

Cycle Time= 5 Days
Flow Time=
Qty.=
People=

• Reallocated effort from engineers to aides – 1.5 hours

Problem Statement
with Backup Data
Answer to
Originator

DESIGN
ENGINEERING ENGINEERING INPUT *
(as required)

• Projected Total Tech Ops Labor Savings – over $1M/ year

ENGINEERING
CHANGE
CONTROL
COMPLETE ECR
• Define the nature of the changes.
• Determine the Design
REVIEW PROBLEM Configuration.
• Determine all affected items.
• Verify that a problem exists
• Determine if change is in scope
• Determine cause.
• Determine if formal Lesson Learned
• Determine condition of prior
submittal is appropriate. Terminate /
units built.
• Complete Informal Actions Reference
• Establish a need date based Only
on the production schedule. • Initiate Change Order (Form U- * = APPROVAL BABYSITTING REQUIRED
5024), If Required
• Initiate Change Order (Form U-

To-Be:
5024), If Required

Reduced Handoffs
NO ACTION

PRODUCT
PROMOTE
DATA DISTRIBUTE
TRACK Y Y ADD PC ECR; ER;
CONTROL ECR FOR ECP

& Redundant Efforts

REVIEW APPROVED? ACTION? INFORMATION DWG TO
REVIEW / (IF REQUIRED)
COMMENTS RELEASE
APPROVAL

NO:
Determine PREPARE ER
Action.
ENGINEERING AIDES (HOURLY PEOPLE) Reinsert where REV ITEM
required CHANGE
POSITION
(FORM)
ADD D.I.
ADD CHANGE

37 1/2 Days 29 Days

ORDER
(if required)
UPDATE DIACS

INTEGREATED PRODUCT TEAM (IPT) CUSTOMER

REVIEW / APPROVE ECR *
APPROVAL
(INCLUDES CHECKING AND PROGRAM MANAGEMENT) Obtain:
(IF REQUIRED)
• Technical Approval
• Implementation
• Cost

Start=
DATA
• CHECKING
• Program Management
Start=
DATA
Start=
DATA
Start=
DATA TOTAL
Start= ECR received
End= End= End= End=
End= Released Engineering
Touch Time = 7 hrs Touch Time = 6.5 hrs Touch Time = 3 hrs Touch Time = .5 hrs
Touch Time = 17 hrs
Cycle Time= 11 Days Cycle Time= 15 Days Cycle Time= 2 Days Cycle Time= 1 Days Cycle Time= 29 Days
Flow Time= Flow Time= Flow Time= Flow Time=
Flow Time=
Qty.= Qty.= Qty.= Qty.=
Qty.=
People= People= People= People=
People=
 Cross Functional Coordination and Buy-in
Achieved Through a Process Simulation Event
• Design • Procurement
– Frank Delisi – Don Hallum
– Ed Booth – Ted McAfee
• Prod Ops / Mfg Engr – Jeff Burnett
– Franz Budel – Bobby Thompson
– Pat Jackson
• Quality
– Joe Chenette • PDC
– Bill Richardson
• Checking
– Tanne Steen
– David Brockman
– Rebecca Jaster
• PP&C • Liaison
– Susan Granacki
– Al Mendez
• Program Management/IPT – Peter DePaiva
– Al Davidoff – Nathan Smith

Each step of the new process was walked through in a

simulated manner by a representative SME to ensure all
procedural details were effectively addressed
gt
M
&
ps ps cq
O O l it y A
r od e ch ua at
l
P T Q M

Process Validated
   
 And the Results are In…
“Lockheed Martin is one of
nine Fortune 100 companies that have
had a positive trend three years in a
row (increased productivity), only one
of the nine in Aerospace industry –
11% from 2001-2002 .”
Del Jones and Barbara Hansen. USA TODAY. McLean, Va.: Aug 13,
2003. pg. B.01
E-mail: andrew.n.parris@lmco.com
Phone: 303-971-7670
Mail: Lockheed Martin Space Systems Company
M/S F9902
P O Box 179
Denver CO 80201-0179