Sunday, March 23, 2014

Focus and Leverage Part 326

Several years ago I was working for a contractor to one of the Department of Defense military entities.  This contractor was responsible for the Maintenance, Repair and Overhaul (MRO) on a fleet of helicopters used to train future DoD Aviators.  When I arrived at this military complex there was an active Lean Six Sigma initiative in place with regular progress updates taking place.  The contractor was focused primarily on cost reduction to enhance their profitability using traditional cost accounting techniques to calculate hard savings.  And each month they had to report their cost savings to their customer.  The contractor’s on-time delivery rate was not as good as it should have been and to make matters worse, the contractor was using exorbitant amounts of overtime to complete the maintenance, repair and overhaul on these aircraft.  But even with overtime, delivery rates were not acceptable.

There were five airfields at this military complex with multiple types of rotary wing aircraft and in an effort to complete more aircraft through their scheduled maintenance process, the contractor was even outsourcing several helicopter for scheduled maintenance in an attempt to improve the availability pool for their customer.  But even with this outsourcing, the contractor was not meeting their contractual requirements and for each aircraft under the contracted amount, the DoD customer imposed a stiff financial penalty.

There were also numerous back shops which were responsible for maintaining, overhauling and repairing various parts to support the contractor’s scheduled and unscheduled maintenance efforts.  In this next series of postings, I want to present what this team did to turn this effort around to produce never-before-seen-levels of on-time delivery to this DoD customer at this military complext.  Because of the sensitive nature of what I am going to present, I will be using coded data such as percentage improvements rather than actual cycle time numbers.  It seems like only yesterday that this amazing turn-around took place.

When I arrived at this installation the maintenance functions were using simple SOP’s aimed at identifying the sequence of activities that had to be completed in order to complete their scheduled maintenance process on the various types of helicopters.  It wasn’t a true project management effort, but they did use a project management software loosely based on the popular Critical Path Method (CPM).  (Note: On several occasions, I have shared the problems associated with this type of project management method, so check out my index of postings if you’d like to learn more about these issues).  Because of the length of time required to complete the scheduled maintenance on each aircraft in the system (i.e. over a month for each aircraft), each aircraft was treated as a separate project.  As I mentioned earlier, the on-time delivery rate of aircraft through their scheduled maintenance area was not good and this contractor was paying the price for late deliveries by way of money penalties assessed by the customer.

Also, when I arrived at this facility, the contractor's Continuous Improvement Group had only 2 Black Belts, 1 Master Black Belt, and 1 Lean Assistant to support the 5 airfields, the different helicopter fleets, and the many back shops.  I originally started there as a subcontractor, but when my contract ran out, I was promoted to the Manager of this CI Group.  The members of this group were well-schooled in Lean Six Sigma.  What I brought to this facility was something new....a working knowledge of the Theory of Constraints (TOC) which was a totally new concept for this facility. One of the first lessons I had to teach everyone was that every business has key leverage points and that in order to achieve significant improvement, we must focus our improvement efforts on them.  In order to significantly improve flow, it was necessary to optimize the cycle time of the process in question.  Of course the leverage point is the system constraint, so by identifying it and focusing our improvement resources there, we achieved the optimum return on our improvement  resources.

I also had to teach everyone that constraints were not always physical in nature and that many times the constraints were actual policies and procedures put in place which were frequently the result of a spontaneous reaction to a problem identified by the DoD customer.  And the further I got into it, the more I realized how important this lesson was because there were many, many spontaneous actions put in place to appease the customer.

Neither the contractor or the customer had never used the Theory of Constraints (TOC) before, so I had to develop presentations to, in effect, educate the masses.  This education started at the top of both the contractor and customer organizations because without leadership’s active support, our improvement initiative would most surely fail.  I started the journey of educating everyone on TOC by using the following simple drawing of an imaginary process.


I started the training, by simply asking the audience the following question:  Assuming you are on day 1 of this process, how many days would it take to process the 1st part   through all four steps?  That is, what is the throughput rate for the first part?  The audience was able to correctly answer this question by adding the individual processing times in all four steps to get 1 part in 25 days.  I then asked them this question:  Now, the process has been up and running for several weeks (i.e. the process is full).  What is the  throughput rate of this process now?  As I recall, initially nobody was able to answer this second question correctly.  The correct answer is 1 part every 17 days or the time it takes the constraint to complete its work on the part.  This was a totally new concept for everyone and it made everyone see why I wanted to focus improvements there first.

I then asked them these three questions:  What if someone had an idea to reduce Step 3 from 5 days to 3 days?  Would the throughput change?  Or how about Step 4 if someone had an idea to cut the days in half from 2 to 1?  The majority of the audience thought it would be a good idea to spend time reducing both steps.  I explained to the audience that if we wanted to improve the throughput of the process, we must first focus our improvement resources on Step 2 because it controls the throughput of this process.  I also explained that by using Goldratt’s 5 Focusing Steps we would identify Step 2 as our leverage point and exploit it by applying Lean and Six Sigma to reduce waste and variation in Step 2 only.  We would then subordinate everything else to Step 2, meaning that the other steps should not "out-run" Step 2.  And if we still didn’t have enough throughput, we would elevate Step 2 until we did which typically means spending some money.  If the constraint moved, we would simply move our improvement resources to it.  This approach was all new to the leadership team, but most of them thought it made perfect sense.

I can’t tell you how important it was for the leadership team to both understand and embrace this method before we could move on.  Without the active support of a company’s leadership team, any improvement effort will wither on the vine or never move forward.  It's also extremely important to actively involve the shop floor workers in any improvement process which is exactly what we did.  In a future posting I'll discuss my version of "involvement" of the shop floor workers.

The immediate change we made to the existing continuous improvement effort was to combine Lean, Six Sigma and the Theory of Constraints as depicted in the following figure.  This was the actual drawing we presented to the leadership team which was depicted as planets orbiting in a solar system, but each interconnected with the others.  In retrospect, the arrows progressing around planet Six Sigma are going in the opposite direction that they should be, but I can honestly tell you that I or nobody else noticed it back then.  (Note:  You will notice that in planet TOC there is a blue rectangle.  I placed it there to cover the name of a software we used to “right” the ship, so to speak, in terms of the project management we used to effectuate our turn-around).

Another important learning for the contractor’s leadership team was that sometimes the constraint is located outside of our process, so I had to explain how we identified it and what we do next?  I explained that by using either a Value Stream Map or a Process Map, we could identify the current and potential future constraints and either immediately perform a Rapid Improvement Event (RIE) or poise our improvement resources so that if and when the potential constraint became a constraint, we would be ready to attack it.  When this constraint is broken, we moved to the next one and the cycle of improvement continues.

For those of you new to my blog, what I’m referring to is Dr. Goldratt's Theory of Constraints 5 focusing steps which are:

  1. Identify the system constraint (i.e. the bottleneck)
  2. Decide how to exploit the system constraint (make the most out of)
  3. Subordinate everything else to the system constraint (run all process steps at the same pace as the constraint)I
  4. f necessary, elevate the system constraint (In the first 3 steps, you shouldn’t be spending money, but if you still don’t have enough capacity, you might have to spend some) Return to step 1, but don’t let inertia create a new system constraint (inertia in this case means don’t become complacent)
  5. Return to step 1, but don't let inertia create a new system constraint

In my next posting, I’ll dive deeper into how things were improved at this contractor’s work place that resulted in significant gains in the scheduled maintenance of helicopters at Fort Rucker.

Bob Sproull





John Holbrook said...

The diagram looks very familiar.

Bob Sproull said...

Since you created them John, I guess you would recognize them. Stay tuned on this series and you'll probably recognize other things. Those truly were the "good old days,"