AF Process Improvement: Enhancing Materiel Readiness
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1 Headquarters U.S. Air Force I n t e g r i t y - S e r v i c e - E x c e l l e n c e AF Process Improvement: Enhancing Materiel Readiness Lt Col Christopher Burke Chief, Policy Team SECAF-CSAF Executive Action Group
2 Where The Air Force is Now The perfect storm a case for change Shrinking budgets Manpower cost rising 6% annually Aging aircraft materiel readiness 23 year old fleet today, 25 years in 2011 Desired outcome Recapitalize our equipment New weapon systems Become more affordable resources $$ Adopt a culture of continuous process improvement Aggressive changes to processes are required to leverage materiel readiness with available resources I n t e g r i t y - S e r v i c e - E x c e l l e n c e 2
3 The Case for Change Expecting More from Aging Fleets By 2011 with avg 25 Yrs... puts considerable upward pressure on costs Average Age AGING FLEETS 23.4 Yrs Millions Flying Hours M FHs OPS TEMPO REMAINS HIGH ,000 8,644 Total Active Inventory 7,000 5,000 7,786 7,345 6,875 6,701 6,450 6,408 6,327 6,307 6,306 6,245 6,286 6,073 6,016 6, ACFT INVENTORY DECLINING I n t e g r i t y - S e r v i c e - E x c e l l e n c e 3
4 The Case for Change Rising Operations & Support Costs Rising cost of operations crowds out needed investments Few tools to address this (BRAC and A-76) Overall Aircraft O&S Costs (FY03/04 Actuals Straightlined) Cost ($B) FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 The victim will be our combat capability I n t e g r i t y - S e r v i c e - E x c e l l e n c e 4
5 Background Installations & Logistics community has been pursuing industrial process improvement methods for about 4 years Command-sponsored approach within Air Force Materiel Command Some pocketed experimentation in other Air Force functional communities / activities Personnel, medical, equipment management Used with great success in many leading companies Toyota, Boeing, General Electric, Pratt & Whitney We need a common AF method to focus on process improvement...we need a major cultural change in thinking and philosophy to effect an AF continuous process improvement operating style I n t e g r i t y - S e r v i c e - E x c e l l e n c e 5
6 Guiding Principles Based primarily on Lean process improvement methodology Functions as our operating style, not another program Retains prime focus on mission effectiveness Requires commander involvement, participation, and leadership Uses existing governance and compliance structure Tied to measurable results in terms of cycle time, quality and resources Linked with programming and resourcing activities This has to improve warfighting effectiveness, or we should not do it! I n t e g r i t y - S e r v i c e - E x c e l l e n c e 6
7 Benefits Eliminate Non-Value Added Time Time Typical Work Week: Mon Tue Wed Thu Fri Sat Sun Work Time (value add) Work Time (non-value add) Wait Time (no value) Before After Benefits Improved operational capability Speed, responsiveness, efficiency Committed, involved workforce I n t e g r i t y - S e r v i c e - E x c e l l e n c e 7
8 Air Force advantages Promises and Difficulties Well developed training and education system Well defined lines of authority Dedication of our people Strong sense of mission Common set of core values Strong leadership Barriers to implementation Resistance to change Lack of cohesive strategy Organizational/tribal boundaries Budget and time constraints Getting and keeping the right people I n t e g r i t y - S e r v i c e - E x c e l l e n c e 8
9 McChord AFB Wheel and Tire Shop Lean Initiative Supports wheel and tire requirements for 51 assigned aircraft, entire C-17 Pacific Fleet and 5 mainland bases I n t e g r i t y - S e r v i c e - E x c e l l e n c e 9
10 Wheel and Tire Shop Newly designed facility tears down and rebuilds wheels and tires, serves as central supply point for tire shipping and receiving 7 step process reduced to 4 Bauer torque machine eliminates 2 members to build wheels along with cutting time by 50% Non-destructive inspection collocated in Wheel and Tire Shop Eliminates move to NDI Shop and reduces damage I n t e g r i t y - S e r v i c e - E x c e l l e n c e 10
11 Wheel and Tire Process PACAF Stateside Distribution McChord Used Assembly Received Bead Broke, Disassembled, Washed, NDI Stored in On-site Supply Point, Ready for Issue 0 15 Minutes 45 Minutes 15 Minutes 12 Hour Cure Check Examined for Depot Asset or Returned to Service. Deflated. Mounted to new Tire, Torqued, Inflated I n t e g r i t y - S e r v i c e - E x c e l l e n c e 11
12 Wheel and Tire Production Processes over 2,300 wheel and tire assemblies annually Annual operating cost of $1.8 Million Process improvement effort dropped manning need from 14 personnel to 5 I n t e g r i t y - S e r v i c e - E x c e l l e n c e 12
13 Dover AFB Lean Team Liquid Oxygen (LOX) Cart Initiative The Goal Identify & remove muda (waste) from the liquid oxygen cart repair processes and increase cart availability Identified customer: Flight line mechanic Customer defined quality as: Available, serviceable LOX carts to meet mission requirements Desired end state: When a mechanic calls for a LOX cart, one is available Reasons for lack of cart availability: Lox cart chassis inspection process takes 5 days I n t e g r i t y - S e r v i c e - E x c e l l e n c e 13
14 LOX Cart Lean Initiative 180 Day Chassis Inspection Process Old State New State Tow to Lox Barn Drain Purge Cart Tow to AGE Facility Inspect Cart Chassis Tow to Lox Barn Purge for Fill Fill Cart Indoor (Requires Purge) Asphalt Outdoor (Not Purge Suitable) Required) I n t e g r i t y - S e r v i c e - E x c e l l e n c e 14
15 Dover AFB: C-5 isochronal inspection process Flowdays reduced from 20 to 14 days Eliminated mid-shift; better use of 6,000 annual man hours Field Level Logistics Success Stories Langley / Mountain Home AFBs: F-15C aircraft phase On time rate increased 87%; Flowdays reduced 30% Next steps: Gun Systems and Corrosion Control I n t e g r i t y - S e r v i c e - E x c e l l e n c e 15
16 Tinker AFB: KC-135 aircraft overhaul Additional 100 aircraft available Flowdays reduced from 380 to 205 Reduced number of docks from 18 to 15 On-time delivery increased 73% Hill AFB: F-16 wing shop Flowdays reduced from 64 to 27 days On-time delivery increased to 81% 71% reduction in work in progress Wait time for delivery reduced to 1 day Robins AFB: C-5 aircraft overhaul Flowdays reduced from 339 to 234 Mechanic travel time reduced by 60% Freed up one dock for additional workload Air Logistics Center Success Stories I n t e g r i t y - S e r v i c e - E x c e l l e n c e 16
17 What We Want From a CPI Operating Style Ability to deal with declining resources without loss of combat capability or ability to modernize Identify and begin to eliminate the waste inherent in our day-to-day processes People who are conscious of the value they deliver and seeking to improve every day Understanding the total role they perform in the end-to-end sustainment chain Enhanced ability to accomplish our mission given the balance between materiel readiness and resources Greater agility in response to changing demands I n t e g r i t y - S e r v i c e - E x c e l l e n c e 17
18 UNITED STATES AIR FORCE I I n n t e t e g g r r i t i y t y - -S S e e r r v v i c i c e e - -E E x x c c e e l l e l e n n c c ee 18
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20 The Case for Change The AF Burning Platform Operational imperatives Increasing need to quickly respond/adapt to evolving risks Sustaining and winning the global war on terror Financial imperatives Increasing competition for dwindling resources Increasing cost of an Airmen ($99K and rising) Reducing cost of ops to invest in future capability Workforce imperatives Increasing work week Endstrength reductions with new mission demands Infrastructure imperatives Reducing the AF footprint (deployed and home station) consistent with expeditionary mindset Our Air Force is becoming unaffordable I n t e g r i t y - S e r v i c e - E x c e l l e n c e 20
21 The Case for Change DoD Budget Authority FOUO 700 Department of Defense Budget Authority, FY1945-FY2011 Budget Authority Supplementals Estimated Supplemental FOUO Korea Vietnam Reagan FY 2005 $ - Billions I n t e g r i t y - S e r v i c e - E x c e l l e n c e 21
22 The Case for Change AF Budget Authority FOUO 220 Air Force Budget Authority, FY1945-FY2011 Budget Authority Supplementals Estimated Supplemental FOUO Korea Vietnam Reagan 170 FY45-05 Avg. FY 2005 $ - Billions I n t e g r i t y - S e r v i c e - E x c e l l e n c e 22
23 Case for Change The $100K Airman 12% 9% 5% 2% 43% Pay Health Care Installation Benefits Retirement Pay Other Vet Benefits Other DoD Benefits 29% CASH COMPENSATION $43,000 NON-CASH COMPENSATION $56,000 Source: CBO Report, 16 Jan 04 I n t e g r i t y - S e r v i c e - E x c e l l e n c e 23
24 Warfighting Approach to Address Support Processes/Costs Strategy understood by all Airmen Measurable goals Defined organizational structures and responsibilities Clear chain of command and assigned accountability Enough data to show this can generate significant improvements across spectrum of AF processes Substantial resource implications cycle time, dollars, equipment availability, quality, people Process improvement may be our most important challenge for the next decade I n t e g r i t y - S e r v i c e - E x c e l l e n c e 24
25 Process Principles Any process is better than no process A good process is better than a bad process One process is better than many processes Even a good process can be improved All work is process work Dr. Michael Hammer Author of The Reengineering Revolution I n t e g r i t y - S e r v i c e - E x c e l l e n c e 25
26 Process Matters At Toyota we get brilliant results from average people managing a brilliant process. Others get average results from brilliant people managing broken processes. --The Toyota Motor Company I n t e g r i t y - S e r v i c e - E x c e l l e n c e 26
27 Washers and Non-Destructive Inspection Station 4 parts washers located within the reach of the overhead crane Eliminates 2 members lifting wheel into wash basin 8 wheels washed simultaneously Parts cleaner uses eco-safe hardware cleaning product Safe for personnel and eliminated hazardous waste by 50% NDI collocated inspection center to the Wheel and Tire Shop Eliminates the need to transport wheels to NDI Shop Reduced wheel damage/physical injury during transport I n t e g r i t y - S e r v i c e - E x c e l l e n c e 27
28 LOX Cart Lean Initiative 180 Day Chassis Inspection Total Savings Reduce Travel Distance by 7,920 Feet / Cart Eliminate 48 Hours of Downtime per Cart X 12 Carts / Year = 576 Repair Hours / Year Decreased Downtime More Available Carts I n t e g r i t y - S e r v i c e - E x c e l l e n c e 28
29 Other Air Force Success Stories Filling Civilian Positions: Streamlined portions of the end-to-end fill process Reduced time from 160 to 120 days AFPC increased serviced population 5,000 positions with no additional manpower AF Civil Engineers: Streamlined Air Force design-build process Second pass: Reduced flowdays from 1,046 to 599 days (42%) AEF Center: Redesigned reclama process Reduced steps from 76 to 16 Reduced flowdays from 131 to 23 days I n t e g r i t y - S e r v i c e - E x c e l l e n c e 29
30 Corporate Approach: What It Will Take Commanders committing time -- their time and their Airmen s time Establishing AF lead and an enabling center for Continuous Process Improvement (CPI) Training the workforce developing expertise Managing priorities tracking results Institutionalizing the concept and integrating it into AF change management efforts I n t e g r i t y - S e r v i c e - E x c e l l e n c e 30
31 Success Stories Toyota Motor Co. On path to overtake GM as world s #1 auto maker 12% share end of 2004 targeting 15% share 15 of 34 most reliable vehicles from any manufacturer in past 7 years were from Toyota Market cap exceeds the Big Three combined Toyota Production System is basis for lean production movement dominating manufacturing trends the last 10 years Revenue Revenue Growth Earnings (EBITDA) Return on Assets Return on Equity $163.64B 26.9% $16.9B 4.75% 13.67% I n t e g r i t y - S e r v i c e - E x c e l l e n c e 31
32 World s #1 computer systems provider Success Stories Dell Inc. 18.5% of world market 33.4% in the U.S. Highly efficient manufacturing and supply chain activities Corporate process improvement model (Business Process Improvement) adopted in 1999 Dell Fiscal Year 2005 (Feb. 1, 2004 Jan. 31, 2005) Net Revenue Revenue Growth Earnings (EBITDA) Return on Assets Return on Equity $49.2B 15% $4.81B 15.23% 53.56% I n t e g r i t y - S e r v i c e - E x c e l l e n c e 32
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