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Original Date: 08/07/1995
Revision Date: 01/18/2007
Best Practice : Lean Enterprise Initiative
The Lockheed Martin Tactical Aircraft Systems (LMTAS) Lean Enterprise Initiative is a three-phased, major re- engineering effort begun in 1991. Prior to this time, as production declined, the company was experiencing quality and schedule difficulties, prompting LMTAS to re-examine its business. The Lean Enterprise perspective encompasses the whole company and the customer. It focuses on two concepts: effectiveness (doing the right things) and efficiency (doing things the right way). LMTAS' approach to Lean emphasizes effectiveness first, systematically eradicating areas the company should not be pursuing, and then doing the rest efficiently.
Using total weapon system cost as the integrating metric, the company began eliminating the non-value-added costs and activities from all aspects of its operation. Many operations such as machining, sheetmetal fabrication, and most other fabrication operations were outsourced. Only those operations that were considered strategically important were retained and streamlined. The number of employees was reduced from over 30,000 to 12,000. A program cancellation also contributed to the downsizing.
Phase I began in 1991 and set the vision and targets for the change. Phase II, begun in 1992, positioned the company for low rate production, and in 1993, Phase III emphasized redesigning the entire business (and is now complete). The company is now oriented around nine core business systems of Customer Value Determination, Business Area Management, Planning and Controlling, New Business, Business Engagement, Product Definition and Design (PD&D), Product Delivery, Product Support, and Infrastructure.
LMTAS has moved from a traditional fabrication and assembly operation to an assembly and composite fabrication operation with Integrated Product Team (IPT) participation by its fabrication suppliers. Weapon system production costs are decreasing dramatically. The per unit cost to the government for the F-16 has been reduced by $3M, and the company is looking to its proposed commercialization approach as offering the best potential for further reductions.
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