Challenging changes in production

A Note to The Reader

This section relates to the work of changing the production operations for military aircraft. The significance of persistent and patient work can be seen here.

The practical value stream in production operations has been radically altered, but above all, it has been possible to produce a single whole in the value stream by means of an integrated working procedure between construction, production engineering and production.

There are three main reasons for this success. The most important was the change in behaviour in operations. It was also possible to introduce new working procedures such as MBD and Lean.

The work with Lean made it much easier for participants to communicate with each other throughout the value stream. Any “storm clouds” were dealt with before they became a problem.

Background

The major change in production capability began in the early 2000s. At this time, there was a substantial volume of aircraft to build and the production rate was high. In order to cope with the export deliveries that existed at that time, measures needed to be taken to significantly reduce turnaround time.

The goal that was defined was for the lead time to be brought down from 36 to 24 months for the entire production programme. However, there were no special customer requirements to change production operations.

It was also found that cost awareness within production needed to be raised. Production costs had been questioned within Saab.

A strategic decision was made whereby measures would be taken to keep hourly costs stable over an extended period.

Recommended reading

The author recommends the following texts that relate to this story: In chapter Having a low life cycle cost under the heading An effective procurement process in chapter Adaptability for new requirements under the heading Creative engineering capability – MBD and in chapter Ensuring long-term operations capabilities under the heading Capability Development in an International Environment.

This text concerns the highlighted areas of A Journey of Change in the Aircraft Industry

Summary

The most central observation from this change work was that good communication needed to be achieved between all employees throughout the value stream in order to implement lasting and powerful streamlining.

An example of changed behaviour and attitude to delivery capability was that no new commitments were made, but instead the attitude of always delivering a faultless product was integrated into the operation. Later, the standardisation of the entire logistics flow could be seen to have led to a major increase in efficiency. The change also dramatically reduced costs, released tied-up capital and provided greater flexibility for both Saab and the customer.

It took three years for the Lean concept to be fully established, and for this way of thinking to be accepted throughout the entirety of production operations. One of the most useful and visually evident changes is the “daily management” meeting format that the production manager has with employees within production operations.

The investment in a model-based working procedure in the form of MBD made it possible to formulate the working procedure at every step of the value stream in a rational way. In addition, many of the tasks could be taken away or substantially simplified, which helped to increase efficiency throughout the production programme.

Furthermore, patient change work in the Lean spirit has been taking place over many years with many small improvements.

We now have unique control of the entire value stream from development to delivery. Comparing the state of affairs in 2009 with the situation today, in 2009 there were around 45–50 major problems, which required continuous serious efforts, while five years later there are 2–10 cases of a minor nature that can be resolved relatively quickly.

The development within production operations has been characterised by creative management and governance, operations have been provided with a great deal of flexibility and the work throughout the value stream has been reviewed.

Description of content

  • One of the projects that was of major significance for the changes focused on profitability and streamlining. This included measures within production, logistics flows and the use of premises.
  • Capacity in military production reached its peak in the mid-2000s, after which the production rate dropped gradually.
  • The learning curve concerns all steps in producing a product based on – among other things – the time it takes for operators to learn the product.
  • The introduction of Lean tools and Lean methods created an excellent and practical working procedure that facilitated day-to-day communication.

A Journey of Change in Production

The major change in production capability began in the early 2000s. At this time, there was a substantial volume of aircraft to build and the production rate was high. In order to cope with the export deliveries that existed at that time, measures needed to be taken to significantly reduce turnaround time. The goal that was defined was for the lead time to be brought down from 36 to 24 months for the entire production programme. However, there were no special customer requirements to change production operations.

It was also found that cost awareness within production needed to be raised. Production costs had been questioned within Saab. A strategic decision was made whereby measures would be taken to keep hourly costs stable over an extended period.

There was a strict categorisation of functions within production. Functions were categorised into component manufacture, two operational departments for assembly and a department for part assembly, which supplied the two assembly departments. In addition, there was a hangar operations category which covered specific operations for aircraft modifications.

Overall, personnel mobility was very low within production operations. Mobility between the various production departments was almost negligible.

A number of different change projects were started in order to increase efficiency. These projects were carried out over a three-year period.

From functional stream to value stream

One of the projects that was of major significance for the changes focused on profitability and streamlining. This included measures within production, logistics flows and use of premises.

The project’s requirements were to generate profitability in the production programme even with a low rate of production. Specifically, it was important for the production configuration to be designed in a way that made it possible to be competitive against low-cost countries.

At that time, it was common for production to be transferred to low-cost countries. It was therefore important for the production system to be designed to be competitive in this regard as well, for those areas and products that it was important to have in-house at Saab’s facilities in Linköping.

The production system therefore needed to be designed to be resource-efficient. This meant that the sizes of premises needed to be optimised and that a flow-oriented working procedure needed to be introduced. There was also a need to review whether synergies could be obtained between military and civil production. The composition and numbers of the workforce needed to be reviewed.

In order to carry this out, Lean and various types of Lean tools began to be introduced. Personnel in civil production of aircraft parts had been working with Lean for a number of years. This meant that experiences from this area of operation could be carried over to military production.

In order to arrive at a better structure for the value stream in production, the possibility of making larger transfers was reviewed, on the one hand to optimise the need for space in premises and on the other to produce good geographical placement. At that time, there were opportunities to make major changes of premises, as other types of rationalisation had opened up that possibility.

A particularly significant factor for implementation was that the need for investment could be kept down.

The project was divided into two steps.

The figure illustrates the two steps of the project for the readjustment of production operations.

The first change step was carried out by optimising the flow and creating synergies between final assembly, hangar and the operation that carried out modifications. The conditions for resource-efficient production had also been defined.

That measure was primarily aimed at various forms of rationalisation, but also at streamlining the spaces that were used for production in order to obtain a good value stream.

At this point, the approach was to transition from a functional stream to a value stream. Substantial transfers of production equipment and machinery were carried out. The flow that was created consisted of component manufacture, assembly, final assembly and hangar operations.

The figure shows how each step in the transition began.

In step two, changes were made to optimise the flow and create synergies between arrival and warehouse operations and the operations carrying out part assembly. This meant that rationalisations and streamlining of space of premises used took place for these operations too. Measures were also taken to move certain operations, allowing premises to be terminated.

So what was the reduction in turnaround time for final assembly? The result of the project was that turnaround time was lowered to 24 months for the entire production programme!

Logistics flow

In the early 2000s, there were too many deviations within logistics from the delivery capacity requirements that were defined. This was the reason why different change projects were started within logistics.

A key element of the problems that existed was that deviations from specified requirements were accepted. This made the problems self-perpetuating, as deviations were accepted up to a certain level. It was therefore necessary to make changes to attitudes within the entirety of production operations.

In the early 2000s, the focus was not on logistics to any significant extent; instead, the focus was placed on time and engineering. At that time, there was no total cost perspective in the operation.

Since then, the focus has changed to creating “added value for the customer”. The focus of the change process was defined as “what is good for the customer is good for Saab”.

Control of the value stream, and thus also logistics, requires measuring and monitoring the operation’s results continuously. Changes therefore started to be made to the whole charging model. The phrase “one price, one lead time” was coined. The aim was that it should only be necessary to call up what was needed rather than ensuring that delivery would be possible in any situation, which led to warehouse construction.

An important reason for not having focused on the logistics flow before was the prevailing business model at that time, with payments according to the time and materials principle. This led to the incorrect view that “someone else would pay” if there were any deviations. One of the biggest changes was to change behaviour. This was just as important as changing the business model.

Building trust

The realisation that openness was central to building trust in everybody provided a new focus. What can we achieve together with the customer and what added value can we create for each other?

Removing all prestige was crucial to this change; it was important to have the courage to show the actual situation, and openness would build mutual trust. It was therefore important to help each other to improve in close collaborations with customers. Since it was intended that the same hourly cost should be maintained in production, it was also necessary to review the entire supply chain management.

It was also decided to convert fixed costs to variable ones as far as practically possible in order to increase flexibility.

New behaviours

The work started by dealing with issues of behaviour, but also changed the operation’s management of objectives. In practical terms, daily management was introduced into the field.

A typical issue that was queried was the root causes for not having the right lead time – such issues were resolved by means of practical, day-to-day collaboration. It was decided that root cause analyses would be performed on all deviations. The aim here was to find better and more flexible working procedures.

The most central observation from this change work was that good communication needed to be achieved between all employees throughout the value stream in order to implement lasting and powerful streamlining.

An example of changed behaviour and attitude to delivery capability was that no new commitments were made, but instead the attitude of always delivering a faultless product was integrated into the operation. Later, the standardisation of the entire logistics flow could be seen to have led to a major increase in efficiency. The change also led to a dramatic reduction in costs, released tied-up capital and provided greater flexibility for both Saab and the customer.

Important reasons for the progress were that in-house personnel were used, who had the necessary skills to carry out the change. They were thus able to reach decisions on how their own operation would function in the future. Furthermore, the affected trade unions were involved throughout the change process. Frequent communication and changes in behaviour were fundamental for the successful result.

Effective logistics

The mid-2000s saw the start of a change project called Gunder, which was an integrated approach for rationalising and streamlining operations. This programme included a sub-project called “effective logistics”. The aim of the change project was to create an effective logistics solution within Saab AB and for Gripen that would be attractive enough to help generate new business.

The measures that would help to do this were as follows:

  • Lowering stock management costs, thereby releasing capital.
  • Lowering warehousing costs by releasing premises, personnel, equipment and tools.
  • Lowering order administration costs and providing more effective order handling.
  • Lowering transport costs.
  • Short lead times.
  • Increasing the level of service.

To carry out the above, existing business scenarios were considered. There was a desire to create mobility with regard to commitments, costs etc. Strategic dimensioning with clear decision timings and operational execution with clear decision timings were introduced.

Within the effective logistics project, a number of different activities were carried out to improve all logistics agreements. The management of suppliers was improved, and commitments for them were also broadened. Another important measure for improving the logistics agreements was the implementation of streamlining of purchasing and material securing work.

Product and service range management was another central part of the change project. There, the process was changed on the basis of logistical requirements. The product range was reviewed and brought under control. This also applied to the range of services. In this context, the decision-making procedure for product and service range decisions was changed.

In order to achieve the above, it was necessary to develop a more responsive organisation that could be more effective with regard to forecasting and capacity planning. The interfaces between operations have not previously been entirely clear. Now they were being clarified and changed.

A central issue for monitoring the change work – and later also the new, improved operations – was the introduction of new tools for the effective management of objectives. Within internal logistics management, a supply centre was created through outsourcing.

The result of the project affected the entire logistics flow. From a rationalisation and cost perspective, this has been the most successful project carried out by Saab in the past 15 years!

Implementation of Lean

Implementation of Lean

Capacity in military production reached its peak in the mid-2000s, after which the production rate dropped gradually. This was the start of a review of how production could be streamlined with lower production rates. Sometime later, various initiatives were initiated with Lean production, using experiences from civil manufacturing. In 2009, military production operations took over component production and assembly for fuselage manufacture from civil aircraft production. This generated opportunities for rationalisation.

When Lean production was initiated, the following description was drawn up.

Lean production means systematically minimising costs and lead times while maximising customer value in the production flow, by identifying and eliminating every activity that does not contribute to customer value.

Lean means making things simpler and more tangibly value-adding for the benefit of the customer. It is about continually finding better and simpler ways to resolve cases, such as recycling and standardising activities. Skills, tools and processes are adapted and integrated for manufacturing the best possible products.

The project that introduced Lean defined a number of overall objectives from the start, as follows:

  1. Lean thinking in all work
  • Securing skills and values.
  1. Continuously reducing the number of comments
  • Quality-assured handover at each step.
  1. 100% delivery precision to the customer
  • Securing the capability to keep to a 24-month turnaround time from order to delivery for a known configuration.
  • Securing the capability for flexibility in production volume according to the production strategy.
  1. Continuous improvement in the capability to operate cost-effective production/development

Success factors when introducing a Lean mind-set

Success factors when introducing a Lean mind-set

Customer satisfaction

  • Clarity in establishing requirements for inbound deliveries and production flow.

Value creation

  • An established working procedure that continuously increases our competitiveness.
  • Production-oriented organisation with knowledge of and focus on customer value.

Value stream

  • Good collaboration and high involvement of suppliers throughout the value chain.

Work flow

  • Continuous balancing of the work flows.
  • Implementation of Best Working Procedure Description (Besta Arbetssätt Beskrivning, BAB).
  • Introduction of ANDON team with a mix of broad and deep expertise.
  • Clear visualisation and communication of the status in the flow.

Culture

  • A working culture characterised by constant striving for improvement.

Removing the unnecessary

  • Right from the start, and deviations are fixed straight away.
  • The capability to identify activities that do not help to generate customer value.

A number of objectives were also drawn up and constantly followed. Some examples are shown below.

Management training for Lean

It was becoming possible to work with the entire production flow. This went smoothly, as responsibility was gathered together under one management team. A strategic decision was taken that, if radical changes were to be implemented, the management needed to have the right training and the right tools.

This led to the introduction of management training in Lean, called “Lean managers”. This training laid the foundation for the working procedure and the spirit that characterises the operation today. Important parts of this training were:

  • Securing competitiveness in order to satisfy customers and owners.
  • Continuously increasing efficiency in the long term in the office and in workshops.
  • Securing Lean skills and capabilities in managers and employees over the long term.
  • Training and skills development for managers in Lean systems.
  • Encouraging the practical application of Lean principles.
  • Providing tools and ideas regarding continued reflection and development.

The figure shows the setup of Lean management training.

The content of the management course was divided up into ten elements; training took place over one year.


 

Primary content:

  1. Basic course for Lean management.
  2. Basic course for Lean.
  3. Course for 5S – orderliness.
  4. Daily management – visual planning.
  5. Method standard with review of the BAB process for the best work description.
  6. Rate & balancing with review of daily schedule.
  7. Continuous improvement and systematic problem solving.
  8. Observational exercises.
  9. Review of Lean Production strategy.
  10. Review of Lean Product Development strategy.

First, a single Lean tool was introduced, in the form of daily management. More Lean tools were then gradually introduced, in particular Lean thinking.

Time to mature the understanding of Lean

It took three years for Lean to be fully integrated, and for this way of thinking to be accepted throughout the entirety of production operations. One of the most useful meeting formats is the meeting with daily management, which the production manager has with employees within production operations.

Daily management with morning meetings had become a natural venue for the immediately affected line managers. They can discuss short cases and then resolve them, so that most problems are resolved by the next working day.

The meeting format takes around 15 minutes to carry out and is based on a short report that constitutes joint problem solving. It provides a full overview of the situation – in this case the production situation.

Fixer culture vs. run plan

In the 1990s and earlier, there had been a fixer position (“detail hunter”) who had dealt with unresolved problems. However, this never improved production flow – quite the reverse, in fact. Most problems were done as quick jobs, which interfered with the ordinary production programme.

In the early 2000s, production management changed. Compliance with the production programme took on a whole new meaning, and the phrase “the run plan counts” was coined, meaning that work would now be done entirely in accordance with the defined production programme. The production programme was updated quarterly until 2009.

By that time production management had become much more stable, so the time between updates was extended to every other year. It is therefore not possible or permitted to add production in the past.

Quick jobs can still be carried out, but the cost is “high”, which “calms down the impatient”.

Having expressed the planning principles for production in terms of “the run plan counts”, it is now possible to manage the production programme in a controlled manner. This makes it possible to see exactly when a job will be completed.

Working with daily management means that quick jobs hardly ever need to be done.

Learning Curve for Aircraft Production

For several years, work has been done to change the flow between the various operational departments within production. In addition, collaboration with construction and production engineering has been changed ahead of the start of production of Gripen E.

This adjustment is a radical one. Repetitive working procedures and standardisation have changed the work.

A model is shown below in the form of a learning curve that is used to plan the production of new products. This model is based on an international standard used by all companies in the aircraft industry. As defined by the model, 180 units need to be produced before the product is optimised and understood.

The learning curve concerns all steps in producing a product. It is based on – among other things – the time it takes for operators to learn the product. Many other steps are also included in the learning curve, such as utilisation of drawings and requirements in creating an optimal working procedure for a given task, as well as optimising tool chains and logistics, etc.

In the early 2000s, the turnaround time for the entire production flow was 36 months. By 2009, it had dropped to 24 months. For Gripen E, the next generation of aircraft, it will reach 18 months.

Because aircraft manufacture can involve fairly long cycles before a task is repeated, it takes quite some time before 180 units are produced.

The learning curve for manufacturing new products has been used by Saab since the 1950s.

The figure shows the internationally recognised learning curve for aircraft production.

Model-based working procedure – MBD

The investment in a model-based working procedure in the form of MBD has led to the above result. Furthermore, patient change work in the Lean spirit has been taking place over many years with many small improvements.

We now have unique control of the entire value stream from development to delivery. Comparing the state of affairs in 2009 with the situation today, in 2009 there were around 45–50 major problems, which required continuous serious efforts. Five years later there were 2–10 cases of a minor nature that could be resolved relatively quickly.

A working procedure that involves working on forward planning makes it possible to prevent problems rather than simply resolve problems that have already arisen.

Rationalisation and streamlining

A large part of the improvement lies in rationalising and streamlining the entire material flow. Between 2005 and 2011, defects per aircraft dropped by 90%.

Continuous rationalisation and streamlining made it possible to keep the average hourly cost at the same level for eight years.

The existing production system has the following capabilities:

  • Can manufacture a complete detail, e.g. a large frame.
  • Can carry out all types of test, e.g. X-ray, magnet testing.
  • Can carry out all types of checks and measurements.

Continuous work is done on what is to be manufactured and what can be purchased pre-made.

When evaluating the changes that have contributed to the efficiency of current production operations, the changes to the value stream are central. We have in principle achieved a seamless value stream from construction to production.

Industry cooperation

In order to allow industry cooperation and offset in connection with export deals, it is important to ensure that the entire value stream for production is gathered together in-house. The level of production needs to be such that a high level of expertise and efficiency can be maintained.

By having the necessary level of production covering the entire value stream, it is possible to offer outsourcing of article manufacture. This means that a high degree of efficiency and strong training and development can continue to be maintained in-house. Furthermore, export customers can be offered full knowledge and training in production systems.

Strategic work with concrete results

When looking over the changes within production operations, three particularly important causes for an improved situation may be noted.

  1. We have been permitted to think strategically.
  2. We have listened to all operations in the value stream.
  3. We have made use of ideas, encouraged innovation and been permissive.

It can now be seen that all articles produced using a model-based working procedure such as MBD have an excellent fit.

Using a model-based working procedure and 3D models makes it possible to see how an article should be assembled. This makes both training and work easier. It is easy to communicate using images, especially in these cases, which deal with very complex assembly with very confined spaces. Nobody within production operations misses the old working procedures.

By virtually creating and designing aircraft and tools in a 3D environment, very effective value streams can be obtained throughout the development and production chain. Designers, production engineers and operators are able to identify collisions, verify access and optimise tools and production streams at an early stage of development, before the hardware is manufactured.

Skills retention within the manufacturing industry

Through virtual techniques, new personnel can be trained in production for all new products before the hardware is physically available. They do this by first learning to build the product virtually, and training until they are able to carry out the steps. They then learn the production process and gain familiarity with the spaces, tools and materials that are to be assembled or installed.

Learning can be significantly more efficient in regard to both time and cost. The virtual environment can also be used to continuously improve and develop processes and methods. The purpose is to reduce lead times, lower production costs and consequently ensure and improve production quality, etc.

Flexibility in how and where operators are trained is also substantially increased. Capabilities for training operators, technicians and support personnel are not as dependent on hardware location. Training can instead be largely conducted in a virtual 3D environment. This can be compared to training of new pilots, where simulators have now replaced what previously required training in actual aircraft.

The figure shows Saab’s learning curve for the production of Gripen E.

Analysis

The introduction of Lean tools and methods created an excellent and practical working procedure that facilitated day-to-day communication and thus made the whole value stream more fluid, from construction, production engineering, production and through to delivery.

The implementation of MBD made it possible to design the working procedure at every step of the value stream in a rational way, as well as allowing a large number of tasks to be done away with while also quickly providing full control of the entire process.

Skills retention within an advanced manufacturing industry is difficult. It is all the more difficult if production rates are low and the average employee age is high. If, as in Saab’s case, around five years’ experience is required to become fully trained, it is much more difficult to retain skills. Moreover, employees need to be certified in order to work on many tasks in production operations. The requirements for training for new employees have increased sharply since the Rules for Military Aviation (RML) were introduced.

With MBD, skills retention and training become easier in that the entire production process can be shown in 3D, which allows trainees to practise on models and thus shortens learning time. From now on, all steps can be worked on upon assembly.

Development within production operations has been characterised by creative management and governance. Operations have been provided with a great deal of flexibility and the work throughout the value stream has been reviewed. Work has been done long-term and skills have been developed not only through better collaboration in the value stream, but also by using a model-based working procedure to take the large rationalisation approaches throughout the value stream.

The working procedures described above mean that, for customers who wish to develop their own production and industrial capability within their countries, it is easy to offer them the ability to learn how to produce advanced aircraft. Constructing effective production expertise takes a very long time if it is to be done from scratch.

This has created awareness at all levels, commitment has increased sharply within operations and a commercial approach has been formed. It is now also every manager’s responsibility to be sure to affect the whole operation. This has led to a prestige-free state of affairs throughout the value stream. Personnel from construction and production engineering work together in teams with the production staff. A particularly important factor has been the increase in professional pride among operators in production. They have greater breadth, are able to work more flexibly, and have high acceptance of personal responsibility.

The author´s reflections