Lean is used to describe the elimination of waste, particularly in the form of time, in favor of adding maximum value to a product or service. This is primarily accomplished by using feedback — including employee and customer responses — to address areas of inefficiency. In fact, studies have shown that an engaged employee — or one who feels valued and listened to by employers — has a direct, positive influence on profitability.
Although the concept is simple, the model has revolutionized a multitude of industries and continues to be the primary mode of efficiency improvement found in nearly every sector of commerce. For example, international shipping service provider FedEx Express used this method to weather the Great Recession. In 2008, maintenance, repair and operations (MRO) team members based in the company’s Los Angeles International Airport wing performed the bulk of the aircraft repairs, major services, plane overhauls and equipment upgrades to the company’s entire aircraft fleet. MRO professionals at this facility performed C-checks, a process of elaborate maintenance and repair that involves disassembly of critical parts. According to the Aviation Safety Bureau, C-checks need to be done every 12 to 18 months, depending on the type of aircraft and the manufacturer’s specifications.
At the time, the average turnaround period for a C-check was six weeks. If there were any delays in this schedule, the company outsourced the C-checks to third-party MROs for an average cost of $2 million per project. Because of the high costs incurred through this outsourcing, FedEx Express leaders chose to implement lean principles and practices to improve the efficiency of its more than 500 workers.
But even before lean efficiencies were instated, investigators tracked waste in the facility. They found that employees spent an average of 1.3 to 2.4 hours each day walking to retrieve parts. This extra time meant delays in service and repair that ultimately required the company to outsource the work.
Once the sources of the delays were identified, company leaders took simple steps to make it easier for MRO professionals to retrieve needed parts. Within a year, FedEx Express saw a drop in wasted time to 0.47 to 1.3 hours a day. In addition, the number of employee trips per day decreased from 106 to just 25. With these time savings, the C-checks could be completed on time with less help from third-party MROs. This lean strategy helped the aerospace company make strategic changes toward maximizing profitability for the long term.
Obstacles to lean thinking
If lean practices can help save both time and financial costs, why aren’t all companies adopting them? One of the challenges to lean thinking is a common misconception that the strategy leads to mass layoffs and overworked employees.
An efficient model does not require one employee to do the job of two. Instead, it means supplying employees with practical solutions for day-to-day activities. For FedEx Express, profit margins were not increased through mass layoffs. Instead, simple adjustments to the parts-retrieval process gave employees the time to service more aircrafts.
An easy solution to improving employee under-standing of the lean process is through the correct practice of the principles themselves. An essential part of the lean model is continuous improvement. This is accomplished by first identifying areas that regularly pose a threat to efficiency and then seeking out good solutions, as illustrated in the FedEx Express example. The easiest way to implement this principle is through employee engagement.
In particular, the direct involvement of employees on the front lines can help company leaders identify areas of waste and take steps toward improvement. And when overall levels of employee engagement are heightened, leaders find that workers will be more open to engaging in and assisting with efficiency improvements.
A high-tech boost
Technology also can help make the transition to lean practices easier. Specifically, the internet of things (IOT) is one of the most important technological advances of the last decade. IOT enables electronic devices to connect, communicate and analyze extensive amounts of data in real time. Aircraft and individual airplane parts often are equipped with sensors that relay flight statistics, plane and part performance, and other information to airports, airlines and manufacturers. MRO activities especially use IOT to pinpoint service areas. Further, technicians now can more accurately predict when aircraft parts will need to be serviced, replaced or repaired. This saves MRO professionals the time of physically reviewing service areas between flights and enables better maintenance planning.
The ability of IOT to collect information in real time has widespread implications for use in the lean model across all industries. In the assembly line, for example, this real-time data supports the immediate detection and resolution of bottlenecks and other slowdowns. For the supply chain, these vast amounts of information enable suppliers to intricately understand the needs of their customers and the lifespan of parts and other supplies.
Building a lean supply chain
Although the day-to-day operations of various industries may be different, the need for models of efficiency is the same. Suppliers must have accurate inventory figures, reasonable turnaround times for packaging and shipping, and the ability to quickly transport parts to their destinations. By using lean principles and embracing IOT within this model, suppliers can extend efficiency benefits to others further down the supply chain.
Because of the tight deadlines for manufacturers and airlines, efficiency within the aerospace supply chain is paramount. When approved engines for the Airbus A320neo arrived late, Qatar Airways canceled an order for 50 planes, which was valued at approximately $5.3 billion. Airbus experienced similar turmoil because of out-of-stock cabin interior parts for the A350. Even a delay at the lowest level of the supply chain can have a direct effect on the bottom line.
One solution to these types of delays is to take advantage of radio-frequency identification (RFID) technology. RFID sensors can communicate tracking information to suppliers, manufacturers and end customers. These real-time location updates can translate into accurate scheduling for every participant in the supply chain.
Another helpful practice is just in time (JIT). The APICS Dictionary defines JIT as: “A philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity. … The primary elements of [JIT] are to have only the required inventory when needed; to improve quality to zero defects; to reduce lead times by reducing setup times, queue lengths and lot sizes; to incrementally revise the operations themselves; and to accomplish these activities at minimum cost.”
For parts suppliers, JIT practices focus on the balance of products in inventory. An optimal supply chain will have adequate inventory in stock to prevent order cancellations or losses to competitors, but it will not be overstocked because this increases storage costs and poses the risk that the parts in inventory will become outdated before they are used or sold. IOT can assist suppliers in optimizing product levels by collecting information about the life cycle of parts, average sales and necessity to the market.
No matter where a company is in the supply chain, its efficiency gains and losses will affect all suppliers and customers. With tight turnaround times and large financial risks, aerospace and defense (A&D) supply chains experience these impacts to an even greater degree. For this reason, it is important for A&D companies — and all supply chain players — to identify areas of waste and improve upon them to create a leaner, more profitable and on-time supply chain.
Bud T. Miller is director of business process management for Kapco Global, a distributor of aircraft parts. He has more than 20 years of experience in sales and has worked for leading companies in the automotive, construction equipment, water quality, safety and aerospace industries. Miller may be contacted at firstname.lastname@example.org.
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