Elements of Excellence

Transcription

1 Elements of Excellence Managing With Analytics Harnessing the Balanced Scorecard (The Enterprise Performance Index) Missiles and Fire Control Steve Arms Director, QMS - Missile Defense LOB MFC Excellence - 1

2 Element of Excellence - EPI Enterprise Performance Index Business Scorecard Instrumentation Flags Trends Adaptable to Other Businesses Complement to Tactical Techniques Discriminator in Industry Strategic Instrumentation Set Higher Understanding of Business Relationships Prediction Oriented Strategic Tool Information for Executive Leaders to Drive Strategy and Results MFC Excellence - 2

3 Metric Driven Results A Metrics Journey PMT: Performance Management Teams: Based Multi-functional Manufacturing Teams Mixed Focus ELC: LMMFC Leadership Reviews of Performance Measures LM21 Lockheed Martin in the 21 st Century: Lean Six Sigma Deployment Strategic Performance Management Teams: Supply Chain Based PMTs Strategic Next Generation of ELC Enterprise Performance Index: Balanced Scorecard Analysis The Journey: Tactical to Strategic Focus on Measures MFC Excellence - 3

4 The Company Work System and Work Processes Work Systems Plan Capture MFC President Execute Support Plan Capture Execute Develop Strategic Objective Develop Long Range Plan Allocate Resources Capture The Business Plan the Program Design the Acquire the Fabricate the Support the VP Business Development VP Technical Operations VP Materials VP ion Operations Work Processes Support Multiple VPs of Lines Ensure Quality Excellence Provide Finance and IT Support Provide Facilities and ESH Support Provide Human Resources Support Provide Legal and Security Support VP Quality Assurance VP Finance & IT VP Human VP Legal Dir Ethics Resources Leadership Structure Mirrors Company Work Systems and Value Stream MFC Excellence - 4

5 Metric Driven Results Metric Alignment Quarterly Next Generation: Strategic Analysis of Work System Performance and Trending Executive Review of Tiered Work Systems and Processes Monthly Team and Level Reviews Daily / Weekly Tier 1: Work Process Fabricate the Capture the Business Plan the Program Tier 2: Work Process Multiple Measures Hours Per Unit All s Defects Per Unit All s Tier 3: Work Process Measure Hours Per Unit X Defects Per Unit Y Tier 4/5: PMT Team Measures Hours Assembly Line A Rejects Assembly Line B Bottom to Top Metric Alignment Roll-up to Balanced Scorecard MFC Excellence - 5

6 Metric Driven Results Metric Alignment Executive Review of Tiered Work Systems and Processes Monthly Quarterly Tier 1: Work Process Fabricate the Capture the Business Plan the Program Tier 2: Work Process Multiple Measures Hours Per Unit All s Defects Per Unit All s Tier 3: Work Process Measure Hours Per Unit X Defects Per Unit Y Next Generation: Strategic Analysis of Work System Performance and Trending Team and Level Reviews Daily / Weekly Tier 4/5: PMT Team Measures Hours Assembly Line A Rejects Assembly Line B Business Rhythm Teams: Daily / Weekly Executive Leadership Council: Monthly Senior Executive Leadership Council: Quarterly Tactical and Strategic Reviews Robust Business Rhythm And Tiered Focus Achieves Results MFC Excellence - 6

7 Realized Results A Marriage of Instrumentation and Leadership Plan Capture Execute Support Develop Strategic Objective Develop Long Range Plan Allocate Resources Capture The Business Rigorous Management Process Produces Sustained Market Growth Actual Orders $ Plan Exceeded Orders Plans in Volatile Market MFC Excellence - 7

8 Realized Results A Marriage of Instrumentation and Leadership Plan Capture Execute Support Plan the Program Design the Acquire the Fabricate the Support the Cumulative Cost Savings Due to Robust Design Process and Resulting First Test Success 100% First Test Design Success Over 12+ Years MFC Excellence - 8

9 Realized Results A Marriage of Instrumentation and Leadership Plan Capture Execute Support Plan the Program Design the Acquire the Fabricate the Support the 100 Improvements in Managing/Developing Our Supply Chain Processes are Driving Operational Effectiveness On Time Percentage On Time Percent On Time % Better Common Processes Evaluated Metric Set Benchmark top performer = 98% Benchmark Average = 87% Parts Procured Strategic Improvements: Enhanced Trend Tool Reverse Report Card Financial Risk Monitoring Parts Delivered Projected Year End Total Supplier Improvement Conference Red Flag Review EPRI Parts Delivered YTD Aug 2012 Supplier PMT Sub-Tier Monitoring Supplier Trend Tool Performance Supplier Data SHAPE, SCORE Tech Support Action Teams Reviews Gateway Disaster Warnings Staffs World Class Supply Chain Performance While Increasing Procured Volume Supplier Parts Delivered Supplier Parts Delivered MFC Excellence - 9

10 Realized Results A Marriage of Instrumentation and Leadership Plan Capture Execute Support Plan the Program Design the Acquire the Fabricate the Support the 1, Operational Performance Improvement Improvement ($) ($) Affordability Through Continuous Learning & Improvement Total Events Annual Cost Savings (Reduction and Avoidance) Cost Reduction 1, Number of Improvement Events Number of Improvement Events Identification of Opportunities Increase to Maintain Steady Cost Improvement MFC Excellence - 10

11 Realized Results A Marriage of Instrumentation and Leadership Plan Capture Execute Support Plan the Program Design the Acquire the Fabricate the Support the Return On Investment Substantially Exceeds Industry Benchmarks MFC Excellence - 11

12 Realized Results A Marriage of Instrumentation and Leadership Plan Capture Execute Support Effective Metric Instrumentation and Leadership Enable Informed Decisions Throughout All of the Work Systems and Work Processes 4 Exceptional 3 Satisfactory Positive Customer Satisfaction Yields Increased Follow-On Business Customer Assessment MFC - >6% above DOD Industry $7 $6 Follow-On Orders ($) $5 $4 $ $2 Customer Satisfaction Improving With Orders and Financial Growth MFC Excellence - 12

13 EPI Strategic Metric System - Hierarchy Tier I Poor Marginal Enterprise Score = 834 Acceptable Exceptional Over Managed 834 Tier 2 Execution Tier I.I Index Scorecard Talent Readiness Index (+/- 100 Pts) +72 Process Process Index Scorecard 738 Composite 798 Score 60% 40% 762 Monitors, Process and Human Capital Performance MFC Excellence - 13

14 EPI Strategic Metric System - Hierarchy Tier 2 Tier Process Hours Fabricate Hours Per Index Per Unit the Scorecard Unit Program Index A Scorecard Comprised of The Resultant Scores for Each Major Work System Including Key Support Functions Tier 3 Tier 4 Fabricate the 624 Tier 5 Hours Per Unit Index 699 Hours Per Unit Program A 120 Scorecard Comprised of the Key Indicators of A Work Process Scorecard For a Group of Work Process Measures Work Process Measure Each Tier Two Index Matches A Value Stream and An Executive Leader MFC Excellence - 14

15 EPI Strategic Metric System - Mechanics Work Process Measure Raw Value Level Weight Score Fabricate the Hours Per Unit (HPU) Index Fabricate the HPU Plan to Actual Line A 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 91% % Fabricate the HPU Plan to Actual Line B 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 98% % 315 Fabricate the HPU Plan to Actual Line C 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 99.5% % 116 Fabricate the HPU Plan to Actual Line D 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 107% % Identify the Key Work Process Being Measured 2. Identify the Work Process Key Measure 3 3. Identify A Scale Which Captures The Expected Range of Performance Spread the Scale from Poor Performance(100) to Perfection (1000). Where Possible Use Normalized Indicators Scales Do Not Have To Be Linear 4. Identify A Relative Importance or Weight For Each Metric Base Off Long Range Plan and Strategic Importance to Business Future 5. Record and Plot Actual Values 6. Identify the Raw Value s Level Based on Its Corresponding Scale 7. Multiply the Level and Weight to Get a Relative Score for Each Measure 8. Sum the Scores To Obtain an Index Score for The Key Measure A Structured Scorecard to Align, Rank and Roll Up Metric Performance for Rapid Consumption MFC Excellence - 15

16 EPI Strategic Metric System - Mechanics Tier 2 Work Systems Plan & Capture Execute Tier 1 Work Systems Measure Raw Value Level Weight Score Enterprise Work System EnterpriseIndex ALL Business Process Index % 319 ALL Execution Index % 443 ALL Talent Readiness Index Raw N/A 72 Work Process Measure Level Weight Score Value Enterprise Work System Develop Strategic Objectives, Develop LRP, Allocate Resources, Capture the Business Business Process Performance Index Business Development Index % 107 Design the Technical Operations Index % 80 Acquire the Materials Index % 100 Fabricate the ion Operations Index % 64 Tier 3 Support the Mission Success Index Raw Work Process Measure Level 900 Weight 1000 Score % 137 Value Fabricate the ion Provide Operations Finance and Index IT 100 Finance 200 Index Support % 110 Support Provide Human Resources Human Resources Index Support % 106 Fabricate the Contract On-Time Deliveries % 182 Ensure Quality Excellence Quality Index % 94 Fabricate the IOP Program Margin Index % 134 Fabricate the Hour Per Unit (HPU) Index % 219 Tier 4 Raw Work Process Fabricate Measure the Manufacturing Loses 300 Index Level 900 Weight 1000 Score Value % 53 Fabricate the Hours Per Unit (HPU) Index Fabricate the Defects 100 Per 200 Unit Index % 30 Fabricate the HPU Plan to Actual Line A 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 91% Fabricate the Supplier Floor Rejects Index % % 26 Fabricate the HPU Plan to Actual Line B 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 98% % 315 Fabricate the HPU Plan to Actual Line C 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 99.5% % 116 Fabricate the HPU Plan to Actual Line D 80% 85% 90% 92% 94% 96% 98% 100% 105% 120% 107% % 91 Scores Roll Up Into Parent Indices MFC Excellence - 16

17 EPI Strategic Metric System Statistical Flagging HPU Index Score?? UL HPU Index Moving Avg. LL Flag Excessive Variation: Identify Non-Robust Processes Identify Extreme Situations Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan HPU Index Score >σ? UL HPU Index Moving Avg. LL Flag Trending: Identify Turns In The Data To Drive Tactical and Strategic Shifts Get Ahead Of Or Leverage Drastic Change Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 HPU Index Score ? UL HPU Index Moving Avg. LL Flag Poor Performance: Flag All Processes With Sub-Par Performance Drive Strategic Shifts Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Scores Flagged To Identify Items Of Interest MFC Excellence - 17

18 EPI Strategic Metric System Correlation / Prediction Plan Capture Execute Customer Impact!!! Develop Strategic Objective Develop Long Range Plan Allocate Resources Capture The Business Plan the Program Design the Acquire the Fabricate the Support the Contract Negotiations Delay, Contract Awarded Inside Lead Time Support Parts Purchased Inside of Lead Time Are Expedited And Many Arrive Late Extensive Rework of Parts Required for Supplier Issues and Delays Ensure Quality Excellence Supplier Parts Exhibit Increased Reject Rates Provide Finance and IT Support Financial Performance Begins to Sway Due To Increased Rework of Supplied Hardware Provide Facilities and ESH Support Provide Human Resources Support Utilize Raw Values To Perform Regressions Identify Dependencies in Work Systems and Work Process Relationships Establish Time Phasing of Upstream Process and Performance Impacts to Predict Impact Evaluate Effectiveness of Strategy Changes Calculate Control Sensitivity of Process Identify Processes Needing Better Controls / Design Provide Legal and Security Support Count of Programs with >0.8 Correlation Between Metrics TCPI SPI Pgo TE Deliveries OCM: Orders Risk Mfg Losses OCM: Orders vs. Plan Sales vs. Plan Programmatics - Business Management IOP Performance Margin TE Health CPI Support the Index TE Uptime TE Response Time First Delivery to Lead Time Ratio Orders Backlog RAM% EBIT vs. Plan Escapes Supplier Parts with Potential Impact to IOP PO's Late to Place Parts Late to IOP Setback Line Gap Risk Manpower EAC Stability MR's Late to Release SFR SPCR Curve CPI Escapes SPI First 4 Delivery to Lead Time Ratio Cash Flow vs. Plan Contract On-Time Deliveries EBIT vs. Plan OCM: Orders Risk 3 Mfg Losses Pgo CSR Conservatism EAC Stability RAM% Orders 1 1 Backlog IOP Perfrmance 3 Margin TCPI OCM: 1 Orders vs. Plan PO's Late to Place DPU Aging 1 1 Nonconformances SFR Areas where metric linkage is now affirmed / created - Areas where metric linkage was already derived or are seemingly unrelated Correlation Can Lead To Time Phased Prediction of Upstream Results MFC Excellence - 18

19 EPI Strategic Metric System Best Practices Identify Stakeholders for Your Work Systems and Processes Drive Ownership to Metrics Drive Ownership to RESULTS Have Stakeholders Identify 5-6 Key Work Process Metrics Focus On Normalized Metrics Identify Meaningful Scales Ensure Scale Reflects Reality Scale Should Drive Metric Toward Perfection (1000 Score) Weight Metrics and Work Processes Based On Their Importance to the Company s Long Range and Strategic Plans Adopt a Frequent and Meaningful Business Rhythm Adopt Meaningful and Challenging Goals Set Strategic and Tactical Direction Your Company Can Utilize Analytics To Help Drive Strategy And Results MFC Excellence - 19

20 Final Thoughts EPI And Malcolm Baldrige Executive Review of Tiered Work Systems and Processes Monthly Team and Level Reviews Daily / Weekly Quarterly Tier 1: Work Process Fabricate the Capture the Business Plan the Program Tier 2: Work Process Multiple Measures Hours Per Unit All s Defects Per Unit All s Tier 3: Work Process Measure Hours Per Unit X Defects Per Unit Y Tier 4/5: PMT Team Measures Hours Assembly Line A Rejects Assembly Line B Next Generation: Strategic Analysis of Work System Performance and Trending Malcolm Baldrige Model provides the framework Measurement of the system that includes focus on Leadership, Planning, Workforce, Operations, with Results to the Customer Balanced Scorecards provide the Measurement Methodology Identifies the measures and goals for each Key Work Process Identifies Ownership and Accountability Enterprise Performance Index provides the Strategic Analysis Analyzes the Work Systems with the focus on the Business Long Range Plan Provides the Knowledge to predict and identify trends early to drive Results Enterprise Score = 834 Talent Readiness Index (+/- 100 Pts) +72 Execution Process Index Scorecard Process Index Scorecard 738 Composite % Score 40% 762 MFC Fundamental Business Principle: Business is not the objective it is the result. Performance is our objective. Tier 2 Tier I Poor Tier I.I Marginal Acceptable Exceptional 834 Over Managed MFC Excellence - 20