I. Program Overview. Organization Name/Program Name: Program Leader Name/ Position/Contact information , Phone

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1 I. Program Overview Organization Name/Program Name: Program Leader Name/ Position/Contact information , Phone Program Category Program Background: What is this program all about? (No more than one page). The overarching need for this program History of the program The product that is created by this program Scope of work original & updated Expected deliverables Current status of the program The Boeing Company Boeing C-40A Program Scott M. Dieckhaus Program Manager (206) (w); (206) (C) Sub-System Sustainment A derivative of the successful 737 commercial airliner, the C- 40A is a reliable, affordable, and fully FAA-certified military transport aircraft capable of carrying 40K-lbs of payload in allpassenger, all-cargo or combi configurations. It is flown by the Navy Reserve s Fleet Logistics Support Wing (FLSW) which provides 100 percent of the Navy s organic airlift capability. The C-40A is often used to support relief missions around the globe. In 1997 the U.S. Navy determined a need to begin replacing their aging C-9 medium-lift aircraft. Boeing Commercial Airplanes fully funded the development and FAA certification of a major derivative of the 737-NG aircraft which became the C (Convertible) aircraft. Naval Air Systems Command (NAVAIR) competitively selected Boeing s solution and became the launch customer for the C-40A. II. VALUE CREATION = 20 POINTS The original scope of work included design, development, production and delivery of two C-40As. Boeing developed a commercial support system and training program for aircrew and maintenance personnel, and provided Interim Contractor support for one year. Boeing also assisted in establishing all operational sites and delivered all support system products. Today, Boeing manages three Federal Acquisition Regulations (FAR) Part 12 commercial contracts for the program, providing aircraft production, modifications and upgrades; sustaining engineering; and Contractor Logistics Support (CLS). The sustaining engineering contract provides configuration management, service engineering, maintenance planning, technical manual revisions, engineering evaluations, engineering studies, and Operational Performance Tool (OPT) administration. Deliverables on the current CLS contract include inventory management, repair and replacement of parts, and depot level maintenance. The Navy and Marine Corps have requirements for four additional aircraft. Under the current production contract, Boeing will deliver the 15 th C-40A aircraft to the Navy in November AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 1

2 Note that we have provided a weighting system on this section that indicates importance to the overall A&D enterprise in improving performance. Value: 50% of category score What is the long-term value, competitive positioning, advantage, and return created by this program to your: Customers National interests, war fighter Company Strength, bottom line, and shareholders Scientific/technical value (particularly for R&D programs) 50% of category score Excellence and Uniqueness: What makes this program unique? Why should this program be awarded the Program Excellence Award? Customer Value: The C-40A is an affordable, relevant, versatile, and reliable aircraft operated by the USN. The C-40A Program focuses on delivering value and affordability to the Navy customer. The aircraft was commercially developed and fully FAA certified using Boeing internal funding, allowing NAVAIR to avoid significant engineering, test, and evaluation development costs. In conjunction with developing and producing an aircraft, Boeing established a post-delivery support plan to maximize the use of the 737 commercial infrastructures for technical data, scheduled maintenance planning, configuration management, service engineering, training, spares, and support equipment. Significant costs were avoided by using: Commercial operations and maintenance manuals in place of unique Naval Air Training and Operating Procedures Standardization (NATOPS) and Navy Tech Pubs Commercial low-utilization schedule maintenance program in place of a typical Navy Phased-Maintenance program Commercial scheduled maintenance task cards in place of Navy Maintenance Requirement Cards (MRCs) Commercial aircraft spare parts pools in place of the Navy purchasing spare parts Commercial depots in place of Government depots for scheduled maintenance Commercial flight crew and maintenance training courses and material in place of Navy Training Detachment classes Affordable: Through the diligence of the Boeing team, the Navy continues to realize the benefits of spreading development costs across the commercial 737 fleet. Relevant: The Boeing and NAVAIR team keep the C-40A updated with the latest operational, safety, and reliability enhancements through the incorporation of commercial service bulletins. This practice results in reduced cost and cycle time. Versatile: Because the aircraft can be reconfigured (allpassenger, all-cargo, or combi ), the Navy has the ability to tailor the airplane for each mission. Reliable: Over the last three years, the C-40A has experienced a Mission Capable Rate of 90+ percent AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 2

3 Company Value: The C-40A is the first military derivative of the 737NG, and has generated over $1B in revenue to Boeing. Using the same business model that leverages the commercial 737 infrastructure, Boeing launched the C-40B and C-40C models for the Air Force and Air National Guard, and has provided support for the additional eleven C-40 series aircraft it has delivered. Total revenue generated by the C-40A/B/C program has grown to nearly $3B for aircraft and support services. The versatility, reliability and affordability of the C-40 series aircraft were also major factors in the Navy s decision to choose Boeing s P-8A for replacement of the P-3. The P-8 program is valued in the multi-billions, and owes a great part of its success to the C-40 program. Excellence and Uniqueness: The C-40A Program is unique in that it is a Navy Reserve program that was not initially funded in the Navy s Aviation Procurement budget, but rather launched with National Guard and Reserve Equipment Account funding. Ten of the 15 aircraft delivered to date have been funded by Congressional budget add-ons. To achieve its goal of affordability, Boeing maintains a relatively small, integrated organization that provides full lifecycle products and services for the Navy Reserve s C-40A fleet. This talented organization manages three contracts with only 25 direct personnel. Among these services are: management of the General Terms Agreements (GTA) with Boeing Commercial Airplanes (BCA) for the production of the C and associated commercial support products; management of the Combi configuration Supplemental Type Certificate (STC) engineering; oversight for certification, manufacturing planning and parts procurement provided by Boeing Oklahoma City; installation of the Combi and Aft Airstair STCs by Boeing San Antonio; and management of three major suppliers for CLS: Delta TechOps (DTO), J. K. Hill and Associates (JKH), which provides part logistics support and field service representatives at the Navy bases, and Boeing subsidiary, Aviall, the world s largest supplier of commercial aircraft parts. III. ORGANIZATIONAL PROCESSES/BEST PRACTICES: (HOW DO YOU DO THINGS) = 30 POINTS Note that we have provided a weighting system on this section that indicates importance in the evaluation process. For each question, respond with the best practices and unique processes used by your program. Strategic Operations 30% of the score Track and Improve Value: Open and honest communication is key to the C-40A program s 2015 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 3

4 On an on-going basis how do you track and improve the value of this program to your customers, corporation, organization, and employees? Specifically, what processes, tools and practices have allowed the value of your program to increase? ability to track and improve stakeholder value. The team is encouraged to maintain frequent contact with their working-level customer counterparts. The business plan calls for Seattle-based program management, engineering and logistics staff to communicate at least weekly with their counterparts at the NAVAIR program office at Naval Air Station (NAS) Patuxent River, Maryland and the C-40A Navy Reserve Type Commander (TYCOM) at NAS Norfolk, Virginia. As the CLS provider, Boeing is in the unique position to communicate with the Fleet Logistics Support Wing (FLSW) staff and operational squadrons on a daily basis. The CLS contract is managed out of the C-40A CLS Fleet Readiness Support Center co-located with the Navy Reserve FLSW at NAS Ft. Worth Joint Reserve Base (JRB) in Texas. The CLS Team has personnel integrated with the squadron operations and maintenance departments at each main operating base, permitting very efficient support for parts inventory management and resolution of any maintenance and supply issues impacting mission requirements. The CLS manager provides a daily status report of C-40A aircraft to the customer and program team, detailing issues that impact the readiness of each C-40A aircraft in the fleet, and when and how each issue will be resolved. The C-40A program conducts biweekly teleconferences with the customer to discuss program issues, review action items, and review the status of all proposals. Boeing has helped the USN leverage lessons learned from the large number of commercial 737s operated worldwide. The value to Boeing and the C-40A Program is tracked using the Boeing ReMICS (Reporting Management Information for Cost and Schedule) system, ensuring that Earned Value Management (EVM) is monitored and reported accurately. ReMICS is a Web-based EVM metric generation tool used for assessing program health. Financial performance against the program s Long Range Business Plan (LRBP), schedule performance, technical performance measures, risk management, action items, help needed, and supplier performance metrics are all tracked on a monthly basis. Value to Boeing and the program is also tracked and measured by customer satisfaction. The level of customer satisfaction is determined through performance assessment reports. Informal Performance Assessment Reports (IPARs) are prepared by the NAVAIR program office each quarter assessing performance on all active contracts. This provides the Boeing team the opportunity to respond to and correct any issue before the release of the formal annual Contractor Performance Assessment Reports (CPARs) AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 4

5 Team Leadership 30% of category score Teaming What unique processes and practices have you put in place to maximize team collaboration and efficiency? Supply Chain With the broader distribution of design, development and production responsibility across the supply chain what unique tools, processes and practices have you put into place to ensure integration of the total supply chain (up/down/across)? People Development Among the most important roles of a leader is the identification and development of talent. What unique processes, tools and practices have you put into place to ensure people are developed and given the opportunity to risk, fail, recover and fully contribute. What metrics have you put into place to ensure this effort is effective? Teaming: Because C-40A is a relatively small program and core team members participate in weekly Program Management Meetings (PMMs) and Staff meetings, maximizing team collaboration and efficiency in the central organization is a straightforward process. To achieve collaboration across the geographically dispersed major suppliers, the program conducts face-to-face meetings and teleconferences. The program also treats its suppliers as valued team members, and encourages open and honest communication. Supply Chain: Efficient processes for delivering spare parts is essential for both Boeing and its suppliers. This ensures maximum aircraft readiness in support of worldwide Navy fleet operations. Boeing has achieved this by selecting best-in-industry partners for teaming on the CLS contract. Delta TechOps (DTO) is the largest airline MRO (Maintenance, Repair, and Overhaul) in North America, owning one of the largest inventories of 737 parts, and having systems and processes in place to rapidly deliver these spare parts to virtually any location in the world. With DTO as a primary supplier, the Navy s C-40A aircraft are treated as if they are integrated into Delta s fleet, receiving parts and maintenance as if they were a commercial airline. The Boeing PART Page (a web-based tool that supports commercial operators around the world) can also be used to quickly deliver parts from one of BCA s worldwide parts distribution centers. For military avionics or high value/high usage parts, the program relies on Boeing Supplier Management and the Boeing subsidiary, Aviall. When an order is placed by one of the C-40A squadrons, if it is a DTO-supported part, the order is processed by the DTO logistics specialist at Ft. Worth. If the order is for a part not supported by DTO, the order is reviewed by one of the C-40A asset managers to determine the most cost effective and efficient alternative means to obtain the part. Boeing and DTO have established processes in place to meet Commerce Department export requirements for commercial parts. Boeing has State Department licenses approved to export military avionics to C-40A detachment sites in Europe, Asia and the Middle-East. Boeing and DTO also have contracts with several freight forwarders to ship parts overseas and efficiently clear customs AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 5

6 People Development: Boeing places a high priority on the development of its employees. The company has processes and systems in place to ensure every employee receives the training, guidance, mentoring and feedback necessary to grow their knowledge, skills, experience and performance and achieve their professional goals. Operations 40% of category score Cycle Time Please describe what your program has done to reduce and continue to improve the cycle time required for the phase of life cycle in which you currently are executing (design/develop, produce, sustain). Include in your description the tools, processes and practices used as well as the metrics. Efficiencies Affordability and breaking the cost curve are among the most important challenges facing all program managers. Describe the areas you have targeted to improve your costs and how you resolved these challenges for each target. Describe how your program has developed or implemented new and unique tools, processes and practices to reduce cycle time for your program s specific stage of the lifecycle (design/develop, Unique to the C-40A Program is that it is a small, tightly integrated program responsible for the entire life-cycle of a product. This allows all members of the C-40A Program to be aware of most aspects and issues that are impacting the program and the customer. The program has focused on cross training many of its members to fill in for specialists when absent. This allows for opportunities to expand employees knowledge and skills into adjacent fields. The team has also experienced significant growth in new, junior-level employees. Each of these employees has been paired with a more senior employee to help in their professional development. Cycle Time: Improving cycle time is important in all phases of the C-40A program; however, cycle time as it relates to CLS is the most critical item impacting cost and mission assurance for the Navy customer. Aircraft readiness is defined as days available for scheduling within the realm of responsibility. This is maximized by reducing cycle time for procuring and delivering mission critical spare parts to the aircraft and completing all depot work as quickly and efficiently as possible. By teaming with DTO, the C-40A program has made the largest significant impact on meeting cycle time goals. Because Delta is a commercial airline, cycle time for parts and maintenance is a critical factor in its profitability. By leveraging Delta s processes and resources parts delivery and maintenance, cycle time is significantly reduced, as compared to typical military support systems or services provided by non-airline commercial MROs. Efficiencies: The most significant factor in improving affordability and breaking the cost curve is maintaining a lean, integrated organization. This includes teaming with best-in-industry suppliers and leveraging the 737 commercial infrastructure, including products and services provided by BCA. Over the last two years, the program has focused on reducing costs for parts repairs and replacements, which make up the largest portion of overall CLS costs. During this time, analyses of spares usage and cost data actuals were conducted. The high cost, high usage, 2015 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 6

7 produce, sustain). Planning, Monitoring, and Controlling What are the most significant change elements your program dealt with in the past 36 months, and what unique best practices and processes did you implement to make these changes. (Examples of change: intellectual property, shortages of critical supplies/raw materials.) and time-critical items were identified, and measures have been taken to reduce costs by approximately 20 percent. Planning, Monitoring, and Controlling: Over the past two years, Boeing has hired supply chain and financial data analysts to determine key target areas for cost and cycle time reductions. A material asset manager was hired to monitor parts orders to ensure parts are ordered at the lowest price and with delivery times that meet contract requirements. These employees have created a database and employed Big Data analytics to more fully understand trends in part usage and cost. This has directly contributed to efficiency and productivity gains. In addition, a full-time C-40A representative, stationed at the DTO facility in Atlanta, was hired to monitor and control DTO s depot maintenance. His primary responsibilities include tracking aircraft and high value assets through DTO s depot repair, and ensuring estimates for non-routine, over-and-above work are reasonable and appropriate. Metrics in these areas are reviewed and monitored for success at weekly PMMs. By using data gathering tools, the C-40A program has been able to define, measure, and improve logistic activities of the aircraft. IV. ADAPTING TO INNOVATION AND COMPLEXITY: (HOW DO YOU DEAL WITH YOUR PROGRAM S UNIQUE COMPLEXITIES) = 20 POINTS Identify the Program s Market Uncertainty level How new is your product to your market and users, based on the definitions below. Then describe how you deal and address this specific uncertainty: - Derivative an improvement of an existing product/system. - Platform a new generation in an existing product line. - New to the Market a product or system adopted from another market - New to the World - breakthrough product, never seen before Level of Market Uncertainty Level (choose one) x_ Derivative Platform New to Market New to the World From an aircraft sales perspective, the market uncertainty for the C- 40A is driven by the fact that it is a highly capable derivative of a commercial airplane that fits the Navy s Unique Fleet Essential Airlift in-theater and trans-oceanic missions in three different configurations (all cargo, all passenger, or combi. ). Uncertainty stems from the fact that few commercial airlines have a need to fly passengers and cargo on the main deck at the same time; and, for pure freighter needs, commercial operators can purchase 737 freighter conversions at less than half the cost of a C-40A. As a military airlifter, the C-40A competes with similarly priced aircraft that were originally designed as military airlifters with the ability to operate out of unimproved fields, roll on and off cargo and air-drop cargo and paratroopers. As such, the C-40A s market focus has been to keep the program sold by targeting senior leaders, up to and including the Chief of Naval Operations, as well as Congressional supporters of the Navy Reserve s need to recapitalize its aging operational support airlift fleet. It is likely the Navy will continue to contract with Boeing for sustaining engineering services, based on the program position as the original equipment manufacture of the 2015 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 7

8 Identify the Program s Technological Uncertainty using the definitions below. Then describe how you deal and address this uncertainty: - Low-tech: application of mature, well-established technology - Medium Technology: existing technology modified to meet new design requirements - High-Technology: recently developed new technology - Super High Technology: nonexisting technology that needs to be developed during the program. Identify the level of your System Complexity using the definitions below. Then explain how you are dealing with this level of complexity: - An Assembly performing a single function. - A Sub-system fitting within a larger system. - A System a collection of subsystems performing multiple functions. - An Array a System of Systems ; a widely dispersed collection of systems serving a common mission. Identify the Pace and Urgency of your team s effort using the definitions below. Then describe how you deal with the aircraft. There are, however, a number of competitors who can meet the Navy s CLS requirements. The challenge is to remain cost competitive and provide the Navy with a best value, best-ofindustry solution for this critical support requirement by teaming with Delta TechOps, J. K. Hill and Associates and Aviall. Technological Uncertainty Level (choose one) Low Technology X Medium Technology High Technology Super High Technology Most of the C-40A program s technology uncertainty is eliminated by virtue of the fact that the program has leveraged commercial 737 infrastructure and maximized the use of existing commercial products and services. With the exception of a few military avionics components and unique technical manuals, the C-40A and its support system is 100 percent commercial, allowing the Navy to affordably benefit from technology improvements in aircraft systems and support products. Where the few military unique systems have been incorporated into the C-40A platform, those systems themselves are not developmental in nature and have been previously proven on other military platforms. Where technological uncertainty exists is in the integration of those military avionics systems with their commercial counterparts. To minimize the uncertainty, the C-40A program works closely with the Boeing commercial side system experts to ensure and certify the integration and interoperability of both military and commercial avionics systems. System Complexity (choose one) Assembly X Sub-System System Array of Systems The C-40A Program is a sub-element of Boeing Defense, Space and Security (BDS) s portfolio of commercial derivative products and services that include VC-25, C-32, C-40B & C, P-8A & I, KC-46, KC-135, KC-10, E-6 and 737 AEW&C. Although all of these programs are based on derivatives of commercial airplanes, the customers requirements vary considerably. In addition, the C-40A Program is one of only two programs contracting through Federal Acquisition Regulations (FAR) Part 12 commercial contracts. BDS s common processes are designed to produce and support major military weapon systems built to military specifications and supported with typical military logistics systems. Many BDS processes have been tailored to satisfy the intent of the process and to keep aircraft and services affordable while meeting the Navy s requirements. Pace and Urgency (choose one) Regular Timing Fast/Competitive X Time Critical Blitz The Navy flies cargo and passengers to support missions around the 2015 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 8

9 program s pace requirements: - Regular timing no specific time pressures. Fast/Competitive time to market is important for competitiveness. - Time Critical there is an absolute and criticalto-success deadline. - Blitz there is a crisis element driving the need for immediate response globe. At least four C-40As are on scheduled detachments in Europe, the middle-east and the Pacific theaters. In addition to scheduled detachments, C-40As are assigned additional logistics missions both within the continental United States, and outside the continental United States, by the Navy Air Logistic Office. As such, the CLS contract has parts delivery time performance requirements that are predicated on getting aircraft back into a full mission capable status as quickly as possible. These requirements have been met or exceeded an average of 97 percent of the time over the life of the CLS contract, due to a number of factors. First, BCA has spares distribution centers around the world in support of commercial aircraft operations. Second, CLS partner Delta TechOps is the largest airline MRO is North America, with a large inventory of parts supporting several hundred 737s. Third, Boeing subsidiary, Aviall, is the world s largest provider of aircraft parts. And lastly, Boeing has the unmatched ability to reach back into the BCA production line when a part is expected to have a lengthy delivery time when coming from other available sources. The same timecritical urgency applies to scheduled maintenance. Aircraft in scheduled maintenance are not available for logistics missions. The Boeing CLS Team has completed all depot maintenance ahead of schedule. Aircraft have been returned to service from C-checks (heavy maintenance overhaul) an average of 29 days ahead of the contracted period of performance. V. METRICS (HOW DO YOU MEASURE PROGRAM S PERFORMANCE) = 30 POINTS Note 1: We are not looking for $ results, but the relative percentage achieved. In particular indicate what specific metrics and data you are using that drive the program beyond standard measures of schedule, budget, and performance, and which have contributed to your program s focus and its success.) Note 2: We have provided a weighting system on this section that indicates importance to the overall A&D enterprise in improving performance. Those with lower weighting are not unimportant; however, they have become given practices that all teams should be using. 40% of category score Customer/Performance - How do you measure the impact of your program on your customer and your customer s satisfaction? Include a description of unique/new metrics, as well as numerical evidence (normally a percentage or rate). Focus on the unique metrics developed to The impact of the C-40A program on customer satisfaction is measured monthly when each squadron prepares and signs Certificates of Compliance (COC) for assessing the CLS performance at each operating base. Each squadron has the opportunity to score and comment on the month s performance. All negative comments are analyzed for root cause and corrective action (RCCA) to prevent the problem from occurring again in the future. Informal Performance Assessment Reports (IPARs) are prepared by the NAVAIR program office each quarter to assess performance on all three active contracts. These IPARs provide the Boeing team an opportunity to respond and correct issues before the release of 2015 AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 9

10 provide an efficient way to effectively communicate this information to your customers and within your organization beyond your program team. 20% of category score Team - How do you measure and assess the impact of your program on your team development and employee satisfaction? 40% of category score Unique Metrics - Describe unique metrics you are using to measure your program s progress and how you focus it for outstanding and future success. formal annual Contractor Performance Assessment Reports (CPARs). Scores across all areas of performance have been satisfactory and very good, indicating that the program is meeting or exceeding all customer requirements and expectations. The most recent CLS IPAR received one satisfactory and nine very goods. The Boeing Company encourages all employees to complete an annual employee survey. The impact of the program and program leadership on team development and employee satisfaction is a subset of the assessment derived from employees scores and comments. Program management reviews the survey results and selects focus areas that need improvement. An employee engagement team, representing a demographic cross-section of the C-40A program, meets and discusses these focus areas. The team identifies fundamental causal factors, and makes recommendations for improvements for the coming year. The C-40A program began using data analytics two years ago to measure aircraft flight hours plotted against costs and Mission Capable Rates. The analytics help the team identify unique trends to ensure that aircraft remain Mission Capable while costs are minimized. An example of this involves identifying parts that are consumed on all overseas detachments. The C-40A Program is able to accurately calculate combined usage rates based on all scheduled overseas detachments, and process a time phased quote for Boeing Commercial to provide parts at the lowest price available. Proper use of metrics has allowed the program to decreases part costs by 20% over the past two years AVIATION WEEK PROGRAM EXCELLENCE INITIATIVE 10