Project Management Institute

Agile manufacturing company management, EIP style

Special Topics - Aerospace Industry

Montie Felman and Patricia Knoop, SofTech, Inc., Fairborn, Ohio

INTRODUCTION

It is generally recognized that the United States has fallen behind foreign competitors in manufacturing. We need to be faster to market with products and to achieve higher quality at lower cost. To this end, we have invested billions of dollars in such technologies as Computer Integrated Manufacturing (CIM), Computer Aided Design (CAD), and Computer Aided Manufacturing (CAM) in attempting to improve our productivity and quality. CAD systems alone are projected to have a $25 billion market by the middle of this decade [2]. This investment has resulted in significant progress in improving manufacturing operations; however, much of this improvement has been isolated in specific segments or elements of manufacturing.

An agile manufacturing enterprise responds rapidly to changes in customer needs and technological innovations by continuously modifying its products to meet these challenges. Agile manufacturing focuses on producing customized products with quality which meet customer needs throughout the product's life cycle. This approach is in contrast to the current focus of mass production based strictly on market projections and product quality measured in defects per product sold. Total integration of the organization is essential to an agile manufacturing enterprise and provides significant benefits to all other manufacturing organizations, including flexible and mass production manufacturing.

How do we achieve this total integration? Are any guidelines available? One Air Force Manufacturing Technology (MANTECH) initiative, the Enterprise Integration Program (EIP), is under way now to develop guidelines for existing and new enterprises and their managers that will help them institute the process, culture, organization, technology, and management methods essential to an integrated enterprise. As a minimum, Enterprise Integration requires that:

  • Functions of an enterprise work together as an integrated whole;
  • Standardization be implemented to provide flexibility and to eliminate “islands” of information
  • Quality measures, better equipped to measure the operational effectiveness of the enterprise, be put in place;
  • Standardization of parts, processes, and products be implemented throughout the organization;
  • An effective enterprise structure be implemented to facilitate and encourage the integration of new technologies into the enterprise.

The EIP objective is to enhance the competitive capability of U.S. industry by fostering broader practice of Enterprise Integration through the formulation of guidelines for accomplishing it, performing extensive technology transfer and consensus building in industry and government, and demonstrating business benefits of Enterprise Integration at pilot implementation sites.

With the first year of this five-year initiative completed, we do not yet have all the answers. However, we have taken a major step forward in starting to develop guidelines that focus on the critical problems. There is no easy solution and no single solution path. For example, it is clear that incorporating advanced technology into manufacturing is essential. However, technology is only one of the resources needed to meet today's challenges.

A “virtual company” would behave as if it were a single company dedicated to the project at hand.

Similarly, management innovations alone are not sufficient, nor are they sufficient even when combined with the implementation of advanced technologies in traditional ways. The EIP initiative and many other independent but related efforts are finding and agreeing that we need to integrate technology with flexible management structures and a knowledgeable work force. We need to do this in new ways that are sweepingly different from the familiar ones in order to accomplish Enterprise Integration and to invoke the changes needed to compete in today's environment.

TECHNOLOGY AND MANAGEMENT CHANGES ARE NOT ENOUGH

Over the past forty or fifty years, manufacturing has undergone an enormous spectrum of changes in technology and management methods and focus. Although we are still making changes and continue to make some progress, our efforts are not nearly enough. Unless we extend the scope and energy of our efforts, we will not succeed in meeting our country's goals of regaining global competitiveness. The trend toward producing a variety of different items in small quantities, plus the need to be able to bring out totally new products quickly, requires flexibility in our enterprises [1] [2] [3].

The Japanese believe that even by continuing to improve some of our most advanced technologies, such as CIM, the U.S. will not achieve the responsiveness needed because the structures already in place hinder the attainment of the structures needed.

The total enterprise must be designed to be responsive [3]. Business objectives as well as product manufacturing must be considered. Such business considerations would inelude, for example, market forecasting and development, product quality, available labor resources and training requirements, capital expenditures, and other indirect factors that affect the overall enterprise. Leaders in American industry are expressing the need to re-evaluate the old paradigms based on mass production and to consider the transition toward the development of agile enterprises with flexible production technologies; organizational flexibility; rapid product development; a knowledgeable, involved work force; and the insertion of cultural changes necessary to making the new agile enterprise work effectively.

THE ROLE OF ENTERPRISE INTEGRATION

Enterprise Integration is an ongoing process which includes defining a vision and strategy for the enterprise, assessing the current processes and practices, establishing a plan for accomplishing the vision, establishing a process for measuring and evaluating progress toward accomplishment of the objectives, implementing the essential elements of the plan, monitoring and evaluating performance, and instituting continual improvements as required.

A recent study initiated within the Department of Defense MANTECH Program Office and partially funded by participating representative industries, emphasized the importance of agile manufacturing to the Department of Defense. This study, performed by a consortium led by the Iacocca Institute [1], reported in 1991 on the global competitive environment U.S. manufacturing will face and the infrastructure it will require as it moves into the 21st Century. The study identified nine “manufacturing enterprise elements” that support the characteristics necessary in an agile enterprise (see Table 1).

PROJECT MANAGERS

Table 1. Manufacturing Enterprise Elements

  • Business Environment
  • Communication and Information
  • Cooperation and Team Factors
  • Enterprise Flexibility
  • Enterprise-Wide Concurrency
  • Environmental Enhancement
  • Human Elements
  • Subcontractor and Supplier Support
  • Technology Deployment

Enterprise Integration, one of the enabling concepts identified in the study, was attributed as being more “critical” than any other single enabling technology. It is essential to the “business environment,” for example, because the business practices and metrics in an agile enterprise will make it possible for managers to digest information from across the entire enterprise as well as any partnerships or “virtual companies” in which the enterprise is involved. Thus, it will be necessary for all computer and information systems in the enterprise to be integrated.

Similarly, Enterprise Integration is essential to “enterprise-wide concurrency,” which the Iacocca Study exemplifies by pointing to the need to integrate such daily activities as product engineering and production-process engineering. The purpose is to allow the product and process engineers to share their knowledge as they work together and, thereby, reduce the total time to market. Enterprise Integration will provide the functional structure and the open systems and electronics communication infrastructure for supporting concurrency.

As the Iacocca Study points out, Enterprise Integration also develops and supports the unified work methods and information base used throughout the enterprise to enable interactive and concurrent activities to occur.

As a final example, “subcontractor and supplier support” is essential to agile enterprises because of the sheer impact in numbers of suppliers and subcontractors on our national industrial productivity. The 360,000 manufacturing firms in the United States with fewer than 500 workers account for 46 percent of the national industrial production [1]. Agile manufacturing will be network-based manufacturing, which taps these companies' resources.

All of these changes will require managers to shift from traditional vertical hierarchical organizational structures to more horizontal structures with fewer levels of management.

Again, Enterprise Integration is one of the critical enabling technologies, because as large enterprises establish Enterprise Integration systems suppliers who are not part of those systems will be cut off from their customers.

In general, Enterprise Integration is essential to the formation of agile enterprises because it ensures that all parts fit together harmoniously tore-duce voids or redundancies; ensures that cost considerations are effectively balanced by people, systems, and technology needs; and provides understanding of all processes or functions (white- as well as blue-collar) through all phases for all organizational levels. By incorporating Enterprise Integration, the whole is optimized to be more responsive, to achieve higher quality and lower cost, and to be more flexible to market demand.

THE ENTERPRISE INTEGRATION PROGRAM'S OBJECTIVES

The five-year EIP contract, being performed by SotTech, Inc. as prime contractor, includes the development of guidelines for Enterprise Integration, the measured demonstration of its merits in real pilot site projects, and the building of advocacy and consensus throughout industry and the government. As the culmination of a number of completed and ongoing MANTECH initiatives in related areas, EIP is also charged with capitalizing on, and working harmoniously with, many other initiatives. The objective is not to reinvent the wheel nor to take over related, contributing efforts that are doing good work. Rather, the objective of the EIP is to build upon such efforts and unify them through the evolution of a set of guidelines that have the power of national consensus and measured, proven results behind them.

The envisioned Enterprise Integration Guidelines (EIG) will begin to provide managers the technical and managerial guidance needed to integrate their enterprises to improve business performance. The EIG will reference existing standards and contain evaluated and accepted practices from various consortia and industry initiatives.

The preliminary version will depend heavily on lessons learned by private and government organizations in areas associated with defining and implementing elements of Enterprise Integration and open system architecture development and application. These details will be obtained from interactions with consortia and open systems architecture developers and EIP baseline enterprises.1 The EIG will be enhanced incrementally and validated using the results of baseline enterprises, concept evaluation sites, and pilot implementation sites.2 Largely by using existing technology, tools, standards, and the combined results of other initiatives, they will guide managers in transitioning to agile enterprises. The EIP is currently selecting baseline enterprises, concept evaluation sites, and pilot implementation sites around the United States to demonstrate the EIP approach to large aerospace contractors and the industrial community as well as the subcontractors who supply subsystems and/or components (see Figure 1).

THE ENTERPRISE INTEGRATION STYLE MANAGER

As manufacturing enterprises adopt more and more of the characteristics of agile enterprises, managers will focus on new activities. Among these activities is orchestrating the formation of “virtual companies” by integrating with other enterprises. Some of the current concepts of a “virtual company” are that it would behave as if it were a single company dedicated to the project at hand. The “virtual company” would need to apply the distributed resources as well as the organizational structures of their constituent enterprises seemlessly, in a “plug-compatible” way.

Representative Activities and Scope of EIP

Figure 1. Representative Activities and Scope of EIP

This plug compatibility means that managers will also focus on building the modularity and interfaces into the resources and organizational structures of their own enterprises to enable them to play in this arena. Techniques for motivating and rewarding self-directed, inter- and intra-enterprise project teams will be needed. Legal barriers to the formation of virtual companies will have to be removed through a combination of the cooperative efforts of managers and enterprise owners and action by the legislatures and courts. Management will also need to find more ways of delegating authority and placing the planning, decision-making, quality, and performance responsibilities on the shoulders of the people who know how to do the work and who know what the problems are. Methods of promoting work force initiative at the operational level will be needed. As is the case with any enterprise, any non-value-added cost of management will need to be reduced or eliminated to improve competitiveness; the management structure, as we know it today will need to become smaller and more effective.

Skills that managers will need to manage enterprises of the future are significantly more diverse than those required in the past. Managers will need not only to delegate more authority and trust to employees, but they will also need to depend on them for knowledge of a broad spectrum of technologies. All employees, including those in management, design, sales, marketing, and manufacturing, will be interacting with computer-based systems to a much greater extent than ever before. Also, new technologies in intelligent controllers and sensors, knowledge-based systems, and process hardware are among the enabling technologies for agile enterprises [1]. Managers will need to ensure that their employees are knowledgeable about all these technologies.

In addition to new management skills, Enterprise Integration style management will need new organizational practices to become more responsive in addressing pressing concerns and issues. Organizational barriers will need to be eliminated. There will be fewer “pigeon-holed” specialists and more multi-disciplined people. Managers will need to find ways to improve employee utilization throughout the organization by optimizing each employee's contribution to the agile enterprise. This optimization will require cross-functional training and greater emphasis on team-oriented behavior, including reward and review mechanisms for encouraging it. Increased automation and the move toward paperless factories will make the enterprise less labor-intensive and more information-intensive. All of these changes will require managers to shift from traditional vertical hierarchical organizational structures to more horizontal structures with fewer levels of management.

Managers, including those in human resources management, will perceive their employees as major assets of the organization to a greater degree than ever before. People will be rotated into and out of teams and will be capable of performing many different functions. Management will need to spend more time and money on employee training. Each employee will represent a major investment of the company, and, as more attention is paid to nurturing and improving employee skills, there will be less turnover. The focus of human resources managers will be shifted away from hiring and firing and toward training, work force diversification, employee empowerment, employee rewards, and team-building.

Finally, Enterprise Integration style managers will spend more time evaluating the needs and opportunities for forming a number of virtual enterprises simultaneously to compete successfully in world markets. Corporations of the future will seldom, and perhaps never, possess all the internal skills and capabilities to respond quickly and take advantage of every new opportunity. Top-level managers will need to understand the legal, accounting, and administrative procedures for accomplishing integration and agility in their enterprises, and they must both motivate and empower lower-level managers to arrange virtual-type activities in a dynamic and responsive way.

EIP—INSERTING ITS OWN TECHNOLOGY

How will the EIP help the Enterprise Integration style manager? How will it transfer its value to the industrial community? How will it insert its own technology? The answer is by carrying out a structured program for demonstrating and measuring results, performing business case analyses, and building consensus within a broad participating spectrum of stakeholder groups.

The transfer of cultural, organizational, and technological elements of Enterprise Integration, as reflected in the guidelines to be produced by the EIP initiative, will be accomplished within the corporate facilities of baseline, concept evaluation, and pilot implementation sites. Formal cost benefits analyses will be performed at each of the Pilot Implementation Sites.

In addition, transfer of results externally to industry in general will be accomplished. To accomplish this transfer, the EIP includes an advocacy initiative that encompasses all activities necessary to promote the acceptance and use of the results of the EIP This initiative will include ensuring the concurrence of industry that the contents of the guidelines are valid, practical, and beneficial and, therefore, that they can be used with confidence. This concurrence will be obtained by obtaining the participation of five stakeholder groups: (1) government, (2) system integrators, (3) enterprise end-users, (4) product vendors, and (5) consortia, standards organizations, and academia. These participants will participate in EIP open industry meetings, make recommendations to the EIP team throughout the program, and band together into a users group that will continue beyond EIP's five-year duration.

The advocacy initiative of the EIP will perform a business case analysis to aid in establishing the viability of Enterprise Integration for accomplishing business objectives. It will include identifying and qualifying metrics in a model that allows a macro analysis for each stakeholder. This model will be related to the results of other EIP tasks such as a formal needs analysis and requirements definition. Its purpose is to convince both private and public sector enterprises of the desirability of integration, to convince system integrators to lead their customers toward sound Enterprise Integration concepts, to convince vendors to market Enterprise Integration-compliant products, and to convince independent agencies to provide testing arrangements and appropriate research and development.

To promote community consensus on the viability of the guidelines, sofTech has formed an advisory and review board with representation from each of the stakeholder groups. This board is providing to the EIP the necessary guidance to ensure that the guidelines and the program for consensus and advocacy are suitable to the needs of each stakeholder.

By demonstrating and measuring the results of methods described in the guidelines, performing business case analyses, and involving a broad spectrum of stakeholders in the review, critique, and advocacy process, the EIP is taking a proactive mute to inserting its own technology

MEETING THE CHALLENGE OF A BRIGHT FUTURE

It is fortunate and encouraging that one of the major challenges for forming and managing agile manufacturing enterprises exploits a number of strengths of the U.S. The ability to form virtual companies will be a potent competitive weapon in the years to come. Our own world leadership in information science and our large and diversified supplier base give us advantages over other countries [1].

Enterprise Integration is a challenging area. Much remains to be accomplished before all the obstacles are fully understood and resolved. The EIP is but one of the initiatives that will guide managers in meeting the new challenges that lie ahead. It will contribute by showing some of what can be done now, by helping to focus attention on the benefits, and by encouraging industry to invest in both realization of available advantages and research and development.

The EIP is significant in the key role it plays in providing the guidelines for enabling integration of the enterprise. By collecting, collating, and integrating the approaches of many programs and consortia with actual experience from industry, and formulating a unified approach into guidelines, the EIP is a mechanism to encourage and promote the formation of agile, integrated enterprises and will help managers meet the challenges of the future. By showing that the guidelines work in actual pilot manufacturing operations, the EIP will provide convincing quantitative data proving that Enterprise Integration is worthwhile.

Through energetic advocacy activities, the EIP will publicize the capabilities implicit in the guidelines and the quantitative performance data showing the competitive advantage that can be realized through Enterprise Integration. In this manner, we believe that the EIP can be instrumental in bolstering the international competitiveness of U.S. industry in general and improving the ability of the U.S. industrial base to support our defense needs in a more responsive higher quality and lower cost manner than ever before.

Thinking always ahead, thinking always of tying to do more, brings a state of mind in which nothing is impossible [4].

Henry Ford

REFERENCES

1. Iacocca Institute. 1991.21st Century Manufacturing Enterprise Strategy, Le-high University, Bethlehem, PA.

2. Robertson, D. February 1992. Managing CAD Systems in Mechanical Design Engineering. IEEE Transactions on Engineering Management, vol. 39, no. 1.

3. Manufacturing 21 Report: The Future of Japanese Manufacturing. 1990. Association for Manufacturing Excellence.

4. Suzaki, K. 1987. The New Manufacturing Challenge: Techniques for Continuous Improvement. New York, NY: Macmillan, The Free Press.

ENDNOTES

1. Baseline enterprises are enterprises that have already begun the integration process and have implemented capabilities which support continuous improvement. A baseline enterprise's integration efforts are recognized by the community as resulting in at least a modicum of success. The significant work which has already been performed by these enterprises, as well as associated system integrator and vendor experience, represents a solid foundation for the preliminary EIG. The data collection and analysis of status and results of baseline enterprises will provide details for inclusion in the preliminary EIG.

2. Concept evaluation sites will be selected by the EIP to evaluate specific concepts associated with enterprise integration. These sites will provide for “real-time” case studies of applying EIG processes, with particular emphasis on the lessons learned; and they will serve as the initial test bed for many of the general principles detailed in the EIG (e.g., incorporating legacy systems). Pilot implementation sites will provide the actual implementation environment needed to validate the EIG as well as to provide feedback regarding essential modifications to evolve the EIG toward a comprehensive set of guidelines.

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Montie F. Felman is a principal consultant for SofTech, Inc. where he is currently the program manager for the Air Force Manufacturing Technology Enterprise Integration Program.

He obtained a bachelor of electrical engineering degree from Ohio State University and performed graduate work in electrical engineering at the Moore School of the University of Pennsylvania.

Mr. Felman has spent 20 of his 36 years of experience managing significant system development and implementation programs. These have included both factory- and defense-oriented applications. Most of these projects have been in challenging areas where emerging product capabilities were being applied to new requirement areas.

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Patricia A. Knoop is currently the deputy general manager of the System Sciences Group of SofTech, Inc.

She has an M.S. degree in computer and information science from Ohio State University, Columbus, Ohio, and an A.B. degree in mathematics from MacMurray College, Jacksonville, Illinois.

Prior to her current position, Ms. Knoop held a series of management positions in the Department of Defense (DOD), including management of the Air Force's Exploratory Development Program for modeling and simulation technology for flight crew training; and management of high-order-language standardization and validation programs, beginning with JOVIAL and concluding with Ada, the current DOD standard language.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

AUGUST 1992 pm network

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