A lean sustainment enterprise model for military systems - Opinion

Acquisition Review Quarterly, Fall, 2002 by Mario Agripino, Tim Cathcart, Dennis Mathaisel

As existing weapon systems age and the costs and cycle times on the maintenance, repair, and overhaul of these systems increases, various organizations within the U.S. Department of Defense are conducting independent studies to help the system become more efficient. Current research efforts on maintenance, repair and overhaul operations focus on individual elements of this "sustainment" system. However, to more effectively solve the sustainment problem, research should be conducted on the whole enterprise, from raw material suppliers to final product delivery. To accomplish this objective, the authors developed a new "lean" framework for military systems sustainment. The goal of this model is to minimize non-value-added activities throughout the entire enterprise.

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Since 1990, the Department of Defense (DoD) has reduced its budget by 29 percent. This reduction has greatly impacted weapon system acquisition and in-service support (Cordesman, 2000). Reduced budgets have forced the military branches to extend the life of current legacy systems with significant reductions in acquisition of replacement systems. In addition, current weapon systems are faced with escalating operations and maintenance costs. These "sustainment" costs are due to:

* Increased operational tempo.

* Increased mean time between maintenance (MTBM) cycles due to increased operational requirements.

* Increased life extension of existing weapon systems due to delays in new system acquisition.

* Unforeseen support problems associated with aging weapons systems.

* Material shortages because of diminishing manufacturing resources and technological obsolescence.

As sustainment costs increase, there is less funding available to procure replacement systems. An analysis conducted by the DoD (Gansler, 1999) concluded that, unless mission requirements and the operational tempo are reduced, or there are significant increases in the budget, the operational maintenance cost portions of the budget will equal the total current (net present value) budgets by the year 2024 (Figure 1). This chain of events has been illustrated and characterized in Figure 2 as the DoD death spiral. To waive off this death spiral, DoD must find innovative solutions to support legacy systems that are cost effective and flexible. The DoD must economically manage these system lifecycles in order to address obsolescence and modernization issues without degrading readiness, cost, and performance objectives.

Along with DoD budgets, the defense industry sector has shrunk dramatically. In order to effectively compete in a significantly smaller market, the industry has seen a large number of corporate mergers. With the restructuring of the new industry base, many of the supply chain networks no longer exist. Second and third tier supply chain businesses have gone out of production. The defense industry sector is changing, and their associated supply chain network is eroding rapidly.

With over 60 percent of the total aircraft system life-cycle cost associated with operations and aircraft maintenance, and as aircraft systems age, there is great opportunity to optimize sustainment costs (Blanchard & Fabrycky, 1998). With some degree of success, industry and government partnerships have been formed to attempt to address these issues. Examples include the U.S. Army's Modernization Through Spares program (Kros, 1999), Agile Combat Support (Eady, 1997), the Lean Aerospace Initiative (2001), the Lean Sustainment Initiative (2001), and Flexible Sustainment (Performance-Based Business Environment, 1997). These initiatives focus on three primary areas:

1. Modernization through commercial off-the-shelf technology solutions (technology refresh and technology insertion).

2. Manufacturing, production, and logistics methods (Just-In-Time, Lean, and Agile initiatives).

3. Modernization of the industrial base (the Flexible Manufacturing System, Material Resource Planning Systems, and Advanced Manufacturing Technologies).

However, these initiatives focus on individual elements of the sustainment system, not the whole enterprise. The question arises: Are these efforts coordinated? Organizations have the mind set that if it was not invented here it has no value. Therefore, the results of independent efforts often are not used by organizations other than those that are the target of the investigation. These projects overlap, and in many cases multiple initiatives are conducted on the same research areas (General Accounting Office [GAO] Report, 1998).

One approach to the problem is to turn to the "lean" principles for guidance. Using these concepts, the idea is to develop synergies along the whole supply chain, from the original equipment manufacturer to the customer. These lean concepts provide a set of tools and an overriding philosophy on how to transform "lean manufacturing" into a "lean sustainment supply chain." However, in order to effectively coordinate these efforts, and to bring military sustainment into the lean paradigm, a new framework or model for the whole enterprise needs to be developed. In this paper, the authors develop this lean framework/model for military systems sustainment. The goal in the model is to minimize non-value-added activities throughout the entire enterprise.