Analysis of a Case Study

Part 1

White, James W., Application of New Management Concepts to the Development of F/A-18 Aircraft, John
Hopkins APL Technical Digest, Volume 18, Number 1 (1997)
Discuss the application of new organisational and supplier management concepts to the development of
F/A-18 Aircraft and include the following in your discussion:
What were the outputs resulting from the logistics considerations?
How do these new management concepts compare/contrast to Blanchard’s approach to Logistics
Engineering and Management?
Would you describe this management concept as successful logistics approaches to a complex system?
Why/Why not?

Department of Defense is implementing a management philosophy called Integrated Product Team

(IPT) to improve Air Force F/A-18 program acquisition. IPT can be defined as a team approach to
systematically integrate and concurrently apply all necessary disciplines throughout the system life cycle to
produce an effective and efficient product that satisfies customer needs. McDonnell Douglas Aerospace
(MDA) organized itself into a “Team of Teams” that interacts with Navy customer teams along the work
breakdown structure (WBS) line. This approach was brought till teaming up with suppliers.

First, we need to understand the F/A-18 Program Office organizational structure. The client,
Vendor structure starts at Level 0, which is lead by program manager. A pioneering approach was taken by
PMO by including an Executive Leadership Team to provide experience & leadership to the project.
Biggest advantage of F/A-18 IPT structure was that the system user, Navy had representative
technically responsible on all levels of IPT (lower levels as well working on individual components and sub
assemblies) [1]. These representatives were active team members and provided-on-the-spot input for
requirement issues. This kept user in the loop and provided a quick way of obtaining guidance on
requirements.

The three primary IPTs were Engineering & Manufacturing Development Team, Production &
System Development Team, and Foreign Military Sales Team. Each IPT further divided into many sub
IPTs, each level II team contains Level III teams that focus on the individual products that make up the
aircraft. E.g; Air Vehicle IPT included armaments, avionics, propulsion, air frame.

Logistically, these approaches had improved the quality, productivity, production flexibility, and
reducing product development time. In Blanchard’s approach (chap 9.6 pg 420), it has been discussed well
the concurrent engineering that has been incorporated in large programs such as F/A-18 programs [2].
There are barriers developed that tend to inhibit the necessary day-to-day close working
relationships, the timely transfer of essential information, and the communications. As for F/A-18 program,
it has been considered, communication is great advantage-if not requirement-for successful implementation
of IPT. By implementing 6 wide ideologies as below; [3]
 Open discussion with no secrets
 Qualified & empowered team members
 Consistent, success oriented, proactive participation
 Continuous “up the line” communications
 Reasoned disagreement
 Early attention to and resolution of issues
 This program allow for increased communications. As a result, meetings were prevalent in this
programs and the participation comes from client, major contractor, and sub-contractors. These teams meet
regularly for system development, production and support.
The teaming approach taken by MDA in development of new designs & product was interesting and
different. MDA & Navy had work together in developing the requirement and specification for displays.
Suppliers were only chosen when they convincingly get nods from MDA that they are capable of
continuing the development. These suppliers were integrated into particular IPT to develop procurement
package where it had given good impact to program where early ambiguities in the development process
eliminated and design iteration and production rework minimized.
Extensive meetings and spend days in the requirement development process, it was biggest
advantage to all team members whom knew and bought into the system requirement. When MDA selected
the same supplier for production, the cycle time is saved as it is not required to educate supplier on system
requirement.
This was contradicting to Blanchard’s approach, where regards to logistic the requirement specified
by the customer and imposed on the system prime contractor and passed to various supplier. The prime
contractor will be the only one to prepare specification / packages and supplier responses in the context of
formal proposals, then evaluated by contractor, contracts negotiated, and program implemented as result
[4]. Design integration only occurs and maintained throughout the system development process at later
stage. Total life cycle time delayed, increased follow-up process, probability of error occurring is higher;
production rework (cost & time) also increases. The whole product system engineering cycle might delay &
costly and poor quality.

As per Blanchard’s (pg 32), concurrent engineering improves the quality and effectiveness of
product through a better integration of requirements and product development cycle time reduced through a
better integration of activities and processes [5]. An Institute of Defense Analysis (IDA) Report R-338,
defines Concurrent Engineering (CE) as “A systematic approach to the integrated, concurrent design of
products and their related processes, including manufacture and support. This approach is intended to cause
the developers, from the outset, to consider all elements of the product life cycle from conception through
disposal, including quality, cost, schedule and user requirement. The definitions of IPT and CE both reflect
the same idea of blending disciplines/processes early in product development. This was made easier in
F/A-18 program, since all stakeholders are team participants from beginning.

This can be seen by approach taken by General Electric Aircraft Engine (GEAE) to the
development of F-414 engine. This prime contractor formed teams with supplier & Navy to ensure new
engine developed within budget and time-line. GEAE started off by working with components design with
key suppliers which have longer lead times and production of parts started earliest using whatever
definition available (design parallel network). As for Blanchard’s logistic activities in the product life
cycle, provisioning or procurement and acquisition of system support elements only will start during
intermediate stage of detail design & development [6]. Only with specific requirement for product, the
process of acquisition commences. This differs from F/A-18, where acquisition starts during preliminary
design with supplier participation and it has save a lot of time and shortens their schedule. It has gone a
step ahead in logistic acquisition to save whole life-cycle time of program.

In the aspect of supplier management, F/A-18 prime contractors have established an infrastructure
of support in its move toward partnership relationships with its supplier. Most of the complex project
contractors create dependency on the suppliers for the completion of project, since matters have become
too complex for prime contractors to possess all necessary expertise and it’s cost-effective to hire specialist
for specific jobs [7]. However, it’s owners responsibility to assure what was needed and subcontractor
know how to produce it. As noted in Blanchards (pg 424), “it is important that logistic concepts and
objectives been established and understood from beginning, and the contribution of each supplier
periodically reviewed” [8] and design integration is realized through good communication and the
conductance of design and suppliers performance review. This has been adapted well in this program by
MDA & GEAE as they found the organization and management of supplier activity present major
challenges. This has lead to introduction of Supplier Management Team (SMT), to work with prime
contractors to improve their supplier management techniques.
With suppliers go thru various stages of growth with different characteristic, it is essential for SMT
to have a good understanding of the prime contractor-supplier interface to prevent most of the supplier
problems that causes delay to whole system. This do include suppliers from lower level also as they are
prime of the products. It prevents the root causes of quality issues at suppliers to increase productivity in
assembly (indirect reduction of quality cost).

MDA maintains a supplier certification process to establish long term partnerships with suppliers.
These relationships in turn enable MDA to satisfy its customer with top quality, technically excellent,
affordable products that are delivered on time. Suppliers are certified thru Supplier Performance
Evaluation and Rating System (SPEARS) in three levels Gold, Silver, Bronze using indicators (KPI) such
as cost of quality & delivery, process improvements, cost of doing business [9]. Supplier manager for each
IPTs will select those characteristic that best apply to supplier. Summary of SPEARS will be sent to MDA
& Navy for review and action. This SPEARS certification process has focused on the complete business
process, accelerated product and process improvements and strengthened teamwork between MDA and
suppliers.

GEAE had introduced “Action Workout” system (AW) to improve the process [10]. It is a high
speed performance improvement methodology that motivates employee to roll up their sleeve and solve the
problems. In Blanchard’s approach to TQM using six sigma, it’ll be only a piece of the problem-solving
puzzle. GEAE shall have realized six Sigma alone did not always get the improvement job done, at least
not quickly enough and at reasonable cost. Using two teams (Leadership & Participant) to examine the
unproductive time, process improvements, make the decision to make changes at earliest time had
increased productivity and shorten the system life cycle. Like Six Sigma, AW connects critical performance
outcomes to performance drivers. However, Six Sigma relies on in-depth data analysis to seek solution,
while AW seeks the same answers in existing employee knowledge and creativity.

Conclusively, new organizational management concept used in F/A-18 program would be

considered as successful logistic approaches to a complex system. The philosophy advocates collocated
teams that use simultaneous engineering, design for manufacturing and assembly, flexible and open
sharing of information. The whole IPT methodology can be used in larger scale a program that works in
limited time and budget as it is improving quality, productivity, production flexibility, and reducing product
development time. Consequently, the total life-cycle cost and time for a given system should be reduced.

But organization shall understand that this management concept is not a universal remedy for all
acquisition problems. The F/A-18 program concept of logistic approach is not a guarantee to work for all
system, and other system should tailor IPT to fit their needs. They also must overcome the traditional
Client-Prime Contractor-Sub-Contractor relationship, it was easiest under a cost-plus-award fee contract
because both sides will have same objectives of allocating resources as wisely as possible. Also, formation
into teams does not ensure that the necessary integration and communication occurs. Integration and
communications are still individual responsibilities, not every individual is comfortable with IPT
philosophy.

Speed is another key point in implementing this new concept in large complex projects using Action
Workout system in continuous improvement of logistic and central in today’s business world. These
approaches in logistic, finding these obvious solution using employees not only saves money, but also
produces better morale, an elusive commodity for any business since the impact from energizing employee
is priceless. As prime contractors would be able implement this on suppliers and manage them more
effectively and productively.

The establishment of contractor-supplier relationship in large complex projects are very essential
and is usually dependent on a complete understanding of the environment in which the supplier operates.
SMT shall have the basic understanding of culture, export import requirements, communication and
transportation link, resources availability and responsible for the technical integration of the tasks
assigned to the suppliers as in this program to assure all of them to meet their common goal.

References:

[1, 3, 7, 9, 10] White J.W., “Application of New Management Concepts to the Development of F/A-18
Aircraft”, Johns Hopkins APL Technical Digest, Vol 18 Number 1, 21-32 (1997)

[2, 4, 5, 6, 8] Blanchard B.S., Logistics Engineering and Management 6th Edition, Pearson Prentice
Hall, Upper Saddle River, NJ, 2004 (ISBN 0131246992)