BREAKING THE MOLD

Forging a Common Defense Manufacturing Vision

Committee on Defense Manufacturing Strategy

Manufacturing Studies Board

Commission on Engineering and Technical Systems

National Research Council

The views and conclusions contained in this document are those of the authors and should not be interpreted as representing the official policies, either expressed or implied, of the Defense Advanced Research Projects Agency or the U. S. Government.

NATIONAL ACADEMY PRESS
Washington, D.C.
1993



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Breaking the Mold: Forging a Common Defense Manufacturing Vision BREAKING THE MOLD Forging a Common Defense Manufacturing Vision Committee on Defense Manufacturing Strategy Manufacturing Studies Board Commission on Engineering and Technical Systems National Research Council The views and conclusions contained in this document are those of the authors and should not be interpreted as representing the official policies, either expressed or implied, of the Defense Advanced Research Projects Agency or the U. S. Government. NATIONAL ACADEMY PRESS Washington, D.C. 1993

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Breaking the Mold: Forging a Common Defense Manufacturing Vision NATIONAL ACADEMY PRESS 2101 Constitution Avenue, N.W. Washington, DC 20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. This study was supported by Contract No. MDA972-89-C-0032 between the Department of Defense and the National Academy of Sciences. Library of Congress Card Catalog Number 93-84248 International Standard Book Number 0-309-04789-7 A limited number of copies are available from: Manufacturing Studies Board National Research Council 2101 Constitution Avenue, Room HA270 Washington, D.C. 20418 Additional copies are available for sale from: National Academy Press 2101 Constitution Avenue Washington, D.C. 20418 B027 Copyright 1993 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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Breaking the Mold: Forging a Common Defense Manufacturing Vision COMMITTEE ON DEFENSE MANUFACTURING STRATEGY WILLIAM G. HOWARD, JR., Chairman, Consultant, Scottsdale, Arizona JOHN M. STEWART, Vice-Chairman, Director, McKinsey & Company, New York, New York BRIAN E. BOYER, Vice-President and Deputy Department Manager, Business Management, Northrop Aircraft Division, Hawthorne, California ROBERT L. CATTOI, Senior Vice-President, Research, Engineering, and Manufacturing Processes, Rockwell International Corporation, Richardson, Texas JACQUES S. GANSLER, Senior Vice-President and Director, TASC, Arlington, Virginia ROBERT H. HAYES, Philip Caldwell Professor of Business Administration, Graduate School of Business Administration, Harvard University, Boston, Massachusetts GEORGE PETERSON, President, George Peterson Resources, Inc., Miamisburg, Ohio Staff THOMAS C. MAHONEY, Director, Manufacturing Studies Board (from July 1990) RICHARD A. EASTBURN, Director, Manufacturing Studies Board (through June 1990) KERSTIN B. POLLACK, Deputy Director, Manufacturing Studies Board (through December 1991) THEODORE W. JONES, Research Associate (through August 1992) MICHAEL L. WITMORE, Research Assistant (through June 1991) LUCY V. FUSCO, Staff Assistant

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Breaking the Mold: Forging a Common Defense Manufacturing Vision MANUFACTURING STUDIES BOARD CHARLES P. FLETCHER, Chairman, Vice-President (Retired), Engineering, Aluminum Company of America SARA L. BECKMAN, Co-Director, Management of Technology Program, University of California, Berkeley LESLIE A. BENMARK (NAE), Manager, Global Supply Chain Systems, E.I. DuPont de Nemours & Co., Inc. STEVEN J. BOMBA, Vice President, Technology, Johnson Controls, Inc. BRIAN E. BOYER, Vice President and Deputy Department Manager, Business Management, Northrop Aircraft Division GARY L. COWGER, Executive in Charge, North American Operations, General Motors Corporation HAROLD E. EDMONDSON, Vice President (Retired), Manufacturing, Hewlett-Packard THOMAS G. GUNN, President, Gunn Associates, Inc. ALISTAIR M. HANNA, Director, McKinsey & Co., Inc. GEORGE J. HESS, Vice President, Systems & Planning, The Ingersoll Milling Machine Company CHARLES W. HOOVER, JR., Professor, Department of Industrial and Mechanical Engineering, Polytechnic University STEPHEN C. JACOBSEN (NAE, IOM), Professor, Center for Engineering Design, University of Utah RAMCHANDRAN JAIKUMAR, Professor, Graduate School of Business Administration, Harvard University J. B. JONES, Randolph Professor Emeritus, Virginia Polytechnic Institute and State University DONALD KENNEDY, Educational Representative, International Association of Machinists and Aerospace Workers THOMAS L. MAGNANTI (NAE), George Eastman Professor of Management Services, Sloan School of Business Administration, Massachusetts Institute of Technology JOE H. MIZE (NAE), Regents Professor, School of Industrial Engineering and Management, Oklahoma State University JACOB T. SCHWARTZ (NAS), Department of Computer Science, Courant Institute of Mathematical Sciences, New York University HERBERT B. VOELCKER, Charles Lake Professor of Engineering, Sibley School of Mechanical Engineering, Cornell University PAUL K. WRIGHT, Professor, Department of Mechanical Engineering, University of California, Berkeley

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Breaking the Mold: Forging a Common Defense Manufacturing Vision Staff THOMAS C. MAHONEY, Director JOSEPH A. HEIM, Senior Program Officer MICHAEL A. McDERMOTT, Program Officer VERNA J. BOWEN, Staff Assistant LUCY V. FUSCO, Staff Assistant

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Breaking the Mold: Forging a Common Defense Manufacturing Vision The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Frank Press is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Robert M. White is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Frank Press and Dr. Robert M. White are chairman and vice-chairman, respectively, of the National Research Council.

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Breaking the Mold: Forging a Common Defense Manufacturing Vision Acknowledgments Over the course of the study, the committee consulted a wide variety of sources. We would like to express our gratitude to the individuals who served on the committee's four panels and to all those who briefed the committee on issues pertaining to defense manufacturing. The panel on defense program initiatives wishes to thank Eric Abell, Wright Patterson Air Force Base; Robert Draim, Strategic Submarine Program, Naval Sea Systems Command; Allen O. Elkins, Army Material Command; Daniel Haugan, Aviation Systems Command, U.S. Army; Michael J. Kelly, Defense Advanced Research Projects Agency; William Kessler, Wright Patterson Air Force Base; Steven M. Linder, Navy Manufacturing Technology Program; and Donald F. O'Brien, Defense Logistics Agency. The panel on defense policy wishes to thank Truxton R. Baldwin, Office of the Deputy Assistant Secretary for Procurement; Steven J. Bomba, Johnson Controls, Inc.; Dale W. Church, Pillsbury, Madison, and Sutro; Michael E. Davey, Office of Science & Technology, Library of Congress; and John M. Swihart, National Center of Advanced Technologies, Aerospace Industries Association. The panel on defense suppliers wishes to thank Jerry Braga, Northrop Corporation Aircraft Division; William Carr, Pratt and Whitney; Lou Carrier, Northrop Corporation Aircraft Division; James C. Dever, Jr., Hughes Aircraft Company; Jack Ferrel, TRW Defense Systems Group; Otis V. Goodwin, TRW/ESG Defense Systems Group; James Hoover, Northrop Corporation Aircraft Division; and Dan Wood, Defense Contract Administration Service. Other significant contributions were gratefully received from J. Ronald Fox, Graduate School of Business Administration, Harvard University; Robert

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Breaking the Mold: Forging a Common Defense Manufacturing Vision Costello, Hudson Institute; and Charles H. Kimzey, Steven R. Jones, and Richard E. Donnelly from the Office of the Under Secretary of Defense for Acquisition and the Assistant Secretary of Defense for Production and Logistics. Each provided valuable insight into the committee's deliberations. Finally, the committee would like to acknowledge the work of George Krumbhaar, who edited the final draft, and the staff of the Manufacturing Studies Board. This report would not have been possible without the hard work and patience of Tom Mahoney, Mike Witmore, Ted Jones, and Lucy Fusco. William G. Howard, Jr. Chairman

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Breaking the Mold: Forging a Common Defense Manufacturing Vision Preface The Committee on Defense Manufacturing Strategy of the National Research Council's Manufacturing Studies Board was asked by the Under Secretary of Defense for Acquisition to advise the Department of Defense (DoD) regarding development of an effective manufacturing strategy. The committee's work was intended to help DoD identify policy options, based on changes in civilian and defense manufacturing, that would improve DoD's ability to use the total U.S. manufacturing base, to make smarter policy decisions related to the defense industrial base, and to define long-term research and investment strategies for manufacturing technology. Given this broad scope, the committee established four working panels, each responsible for a specific aspect of defense manufacturing strategy: national manufacturing perspectives, policy, program initiatives, and suppliers. A colloquium was held June 5–6, 1990, to provide a common starting point for the panels. Dr. Jacques Gansler, a member of the committee and chairman of its Panel on National Perspective, described the scope and key issues for a defense manufacturing strategy based on economic and political trends. During the following six months, each of the panels addressed the barriers to, and opportunities for, a defense manufacturing strategy in their respective areas. The four panel reports were delivered to the committee by January 1, 1991. (Summaries of these reports are in Appendix A.) The committee noted that the panels identified many of the same problems that have plagued the DoD for decades and have been addressed in prior studies. In fact, these problems have spawned hundreds of reports but their recommendations have resulted in little fundamental or systemic improvement in the way defense systems are designed, developed, and pro-

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Breaking the Mold: Forging a Common Defense Manufacturing Vision duced. This committee did not believe that another recital of similar recommendations for specific defense manufacturing programs was likely to be any more effective than earlier efforts. Concurrently, Operations Desert Shield and Desert Storm were instructive to the committee's deliberations. U.S. forces in the Gulf confirmed beyond doubt that the U.S. military is equipped with superior weaponry that performs reliably, predictably, and, in some cases, amazingly. The committee, however, also was reminded of weaponry cost and questioned whether such capability can be maintained given the pressing trends of global production, escalating hardware costs, increasing levels of technological sophistication, and dependence upon offshore technologies. The committee concluded that these problems, already relevant to business executives, must be addressed by defense planners. Therefore, in fulfilling its charge, the committee framed its defense manufacturing strategy around contemporary, and evolving, principles that are shaping the management practices of leading manufacturers, including defense manufacturers. (Defense, unfortunately, lags behind commercial practice to its disadvantage in many of these practices.) The committee holds that substantial change within the defense manufacturing sector is required. The necessary changes are by no means limited to improved acquisition regulations, and, in fact, are not limited to the DoD. The entire defense community—contractors, DoD, Congress, and the Office of Management and Budget (OMB)—must be involved in an interrelated ''Change Process'' to achieve the benefits that are possible and essential. In this report the committee describes a process for achieving the change needed within the defense community. Dozens of reports have identified what to change in defense manufacturing. We, here, try to describe how to change; that is, a management process (already under way in U.S. industry) that should be applied. The payoff is enormous—our current arsenal could be maintained for perhaps 30 percent less cost and with higher reliability and improved responsiveness. That is worthwhile. There no doubt will be strong resistance to the change process outlined by the committee, but similar change has already started in many manufacturing companies. The end of the Cold War has brought different missions, reduced defense spending, and shifting acquisition priorities. The committee believes that initiating a major change process will minimize the loss of critical capabilities in a shrinking defense market and, at the same time, result in very significant cost, quality, and timeliness improvements in the design and production of weapon systems. Improvement will be slow but steady, provided there is constancy of purpose at the senior levels of DoD, the Congress, and corporations. The end of the Cold War provides an unusual opportunity, unparalleled in the past five decades, to effect such a change. William G. Howard, Jr. Chairman

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Breaking the Mold: Forging a Common Defense Manufacturing Vision Contents     EXECUTIVE SUMMARY   1 1   DEFENSE MANUFACTURING ON THE DEFENSIVE   8 2   A CHANGE PROCESS THAT CHANGES   13 3   THE CHANGE PROCESS   19 4   DOD IS DIFFERENT . . . PARTLY   26 5   "WE'RE ALREADY DOING THAT!"   31 6   DEFENSE MANUFACTURING WOULD BE DIFFERENT   34 7   IMPLEMENTING A NEW DEFENSE MANUFACTURING STRATEGY: AN ILLUSTRATIVE MODEL   37     APPENDIXES         A Review of Study Panels   45     B A Review of Selected Reports on Defense Acquisition and Management   52     C Suggested Reading   78     BIBLIOGRAPHY   79

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