6
Defense Manufacturing Would Be Different

If such a change process in defense manufacturing is to be undertaken, first there must be a substantial management effort with little visible improvement in cost, quality, or timeliness in the short term, due to the long cycle time for weapon development and production. However, within 3 to 5 years, significant improvements would be noted on single weapon systems, with sharply improved quality, or cost, or timeliness. 1 Between 5 and 10 years, a new "steady state" for defense manufacturing would emerge and would be characterized by significantly lower cost for most systems, much better quality, and better adherence to shortened schedules.

This new "steady state" would provide different benefits to each participant in the process.

The Congress would notice:

  • Better management control of weapon systems, with fewer overruns, greater performance on initial testing, and more "reasonable" behavior by the Department of Defense (DoD) and its contractors.

  • The need for fewer laws governing defense procurement.

  • Greater access to information about the current status of weapon systems and greater understanding of the interaction between the DoD and the major contractors working on each system. DoD and the contractor would seem to be doing the "right thing," including meeting estimates and achieving sensible trade-offs among technical capability, cost, and schedule.



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OCR for page 34
Breaking the Mold: Forging a Common Defense Manufacturing Vision 6 Defense Manufacturing Would Be Different If such a change process in defense manufacturing is to be undertaken, first there must be a substantial management effort with little visible improvement in cost, quality, or timeliness in the short term, due to the long cycle time for weapon development and production. However, within 3 to 5 years, significant improvements would be noted on single weapon systems, with sharply improved quality, or cost, or timeliness. 1 Between 5 and 10 years, a new "steady state" for defense manufacturing would emerge and would be characterized by significantly lower cost for most systems, much better quality, and better adherence to shortened schedules. This new "steady state" would provide different benefits to each participant in the process. The Congress would notice: Better management control of weapon systems, with fewer overruns, greater performance on initial testing, and more "reasonable" behavior by the Department of Defense (DoD) and its contractors. The need for fewer laws governing defense procurement. Greater access to information about the current status of weapon systems and greater understanding of the interaction between the DoD and the major contractors working on each system. DoD and the contractor would seem to be doing the "right thing," including meeting estimates and achieving sensible trade-offs among technical capability, cost, and schedule.

OCR for page 34
Breaking the Mold: Forging a Common Defense Manufacturing Vision New technologies would be incorporated throughout the life of a system, as priorities, military threats, and technologies changed. Although there would still be disagreements over the political aspects of defense manufacturing and procurement (such as closing bases), there should be a clearer understanding of the costs of politically based decisions. These may seem counter-intuitive. Fewer laws leading to better control would not be the initial conclusion of most observers. However, where this process has been implemented well in manufacturing companies, fewer "laws" (policies and procedures) are required to achieve better performance. DoD executives would notice: Less Congressional interest in single issues, "small" items. Better industry response on the big questions of weapon systems performance, cost, quality, and schedule. Greater real control of the procurement process with less administration, procedures, and rules. There would be less need for arbitration and appeals because more problems would have been avoided or resolved early by the parties immediately involved. Arguments over regulations would decrease. Less disruption of schedule, specifications, or objectives in the midst of a weapon program due to late changes. More technical function, faster, at higher quality for less money. Greater use of commercial items. Greater interest in cost reduction and control. While this would require a change in the skills of DoD personnel, industrial experience is encouraging. Those people involved in procurement, manufacturing, and quality control of weapon systems would need to become problem solvers, able to control a project early and make trade-offs among costs, quality, performance, and time, which is not the rule now. Such a shift in skill is the reason the process takes 5 to 10 years. Industry would notice: Trade-offs among a weapon system's performance, schedule, quality, and cost being made early in the system's life, or early in the life of a modification, rather than late in the design process. Increasingly stable schedules, functional specifications, and working relationships with DoD. Far fewer rules. Disagreements would be handled cordially. A more effective and motivated work force.

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Breaking the Mold: Forging a Common Defense Manufacturing Vision Substantial two-way discussion with DoD as a customer in order to solve problems with the weapon system early. Supportive rather than adversarial relationships among major subcontractors and the customer. (Appendix A describes these customer-supplier relationships in more detail.) Consideration of the full life-cycle cost and performance from the start of a program. While most contractors would applaud such a situation, it will be difficult for many to adapt to this manner of working because many contractor engineering managers, manufacturing managers, and executives are not accustomed to working this way. However, this new system will eventually develop managers competent to achieve world-class manufacturing levels in both defense and commercial markets. Getting to this new steady state is difficult. As we have described, there is a need to: Establish values. Establish a vision. Rethink the planning and control of the weapon systems development and manufacturing process. Evolve new practices and procedures. Make thousands of decisions on how weapon systems will be developed and manufactured. Practice the new process. Many corporations have found (admittedly on a smaller scale) that where this process has been followed there is little interest in returning to the prior way of working. Success is likely. The "gain to pain" ratio in early days will be unfavorable, but will be substantially favorable after 5 years if given sustained support. NOTE 1.   It is difficult to estimate realistically the benefits of a new defense acquisition culture. Others have made estimates of cost savings from implementing only relatively minor portions of the defense manufacturing strategy described in this report. For instance, according to the Congressional Budget Office, alternative procurement plans with higher production rates for the 1988–1992 period would increase production rates 19 to 127 percent. The higher production rates would reduce unit costs of selected weapons from 2 percent to more than 20 percent, thus eventually lowering overall program costs. See, Congressional Budget Office. 1987. Effects of Weapons Procurement Stretch-Outs on Costs and Schedules. Washington, D.C.: Government Printing Office. According to the Institute for Defense Analysis, cycle time can be reduced 40–60 percent by using concurrent engineering techniques and manufacturing costs can drop 30–40 percent by having multifunctional teams integrate product and process designs. See, Institute for Defense Analysis. 1988. The Role of Concurrent Engineering in Weapon Systems Acquisition. Washington, DC: December. p. vi.