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"SAP Americas is a subsidiary of SAP AG, the world's largest business software company and the third-largest software supplier overall.
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Source : SAP
Early Lean Adopters Embrace Technology
Business Process Improvement is also known as :
Business Process Improvement,
Process Improvement Metrics,
Business Process Improvement Certification,
Define Process Improvement,
Business Process Improvement BPI,
Lean Management,
Business Process Improvement Consulting ,
Process Efficiency Improvement,
Process Improvement Lifecycle,
Continuous Improvement Manufacturing,
Lean Manufacture,
Lean Manufacturing Basics Principles Techniques,
Lean Process Improvement,
Continuous Improvement Process,
Process Improvement Methodology,
Lean Improvement Tools,
Process Improvement Lean Manufacturing,
Manufacturing Process Management ,
Manufacturing Process Improvement,
Tool Optimization Manufacturing Process,
Process Improvement Manager,
Aerospace and Defense A&D,
Lean Aerospace and Defense A&D Manufacturing,
SCM Supply Change Management,
Aerospace and Defense A&D SCM.
Market Segment
Results from Aberdeen Group report, The Lean Supply Chain, indicates that Aerospace and
Defense (A&D) manufacturers are 40% more likely to be Best in Class performers – companies
that are characterized by having an integrated Lean approach and solution with technology
enablers - than their peers from other industries. One of the reasons for this performance
difference is their early adoption rate for Lean. The maturity of this industry is directly reflected in
its increased rate of technology and lean tools utilization on the shop floor.
Lean Adoption
Lean is a philosophy that espouses continuous improvement, the simplification and
standardization of business process, and the elimination of all forms of waste. A&D
Manufacturers have taken the lead compared to their peers when it comes to adopting Lean
philosophies and processes in their organizations. These manufactures are 81% more likely to
have adopted Lean processes for more than 5 years, as compared to the general population.
(Figure 1).
Another interesting finding was the considerable difference in the adoption rates among the
A&D manufacturers. Even in the same vertical, the Best in Class (BIC) companies are 72% more
likely to have adopted Lean manufacturing processes for more than 5 years. This difference
among the A&D manufacturers points towards the fact that there is still ample room for
improvement among the A&D sector.
Different Responses for the Same Challenges:
Deploying Lean techniques and technologies in the manufacturing process can help companies to
significantly improve their operational performance, customer responsiveness and hence the bottom
line financials. But as the famous adage goes "it is easier said than done"; companies are facing
challenges in implementing Lean concepts. Even with the early adoption rates, the A&D
manufacturers are facing challenges similar to those faced by the general population. The challenge
of ‘Cultural Change’ is a top issue that manufacturers in every industry vertical are currently
facing. But interestingly, A&D manufacturers are responding to the challenge with a slightly
different perspective.
Companies that are relatively new in their
Lean journey, start with taking small,
pragmatic steps to become lean. This is
the approach followed by the majority of
the manufacturers. Once they realize the
early benefits of using Lean techniques
they get aggressive with their strategy.
A&D manufacturers have already passed
that stage and hence are following
different tactics to respond to the
challenges.
A&D manufacturers are more likely to
leverage external domain expertise with
the use of consultants and trainers to speed up their Lean initiatives. This is an important step by
A&D manufacturers, taking in consideration the performance gap that exists in the vertical. A&D
manufacturers that are early in their Lean journey can use some outside help to get in pace with the
top performers in their field. Getting top management engaged with the Lean process is another
important strategy followed by A&D manufacturers. In order to get and sustain buy in from top
management, it is important to make them realize the short term as well as long term strategic
benefits of adopting Lean tools. It becomes a lot easier for any company to address important issues
when a decision comes from the top rather than from the grass root level. Commitment from top
officials also helps to increase the technology adoption rate for the manufacturing processes.
Technology Adoption
Technology plays a crucial role when it comes to applying Lean concepts in manufacturing.
Technology is used to increase collaboration across different levels of the organization. With
companies expanding their supply chain globally, manufacturers are in need of Lean tools and a
robust technology platform. This will help companies to address the challenge of growing
complexity in the supply chain and also to adopt Lean on the shop floor and across the
organization.
A&D manufacturers have embraced the use of technology in their approach towards going Lean.
They are 40% more likely to use ERP solutions as a general foundation for Lean as compared to
other manufacturers. This difference is amplified among BIC A&D manufacturers. In fact, every
single BIC A&D manufacturer benchmarked by Aberdeen utilizes ERP technology to support Lean
initiatives. ERP solutions have come a long way from being used to manage the back office
business processes to being used as a solution to encompass customer and supplier functions.
As companies start realizing the real benefit of
using Lean tools across departments, they
gradually move from the manual approach
(pencil/paper and spread sheets) to the use of
more automated applications – SCM (Supply
Change Management). A&D manufacturers
being historically early adopters of Lean have
led this approach. This can clearly be seen in
Figure 4, where A&D manufacturers have
overtaken the general population in adopting
Lean tools, such as Kanban, Level Loading,
Supermarket Sizing and Value Stream
mapping across the enterprise. The Aberdeen
Group attributes this increased adoption of
Lean tools to the industry’s early adoption of Lean philosophies and the utilization of ERP as a
foundation of Lean, all of which precede Best in Class performance.
Aberdeen Conclusion
Many Aerospace and Defense manufacturers are enjoying a competitive advantage because of an
early adoption of Lean tools. However, there are still considerable differences in the performance
among A&D manufacturers. The best way for A&D manufacturers to achieve best in class
performance is by using external domain expertise, and utilizing ERP with Lean specific
functionalities as a foundation for implementing the above Lean tools. For those Aerospace and
Defense manufacturers that are performing at the Best in Class level; continue utilizing technology
to institutionalize Lean philosophies and continue to extend Lean initiatives across the supply
chain. By implementing these strategies the Aerospace and Defense industry will continue to lead
the Lean adoption curve and continue to enjoy performance benefits that are superior to almost all
other industries.