Magazine article National Defense

'Lean' Manufacturing Offers Remedy to Spare-Parts Crisis

Magazine article National Defense

'Lean' Manufacturing Offers Remedy to Spare-Parts Crisis

Article excerpt

The principles of "lean manufacturing," which were adopted by the automotive industry in the 1970s, could prove useful to the Defense Department's ongoing efforts to obtain spare parts more quickly and at lower prices. For the Pentagon, this could result in improvements to the readiness of the military force.

The shortage of spare parts to support its weapons systems--especially those parts needed to maintain a growing population of older platforms--has long been viewed as a challenge for the Defense Department. This predicament has been further complicated by a recent shift to drive down operating costs by reducing the department's inventories of spare parts.

Instead of maintaining a redundant system of buying and stocking parts within its own warehouses, the Pentagon wants to develop partnerships with vendors who will provide equipment as needed. Yet, these vendors also are moving to adopt lean practices for inventory management.

Some experts fear that slashing excess production capacity and trimming on-hand inventories will jeopardize the Defense Department's ability to obtain spare parts--especially as demand increases during a crisis. As vendors re-size their operations to supply the Pentagon's peacetime needs more efficiently, where will government obtain additional capability to support sudden surges in demand?

The answer is that the application of lean techniques will improve parts availability and increase responsiveness to demand spikes. Furthermore, this approach may help to mitigate many of the concerns associated with a shrinking defense industrial base.

The concept of producing parts just-in-time was introduced first during the early 1970s, at the peak of the oil crisis. While many automotive companies were struggling to remain viable, it became clear that something different was happening at the Toyota Motor Company.

This company weathered the storm much better than its competitors. As a result, managers across Japan and around the globe sought to rake a closer look at what has since become known as "lean manufacturing."

They ultimately found that Toyota had achieved its vision of creating profit through cost control. In other words, the company had shown that by better managing what it could control--its internal operations--it could thrive despite changes in the operating environment. This is precisely what the Defense Department is trying to do today. By restructuring its methods for supplying spare parts, it seeks to ensure timely deliveries, even if the environment changes quickly.

Lean manufacturing allows factories to produce parts on a scale that much more closely matches their demand. Lean facilities need not manufacture huge batches of items in order to be cost-effective. Instead, they can restrict production to just what is needed to fill current orders. Thus, they no longer find it necessary to maintain huge warehouses of excess inventories. More importantly, they can shift their production capacity from producing parts that currently are not needed to those with an identified demand.

Because of this flexibility, they can meet their schedules, even after trimming production capacity and inventories. This flexibility can help them cope with unforeseen increases in demand--even as suppliers move to slash their excess capacity. They can do this by addressing a core enabler of lean manufacturing--variation management.

Variation Management

As the Toyota Motor Company perfected its lean approach to manufacturing automobiles, the company emphasized minimizing the sources of factory variation. For example, Toyota recognized that, in order to reduce inventories, cycle times, and product cost, it would need to stabilize factory workflow, making production scheduling much more predictable.

For that reason, the company attempted to level out the demand for parts throughout its factory and supply chain. …

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