AN *GME TNG9LEGE

U_____ DEFENSE

MANUFACTURING MANAGEMENT

GUIDE FOR PROGRAM MANAGERS

AR.1989 THIRD EDITION

L4
2 3 PHOTOS COURTESY OF

1. MCDONNELL DOUGLAS

4 2. LTV

3. HONEYWELL

4. MOTOROLA

5. FORD

6 7 8 6. GRUMMAN

7. MARTIN-MARIETTA __ 8. GEN-CORP

9 10 9. MOTOROLA

10. ROCKWELL
DEFENSE

MANUFACTURING

MANAGEMENT

GUIDE FOR PROGRAM MANAGERS

THIRD EDITION

APRIL 1989

DEFENSE SYSTEMS MANAGEMENT COLLEGE

FORT BELVOIR, VIRGINIA

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This guide was prepared by the Modem Technologies Corporation, Dayton, Ohio, under the

direction of Mr. Thomas M. McCann under Contract N -M[,_ 903-88-C-0105. The contract was

supervised by the Defense Systems Management College, Foi v-TWRg-ITiM,.- The views and

opinions expressed herein are those of the authors and should not be construed as an official

Department of Defense position or policy unless so designated by other official documentation.

Whenever In this publication, "man", or "men", or their related pronouns appear, either as words or

parts of words (other than obvious reference to named male Indivlduals), they have been used for

literary purposes and are meant In their generic sense.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC

20402.

S"w-o oo?-ý 00 o-oCA14- b
PREFACE TO THE THIRD EDITION

When th, Defense Systems Management College (DSMC) published the first editions of this

guide (then called a "handbook"), it promised to release new edition," whenever there were sufficient

changes In policies, procedures, and practices to make It appropiite to do so. Now It Is appropriate

to release the third edition.

Although the text has been revised, the basic objective of the guide has changed very little.

The guide has become one of a family of educational guides published by the college and written

from a Department of Defense (DOD) pnrspective; i.e., non-service peculiar. These guides are

intended primarily for use in the courses at the DSMLC and, secondarily, as desk references for

program and project management personnel. This guide is Intended to assist both the Government

and industry personnel in executing their management responsibilities relativa (o the manufacture of

defense systems.

The current family nf technical guides, in addition to this d•ocument, Includes the following:

Integrated Logistics Support Guide

First Edition: May 1986

Systems Engineering Management Guide

Second Edition: Dec 1986

Test and Evaluation Management Guide

First Edition: Mar 1988

Mission Criticel Computer Resources Management Guide

First Edition: Sep 1988

Risk Management Guide

First Edition: Mar 1989

This guide Is designed to provide the user with an understanding of, and a basic working

familiarity with, the newest and most effective manufacturing management methods used In defense

systems acquisition prograrna today. It is intended that the guide be particularly useful in preparing

for and executing the production phase of a defense system program. The guide Includes a

discussion of DOD policies, directives, methodologies, and practices -- along with a list of acronyms

and a glossary of terms -- app'.cable to the management of the manufacturing efforts of defense

contractors.

The basic activities associated with producing defense systems and associated equipment,

the current critical issues affecting manufacturing management, thd common causes (and cures,

when known) of manufacturing problems, and lessons learned on past programs have been placed In

focus. Manufacturing management considerations during the development, as well as the production

phase of a program, have been addressed. Further, the guide has related the manufacturing

function to the fielding of defense systems and subsequent logistics support activities.

The DSMC has accepted the long-range responsibility for keeping this guide up to date.

Therefore, anyone having comments and recommendations relating to the overall text, or the

coverage of a specific aspect of manufacturing management, is encouraged to use one of the tear

sheets located at the end of the guide -- or a letter, if no tear sheet Is available. Mail It to the

Director, Technical Managemenit Department, Defense Systems Management College, Fort Belvoir,

Virginia 22060-5426. Your comments and recommendations will be given serious consideration

during preparation of the next edition.

David D. Acker

Project Manager

LTC Sammie G. Young, USA

Co-Project Manager Defense Systems Management College

Fort Belvoir, Virginia

1 April 1989
CONTENTS

PREFACEI

LIST OF FIGURES AND TABLES v

CHAPTERS

I OVERVIEW OF DOD MANUFACTURING MANAGEMENT

2 THE INDUSTRIAL BASE

3 PRODUCT DEVELOPMENT

4 MANUFACTURING STRATEGY

5 TOTAL QUALITY MANAGEMENT AS rr RELATES TO THE MANUFACTURING PROCESS

6 MANUFACTURING PLANNING AND SCHEDULING

7 PRODUCIBILITY

8 MANUFACTURING TECHNOLOGY

9 MANUFACTURING COST ESTIMATING

10 CONTRACTING ISSUES IN MANUFACTURING

11 TRANSITION FROM DEVELOPMENT TO PRODUCTION

12 MANUFACTURING SURVEYS AND REVIEWS

13 MANUFACTURING CONTROLS

14 FACTORY OF THE FUTURE

APPENDICES

A LIST OF ACRONYMS

B GLOSSARY OF TERMS

C INDEX
LIST OF FIGURES AND TABLES

Figu-re E

1-1 Program Manager's Reporting Chain 1-3

1-2 Acquisition Management Structure 1-4

2-1 Productivity Results from Effective Interaction of the Work Force,

the Processes, and the Product 2-8

2-2 Industrial Spending In U.S. for Research and Development 2-10

2-3 Air Force Data Flow for Production Base Analysis 2-14

2-4 Graduated Mobilization Response 2-16

3-1 The Generic Product Development Process 3-2

3-2 Manufacturing Management for Major DOD Acquisition Programs 3-5

3-3 Contracting Support 3-22

4-1 Systems Acquisition Strategic Environment 4-2

4-2 Manufacturing Constraints and Risks 4-3

4-3 Elements of Manufacturing Strategy 4-3

4-4 Manufacturing Strategy Decisions 4-4

4-5 Critical Design Disciplines 4-7

4-6 General Leader/Follower Contracting Objectives 4-8

4-7 Leader/Follower Conditions for Use 4-8

4-8 Multi-Year Contracting Objectives 4-10

4-9 Multi-Year ContractIng Criteria 4-10

5-1 The Fourteen Management Principles of Dr. Demlng 5-2

5-2 DOD Posture on Quality 5-5

5-3 Examples of Pareto Chart Before and After Improvement 5-8

5-4 Sample of Ishlkiwa Diagram 5-9

5-5 Off-line and On-line Quality Control Via Taguchi 5-12

5-6 Objectives of DOD Quality Programs 5-15

5-7 DOD Quality Concept 5-17

5-8 Potential Savings 5-18

v
LIST OF FIGURES AND TABLES (CONT)

Fiure

5-9 Major Objectives of DOD Reliability & Meintainability Policy 5-19

5-10 Typical Tests Yielding Reliability Information 5-21

5-11 Assessment of Reliability Growth 5-21

5-12 Reliability Growth Curve 5-22

5-13 Reliability and Maintainability Quality Team Model 5-24

5-14 Concurrent Engineering Approach vs. Typical Approach 5-25

6-1 Manufaciuring Resources 6-3

6-2 Manufacturing Risk Assessment 6-5

6-3 E>yr act from Manufacturing Plan 6-6

6-4 Master-Phasing Chart for a Typical Defense System Production Program (Simplified) 6-8

6-5 Example of First Unit Flow Chart for a Symbol Generation 6-9

6-6 Master Schedule for an Electronics LRU 6-10

6-7 Hierarchy of Schedules 6-12

6-8 Typical Hierarchy of Schedules 6-13

6-9 Proposed Steps in a JIT Manufacturing Program 6-16

6-10 Lead Times 6-17

6-11 Actions to Minimize Impact of Lead Time Variations 6-19

6-12 Materials Requirements Planning Information Flow 6-24

6-13 Manufacturing Resources Planning ii Information Flow 6-25

7-1 Physical Characteristics 7-3

7-2 Producibility Considerations During the Interative Design Process 7-5

7-3 Engineering Design Criteria 7-6

7-4 Plan,.ing Data Requirements 7-7

7-5 Producibility Engineering Planning Objectives 7-8

7-6 Producibility Engineering Planning Funding Profile 7-9

7-7 Produclbility Analysis Checklist 7-11

8-1 Manufacturing Processes Available for Metal Fabrication 8-2

vi
LIST OF FIGURES AND TABLES (CONT)

8-2 Relative Machining Costs and Surface F!.Aish 8-4

8-3 Symptoms of Poor Facility LayoL.t 8-5

8-4 Future TrendL in Technology 8-6

8-5 Manufacturing Technology/Acquisitiun Management 8-7

8-6 Cost Reduction Example 8-9

8-7 IMIP cnd Program Baseline Adjustments 8-10

8-8 Typical Robot Tasks 8-14

8-9 Typical Manufacturing Cost Distribution 8-15

8-10 Comparison of Manufacturing Method Unit Costs, By Level of Production 8-16

8-11 Interrelationships of Discrete Design Phases 8-19

8-12 CAD/CAM - 'ow It Works 8-20

8-13 Integrated Manufacturing System 8-22

9-1 Manufacturing Costs (0enesis 9-2

9-2 Manufacturing Improvement Corve 9-10

9-3 Components of Learning 9-11

9-4 An 80 Percent Learning Curve Drawn on Arithmetic Graph Paper 9-13

9-5 An S-Curve Model 9-15

9-6 Learning Curve 9-16

9-7 Manufacturing Rate Options 9-18

10-1 Manufacturing Management Program Goals 10-2

10-2 MIL-STD-1528A Requirements 10-2

10-3 Incentive Improvement Goals 10-3

10-4 Contractor Make-or-Buy Program Support 10-6

10-5 Contractor Purchasing System Review Special Concerns 10-7

10-6 Contract Data Requirements Ust Data Obje3ctives 10-8

10-7 Typical Manufacturing Management Data Items 10-9

10-8 Uses of Technical Data 10-10

vii
LIST OF FIGURES AND TABLES (CONT)

11-1 Acquisition Process for Major Weapon Systems 11-2

11-2 Critical Path Templates 11-4

11-3 Template Timellnes 11-5

11-4 PRR Template Relationship 11-7

11-5 Production Planning - Template Relationship 11-9

12-1 Product-Centered Surveys 12-2

12-2 Design Reviews 12-3

12-3 Production Readiness Indlcators 12-4

12-4 Projected Profile for Engineering Change Traffic 12-5

12-5 Projected Profile for Test/Process Yields 12-6

12-6 Projected Profile for Requirements Changes, Error Discovery, and Coding Revisions 12-7

12-7 Product Design Evaluation Issues 12-9

12-8 Contract Administration Office Expertise 12-9

13-1 Typical Manufacturing Problem Areas 13-2

13-2 Configuration Management by Baselines 13-6

13-3 Benefits of Work Measurement Systems 13-11

13-4 Elements of a Contractor's Work Measurement System 13-12

13-5 Work Breakdown Structure Level Identification 13-14

13-6 Work Breakdown Structure Extended to Cost Account and Work Package Levels 13-15

13-7 Objective Chart 13-17

13-8 Production Plan 13-17

13-9 Une-of-Balance Chart 13-18

14-1 Integrated Manufacturing System 14-5

14-2 Open Systems Interconnection Model 14-8

14-3 Concurrent Engineering Model 14- i 0

14-4 System Integration In Concurrent Engineering 14-11

14-5 CALS Management Organization 14-12

viii
LIST OF FIGURES AND TABLES (CONT)

FiEure

14-6 Transitional Plan for the IWSDB 14-13

14-7 Integrated W3apon System Data Base 14-13

14-8 Current Data Trantsfer 14-14

14-9 Near Term Improvements 14-15

14-10 Computer-Aided Logistics Support 14-16

Table

6-1 Estimated Percqnt Improvement for Different Industries as Result of

JIT Implementation 6-16

9-1 Factors Leading to Manufacturing Improvement 9-10

9-2 Cost Impact of Varying Baseline Unit for Standard 9-16

ix
CHAPTER ONE

OVERVIEW OF DOD MANUFACTURING MANAGEMENT

CONTENTS

PEm

OBJECTIVE 1-1

INTRODUCTION 1-1

ORGANIZATIONAL STRUCTURE 1-2

OSD AND DOD COMPONENT RESPONSIBILITIES 1-4

GOVERNMENT PROGRAM MANAGER RESPONSIBILITIES 1-5

RELATIONSHIP BETWEEN GOVERNMENT AND CONTRACTOR PROGRAM MANAGERS 1-5

GOVERNMENT PROGRAM MANAGEMENT OFFICE PERSONNEL SELECTION 1-6

TOTAL QUALITY MANAGEMENT AND COULD COST 1-6

REFERENCE DOCUMENTS 1-7

REFERENCE LIST 1-8
OVERVIEW OF DOD MANUFACTURING MANAG=-MENT

OBJECTIVE

Manufacturing (production) Is the Throughout all these phases, an

conversion of raw materials into products essential element Is the role of the

and/or components themeof, through a series manufacturing manager and the organizational

of manufacturing procedures and processes. environment under which he operates. The

It includes such major functions as focus of this chapter is on the organizational

manufacturing I lar'ning and scheduling; structures within DOD and the nature of the

manufacturing engineering; fabrication and assignment of responsibility for manufacturing

assembly; in.tailation and checkout; management tasks within that structure.

demonstration and testing; product assurance; There Is also consideration of the nature of

and determination of resource requirements. the relationship between the program manager

and the industry counterpart organizations. Manufacturing management Is the The successful completion of a program

technique of planning, organizing, directing, requires that an effective working relationship

controlling and Integrating the use of people, be established, with mutual understanding of

money, materials, equipment, and facilities to the responsibilities of each,

accomplish the manufacturing task

economically. A manufacturing management

system is composed essentially of three INTRODUCTION

phases: planning, analysis, and control. The objectives of DOD manufacturing

management are:

1. During the planning phase, consideration must be given to such factors as I. To ensure that proper

material acquisition, an adequate work force, manufacturing planning has been

the engineering design, and provisions for accomplished early in a program so that the

sub-contractor support. Production feasibility manufacturing effort will be performed

and producibility of the engineering design are smoothly. critical factors that must be considered early in

a program. This consideration must Include 2. To ensure that the system plannirg, new p.rocesses, facilities, tools and design will lead to efficient and economical

test equipment, and cost control during design. quantity manufacture.

2. During the analysis phase, 3. To assess the status of the

answers must be provided to such questions program at any point during the production

as: Is the manufacturing process working? Is phase to determine if schedule, costs,

it efficient? Is manufacturing being and quality standards are being met.

accomplished by the most economical

method? Is the mahtufacturing plan being 4. To conduct assessments and

followed and are ,he established goals being reviews of the manufacturing effort required to

met? (During system design and meet decision points at each phase of a

development, these questions noed to be defense systems acquisition program. projectod into the future manufacturing effort to

identify required preparatory actions and to One of the basic thrusts within DOD is

assess risks.) to Increase management focus on

manufacturing and total quality management

3. During the control phase, the during early defense system (weapon)

manufacturing effort must be monitored to program phases. There are significant costs

ensure that the manufacturing management associated with the manufacturing effort.

function is performing within the constraints These coets, to a great degree, are Inherent in

and limits that have been established, the design. As a design evolves, certain costs

become essentially fixed. Given the objective of minim!ding cost and the existence of

nro,•ctions that Indicate imited dollars

available for future manufacturing effort, It will

' -*11 IL
be necessary to Identify costs at the point Executives (SAE) for their respective

when they are being fixed. This situation components. The Individual SAEs manage the

provides the need for early assessment. established acquisition structure and process within their component, consistent with DOD

guidance; report breaches to the program ORGANIZATIONAL STRUCTURE baselines; and establish policy for managing The Undersecretary of Defense for component programs.

Acquisition has the direct responsibility for

DOD manufacturing management policy and Authority for acquisition management guidance In the acquisition of defense Is assigned In a three tier management

systems. The head of each DOD component structure recommended by the President's

(Military Departments and Defense Agencies), Blue Ribbon Commission on Defense

In tumn, Is responsible for developing and Management (better known as the Packard

Implementing procedures within the Commission). Within this structure, program

components. Figure 1-1 depicts the variation managers report to Program Executive Officers

of the command structures for defense system (PEOs) who report to the SAE, as shown In

acquisition within the components. Figure 1-2. In responding to this requirement (from the Goldwater-Nichols Department of

DOD Directive 5000.1, Major and Defense Reorganization Act), each of the

Non-Major Defens3e Acquisition Programs, Services has structured acquisition policy and

establishes the approval cyde and procedures program axecution organizations somewhat

for weapon system acquisition. The directive differently. applies to the staff of the Secretary of

Defense, the Military Departments, the The Army has a single command, the

Organization of the Joint Chiefs of Staff, the Army Materiel Command (AMC) that

Unified and Specified Commands, Defense accomplishes all the research, development, Agencies, Including The Strategic Defense acquisition and logistics support functions.

Initiative Organization, and DOD Field Within AMC, the Chief of Staff for Production

Activities or Components. provides manufacturing management guidance to the Major Subordinate Commands (MSCs). The Directive establishes the The MSCs such as Aviation Systems

Undersecretary of Defense for Acquisition as Command, M iss IlIe Command, the Defense Acquisition Executive (DAE). The Tank-Automotive Command or Test and

DAE Is charged with assuring that the Evaluation Command manage the specific manufacture of each weapon system is research, development, acquisition, test and

performed so as to produce the most efficient, support for each assigned weapon system cost-effective, and highest quality end Item within their respective program management possible. He does this through his role as the office.

Chairman of the Defense Acquisition Board

(DAB). The DAB (vice-chaired by the recently The Navy's principal subordinate

created Vice Chairman of the Joint Chiefs of Systems Commands (SYSCOMs), i.e., Naval

Staff who assures that requirements are met) Sea Systems, Naval Air Systems, Space and

provides approval, policy guidance and Issues Naval Warfare, Naval Mine Warfare, Naval

resolution as the weapon system moves Supply Systems, and Naval Facilities

through the acquisition cycle from: Milestone Engineering are responsible for providing 0 - Program initiation/Mission-Need Decision; material support for the operating needs of the

Milestone I - Concept Demonstration/Valdation Navy and for certain Marine Corps needs.

Decision; Milestone 11 - Full-Scale The SYSCOMs report directly to the Chief of

Development Decision; Milestone Ill - Full Naval Operations. The program offices within

Rate Production Decision; Milestone IV - the SYSCOMs are responsible for the

Logistics Readiness and Support Review; and manufacturing management functions for the

Milestone V - Major Upgrade or System defense systems under development. Replacement Decision. (See Chapter 3 for However, guidance on transitloning from

discussion of the acquisition process.) The development to production comes from the

Undersecretaries of the Army and Navy and Assistant Secretary of the Navy for Ship the Assistant Secretary for Acquisition for the Building and Logistics. Air Force serve as Service Acquisition

1-2
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commands concerned with the defense provided to the program managers. The systems acquisition process, the Air Force PEOs are the officials responsible for Systems Command (AFSC) and the Air Force administering a defined number of acquisitions Logistics Command (AFLC). AFSC, through and reporting program status to the SAE. The the Deputy Chief of Staff/Product Assurance concept behind this approach Is thiat the and Acquisition Logistics, Is responsible for the acquisition system will be characterized by manufacturing function. AFLC, through the short, direct lines of communications; less staff Deputy Chief of Staff/Contracting and Interaction; and streamilned procedures. Manufacturing is responsible for the Overall the program manager, who Is the manufacturing function after the program Individual responsible for execu~ng the management responsibility Is transferred from program, will experience fewer layers of AFSC to AFLO. management oversight (no more than one

management tier between the PM and the

SAE), and will be able to receive the puldance OSD AND DOD COMPONENT he requires In atimely fashion. RESPONSIBILITIES

As stated previously, DOD Directive In addition, OSD chartered In the 5000.1, Mair r and Non-Major Defense summer of 1988 a Defense Manufacturing Acquisition Programs, gives the Board (DMB) similar to the Defense Science Undersecretary of Defense for Acquisition, as Board. This group of senior personnel froin the DAE, the responsibility to establish government, defense and non-defense manufacturing policy and direction. Policy industry, labor and academia will provide emphasis Is placed on long range planning analysis and advice to OSD on manufacturing and effective requirements which allow for Issues and will aid In evaluating the smooth transition from development to effectiveness of new policies and Initiatives. production. The guidance Includes such areas The Board will also develop approaches to

as production planning, transition to apply Innovative technology throughout the production, concurrent engineering, total manufacturing industry; Improve quality In quality management, could cost, and manufacturing processes, primarily through !he manufacturing technology. The DAE passes concept of Total Quality Management; anC- this policy through the respective SAEs, who increase the use of concurrent engineering -

1-4
designing the product and its manufacturing identification of risks, the development of

processes at the same time. The initial term preliminary cost and schedule estimates, and

of the DMB is two years. At that time, a the identification of Issues that must be

decision will be made as to the Board's future, resolved prioi to the Milestone II decision.

Preparation for Production Readiness Reviews

DOD Directive 4245.6, Defense should b e g I n in t h e concept

Production Management, establishes policy demonstration/validation phase. The Program

and assigns responsibility for manufacturing Management Office (PMO) should establish

management within the DOD components for and provide criteria to the contractor as early

the acquisition of major defense systems. as possible. A successful Milestone II

This direction is practical for programs of all requires a plan for transitioning from

magnitudes and is supplemented with more development to production. Milestone Ill

detail by the respective DOD components. requires verification of the product producibility

and production schedule capabilities.

Major programs in each Service begin

following SECDEF or Deputy SECDEF The PM should work closely with the

acceptance of the mission need statement contractor counterpart to ensure that all

(MNS). The justification contains an analysis manufacturing objectives will be met. The PM

that has taken into consideration the existing should insist on aggressive producibility

technology base. Manufacturing management actions, comprehensive production planning

is considered at each decision point and scheduling, an.J efficient manufacturing

throughout the system life cycle. A methods. Sufficient funds should be budgeted

manufacturing feasibility assessment is made for use during the full-scale development

by the responsible DOD component during the phase to accomplish these tasks. Producibility

development of the componernt/OSD decision engineering and planning (PEP) and Initial

leading to the concept demonstration/ production facilities (IPF) definition efforts

validation phase. The producibility of the should start during product design to avoid

design approach and production risks are incurring significant cost and delays in starting

reviewed prior to the full-scale development the manufacturing effort.

phase. Toward the end of the full-scale

development phase, a final Production The, PM through the manufacturing

Readiness Review is performed to determine team in the PMO, should monitor progress

whether the program is ready to enter the against the manufacturing plan. The PMO

production and deployment phase. team should have a good technical

understanding of the product so that technical

problems can be resolved and design

GOVERNMENT PROGRAM MANAGER modifications can be evaluated effectively.

RESPONSIBILITIES The PM, of course, must be aware of each

The government program manager contract and engineering change during the

(PM) needs to be concerned with program, and the impact of that change on the

manufacturing management early in the overall program.

process of defense system acquisition. The

design producibility, the manufacturing

processes, the tooling to be developed, and RELATIONSHIP BETWEEN GOVERNMENT

production testing and demonstrations AND CONTRACTOR PROGRAM MANAGERS

Identified during preliminary design should be Interaction between contractor

evaluated to determine the overall manufacturing executives and the government

manufacturing risk, as well as cost and PM is required during program planning when

schedule Impacts. Manufacluring risk is one program schedules and budgets are being

of the important factors in making the decision established. This relationship should continue

to proceed with the concept throughout the life cycle of the program. Such

demonstration/validation phase and later with interaction usually results in the development

the full-scale development phase. of better schedule and cost planning. Also, It

increases the validity of information used by

No later than the concept the contractor(s) for work force, technology

demonstration/validation phase, a producibility and capital expenditure planning.

analysis should be made to aid in the

1-5
Interaction Is required in the review of The relationship of manufacturing work in process and the contractor methods management to acquisition strategy. and procedures. This assists both government arid contractor managers in their Or n figuration management and Its

understanding of the manufacturing proposais relationship to the manufacturing effort.

and In the expeditious resolution of

manufacturing problems. This Interaction Is an Total quality management. absoiute necessity, and in some cases the PM

wli find that Interaction between the Depot maintenance or repair facility government and contractor manufacturing operations. How to control/reduce costs.

personnel can serve as a forcing function for

the top contractor design personnel to Productivity improvement. communicate and coordinate program decisions with their own manufacturing personnel. A management tool like Award TOTAL QUALITY MANAGEMENT AND

Fee can Increase visibility Into the Interaction COULD COST

aspects of the producibility program. The goals of Total Quality Management (TOM) and Could Cost are to

When budgeting for manufacturing, Improve Li~e quality and lower the cost of

interactlion will enable the government PMO to system acquisitions. These require the

determine the significant cost impacts commitment of the entire acquisition experienced by the contractor. Interaction community. Attention must be focused on

Increases the government P MO's integrating the acquisition processes, reducing understanding of the contractor's non-value- added work, and Improving manufacturing operations and manufacturing contractor performance. pricing methodology, as well as the factors

that can Impact manufacturing operations. There are many acquisition streamlining and quality Initiatives which

contribute to the TQM/Couid Cost goals. By GOVERNMENT PROGRAM MANAGEMENT combining these Initiatives with Innovative OFFICE PERSONNEL SELECTION thinking, a corporate strategy can be

Personnel selected to perform the formulated that will achieve the goal of

manufacturing management task in a quality/cost Improvements In DOD acquisitions.

g ov er nm e nt PMO0 s ho ulId b e

production-oriented and should understand The TOM/Could Cost philosophy can

fully the Importance of continuing assessment be integrated into the acquisition process of the manufacturing effort. Knowledge of the through ongoing initiatives, encouraging future

following Is Important for government innovations which improve quality and reduce

personnel to have or to develop when they cost, and assuring that TOM/Could Cost tools

are assigned the manufacturing management and techniques are addressed In the planning responsibility: and execution of acquisition programs.

Manufacturing processes and their Applying the TQM/Could Cost

management. philo ,ophy In the acquisition process will

reqL.re a "cultural" change within DOD. To

Engineering operations, effect that change, a TOM Master Plan has

been developed which concentrates on one

The technical performance fundamental objective: the continuous

requirements of the defense system/product Improvement of DOD products and services.

(as specified in the contract). To meet this objective there will also have to

be full DOD and contractor participation and

The DOD pianning, programming, and commitment. Some of the primary challenges budgeting cydle. In Implementation of this concept are:

Manufacturing planning and 1. Foster an awareness of and

scheduling, commitment to the philosophy In the DOD acquisition community.

1-6
2. Work closely with industry to REFERENCE DOCUMENTS

Identify and remove barriers to quality/cost Numerous reference documents Impact

Improvement and to develop acquisition the manufacturing management function

incentives that encourage contractor throughout the acquisition process. These

performance improvements, documents originate from many sources and

range across academic disciplines, functional

3. Identify, describe and develop tools activities, and job specialties.

and techniques that have a positive impact on

quality and cost; integrate them into functional The following is a reference list oi

processes. DOD Directives (D), !nstructions (1) Manuals

(M), Pamphlets (P) Military Standards (MS),

4. Integrate this philosophy into and other documents. The documents listed

acquisition programs. contain DOD policy guidance applicabie to the

manufacturing management function. They

5. Assess the effectiveness of TOM are listed as sources of DOD manufacturing

and Could Cost implementation by evaluating management information.

functional and program performance

improvements.

1-7
REFERENCE LIST

Number Title

(D) 2000.9 International Coproduction Projects and Agreements

(I) 2010.4 U.S. Participation in Certain NATO Groups Relating To Research,

Development, Production and Logistics Support of Military Equipment

(D) 2010.6 Standardization and Interoperability of Weapons Systems and Equipment

Within the North Atlantic Treaty Organization

(I) 3235.1 Test and Evaluation of System Reliability, Availability and MaIntainabl!Ity

(D) 4005 Defense Acquisition Research

(D) 4005.1 Industrial Preparedness Production Planning

(D) 4005.16 Diminishing Manufacturing Sources and Material Shortages

(I) 4005.3 Industrial Preparedness Planning

(M) 4005.3-M Industrial Preparedness Planning Manual

(H) 4105.59H DOD Directory of Contract Administration Services

(I) 4120.20 Development and Use of Non-Government Specification and Standards

(D) 4120.3 Defense Standardization and Specification Program

(I) 4120.19 DOD Parts Control Program

(I) 4140.41 Government-Owned Materiel Assets Utilized as GFM for Major Acquisition

Programs

(D) 4155.1 Quality Program

(I) 4155.20 Contractor Assessment Program

(D) 4160.22 Recovery and Utilization of Precious Metals

(I) 4200.15 Manufacturing Technology Program

(D) 4120.8 DOD Bill of Materials

(D) 4245.3 Design to Cost

(D) 4245.6 Defense Production Management

(D) 4245.7 Transition from Development to Production

(M) 4245.7-M Transition from Development to Production Manual

(D) 4245.8 DOD Value Engineering Program

(H) 4245.8 DOD Value Engineering Program

(D) 4245.9 Competitive Acquisitions

(D) 4275.5 Acquisition and Management of Industrial Resources

(I) 4210.4 Studies on the Availability of Materials

(I) 4400.1 Priorities and Allocations

(D) 5000.1 Major and Non Major System Acquisitions

(I) 5000.2 Defernse Acquisition Program Procedures

(D) 5000.3 Test and Evaluation

(D) 5000.29 Management of Computer Resources in Major Defense Systems

(I) 5000.38 Production Readiness Reviews

(D) 5000.39 Acquisition and Management of Integrated Logistic Support for Systems and

Equipments

(D) 5000.40 Reliability and Maintainability

(D) 5000.43 Acquisition Streamlining

(D) 5000.44 Industrial Modernization Initiatives Program

(D) 5000.45 Baselining of Selected Major Systems

(D) 5000.49 Defense Acquisition Board

(I) 5010.12 Management of Technical Data

(D) 5010.-19 Configuration Management

(D) 5010.20 Work Breakdown Structures for Defense Material Items

(M) 5025.1-M DOD Directives System Procedures Manual

(D) 5220.22 DOD Industrial Security Program

(I) 7000.2 Performance MeasuremerA for Selected Acquisitions

(I) 7000.3 Selected Acquisition Reports

(I) 7000.10 Contractor Cost Performance, Funds Status, and Cost/Schedule Status

Reports

1-8
(1) 7000.11 Contractor Cost Data Reporting (CCDR)

(I) 7045.7 The Planning, Programming, and Budgeting System

(I) 7220.31 Unit Cost Reports

(MS) 109B Quality Assurance Terms and Definitions

(MS) 470 Maintainability Program Requirements (for Systems and Equipments)

(MS) 480 Configuration Control - Engineering Changes, Deviations and Waivers

(MS) 481 A Configuration Control - Engineering Changes (Short Form)

(MS) 482A Configuration Status Accounting Data Elements

(MS) 490 Specification Practices

(MS) 499A Engineering Management

(MS) 785B Reliability Program for Systems and Equipment Development and Production

(MS) 881 A Work Breakdown Structures for Defense Material Items

(MS) 1521A Technical Reviews and Audits for Systems, Equipments and Computer

Programs

(MS) 1523A Production Management

(MS) 1567A Work Measurement

DOD-STD-100C Engineering Drafting Practices

MIL-1-45208A Inspection System Requirements

MIL-Q-9858A Quality Program Requirements

(DCAA) P 7641.47 Cost/Schedule Control Systems Criteria Joint Implementation Guide

1-9
CHAPTER TWO

THE INDUSTRIAL BASE

CONTENTS

OBJECTIVE 2-1

INTRODUCTION 2-1

INDUSTRIAL BASE ASSESSMENT 2-2

Senate Activity 2-2

House Activities 2-3

DOD POLICY INITIATIVES 2-4

INDUSTRIAL BASE IMPACTS 2-4

Lead Times 2-4

Supplier Base Reduction 2-5

CAPACITY AND INVESTMENT DECISIONS 2-5

MOBILIZATION CAPACITY 2-6

PRODUCTIVITY 2-6

Factors That Influence Productivity 2-7

Work Force 2-7

Management 2-8

Capital Investment 2,8

New Technology 2-9

The Challenge 2-9

CRITICAL MATERIALS AND COMFONENTS 2-9

Strategic and Critical Materials Stockpiling 2-9

DOD POLICY ON THE DEFENSE INDUSTRIAL BASE 2-11

Basic Concept 2-12

D to P Concept 2-12

Surge Capabilities 2-13

THE INDUSTRIAL BASE PLANNING PROCESS 2-13

Industrial Preparedness Measures 2-15

GRADUATED MOBILIZATION RESPONSE 2-15

DEFENSE PRIORITIES SYSTEM AND DEFENSE MATERIALS SYSTEM 2-16

Description 2-16

Defense Production Act and Associated Executive Orders 2-17

Rated Orders Under Defense Priorities System 2-17

Assignment of Priorities to Rates Contracts 2-17

Requirements, Set-Asides and Allotments 2-18

Requests for Special Assistance 2-18
THE INDUSTRIAL BASE

OBJECQT IVE

Success in developing and producing The U.S. Congress has been focusing

defense systems relies heavily on the attention on the defense Industrial base for a

technological and industrial capability of the number of years. One of the definitive

defense industry. In managing development descriptions of the base was a report by the

and production programs, the program House Armed Services Committee (HASO) on

manager needs to specifically assess and December 31, 1980, titled, "The Ailing

understand the capabilities of the industrial Defense Industrial Base: Unready for Crisis."

base to support the program. The material This report described a serious decline In the

which follows describes the structure and nation's defense industrial capability. The

problems of the industrial base and the report cited an alarming erosion ot crucial

avenues available to the program manager to industrial elements, coupled with a

achieve the necessary and available support mushrooming dependence on foreign sources

from that base. Key guidelines to follow are: for critical materials.

1. Determine the capability of the base to A number of problems have degraded

supply the types and quantities of material the ability of the industrial base to respond to

required. near-term readiness, surge and mobilization

requirements in a timely manner. The same

2. Provide industry motivation to problems have resulted in a deterioration of

compensate for any shortcomings in capability the subcontractor and vendor base which has

or capacity. diminished the likelihood of competition and

contributed to the emergence of production

3. Make use of the Defense Priorities bottlenecks.

and Defense Materials Systems. Our society is changing at an

4. Assure continuing ability to meet ever-increasing pace due to advances in

production surge and continuing support technology and economic stimulation by

demands of the operating forces. foreign competition. America has historically

been a leader in technology innovation,

applicaticn, and productivity. This has

INTRODUCTION provided us the competitive edge necessary to

The industrial base is composed of secure a large market share. A substantial

prime contractors, together with tiers of loss in commercial market share In recent

subcontractors, with the plant and equipment years has been largely due to United States'

and skilled workers necessary to develop and failure to acknowledge and prepare for the

produce the hardware required to fulfill the increasing capabilities of our worldwide

nation's defense program. competitors.

The mission of the Department of The market for defense systems and

Defense is to provide for the common defense equipment has been relatively shielded, but Is

of the country. This requires a political and now being affected by the Increasing reliance

military infrastructure which can provide on foreign manufacturers for various products

worldwide influence. The heart of the United that U.S. manufacturers can no longer produce

States deterrent power is an inventory of with comparable quality at competitive prices.

military equipment and human resources. The

lifeblood of this capability is the United States' Current economic conditions and the

Industrial base. The "industrial base" uncertain future being projected are compelling

combines the manufacturing processes with reasons for a change in attitude. American

the managerial talent which establishes a industry is awakening to the challenge of

strong economy and industrial sector to foreign competition, but finds itself In a

produce weapon systems required to provide mind-set that is very difficult to change. The

for the defense of the rountry. industrial revolution and the post-World War 11

prosperity gave everyone a false sense of

2-I
security. A sustained demand for American economy, and the future of the work force.

products, supported by a lack of competition In However, DOD cannot be complacent about

the International markets, Induced the national security Implications of a declining complacency regarding quality and led to the industrial base. We must, therefore, use the

pursuit of short - term objectives for larger leverage of the DOD procurement budget to

profit margins, help modernize our factories, Increase

productivity and quality, and provide Incentives

In many cases Industry 'ias that will promote technological and

disregarded the Impact of quality technology manufacturing leadership essential to national

due to perceived excessive cost. security. Manufacturers are now being required to

radically modify many of the ingrained concepts and adopt new principles based on INDUSTRIAL BASE ASSESSMENT

the new concept that quality cannot be The Congress and DOD have both

Inspected into the end item. been active recently in defining the status of

the industrial base and developing potential

During the past decade, we have solutions.

witnessed a substantial loss of manufacturing capability as many companies and practically Senate Activity

entire Industry segments have closed shop. On July 23, 1987, the Senate

Failure to improve quality, while striving to Subcommittee on Defense Industry and

reduce cosls and Improve the declining profit Technology of the Committee on Armed

margins caused by foreign competition, has Services conducted a hearing on the

often been cited as the problem. Many manufacturing capabilities of key second-tier

companies have been driven out of the market defense industries. The information presented due to their inability to recognize their to the Senate included statements about the

shortcomings and Implement fundamental health of the optics, bearing and machine tool

changes throughout their organization. This industries, and a statement from the Defense

process has, through the years, caused a Advanced Research Projects Agency significant erosion of our industrial base. (DARPA). The subcommittee members

received in-depth testimony on the technology

The ability of our military forces to base, the industrial base and on the Impact of

meet our national security objectives is, in the changes to DOD's acquisition process. large measure, a function of the strength and The conclusions arrived at by the committee

vitality of U.S. industry. If we characterize the members were that the technology and

condition of U.S. industry as a percent of the industrial base were deteriorating; but, more

national product, it appears to be expanding. importantly, the root cause of this condition

For example, factory capacity Is Increasing, appeared to be In the second and third-tier

capital investments are up, and unemployment defense manufacturers. Within the optics Is at Its lowest level In seven years. However, Industry, foreign manufacturers provide 75% of

these statistics are misleading because they the optics used by DOD and American

do not reflect the true status of key defense manufacturers. The crux of the problem Industries, The DOD Is dependent on many seems to be in the nature of competition highly specializod industries; therefore, we between American and foreign manufacturers,

must focus on specific Industry segments which will be discussed later. The

when we assess the industrial base In relation recommendations provided to the Senate by

to national interests, the optics Industry include the following: require DOD to purchase all precision optical The DOD has been surveying some components from domestic sources; provide industries known to be facing difficulties. We government support to an industry-wide do not know the full extent of the Implications apprenticeship training program; and provide of a failure of these highly specialized congressional and DOD funding support for a

Industries on our ability to preserve the peace program aimed at making the U.S. optical

or mobilize for war; but we do know that the manufacturer more competitive In the world

DOD cannot solve industry's problems. market.

Ultimately, Industry's behavior will determine

not only its own health, but also the national

2-2
It is readily apparent that the bearing approach provide the utmost flexibility for

Industry plays an important role in all aspects conducting business in the world market.

of the country's defense. Current studies

indicate that the domestic industry cannot The result of this hearing was t.,e

meet mobilization requirements. The import introduction of a bill, SS1892, to strengthen picture for 1986 shows that the U.S. imported the industrial base. S1892 acknowledges the

64% of ball bearings, 40% of tapered roller Importance of the industrial base for tVe

bearings and 17% of other roller bearings, defense of the nation: to develop The Anti-Friction Bearing Manufacturers' technologically superior defensu material

Association supports an import quota program rapidly and to produce such material efficiently

and DOD has ruled that all its contractors in cost-eftective quantities during peacotime

must buy only American-made ball bearings, and to expand production cimpacity rapidly to

meet the demandb of a national errebiency.

The machine tool industry's capability The bill provides for the milntenance and

to support a mobilization is not any better that Improvement of the industrial base. It gives

the previous examples. Since 1986 imports management responsibilities to the

have met 49% of the domestic machine tool Undersecretary of Defense for Acquisitinn to

demand; 25% of the domestic machine tool encourage investmert In emerging

capacity has been forced from the business or technologies, moderniz!ng production facilities

moved off-shore. The National Machine Tool fostering the dedicated participation of private

Builders' Association (NMTBA) which supports U.S. sources, and discouraging unfair

a continuation of the 1987 Defense practices by foreign sources.

Appropriations Act states that, "Fiscal Year

1987 funds cannot be used to purchase, for House Activities

use In DOD facilities, 23 Federal supply The House conducted several hearings

classes of defense-sensitive machine tools before the Subcommittee on Economic

from sources other than the United States and Stabilization of the Committee on Banking,

Canada." The NMTBA is also a strong Finance and Urban Affairs during the months

supporter for increased use of the IMIP and of July and September 1987, to develop the

MANTECH programs. new Industrial Base initiative. The hearings

focused on the entire cross-section of

A DARPA rApresentative's testimony Industrial base Issues Including: condition of

summarized the nature of the competition by the defense production and mobilization

concentrating on the Japanese approach to capability; and the defense supply system for

conducting business. First, they use many such parts as gears and aircraft parts; finally

techniques to achieve rapid commercialization the hearings centered around DOD's Industrial

of new technologies facilitated by the Ministry base Initiative, which will be discussed later.

of International Trade and Industry (MITI). The hearings concluded that there is a

The MITI establishes strategic direction, sets growing dependency on foreign sources for

up joint ventures, and provides financing and key components and materials required for the

protection in the domestic marketplace. manufacture of weapon systems; the

Second, the nature of the Japanese depLtdence threatens the capability of

manufacturing enterprise is also important. Industry to respond to defense production

The Japanese invest heavily in manufacturing needs in a timely manner; vendors could only

research; make extensive use of just-in-time sustain a military operation for a few months;

inventory control procedures which reduce the U.S. industrial capability must be

work-in-process costs; and maximize the strengthened and preserved; and a potential

output of the human resource by attracting the conflict's outcome could depend upon our

best engineers, providing extensive training to ability to produce faster than the enemy. The

the workers and rotating the job assignments result of the hearings was a bill, H.R.4037,

for all categories of workers. Finally the which was to amend the Defense Production

Japanese fully subscribe to the "total quality Act of 1950. H.R.4037 is designed to

concept". The Japanese belief that quality is revitalize the defense Industrial base of the

designed in, not inspected in, permeates all United States. The Act gives the President

aspects of business from R&D, design, vendor the authority to: limit the purchase of parts for

purchase, and fabrication finally to test. This all existing and new weapons systems to

domestic sources; designate critical industries

2-3
for assistance in facilites modernizatiorn; and coordinated Industrial Preparedness

develop domestic capability for material, Programs; coordinate defense materiel

services or skills; and use loan guarantees, acqulsltion responsiL' itles, promote data

price -uarantees or direct loans all In suppor, exchange between countries to Improve

of the industrial base. industrial responsiveness aad the effectiveness

of the production base analysis; provide

guidance with the goal to develop oxecarahlDOD POLICY INITIATIVES programs; and develop policy

A major portion of the testimony to the reco(mmendations.

House of Representatives from the Assistant

Secretary of Defer, e for Production and

Logisticr Is expanded In a document tited, INDUSTRIAL BASE IMPACTS

"Bolstering Defer s.• ,ndustrlal The Impact of crucial industnal base

Competitiveness." datod July 1988. !n the elements on program success Is apparent

document, the Undersecrotary of Defense for when one examines lead times, the supplier

Acquisition reported .o the Seci atary of base, productivity, and Industrial preparedness

Defense or a plaii ko preserve the !ndustrial pleanlng. This chapter will not cover each of

base and lay the grouno-work for any these subjects in detail; however, the mejor

mobilization activity. rhe underpinnings to this points presented here should give the reader

approach are that DOD plays an Important an understanding of the magnitude of the

role In the marl-,cplace with spending that problem and some of the new Initiatives within

represents approximately 21% of the the DOD to deal with them.

mar'ufacturlng gross national product and so

has the leverage to accomplish the plan. Th', Lead Times

more pressing portion of the plaii, wiich hbs Lead times for defense materi,. and

been accomplished, inchde3 !he establishment components tend to be volatile. 1here are

of a Deputy Undersecretary of Defense for various reasons for this situation, such as:

Production Base and International Techn,..ogy imbalances between cipecity and demand;

and a Defense Manufacturing Board (DMB), competition from commercial cuDpliers; raw

Initially the Undersecretary will function as the materials not available.

focal poirt or advocate for the production

base; asses,. the Impact of foreign Lead times are severely Impacted by

dependency: determine wl.ich industry capacity limitations. As orders increase

segments should be supported by DOD beyond existing capacity, the contractor has

strategic planning; and develop a DOD the option to Increase capacity or to add new

technical educational ,scholarship program. orders to backlog. For a contractor with a

The DMB is chartered to uevelop a better reasonably steady demand and no capacity

relationship with industry; recommend expansion, increasing bac'Jog increases In

enhancements to the Industrial Modernization lead time. When these iead time Increases

Incentives Program; and study methods to are communicated to customers, their

Integrate the manufacture of commercial and response to the lead time is to issue orders

military product lines. Immediately to ensure material availability.

With constant capacity, these new orders must

Additionally, on 23 March 1987, Mr. E. also be added to baLklog, which must then be

J. Healey, the Assistant Deputy Minister reflected In incrased lead time. As this

(Materiel) Department of National Defense self-fueling process, oftan called tLe lead time

Canada, and Mr. R.B. Costello, Assistant capacity syndrome, continues, a relatively

Secretary of Defense for Acquisition and small increase in demand can result in

Logistics, U.S. Department of Defense, signed extremely large Increases in leao times. The

the charter for the North American Defense area of compotient and material load time is

Industrial Base Organization (NADIBO). The extremely critical to meeting program

Organization officially recognizes the defense schedules and defining long lead and

Industrial base relationship which has existed advanced b-iy requirements. The program

between the two countries for more than 50 office should maintain co, dtlnuing visibility of

years. The Organization is designed to: the current status of and the forecast changes

promote the U.S. and Canadian Industrial in lead times.

Preparedness Programs; foster cooperation

2-4
Su.p!lier Base Reduction number of these new and returning firms are

Numerous causes have been linked questioning the desirability of remaining In the

with the reduction in the defense supplier base for a number of reasons. Many small

base. The primary reasons include economic firms find the requirements Imposed by the

conditions, material shortages, foreign DOD make business unprofitable.

competition, and government regulations. The

impact on defense systems programs is fewer The program manager should regularly

companies in the market place, some loss of evaluate the total industrial structure

competition (with all that entails) and P. supporting the program for Indications of

possible increase in lead times. The potential capacity or capability problems. The

implications in periods of surge or mobilization fact that this very critical portion of the

are obvious, as numerotis defense systems Industrial base ik deteriorating Is a concern of

place demands on too few suppliers, the Department of Defense. DOD Directive

4005.16, "Diminiahing Manufacturing Sources

It is of paramount importance that and Material Shortages," is a result of this

sufficient production capacity exists within the concern and assigns responsibilities within

industrial base to produce defense systems each DOD component for action to be taken

according to planned peacetime schedules when essential manufacturing sources are

with sufficient capacity to expand to meet endangered. Contractual provisions that would

increased requirements or accelerated serve to alleviate problems that may be

schedules due to a wartime situation. encountered by subcontractors should be used

whenever possible.

Although defense hardware is usually

thought of as being produced by only a few

large prime contractors, the entire industrial CAPACITY AND INVESTMENT DECISIONS

base encompasses a large number of Capacity can be defined as the

subcontractors and suppliers that may be maximum rato of productive or conversion

,'ngaged entirely, or to some extent in capability of an organization's operations.

government work. The large prime contractors Capacity is normally constrained by physical

generally havo sufficient capacity to meet facilities, available productive equipment,

normal requiremrnts and surplus capacity for tooling and/or test equipment. The portion of

wartime surge demand. Crucial to meeting this capacity actually utilized is determined by

wartime demand are the many tiers of the demand on the plant for current and

subcontractors. This is especially critical since known future workload. Firms engaged In the

the DOD depends almost entirely or. the defense industry must be particularly aware of

private sector for the materials necessary to a need for excess •apacfty because its

support wartime operations. customer's (military) tiemands tend to be

somewhat unstable over time.

Ot the many thousand companies that

comprise the defense industrial base, the Operational and Investment decisions,

majority (over 70 percent) are classified as made by the contractor, which could increase

being subcontractors and lower tier suppliers, capacity are influenced by return on

More than half of all the dollars expended for investment or profit in relation to the risk

defense materiel acquisition go to this perceived and the potential return from other

segment of the industry. This underlying opportunities. Since the early 1970's there

sector of the industial base has deteriorated have been indications that a majority of

drastically since the Vietnam War rosulting in industrial facilities used to produce weapon

bottlenecks for many parts and supplies, systems and materiel have been growing

Thousands of suppliers dropped out of the older, and new investment has not been

defense business entirely, and others are keeping pace with equipment obsolescence or

reluctant to expand in fear of future the advances in manufacturing technology

curtailments in defgnse expendituree. During which could lead to higher productivity and

the defense b'jild up of the 1980's many of lower costs. This has led to an Industrial

these firms returned to the defense base and bottleneck where certain limited suppliers are

were joined by many new entries. The taxed to capacity with comptslng military and

emphasis on competition provided motivation civilian orders. Lead times for the Items

for many new supplies to enter the base. A produced at these facilities tend to be

2-5
extremely volatile and subject to the demand maintained In order to provide mobilization

lead time syndrome described above, capability. The defense Industry's ability to

rapidly expand its manufacturing operations Is

Firms engaged In defense related an essential part of the overall defense

business tend to look for relatively short posture. pay-off periods for investment, thus reducing The following factors should be

the risk of financial losses If the long term considered to Improve planning for

business outlook proves unfavorable. There is mobilization:

an indication that defense industries are

maintaining their profitability by limiting their o Planning should be highly selective.

Investments In equipment. In doing so, they Products that would be required and could be

continue to use equipment that is aging faster supplied should be Identified.

economically than that used in many commercial Industries. This practice Is likely o Critical parts and essential

to result In Increasingly labor intensive manufacturing machinery, rather than just end

operations and higher prices for DOD goods. items must be effectively planned. Planning This problem Is discussed In more detail later must be done for the long lead Items, the

In this chapter. parts for which there are only a few suppliers,

or the particular machinery that Is already In

The availability of capital together with use on three shifts.

its cost, exerts a great influence on the

defense firm's decision for increased 0 Critical labor categories must be

Investment. Generally, lending institutions examined since this could be a large potential perceive defense contractors as less attractive problem. Planning must Include other

risks than their commercial counterparts. demands on this labor, Including military Whenever capital is scarce, less desirable reserve requirements. credit risks have a difficult time In securing

outside financing; therefore, defense 0 More research and development work

contractors find It hard to raise money if a needs to be sponsored to find substitutes for

capital shortage develops. If they can secure the many critical materials on which we are

needed financing, It will generally be at a presently foreign dependent. Advances In

higher rate than that charged to commercially manufacturing technology could aid In

oriented firms. alleviating this problem.

A DOD Investment Policy Study Group 0 Purchases should be funded of all

(IPSG) formed In 1976 found that "necessity" items which would significantiy affect

(that Is, to produce the product to stay in the mobilization capability but would not

business), competition, rates of return, cash significantly reduce peacetime defense

flow, and perceived risk were the major production. An example would be buying long determinants of investment in defense lead time parts one or two years in advance.

business. Of these, risk in relation to return

and cash flow seemed to be the major factors Most of the defense Industry prime with respect to the analysis of Individual contractors have some excess plant capacity

Investment projects. to gear up In the event of mobilization or

surge, but the lower tiers, the parts suppliers There are several measures that may and subcontractors, represent the bottlenecks

be taken by the government to encourage in mobilization capability. In developing these

needed Investment by defense contractors. plans it is Important to remember that different

Among these are multiyear contracting, primes may depend on the same subs for

Industrial modernization Incentives which are "Surge.- discussed elsewhere In this Guide.

PRODUCTIVITY

MOBILIZATION CAPABILITY Productivity enhancement Is Important A factor that Is unique to defense plant to both Industry and DOD management. In

and equipment requirements Is the excess Industry, productivity growth leads to lower

capacity that must be established and costs and provides an opportunity for lower

2-6
priced products and/or higher profits. It also produced to the quantity of resources

makes possible Increased benefits for (persornel, capital facilities, machine tools and

employees. In DOD, productivity growth helps equipment, materials and Information) required to ensure that defense system programs will to produce them.

meet cost and schedule targets, thus providing

more resources for other defense needs. The To determine productivity one must

productivity of any Industrial firm Is a measure ask: First, was the desired result achieved?

of how well the resources In that firm are (the effectiveness question). And, second,

brought together and used to accomplish a set what was the quantity of resources consumed

of results. Productivity Isn't just an Increase in to achieve it? (the efficiency question). the volume of shipments, although this Is one Effectiveness relates to performance; element. Traditionally, productivity has been efficiency, to resource utfization. How well

defined as the acceptable output per labor resources are brought together and utilized Is

hour. Using this definition, we would quickly Indicated by comparing the magnitude/volumne discover that In a firm with many employees of results, usually called the output and little automation, productivity depends (effectiveness) with the magnitude/volume of

principally upon human achievement. On the the resources consumed, usually called the

other hand, in a firm where automation Input (efficiency). This ratio becomes an Index

predominates, the human contributions to of the definition and a measurement of

productivity play a lesser role, productivity.

Fred Gi. Steingraber has written a fine Factors That Influence Productivity

summary of how the definition of productivity The factors that Influence productivity has changed over the years. This Is the way growth are the work force, management, he sees It: capital investment, and technology.

"The definition of productivity has Work Force

changed considerably over the past fifty years. The members of the work force

Back In the 40's and 50's the measurement of represent an Integral part of the productivity productivity focused on output, or the picture. This Is portrayed In Figure 2-1.

production of as much as possible. In the Referring to this figure, you can see that each

60's and 70's quantity was no longer as of the three categories -- work force, process, Important as efficiency, or production at the and product -- Is composed of subordinate

lowest possible cost. Now In the 80's, given elements, any one of which can Impact the constraints Imposed by scarcities, productivity growth. Productivity growth occurs

regulations, changes In job skill and cost mix, when the cumulative effect of the

and greater International competition, the interdependent elements Is Improved. productivity emphasis is on effectiveness.

Corporations are Increasingly liable for the The quality of the work force affects

quality of their products and the services they productivity. As the quality Increases or

offer. [Corporations] are considered social decreases, the productivity Increases or

entities, not just economic entities. And, as decreases. There has been a decline In the

social entities, [they] are held accountable for quality of the work force In the United States

attitudes toward issuas ranging from the during the past few years. This decline can

environment to the quality of life in the work be attributed to a rise In the proportion of

place and ultimately to the quality of the young and Inexperienced workers in the work

product delivered. As a result, the definition force and the decrease In the average work

of productivity as output over Input Is useless effort. Also, the lack of motivation of many unless we realize that output now includes in young workers has had an adverse effect on

additioo' to product such factors as quality, productivity. service, and safety, while the Input is

government, unions, people, money, technology, information, motivation ....

Productivity Is more than output over

Input. It Is the relationship of the quantity and

quality of products, goods, and services

2-7
Fiue - Pouc~it eulsfrmEfetieIneatinofte1ok4oce0h

Proeses an teORoduct E

In~~~~~~~~~ 91 su th umr f fre ti rmMagenthttewokr

Prdctvt nesetr0twsidctdta eealytk hi us codnlatt

effcivue2 wa obltrProductivity ieuls throug ofetvnteorganiztion may nh Work tFoutcell when

emloe ptihpatumnerograms.suter applired Ito anfother.nTherefore iht ise imortant

crommuncativiynesletrank Itwsecondiflloed bya fonral manaer toei assess thecituaiongy within

iprovled labheork manageen -reltos themsmngrs ogniztionvbeforetaking specIficrtanctin

ieasedntralInngedimerve qualiy, prdcincrase toe enhance onproductivity. n hi eiet

autrovmantin productvmt ineTive pulanshe os th enac prdtityhouotte

resedution programsan deinreasrtid rnsea oraniztion Inesmnfotuntlatosta

anreesltso i uvy ttdtah opmnt Caapimnttalknes to mpoen isonecssary If

effctie t boste wy podutivty strouh oeprodutiiztyison bey ehned. PorkoductivitywhIs

employeeparticpto prgas etr apinfuned anther by Thiersfre Inutra fIrs Iprare Omne tof thenkes teond prollwducviy foaable tosto s asides for sinetmention neW

enhancemen within manygmn eatos organization isor tcnlgeupntaknd faciities.tifoth

mancrageedtant.Thn Imrvdqacition, tttue, Inraned Unitednhances isrokcingfoitwytoiprv

autrstonal eaplesucofitmanageentiv pervade prdcivtionestssiuaetaia

reuthe oroganiation n and Inraffet dretlyrthe sapiaInetendig

maattitues,. aTion andmtivtions ac thens worktd ttsIsloigfo a t mrv

2-8
Tom Wolfe, contemnporary author antl that will lend themselves to automation,

social critic, believes that the greatest source manpower/work load forecasting that takes Into

of productivity loss in the United States in the account factory automation, and a mechanism

1970's was in the short term orientation of for worker feedback.

industrial managers. Managers who occupy

their positions for short periods of time, either The Challenge

because of job rotation or turnover, are not Productivity enhancement Is especially

prone to make long term investment decisions Important In the defense systems acquisition

or substantial capital Investments. Further, business. It Is only through enhanced

industrial firms have problems in executing productivity that we can continue to afford

long range and consistent company strategies defense (weapon) systems In sufficient

when management changes frequently. quantities to &eter or counter any foreign

Finally, there seems to be a trend away from threat to our way of life. In the United Staies

engineering backgrounds among chief we have reached the poir~t at which It has

exe-tutive officers In the defense Industry, become difficult to sustain the rate of

Pernaps some of our problems today are the productivity growth we attained In 1-:ý past.

result of the muted voices of engineering and Continuing technological Innovation and

manufacturing executives when key policy increased capital Investment will help, but they

decisions are made. cannot enhance productivity without a work

force in tune with the need. The ability,

Wolfe bemoans the rise of attitude, and action of the oeople In -le work

self-centeredness in our social fabric, force will have a pronounced etffe on the

Unfortunately, the lack of commitment he has future growth of productivity In this country.

observed in our social fabric has also begun

to appear in our industrial fabric. The

stockholders in our industrial firms are CRITICAL MATERIALS AND COMPONENTS

demanding higher short term earnings. There Is a growing dependence in the

Industrial growth calls for capital Investment defense Industry on materials and products

which reduces short term profits. The from foreign countries. The depndence

management of industrial firms in the United ranges from relying entirely on Imported States must make long term commitments to minerals to using electronic components in our

research and development (see Figure 2-2), weapons systems that are manufactured

automating the 'actory, and corporate growth if abroad.

productivity Is t )be enhanced.

Strategic and Critical Materials Stockpilinji

New Technology The Strategic and Critical Materials

"Economic growth, technological Stockpiling Act requires that a national

innovation . . . these are the components of defense inventory of strategic and critical

progress. These are the engines that drive materials be acquired and retained to preclude

our country forward," says Herbert E. Meyer, dependence on foreign supply sources In

an editor of Fortune. The enhancement of times of national emergency.

productivity Is not only affected by the results

of research and development, but by The growth of high technology has

application and acceptance of new technology, altered the various military threat environments

According to Frank Batten, past president of faced by deployed forcos. Fundamentally,

the New York Stock Exchange," Productivity threat environments, weapon systems, the

growth [results from] the application of new domestic Industrial base, and materials used In

technology to the production of goods and defense have been In a constan~t state of

services." change over the past 40 years; the rate of

change is increasing. International industrial

A well-managed industrial firm is one Interdependency has added to the compexity.

in which there is an effective integration of the A national defense stockpile needed 40 years

work force and advanced technology. The ago when the domestic industrial base was In

genesis of such an organization Is an an expansion mode Is different than a

Implementation plan that includes education of stockpile needed today with the base In a

the work force for factory automation, early diminishing mode.

Identification of new manufacturing processes

2-9
0

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00

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SOREzAINLSINEFUDTO

Fiue - ndsrilSenig nUS.fr eerc ndDvl1mn

~~~iue22Industrial rwmtiasfrsuplendin in amsthl ReerchneDvlomn U.S.mre oh for 

Thlpoie prang ofdefeonseIndustra neeed andioundihidualtmaterials.thatiaredtotbe

emergeanbsciesisentals Idifferient. Durnghorugol.hh .. dees nds a

War condep Isthel Kmoreancofit, the conteptteof bceePeogent manaforeint sourices fhorl

anesv oity topoidentf stockpile hra was acscurtsurcao h materials nopnnJpanblhas taeken

anIndustilrawc monateials ofo suppmetlersw tonalmotai hvalfiofthe U.S markinetpfrnteny

patrocess, spon fabicators andusra bsubcolContractors copteheoryd chip andouJapan Is postbingh

could, provdaysned pars anresndl comonensneed snmaerious thraeatnto theram U.S. smcondctr

tiesof manufacture weaon n system and toos inubstry.oanh iimlueofciia

hisaconcept is srertil impporanth sunited Stathes Patrogs.Inream maaementaofics e should b

isamovng away fqimnrom ucaibasice mateials plaerformastd eafrlys i the Iprogra eiton

wintenisiveth soimety Whereioas temestockpil wmsidntifyactriticalrmaterialaproblemsduce tow

rely toay' i inceasngl ned fouse on manuateriamnagtementopograms that covdmaer

tieseo mnfcrtuclmtring s stocmkpie up for loat substeficuionendthmima use of critical mtras

established goals. Of the 62 family groups 2-0Defense systems designs that economize on
critical materials should be encouraged with manufacturing sources or by material

incentive awards to contractors. shortages.

Other references that deal with Industrial

DOD POLICY ON THE DEFENSE preparedness planning are:

INDUSTRIAL BASE

As stated in the beginning of this 1. Executive Order 1 1490, Assigning chapter, the Department of Defense is Emergency Preparedness Functions to Federal

responsible for assuring that sufficient Departments and Agencies, 11 June 1976.

industrial capacity exists to meet potential wartime needs for the military services. 2. Defense Mobilization Order 11

Executive Order 11490 assigns responsibility (DM0-Il), Maintenance of the Mobilization

to the Department of Defense, in conjunction Base, 1 July 1980.

with industry and other government agencies, for conducting industrial preparedness 3. DODD 4275.5, Acquisition and

planning. The Defense Department has Management of Industrial Resources, 8

Issued a number of directives and instructions October 1980.

stating the policy that will be followed and

setting forth guidelines and implementing 4. DODD 5000.1, Major and Non Major procedures. Pertinent to this purpose are the Defense Acquisition Programs. following: 5. DODI 5000.2, Defense Acquisition 1. DODD 4005.1, -DOD Industrial Program Procedures.

Preparedness Production Planning," (a) establishes policy and assigns responsibilities 6. DODD 4151 .1, Use of Contractor and

for planning of industrial resources for Government Resources foi- Maintenance of

peacetime, surge and mobiiization production Material, 20 June 1970.

of essential military material, (b) issued

pursuant to the emergency preparedness 7. Federal Acquisition Regulation. responsibilities assigned to the SEODEF under

Section 401 of Executive Order 11490 and the 8. DODD 4245.1, Defense Production

production readiness functions as defined in Management. Defense Mobilization Order 11, Maintenance of

the Mobilization Base. 9. DODI 4400.1, Priorities and Allocations - Delegation of DO and DX Priorities and

2. DODI 4005.3, "Industrial Preparedness Allocations Authorities, Rescheduling of

Planning." This Instruction authorizes: (a) Deliveries and Continuance of Related

publication of a single DOD Industrial Manuals, 16 November 1971.

Preparedness Program Planning Manual (DOD 4005.3-M); (b) policy and guidance to identify 10. DODI 4210.4, Studies on the

and prioritize an Industrial Preparedness Availability of Materials, 6 October 1971.

Planning List (IPPL); (c) preparation of a

Production Base Analysis (PBA) report on the 11. DOD Manual 4005.3-M, Industrial

existing industrial base; (d) integration of Preparedness Pianning Manual.

industri~kl preparedness planning for both surge and mobilization into the production The objectives below have been

management of defense systems by the established to Improve Industrial base

responsible program/project and item capability and responsiveness:

managers. 1 . Develop an Industrial base capability 3. DODD 4005.16, "Diminishing to produce and deliver the five-year peacetime Manufacturing Sources and Material procurement program efficiently, effectively and

Shortages." Establishes policies and assigns as quickly as possible. responsibilities within each DOD component to

assure timely action is initiated when essential 2. Develop an Industrial base capability end Item production capabilities are which will provide surge responsiveness. endangered by the loss or impending loss of

2-11
3. Develop an Industrial base capability production of needed Items to satisfy various

which will permit accelerating the attainment of contingencies, using peacetime priorities end

programmed sustainability for selected critical allocations authorities and existing facilities

systems or items. and equipment.

4. Increase industrial preparedness D to P ConceDt

planning funding levels and integrate industrial Mobilization planning is based on the

preparedness resource requirements into the "D to P" concept. This is a logistics planning

Planning, Programming and Budgeting System concept by which the gross material readiness

(PPBS). requirement in support of approved forces at

planned wartime rates (for conflicts of

Basic Concept Indefinite duration) will be satisfied by a

Mobilization involves preparing for war balanced mix of assets on hand on D-day (the

or other emergencies through assembling and day on which operations commence) and

organizing national resources; and the process assets to be gained from post D-day

by which the Military Services, or part of them, production through P-day when the planned

are brought to a state of readiness for war or rate of production deliveries to the users

other national emergency. This Includes equals the wartime rate of expenditure. The

activating all or part of the Reserve expansion of production occurs through a

components, as well as assembling and mobilization effort (Initiated at M-day). D-day

organizing personnel, supplies, and material, and M-day may or may not occur

The industrial preparedness program is simultaneously. The demands for

a coordinated system of plans, actions and consumption are established based upon the

measures for the transformation of the operational scenario. These demands are

Industrial base, both goversiment-owned and translated by the Joint Chiefs of Staff into a

civilian-owned, from its peacetime activity to Composite Commander In Chiefs Critical

the emergency program necessary to support Items/Weapon Systems List (CINC's List) and

the national military objectives. It includes furnished to the DOD components for

Industrial preparedness measures such as consideration in developing the service Critical

modernization, expansion and preservation of Item List (CIL). The CIL is used to develop

Industrial facilities. Industrial preparedness the Industrial Preparedness Plann!ng Ust

focuses on two major areas of industrial base (IPPL). This list shows the weapons systems

capability, mobilization and surge. Mobilization and components selected by the military involves preparing for war or other departments and the Defense Logistics

emergencies through assembling or organizing Agency for Industrial preparedness planning.

,i3tional resources to focus those resources on Once items on the IPPL are specified, any of

bringing the Armed Forces to the required a number of methods may be used for

state of readiness and providing the resources planning including:

to sustain Armed Forces operations. Surge is

the accelerated production, maintenance and 1. Preparation of Industrial Preparedness

(epalr of selected hems, and the expansion of Production Planning Schedule (DD Form

.glstics support services to meet 1519).

contingencies short of a declared national

emergency utilizing existing facilities and 2. Data Item Description (DID) for

ec 'pment. Only existing peacetime program Industrial Preparedness Planning (this Is

pr, ities will be assumed available to obtain especially appropriate for new acquisitions).

materials, components and other industrial

)urces necessary to support accelerated 3. Direct Industrial Base Plaining (without

program requirements. Armed Services Production Planning Officer

(ASPPO) involvement).

The foundation of mobilization

preparedness planning is 1he realistic 4. Special Studies.

determination of the total production

requirements necessary to support the These approaches are described in detail in

approved forces post-mobilization day (M-day). the Industrial Preparedness Planning Program

Surge, on the other hand, is not planned on a Manual, DOD 4005.3-M.

given scenario but on the ability to accelerate

2-12
Surge Capabilities Additional specific problems in

During 1983, a simulation of industrial reaching surge objectives were identified in a

responsiveness was accomplished under the year-long study by about 60 aerospace

auspices of the American Defunse companies. The study determined that

Preparedness Association and the National shortfalls in the U.S. aeronautical space

Security Industrial Association. The industry hamper airframe and engine

simulation, requested by the Deputy Secretary manufacturers' ability to surge production to

of Defense, had as its objective the meet emergency requirements and could

development of a set of recommendations for seriously hurt U.S. defense capabilities. The

potent;al government and industry actions, study showed that while there is some surge

which would, if instituted, provide a capability capability among airframe and engine

to increase production of critical end Items producers, production at surge levels cannot

(surge) In a national security emergency be sustained for more than a few months at

situation short of full mobilization. At the best.

compl6tion of the simulation, the following

conclusior.i were reachec.

THE INDUSTRIAL BASE PLANNING

•1 Producticro capacity for significantly PROCESS

expanded ouiput can ZJe made available at the The process is really twofold; first, the

prime .avel at a raasonable nost subject to program manager is required to plan for surge

these condltiorbz: and mobilization, which will be discussed later.

The Military Services, along with DLA, are

a. Findings may be transitory as a required to assess the capabilities base to

function of economic -developments. meet surge and mobilization requirements and

determine where essential military items can

b, A riumbeý t,., second and third tier be obtained to satisfy surge and mobilization

suppliers Qould bocom"ne choke points, requirements. To accomplish the planning the

services are required to develop an annual

c. Continued comfortable reliance on Production Base Analysis (PBA). The

oftshore cap 3bil.ty for low cost labor combined PBA of the services measures

procet-sing, som,n unlq'ie products and industry's capability to meet defense

coproductlon could lead to major disruptions. requirements and assesses the condition of

the industrial base. The PBA evaluates

d. Commcicial production develops and current and planned plant capacity and the

suppovitt canability (or expanded military potential competing demands between military

output. and commercial requirements during

emergencies. During this annual process the

e. Critical materials, if not stockpiled and Secretary of Defense provides the services

supplied as required, could become production with "Defense Guidance", which outlines the

stoppers. latest scenario upon which to plan for an

industrial base program. Also, each year the

2. The major output drivers are the basic Commanders of the Unified and Specified

availability of production capacity, i.e., Commands provide a single list of critical

production and test equipment, manpower, weapon systems and components or critical

material, energy, etc. at the prime and subtier items list (CINC's CIL) to the industrial base

level. Waivers and deviations contribute to planners. The services then develop their

accelerated production and, in specific own list of critical weapon systems which Is

Instances, perpetuate major bottlenecks If not analyzed to determine which components,

granted. spares and production capacity are required to

support the CINC's CIL. As an example the

3. Preparatory funding, assumed for the Air Force's data flow is outlined in Figure 2-3.

simulation, is a real need to build The process quantifies production for surge

subcontractor capability and to support and mobilization; identifies IPMs; provides

Increased demand for subcontractor and prime feedback to the operation planners; and

working capital. develops peacetime investment options for the

PPBS and an emergency budget.

2-13
DEFENSE GUIDANCE

COMMANDERS-IN-CHIEF

CRITICAL ITEMS LIST

AIR FORCE CRITICAL

ITEM REQUIREMENTS

ANALYSIS

AF CRITICAL ITEMS LIST

PRODUCTIVE BASE

ANALYSIS PROCESS

PRODUCTION BASE

ANALYSIS REPORT

SURGE/MOBILIZATION

INVESTMENT I ANALYSIS

SUSTAINABILITY

ANALYSIS

AIR FORCE

PPBS AND OPERATION

PLANNING ACTIVITY

Source: Draft AF Industrial Base Program Planning Manual, 19 July 1988

Figure 2-3 Air Force Data Flow for Production Base Analysis

2-14
Industrial Preparedness Measures preparedness involves the Integration of

The analysis of Industrial capability planning responsibilities for current systems provides the basis for estimating the ability of Into the program management and

the production base to meet specified procurement functions of the services. This

production requirements as well as the change will require program managers and

facility's maximum capabilities to provide a procurement officers to consider Industrial

certain Item or items. They also suggest what preparedness from system development

types of actions could be taken to enhance a through production/deployment and will be part firm's ability to respond to demand for needed of the DAB approval process. Planning for

products. These actions are called Industrial critical systems, equipment, and components Preparedness Measures (IPMs). These IPMs may be funded as a separate line Item In

may include such actions as: procurement contracts (including appropriate Data Item Descriptions). 1. Modernizing or expanding facilities.

The program manager Is required to

2. Developing Improved production include mobilization capability In acquisition techniques. planning. This requirement was Included In

the Defense Programming and Planning 3. Awarding "pilot line" contracts. Guidance and In the Planning and

Programming Guidance Memorandum for FY

4. Establishing or maintaining stand-by 1982. DOD Directive 4005.1, Instruction

production lines. 4005.3, and Manual 4005.3-M emphasize this

responsibility. 5. Maintaining a warm production base.

The responsibility for IPP has recently

G. Acquiring and maintaining plant been added to the program manager's charter.

equipment pack'ages with all the necessary The PM must:

special tools, dies, fixtures and special test

equipment. 1. Provide contractors with Information

concerning required mobilization capabilities.

7. Establishing and maintaining multiple production sources. 2. Plan for funds for the creation of any required surge or mobilization capacity.

8. Prestocklng raw materials, semifinished

materials, components and assemblies. 3. Evaluate the contractor's mobilization

plans. 9. Multiyear contracting.

The provisions for attaining the

10. Establishing programs to increase the required mobilization levels should be

retention of personnel with key technical skills, described In the production plan with specific attention to the issues identified In 1983

Industrial Responsiveness Simulation. Also,

11. Exercising guarantee authority of the the Impact of the requirement on facility needs

FAR and Defense Production Act. should be described. As a program nears

completion of the production phase, IPP

12. Recommending design changes or requirements should again be considered as

waivers, part of the decision process Involved In the

disposition of the special tooling and special 13. Underwriting the establishment/main- test equipment.

tenance of U.S. production sources for critical

defense material when no current U.S. source

exists. GRADUATED MOBILIZATION RESPONSE

The latest thinking from OSD Is In the

14. Conducting special studies. area of Graduated Mobilization Response (GMR), as a technique to better fit-up One of the more significant recent Industrial base planning to potential hostile

DOD initiatives to Improve Industrial acts on the part of an aggressor. In January

2-15
1988, GMR was defined as, "An interagency purposes. First, the systems help ensure that

coordinating system and process for national programs are maintained on schedule

integrating ambiguous and specific warnings by providing priority treatment for the purchase

with appropriate resource action to: mitigate of products and materials by government

the impact of, improve responsiveness to, agencies, contractors, subcontractors and their

and/or recover from a national security suppliers. This is accomplished by directing

emergency or other crisis." The GMR system the flow of materials and products to the

provides a framework for mobilization planning nation's military, atomic energy, space, and

across a range of conditions from peacetime domestic energy production or construction

to total mobilization. The concept is a system programs. These programs are referred to as

which triggers the response of the industrial "claimant agency" programs. e mobilized

base In much the same manner that the should the need arise.

DEFCON system triggers the military service

and National Security Command in event of The Defense Priorities System and the

an emergency. GMR allows for reaction to all Defense Materials System provide the means

aspects of emergencies from acts of for exercising the priority and allocation

aggression on the part of a belligerent to a authorities of the President for the purpose of

natural disaster. GMR has three stages which promoting the national defense. They also

are further defined into seven levels as shown provide a system which can be promptly

in Figure 2-4. An important aspect of this expanded to direct the Industrial economy of

system is the increasing control exercised by the country to meet the exigencies of war, or

senior officials.

GMR STAGE 3 GMR STAGE 2 GMR STAGE 1

PLANNING AND CRISIS MANAGEMENT NATIONAL EMERGENCY/WAR

PREPARATION

Iovol 6 5 I 4 3 2 1

deliberate crislsplannng mobilizationg of the economy

planning and prePIrations, a

Investment actlo js I

(patt.rn of threit to US Id'ed) (direct challenge to US security) I I I

Independent progressively riore NSC or othe" centralized

actions and coorc and NSCjdlrection control I

Info exchange I I I

I I I

Figure 2-4 Graduated Mobilization Response

DEFENSE PRIORITIES SYSTEM AND

DEFENSE MATERIALS SYSTEM

Description

The Defense Priorities System (DPS) other programs designated by law and a

and the Defense Materials System (DMS), Presidential finding as being essential to

promulgated under authority of the Defense national security and to maximize domestic

Production Act of 1950 (DPA) as amended, energy supplies.

are designed to accomplish two main

2-16
Defense Production Act and Associated Secretary of Commerce to the Domestic and

Executive Orders International Business Administration (DIBA). Under Title 1 of the Defense The administration of these powers with

Production Act of 1950, as amended, the respect to Industrial przductlon and allocations

President is authorized to establish priorities In of designated materials Is accomplished

the performance of contracts or orders for the through a series of regulations and orders

purpose of assuring contract performance. He called the Defense Materials System and the

is also authorized, under the samne authority, Defense Priorities System.

to allocate materials and facilities for the

purpose of promoting the national defense. Rated Orders Under Defense Priorities System The term "national defense" is defined In the The rules relating to the status,

Defense Production Act as ". . . Programs for placement, acceptance, and treatment of

military and atomic energy production or priority rated contracts and orders are

construction, military assistance to any foreign contained In Defense Priorities System Reg. 1.

nation, stockpilng, space, and directly related There are two types of priority ratings: DO

activity." ratings and DX ratings. A complete priority rating consists of either one or the other of

Executive Order 11912. Executive these ratings symbols and the appropriate Order 11912 delegates to the administrator of program identification symbol (e.g., DO-Al or

General Services authority to use the priorities DX-A3). and allocations authority of the DPA to

maximize domestic energy supplies. All DO ratings have equal preferential

status and take priority over all unrated orders.

Executive Order 12148. Executive The program Identification~ symbol which is

Order 12148 delegates to the Federal part of the rating does not affect the

Emergency Management Agency, General preferential status of the rating, that Is, the

Services Administration (FEMA/GSA) overall rating DO-Al has the same preferential status

authority for the supervision and coordination as the rating DO-E2. All DX rated orders

of' the emergency planning activities of the have equal preferential status and take priority

Federal Departments and Agencies. It also over all DO rated orders and unrated orders,

makes FEMA responsible for assessments of

the nation's industrial capability to support Between rated orders of equal

military and essential civilian emergency preferential status, priority is given to the order

requirements. which was received on the earlier date. If

there is a conflict between orders of equal

In accordance with this Executive preferential status received on the same date,

Order, specific authority for the various preference must be given to the order which

functions of Title I of the DPA has been has the earliest required delivery date.

redelegated as follows:

Assignment of Priorities to Rated Contracts

1. The Secretary of Energy with respect The Defense Priorities System and the

to petroleum, gas, solid fuel sand electric Defense Materials System require that any

power; contractor or supplier who receives a DO or

DX rated contract or order must use the

2. The Secretary of Agriculture with assigned priority rating In obtaining products,

respect to food and the domestic distribution materials, or services needed to complete of farm equipment and commercial fertilizer; production, construction and research and

development projects for such programs. 3. The commissioner of the Interstate Properly Identified rated orders are called

Commerce Commission with respect to certain "mandatory acceptance orders" because they

limited, domestic transportation functions; and must be accepted and given preferential

delivery over nonrated orders.

4. The Secretary of Commerce with

respect to all other materials and facilities. Priorities are assigned to prime

contracts by Claimant Agencies. The

Implementation of functions under Title Department of Defense initiates the use of

1 of the DPA has been assigned by the ratings by assigning them to prime contracts

2-17
or purchase orders for defense related items, of resources for the fulfillment of authorized

The prime contractors to whom the priority programmed requirements. Producers are

ratings are assigned must place these rating required to reserve space on their order books

symbols on the subcontracts and purchase for the acceptance of ACM orders in the case

orders which they place to complete their of controlled materials and rated orders for

rated contracts. Subcontractors and suppliers other materials or prodiiits, up to a specified who accept priority rated orders from their percentage of their proco.ction. The reserve

customers must use the ratings they receive to percentage on the order books Is held open obtain products, components, and materials to only during specified lead times after which

fill such rated orders. ACM orders or rated orders may be rejected. However, DX orders must be accepted Requirements, Set-Asides and Allotments irrespective of lead time and whether or not

Requirements for controlled materials the reserve percentage has been reached.

are submitted to the Federal Emergency Management Agency, General Services Requests for Special Assistance

Administration (FEMA/GSA) on a quarterly Usually, mandatory acceptance orders

basis by the Claimant Agencies (DOD, ERDA, are accepted and the products and materials

DIBA and DOE). The FEMA/GSA uses the called for thereunder are provided to meet the

requirements submissions to make program required delivery dates. There are, however,

determinations as to the amount of controlled occasions when the regular procedures materials needed for each Claimant Agency provided by DPS and DMVS are not sufficiently

program. For these determinations the FEMA effective in enabling contractors to fulfill rated

allots appropriate quantities of each of the contracts on schedule.

controlled materials to the Claimant Agencies. The allotments constitute an authorization to When a contractor finds that the

the Claimant Agencies to use the specified d )livery promised by a supplier will not

quantities of controlled materials in the support the contract delivery schedule, or If he

accomplishment of approved programs. The is unable to obtain acceptance of orders for

Department of Defense makes allotments of products or materials required to perform the

appropriate quantities to the several military contract, he shall request assistance from the

departments and subclaimant agencies, appropriate Claimant Agency, generally through the procuring organization, often

Allotments are issued to Claimant through the program office.

Agencies in terms of the following breakdown

of controlled materials: Request for assistance must establish

that:

1. Carbon steel (including wrought iron).

1. There is an urgent need for the

2. Alloy steel (except stainless steel), products, materials or services covered by the

mandatory acceptance order.

3. Stainless steel.

2. The contractor has exercised

4. Copper and copper-base alloy brass reasonable effort to resolve the problem mnill products. through employment of his own resources.

5. Copper wire mill products. 3. The request for assistance Is timely.

6. Copper and copper-base alloy foundry 4. The request is not seeking to: (a) products and powder. Force the solution of purely technical

problems, (b) Press for price advantage, (c) 7. Aluminum. Force the resolution of contractual problems,

(d) Force unnecessary acceleration of delivery 8. Nickel alloys. dates, (e) Secure performance beyond the

reasonable capability of the supplier, (f) Force

The "set-aside" is one of the acceptance of superior terms and conditions of

techniques developed under DMS/DPS to sale.

assure the availability of an adequate supply

2-18
Each level of the contractual chain is A directive Issuee by OIM takes

expected tc employ its fu!l resources in precedence over all mandatory acceptance

attempting to resolve the problem before orders depending on the terms of the

passing the assistance request to the next directive. For this reason it Is a particularly

higher level. If the C!aimant Agency to whom useful formal tool in eliminating bottleneck,

the request may be sent is unable to and expediting orders. A contractor must

overcome the difficulty, the request is accept and comply with each directive Issued.

forwarded to the Office of Industrial Diectives usually require a contractor to take

Mobilization (OIM) in the Department of some specific action as defined in the directive

Commerce for appropriate action. itself. Directives take precadence over all

rated orders both (DO and DX) as well as

OIM officials will attempt to expedite over unrated orders. Directives, unlike priority

the deliverie3, correct any bottleneck, or have ratings, are not extendible to the lower tiers In

the order accepted, by negotiating directly with the production chain.

the supplier or perhaps by locating other

sources of supply. OIM provides special

assistance in such cases using either formal

or informal administrative methods.

2-19
CHAPTER THREE

PRODUCT DEVELOPMENT

CONTENTS

OBJECTIVE 3-1

INTRODUCTION 3-1

Identification of Need/Opportunity 3-1

Candidate Concepts to Satisfy Need 3-1

Development of Budgets and Schedules 3-1

Evaluation of Candidate Concepts 3-2

Determination of Preferred Approach 3-3

System Design 3-3

Fabrication of Prototypes 3-3

Production 3-4

Product Improvement 3-4

MANUFACTURING MANAGEMENT FOR MAJOR DOD ACQUISITION PROGRAMS 3-4

Introduction 3-4

MANUFACTURING CONCERNS DURING THE CONCEPT EXPLORATION/DEFINITION

PHASE 3-6

Evaluate Production Feasibility 3-6

Assess Production Risks 3-7

Identify Manufacturing Technology Needs 3-7

Estimate Manufacturing Cost 3-7

Develop Manufacturing Strategy 3-7

Identify Deficiencies in U.S. Industrial Base 3-8

Determine Availability of Critical Materials 3-8

Develop Contract Requirements for Concept Demonstration and Validation Phase 3-8

MANUFACTURING CONCERNS DURING THE CONCEPT DEMONSTRATION/VALIDATION 3-8

Resolve Production Risk 3-8

Complete Manufacturing Technology Developments 3-9

Develop Initial Manufacturing Plan 3-9

Assess Potential Producibility of Competitive Designs 3-9

Evaluate Producibility Criteria 3-10

Plan for Achieving Producibility 3-10

Assess Production Feasibility 3-10

Plan for Use of Competition In Production 3-10

Evaluate Long Lead Procurement Requirements 3-11

Determine Need for Limited Production 3-11

Develop Initial Manufacturing Cost Estimate 3-11

Develop Production Readiness Review Plan 3-12

Develop Contract Requirements for Full Scale Development Phase 3-12

MANUFACTURING CONCERNS DURING THE FULL-SCALE DEVELOPMENT PHASE 3-12

Define and Proof Manufacturing Processes and Equipment 3-12

Complete Manufacturing Plan 3-13

Execute Producibility Engineering and Production Planning 3-13

Evaluate Producibility of Design 3-13

Define Required Manufacturing Resources 3-14

Develop Detailed Production Design 3-14
CONTENTS (CONT)

Pagle

Develop Production Work Breakdown Structure 3-14

Develop Manufacturing Cost Estimates 3-14

Accomplish Production Readiness Reviews 3-14

Develop Contract Requirements for Production Phase 3-15

MANUFACTURING CONCERNS DURING THE PRODUCTION AND DEPLOYMEt r PHASE 3-15

Execute Manufacturing Pi ogram 3-15

Complete Initial Production Facilities 3-16

Integrate Spares Production 3-16

Maintain Production Surveillance 3-16

Implement Product Improvement 3-16

Provide and Support Government Furnished Property (GFP) 3-17

Accomplish Value Engineering 3-17

Accomplish Second Sourcing/Component Breakout 3-17

Complete Industrial Preparedness Planning 3-17

Plan for and Accomplish System Transition 3-18

POST P9ODUC1IION SUPPORT AND PROGRAM TRANSITION 3-18

Interface Questions 3-.19

Changing Production Capability 3-19

End Item Production Endangered 3-19

Implementing Procedures 3-19

Support for Out-of-Production Systems 3-20

High Value Spare Parts Breakout Program 3-20

CAO Involvement 3-21

Life of Type Buy 3-21

MANUFACTURING CONCERNS RELATED TO CONTRACTING SUPPORT 3-21

PREPLANNED PRODUCT IMPROVEMENT 3-23

Product Improvement 3-24
PRODUCT DEVELOPMENT

OBJECTIVES

This chapter of the guide establishes a performing or sponsoring research efforts.

model of the process by which products are Often these efforts uncover technologies developed and produced for use. A generic which, if exploited, could yield a significant development process is described to serve as advantage. In this case, the "market" is

a basis: (1) for integrating the specific evaluated to determine in what form the

manufacturing management activities and technology should be developed in order to

Issues discussed in the Guide, and (2) to yield maximum advantsage. 'This analysis also

obviate the need for major revision of the text produces a functional description of the

which could result from changes In the DOD performance of the eventual product or

development process. This generic process is weapon system and can serve to Initiate the

compared with the current DOD priocess (as It product development process. has been modified during the DOD Acquisition Improvement Program) to 9stablish a Candidate Concepts to Satisfy Need

correspondence between the DOD phasing After the need or opportunity has been

and terminology and the Guide material, defined, the second phase of the process involves search for and selectioni of candidate

concepts to meet the need or apply the

INTRODUCTION exploitable technology. This phase is

A large variety of products (defense somewhat unconstrained In the sense that

systems and equipment) are developed and limits of cost, technology and time may be

produced for the DOI). The process by which Ignored duiring the process of defining these products are developed and produced candidates. The basic thrust is to allow

contains basic similarities from one product to creativity and innovation to flourish, hopefuliy the next. The generic process (Figure 3-1), yielding optimal solutions to the defined

which we will explore here, is applicable to problems. Within the commercial environment, commercial as well as DOD products. the Initial definition of the problem~ may be

constrained in terms of the eventual cost to

Identification of Need/Opportunity the consumer of the product to be developed. The process starts with the definition This constraint may result from the decision to

cof the need for a product or the Identification exploit a particular selling price range within

of an exploitable technological opportunity. the competitive marketplace and, as such, the

Each of these possibilities needs to be candidates must have a reasonable lil~ellhood

examined separately. In the commercial of being produced at a cost compatible with

arena, companies are continually evaluating the defined selling price. their markets to determine market segments which are not being served with an Development of Budgets and Schedules

appropriate product and which could be As the process of budget and

profitably served by a new product or a schedule development begins, some of the

modification of an existing product. DOD, in a constraints of the "real world" are applied to

similar vein, continuously reviews the the candidate concepts. Within commercial

operational missions assigned to its forces to entities, as well as the DOD, 'there are limited

determine areas which are not adequately resources which may be applied to

served by the available weapons. In the development and production of products. One

commercial as well as the military constraint which impacts DOD, as well as the

environment, needs which are identified are commercial entity, Is the issue of affordability. structured In terms of the "market place" -- The basic question is whether the capability of

consumer needs or military operational the product is sufficiently valuable such that

performance. These functional descriptions the potential cost can be justified within the

thus serve as the bacis for initiation of a limited resources forecast to be avaiia"',le. In

product development, the commercial sector, this would invo~ve

estimating the ability of the product to

In a similar vein, both DOD and the compete effectively for the target consumer's

commercial business entities are continually

3-1
IDENTIFICATION OF NEED/OPPORTUNITY

EVALURODUTION O ADDT OC

SDETERMINATION OF PREFERRED APPROACH

- I

1PRODUCT IMPROVEMENT]

Figure 3-1 The Generic Product Development Process

budget. In the military environment, the focus Evaluation of Candidate Concepts

is on the ability of the product to justify the During the portion of the process

necessary le.vel of allocation of DOD involving the evaluation of candidate concepts,

budgetary resources. The budget decisions are made which have profound

development process causes the candidate Impact on the nature of the product or system

concepts to compete among themselves for which results from the development process.

resources, as well as to compete with other These decisions are embedded In the set of

development programs under consideration by criteria which are used for evaluation of the

the organization. The final apportionment of candidate concopts. The Inclusion of a

resources by the organization reflects such measure such as cost to produce at this early

Issues as the magnitude of the need or oppor- phase can weight the development cycle

tunity, the expected benefits to be derived toward products whose costs are within,

from the development program, the level of or at least near, the "affordable" zone.

resoujrces required and the perceived Conversely, excluding or minimizing such a

likelihood of success. These initial budgets measure would tend to allow for development

and schedules are normally firm for the early of a product or system whose cost may le'sr

exploratory phases of the process but reflect prove to be prohibitive. This argument applies

estimates or targets for the later phases. equaliy well to such other measures as

performance, supportability or reliability.

3-2
The evaluation of candidate concepts assuring that systems can be effectively

can Include actual fabrication of prototype operated and maintained by the users of the

hardware or physical models. It may also be equipment. The extendeo product design limited to paper analyses or fabrication of needs also to focus on the support of the

portions of irhe eventual product or system. product or system throughout Its expected life.

The critical issue to be addressed during this Repair concepts and maintenance service

time period Is the essurance that the systems must be specifically defined for those

technology embedded In the product is products which are not consumnables. The

sufficiently well understood so that the product product or system Itself must be completely performance objectives can be attained within defined so that prototype units can be

acceptable risk limits. The issue of the constructed. Again during this effort there are

degree of acceptable risk Is unique to the competing cost pressures. The designers org&hnization and may vary over time within seek to atta~n the tqrget performance capability individual organizations, it Is necessary to within a defined budget. There Is also

develop estimates of the level to which each emphasis on managing the design so as to

candidate solution will satisfy the established control the cost to produce the product and

measures of effectiveness. These estimates the user's cost to support ft. These latter

can then serve as a basis for the decision to costs can be controlled but the control

commit additional resources to one or more of normally requires additional design Iterations, the candidates which reflect preferred thus Increasing the cost of generating the

approaches. design.

Determination of Preferred Approach System survivability Is the ability of a

The determination of the preferred system to withstand or survive the external

approach utilizes the results of the evaluation effects of a hostile environment and continue

of the candidates against the measures of to perform the mission for which It Is

effectiveness, In conjunction with the near term designed. Survivability considerations such as

financial constraints, to define the nature of temperature extremes, shock, vibration,

tho next element of the developmant process. humidity, etc., are routinely considered during Unless one of fth candidate solutions has system design. However, the special areas of

been shown to be both technically far superior nuclear and nonnuclear survivability are not

and attninable at low risk, it Is beneficial to usually emphasized as much as the more

carry mc~re tlan one candidate Into a more conventional environmental factors mentioned

explicit design. The decision maker needs to above. These two special areas, particularly balance the higher probability of ultimate nuclear survivability, must be placed on equal development success attendant to multiple footing during design with the other

altematives with the cost Involved with detailed environmental factors for systems having these

design and test of the alternatives. The survivability requirements. eventual choice normally reflects a

compromise between these two factors. Fabrication of Prototypes When the design Is defined, prototypes

System Deslgn are fabricated. There are two primary When the preferred alternatives have purposes for prototype fabrication. They are:

been Identified, detailed design of the

extended product or system Is initiated. The 1. To demonstrate through test that

term "extended product desigr" Includes the product has the features and capabilities design of the product in terms of Its interaction required, and

with the manufacturing system from which It

wiI; be produced, the use environment it will 2. To validate that the product can

f ace and other products or systems with which be bult within the cost and time constraints.

ft must Interface, as well as the details of the

product Itself. In the commercial arena, the When we look at the first of these

emphasis on use environment has been objectives, It Is Important to note that many of

strongly reinforced through increased product the required attributes may be usage oriented, liability litigation and legal and regulatory that Is they speak to the utility of the product actions such as recalls. In the military in its end use environment. The degree to

environment, there Is Increasing emphasis on which the product satisfies these required

3-3
attributes (such as availability and reliability) shortcomings Identified In test or recognized will reflect the attention given to these opportunities for Improvement. Umited

attributes during the design phase and the production Involves establishing a base line

degree to which realistic testing of these design, a plan for change Introduction and the

attributes in the prototypes can be organization of the manufacturing resources

accomplished. required to execute the design. The primary

resources which must be acquired and applied The second objective for prototype are personnel, capital and capital equipment, fabrication can be achieved by actually technology and materials. One of the critical

building the prototypes In the manufacturing challenges in this phase Is the control of the

shops and recording the time and cost manufacturing process. It Is of paramount required. This approach is not available for Importance to ensure that: (a) the design most cases. Often, the design is not capabilities are not degraded In the as-built

sufficiently stable to support the development product, and (b) the cost to execute the

of specific manufactur~ng instructions. It is design remains within target. also possible tWat the Investment in production __________________________ tooling is not justified until it Is determined that Product Improvement the product should go Into quantity production. As production of the system continues

As a result of these or other compelling and feedback Is received fromn the users, there

reasons, the fabrication is often done by is often a series of product Improvements selected personnel, in special fabrication areas which are defined and executed. When the

in accordance with media different from those product is competitive with similar products, used for quantity production. Thus, the these Improvements are often driven by the

validation of a manufacturing approach is often action of competitors. The challenge In this

a projection of controlled experience Into the phase of the cycle is to Integrate these

actual shop environment, changes into the production system with

minimum disruption and cost. The changes The physical and functional testing of Introduced reflect both improvements In the

the prototype provides the basis for an ability of the product to meet the original informed decision to start quantity production. design objective and extensions of capability By testing the product against the defined to meet Increased or broadened performance performance objectives, a profile of the utility objectives. and value of the product is developed. Often

the testing addresses two separate, but related

issues: MANUFACTURING MANAGEMENT FOR

MAJOR DOD ACQUISITION PROGRAMS

1. How well does the product meet

Its defined performance objectives? Introduction

The model of manufacturing 2. How well does it satisfy the management In system acquisition describes

current need of the ultimate user? the major manufacturing tasks (activities) which are typical for major hardware

If both of these questions are development and production programs within

satisfactorily answered and the product can be the Department of Defense. The tasks are

produced within the defined time and cost described within the context of the acquisition constraints, the product is released for quantity process described in DOD Directive 5000.1, production. Major System Acquisition. The chart, Included

as Figure 3-2, lists the manufacturing tasks

Production which are to be accomplished, as a minimum, The release for production normally In each phase of the acquisition process. Involves a significant financial commitment for Each of the tasks listed on the chart Is

the developer. The manufacturing system described In overview fashion In the supporting must be adapted to the new product and often text. The text also provides references to the

a significant amount of production tooling must Defense Manufacturing Management Guide

be built and put in place. These efforts are for Program Managers where additional

often hindered by a need to incorporate some discussion of these tapics may be found.

level of change to the design reflecting eitlier

3-4
i wit

IE CE

3-5
The Intent of the model Is to provide earlier phases. Where these preceding events

an Introductory overview of the manufacturing have not occurred, the manufacturing manager management tasks which should be can determine If the activities described for the

accomplished to ensure a successful phase of Interest need to be modified to

acquisition program. The development of the account for accomplishments to date.

manufacturing system necessary to build the

defense system is a complex task which may The model Is developed from the

rival the complexity of the defense system perspective of the DOD manufacturing design process. If It is to be successfully manager'. It focuses on the responsibilities of

accomplished, proper action is required from the personnel Involved within the program the earliest phases of the acquisition process. management office for achieving a capability to successfully enter and complete the

The manufacturing activities described production phase. While many of the activfties

within this model reflect those actions typical described In the model reflect actions to be

of a major DOD hardware acquisition program. taken by the prime and subcontractors, the

Where the primary emphasis of the acquisition model Is not meant to be a total description of

is on software, firmware or subsystems, there the contract responsibilities. Since many of -

may be substantial difference between the the actions required to achieve the

model and the actual activity. For these types manufacturing management objectives are

of acquisitions the model may be viewed as a accomplished through contract actions, the last

general guide to the kinds of activities which section of this model provides a brief

should be considered. These considerations discussion of the support required from

must be tempered with the realities of the manufacturing management personnel during acquisition program and the differing end the solicitation and award process. objectives of the program. There may also be

differences where the objective of the

development process is an electronic system. MANUFACTURING CONCERNS -DURING

This type of system, while requiring similar THE CONCEPT EXPLORATION/DEFINITION

types of activities as mechanical systems, PHASE

often Involves earlier fabrication of the models

and prototypes which car. be subjected to test. Evaluate Production Feasibility In this event, the other supporting activities The program manager should ensure

described In the model may occur at earlier that a manufacturing feasibility assessment Is

points than are described In the model. accomplished in the Initial phases of product development. The feasibility estimate

The manufacturing management effort determines the likelihood that a system design is a subset of the total program management concept can be produced using existing planning and execution. Consequently, the manufacturing technology while simultaneously plan for accomplishment of the manufactuning meeting quality, production rate and cost

activities should be embedded in the program requirements. management planning documents early in the

development cycle. In developing the The feasibility analysis Involves the

manufacturing management approach, It Is evaluation of:

critical to note that the activities for all phases should be defined relatively early. This early 1. Producibility of the potential definition Is necessary since activities ap- design concepts. propriate for later phases often need to appear

as statements of intent or planning guidance 2. Critical manufacturing In the program documentation or contracts processes and special tooling development developed In earlier phases. N Is therefore which will be required. suggested that the total model be reviewed

when developing plans or contractual 3. Test and demonstration

requirements for a specific phase. This will required for new materials.

allow the manufacturing manager to consider

the potential Impact of future activities and 4. Alternate design approaches establish a base line for the types of activities within the individual concepts. which should have been accomplished In

3-6
5. Anticipated manufacturing risks compatibility of the demands of the

and potential cost and schedule Impacts. manufacturing task

and the manufacturing facility and equipment

The feasibility assessment is required to accomplish it. Part of the result of

accomplished to bound the manufacturing risks the manufacturing feasibility evaluation is the

incurred in selecting a particular design, identification of manufacturing technology

fabrication concept and material as the basis needs. The needs are Identified so that the

for moving into the concept demonstration and kinds of manufacturing capabilities that will be

validation phase. Without this type of required can be put on line in the factory prior

assessment, the program manager may find to the production phase. When manufacturing

that later phases of the program cannot be technology development programs Involve

accomplished within the defined thresholds as some risk, the program manager should

a result of incompatibilities between the consider requiring the design contractor to

system design and the manufacturing identify (o, uevelc,.) fall-back positions for

technology available to execute it. each of ýýe risk areas and/or demonstrate the

rc¢ ,ired capability in the laboratory or In pilot

Guide References: 6-1, 8-1 pro,,uction.

Assess Production Risks Guide References: 4-3, 8-5

Based upon the feasibility assessin' '.,

the program management office ! uld Estimate Manufacturing Cost

develop a manufacturing risk evalua ,n to At the level of system definition

quantify the statement of manufacturing typically available durlnq the concept

feasibility. Manufacturing risk assessment is a exploration phase, detailed manufacturing cost

supporting tool for the contractor and pro,,, estimates cannot be developed. There Is P

office decision making process. It se& '. to oeed, however, ). develop es'imat's of the

estimate the probabilities of success or failure level of rescrjrce expenditwa, es that will be

associated with the manufacturing altevr';tives required to develc, R-n: produ,) xhe 'arlous

available. Those risk assessments rr- eflect system alternativs. heso tstimates will ý,e

alternative manufacturing approacht to a used as part o, the evaluation c* afordabi1

ty

given design or may be part of the evai!,ation and in establishing initial pro.gram thre."hlds.

of design alternatives, each of which hai an In mczt cases, the -'as will t- aveloped

associated manufacturing approach. It st iuld through the use .tlsticall ad cost

also consider the sensitivity of the fea.,, 'ty estimat;ng re!, \ioi .ps (CE oir by

estimates to the assumptions which . re comparison of the proposed 3#stb,,s ,ith

made on those areas of the design tor wl, ,h similar systems whose costs P . known. The

specific design data were not available, cost estir:,ates will be used for evaluating aiid

,,,lecting system concepts for entry Into the

The quantified risk levels can then coneapt demonstration and validation phase.

serve as the basis for the developry.. -, of

specific risk resolution approaches for ' e later Guide References: 9-5

phases of the acquisition 2ycle ar~l can

provide guidance to the budge, etit-nto. Develop Manufacturing Strategy

process. In programs where manuf-cturing Program production strategy Is a

risk has not been add. .iser, durlig subset of the overall acquisition strategy.

development phases, err, ;',ve beer, Specif.; decisions need to be made

problems during tho prodi, ction phi j concerning the level of competition which is to

Involving high cost, exfensivl dwi'ig chV3nr, s, be attained during the productic., phase. If

unplanned material q',..4 ,recess ohanges ,. U the program will be dual sourced, the eariy

difficulties ire ol,?liN 'ng I,,Pdware whic.h plh,,ning must take into account the strategy

conform- to the consaG,: -eq~iremer ts in time. required to assure availbility of capability and

data and data rights for dual sourcing. New

Guide Referem.-_ý 6-3 manufacturing technologies, If required by the

system concept, will require specific plans for

Identify Man. L.. "',rinq Technology Needs development, proof and transition of the

The e-'aluatior of manlfa( turing technology to the eventual producer. This

capability is base -, on the analys .: of the effort will necessitate dose coordination with

3-7
the Service manufacturing technology Government. In the evaluation of the alternate

organization to assure compatibility of the system concepts, needs for these critical

technology development schedule with the materials should be Identified and system

system development schedule. Many studies acquisition planning should specifically have shown that competition makes a major consider the risk of their nonavailability. This

contribution to reducing weapon system cost. may Include measures such as the use of

If competition Is to be effective, It must result alternate materials (which may offer lower

from the application of a clearly defined performance but Ave reasonably assured

strategy to ensujre that an environment of true availability) or specific forward planning to

competition can be established and obtain the required materials. This forward

maintained. planning may Include establishing a track of

the availability and market for the required Guide References: Chapter 4 materials. If difficulties are forecast In

obtaining the materials from the open market,

Identify Deficiencies In U.S. Industrial Base it may be possible to place an advance buy or

The manufacture of the system to obtain them from government stockpiles.

concepts under evaluation will require a

particular mix of type and quantity of Guide References: 2-9

manufacturing capabilities. The various

system concepts need to be evaluated to Develop Contract Requirements for Concept define the demand that they will create for Demonstration and Validation Phase

specific materials and manufacturing The program effort during the concept

processes. These demands need to be demonstration and validation phase will be

compared with the current and forecast ability dictated by the specific requirements which are

of the defense industrial base to Insure that established and Included In the contract(s). the required capabilities will be available. Manufacturing Involvement during the

Where deficiencies are Identified, the demonstration and validation phase Is primarily

management strategy should be modified to directed toward the resolution of the Identified

adapt the system design to the forecast manufacturing risks, the assessment of system capability, or action should be initiated to producibility and the development of Initial

motivate industry to create the capability production plans. Specific statement of work

required. If neither of these actions Is language and data item requirements need to

feasible, the development or adaptation of be established to clearly Identify the specific

government-owned facilities may have to be tasks which the contractor Is to accomplish. pursued. Broad general stalernents which establish

objectives for the manufacturing management This Identification must also consider function In the eariy phases of the program the capabilities of the subcontractors. Chapter will not normally result In cost-effective, 2 provides Information indicating that there Is producible designs.

a deteriorating capability of the subcornractor

base to support the planned levels of Guide References: 3-21, Chapter 10

production from both a quality and quantity

standpoint. MANUFACTURING CONCERNS DURING

Guide 'teferences: 2-2 THE CONCEPT DEMONSTRATION/

VALIDATION PHASE

Determine Availability of Critical Materials

A number of materials are classified Resolve Production Risk

as strategic by the U.S. Government for Production risk resolution involves

Industrial and defense purposes. For many of demonstrating the attainability of the levels of

these materials the United States Is heavily manufacturing capability required. During this

dependent upon Imports. Defense system phase, It Is not necessary that all the details

performance may be dependent upon the use of the production processes be demonstrated.

of one or more of these materials. In some The areas that represent advances beyond the

cases the future availability of these~ materials current capability should be demonstrated In

Is dependent upon factors beyond the control environments which are somewhat

of the program manager or the U.S. representative of the produc"'in floor. The

3-8
focus is on determining that there is a F-hase the prime contractor(s) should be

reasonable expectation that the manufacturing tasked to prepare an initial draft of the"

materials and processes which will be required manufacturing plan. This plan should reflect

can be obtained or fauricated in sufficient the degree of system dofinition attained during

quantity and quality to meet the production concept DEMVAL, Identify the fabricatioii

phase requirements. Deferring risk resolution methods planned within the facilities, and

to a later phase incurs a concern that the estimate personnel n..sources forecast to be

design will have to go into production relying available during the production phase. The

on the processes or materials which have plan will also reflect the programmatic

relatively unpredictable processing time and decisions concerning the degree and type of

cost. There is the possibility that competition In the oroduction phase and the

;ompromising efforts to meet quality, cost, and needs for long lead procurement or limited

schedule goals may adversely affect technical production. Vh6,'e it Is anticipated that

performance of the end Item. significant facilities modilfication ow construction

will be required, this effort should be described

Guide References: 4-5, 6-3 within the man.:'acturing plan. An Initial

description of the time phased schedule for

Comp~lete Manufacturing Technology boih the Full-Scale Development and the

Developments Production and Deployment Phase tasks

For those technologies identified necessary to successfully produce the required

during the concept exploration phase as quantity of systems should also be described.

requiring devolopment, laboratory demonstra- if it is determined that the learning curve will

tions should be accomplished. As with the be applicable for scheduling and cost

system development program, the estimation, the elected slope(s) and base

manufacturing technology development often points (first unit, standard) should be

represents a phased approach to definition estimated. The program office snould carefully

and demonstration. The technology developer evaluate this schedule for reasonableness and

should demonstrate that the required process attainabiity within the scope of the planned

or material capability is attainable under yearly program budgets.

laboratory or controlled conditions and also

describe the procedurs by which the Guide References: 6-2, 6-4

technology can be extended into the

manufacturing shop environment. Since it is Assess Potential Producibility of Competitive

normally anticipated that critical processes will Des.gs

be demonstrated in the production Producibillty is a measure of the

environment during the full-scale relative ease of producing a product or

development (FSD) phase, it Is important that system It ik also an engineering function

the laboratory (or controlled production) directed toward generating a design which Is

process capability be demonstrated during this compa-tible with the manufacturing capability of

phase. Failure to do so may increase the the defens, ir.dL'strial base. Each competing

risk, during FSD, that the material or process design needs to be evaluated from a

may be found not to be a viable approach for producibility standpoint. The producibility effort

meeting the weapon system design must take into account the quantity of units or

requirements. systems to be produced and the rate at which

they will be manufactured, since quantity and

Guide References: 8-5 rate determine the magnitude of the potential manufacturing efficiencies to be gained or

Develop Initial Manufacturing Plan problems to be avoided. Producibility

The purpose of the manufacturing plan evaoiiations will serve as a basis for estimating

Is to portray a method of employing the the likney manufacturing cost and assessing

facilities, tooling, and personnel resources of the level of manufacturing risk of the system.

the contractor and subcontractors. It should Results of these assessments will support the

reflect all the time phased actions which are development of specific contractunl provisions

required to produce, test and delive,* for the full-scale development phase. Specific

acceptable systems on schedule and at requirements may be Identified based upon

minimum cost. During the Concept the inherent level of producibility, the specific

Demonstration and Validation (DEMVAL) system designs, and the susceptibility of each

3-9
to manufacturing cost reduction through an accomplished by the contractor. Formal

aggressive producibility program. submission of the plan may be required by the

contract or the plan may be reviewed at the

In assessing producibility of the contractor facility.

varlou3 design concepts, it is important to

defing the types of production technology Guide References: 7-10

required and to contrast it quantitatively and

qualitatively with the existing and forecast Assess Production Feasibility capability of the defense industry. There is a Production feasibility Is the likelihood

direct correlation between producibility and that a system design concept can be

cost, which needs to be a part of the produced using exiating production technology comparative analysis of the competing system while simultaneously meeting quality, designs. Ignoring th, issue of producibility production rate and cost requirements. As a

can lock the acquisition program Into design follow-on to the feasibility assessment acsolutions which can only be accomplished at cornplished during the concept exploration unnecessarily high levels of production cost or phase, the program office should use the

design changes which can entail substantial increasingly more complete descrption of the

technical, cost and schedule risk. ',ystem to update the assessment. This may

be done within the program office or by the

Guide References: 2-2, 6-2, 7-3 prime contractor(s). As the system delgign

concept and manufactuiing approach are

Evaluate Producibility Criteria validated and design decisions are made, the

A part of the contract for the Concept amount of flexibility on the choice of

DEMNAL phase should require that the production technologies decreases. It Is

contractor Oevelop producibility criteria to guide Important for the program manager to ensure

the design effort. The criteria should reflect a that design decisions reflect currently available

blending of general criteria (such as minimum production technology. Consideration of

parts count) and specific criteria applicable to feasibility must occur In a bounded

the type of equipment being developed. The environment. The primary bounds are the

effectiveness of the producibility program will existing state of production technology, the

be controlled by the extent to which the cost targets established for the system, and

design engineers understand and apply these the production rate and schedule

criteria. Success also depends heavily on the requirements.

definition of a clear complete criteria list and

its communication to the design function. Feasibility assessment Is useful In

supporting decisions concerning which of the

Guide References: 7-10 competing system designs should be canrled

Into FSD. It Is also used to determine which

Plan for Achieving Producibility of the manufacturing processes should be

Achieving producible designs roquires proofed during FSD and the nature of the

creating a plan that will permit the integration proofing required. The process of weapon of producibility analysis into the mainstream system design Is dynamic and the search for

design effort. As a result of the contract the-best solution often Involves changes to the

requirements, a plan should be created by the design concept which can Impact the

contractor which describes how these Issues manufacturing processes to be used. Failure

will be addressed within the organization which to assess feasibility at a number of points will create and test the design. Although during the acquisition process can result In

many of the detailed tasks in achieving the accepting changes to the design which are

producibility objective may not be incompatible with the capability of the

accomplished until the Full-Scale Development Industrial base.

Phase, the plan should describe specifically

what activities will be accomplished in each Guide References: 5-4, 6-1, 8-1

phase, the responsible organization, and the

management controls that will be established Plan for Use of ComPetition in Production

to ensure successful accomplishment. The If the program manufacturing strategy PMO review should focus on the realism, (see above) includes the use of competitors in

completeness and clarity of the planning the Production Phase, specific plans for

3-10
achieving the defined level of competition must retrofit programs and resulting costs while still

be established during the Concept providing adequate numbers of hard tooled

Demonstration and Validation (DEMVAL) production Items for final development and

Phase. The Concept DEMVAL contracts operational test prior to a full production

establish whether there will be a competitive decision. This approach can be used to

production phase and ensure that provisions minimize the risk of committing the necessary

are Included so that the government receives resources for the production phase by allowing

the necessary technical data and rights to Its for test and tryout of the manufacturing

use. During the Concept DEMVAL phase, the equipment prior to full production release. It

planning effort should focus on identifying the also may provide test Hems which are fully

potential limits on competition which result representative of the production configuration.

from the various design solutions and on The difficulty In using a limited production

means for reducing their Impact. Decisions approach is the need to Invest In manushould be made relative to the timing of the facturing tooling ar'd test equipment eadler In

Introduction of competition and the basis on the acqulslilon cycle This may cause

which the competition will be held. If parts of budgetay problems. There Is also a risk that

the system are planned for later government devoloprnwnt and operational test results may

breakout for competition, this should be dearly Indicate a need for deosign changes that will

described In the contract ti ensure that ob3olete the tooling and test equipment.

contractor plans are based on the same

presumptio.is as the government plans. This Guide References: 4-5, 6-7, 111-12

can prevent later misunderstanding and Iriction

during the execution of the production phase Develop Initial Manufacturing Cost Estimate

effort. One of the major elements nf the life

cycle cost of any defense system Is the

Guirle References: 4-1, 4-8 Investment cost to produce the quantity

required for deployment. The Improved

Evaluate Long Loud Procurement definition of system design and manufacturing

Reqguirements planning should provide a basis on which the

For many defense systems the time manufacturing costs can be estimated with

span between release of p;oduction funds and greater precision than, was available for the

the requited first delivery is less than the estimate accomplished during the Concept

required lead times for some of the matorials Exploration phase. The earlier estimate, In

or subsystems. In developing the full-scale most cases, is based heavily on statistical and

development (FSD) phase plans and the data parametric estimating approaches. As the

for the Decision Coordhlating Paper/in2egrated desigjn deflnillon increases, the contractor and

Program Summary, the requirements for long the PMO should be able to repla.,'e Ihe3,

lead materi!t, or subsystems, both contractor siatist',ýal estimates with estimates based upon

and government furn'shed, should be specific design characteristics and features

Identified. The fuods required for these long ,knd a knowledge of the manufacturing system

lead items should be identified during the in which they will be fabricated. At this point

budget process. Determining the specific In the dovelopment cycle we should not

requirements for long lead funding Is made expect to have the specific design deflnlon

difficult by the volatilA nature of lead times ,'r needed to dAvelop a detailed estimate based

many defense materials. Where possible the upon manufacturIng ;ator standards; hi)wsver,

analysis should be based on expected it should be possible to utilize a higher crder

availability and lead times which are forecast estimating standard such as hours-per-circuitto be in existence at the time of production board (by type) or cost of ,astings based

start. upon number of castings and total weight. f

a design-to-procluction unit cost requirement is

Guide References: 6-15, 11-11 inciL dvd In the contract, the reasonableness

and attainability of the contractor's

Determine Need for Limited Production apporticnment oi the Jnit production cost goal

Low rate initial production is a term should be assessed to prevent the program

describing a low rate of output at the from being based on unattainable goals which

beginning of the manufacturing program to will later cause unavoidable cost growth.

reduce the government's exposure to large

3-11
Gide Roferences: 9-5, 9-17 9. Technical data

Develop Production Readiness Review Plan 10. Long lead authorization

One of the major PMO program office

tasks during the FSD Phase is completion of If valid requirements exist for

the Production Readiness Review (PRR). It is contractor actions during FSO, they must be

critical that the specific requirements for included in the contract. If It Is necessary to

contrac',.r planning and support to the PRR be Include them later by contract modification, the

included In the FSD contract. There is also a cost will almost always be greater and the

need to ensure that the necessary government efforts will start later than the optimal start

evaluation skills are available during FSD. time. These optimal start times are developed

These needs can only be met if the major by analysis of the required set-back times

readiness Issues are identified during the required to allow completion of the necessary

DEMVAL phase and the methods for activity prior to the need date dictated by the

evaluating readiness are clearly defined. The program schedule.

readiness issues must cover both the defense

system design and the production planning Guide References: 3-21, Chapter 10

required. Since many of these issues are

normally evaluated as part of the continuing

process of design and program reviews, the MANUFACTURING CONCERNS DURING

planning for PRR should clearly describe how THE FULL-SCALE DEVELOPMENT PHASE

the outputs and analyses of these reviews can

be applied to the PRR task. Define and Proof Manufacturing Processes

and Eguil'rment

Guide References: 6-1, 12-3 Amnng the critical elements to be

defined during FSD phase are the

Develop Contract Reo-oirements for Full Scale manufacturing processes which will be utilized

Development PhasiD to build the defense system. The sequence of

The FSD Phase will involve the manufacturing processes begins with the

definition of the full detailed design for the receipt of the raw material, where special

weapon system, the logistics support structure handling and storage may be required.

and the manufacturing system. Specific Additional processes requirements may include

statement of work language needs to be such items as cleaning, heat treatment, clean

developed to cover those manufacturing areas room controls, controlled testing and special

which have been determined to be necessary handling (i.e., personal grounding requirements

during FSD. Typical areas to be considered for electronic components). Identification of all

for Inclusion are: processes must be a part of the design

documentation. Where the selected processes

1. Manufacturing management contribute manufacturing risk to the program,

systems the processes should be proofed during FSD.

The purpose of proofing is to ensure that the

2. Work measurement process can produce repeatably conforming hardware within the cost and time constraints

3. Production planning of the production phase. It Is Important that

the proofing be accomplished in an

4. Producibility engineering and environment that simulates actual production

planning (PEP) conditions. These conditions inc'ude the

physical facilities, personnel and manufacturing

5. Production readiness reviews documentation. It may also be necess-ry for

(PRR) the contractor to establish training and

certification programs for the shop personnel

6. Reporting systems to ensure that the process capabilities cE,n be

attained on a recurring basis.

7. Manufacturing data (including

production plan) Guide References: 4-5, 8-5, 8-12

8. Make or buy

3-12
Complete Manufacturing Plan of the impact on cost, schedule and technical

At the end of the FSD, all of the performance. Early production planning based

Information necessary to plan the detailed on design and schedule requirements is

manufacturing operations for the system essential if production delivery schedules are

should be available. This information should to be fulfilled. Production planning must

be described in a manufacturing plan covering include identification of potential problems with

the issues of manufacturing organization, an assessment of the capability requited to

make or buy planning, subcontract produce the item and industry's current

management, resources and manufacturing capability to manufacture the system as

capability, and the detailed fabrication and designed. Potential production problems that

assembly planning. The plan should also require further resolution by study or

describe the types of Government Furnished development must be identified and action for

Property (GFP) required and the specific need resolution initiated. The producibility

dates for it. The contractor management engineering and planning effort also results in

control systems, including those for the definition and design of the special tooling

configuration management, the control of and test equipment required to execute the

subcontractors and manufacturing performance production phase effort, as well as the

evaluation should be described in sufficient preparation and release of the manufacturing

detail for the program management office to data required for the start of manufacture.

determine their expected utility. The plan developed should also include consideration of Guide References: 4-3, 7-6, 11-10

the potential requirements for industrial

preparedness planning, including surge Evaluate Producibility of Design

capability during the production phase and the There are a number of factors to be

post production phase requirements for considered in ensuring the producibility of a

support to employment of the system in design:

combat situations. The development of this

formal manufacturing plan contributes value to 1. Liberal tolerances (dime.isions,

the program from two standpoints. The mechanical, electrical).

primary benefit accrues from the fact that the

contractor has to crystallize the manufacturing 2. Use of materials that provide

planning to a point where it can be described optimum machinability, formability and

'n the detail required. The secondary benefit weldability.

is the usability the plan provides to the

program management office personnel. It 3. Shapes and forms designed

serves as a basis for a structured review of for castings, stampings, extrusions,

the contractor approach, the expected cost of etc., that provide maximum economy.

the production phase effort, and a fuller

assessment of manufacturing risk. Where 4. i n s p e c t i o n a n d t e s t

such a plan is not developed during the FSD requirements that are the minimum

Phase there is often unnecessarily high cost needed to assure decired quality and

and schedule turbulence at the front end of maximum usage of available and

the production phase. standard inspection equipment.

Guide References: 4-1, 6-4, 6-20 5. Assembly by efficient,

economical methods and procedlures.

Execute Producibility Engineering and

Production Planning 6. Minimized requirements for

Producibility, as noted above, is a complex or expensive manufacturing

measure of the relative ease of producing a tooling or special skills.

product or system. Alternate manufacturing

methods, materials, resources, and processes There should be evidence that the

must be a consideration of the detailed design contractor has accomplished producibility

if thi' economics of manufacturing and analyses of various options for the

assembly are to be considered. Producibility manufacturing task. The FSD phase results in

studies and analysis of the altematives are the system design for entering production. As

conducted by the contractor with consideration the design evolves during FSD, its producdbility

3-13
should be subjected to regular review Develop Production Work Breakdown Structure

(probably as part of the normal design review The planning, execution and control of

process.) the production phase activities require that the

work be divided Into manageable tasks that

Guide References: 7-3, 7-10 are compatible with the existing manu~acturdng

and performance measurement systems.

Define Required Manufacturing Resources Often, the work breakdown structure (WBS)

One of the most Important elements of used during the development phases will not

any production design is the definition of the be appropriate for the production phase.

manufacturing processes. No matter how Consequently, the contractor should, as a

good a design may be, it Is useless if system basis for production planning, Identify the WBS

or product cannot be built. Although which is to be used. While this WBS may

Impossibility of production Is unusual, the differ from the FSD structure, the two should

capability to produce the design may be be such that production phase costs can be

limited or the costs to produce it may be related to the development WBS. This Is

exuessive. It is therefore essential that critical for those programs which have utilized

availability of manufacturing resources be a a design-to-unit production cost management

consideration during the design review app-occh during development.

process. Manufacturing engineers should be

a part of each design team to assure Guide References: 9-17, 13-13

adequate consideration of availability of

required manufacturing resources. Develop Manufacturing Cost Estimates

As the definition of the system design

Manufacturing resources should not be and the manufacturing approach are

limited to manufacturing methods but should completed during the FSD phase, tho

Include materials, capital, manufacturing information necessary !or more precise

technology, facilities, qualified labor, and the estimates of production phase manufactuilng

management structure to effectively integrato cost becomes available. During the FSD

them. The successful completion of the phaz-., the Initial manufacturing cost estimate

production phase will depend upon the should be updated on a regular basis to

efficient application of the full spectrum of reflect the Increasing degree of detail

these resources to the task of fabricating and available. These estimates should be based

delivering the defense system design. upon application of detailed manufacturing

standards to the operations to be performed

Guide References: 6-20, 8-1 and adjusted, as necessary, by realization

factors and/or learning curves to develop the

Develop Detailed Production Design time phased manufacturing cost. If the

Prior to release of drawings to contractor(s) does not have a system for

manufacturing the detailed design drawings, development and application of labor

bills of material and, product and process standards, strong consideration should be

specifications must be completed. Further, it given to including a contract requirement, such

Is essential that design reviews be conducted as MIL-STD-1567A, Work Measurement, In the

to assure that the contractor is complying with FSD phase contract. If there Is to be an

the design requirements and meeting the Industrial Modernization Incentives progrcm

cost/design goals. The final design definition accomplished, the manufacturing cost estimate

Is the result of the performance requirements, should be structured to reflect the expected

the outcomes of the testing accomplished, benefits of this program.

producibillity studies and other design

Influences. The production phase effort Guide References: 9-5, 9-7, 9-9

requires that the design be specified to a very

low level of detail so that the required Accomplish Production Readiness Reviews

processes and resources can be Identified and The objective of a PRR Is to verify

obtained, that the production design planning and

associated preparations for a system have

Guide References: 11-14 progressed to the point where a productinn

commitment can be made without Incurring

unacceptable risks of breaching thresholds of

3-14
schedule, performance, cost, or other 10. System audit

established criteria (DODI 5000.38). PRRs

should be conducted by the program manager, 11. Technical data

as a time-phased effort that will span FSD and

encompass the developer/producer and major 12. Competition

subsystem suppliers. The PRR examines the

developer's design from the standpoint of Production phase Incentives may be

completeness and producibility. It examines included to motivate contractors to Improve

the producer's production planning performance and control costs. The benefits

documentation, existing and planned facilities, attainable through use of multiyear contracting

tooling and test equipment, manufacturing should also be explored.

methods and controls, material and manpower

resources, production engineering, quality Guide References: 3-21, 4-9, Chapter 10

control and assurance provisions, production

management organization, and controls over

major subcontractors. The result of the PRR MANUFACTURING CONCERNS DURING

supports the program mana•ers affirmative THE PRODUCTION AND DEPLOYMENT

decision aW the production decision point, that PHASE

the system is ready for efficient and

economical rate production. Exccute Manufacturing Program

The primary function of the production

Guide References: 11-6, 12-3 phase is to complete the manufacture of the

defense system within the established time

Develop Contract Requirements for Production and cost constraints. Normally, the production

Phase rate is structured to start slowly and build to a

Specific requirements must be defined steady state rate. Much of the same

Identified for Inclusion In the statement of work type of evaluation of contractor planning for

for the production phase. The particular initiation of the production phase (generally

requirements reflect the areas that have been through the PRR) needs to be focused on the

determined to be of importance, given the contractor planning to increase to the defined

acquisition strategy of the program. Typical rate. The program manager also needs to

areas to be considered for inclusion are: focus attention on the levels of engineering

change activity. An excessive number of

1. Manufacturing management engineering changes can disrupt the structure

systems of the manufacturing planning and result in

high manufacturing costs. Also, attention

2. Work measurement needs to be given to ensuring that acceptance

criteria for the product or system are clearly

3. Manufacturing data (including specified and that there is minimum use of

manufacturing p:len updates) waivers, deviations and Material Review Board

actions during the acceptance process. The

4. Initial production facilities program office manufacturing personnel should

participate in the Physical Configuration Audit

5. Production and material covitrol (PCA) when the "as built" item is compared

systems with the technical documentation. Upon

satisfactory completion of the PCA, the

6. Manufacturing reporting primary acceptance criteria will be the physical

systems (espechlly line of and test requirements listed in the technical

balance) documentation. The completion of the

production phase normally involves a series of

7. Control of subcontractors and contract actions which will need to be pianned

vendors and completed to fill the system acquisition

objective. For each of tiesa contracts, a

8. Make or Buy program decision will need to be made on the contract

type, the incentive structure, if any, tie level

9. Government Furnished of government control and the desired

Property program visibility.

3-15
Guide References: 5-3, 10-1, 13-5 should be integrated with the basic 3ystem production to take advantage of the lower

Complete Initial Production Facilities costs associated with larger fabrication lots

The Initial Production Facilities (IPF) within the facility. The spares Items to be

include the special tooling, special test produced can also impact the cost estimate

equipment and plant rearrangement cost where learning curve analysis Is used at lower

necessary to accomplish cost-effective levels of the system hardware since the

manufacturing. The design of the IPF should spares quantities can Increase the number of

have been accomplished as part of the units built above that shown on the end Item

Producibility Engineering and Planning (PEP) schedule. Failure to consider the capacity accomplished during full-scale development, needs for spares can result In diminished

The PEP output includes a description and capability to support the fielded system, thus

design of Vie required facilities and is based reducing its availability, or a drain on

upon the production plan developed during production parts as they are diverted to

FSD. Changes to that facility definition and support of the deployed systems.

desion may be required if the production plan has 'beero obsoleted by program changes or A second source for spare parts may

test problems. The timing of the IPF may be desired to ensure future delivery or for

pace the initiation of the production units if the enhanced competition. The production phase manufacturing approaches are tooling is an opportune time to solicit second source

dependent. bids and identify possible spare parts

suppliers. The data package Is complete and

Failure to inifiate arid complete IPF in quantity requirements for quantity buys may be

a timely manner generally results in greatly sufficient for a supplier to tool up for the parts. increased direct labor unit cost for the early

units, delayed completion of early units and Guide References: 3-20, 6-21

delays in the start of progress along the

expected program learning curve. The Maintain Production Surveillance

increase in rarly unit cost results from the f act One of the primary program

that the investment in special tooling and management tasks during this phase Is to

special tes. equipment is justified on the basis establish and maintain a system for

of unit cost reductions. There may also be accomplishing surveillance over the progress unforeseen additional cost for the revision of of the contractor performing the manufacturing the manufacturing process documentation tasks. Generally, the program manager will

developed during PEP since the want to ensure that information Is available to

documentation was developed on the measure contractor effectiveness from time,

presumption that the IPF would be In place. cost and technical achievement standpoints.

The program manager must also choose

Although claims of large unit cost between a formally structured and

reductions may be made, the average unit contractually specified management control

cost over the total production quantity will be system or a currently existing contractor

higher when FSD tasks are incomplete. A system. When problems occur during the

well developed production plan will be more production phase, the management control

economical in terms of total program cost or system should provide timely Information to

average unit cost even though it may follow a the program manager In a format that will

higher value learning curve. The number of support decision making and action processes. change proposals will also be less for a well

planned program. Guide References: 6-22, 10-1, 13-16

Guide References: 4-5, 6-20, 11-10 Implement Product Improvement

The Follow-On Operational Test and

Jintegrate Spares Production Evaluation (FOT&E) and the Initial user

As the system iý deployed and enters feedback on the system often identify areas

training and operationc-1 use, there Is a where improvements can be made to the

continuing requirement, on many systems, for system to allow It to better meet the constantly

.,pare and repair parts. To the exten? changing operational environment. The

possible, the manufacture of these parts challenges for the program manager Involve

3-16
the decisions on which of these improvements The VE program clause requires the

to make, and the method of incorporating contractor to establish a VE program within his

them on the production line. To minimize facility to Identify potential applications of VE

production cost,the number of engineering and prepare VECPs.

changes should be kept to a minimum, but

operational requirements often militate in favor VE has the potential to significantly

of change. A program may also involve reduce acquisition and support costs for those

preplanned product improvement. If this elements of the product or system to which It

acquisition strategy applies, when and how to is applied. In addition to including the

incorporate such improvements must be appropriate contract language, the success of

resolved early In the program. a VE program Is critically dependent upon the

level of program office support. which is

Guide References: 3-24 provided. This support can be provided In two

ways. First, the decision makers In the

Provide and Support Government Furnished program office can encourage the Identification

Property (GFP) and submission of VEOPs. Second, the

Where a decision has been made to personnel evaluating VECPs can approach the

provide use to the contractor, the program task with an open mind.

manager must ensure that the property,

conforming to the technical description, is Guide References: 7-16

delivered to the contractor in accordance with

the agreed-to schedule. The primary Accomplish Second -Sourcina/Comooneni

motivations for providing government property Breakout

to contractors are to reduce cost and increase As noted above, competition has been

standardization within the logistics system. shown in a number of studies to have a

The trade-off for these benefits is the beneficial effect In reducing program cost.

acceptance by the government of some of the The plan for introducing competition during the

responsibility for contract performance. When production phase can involve either the

GFP is Involved, the contract clause provides establishment of a second source or the

that If the GFP is late or defective there may breakout of selected components of the

be an adjustment to the contract schedule, or system for direct government (preferably price, or both. It is, therefore, incumbent upon competitive) procurement. Accomplishing

the program office to ensure that an effective government objectives in these two areas

management control system is established to; requires that the data and data rights are

a) validate contractor need dates, b) budget obtained from the developing contractor.

for the GFP, and r.) acquire the GFP and These rights should have been obtained

deliver it to the contractor on time. during the development phases with data

delivery late in FSD or early in the production Guide References: 4-5 phase. Since the introduction of new sources

will involve contractors who may not have the

Accomplish Value Engineering benefit of the development experience, a

Value engineering (VE) is an careful plan for technology transfer must be

organized effort directed at analyzing the established. Many times, successful

function of a product or system for the manufacture of a product or system Is

purpose of achieving the function at the lowest dependent upon processing factors not

overall cost. During the production phase, the disclosed in the technical data package. value engineering effort amounts to a

reappraisal of the design from both a Guide References: 4-6, 4-8

functional and cost standpoint. There are two

ways to Include value engineering in the Ccmnpleie Industrial Preparedness Planning production phase contract: by a Value The Industrial Preparedness Planning

Englr~erng Incentive Clause or by a Value (IPP) program focuses on establishing the

Engineoring Program Clause. The VE capability to support increased levels of usage Incentive Clause provides the contractor with of equipment resulting from combat operations.

the opportunity to submit Value Engineering The primary emphasis during the production Change Proposals (VEOPs) and to share In phase is the evaluation of the ability of the

the savings accrued from approved VECPs. contractor base to surge production to meet

3-17
higher levels of consumption. As the delivery and the establishment of support

production phase is nearing completion, action capability to coincide with Initial fielding of the

needs to be taken to determine if any of the system. This has often forced provisioning to

subsystems or components of the defense be accomplished In a very short time. While

system will be critical to support of wartime some success has been achieved In having operations. If so, the mobilization spare parts on hand, It has virtually eliminated

requirements for the items must be identified, our ability to establish competitive sources or

contractor plans for accomplishing tli e assure fair and reasonable pricing of these

mobilization must be established, and the spare parts. If the Services are to support

capability to execute the mobilization must be weapon systems as they are delivered into the

created or retained from the production phase Inventory, and obtain spare parts at fair and

equipment. reasonable prices, some radical changes In

the weapon system acquisition process will be

Guide References: 2-13, 3-20 required.

Plan for and Accomplish System Transition Interface Questions

As the system acquisition process is With considerable resources now

completed with the attainment of the invested in the product/system, many Interface

acquisition program objectives, the responsi- questions become extremely crucial. Are

bility for the product or system acquisition organizational force and equipment tables,

functions: procurement, engineering, finance, allocation of units, and field support plans and logistics is dispersed through the compatible with the production planning? respective Service organizational structure. Have the produclon rates been established for

The effort focused on the program support program .'equirements, support and

management approach is no longer needed. test equipment, spares support, storage and

The program manager must ensure that transportation, and training? Have test and

documentation of the system is complete, and demonstration requirements been established

the support requirement is properly defined and a methodology developed for Incorporating and structured. user changes In documentation for release to

production? Are plans formulated for updating

Guide References: 3- 18 specifications and drawings to reflect the

production design and for obtaining suitable

technical documentation packages necessary POST PRODUCTION SUPPORT AND for considerations such as competitive PROGRAM TRANSITION procurement and component breakout?

The term "transition" is analogous to

many terms used throughout the Services to As noted above, a host of program describe the attainment of the acquisition transition considerations confront the program

program objectives and the dispersion uf manager in the p-oduction and deployment product/system acquisition functions -- procure- phase. While relatively dormant earier In a

ment, engineering, production finance~, program, these considerations suddenly

logistics, facilities -- in whole or In part become critical at the very height of the

throughout the respective Services, production process. Has a risk analysis organization structures. A sample of such Identified potential production plan and rate

terms Include "transition planning," "program deficiencies? Is the producibility plan transition," and "turnover management." adequate for full and follow-on production? Are the various facilities, tooling, Industrial

Program management documents and capacity and related schedule plans current?

master schedules must Include transition Have Foreign Military Sales (FMS) and other

considerations. While the mechanics involved Service requirements as well as related

in transition will vary among the Services, the production processes, rates and quantities

end result is the availability of the system for been validated, documented and kept current?

use by the operating forces in consonance

with DOD objectives. As the focus shifts from the program

manager to the internal Service Interface,

Emphasis in weapon system those seeds sown early-on In the product

acquisition has boen on early production and development process will mature and, If done

3-18
properly, will ensure program integrity to the Implementing Procedures

system user. In accordance with DOD Directive

4005.16, each DOD component shall develop Changing Production Capability Implementing procedures by the Initiation of

The program manager should be prompt and timely actions to assure the

aware of changing production capability as the availability of critical materials and

transition from production to spare parts manufacturing capabilities to support current

provisioning will severely reduce his and planned defense requirements.

opportunities for future spares procurement if Component responsibility Includes:

production facilities are changed to

accommodate a new product line, material 1. Establishing and maintaining a

needs change or new tooling for special single organizational focal point to monitor all

purpose machines Is Installed. If extended material shortage and diminishing source

production runs did not provide a spare parts situations.

Inventory, the cost of parts produced at a later

date can be significantly higher than the 2. Developing plans and

original procurement. Conditions which drive simplified coordination mechanisms to deal

up spare parts prices Include: with existing and potential diminishing manufacturing sources and material shortages, a) Smaller order quantity including interaction with government activities.

requirements.

3. Taking rapid remedial action

b) Orders for earlier configuration when faced with a material shortage or

units which require special documentation, manufacturer phaseout.

C) Parts require special purpose 4. Initiating actions to reduce

tooling, reliance on sole source manufacturers and

suppliers through the development of

d) Unique or scarce material additional sources or coordination of substitute

requirements. Items with equipment users.

e) Lack of production capability 5. Maintaining close contact with

due to a number of factors: Out of business, industrial/scientif ic ind engineering discontinued facilities, lack of available organizations and Industry through a system of

production capacity, etc. follow-ups to discern futur, trends.

f) Special handling, packaging 6. U s Ing engineering, and shipping requirements. standardization and technical organizations to

assure that the most current standard or

End Item Production Endanglered preferred parts are used In systems design DOD Directive 4005-16 establishes and development. policies and assigns responsibilities to assure

that timely action Is Initiated when essential 7. Reviewing the efforts of other

end Item production capabilities are government departments In the area of

endangered by the loss or Impending loss of material shortages and production phaseouts. manufacturing sources, by material shortages, Using output from their system where possible

or that have been reduced to a single source and ensuring that a compatible data

with Inadequate production capabilities. DOD Interchange method Is established.

components have a responsibility to coordinate

with operational activities within other 8. Developing compatible government agencies on the Identification of management techniques through coordination

critical items and possible solutions, when with other DOD components and ensuring that

faced with a material shortage or adequate information and controls for material

manuiacturIng phaseout. shortage and diminishing source situations.

3-19
9. Ensuring that diminishing ijigtŽalue ýSare Parts Breakout Prog~ram manufacturing sources and material shortages For items which represent recurring

are recognized in the DAB proceedings. spare parts requirements and substantial

annual buy value, aggressive action to develop 10, Developing a technique where alternative sources of supply is required. feasible to identify "end item application" for These sources ensure continuing part those critical or weapon system essential availability and competitive sources for these

items affected by shortage/phaseout parts. The process of establishing competitive conditions. sources for these parts starts early in t~ie

production phase and continues as long as

11. Seeking manufacturer's and they are in the supply system. supplier's commitments to provide maximum

advance notice prior to phasing out production During the provisioning process,

or supply of material, decisions are made in consonance with the

Maintenance Concept, including what spare4 12. Advising using Military parts will be specified, and what spare parts Departments and other users of date(s) new to the inventory must be Identifiled and

beyond which support will no longer be purchased to meet initial support requirements. provided for item(s). The DOD components After identification of the spare parts required

are responsible for notifying International to support the Maintenance Concept, decisions

Logistics (IL) customers. also must be made as to how they will be

procured in terms of competitive posture. The

While the mechanics involved in intent of the High Value Spare Parts Breakout

transition will vary among the Services, the Program is to identify those high dollar spare end result is the availability of the system for parts which offer the greatest potential savings use by the operating forces in consonance through competitive procurement or "breakout."

with DOD objectives. Transitioning the system High Dollar Value Replenishment Spare Parts

to the operational forces, and developing as can be defined as spare parts Included In well as monitoring and controlling transition those items ranked in descending order of

milestones become especially important in the annual buy value (computed by multiplying the

production phase of the system acquisition unit price times the annual buy quantity) which

process. represent at least eighty percent (80%) of all

dollars expected to be spent in the 12-month

Support for Out-of- Production Systems period when measured in descending order

Support for out-of-production system,, from the highest annual buy value Item.

should provide an organized approach and

methodology for attaining competition and tair Usually, the developing contractor is

and reasonable prices for spare parts no asked (required by the contract) to provide the longer in production. contractor technical documentation as a basis

for government decision on the method of

For out-of- production systems, the purchase. Each item is screened by the

weapon system program manager should government and the item is assigned an

consider the value to DOD of establishing post Acquisition Method Code (AMC) and AMC

production support agreements for those Suffix Code in accordance with DOD FAR

systems. This can ensure that costs for Supplement 6. The AMC will determnine how

required spares do not reflect source the item will be purchased unless changed by constraint circumstances leading to subsequent review. The suffix code explains unreasonable prices. Procedures also need to the basis for assignment of the AMC. During be established to qualify additional the life of the part or item, regular screening manufacturing sources to provide competition intervals (often three years) are established.

on specific parts. These procedures should At each screening, the item management be consistent across the procuring agencies organization reviews the forecast buy and the

an'd should allow for qualification across item to determine if action could be and

general groups of items built using the same should be taken to develop competitive manufacturing process. sources for the item.

3-20
CAO Involvement phases based upon the strategy developed for

Significant Improvements can be the individual acquisition program. Irrespective attained by greater involvement of the Contract of the particular acquisition strategy, almost

Administration Offices (CAOs) In the spare every program will have at least one contract

parts acquisition process. This involvement action associated with It and the vast majority should Include review of prime contractor of programs will have a number of contract

vendor competition, source identification for actions. The significance of these actions lies

direct purchase, limited rights assertions and in the fact that the implementation of the

price reasonableness of prime and manufacturing management goals of the

subcontracted spare parts. This effort should program is accomplished primarily by the

be implemented through use of support and contractor, and program success depends interface agreement consummated between upon establishing clear contract provisions for

the CAOs and the involved buying activities, each contract let during the system acquisition. The increased CAO Involvement will add to This section provides a brief discussion of the

the spare parts acquisition program the typical activities which would be required from

knowledge and access that results from the the manufacturing management group in

continuing relationship between the CAO and support of the contracting effort.

the prime contractor. Specific management attention must be directed to the identification Figure 3-3 provides a graphic and quantification of price pyramiding on spare representation of some of the major events to

parts. Removing situations in which prime be supported during a contracting action. The

contractors and upper tier subcontractors add approval of a program through the Acquisition

cost to an Item without adding value can make Decision Memorandum (ADM) or other similar

a significant contribution to achieving fair and documentation, combined with availability of

reasonable prices for spare parts. This can budget funds, provides the basis for a

be achieved by breaking these parts out for solicitation document, usually a Request for

direct purchase from the actual manufacturer Proposal (RFPI to Industry The

(or possibly for open competition). manufacturing management function provides to the contracting off icer the detailed

Life of Type Buy requirements for the manufacturing iasks to be

When all other alternatives have been accomplished during the period of contract

exhausted for an item no longer to be performance. This could include stat

ement of

produced, Mie of type buy, a ore-time work language, data items or contract special

procurement may be necessary. Procurement provisions required to achieve the

quantity, according to DOD Directive 4005.16, manufacturing management objective defined

will be based upon demand and/or for that period of performance. The

engineering estimates of mortality, sufficient to development of these requirements should

support the applicable equipment until phased reflect the types of activities described In the

out of the system. model for the particular acquisition phase(s)

covered by the contract, as well as other

Post production support will, by requirements which reflect areas unique to the

focusing organizational resources on Improving specific program. the process by which spare parts are

acquired, assure a more eff icient and For each of the requirements Included

responsive logistics support program, as well in the RFP, evaluation criteria need to be

as normalize the price paid for each part. established. These criteria should focus on

those elements of the proposal which could

affect system effectiveness, the contractor's

MANUFACTURING CONCERNS RELATED ability to produce the system or the

TO CONTRACTING SUPPORT government's ability to support it. The

The model presumes that each phase developed criteria are needed to describe the

of the acquisition process will be accomplished minimum performance or compliance through a separate contract action. This will acceptable to enable a contractor to meet the

not be true for all programs since the program requirements of the RFP. These criteria are

manager has the flexibility to develop then used as a basis for the evaluation of the

acquisition plans which may combine phases individual contractor proposals. In performing within single contracts or delete specific the proposal evaluation, the evaluator needs

3-21
SECRETARY OF DEFENSE

BUDGET ACQUISITION DECISION

MEMO (ADM)

SERVICE

IMPLEMENTATION

SOLICITATION

(RFP) I

EVALUATION

CRITERIA I

.. . I

PROPOSAL(S)-I

EVALUATION AND

F SCORING

PRE-AWARD

SURVEY

Iv

I SELECTION AND

CONTRACT NEGOTIATION

Figure 3-3 Contracting Support

3-22
to know the requirement as stated In the contractor, can be expected following

solicitation, and what Is considered to be the announcement of award. In these reviews,

minimum acceptable response. For each the Information provided should be factual and

area, generally, the evaluator must provide an specific as to the proposal content and

evaluation of the contractor's proposal, In program requirements or standards. Although particular whether It meets or exceeds the government evaluation factors should be

minimum requirement; a narrative discussion available for review, scores for competing

of the evaluation; and an assessment of the proposals are not to be disclosed as they

risks attendant to the contractor's proposed serve no useful purpose In helping the

approach. contractor to Identify critical program needs

and possible proposal Inadequacies.

The Individual evaluations are then

combined according to the individual scoring

and weighting system for the particular PREPLANNED PRODUCT IMPROVEMENT

contract action to develop relative measures of Prepianned Product Improvement (P31)

the proposals received. It Is Important to note ... sometimes writteii, PPPI ... le an acquisition that proposals are measurkd against the strategy which programs resources to

standard -- not against each other. The accomplish an orderly and cost-effective

technical evaluations are combined with the phased growth of a system's capability, utility

evaluation of the cost proposals to determine and operational readiness. P31 Is directed

that proposal which Is most advantageous to toward the objectives of:

the government. As an adjunct to the

proposal evaluation and analysis effort, a Shortening the acquisition and

preaward survey of those offero-s being deployment time for a new system or an

considered for award is normally incremental capability;

accomplished. This preaward survey is

accomplishied by the Contract Administration Reducing overall acquisition and

Office (CAO) which has cognizance over the operational support costs, extending useful life

individual off erors' facilities based upon of equipment, reducing technical, cost and

request by the acquisition office (and often schedule risk;

with personnel augmentation from the program office). The purpose of the preaward survey Accomplishing orderly growth from

Is to determine that the offerors have the initial to mature system reliablity; and

physical, financial and managerial capability to

accomplish the effort described In the Reducing logistics and support

proposal. problems entailed with new material

Introductions.

The support to the contracting process Is directed toward ensuring that all required New System Agplication manufacturing management requirements are: P31 is normally applied to a system a) Included In the solicitation, b) appropriately early In the program - when it can be a factor

addressed In the proposal, c) capable of being In concept selection. P31 Is subsequently accomplished by the proposing .)ontractor, and carried forward in a program by Including

d) Included In the contract as awarded. The flexibility In the basic system design to

specific support activity tends often to be more accommodate future evolutionary

extensive and Intense than the discussion Improvements. above may Imply, especially when there are a

relatively large number of offerors for a The P31 approach Is a useful

complex system. it Is essential that care be acquisition concept for new programs under

exercised throughout the process to ensure the following circumstances:

that the resulting contract Includes those

requirements necessary to establish a firm There Is a long term military

basis for successful manufacture of the requirement to be satisfied,

ultimate system design. The threat or need Is projected to

Review of an Individual contractor's change as a function of time requiring a

proposal, especially with an unsuccessful change in the response,

3-23
Required technical performance or Submission (POM/BES) and Extended

system capability Is expected to increase with Planning Annex (EPA). Once P31 becomes a

time, part of the acquisition strategy, failure to fund

It will be considered a nmajor change in

There is a need to field the system In program.

the rear term with less than its full capability,

and P31 is to be used where there are

legitimate technical and schedule risk

The sponsoring service is willing to impediments to proceeding with a full

pay higher initial costs to obtain growth capability system, but is not to be used as i

potential for future exploitation, ruse to initiate an underfunded and

unaffordable program. Such programs are

DOD policy being promulgated as a destined to become deficient in performance

result of the DOD Acquisition Improvement or to suffer early cancellation.

Program (AlP) initiated in 1981 requires the

program manager to include P31 as an Product Improvement

element of the program acquisition strategy, For on going systems, i.e., those

and to pursue P31 when it is clearly already In FSD or beyond, product

established that its application will reduce risk, improvements should be considered for

acquisition time, and/or overall cost. P31 will incorporation only when production

not be used to artificially extend the incorporation is not more costly than a new

development effort or correct deficiencies design, retrofit costs are reasonable, and

encountered in attaining initially specified equipment downtime is not excessive.

system performance. Product improvements, rather than new

product d signs, should be considered under

As the design of a new system the fo.'owing circumstances:

evolves under a P31 approach, the basic

design of the system will anticipate any 0 There Is change In the threat

preplanned product improvements which are requiring Increased capability or utility which is

identified in the military requirement technically feasible to obtain,

documents and subsequent'y contained in the

acquisition strategy and confirmed at milestone 0 There is technological

decisions. Provisions will include structurb, breakthrough in advanced development which

space, weight, moment, power, air will present an opportunity for significant conditioning, and other accommodations to advancement in system military worth,

facilitate production incorporation and retrofit

and minimize operational disruptions. 0 When Improvement in design will pnrvide a cost-effective means for meeting

P31 is approached as a design change otherwise unattainable readiness requirements,

mechanism for incrementally phased

Introduction of additional system capabilities at 0 When thG system is modular

specifically defined points. Each evolutionary or adaptive to accept upgrading,

materiel change should meet a corresponding

aspect of the th,'eat or exploit a technological 0 When there is sufficient

advantage, capacity for growth in the design in the form

of structural, space, weight, and power

As stated above, l'31 is not used to provisions so that needed engineering

correct deficiencies encountered in the basic changes can be made without prohibitive

development. In particular, P31 Is not a test modification costs in production or retrofit, and

and fix technique to achieve the reliability,

availab~iity, and maintainability (RAM) specified 0 The systemn servize life is

for initial operation; however, P31 is used to compatible with the changes entailed.

achieve a planned growth in the RAM level.

Resources to accomplish P31 will be made When a product improvement 3 made

visible during the PPBS cycle and placed in to a weapon system, it should represent a

the Five-Year Defense Plan, (FYDP) Program cost-effective approach to achieving the new

Objectives Memorandum/Budget Estimate level of operational capability required.

3-24
CHAPTER FOUR

MANUFACTURING STRATEGY

Page

OBJECTIVE 4-1

INTRODUCTION 4-1

ELEMENTS OF MANUFACTURING STRATEGY 4-2

Production Competition 4-3

Producibility Engineering and Planning 4-3

Quality Planning and Approach 4-3

Industrial Modernization Incentives and Manufacturing

Technology 4-3

Government Review Process 4-5

Tooling/Test Equipment Concept 4-5

Govomment Furnished Property and Breakout 4-5

Contract Povisiois 4-5

Manufacturing Process Proofing 4-5

Production Rate 4-5

Type of Production Competition 4-5

DESIGN COMPETITION 4-6

LEADER/FOLLOWER CONTRACTING 4-6

Objectives of Leader/Follower Contracting 4-6

Approaches 4-6

COMPONENT BREAKOUT 4-8

Objectives of Component Breakout 4-9

Breakout Isues 4-9

Guidolines 4-9

MULTI-YEAR CONTRACTING 4-9

Mufti-Yar Contracting Objectives 4.9

Guidelines 4-9

INDUSTR..\L MODERNIZATION INCENTIVES PROGRAM 4-11
MANUFACTURING STRATEGY

OBJECTIVE

This chapter describes the program ELEMENTS OF MANUFACTURING

manufacturing strategy development within the STRATEGY

context of acquisition strategy development. A A manufacturing strategy is a detailed

number of manufacturing strategy alternatives plan for assurinC timely and cost effective

will be presented to aid the PM in the strategy production of an Item which meets all

development and definition process. In operational effectiveness and suitability

addition, specific elements of the alternative requirements. To be effective the strategy

strategies are described to establish the basis must be developed In consonance with

for application and their conditions for use. program engineering, contracting, and logistics

strategies, considering current and projected

constraints, risks, and opportunities In the

INTRODUCTION industrial-technological base. Key elements of

Manufacturing sirategy development is consideration are identified in Figure 4-2.

a key element of acquisition strategy

oevelopment. As shown in Figure 4-1, the ManL"acturing strategy development

same could be said of engineering, must begin during the earliest stages of

contracting, or logistics strategy. Integrated system development. Acqu!sition decisions

within the program management approach, such as system design approach and

these four disciplines are primarily responsible production rate are Intimately Intertwvned with

for achieving program goals for cost, schedule, manufacturing strategy. Manufecturing

and operational effectiveness and suitability, strategy will affect design and production rate

decisions. Design and production rate

Strategy and the strategic planning decisions will affect manufacturing strategy.

process should Involve three major features,

rational decision making, a single defined goal, While only the most general definition

and optimization. Unfortunately, these of manufacturing strategy may be possible

features are not typical of the planning during the early stages of system

activities 'n many Program Management development, this general definition will

Offices (PMOs). More often the planning and provide a foundation for early acquisition

the resulting strategy results from negotiation, decisions and for later, more detailed, strategy

consensus building and adaptation to definition. The manufacturing strategy must

decisions and constraints imposed by be flexible enough to identify and adapt to

Congress, DOD or Service Headquarters. The changes in the product and the manufacturing

time pressures Inherent in the acquisition environment. Changing constraints, risks, and

process can also contribute to a significant opportunities can affect even mature system

reduction in the emphasis on and resources production.

committed to developing a rational strategy.

Clear manufacturing strategy

6,rategy is fundamentally a long term development will affect government and

Issue. It focuses on the clear definition of the contractor actions. Both govemment and

details of the program objectives and the contractor management will be motivated to

development of an Integrated approach to adopt options that minimize the effect of

achieve those objectives. Measurable goals manufacturing constraints and risks and

ano milestones are vital for success in pursue beneficial manufacturing oppoitunities.

executing the strategy, These goals and

milestones must be supported by action plans Figure 4-3 lists the major elements of

which include the underlying assumptions, the manufacturing strategy for a particular

allocatio, of responsibility, time and resource program. For each element in the strategy,

requirements and risks. decisions must be made relatively early In the

acquisition process to ensure that the required

actions are taken in a timely manner.

Tradeoffs are made, often within the context of

the deveiopment cf the program acquisitlcn

4-1
SYSTEM

REQUIREMENTS/

CONSTRAINTS EVOLVING THREAT

SCHEDULE

MUFACTURING/SUFF

C ~ QUALMITY

SASSURANCE

F T FNINEERNCIA S Acq S LOGSTIC A 

T S

strategy. Each element has associated with it total quantity to be produced and the

a set of costs and risks which need to be estimated total funds forecast to be available

assessed against the specific program realities are often established. Within these

and technological challenges. Detailed constraints, the detailed strategy Is developed.

discussion of each of these topics is provided

elsewhere in this Guide, but the major Production Competition

decision issues in the strategy development Decisions must be rn~ade on whether

process are described below, to utilize more than one source for

manufacturing 'during the production phase.

Normally certain decisions are already Normally, competition In this phase will act to

made and serve as input to the strategy reduce recurring manufacturing cost. The

development process shown in Figure 4-4. trade off is the increased non-Tecurring cost to

The system to be developed and produced is establish the other source(s). Schedule and

described to some level of detail and some of technical risk are reduced with multiple

the major milestones such as Initial sources; however, the problem of end item

Operational Capability are established. The variability is increased.

4-2
* INDUSTRIAL BASE CAPABILITIES

• STRATEGIC AND CRITICAL MATERIALS

* CRITICAL MANUFACTURING TECHNOLOGIES

* TOOLING AVAILABILITY

* TEST EQUIPMENT AVAILABILITY

Figure 4-2 Manufacturing Constraints and Risks

LEVEL OF PRODUCTION COMPETITION

TYPE OF PRODUCTION COMPETITION

ROLE OF PRODUCIBILITY ENGINEERING AND PLANNING

QUALITY PLANNING

QUALITY ASSURANCE APPROACH

ROLE OF INDUSTRIAL MODERNIZATION INCENTIVES PROGRAM

MANUFACTURING TECHNOLOGY INSERTION

GOVERNMENT MANUFACTURING REVIEW PROCESS

TOOLING AND TEST EQUIPMENT

GFP AND COMPONENT BREAKOUT APPROACH

CONTRACT PROVISIONS AND REPORTING

MANUFACTURING PROCESS PROOFING

PRODUCTION RATE

Figure 4-3 Elements of Manufacturing Strategy

Producibility Engineering and Planning Industrial Modernization Incentives and

Decisions must be made on the Manufacturinj Technology

structure and funding levels of the formal The Industrial Modernization Incentives

Producibility Engineering and Planning (PEP) Program (IMIP) and the Manufacturing

program. The timing of initial formal Technology (MANTECH) Program are

Producibility Engineering and Planning (PEP) separate sub elements of Industrial

actions must be established and the objectives priparedness. Both programs seek to assure

for the contracts in each acquisition phase productivity, readiness and responsiveness of

need be determined. The activities in each the deense industrial base through acquisition phase need to build on the modernization of the manufacturing and

preceding activities and set the foundation for management processes of the enterprise.

transition from development to production. MANTECH focuses on advancing

Quality Plannig andApproach state-of-the-art manufacturing technologies and

The manufacturing approach to processes from the research and development

meeting TQM objectives must be defined. er'vironment (laboratory) to the production and

Early action by manufacturing is necessary to shop floor environment. Technologies with

obtain optimum quality in the delivered system generic application required for defense

by ensuring that the constraints of materials sys'tems and having high technical and

and processes are explicitly considered. financial risk characterize the projects with the

highest priority for MANTECH funding.

MANTECH projects demonstrate production

4-3
.) 0 W 0 Z IL 0

0u0 0 0 0 M.

I-I 0 0 -

4u < 0C w QU

' U R 0 Z IU EL 0 UJ) a. u

<Z w 0 >

00 Z cc " - m- U 0 0

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0s z 0 c

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application of emerging technologies. Proven Government Furnished Property and Breakout

technologies resulting from the MANTECH Providing equipment or subsystems to

program are candidates for implementation the prime contractor as Government Furnished

under IMIP. Property (GFP) may reduce the acquisition

cost and contribute to greater commonalty in

IMIP aims at improvements on a deployed systems. There is however, a

factory-wide basis by providing industrial corresponding shift of responsibility for system

incentives for modernizing the total enterprise performance and delivery from the contractor

through implementation of well established and to the government. Consideration needs also

proven state-of-the-art technologies. Although to be given to the potential for later breakout

many IMIP projects have been established on of equipment of subsystems from Contractor

an individual weapon system program basis, Furnished Equipment (CFE) to GFP.

the government's preference is for a

factory-wide approach that is applicable lo all Contract Provisions

weapon systcms and DOD product lines wit~in Each of the choices made in

the enterprise because it offers the greatest developing the manufacturing strategy must be

potential benefit to the DOD. Perhaps the supported by selection or development of

most important distinction of IMIP is that it appropriate contract clauses. Where specific

uses a business agreement to accelerate actions may be planned for later phases for

implementation of modern manufacturing the acquisition process, it Is often necessary to

technology across product lines and production include enabling or planning provisions in the

contracts. IMIP couples contractual incentives earlier phase contracts to create the proper with technology implementation. environment and relationship for the later

actions.

MANTECH and IMIP work together to

enhance productivity, reduce weapon system Manufacturing Process Proofing

cost, improve industrial base capacity, and The manufacturing strategy should

capability peacetime, surge and mobilization. include the criteria for determining which

production processes will require proofing and

Government Review Process the timing of such proofing activity. Process

D)ecisions need to be made conct .ning proofing can make a major contribution to risk

the amount of PMO and other government reduction, but It may involve cost and/or

involvement during the life of the program. potential schedule impacts during the

These decisions include the type and quantity development phase.

of data items, on-site reviews, and issues and

contractor decisions which will require PMO or Production Rate

other government organization approval. In While the production rate will be

addition to identifying the government reviews, constrained by the available funds profile,

initial decisions need to be made on the depth some allowance for variation may remain, In

and extent of the reviews to serve as a basis addition, total program cost may be

for contractor and government resource significantly impacted by changes In production

planning. rate. These impacts need to be assessed and

presented to the Involved decision makers.

Tooling/Test Equipment Concept

The general guidelines for planning for Type of Production Competition

tooling and test equipment need to be Part of strategy development Involves

established. The issues include contractor definition of the long term relationship between

investment, the level of rate tooling and test contractors and the government. Research

equipment to be utilized, the transition from and field experience indicate that competition

limited life to rate tools and the degree of between contractors can provide real benefits

similarity between production test equipment by encouraging contractor innovation and cost

and depot test equipment to be requ;ted. re luction. At the same time, a true strategic

Also, guidelines for maintaining tools and test approach implies a long term partnership.

equipment need to be set forth. Several approaches have been used to

balance these apparent conflicts in

deveIlopment of a strategic

government/contractor approach to system

4-5
development and production. These the concept into a mature product. The

approaches include: leader/follower government and its contractors must share

contracting; component breakout, multi-year equal responsibility for this misunderstanding.

contracting, and incdistrdal modernization The contractor's proposal and government

Incentive utilization. source selection process provide the last

cost-affective opportunity to ensure application

of these critical disciplines during design and

DESIGN COMPETITION the achievement of design maturity.

Requirements should be delineated in

both quantitative and qualitative terms at lower

levels of detail as product development LEADER/FOLLOWER CONTRACTING

unfolds. Further requirements should always Leader/follower contracting is a

precede functional or physical means, which technique under which the developer or sole

should then be designed or selected to satisfy producer (leader company) of a product

the requirements. furnishes manufacturing assistance and

know-how or otherwise enables another

It must be economically feasible to source (the follower company) to become a

manufacture a quality product at a specified supplier of the product. This procurement

rate and to deliver end Items capable of method Is sometimes referred to as "second

achieving the performance and reliability sourcing," or leader company procurement.

Inherent in the design. This design

requirement Is not always well understood and Oblectives of Leader/Follower Contracting

historically has taken a back seat to the more The objectives presented In Figure

popular objective of high performance. The 4-6 represent a general outline of the

results of this neglect have ranged from elements that must be evaluated In

factory rework rates In excess of 50 percent to consldering the use of leader/follower

suspension of governmen,' acceptance of end contracting. Considerati'n of these objectives

items pending major redesign for producibility. and individual program differences is essential

A strong producibility emphasis early In design to successful application of this approach.

will minimize the time and cost required for Vital program considerations include: supply

successful transition to production. restrictions; manufacturing quantities; program relationship to other programs; and potential

DOD 4245.7-M, Transition from improvement of product quality and/or cost

Development to Production specifically reduction from the introduction of competition.

identifies the importance of the design Consideration of the relationship between

disciplines enumerated In Figure 4-5. program requirements, funding, and economic

Contractor performance in these disciplines production quantities Is vital, particularly when

should be an Important source selection only small quantities are required.

evaluation criterion. Accordingly, competition

should be maintained In the acquisition There are several policy limltations to

process until contractor performance in these be considered by the program manager. For

critical design disciplines can be properly example, leader/follower contracting should be

assessed. used only when the circumstances identified In

Figure 4-7 are present.

DOD 4245.7-M and NAVSO P-6071,

Best Practices, provide general guidelines Approaches

which may be used In developing criteria ;or Several contraetual approaches are

design effort evaluation. Specific criteria n'st available including:

be tailored to Individual system requirements.

1. Awarding a prime contract to

A high risk of acquisition program the leader company which obligates the leader

failure is always present at the outset of the to 3ubcontract a designated portion of the total

design process. While some levels of risk number of end items to the followe, company

associated with a new technical concept may and to assist the follower in mnpnufactoring

be unavoidable, historically this risk has been

magnified by the misunderstanding of the

Industrial design disciplines necessary to turn

4-6
*DESIGN REFERENCE MISSION PROFILE IDENTIFICATION

*DESIGN REQUIREMENTS IDENTIFICATION

*TRADE-OFF STUDIES

*DESIGN POLICY DOCUMENTATION AND USE

*DESIGN PROCESS CONSIDERATION OF MANUFACTURING

AND OPERATIONS

*DESIGN ANALYSIS INCLUDING STRESS AND STRENGTH ANALYSIS

*PARTS AND MATERIALS SELECTION CONSIDERING SPECIAL SYSTEM

REQUIREMENTS

*SOFTWARE FUNCTION AND LOGIC DESIGN ANALYSIS

*COMPUTER AIDED DESIGN UTILIZATION

*DESIGN-FOR-TESTING

*CONFIGURATION CONTROL

*DESIGN REVIEW DISCIPLINE

*REALISTIC DESIGN RELEASE SCHEDULIN4G

Figure 4-5 Critical Design Disciplines

2. Parallel production wherein two A second factor concerns the

separate prime contracts are awarded. The Technical Data Package (TDP). In many leader company prime contract would contain cases, the completeness of the TDP will be a

a requirement that it provide the requisite function of the technology involved and the

assistance to the follower company for government's ability to both accurately state Its

manufacturing of the items. data requirements and maintain configuration control. This Implies a cost which the

3. Designating the follower government must assume and is similar to

company as the prime contractor for the costs associated with commercial practices production of items, under which the follower involving licensing arrangements, joint

company is obligated to subcontract with a ventures, or teaming. specific leader company for the requisite know-how. A 1988 DOD Inspector General report Identified cost estimating and analysis Certain factors should be considered problems which have been encountered with

In utilizing this acquisition strategy. It may be dual source programs. Their findings Indicate

difficult If not impossible to maintain leader that the potential savings are overestimated by

company commitment to the technology the cost-benefit analysis methods currently In

transfer without a contractually binding use. They also determined that these

arrangement. Thus, it a program encounters estimates do not always consider all the

delays or slippages because of funding or pertinent costs. When developing a strategy requirements changes, leader company for dual sourcing, the PM should ensure that

decisions to reallocate resources to other the structure of the program Is such that

government programs or commercial markets competition will be effective (i.e. the "loser" In

may seriously impact the program. This is a split buy does not get too high a percentage especially pertinent if a follower company Is of the work), In addition, careful analysis of

experiencing technical problems. Maintaining the full cost for implementing and maintaining control of the leader firm may be particularly the competitive environment should be

difficult when the leader company Is a accomplished, with special emphasis on the

subcontractor. Since the government has no non-recurring costs to reach an effective

direct contra.c:tual relationship with the leader, competitive status. Systeris should be in

If a problem develops, the government's only place to monitor the costs of dual sourcing for

recourse Is through the follower (prime) comparison with estimates and for use In

company. evaluating potential changes to the acquisition

strategy.

4-7
- SHORTEN THE TIME FOR DELIVERY

- ESTABLISH ADDITIONAL SOURCES OF SUPPLY FOR REASONS SUCH AS

GEOGRAPHICAL DISPERSION OR BROADENING THE MANUFACTURING BASE

- MAKE MAXIMUM USE OF SCARCE TOOLING OR SPECIAL EQUIPMENT

- ACHIEVE ECONOMY IN MANUFACTURING

- ASSURE UNIFORMITY AND REL;ABILITY IN EQUIPMENT PERFORMANCE,

COMPATIBILITY OR STANDARDIZATION OF COMPONENTS, AND

INTERCHANGEABILITY OF PARTS

- ELIMINATE PROBLEMS IN USE OF PROPRIETARY DATA

- EFFECT TRANSITION FROM THE FULL-SCALE DEVELOPMENT PHASE TO THE

PRODUCTION PHASE AND TO SUBSEQUENT COMPET171VE PROCUREMENT

* IMPROVE THE COMPETITIVE STATUS OF MAJOR ACQUISITIONS

Figure 4-6 General Leader/Follower Contrating Objectives

" THE LEADER COMPANY POSSESSES THE NECESSARY MANUFACTURING

KNOW-HOW AND IS ABLE TO ASSIST A FOLLOWER COMPANY

" NO SOURCE, OTHER THAN A LEADER COMPANY, COULD MEET THE

GOVERNMENT'S REQUIREMENTS WITHOUT LEADER COMPANY ASSISTANCE

" ASSISTANCE OF THE LEADER COMPANY IS REQUIRED TO PRODUCE

THE ITEMS

"* THE GOVERNMENT RESERVES THE RIGHT TO APPROVE CONTRACTS

BETWEEN THE LEADER AND FOLLOWER COMPANIES

Figure 4-7 Leader/Follower Conditions for Use

COMPONENT BREAKOUT

The term "component breakout" can acquisition plan should Identify those

be defined as a program management milestones at which component breakout

decision of whether or not subsystems, decisions should be made. These decisions

assemblies, subassemblies, and other major Include those which must be made early in the

elements of end Items or systems should be contracting cycle on such matters as initial

purchased directly by the government and program support levels of government provided to the prime contractor as fprnishd versus contractor furnished

government furnished material. Here, equipment and the contract provisions consideration of component breakouT will be covering spare parts provisioning. limited to components that have been

contractor-furnished material in a previous

system buy. The approved and current

4-8
Objectives of Component Breakout MULTI-YEAR CONTRACTING

Whenever a prime contract for a A multi-year contract Is a contract

weapons system or other major end Item will covering planned DOD requirements for an

be awarded without adequate price Item for up to 5 years. In most cases, the

competition and the prime contractor acquires contract Is funded for only one year at a time.

components without such competition, DOD The contractor Is protected against loss

policy is to break out those components If resulting from cancellation by contract

substantial net cost savings can be obtained provisions which aliow reimbursement of costs

without jeopardizing the quality, reliability, included In a cancellation ceiling. This

performance or timely delivery of the end Item. cancellation ceiling covers only nonrecurring Additionally, the desirability of component costs, such as equipment Investment which

breakout should also be considered whenever would have been amortized over the life of the

substantial net cost savings will result from contract. This technique offers significant greater quantity purchases or improved potential for cost savings by enhancing logistics support. Component breakout also program stability and providing contractors with

provides a firm basis for iater direct purchase the capability to optimize schedules, stabilize

or competitive purchase of the required spare their workforce, purchase economic lot buys of

and repair parts. material, and plan for Investing In cost

reducing capital Improvements. Although

BreakoutIlssues multi-year contracts can benefit the

There are many issues of importance government by saving money and Improving

to the program manager In the Implementation contractor productivity, it can also entail certain

of a component breakout program. How are risks, Including Increased cost to the

breakout candidates to be Identified? What government, should a multi-year contract later

logistics system risks are involved? How will be changed or terminated.

economic and quantity change factors

influence cost? What responsibilities will the Multi-Year Contracting Obiectives

government share or assume as a result of Multi-year contracting Is encouraged to

providing government-furnished components? take advantage of one or more of the

Will the item be purchased competitively or on objectives presented In Figure 4-8.

a sole source basis? The answers to these

quesiions cross many disciplines Including In general, the primary objective for

production, engineering, finance, and contract multi-year contracting Is the potential for lower

administration. Most weapon systems involve weapon system costs. Estimates of potential relatively large numbers of end Items procured savings have been made In the range of 10 to

over the program life cycle which often 30 percent. Experience Indicates that specific extends over a number of years. savings are difficult to calculate but that

savings of 10 to 15 percent appear to be

Guidelines reasonable.

The program manager should base

each component breakout decision on an Guidelines

assessmient of the potential risks of degrading Multi-year contracting may be used

the end item through such contingencies as when Congress authorizes funds for up to five

delayed delivery and reduced reliability of the years for the procurement of specified

component, calculation of estimated net cost quantities. Although appropriations are still

savings over the program life cycie, and granted annually, the service agreements with

analysis of the technical, operational, logistic the congressional committees almost

and administrative factors Involved. Particular guarantees the multi-year procurement (MYP) emphasis should be placed on assessing the term and allows significant advanced

stability of the design, the availability of item procurement of long lead Items. Multi-year data required to support the breakout decision, contracting must make it possible to attain one

and the ability of the government to transfer or more of the objectives In Figure 4-8 where

the design desi~ription U. a potential source. all the criteria in Figure 4-9 are present.

4-9
"* LOWER COSTS

"* ENHANCEMENT OF STANDARDIZATION

"* REDUCTION OF ADMINISTRATIVE BURCEN IN THE PLACEMENT AND

ADMINISTRATION OF CONTRACTS

"* SUBSTANTIAL CONTINUITY OF PRODUCTION OR PERFORMANCE, THUS

AVOIDING ANNUAL STARTUP COSTS, PREPRODUCTION TESTING COSTS,

MAKE READY EXPENSES, AND PHASE OUT COSTS

"* STABILIZATION OF CONTRACTOR WORK FORCES

"* AVOIDANCE OF THE NEED FOR ESTABLISHING AND "PROVING OUT" QUALITY

CONTROL TECHNIQUES AND PROCEDURES FOR A NEW CONTRACT EACH

YEAR

"* BROADEN THE COMPETITIVE BASE WITH OPPORTUNITY FOR PARTICIPATION

BY FIRMS NOT OTHERWISE WILLING OR ABLE TO COMPETE FOR LESSER

QUANTITIES, PARTICULARLY IN CASES INVOLVING HIGH START UP COSTS

"* PROVIDE INCENTIVES TO CONTRACTORS TO IMPROVE PRODUCTIVITY

THROUGH INVESTMENT IN CAPITAL FACILITIES, EQUIPMENT AND ADVANCED

TECHNOLOGY

Figure 4-8 Multi-Year Contracting Objectives

"* MULTI-YEAR CONTRACTING WILL RESULT IN LOWER TOTAL COSTS

"* MINIMUM REQUIREMENTS FOR THE ITEM TO BE PURCHASED WILL

REMAIN UNCHANGED DURING THE CONTRACT

"* THERE IS A REASONABLE EXPECTATION THAT THE DOD WILL

REQUEST NECESSARY FUNDS

"* ITEM DESIGN IS STABLE

"* COST ESTIMATES AND SAVINGS ESTIMATES ARE REALISTIC

Figure 4-9 Multi-Year Contracting Criteria

4-10
INDUSTRIAL MODERNIZATION INCENTIVES

PROGRAM

The Industrial Modernization Incentives

Program (IMIP) is an example of

government/contractor partnership for mutual

strategic benefit. Industrial modernization

incentives may be negotiated and Included in

contracts for research, development, and/or

production of weapons systems, major

componen't., or material The purpose is to

motivate the contractor to invest in facilities

modernization and to undertake related

productivity improvement efforts that It would

not have otherwise undertaken or to invest

earlier than it otherwise would have done.

Incentives may be in the form of productivity

savings rewards, contractor Investment

protection, and/or other appropriate forms.

They may be used separately or in

combination. Contractor Investment protection

by government assumption of part of the

investment risk is the keystone of IMIP.

Program details including, specific goals and

limitation are presented in Chapter 8.

4-11
CHAPTER FIVE

TOTAL QUALITY MANAGEMENT

AS IT RELATES TO THE MANUFACTURING PROCESS

CONTFNTS

OBJECTIVE 5-1

INTRODUCTION 5-1

TOTAL QUALITY MANAGEMENT OVERVIEW 5-1

Current Environment 5-3

Good Enough Versus Continuous Improvement 5-3

PRINCIPLES OF TOTAL QUALITY MANAGEMENT 5-4

TOTAL QUALITY MANAGEMENT TOOLS 5-4

Basic Tools of Statistical Process Control (SPO) 5-6

Design of Experiments (DOE) 5-8

Taguchi's Quality Philosophy 5-10

Quality Function Deployment (QFD) 5-12

PROGRAM MANAGEMENT REQUIREMENTS 5-14

Quality of Design 5-14

QUALITY ASSURANCE 5-16

Quality of Conformance 5-16

Contract Administration Office Role 5-17

Quality Feedback 5-17

RELIABILITY AND MAINTAINABILITY 5-18

Reliability of Design 5-19

Reliability Testing 5-20

Reliability Growth 5-20

Reliability In Manufacturing 5-20

Reliability and Maintainability Quality Team Concept 5-22

TOTAL QUALITY MANAGEMENT INTEGRATION 5-24

Concurrent Engineering 5-25

Quality in the Source Selection Process 5-25

Industrial Modernization Incentive Program 5-25

Warranties 5-26

Acquisition Streamlining 5-26

Value Engineering 5-26
TOTAL QUALITY MANAGEMENT

AS IT RELATES TO THE MANUFACTURING PROCESS

OBJECTIVE

The key objectives of DOD's Total and suitability focusing on Increased

Quality Management (TOM) approach are to customer/user satisfaction.

broaden the focus on quality and to change the present culture dealing with the acquisition To meet this challenge, DOD and

process, contractual requirements, design and industry must redirect the work force, change manufacturing practices, and the concept of management styles, implement new processes, acceptable quality. This Guide Is concerned and most important, listen~ to employees, as

only with TOM as It relates to the well as their customers, the operating forces.

manufacturing process. Management must create the climate to esto~blish challenging goals and to ensure that

the yvork force Is properly motivated. Tangible INTRODUCTION actic ns are necessary to stimulate changes. Quality means meeting all of the user's

needs--cost, schedule, reliability, Improvements in quality can provide maintainability, and all of the other attributes the highest return on investment, because they that contribute to a system's value. involve the efficient use of existing people and

Operational superiority of U.S. weapon material resources. The reduction of errors at

systems Is associated with a high degree of every level reduces costs and improves the

technical sophistication and superior effective use of resources. Quality does not

performance. However, that superior cost; It pays. performance would be to no avail if industry could not produce quality equipment free of

defects and consistent in performance, dur- TOTAL QUALITY MANAGEMENT OVERVIEW

ability, and reliability. TQM is the application of methods and

human resourcos to control the processes that

Quality (excellence) is a matter or produce defense materiel, with the objective of

culture and behavior. We must change those achieving continuous Improvement In quaiity. cultural aspects that impede production of high The DOD TOM strategy also addresses the

quality systems. DOD is working with the concurrent need to motivate U.S. industry to

services and Industry to identify the key greater productivity. It Is a strategy for

approaches to enhance quality. Many improving the quality of DOD processes and

excellent tools have been developed, but DOD products and achieving substantial reductions

has not been fully successful In Implementing in the cost of ownership throughout a system's them. Dr. Robert B. Costello, the life cycle. Undersecretary of Defense (Acquisition), signed a memorandum to the service TOM draws on a rich heritage of

acquisition executives which Initiated research and experience reaching back to the

implementation of a DOD Total Quality development of Statistical Process Control

Management approach. This memorandum (SPC) during World War 11. The many strongly states that DOD Is committed to distinguished scientists, engineers and

taking a leadership position. practitioners have contributed to the rich body of knowledge Include: Dr. Walter A. Shewhart

The TQM process is a total (SPC), Drs. Harold F. Dodge and Harry Romig organizational approach to continuous (Sampling), Ellis R. Ott (Process Quality Improvement of quality and productivity. TOM Control), Eugene L. Grant (Statistical Quality requires management to exercise the Control), Dr. Amand V. Fiegenbaum (Total leadership to establish the environment for the Quality Control), Dr. Joseph M. Jiuran

process to flourish. It involves an Integrated (Industrial Quality Control), Dr. W. Edwards

effort toward improving performance at every Deming (Quality and Productivity level. This improved performance must satisfy Management), Philip B. Crosby (Quality goals of quality, cost, schedule, mission need, College), Genechi Taguchi (Experimental

5-1
Design), Dr. Kaoru Ishikawa (Cause/Effect The non-technical aspects of TOM

Diagrams), Shigeo Shingo (Low-cost, high Include process Improvement methodology quality production). Including problem solving techniques, performance measurement techniques, reward

At the current time, much of the and recognition system, team operating Implementation of TOM within American principles; dedicated, knowledgeable Industry is being accomplished within the facilitators; intensive training; cross functional

context of the "Fourteen Management TOM teams; user and customer Involvement

Principles" of Dr. W. Edwards Deming. These and feedback.

points are shown In Figure 5-1.

"* CREATE CONSTANCY OF PURPOSE FOR IMPROVEMENT OF

PRODUCT AND SERVICE

"* ADOPT THE NEW PHILOSOPHY

"* CEASE DEPENDENCE OF INSPECTION TO ACHIEVE QUALITY

"* END THE PRACTICE OF AWARDING BUSINESS ON BASIS OF PRICE

TAG ALONE

"* CONSTANTLY AND FOREVER IMPROVE THE PROCESS OF PLANNING, PRODUCTION, AND SERVICE

"* INSTITUTE MODERN METHODS OF TRAINING ON THE JOB

"* INSTITUTE MODERN METHODS OF SUPERVISION

"* DRIVE OUT FEAR

"* BREAK DOWN BARRIERS BETWEEN STAFF AREAS

"* ELIMINATE SLOGANS, EXORTATIONS, AND TARGET FOR THE WORK FORCE

"* ELIMINATE NUMERICAL QUOTAS FOR THE WORK FORCE AND NUMERICAL

GOALS FOR MANAGEMENT

"* REMOVE BARRIERS THAT ROB PEOPLE OF PRIDE OF WORKMANSHIP

"* INSTITUTE A VIGOROUS PROGRAM OF EDUCATION AND SELF-IMPROVEMENT

"o PUT EVERYBODY IN THE COMPANY TO WORK TO ACCOMPUISH THE

TRANSFORMATION

Figure 5-1 The Fourteen Management Principles of Dr. Deming

The TOM concept embraces the TOM is implemented by obtaining effective Integration of existing management top-level commitment to TOM In both DOD

Initiatives and Initiation of new techniques that and industry. It requires extensive training, have a positive Impact on quality. Examples review and reform of contract related policies

are: acquisition streamlining, statistical and practices (e.g., FAR, specs and

process control, continuous process standards, administrative procedures) to

Improvement, value engineering, transition radically change. the acquisition culture. Pilot

from development to production, warranties, applications and contractor participation efforts

gain sharing, Taguchi methods of experimental are currently underway and much Is being design, quality function deployment (OFD), leamned about the effectiveness of various

simultaneous engineering and concurrent approaches. design; variability reduction and just in timo,

group technology or cellular methods for shop operation.

5-2
(urrent Environment Good Enough Versus Continuous Improvement

A 1987 Gallup Survey of Chief For a long time, DOD followed the

Executive Officers' views on quality revealed concept of "minimum acceptable" quality.

some disturbing conclusions. The survey America's manufacturers and DOD

found that while 81% of the CEOs laid claim maintenance depots have pursued this

to "visibla iop management commitment for concept with the resignation that a persistent

total quality" and 63% claimed to use TOM level of errors, perceived as irreducible, was a "very often or often", only 38% of the way of life. This concept was a major

comoanies used hourly employee involvement contributor to high failure rates and the

tean,s, only 39% used salaried involvement escalating cost of repairs. DOD cannot

team, and only 45% used statistical process tolerate this concept if it Intends to maintain a

controls. Well over 50% of the CEOs felt that leadership role among industrial nations.

their compjany's cost of quality (COQ) was

under 5%. Experts calculate the average Previous DOD quality programs

COO at 20-30% of sales. What is particularly focused on inspection, or ensuring

frightening is ,ciat many CEOs don't know conformance to requirements. Total Quality

what percentage of their business is dedicated Management changes the focus of quality from

to avoiding waste and don't feel comfortable at inspection to continuous process Improvement.

guessing at a number. The essence of this approach Is providing the

impetus for improving requirements, design,

This cust in terms of internal and and manufacturing processes.

external failures, preiention cost and appraisal

co~sts is often 20% or more oe DOD contr,•ct Manufacturers must Implement

dollar value. This does consider reductions in rigorous and effective defect prevention

performance, availability, reliability and process control programs. The process

maintainability that result from quality operation should continuously strive for

problems. While itany -.ontractors claim to improvement rather than accept a

have TOM systems, !her: has not been much predetermined level of defects. By building a

improvement in product quality or integrky. Air series of quality checks into the process, all

Force Contract Management Division imperfections will eventually be screened out

continues to find problems during their and corrected c:uring the process. This

Coptactor Operations Reviews, similar to apdroach will dramatically change the

those that 'hey have found and documented in prevailing mind-set and be pivotal In the

the past. The Defense Logistics Agency cultural change being advocated.

continues to find excpssive rates of waivers

and .eviat;ons, often in excess of 40%. This Unfortunately, in the past DOD

would indicate that problems exist in accepted inefficient work and rework as a

prevention, that industry is not building quality normal state of affairs. Yesterday's errors

into DOD products and services. A recent became the basis for planning today's "shula cost" review documented that 45% of contracts. Responses to some RFPs for

testing is really re-testing and that 80% of production rontracts have shown that 30 to

sustaining engineering is dedicated to Material 40% of the fabrication and assembly cost Is

Review Boards (MRB) and failure analysis. for reprocessing. Forty-five percent of the test

cost is for equipment and labor to troubleshoot

This must be changed. One way is and retest failed items. These figures are

through greater use of process control in place based on the time expended on contracts for

of product inspection. An example is the Air correction of errors.

Force Variability Reduction Program (VRP) to

improve combat capability throtgh defect DOD uses specifications and

reductions. The objectivo of VRP is to design standards to impose contractual requirements.

and build to target value specifications rather These documents are essential to the

than tolerances. These values are directly acquisition process because they provide the

related to achieving the user's operational baseline for the proposal and source selection

requirement-,. As the manufacturing process process, as well as the legal basis to

becomes more capable, the yields increase as determine contractual compliance. One of the

defects decrease. requirements found in these documents Is

Acceptable Quality Level (AQL) or the Lot

5-3
Tolerance Percent Defective (LrPD). These with manufacturing engineers and logisti-cians. provisions were originally intended to institute This team must develop producible designs standard sampling procedures to ensure that meetperformance expectations and are

quality integrity of large production lots. Such affordable. DOD has already created such

numerical values, however, have been used teams in the Office of the Secretary of

by many manufacturers to justify lack of action Defense, with members from research and

In instituting effective process controls to advanced technology, production, and logistics.

improve quailty. These contractors have

accepted the "good enough" concept, and TQM is essential to achieve these

have lost sight of good business practices goals. Therefore, contracts should be

aimed at customer satisfaction. Allowing a awarded to companies whose products and

persistent level of errors as a way of life has services reflect the application of TOM and

contributed to unacceptable failure rates in who have demonstrited outstanding reliability. defense equipment and to the escalating cost Recent changes to the FAR require that

of maintenance and logistic support. quality be considered os a factor in source

selection.

The DOD, to rectify the perception of

allowable defects and stimulate changes to

improve product quality, has recently directed PRINCIPLES OF TOTAL QUALITY

Its specification preparing activities tc remove MANAGEMENT

AQLs and LTPDs as fi :ed requirements in TOM is a term in general use,

military product specifications. This action will although there is no specific agreed-upon provide opportunities to improve quality to the definition within DOD. The five principles of

max~inum extent possible by promoting corn- TOM have been identified as follows:

petition based on excellence.

0 User satisfaction; meet your Intricate sampling plans based org customers' requirements prescribed AQLs required the inspection of 0 Problem prevention - not

products to determine acceptance, thereby problem detection

relieving the contractor of further responsibility 0 C o n t i n u o u s p ro ces s

for quality. The new approach recognizes the improvement value of sampling inspection techniques as a 0 Innovation in products, quality assurance tool. It removes, however, processes and services

the inference that a predetermined amount of 0 Involve everyone defects are expected and allowable. it

enforces the concept that all delivered The focus of the TOM efforts are

products are expected to comply with the directed toward assuring that the systems and

established technical requirements. equipment provided to the operational forces

have, and will continue to have throughout Contractors must institute effective their life span, performance characteristics

process controls and in-process inspection which satisfy the required level of military techniques that preclude out-of-tolerance capability. conditions during manufacturing in order to

achieve continuous improvement and the These directions need to be

ability to compete on the basis of quality. By interpreted within the structure of the DOD

stabilizing the process well within acceptable TOM approach and the DOD Posture on

limits, the "defect-detection" approach is Quality shown, in Figure 5-2.

replaced with the "defect prevention"

technique. The latter does not leave the

process to chance and then require screening TOTAL QUALITY MANAGEMENT TOOLS

of the good from the bad at the end of the Total Quality Management requires the

process, nor does it rely exclusively on a synergistic interaction between management sampling inspection that offers a measure of philosophy and procedures, and quality the degree of non-compliance, technologies. No single checklist or formula

can be developed to Institutionalize this

The procurement system must become philosophy in the DOD procurement

more flexible. Designers must work closely 54community.
*QUALIT% IS ABSOLUTELY VITAL TO OUR DEFENSE, AND REQUIRES

A COMMITMENT TO CONTINUOUS IMPROVEMENT

*A QUALITY AND PRODUJCTIVITY ORIENTED DEFENSE INDUSTRY,

WITH ITS UNDERLYING INDUSTRIAL BASE, IS ~I HL- KEY TO OUR

ABILITY TO MAINTAIN A SUPERIOR LEVEL OF READINESS

*IMPROVEMENTS IN QUALITY PROVIDE AN EXCELLENT RETURN ON

INVESTMENT AND, THEREFORE, MUST BE PURSUED TO ACHIEVE

PRODUCTIVITY GAINS

* TECHNOLOGY, BEING ONE OF OUR GREATEST ASSETS, MUST BE

WIDELY USED TO IMPROVE CONTINUOUSLY THE QUALITY OF

DEFENSE SYSTEMS, EQUIPMENTS AND SERVICES

* QUALITY MUST BE A KEY ELEMENT OF COMPETITION

* ACQUISITION STRATEGIES MUST INCLUDE REQUIREMENTS FOR

CONTINUOUS IMPROVEMENT OF QUALITY AND REDUCED

OWNERSHIP COSTS

"* MANAGERS AND PERSONNEL AT ALL LEVELS MUST BE HELD

ACCOUNTABLE FOR THE QUALITY OF THEIR EFFORTS

- COMPETENT, DEDICATED EMPLOYEES MAKE THE GREATEST

CONTRIBUTIONS TO QUALITY AND PRODUCTIVITY. THEY MUST

BE RECOGNIZED AND REWARDED ACCORDINGLY

"* QUALITY CONCEPTS MUST BE INGRAINED THROUGHOUT EVERY

ORGANIZATION WITH THE PROPER TRAINING AT EACH LEVEL,

STARTING WITH TOP MANAGEMENT

"* PRINCIPLES OF QUALITY IMPROVEMENT MUST INVOLVE ALL

PERSONNEL AND PRODUCTS, INCLUDING THE GENERATION OF

PRODUCTS IN PAPER AND DATA FORM

"* SUSTAINED DOD-WIDE EMPHASIS AND CONCERN WITH RESPECT

TO HIGH QUALITY AND PRODUCTIVITY MUST BE AN INTEGRAL

PART OF OUR DAILY ACTIVITIES

Figure 5-2 DOD Posture on Quality

5-5
TOM must be based upon a second, the major push for SPO brought about

recognition of the need for interactions through applications in the automobile Industry. between various disciplines. There is a

natural tendency to search for the solutions to SPO is an operator's tool. It assists

a problem within one's own discipline. For the operator in making timely decisions about

example, some promote the view that the process: adjust, leava alone, or shutdown

management commitment is the key to a and take corrective action before defects are

successful TQM. Others focus on the use of produced. SPO provides evidence of how a

quality technology. Any myopic view is process is performing. SPO helps distinguish disastrous In TOM because it is a team effort, between patterns of natural variation

Management must have a conceptual (expected), and the non-desirable, unexpected understanding of quality technology including variations (assignable to malfunction). SPO

statistical thinking and tools. Technical provides a better understanding of how the

personnel must understand management's role processes affect the products. Assurance of

and limitations. DOD managers, both In conformance is, therefore, obtained through Industry and government, must perform within defect prevention by control of the various

the framework of DOD acquisition laws and processes, rather than after the fact. Clear

regulations. Also, statisticians and other understanding of the causes and extent of

quantitatively trained personnel must avoid the variation can also be used as a basis for

pitfall that statistical thinking and tools are the reducing the process variability, thus Improving total solution. The use of statistical techniques the quality of the output. is certainly necessary, but definitely not the

single sufficient condition for success. The Japanese have trained a ls.ae

Experience has shown that use of statistics portion of their work force In the use of seven

has a limited Impact unless its use is basic quality control tools. These are also

supported by a larger system such as TOM. sometimes referred to as the elementary SPO

By institutionali!zing TOM, the DOD program tools and are used by the production workers

M-a-agers can help ensure the proper role and to solve day-to-day shop floor quality

use of quality technology. Thus, TOM tools problems, mainly through their quality do not merely include statistical methods, but improvement teams and employee suggestion also Include concurrent engineering, computer systems. The number of suggestions turned

applications, CAD/CAM systems, producibility In by Japanese workers is legendary. While

analysis, data-management and analysis the average number of suggestions per

systems, value engineering, transitioning from employee per year In the United States is 0.1, development to production templates, and the figure in Japan Is 10. More Important, several other techniques outlined In the over 80% of the worker suggestions are

various chapters of this guide. approved by the Japanese management. This

Is mainly because Japanese workers are

This section will focus upon the TOM trained in the basic tools of quality control and

tools pertaining to quality technology, thus experiment with their own Ideas, pilot

runs, and submit their suggestions to

Basic Tools of Statistical Process Control(SPC) management only when they are reasonably One key element of the continuous sure of success. Thus, Instead of having a

quality Improvement concopt Is process few professionals to tackle problems, they control. For many manufacturing processes, have an army of problem solvers. The

statistical process control (SPO) is most following Is an outline of the objectives and

effective. SPO Is based on the premise that methodology for each of the seven (7) basic

all processes exhibit variation; In other words, quality control tools:

it Is an analytical technique for evaluating the

processes and taking action based on 1. P.D.C.A. (Plan, Do, Check, Act) stabilizing the process within the desired limits.Th b A c leI apr l m sovn

SPO Is one of the most widely used tool by trial and error and consists of the

statistical quality control techniques In the following iterations:

United States. Two things have caused this

to happen: first, the rediscovery of the works o Plan the Work

of Dr. W. Edwards during the early 1980's;

5-6
o Execute 4. Check Sheets/Tally

Sheets/Histograms/Frequency Distribution

0 Check Results Diagrams

0 Take action iT there is a There are several types of check

deviation between desired and sheets: for process distribution, for defective

actual results items, causes, defect locations (sometimes

referred to as "measles charts"), and as

0 Repeat the above cycle until memory joggers for Inspectors while checking

deviation is reduced to zero. products. Their main function is to simplify

data gathering and to arrange data for

This tool is used mostly by production statistical interpretation and analysis.

workers and whenever more powerful

techniques are unknown or unsuitable. Histograms and frequency distributions

provide a graphical portrayal of variability.

2. Data Collection and Analysis Their shape often gives clues about the

process measured, such as mixed lots

This is generally the first step in (bimodal distribution); screened lots (truncated

identifying and reducing the variation in any distribution); amount of spread relative to

process. The major steps involved are: specifications; non-centered spread relative to

specifications. There are two general

o Define specific reasons for the characteristics of frequency distributions that

collection of data can be quantified--central tendency and

dispersion.

0 Decide on measurement

criteria 5. Pareto's Law

o Assure accuracy of measuring Vilfredo Federico Pareto was a

equipment (minimum 5 times nineteenth-century Italian economist who

greater than product studied the distribution of income in Italy and

requirement) concluded that a very limited number of

people owned most of its wealth. The study

0 Randomize and stratify data produced the famous Pareto-Lorenz normal

collection (time, material, distribution law, which states that cause and

machine, operator, type and effect are not linearly related; that a few

location of defects) causes produce most of a given effect; and,

more specifically, that 20% or less of causes

0 Analyze data using several produce 80% or more of effects.

SPC, or Design of Experiments

(DOE) tools. Di. Joseph M. Juran, however, is

Sredited with converting Pareto's law into a

3. Graphs/Charts v 3rsatile, universal industrial tool applicable in

diverse areas, such as quality, manufacturing, The most common types of supplier materials, inventory control, cycle

graphs/charts are bar charts, line charts, and time, value engineering, sales and marketing.

pie charts. These are tools for the In fact, in any industrial situation, by

organization, summarization, and statistical separating the few important causes from the

display of data. Their main objective is to trivial many, work on the few causes can be

display trends, reduce data, or communicate prioritized. Figure 5-3 is a typical example of

and explain data. It is ,mportant that the a Pareto chart and its usefulness. Three

purpose of using graphs or charts be clearly items, which alone accounted for $2,800 per

established and the usefulness periodically month of loss (or over 80% of the total loss)

examined, as shown in (a), were prioritized and reduced

to $1,400 per month as shown in (b), before

the remaining problems were resolved.

5-7
6. Ishikawa Diagram 7. Control Charts

This technique was developed by Dr. In the minds of some quality

Kaoru Ishikawa, one of the foremost professionals and nonprofesslonals alike, the

authorities on quality control in Japan. The control chart is synonymous with SPC. In

Ishikawa Diagram is also known as reality however, control charts are simply a

cause-and-effect diagram or, by reason of its maintenance tool. Their main function is to

shape, a fishbone diagram. It is probably the

most widely used quality control toc; for

problem solving among blue-collar workers in

100

90

80 -- ----.---

(%) 100

S70 U 90

60 2 80 _-2

so 70

60

2 40 50

30 I140

30

20

20

10 10

0 - 0 .u 0 W" < co Q $

UU UU U CU U

(a) Before Improvement (b) After Improvement

Figure 5-3 Examples of Pareto Chart Before and After Improvement

Japan. While It is a relatively simple tool, its maintain a process under control, once ;ts

effectiveness is less than optimal. This is inherent variation has been established and

mainly because it allows only one cause to be minimized. The most common misuse of

varied at a time and thus, the interaction control charts is put them into effect in order

effects are missed, which in turn results in to solve problem. If there is a known

only partial solutions and, thus, less than problem, the application of control charts will

optimal Improvement in quality, not solve it. It will simply confirm that a

problem exists. Any improvement must come

Figure 5-4 is an example of a by reduction in the inherent variation in the

cause-and-effect diagram, listing all the process. This can be accomplished In a

possible causes that can produce solder limited fashion by simple tools such as

defects In a wave solder process. (For the brainstorming and cause and effect diagram;

sake of simplicity, only two major branches: or, more effectively through the use of

machine and machine materials are shown. sophisticated Design of Experiments.

Figure 5-4 is an excellent compilation of all

the variables that can cause a solder defect. Design of Experiments (DOE)

It also highlights with circles those variables The main objectives of Design of

judged to be important. Experiment (DOE) techniques are to:

5-8
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z y

0 ( 0

tI I

z U)

0 FL

0~ n

cwU

a- 0 0

CL E

ML W U

UJ <

m -9
o Identify the important variables' reduction are necessary for staying In

whether they be proouct or business.

process parameters, materials

or components from suppliers, 3. A continuous quality

environmental or measuring Improvement program Includes Incessant

equipment factors, reduction in the variation of product

performance characteristics about their target

o Separate these variables into values.

one to four important variable.

4. The user's loss due to a

o Reduce the variation on the product's performance variation Is often

important variables (Inclucuing approximately proportional to the square of the

the tight control of Interaction deviation of the performance characteristic

effect) through close from Its target value.

tolerancing, redesign, supplier

process improvements, etc. 5. The final quality and cost of a

o Open up tolerances on the manufactured product are determined to a

unimportant variables to large extent by the engineering designs of the

reduce cost substantially, product and its manufacturing process.

The classical approach for DOE was 6. A product's (or process's)

ploneered in the early 1920's by Dr. R. A. performance variation can be reduced by

Fisher, who devised techniques for running exploiting the nonlinear effecis of the product

agricultural experiments in the imperfectly (or process) parameters on the performance

controlled conditions of the outside world, ,-haractpristics.

rather than in a greenhouse. His methods

produced good results in medicine, education, 7. Statistically planned

and biology and were quickly adopted In thes'• experiments can be used to Identify the

discipiiner. In general, however, managers' settings of product (anC process) parameters

understanding and support of DOE in that redu( performance variation.

mainstream industry in U.S. and Europe has

been limited. These seven points do not cover all of

Taguchl'- ideas. Some of these points have

While the clascical DOE developed by also been made by ther quality experts.

Fishur was based upon a factorial design, the

Japanese t~ave been very successful in using Ve-iation Reduction

fractional factorial designs and other Perhaps the mc ;t Impottant distinction

o,"thognn&i arrays to improve products early in between the conven, anal and Taguchi's

the menufacturlng process. Dr. Genichi approach to dea' with- proc.,s o product

Taguch), Ih particular, has emphasized the variability i,1 the way the need for variation

Importance of DOE in minimizigi variations reduction is perceived. According to the

snc bringinq the mean on target, In making conv.)ntionol wisdom, no matter how narrowly

products resistait to variations In compon-,nts. a parameter ialls within specification limits, the

user ¶il be 100% satisfied; and no matter

TIalu~chi's Quali.Phlil how narrowly a parameter falls outside a

Before de,.i4ig with Taguchis DOE specification lmilt, the user will be 100%

techniques it Is important to undorstand the dissatisfied. Taguchi's approach, on the other

basic elements of Tagtichi 3 quýJity philosophy. hand, suimises that loss occurs not only when

The wollowing sev•i, points explair; these basic tne produw Is outside of specifications, but

elements: also when the product falls Within

specificetions. In addit;on, tie loss continually 1. An imortant dimension of the increases as the product dev'ates further from

quality of a manufactured prodict is the *tat the targ., value. While i loss !uncion ,may

loss generated by That product to society. take on many aifferent form3, Taguchi has

found that the simple quadr&tic lunction

2. In a -ompetitive economy, approximates the behavinr of 'ess iii maiy

continuous quality improvement and cost cases. When the quality characthdstif, of

5-10
interest is to be maximized (such as tensile parameter design-the step where they can

strength) or minimized (such as part reduce costs and Improve quality most

shrinkage) the loss function may become a efficiently.

half parabola. The loss function promotes

efforts to continually reduce the variation in a

product's functional characteristics. Taguchi's

method of quality eng7neering can be used to The strategy in Taguchi's experimental

attain such improv,.ments design is to recognize controllable factors and

noise factors and to treat them separately.

Controllable Factors Versus Noise Factors The search for interactions among controllable

To minimize loss the product must be factors is de-emphasized, although there are

produced at optimal levels and with minimal exceptions. The key to achieving robustness

variation in its functional characteristics. Two against noise is to discover the interactions

factors affect the product's functional between controllable factors and noise factors.

characteristics: controllable factors and noise Specific interactions between controllable

(or uncontrollab!e) factors. Controllable factors factors and noise factors need not even be

are factors thpt can easily be controlled, such identified. As long as the noise factors are

as choice of mater;a% cyc1s time, or mold changed in a balanced fashion during

temperature in an injection molding process. experimentation, preferred parameter values

Noise factors, on the other hand, are nuisance can be determined using an appropriate

variables -hat are Oilher difficult, imnossible, or signal-to-noise ratio.

expensive -to control.

Summary of the Taguchi Approach

There arr- tiree types of no',e factors: The Taguchi approach is displayed in

onter noise, znner noise, and betwoen product Figure 5-5. According to John Vergoz, vice

noise. F:," the inject'un molding process, the president of technology at the Budd Company

ambient temperature and humidity may be the in Troy, MI, "A definite benefit to the Taguchi

outer noise; the aging of th; machinery and methods is that design engineers and process

tole, ances on the process factors may be the engineers learn how to talk to each other in a

inner o.)ises; while manufacturing common language." The two groups can

imperfections are generally responsible for the quantify the relationships between the

between p.oduct noise. Noise factors, in manufacturing process and the design

ger:eral, vrýi responsit'e for causing a requirements.

product's ftrictional chaiacteristic to deviate

1r,•in its target value. 1 ne goal is not to Vergoz adds that design and process

identify the most "guilty" noise factors so that eoigineers can pinpoint which variables have

an attempt can be made to contrc. them. the strongest functional relationship to

Controlling noise factors is ery costly, iH not product's requirements. The Taguchi methods

impossible. Values -hould be selected for the isolate the effects on the product of adjusting

co|ttrollable factors to make the product or manufacturing variables that can be controlled.

process least sensitive to changes in the noise The methods isolate the effects on the product

factors; that is Instead of finding and of adjusting manufacturing variables that can

eliminating causes, as the causes are often be controlled. The methods also determine

noise fa(cors, the impact of the causes shculd what effect uncontrollable variation in the

6G removsd or reduced. manufacturing process has on quality.

Parsmeter Vergoz points out three strengths of

The tool used to achie s the using the system. First, the methods help

robustness against nc se factors and reduce determine the functional relationship between

cost i6 called parameter desigr. Parameter those things that can be controlled and the

design, Taguch' style, i-volves experimeptal outcome of the process. Second, the

design iechniques utilizing orthoional arrays methods can be used to move the mean of

and the signal-to.iioise railo. In the Unitcrd the process results to the desired position by

States, m'ist engineers are conditioned tC chr'ngi'rg controllable variables. Third, the

spend money to reach required product Taguch1 methods determine the relationship of

peiiczmance ievels. They jump from system noisa - data and variables the cannot be

design to ,)lerance dosign, often omitting controlled, including the stackup of normal

5-11
processing tolerances - to the variation in the

product as manufactured.

QUALITY OFF-LINE QUALITY OFF-LINE QUALITY

• LOSS OF QUALTY IS CONTROL IN PRODUCT CONTROL IN PRODUCTION

THE FINANCIAL LOSS DEVELOPMENT ENGINEERING

IMPARTED TO SOCIETY SYSTEM DESIGN SYSTEM DESIGN

AFTER IS SHIPPED A PRODUCT • PASYSTER PARAMETER DES1GN PARYSTER DESIGN DESIGN *1 PARAMETER DESIGN

IS SVICED CTOLERANCE DESIGN * TOLERANCE DESIGN - SERVICE COST________ __________

- CUSTOMER DISSATISFACTION DESWIINS THAT ARE PROCESSES THAT FEATURE D AND QUALITY ROBUST AGAINSTNOISES PRODUCE UNIFORM ARE DIFFERENT AND HAVE FINANCIALLY PROPUCTS

CHARACTERISTICS JUSTIFIED TOLERANCES ECONOMICALLY

STANDARD DEVIATIONS

PERFORMANCE TRANSFERRED QUALITY CONTROL

VARIATIONS DESIGN QUALITYCONTROL

VARIATIONS FROM ROBUSTNESS KEEP MEAN VALUES

DESIRED PERFORMANCE ON TARGET

VALUES CAUSE LOSS WMAINTAIN INHERENT

OF QUALITY / STANDARD DEVIATIONS

S/ L L

/ I

SERVICE SYSTEM NOISES

MAINTAINS ROBUSTNESS 1 DETERIORATIONS' - --

REPUTATION AGAINST NOISES MEANS AND

DESPITE MINIMIZES RESPONSE STANDARD

QUALITY LOSS (PERFORMANCE DEVIATIONS*

VARIATIONS) OUTER NOISES

TO NOISES MARKET (UNCONTROLLABLE)

INNER NOISES ILLUSTRATION COURTESY OF DR. DON CLAUSING,

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

Figure 5-5 Off-line and On-line Quality Control Via Taguchi

Quality Function Deployment (QFD)

Quality function deployment (QFD) is stage of product development and production

an overall concept that provides a means of (i.e., marketing strategies, planning, product translating user requirements into the design and engineering, prototype evaluation, appropriate technical requirements for each production process development, production

5-12
sales). This concept is further broken down responsibilities to specific departments. The

Into "product quality deployment" and term "quality function" does not refer to the

"deployment of the quality function" quality department, but rather to any activity needed to assure that quality is achieved, no

The basic idea of QFD originated in matter which department performs the activity.

Japan and was introduced to U.S. industry by Dr. D. Clausing. Ford Motor Co. and several 5. Quality Tables

supplier companies were pioneers in the These are a series of matrices used to

development of QFD as an operating translate the voice of the user Into final

mechanism to transformn customer expectations product control characteristics.

Into specific design and manufacturing

requirements. The first U.S. automotive To understand QFD, It must first be

vehicle to benefit from this formalized form of understood that the approach to quality Is

QFD was the 1988 Lincoln Continental. In a fundamentally different in U.S. and Japanese

recent speech, William E. Scotland, Ford's vice companies. In Japanese companies, the

president of manufacturing operations, user's voice drives all activities, while In many

characterized QFD simply as the means to U.S. companies, It Is the executive's voice or

"build cars for the taker--not the maker." the engineer's voice that prevails. Furthermore, as compared to many U.S.

In the past U.S. industry has companies, Japanese companies pay more

concentrated more on meeting company or attention to fixing what the user doesn't like.

technical requirements, and less on customer That Is, the Japanese put mnore effort Into

expectations. Now, the task is "How can we designing quality at the product design stage,

deploy customer expectations into technical while U.S. companies put a greater emphasis requirements with ali company functions on problem solving.

integrated through a common set of work load

determinants?" From a hardware standpoint, In QFD, all operations of the company

several U.S. companies (especially Ford) have are driven by the "voice of the user"; OFO

been very successful in the application of QFD therefore represents a change f rom

for product Improvement; many case studies manufacturing process -quality control to

now available Illustrate how matrix charts or product developme*nt quality control. Kobe

binary tables have helped integrate vadious Shipyard, Mitsubishi Heavy Industries, Ltd.,

diverse activities within a company or division, formalized QFD in 1972, marking the

beginning of this movement In Japan.

Key terms most frequently associated

with QFD are as follows: QFD brings several benefits to

companies willing to undertake the study and

1. The Voice of the User training required to put the system in place:

The user's requirements are expressed

in their own terms. o Product objectives based on

customer requirements are not misinterpreted

2. CounterpartCharacteristics at subsequent stages.

An expression of the user's

requirements in technical language that 0 Particular marketing strategies

specifies user-required quality; counterpart or "sales points" do not become lost or blurred

characteristics are critical final product control during the translation process from marketing

characteristics, through planning and on to execution.

3. Product Quality Deployment 0 Important production control

These are the activities needed to points are not overlooked -- everything

translate the voice of the user into counterpart necessary to achieve the desired outcome Is

characteristics, understood and in place.

4. Deployment of the Quality Function o Tremendous efficiency is

These are the activities needed to achieved because misinterpretation -- of

assure that. user required quality is achieved; program objectives, marketing strategy, and

the assignment of specific quality

5- 13
critical control points -- and need for change equipment but, instead, Is the result of

are minimized, focused effort and attention during program

planning, design and manufacture. To

The QFD system concept Is based on achieve quality objectives In deployed

four key documents as follows: systems, DOC' Directive 4155 1 charges the

program manager with fth responelblty for

1. Overall User Requirement Planning the development and execu~ion of a program

Ma~rlx to assure the .4ua~lty of systems being

Thik translates the voice it the user acquired lot' T'Se More specftc~y. the

into count*u-part control characteri' acs; that is, directive de'rws 4oki 0asurWOc aS a

it provides a way of turning general user planned mvid z.iP-aMk- Patter of all eWons

requirements--drawr Irom market evaluations 'ecessait to ý, - o on~oerKcs that atqu~ef

comparisons with crimpetltion. and marketing~ !ec-hrcal *wju~rorrPnts Iwo ealebilihed.

plans--into specified final product contro, : T~A fw !Zrm !'r o estUabbsed

characteristics -~ &-%d s c

2. Final, Prnoduct Characwristic _Pp!9yrrnt

Matrix ~~f'v~ G- Li .0th I"' 

This translates tthe output of ~- -2i 4tiame. -.5 4toasd or' Wvee

planning matrix- -that is. tte final p00ootx -* Skic-- .. qua of

control charact, tics--into criticai corrvcneu- 10SAV -30k- e.9nWor- W~d QUEY of

characteristics Thus, it moves one s tei ao'Wt0,Ytei rmect the

farther back in the design amo assomr' * _'reotf "- Syster or pfO(d.cl to

process "whet the :~eI:~ Vie iUsW )DON4C

ý'py*" * -". ~mWiA~aw " or

3. Process Plan and Quality Control Charts xjit cow-r-tŽ 9 4 'bq used Wo prevent

These charts Identify critical produo Jleects in mrnaxactLnmg or in equqxnrit to be

and process parameters, as well as control of L' 0Vided to DOD uXSer OudNy of

check points for each of those parameters conformance s thie measure of 11he exten to

*"cf' the -14,~a real systwrn conforms to

4. Operating instructions the design criteria and Mie needs of the user.

The operating instructions are based

on the critical product and process Qualiy of Desicgn

parameters; these Instructions identify The quality of a oarticullar design Is

operations to be performed by plant personnel the inherent capability of tte product resulting to assure that important parameters are from that design to meet u.3er's needs. The

achieved. objective of the DOD a..quisitlor process Is to

provide to the operational forces cost-effective

The overall QFD system based on products that are mission-capable upon receipt

these documents traces a continuous flow of and throughout their operational iffe. This

informnation from user requirements to plant requirement is Integral to the three basic

operating instructions; it thus provides what W. quality of design issues:

Edwards Deming calls *a clear operational definition" -- common purpose, priorities, and 0 Performance

focus of attention.

0 Reliability

PROGRAM MANAGEMENT REQUIREMENTS 0 Maintainability The DOD requires that the program

management office (PMO) develop and Measures of quality of design may be

manage quality programs to achieve the characterized In terms of the emphasis on

specific objectives shown In Figure 5-6. each of these isguen received during design of

the complete product -- Including design effort

Current DOD philosophy and to reduce exceptional manufacturing or support,

procedures recognize that quality Is not burdens.

something that naturally results from the

development or Improvement of systems and

5-14
Performance: What is the designed interacts with its use environment,

demonstrated level of military performance of the inherent reliability of the design is the

the end system? In this regard, we look to basis for prediction of the duration and

those characteristics that give the item military probability of failuire-free service -- assuming

utility -- such as payload, range, effective that the design has not been degraded by the

radiated power, thrust, probability of kill, manufacturing processes. In this sense, the

speed, or any of a vast array of quantitative quality of design can be viewed as a boundary

parameters. The quality of design is reflected because the system, as produced, cannot be

in the level of the performance characteristics better than the theoretical quantitative quality

that can regularly be obtained under field of design.

conditions without damage or excessive wear

and tear on the equipment. This perspective Maintainability: What is the likelihood

of the quality of design is intimately related to that the system can be retained in or returned

our military strategy regarding use of to its specified capability while in the use

"* ASSURE MISSION AND OPERATIONAL EFFECTIVENESS AND USER

SATISFACTION WITH DOD PRODUCTS

"* ASSURE THAT ALL SERVICES AND PRODUCTS IN WHICH THE DOD HAS

AN IIN rEREST CONFORM TO SPECIFIED REQUIREMENTS

"* ASSURE THAT ESSENTIAL QUALITY AND RELATED TECHNICAL

REQUIREMENTS ARE CONSISTENT WITH CUSTOMER NEEDS

"* TAILOR CONTRACTUAL QUALITY REQUIREMENTS FOR EACH ACQUISITION

IN COMPLIANCE WITH DOD DIRECTION FOR SPECIFICATIONS AND

STANDARDS APPLICATION

"* ASSURE THAT ALL THE ABOVE ARE COST EFFECTIVE

Figure 5-6 Objectives of DOD Quality Programs

technology as a force multiplier and, thus, it is environment? The maintainability of a system

a significant element in successful design is a measure of the level of difficulty involved

evolution, in retaining, through preventive maintenance,

or restoring, through repair or raplacement,

Reliability: How long can the user function to the system when maintenance is

count on the system to provide utility? performed by personnel having prescribed skill

Quantitative reliability engineering, as an levels, and using defined procedures and

aspect of quality of design, deals with the resources. Maintainability of the design

duration and probability of failure-free measures such quality of design choices as

performance under statrjd conditions. complexity, access~lbility, and testability in the

Reliability is a function of the design installed condition. The measures provide a

complexity and the Inherent ability of the parts quantitative relationship among quality of

of the system to continue functioning properly design decisions and the resulting skill level

under operational conditlans. It is influenced requirements, special equipment requirements,

by design decisionhs on quantitative issues and related resource requirements for

such as stress levelf, design margins, part resolving test, repair and other similar issues.

selection, part simplicity, redundancy, and

operating temperat'~res. When the system as

5-i15
The combined effect of the inherent DOD materiel. The Issue of product quality

reliability and maintainability quantifies the must be a central Issue from the program

operational availability of the system. By initiation through the production and

".availability" we refer to the proportion of time deployment phase of the life cycle. Within

in which the system is capable of performing DOD, the "Quality Concept" illustrated In

its defined mission. Where the availability Figure 5-7, consists of quality of design,

inherent in the design is low, it can be prevention of defects, and workmanship. The

Improved by special support and maintenance interrelationship of each Is suggested by the

action or by restriction on system use, but size of each cell and its border relationship to

these actions incur penalties in cost to support the adjacent cell.

the system. Reliability and maintainability

emphasis in design means that an operational The quality of design effort begins with

availability approach to quantifying system the Concept Exploration/Definition phase of the

parameters can result in higher quality of program life cycle, continues through

design than a fragmentary suboptimized Full-Scale Development, and many times

approach would produce. continues into production and even redesign

after deployment. Often mistakes In design In developing designs that will exhibit are revealed due to production problems

the requisite quality, the PM office must encountered when production is attempted or

continually evaluate the design as it evolves to when customer complaints report problems

determine the adequacy of contractor attention relating to qual-,ty of design.

to quality issues and to determine the

expected level of the resulting quality of the Defect prevention starts with the first

design. In their participation in the design development- prod ucti on planning, and

process, the PM office should focus on the continues through the operation and

quality characteristics of the design. A quality deployment phase of the life cycle. Figure 5-8

characteristic can be defined as a basic shows the relative savings attainable by early

element that is determined to be one of the focus on product quality. Workmanship is

requirements for arriving at a configuration or normally associated with the initial production

design that wilt satisfy the user need or efforts and continues throughout the

mission involved. In one sense, all of the production phase. Any time a problem in

descriptors and characteristics of the design quality becomes evident, the required

could be defined as quality characteristics, corrective action must be taken to correct or

since the eventual performance is a composite fix the problem and its causes.

of all the design details. This definition is too

cumbersome to be of value in prescribing DOD Directive 4155.1, Quality

design review activity. The PMO should limit Program, provides broad and general policy

the field of definition to only that set of design for the implementation of quality programs

elements or featuros that have quantitative throughout DOD.

and theoretically auditable impact on the

system's performance and availability. This Quality of Conformance

set could include issues such as parts' relative The production phase of the

stress levels, materials, test parameters, acquiz-ition process has a major impact relative

dimensions and tolerances, grade of parts to quality characteristics. Quality of

used, system and subsystem complexity, conformance becomes a reality or a failure as

controlled manufacturing processes, systemn the result of production efforts. The

producibility, and ins pectability. These manufacture, processing, assembling, finishing,

elements represent characteristics that must and review of the first article and first

be controlled during the production of the production units, is where failure or success In

system to ensure Zhat the quality of the area of quality of conformance Is first

conformance is not degraded. measured. The original design quality

characteristics can be easily altered In

production. Any operation which causes the

QUALITY ASSURANCE characteristic to be outside of the specified

The quality of DOD materials and limits will render the configuration of the

equipment is the responsibility of every person product different from that which was originally Involved in the acquisition and management of intended. This sometimes results in the

5-16
granting of waivers, deviations, or changes are at source, the Contract Administration

which may alter the fitness for use. Services (CAS) element has the responsibility

for assuring ,'ntractor compliance with all of

A quality program requirement in the contract provisions including the contract

accordance wi'h MIL-Q-9858A is used on quality requirements. Normally, the Defense

major system acquisitions, in addition to a Logistics Agency (DLA) Is the CAS element

standard inspection requirement. responsible for contract administration, an'

MIL-Q-9858A requires the contractor to DOD Directive 4105.59 provides a list of

establish and maintain •- quality program assignments. Plant cognizance may be

acceptable to the government in accordance assigned to the Army, Navy, or Air Force If

with the military specification. This they have predominant Interest at a

requirement is established when the technicai contractor's plant. The CAS component

require control of work operations, in-process Quality Assurance Representative (OAR), who

DESIGN WORKMANSHIP

DEFECT PREVENTION

Figure 5-7 DOD Quality Corncept

requirements to the contract are such as to is assigned the responsibility for the contractor

controls and inspection, as well as attention to facility, is the individual charged with

other factors (e.g., organization, planning, work responsibility for assuring that the contractor

Intructlons, documentation control, advanced complies with all contract quality requirements,

metrology). including evaluating and determining the

acceptability of contractors inspection system MIL-Q-9858A requires the contractor to or quality program, and for perform!hg product

develop written procedures and make them inspection to assure quality of conformance.

available procedures before beginning

production under the contract. Quality Feedback

The last elemen, which affects the

Contract Administration Office Role product quality Is the feedback after the item

In addition to specifying the proper is in use. The results n! the design and

contract quality requirement, the contract must manufacturing efforts receive their real test

also stipulate the place of performance of when the Item or system is actually placed in

government acquisition quality assurance use. If all of the prior efforts have not been

(Government source inspection) and the place adequately perfoi-ned, the resulting product

of acceptance of the supplies or services. may fail ",o meet the user's needs. The goal

When government quality assurance actions is to strive for no failures and full user

6-17

• I m m I • I IMM I I
satisfaction. If this is not achieved, there is weapons system's effectiveness to one of

still the potential for correction to remove the performance set against a backdrop of the

cause of failure and of !he user discontent. total life cycle cost of ownership has been an

Of course, this Is most difficult at this late evolutionary process. The DOD Directive Is

stage of the acquisition cycle. Engineering an internal document that establishes the

changes after this point cost more to Defense Department's policy on reliability anid

Implement than those discovered during initial maintainability, and will be used to convey that

design; therefore, it Is important that all quality policy down to the level of systems program

actions take place during design, development, managers In the Individual services.

and manufacture of the product.

CORRETIONTAGUCHI TAGUCHI

TECHNIQUE QFD DESIGN PROCESS SPC INSPECTION WARRANi V

With TOM, design and

process are optimized early

In the product cycle saving

up to 50% In product cost.

COMPANY

WIDE

COST

TO

CORRECT

ERRORI

PRODUCT PLNIGPRODUCT PROCESS

STAGE PLNIG DESIGN DESIGN IPRODUCTION ITEST DELIVERY

P4*ASE IN WHICH ERROR IS DISCOVERED

Figure 5-8 Potential Savings

RELIABILITY AND MAINTAINABILITY

DOD's policy on weapons system The DOD reliability and maintainability reliability and maintainability, as outlined in policy has five major objectives as shown In

Directive 5000.40, July 1980, rates operational Figure 5-9.

availability as equally Important as operational performance. and requires managers of The Intent of Directive 5000.40 Is not

military devý.,pment programs to ensure that only to inject reliability and maintainability Into

reliability factors are engineered into their the early engineering phase but to document

systems from the earliest design phase. the achievement of required standards by establishing a series of reliability goals and

The shift In DOD emphasis from thresholds for the program managers to meet

performance as the single measure of a

5-18
from the start of the engineering and 0 Apportionment of Reliability

development pi ,vess, Requirements: establishing the necessary

subsystem, equipment and part rellabilIt1

Reliability of Design required to meet system requirement.

Reliability focuses on the issue of the 0 Parts Derating: the use of

duration or probability of failure-freE- parts with specified performance characteristics

performance under stated conditions. It is much greater than the performance limits by

generally recognized that system reliability is a the design.

direct function of the system design and that

success in achieving reliability in fielded 0 P a r t s C o n t r o I a n d

systems is a result of two factors: attention to Standardization: minimizing the number of

reliability during the design phase and testing different part configurations and using parts

to measure attained reliability as part of a with known performance.

planned reliability growth program.

"* INCREASE WEAPONS SYSTEM READINESS AND MISSION

SUCCESS RATIOS

"* REDUCE THE MILITARY SERVICES' MAINTENANCE AND LOGISTICS

SUPPORT COST

"• LIMIT THE MANPOWER NEEDED FOR MAINTENANCE AND SUPPORT

OF ADVANCED WEAPONS SYSTEMS

"* PROVIDE DOD MANAGERS WITH FEEDBACK INFORMATION ON THE

PERFORMANCE OF WEAPONS SYSTEMS

UNDER OPERATIONAL CONDITIONS

"* ENSURE THE BEST RETURN ON INVESTMENT IN TERMS OF

OPERATIONAL CONDITIONS

Figure 5-9 Major Objectives of DOD Raliability & Maintainability Policy

There is a growing emphasis on the 0 Design Simplicity: using the

need to make reliability issues a more visible minimum number of parts, thus reducing

part of the design process. This emphasis complexity.

reflects a recognition that reliability of the

system is a basic function of the specific 0 Minimized Terminal and

elements of the design, and that post-design Component Temperature: reducing thermal

fixes are an inefficient mechanism for stresses.

achieving reliability targets. Some of the

specific reliability activities which should be 0 Redundancy: assuring mission

considered during design phase include: success in the event of single system failure.

0 Failure Mode Effects Analysis: 0 Increased Safety Margins:

providing an evaluation of each potential mode allowing for continued performance in

and mechanism of failure, probability of over-stress situations.

occurrence and probable effect on

performance. These activities may lead to design

solutions which invoke penalties within other

design measures such as cost, weight or

5-19
performance. The ultimate objective of the evaluation based on various data developed

design process is to achieve, through either through design analysis or through test.

appropriate trade-off, a balance between A considerable amount of test data, which Is

operational effectiveness and ownership cost. particularly useful as a means of evaluating

reliability and maintainability, can often be

Reliability Testing made available in early stages of a program An additional area of importance to the through proper planning and utilization.

PMVO Is the requirement that programs include

provisions for demonstration and test to show Reliability Growth

that the quantitative requirements have been Reliability growth is a function of the

achieved, maturity of leL-.gn and the application of

engineering and test resources. It provides

Reliability testing and the evaluation of visibility to the decision-makers of how

test data provide tangible results concerning reliability Is improving throughout the program. the reliability of design. The results of In general, reliability growth Is the result of an

conducting the analyses based on test data interactive design process. As the design of

are thus very critical since they serve as the various items/systems matures, the designer

cornerstone for many decisions such as identifies actual or potential sources of failures

design adequacy, assurance that reliability an d proposes product redesign o r

under field conditions will be adequate, and manufacturing process improvements to

the need for design changes. The utilization resolve problems.

of test data for reliability analyses must be

very carefully planned and evaluated. Reliability growth assessments (Figure 5-1 1) are used in controlling the growth

In general there are two categories of process through examination of reliability

tests which can be used to provide information growth curves which are generated and

for supporting evaluations. These are the maintained for the items under consideration.

measurement tests (i.e., tests designed to Reliability growth curves (Figure 5-12) show

measure reliability), and evaluation tests (i.e., both the planned and assessed growth, and a

tests which generally result in a regression comparison of these values will Indicate

analysis designed to evaluate relationships program progress. On the basis of these

between environments or stresses and comparisons, the contractor or PMVO can

parameters which influence the reliability of an develop appropriate strategies Involving Item). Properly used, both categories of tests reassignment of resources or adjustment of

can be used to provide information for time frame. The monitoring of reliability

monitoring reliability progress or for Identifying growth involves comparisons of the on going the potential areas where greater activities against the applicable reliability

concentration is required to achieve objectives, program plans. The activities are monitored to

However, it should be pointed out that the establish whether performance conforms to the

approach to planning, analysis, and use of management plan. An additional area of

results depends, in a large measure, on the importance of reliability monitoring Is the

category of test being conducted. design review at various stages of the

development effort to determine whether the

Since test data can be extremely product design adheres to the expressed and

valuable in monitoring, It is important to be implied performance requirements.

able to Identify the 'types of tests that are

often applied. These tests, shown in Figure 5- Reliability in Manufacturing

10, can frequently be used as sources of The reliability of the as-built product is

reliability oriented information, provided of bounded by the inherent reliability of the

course that planning has been such that the design. In achieving design reliability in the

appropriate reliability data will be recorded manufactured product, it Is critical for the

along with Information normally obtained from design team to specify the physical and

these tests: functional requirements which must be

achieved in the parts and components.

It should be pointed out that the Whenever possible these requirements should

assurance of reliability program effectiveness be described in a manner that will allow

requiros a continuous monitoring and

5-20
- QUALIFICATION TEST

• PREPRODUCTION TEST

- LOT ACCEPTANCE TEST

. INDIVIDUAL ACCEPTANCE TEST

- CRICAL WEAKNESS RELIABILITY TEST

• TEST TO FAILURE

Figure 5-10 Typical Tests Yielding Reliability !nformation

Z

DETECTION OF DESIGN FAILURE

SOURCES

DETECTION OF DETECTION OF

FAILURE FAILURE I

SOURCES SOURCES

DETECTION OF

FAILURE

SOURCES

Figure 5-11 Assessment of Reliability Growth

5-21
in-process control during manufacture. These significant Improvements In achieved reliability requirements should be Included In the and quality. company's quality planning for both In-house

and subcontractor manufacturing.

PLANNED GROWTH.

MTBF

TEST HOURS (CUMULATIVE)

Figure 5-12 Reliability Growth Curve

~Even where the controls above are Reliability and Maintainability Quality Team

specified, there is some risk that reliability of Concept

the hardware may be degraded by changes In Because of its potential value, It is

tooling, proces,3es and wr*4 flow. These Important to briefly describe the Reliability and

types of changes are a normal part of most Maintainability (R&M) quality team concept manufacturing programs. To assure that these which has been used successfully. The new

chianges do not have a negative Impact on concept Is the Idea of Major James F. Guzzi,

hardware reliability, Production Reliability when he was serving as R&M Manager for the

Acceptance Testing (PRAT) can be required 0-17 Aircraft being developed by Douglas by the PMO. These tests are accomplished Aircraft Company as the alilifter of the future.

on delivered or deliverable production items The concept uses R&M Quality Teams and a

under specified conditions, to assure that the Review Council.

manufacturer has complied with the specified reliability requirements. The PMO must lndustrys, approach to building a

specify the particular items to be tested, the weapon system -- a complex engineering and

test duration, frequency and test plan and manufacturing task -- emphasizes the need to

environment. In addition, focused emphasis recognize and understand the dynamic

on continuous process improvement can yield process that defines total system R&M. Any

program organization must be Innovative In its

5-22
approach to achieve the desired understanding organization to "manage" the

of this process. R&M are always addressed; system approach to R&M

however, today the need to achieve better through the integration of all

R&M can be enhanced by a new integrated functions.

approach. The technology and management system are equal partners In this effort. - Management commitment

drives the program, provides The R&M Quality Team concept guidance and control, and

provides an enhancement of the R&M ensures I&M requirements are

management approach during the Full Scale met.

Engineering Development phase of a weapon

system program and does not disturb the A system level management approach Integrity of the organization. During this is used to achieve the R&M design goals phase, the design requirements of the weapon through the leadership of Its mem.bers. The

system are engineered "in" and the resultant effective manager understands the dynamics Inherent R&M characteristics and the related of team communication and effectively carries

combat capability are "locked in". out these tasks. In addition to team

management, information dissemination Is a

With the focus being placed on the critical factor and must also be clearly carried

importance of R&M, the opportunity to do It out. Once established, communication and

right the first time becomes the challenge for Information Influence changes and allow

both Industry and the government who work enthusiastic workers to establish and reach

as a t( am to meet the goal. Trhe team Individual, team, and organizational goals. A

approach provides an atmosphere of total system level process allows feedback and

understanding for a win-win solution, insures a team solution will be successful.

The method of team solution can be defined

In multi-functional organizations, the as parlicipative or power-sharing concept, the

objective to achieve system R&M requirements R&M Quality Team concept achieves equality requires that the organization use a system with the other factors in the solution.

engineering approach that has a focus on

system level R&M design requirements Participative decision making (PDM) Is

throughout the total development process. straight forward -- a mode of joint The system R&M concept allows an decislon-making In a participative, focused

organization to successfully manage the R&M climate. Decisions are made by a group of

efforts across the total design organization, people with each member of the group making

an input to the final decision. It Is truly a

The basic premise of the R&M Quality system engineering approach. PDM Is also

Team concept supports the R&M design consiidered as a continuum with managers

process and the need to provide an Innovative varying the level of team and Individual

approach to enhance the management of participation according to immediate task

systemn R&M during the design process. The requirements, participation characteristics, following basic assumptions provide a situational conditions, and likely task outcome.

foundation for an understanding of the R&M Review Councils and Quality Teams are

development of the concept. designed to use PDM to achieve integrated solutions. -R&M is co-equal in importance to cost, schedule and other An R&M Quality Team concept has

performance factors. been conceptualized and developed to focus

management attention on the system level - R&M is a total system design R&M process during Full Scale Engineering

process that affects the whole Development. The concept Is simple, but well

organization. founded, and It provides a powerful means to

streamline and enhance the communications - The management of R&M is and system engineering process in a total

not the responsibility of a organization. This concept has provided the

single function. It Is the capability for a directed response to system responsibility of t he R&M problems while creating an atmosphere

5-23
for system change. The approach facilitates most R&M for the process is assured. The

R&M engineers and systems designers to results to date using this concept have been

work as a chartered team under the guidance very Impressive and have demonstrated a

and direction of an R&M Review Council. potential for enhancing the acquisition process for a weapon system. The concept provides

The R&M Quality Team concept, which the invaluable ability to effectively manage

Is defined in Figure 5-13, establishes and transition of a program from development to

Integrates the lines of communication among production. For example, the concept links

the functions of the Review Council shown in design to manufacturing through the Review

the vertical direction in the figure and in the Council and the team Interactions. Further, it

horizontal direction by the Quality Teams. provides an R&M focus throughout the

This process creetes a R&M management production process and this translates to

network within an existing organization, production quality.

Activity is managed by the Review Council to

Insure that the "focus" is not dihi'ted in the

functional activities and Insures that R&M is TOTAL QUALITY MANAGEMENT

part of the design effort. In essence, the INTEGRATION

concept creatos a system engineering There are a number of relatel efforts

approach that drives the R&M goals to meet which can make major co )tributions to

the total system level requirements. achieving TOM objectives. As h prig:,-m

MANAGEMENT CHARTER

R&M REVIEW TASKING

COUNCIL PRIORITY

P~ROBLEM

IDENTIFIC;ATION R&M

PRIORITIZATION FOCUS

PROCESS

R&M QUALITY FACT FINDING

TEAMS PROVLEM SOLVING

STATUS REPORTING

ASSIGNED AS REQUIRED

IDESIGNER SYTM SYSTEM 

ENGINEER 

RELIABILITY SYSTEM OTHERS AS MAINTAINABILITY REQUIRED

ENGINEER

Figure 5-13 Reliability and Maintainability Quality Team Model

Through enactment of an R&M Quality plans In these areas are developed, attention

Team concept, management commitment is to the TOM principles and objectives is

built-in and the necessary focus to provide the

5-24
necessary to maximize the impact of TOM on Recent changes to the Federal

the acquisition process. Acquisition Regulations make quality a factor

in the source selection process. The Intent Is

Concurrent En.ainerlng not to exclude any potential bidder, but to

Concurrent engineering is a systematic raise the quality consciousness of those

approach to product design that considers all companles/suppliers who plan to bid on a

of the elements of the product life cycle. newcontract, and to give due consideration to

Concurrent engineering defines the product, its those companies/suppliers with a good record

manufacturing process and other required and vvth products and services that reflect the

life-cycle processes such as maintenance, application of continuous quality Improvement

techn'ques. Through this approach, the

The advantage of concurrent acquisition cost Is placed In the proper

engineering is illustrated In Figure 5-14. See perspective as related to the total cost of

Chapter 11 for an additional discussion about product ownership.

Concurrent Engineering.

TYPICAL

CONCURRENT / - N

DESIGN ENGINEERING /

CHANGES -'

PRODUCTION

TIME

Figure 5-14 Concurrent Engineering Approach vs. Typical Approach

Quality in the Source Selection Process Industrial Modernization Incentive Proaram

The procedures used to award The Department of Defense IMIP Is a

contracts have traditionally focused on the joint venture between government and Industry

lowest bid. While this approach enhances to accelerate the Implementation of modem

competition; quality is not always given equipment and management techniquos In the

adequate consideration. To further compound industrial base. An IMIP is considered when

the problem, past history of performance does competitive market forces are insufficient to

not always play a role in determining eligibility motivate Independent contractor modernization.

for contract award. In other words, An IMIP can also be Implemented when

contractors with poor performance history may significant benefits such as cost reduction,

continue to compete on an equal basis with elimination of production bottlenecks, Improved

contractors who are more capable of quality, reliability, maintainability arid improved

producing quality products and who have a surge capability will result.

good reputation in dealing with the

government. The short term IMIP objectives are to

reduce defense costs and lead times end

Increase the quality of manufacturing through

5-25
productlivity gains. The long term objective is that only the necessary requirements are

a strong responsive Industrial base capable of imposed during each acquisition phase

meeting current needs as well as surge ind through tailoring of military standards. This

mobilization requirements. approach gives program managers greater

latitude to defer imposition of military

Benefits of IMIP can be ,measured in specifications and other detailed "how to"

terms ot stimulating capital investments, contract requirements until industry has had

Increasing manufacturing flexibility and the opportunity to recommend ;he most

production capacity to respond to defense technically appropriate and cost effective

requirements, and realizing savings throughout approaches.

the life of a more reliable weapon system that

is produced In modern facilities. IMIP offers Efforts are underway to enhance

contractors the opportunity to pursue streamlining policies to encourage early

something that under "business as usual" analysis and tradecffs to weapon system cost

conditions, would be unacceptable financially, and performance, In order to achieve the best

or too risky technically. The program is value for the DOD. The military departments

expanding and in the future it will take on a and industry are working together to Identify

broader focus in the DOD support outdated and unnecessary military

Infrastructure. speclficatlins and standards, and come up

with better procurement documents that are

Warranties compatible with new technology. A recent

Much has been said about warranties survey Indicated that streamlining IF; resulting

In the context of providing assurance of in significant reductions in lead time and cost

quality. Warranties are used successfully In of weapon system acquisition, as well as

the commercial world, and they do present a enhanced quality due to better understand!ng

good too: in our quest for quality. As and ilmely Imposition of requirements

contrasted with the commercial market,

however, the majority of DOD purchases are Value Engineering

for unique equipments and systems produced Value er';, ineeii.g Is a systematic

in small quantities. Moreover, these effort directed at analyzing the function of

equipments are handled and serviced by systams, equipmet, facilities, services, and

government personnel and, considering the supplies, to achieve es ential functions at the

number of people Involved, the complexity of lowest life-cycle cost without compromising tne

the supply system, anc' the various required performance, reliability, quality, and

performance requirements tMat cannot be safety. Value enginee.Tng iF" also used to

readily tested, it becomes very difficult to improve quality and reliability, thereby

effectively administer warranties. achlevi•,g additional long termn benefits.

The primary intent for using warranties The DOD Value Enginee'ing Program

should be to motivate contractors to improve has two elements: one Is the in-house a&ivity

the quality of their products, so that they performed by DOD personnel; the other Is the

would reap financial benefits by avoiding the DOD contractor pogram. Both elements have

warranty cost of repairs and replacements. provided financial rewards. During the 1986

Warranties are no substitute for quality, and fiscal year, the In-house program );elded

should not be used as a crutch. Simply put, approximately one billion dollars in ssvings,

when a sysiem fails to accomplish the mission while contractor proposals amourted to an

for which it was intended, the warranty can additional savings of $450 million.

never compensate for potentially devastating

results.

Acquisition Streamlninig

Acquisition streamlining Is a major

initiative directed at the development of

realistic and cost effective contract

requirements. The program objectives are to

reduce the time and cost of weapon system

acquisition, and to improve quality. It ensures

5-26
CHAPTER SIX

MANUFACTURING PLANNING AND SCHEDULING

CONTENTS

C3JECTIVE 6-1

INTRODUCTION 6-1

FEASIBILITY AND CAPABILITY ANALYSIS 6-1

MANUFACTURING RESOURCE ANALYSIS 6-2

DEMAND CAPACITY ANALYSIS 6-3

MANUFACTURING RISK ASSESSMENT 6-3

Assessing Risk 6-4

RisK Identification 6-4

DEVELOPING THE MANUFACTURING PLAN 6-4

Scheduling 6-6

Master Phasing Schedules 6-7

First.-Unit Flow Chart 6-7

Master Schedules 6-7

Scheduling And Factory Loading 6-11

Inventory Control 6-14

Just-In-Time 6-14

Lead Time Evaluation 6-15

Determinants of Lead Time 6-15

L.ead Time Analysis 6-18

Personnel Planning 6-19

Facility Planning 6-19

MANUFACTURING PLAN PREPARED BY THE CONTRACTOR 6-20

Purpose 6-20

Manufacturing Organization 6-20

Make Or Buy 6-20

Resources And Manufacturing Capability 6-20

Manufacturing Planning Data 6-21

Value Of The Manufacturing Plan 6-21

Planning For Spares 6-21

ECONOMICAL PRODUCTION RATES 6-22

MANUFACTURING PLANNING AND CONTROL SYSTEMS 6-22

Material Requirements Planning 6-23

Manufacturing Resources Planning 6-23

MRP-MRP II Problems From The DOD And DCAA Perspective 6-26

An Approach To MRP-MRP II System Assessment 6-26
MANUFACTURING PLANNING AND SCHEDULING

OBJECTIVE

In achieving the objectives of a define the specific elements of the prime

production program, a substantial body of cont actor organizaticn that will be Involved In

resources must be effectively applied to the the program and the numbers and types of

defined task. The purpose of manufacturing subcontractors required. The decision

planning and scheduling is the identification of regarding subcontractors should be made fromn

these resources and their integration into a the standpoint of contractor capability as well

structure that provides the capability to as capacity. Within the context of the defined

achieve production objectives. The material in business structure, there should be an

this chapter identifies the actions which should Identification ol the specific resources required. be taken by the program manager and the Personnel should be identified In terms of both

system contractor(s) to develop that structure. quantity and specific skill types required, timeThe issue of manufacturing risk assessment phased over the planning horizon.

and Its application to the planning Drocess is Manufacturing facilities and. equipment which

described. Risk assessment, one of the will be required at the prime and subcontractor

program manager's significant manufacturing locations should also be Identified. In DOD

tasks during development -- is an element programs, consideration should be given to

which is required to be addressed in the the use of government furnished facilities and

milestone review process. The primary equipment. Under Federal Acquisition manufacturing planning and scheduling Regulation (FAR 45.302-1), providing challenge to the program manager Involves government facilities Is discouraged. measuring the qualitative and quantitative manufacturing resources required for While the system cost Is not normally production. an element of the manufacturing plan, the cost

of manufacturing a product can be significantly

After reviewing this chapter, the Program impacted by the spercif ic methods selected !o

Manager should: accomplish the manufacturing tasks. Key

guitielilies are:

-Have a good understanding of the, elements Involved In manufacturing planning 1. Assure that development contracts

and scheduling. Include requirements for contractc-r

planning and scheduling for - Be able to assess the qluality, depth production. and type of analysis performed by a contractor

In developing the manufacturing plan and 2. Challenge assumptions concerning the

schedule. -viailabili~y of manufacturing resources.

- Understand the need for and value of '3. Explicitly consider the risks inherent in

the contract manufacturing plan and schedule. the proposed approach and Initiate

actions to reduce the risk or provide - Understand the imp~ortance of schedule fall-back positions. integration based upon a valid master phasing

schedule. 4. Require contractor preparation of a

manufacturing plan to assure that - Have a basic understanding of some proper conaideration has been given to

of the types of manufacturing planning arid the resource needs for production.

control systems used by contractors today, and what they are designed to accomplish. 5. Evaluate the plan.

INTRODUCTION FEASIBILITY AND CAPABILITY' ANALYSIS

Based upon the product manufacturing The Issues oi manufacturing feasibility demands, a business structure for the program and capability are addressed in the initial

can be developed. This structure should phases of the product development process.

6-1
The evaluation of manufacturing feasibility and evalua~i n to quantify tie statement of

capability are directed toward analysis of the marnufactuJring feasibilty. What is the risk

compatibility of the demands of the level? Normally, risk Is expressed in torm!3 of

manufacturing task and the manufacturing high, medium aid low. A major result of the

facility and equipment required to accomplish feasibility evaluation is the Identification of

It. The capability of a contractor manufacturing technology needs. The purpose

(manufacturing source) to successfully execute of this Identification Is to determine which

the manufacturing effort depends upon that planned or on going manufacturing technology

contractor having: programs are required to achieve production phase objectives. Pririt~y can then be given

0 An understanding of the manufacturing to these programs to ensuro that necessary

task, capabilities can be put on line In the factory prior to the production phase.

0 Adequate qualitative production skills, The feasibility analysis also provides a

0 Sufficient personnel (on hand or basis for manufacturing planning because Its

available), accomplishment Involves the evaluiation of:

0 Sufficient facility floor space, 1. Producibility,

0 Equipment in satisfactory condition, 2. Critical manufacturing processes and

special tooling developments,

0 Adequate, operable test equipment, 3. Test and demonstration requirements

0 Assured, capable suppliers, for new materials and processes,

o Management capability, and 4. Alternate design approaches,

0 A plan to coordinate all resources. 5. Anticipated manufacturing risks and

potential cost and schedu!e Impacts.

In the initial phases of product

development, the Program Manager should

ensure that a manufacturing feasibility MANUFACTURING RESOURCE ANALYSIS

assessment Is accomplished. The feasibility Manufacturing management, as

estimate determines the likelihood that a defined In DOD Directive 5000.34, Is "The

system design concept can be produced using effective use of resources to produce on

existing manufacturing technology while achedule the required number of end Items

simultaneously meeting quality, production rate that meet specified quality, performance and

and cost requirements. cost." A few comments can be made about

this definition to serve as a basis for

Feasibility is a bounded issue. It is consideration of manufacturing planning. The

bounded by existing manufacturing technology, first significant word Is "effective." The

There Is a presumption that the state of question is: "When measured against what

current manufacturing technology relative to baseline?" How does something that has to

the system concept can be defined. There Is be defined on a specific program In terms of

also a presumption that the system concept relative or absolute cost compare to programs

will have sufficiont definition to determine the within similar resource constraints?

technology demands embedded in it. Having

determined the state of technology and the The classic manufacturing resources

system demands, questions such as those required are illustrated In Figure 6-1.

which follow should be raised. What is the

likelihood that the manufacturing task can be 1. Capital. Capital represents the

accomplished given your knowledge of the monetary assets which are available to

design and given your knowledge of the the contractor. Capital can be used to

production environment In existence today? finance on going work, for Investment

Based upon the feasibility assessment, the to improve capacity or capability, to

PMO should develop a manufacturing risk broaden the market base, or for any of

6-2
PEOPLE

FAW MATERIALS I TIME

MANUFACTURING TECHNOLOGY

CAPITAL I FACILITIES

Figure 6-1 Manufacturing Resources

the number of competing uses within DEMAND CAPACITY ANALYSIS

the contractor's organization. In developing a manufacturing plan, expected demands have to be analyzed In

2. Facilities. Facilities are the real terms of equivalent resource requirements, property In the factory - the Demand capacity analyses Involve "exploding" environment In which the products are units of output into equivalent units of Input built. The term Includes the Industrial and processing capability required to produce equipment, machine tools, and shop these outputs. The purpose Is to define the

aids to manufacturing. amounts and types of materials, equipment,

and personnel skills that will be required to

3. Manufacturing Technology, meet the contract requirements. Manufacturing technology is that set of

efforts undertaken to Improve the Some resources remain relatively manufacturing processes, techniques fixed, whereas others are variable. Machines,

or equipment required to support floor space, tools, and equipment -- fixed

current and projected requirements. capital assets -- remain relatively constant

This area Involves advancements In from one planning period to the next; but

the way things are done in the factory, personnel staffing may vary. incuding the processes that are

available to take raw material, enter It The development of an effective

Into a productive process, and manufacturing plan Is dependent upon the

transform it Into something useful that ability of the contractors involved to

meets DOD needs. accomplish a rather detailed translation of the

product's physical and functional

4. Raw Materials. Raw materials are the characteristics Into a set of manufacturing basic materials used In the manufac- processes. The program office should

turing process. The focus of the evaluate the contractor's performance in

government and contract effort should accomplishing the detailed definition of

be on the most efficient utilization of process demand to ensure (a) that a complete the required raw materials. definition Is available, Including process precision requirements, and (b) the Information

5. lime. Time Is a resource available to Is provided to the personnel responsible for

all contractors. it provides a constraint Identifying and providing the manufacturing

on the contractor since performance resources.

and delivery commitments are related

to specific dates.

MANUFACTURING RISK ASSESSMENT

6. Peoole. People Include those Manufacturing risk assessment Is a

managing the program, design supporting tool for the contractor and program engineers, manufacturing engineers, office decision-making process. It seeks to

and (probably the most Important) estimate the probabilities of success or failure

factory operations -- the direct and associated with the manufacturing alternatives

Indirect labor personnel. available. These risk assessments may reflect

6-3
alternative manufacturing approaches to a 1. Establish a plan to prove out the

given design or may be part of the evaluation material or process prior to Iintiation of

of design alternatives, each of which has arn manufacturing, and

associated manufacturing approach. 2. Identify a fall-.back approach It the

Assessing Risk material or process cannot be used

Manufacturing processes and successfully In manufacturing.

materials mnay be divided into three broad

groups:Tracking contractor progress In

1. State-of-the-practice Identifying and resolvng manufacturing ilsk

can be accomplished through the combination

2. State-of-the-art of a government design review process and

the production readiness review. When there

3. Experimental, is a reasonably high level of manufacturing

risk, the Program Manager should consider

State-of-the-practice Implies that the the advisability of having the contractor

material or process is In general use In provide status at each of the scheduled

Industry, Is weil understood, and has a long program reviews. Also, the Program Manager

usage record. These processes and materials should have the members of his team track

generaily represent low-risk approaches. risk and Its resolution. The status report could

be made a part of the Internal reporting State-of-the-art implies that a material system.

or process has had some factory usage, but

was recently developed and is available from

only one or a limited number of sources.

These types of processes often provide the

potential for cost or time savings but may DEVELOPING THE MANUFACTURING PLAN

Introduce risk if they have not been used in The statement of work and the product the particular application or by the producer. design are the elements on which a program manufacturing plan Is based. The

Experimental processes or materials manufacturing plan defines the required have been demonstrated in the laboratory, but sequence of operations In engineering, not In the factory environment. These purchasing, manufacturing, and product

processes and materials often hold great assurance prior to delivery. The plan contains

promise in terms of reduced cost, Improved the tasks to be performed by the contractor

material properties, and better performance. and the subcontractors, as appropriate, and

Their use should be demonstrated In the the organizations delegated responsibility for

factory environment prior to use In a carrying out these tasks.

manufactu~ring program.

One of the most complex operations In

Risk Identification developing the manufacturing plan Is

As the design evolves, the estimating the, resource requirements. manufacturing Implications of various design Manufacturing planning, tooling, fabrication and

options should be evaluated as part of the assembly, Installation, testing and product ongoing review process, as shown In Figure 6- assurance labor-hour costs must be developed 2. The appropriate manufacturing concepts by applying valid estimating techniques. The

should be Identified by the manufacturing final step Is to convert these labor hour values

engineers so that the risk levels associated Into spedific skill requIrements. Equipment with those approaches can be evaluated. This and other facility requirements must also be

Is a critical procedure If the selected system determined and cost estimates developed. design alternative requires the use of an

experimental material or process. if it does, Estimates of manufacturing resource

or If a state-of-the-art material or process Is to requirements are used In conjunction with the

be used, two actions should be taken: work statement to develop a time-phased action plan. This plan displays the time flow

6-4
DESIGN CONCEPT

MANUFACTURING IMPLICATIONS

--- '-=--- -- -- -- -- --- MANUFACTURING TECHNOLOGY

I ISTATE OF THEI

ART KSTATE OF

PRACTICE EXPERIMENTAL

THEOETICAL

I NEEDS

Figure 6-2 Manufacturing Risk Assessment

of the manufacturing elements such as tooling, definition is required. This preliminary dasign

receipt of purchased parts and materials, definition should provide sufficient detail to

fabrication, assembly, test, product assurance, obtain the necessary material required for Inand delivery, house or subcontractor fabrication. Final

design for a part Is required prior to Initiation

The longest cumulative flow prior to a of part fabrication.

manufacturing control point determines the

time at which design definition must be This particular example In Figure 6-3

available from the engineering function. presumes the use of an assembly tool. The

These flows are converted to manufacturing tool design, fabrication and check out times

demand dates which are coordinated between are shown. Detailed design definition of the

engineering and manufacturing operations, assembly Is required In order to property

The intent of the total process is to ensure on- design the tool. The need dates Identified for

time product delivery, the various preliminary and final designs are

communicated to develop the engineering

Figure 6-3 shows the concept release schedule for the various parts and

involved. Prior to ordering the necessary assemblies comprising the system. Where

parts or raw materials, a preliminary design there are Inconsistencies between the demand

6-5
RAW MATERIAL FAB

A PART A

RAW

MATERIAL SUBCONTR FAB

LABOR PART B

PARTS ., FABRICATE 1

ORDER A PART C

RAW FABRICATE ASSEMBLY TEST

A 'MATERIAL AAARTD

TOOL DESIGN ASSY TOOL FAB CHECKI

LEGEND: NEED DATA FOR

a. PRELIMINARY DESIGN A

b. FINAL DESIGN A

Figure 6-3 Extract trom Manufacturing Plan

dates and the release schedule, replanning of communicated to scheduling, with all the

either the release schedule or the supporting Information on work package size

manufacturing schedule must be selection, content, personnel loading, work

accomplished, center level loading, facilites occupancy

determinations, timing of actual material

Scheduling needs, process options In the event that tools

One of the primary objectives of the and equipment are unavailable or overloaded,

contractor during the Production Phase is to and the many other considerations In the

produce and deliver a specified number of manufacturing plan. Since scheduling may be

units of product to the user on the planned a function of several organizations or

dates. In order to meet this objective, the elements, this may be a forrridable problem

contractor must schedule all of the steps In area.

the process, from design to delivery, in a

logical and economical pattern. The A second problem area Includes the

manufacturing plan and the schedule must be need to accomplish the planned actions within

Integrated since scheduling represents the the total resources available, without any

ultimate application of time to the tasks to be discontinuities in the orderly and efficient

performed. The plan emphasizes how and performance of work. When discontinulties

what to build. it determines when the arise, scheduling often is compromised. Soon

resources are expended and must consider all the carefully conceived manufacturing plan

active requirements. Scheduling ensures that does not reflect the shop practice and the

resources are available when needed, no work is guided by a series of "work around"

resources are overloaded or overexpended plans.

during any of the manufacturing tesks, the

most efficient application of resources is made, Information affecting scheduling must

and customer delivery dates are satisfied. be available. It must be processed, sorted,

and stored. Each contractor will have its own

The planning strategy must be unique Information system. The PMO must be

6-6
familiar with that system and its ability to program or a model change. The first unit

recall quickly and accurately all those pieces flow chart is developed by utilizing the

of Information Impacting the execution of the schedule milestones found on the master

manufacturing plan. phasing schedule and the assembly sequence, estimated labor hours, and most desirable

A wide variety of schedules may be crew size for each assembly or Installation

used by a contractor, some produced by the operation. The flow time for each of the

schedulers themselves. Some schedules assemblies Is determined by utilizing the

cover the entire manufacturing effort and affect estimated labor hours, the most desirable crew

everyone. Others contain information of size, and the numbar of shifts to be used. Interest only to the group that produces them. (This Information Is often estimated from past To keep the many schedules from conflicting project- of similar nature and size.) Figure 6-

with each other, even though they may have 5 is Illustrative of a first-unit flow chart.

been produced independently, a system of

top-down scheduling Is used. This m~eans that With the overall sequence of the major

a subordinate schedule must conform with the operations defined, all of the simultaneous

constraints of the parent schedule. A carefully activities and operations must be scheduled

disciplined one-way system keeps the more for completion to meet subsequent events

detailed but smaller scope subordinate which are dependent upon them.

schedules In harmony with th.) rest. Correspondingly, start times for all the

activities and operations being carried on

The material In this section describes simultaneously are determined In turn by

some of the typical schedules used in individually working back through their required manufacturing defense systems or equipment flow times. Their Individual flow times wil

and their Interrelationships, dictate the scheduling of their starting dates.

Master Phasing Schedules In this manner, the entire schedule

The master phasing schedule can be displayed on one chart for the first

establishes the basic relationship between production unit. All organizations can

engineering release of the production design, determine at a glance when their

parts and material procurement, fabrication, responsibilities start, how long they have to

assembly, Installation, test product assurance carry them out, and when they must be

and delivery of the product. It summarizes completed. the entire program In order to ensure

cempatibility of all subsequent planning and Master Schedules

scheduling. The master phasing schedule Is Master schedules are developed In a

developed to reflect both the program manner similar to the first unit flow chart

requilrements and contractor commitments. fxcept that they show all the production Completion milestone dates are normally components or units In sequence over a

displayed pictorially in a master-phasing chart, period of time Instead of just the first unit.

which visually depicts milestones for each Master schedules are so called because they major phase and planning element that must are the major source for controlling overall

be completed. Figure 6-4 lists the major manufacturing operations. They are the basis

events for which relationships are required In for coordinating all supporting elements of the

a typical defense system production program. program from space and facilities requirements to tooling and equipment, vendor activity, The master phasing schedule provides labor, raw material preparation, detail parts the basic schedule framework within which fabrication, assembly and Installation

detailed schedule planning is accomplished. operations, functional testing, and finally The master phasing schedule is used to delivery to the customer. Figure 6-6 shows a

develop the first unit flow chart, master master schedule for an electronfs system .chedules, and overall schedule direction for showing span times for specIfic units from

ine ,--rious functional organizations. procurement, production, to delivery on dock.

First-Unit Flow Chart Several different criteria and data are

The first-unit flow chart is developed to utilized to develop master schedules:

define the schedules for the first unit of a new

6-7
Lyon 2c1wuj

PROGRAM MILESTONES (SHOW APPROPRIATE START AND

PROGRAM GO-AHEAD COMPLETION DATES BY MONTHS OR

LONG-LEAD GO-AHEAD WEEKS IN THIS SECTION OF THE

MANUFACTURING DECISION SCHEDULE)

START DESIGN LAYOUTS

ENGINEERING DRAWING RELEASE

CONTRACT DELIVERY SCHEDULES

ASSOCIATE CONTRACTORS

SUBSYSTEMS ON-DOCK

FABRICATION, ASSEMBLY & CHECKOUT

SCHEDULES & EVENTS

OPERATIONS SCHEDULING

ISSUE ASSEMBLY PLAN

ISSUE FINAL TOOLING PLAN

ISSUE MASTER SCHEDULE

PURCHASING/MAJOR SUBCONTRACTS

MAKE-OR-BUY PLAN

PURCHASE ORDER AWARDS

MAJOR SYSTEM AWARDS

PROCURE LONG-LEAD MATERIAL

PRRs FOR CRITICAL MAJOR SUBCONTRACTS

QUALIFICATION TESTING

COMPONENTS

SUBSYSTEMS

SYSTEMS

MANUFACTURING & ENGINEERING

TECHNOLOGY DEVELOPMENT PLAN

SUBCONTRACT DATA PACKAGES

MANUFACTURING TOOLING POLICY

MANUFACTURING OR PURCHASING PLAN

PRODUCIBILITY STUDIES

IDENTIFY RATE TOOLING

TOOLING

FABRICATE MASTER TOOLS

FABRICATE DETAIL TOOLING

FABRICATE ASSEMBLY TOOLING

DESIGN TOOLING

DESIGN INTERFACE TOOLING IN

SUPPORT OF SUBCONTRACTORS

FABRICATE MANUFACTURING TOOLING

FACILITIES

MANUFACTURING STATION PLAN

LAYOUTS FOR FACILITIES

FACILITY CONTRACTS EXTENSIONS

DESIGN, CONTRACT, PREPARE & OCCUPY

MANUFACTURING FACILITIES

SET UP ASSEMBLY AREAS FOR

MANUFACTURING

MANPOWER

DEVELOP TRAINING PLAN

ACQUIRE PERSONNEL

TP.AIN PERSONNEL

MANAGEMENT SYSTEMS

ISSUE MATERIAL REQUIREMENTS SYSTEM

ISSUE MATERIAL PROCUREMENT & INVENTORY

SYSTEM

ISSUE PRODUCTION CONTROL SYSTEM

ISSUE WORK MEASUREMENT SYSTEM

Figure 6-4 Master-PhasIng Chart for a Typical Defense System

Production Program (SimplIfied)

6-8
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A. Sh..iping Schedule completed. This schedule is concerned with

The order In which the company has tooling, detail parts, subassemblies, and

planned !o meet the delivery commitments is compcnent fabrication.

shown to the point of completion of final

assembly in the factory. This establishes the The fourth level schedule is the most

basic cycle rate as follows: detailed. It Includes the daily production

activities of all the factory shops. Individual

Delivery rate : 10 units per month jobs ate analyzed and sequenced and

Average work days ý er month : 21 standards are applied to factory loadin0 of

days materials, machines, and labor. Figure 6-7

Basic cycle rate: Work days per month shows the concept of the hierarchy of

- 21 manufacturing schedules. These are

Delivery rate 21: 10 = 2.1 integrated with other functional schedules as

Thus, the basic cycle rate is one unit every shown in Figure 6-8.

two work days.

The Initial effort in the production

B. First-Unit Labor Hcurs phase of a program often involves maximum

The first-unit labor hours are those personnel loadings to meet the schedule. The

estimated to complete the first unit of produc- latter phases strive for optimum crew loading

tion. through refinement of the operating plan and

supporting activities to achieve cost reduction.

C. Crew Loads The objective of the manufacturing analysis

The crew load represents the total during the Full Scale Development Phise is to

numbtr of assembly personnel that can determine these optimum loadhigs, but

operate concurrently on a specific unit In a normally the design changes which occur

particular producion area. during initial production require revisions to the

original concept. The contractor should have

Scheduling And Factory -Loading specific goals for each operating fuiction, i.e.,

The goal of the scheduling effort is to the facilities, material, and personnel required

optimize all of the manufacturing resources to perform the work. In order to achieve the

from program go-ahead through dol;very of the manufacturing goals, the contractor should

pioduct, have a cost data collection and status

reporting system to evaluate performance

In general, the process involves relative to the goals, determine performance

analysis of the complete manufacturing trends, and make necessary adjustments.

operations down to detailed factory operations.

The master schedule, discussed earier, There must be latitude available In all

defines the framework of the starting and of the schedules. It follows, then, that the

completion dates of the major manufacturing resulting schedules do not, Indeed cannot,

tasks to be accomplished in a defined period. reflect the most streamlined and efficient way

The scheduling effort involves filling in this of doing the work, and the most cost-effective

framewoti( with the detailed manufacturing planning possible. Maximum effort is needed

schedules of all components involved in the to carry out the work according to the lowest

product. The first step taken in this effort is to level manufacturing schedules so that the

Iniegrate all of the details for producing each higher level schedule structure Is satisfied.

major assembly -and section into an overall Otherwise, a major scheduling revision will be

time table In units of days or weeks. The required that may impact other programs In

second level schedule shows the logical, the contractor facility along with the one in

practical sequence which ensures a smooth trouble.

flow of work. It provides the schedule for

completion of engineering, tooling, The scheduling integration issues

procurement, fabrication, assembly and check- raised are applicable to all programs. While

out. the manufacturing planning and scheduling

techniques used to build defense systems --

The third (next lower) level schedule, aircraft, ordnanoe, and space systems, -- will

evolved from the master schedule, determines vary, the program manager must be aware of

the day (or hour) each component Is to be the existence of this Important aspect of

6-11
MASTER

SCHEDULE

COMPONENT ASSEMBLY &

SCHEDULES SUBASSEMBLY

SCHEDULES

Figure 6-7 Hierarchy of Scheduies

6-12
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6-13
manufacturing management in developing the production benefits, they represent an

manufacturing plan. investment that involves capital costs that

needs to be balanced against the benefits

Inventory Control obtained. Batch processing Is a term often

Manufacturing management is used to describe this type of manufacturing

concerned with the integration of people, system. Batch size should reflect the most

materials, equipment, machine tools, and economical order quantity for the process, thus

manufacturing processes in the production of minimizing total cost of setup and processing.

the end item. This requires determination of

material requirements and components to Just-In-Time

support the manufacturing rate and The just-in-time (JIT) manufacturing

determination of manufacturing lot quantities. control philosophy has evolved from Japanese

These decisions can be treated as inventory manufacturing techniques. In essence,

control functions. The traditional approach to Japanese manufacturers have rejected

inventory control appears to concentrate on approaches utilizing complex management

three areas: stockroom housekeeping, programs and controls, computers and

accuracy of inventory records, and surveillance information processing, and with mathematical

of inventory variances. These are certainly modeling. The Japanese way Is to simplify

important areas, but they do not address the the problem. Japanese systems consists of

central function of inventory control, i.e., simple procedures and techniques that do not

maintaining minimum investment in material require a particular cultural environment for

consistent with operational requirements. implementation.

Types of Inventory As pointed our by Schonberger in his

There are two basic types of material book Japanese Manufacturing Techniques, the

inventories. These are: Japanese control system consists of two types

of procedures and techniques. The two types

1. In-process or Pipeline Stock. The size pertain to productivity and to quality. The

of the work-in process inventory is aspect of the Japanese system pertaining to

necessarily a function of process time productivity Is known as just-in-time, but there

and demand rates. are a host of other Japanese quality improvement concepts and procedures. Total

2. Stock Inventories. Stock inventories quality management (TQM) covers this set of

are inventories carried between stages procedures and techniques. TOM

in a manufacturing-distribution process. encompasses some of th9 just-in-time

techniques and Improves productivity by

Manufacturing irventories are avoiding waste.

"decouplers" or "insulators." Stock inventories

Insulate a manufacturing process from the In Japan, the workers and line

Inherent variability of the processing stages in manager are the focal points of Implementing

the manufacturing cycle. These inventories just-in-time procedures and techniques. There

also provide protection a(ainst potential line is much less emphasis on staff specialists

stoppages. than in the United States. While there is a

growing awareness of the lust-in-time

Many companies use inventories to philosophy, there has only been small

decouple successive stages of production, progress made in implementing JIT In the

They view it as uneconomical to schedule United States. This will continue to be true as

parts through some systems due to the long as upper management Is uninformed

unbalanced nature of operation times in about the power and payoffs associated with

prccesses performed at the various machine JIT.

stations and the tool changes required for

each operation. The use of inventories to Just-in-time is a misunderstood

disengage successive stages allows each philosophy in the United States. There are

stage to operate more efficiently; the operation many erroneous perceptions of what it is. JIT

of a particular stage is nct compromised by is not:

the demands of preceding and succeeding

stages. Although inventories provide o An inventory program.

6-14
6, Wnenever possible, manufacture end

o An effort than involves suppliers, only. items to meet demand and not to

stock.

o A cultural phenomenon.

7. Redesign the process flow to eliminate

o A materials project operations that don't add value.

o A program that displaces MRP. 8. Eliminate set-ups or changeovers, where possible by dedicating

o A panacea for poor management. equipment to product groups.

Rather, JIT is an enterprise-wide 9. Select a few critical pails and Institute

operating control philosophy that has as Its a pull system prior to call completion.

basic objective the elimination of waste.

Under JIT, waste Is considered anything other

than the mnilmum amount of equipment, 10. Get the supply continuum Involved in

materials, parts, space, and worker's time that delivering only when needed,

Is absolutely essential to add value to a

product. JIT strives to Identify activities that Implementing JIT techniques is not just

do not add value and eliminate them. JIT can an inventory program of only for suppliers. If

be used by any manufacturer interested in conceived properly, it can be a strategic tool

eliminating waste and simplifying the workload, for greater market participation.

The companies in the U.S. that have Lead Time Evaluation

Implemented JIT have realized spectacular It Is necessary for the contractor and

results as Indicated in Table 6-1. the PMO to maintain continuing visibility of

material, parts, and processing lead times.

William A. Wheeler III of Coopers and

Lybrand has Identified 10 distinct steps that There are several definitions of "lead

should be considered in any comprehensive times." Clarification of the most commonly

JIT manufacturing program. See Figure 6-9 used terms is provided In Figure 6-10. An

initial estimate of the time required to procure

A summation of the steps that can be the necessary components and to manufacture

taken by a manufacturing company follows, the item is defined as the "contract lead time."

This lead time can be divided Into its two

1. Invest time in .1earning JIT control primary components: manufacturing lead time

techniques. and material lead time. Manufacturing lead

time can be further sub-divided into inspection

2. Organize for success, i.e., establish a (also called dock time), fabrication, assembly

productivity control organization to and check-out Material lead time can be

identify and Implement operational defined in several ways. This is especially

Improvements. relevant when material or component lead

times are experiencing large changes. There

3. Ensure all employees gain awareness are three primary material/component lead

of JIT and become educated in JIT times considered in this section; (1) First End

technologies. Item Lead Time; (2) Material or Component Product ion Lead Time; and (3) Total Material

4. Establish an attitude that each person and Component Lead Time. The time

has a responsibility for his/her required to deliver the first end item (first end

equipment and tools. article lead time) may exceed the contract

lead time when material and component lead

5. Continuously control and reduce times are extremely long.

variances to improve manufacture and

quality of product. Determinants Of Lead Time

The lead time for a particular material

or component Is not static. It varies with a

6-15
Automotive Fashion Mechanical Electric

Reductions Supplier Printer Goods Equipment Components Range

Manufacturing

lead time 89 89 92 83 85 83-92

Inventory

Raw 35 70 70 73 50 35-73

WIP 89 82 85 70 85 70-89

Finished goods 61 71 70 0 100 0-100

Changeover time 75 75 91 75 94 75-94

Labor

Direct 19 50 5 0 0-50

Indirect 60 50 29 21 38 21-60

Exempt ? ? 22 ? ? ?-22

Space 53 N/A 39 ? 80 (Est.) 39-80

Cost of quality 50 63 61 33 26 26-63

Purchased material

(Net) 7 11 6 N/A 6-11

Additional capacity N/A 36 42 N/A 0 0-42

(Coopers & Lybrand)

Table 6-1 Estimated Percent Improvement for Different Inlustries as Result of JIT

Implementation

Plan

Organize for success

Awareness ed:uca tio n •

Supplier Established

networks good attitude

JIT

Themes

P l sy t e V is ib ility , .OI u a lity

" Synhroizamroionn

Pull syvstem : Synchronization -m Quality

"* Simpictiprven

"* Continuous

Set-up Uniform plant

reducton ... Redesign ptocess load

flow

Figure 6-9 Proposed Steps In a JIT Manufacturing Program

6-16
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6-17 I
number of economic or other type conditions. requires that three criteria be met In the

Some of the elements which affect lead times justification of advance buys:

are:

(1) component lead time significantly

o Number of industrial sources, longer than average component lead time,

o Industrial source workload,

(2) component requirement Independent of

0 Raw material availability, end items, and

0 Raw material costs, (3) component fully funded. The latter

two criteria often present obstacles to efficient

0 Overall Industiy demand, management of weapon systems procurement.

The reality of today's defense marketplace 0 Technology level of parts and suggests that a timely response to military

materials, needs In periods of long lead times requires

that some subcomponent production decisions

o Cost of money, be made prior to end article manufacturing

decisions.

0 Escalation due to inflation, and

In detrmilning the amount of advance

0 De-escalatior, due to technology, buy funding required, the program manager

should task the contractors to Identify their

Lead Time Analysis needs In their budgetary and planning Defense systems typically exhibit lead estimates. Where the lead time Is a potential time volatility. In the discussions of scheduling problem, the PMO should assure that the

it Is noted that the start date for contractor program planning documents Indud- a long activity is noimally based on a set back from lead material contract and that sufficient funds

the required completion date. The setback is have been Identified in the Five-Year Defense

dictated by the operation flow times and the Program.

material and component lead times. When

the lead time is in error, two possible Given the volatility of costs and lead

problems exist. If the leed time estimate is times for defense system components, the

excessive, the funds requirement will be PMO should carefully evaluate the contractor's

established unnecessarily early. This may estimate of the long lead requirement. The

lead to an overstatement of the lead-time basis for both the time span and the oust

funding requirement and could result In funds should be clearly supported. Where the long being drawn unnecessarily from other areas of lead tasks Include elements such as tool

need. If the lead time estimate is understated, diesign or manufacturing engineering, these

specific contractor activities could experience a should be carefully reviewed to ensure that

start date that will not support the required they are not a part of the development activity

delivery date without the expenditure of or included In a previous contract.

premium effort, resulting In higher than

necessary program cost or even potential For those Items which represent risk to

schedule slippage, the program, the PMG may establish a

program of continuing infomration Interchange The impact of lead time variations on with other DOD programs which use those

a particular program can be minimized. The materials and components. These contacts

set of actions to achieve this, shown in Figure will provide data which can be used to

6-11, can also have beneficial effect on the evaluate or corroborate the lead time data

need for and magnitude of the long lead being acquired from the contractor. in

material reqLlrements discussed below, addition, It may be advisable for the Program

Manager to establish a specific program Existing Regulations For Advance Buy procedure for maintaining continling visibility The primary regulation governing of ýead time variation. Other potential actions

advance buys Is DODD 7200.4, dated 30 whleh can minimize program risk Include use

October 1969. Interpretation of this regulation of dMial sources and altemate materials and

6-18
"* ENCOURAGE DESIGN STABILITY

"* INVESTIGATE ADVANCE PROCUREMENT FUNDING POSSIBILITIES

"* CONSIDER USE OF MULTI YEAR PROCUREMENT

"* CONSIDER LISE OF OFF-THE-SHELF SUBSYSTEMS

"* ENSURE COMPLIANCE WITH DEFENSE PRIORITIES SYSTEM

RATED ORDERS

"* EVALUATE SPECIFICATION NEEDS. CONSIDER SUBSTITUJTIONS FOR

COMPONENTS AND MATERIALS IDENTIFIED AS LONG-LEAD-TIME ITEMS

"* CONSIDER COMBINED PROCUREMENT OF END ITEMS, SPARES, AND

REPAIR PARTS

Figure 6-11 Actions to Minimize Impact of Lead Time Variations

Increased contractor inventories of these Facility Planning

items. The facility includes the plant and

productive equipment which Is to be made

Personnel Planning available to accomplish the production task.

In developing a personnel plan, the In developing the facility plan, both the

contractor needs to consider the number of quantitative and qualitative demands of the

personnel needed, the specific skills of the product must be considered. The qualitative

personnel, the phasing of the requirements, analysis determines the types of processes

and the ability of the organization to add which will be required. The contractor then

persornel. The ability to meet the personnel has the option of utilizing currently existing

demands should be a !unction of the labor facilities, acquiring new facilities, requesting

pool available within the contractor's government-furnished facilities (must be

organization and the ability of the local area to requested in the proposal) or subcontracting a

provide the quantity and types of people portion of the effort. The q~uantitative analysis

required. will determine the size of the processing departments within the facility. This analysis

There afso needs to be a clearly should consider the number of units to be

defined profile of the required workforce and a delivered, and the rate of delivery. The

plan for the acqu~sition and training of new information collected In the analysis will

personnel. While on-the-job training (OJT) provide a measure of the number of work

may be an effective mechanisin for providing stations and the floor space required.

the required knowledge, its effectiveness is

limited. Where the skills involved are relativ'ely After determination of the facility

complex, there should be some form 01 formal requirements, the next concern Is plant layout

training provided, and workf low planning. In most cases, the

layout is constrained by the existing facility;

The PMO should review the adequacy however, It may be possible to revise the

of the plannea personnel loadings to ensure layout for a new program. that adequate numbers of people of the

required skills are made available. When a The planning for material flow within a

large personnel increase is planned, the manufacturing facility Is of major importance.

sources of those personnel should be Some studies have indicated that, In the job

determined and evidence of their potential shop environment (which is representative of

availability should be provided by the much of the defensra industry) parts are in

contractor. transit, or waiting at work stations, as much as

95% of the time. In dev~eloping the flow

pattern, the objective Is to establish a pattern that allows constant progress from raw

materials and purchased parts (or components) to the completed product.

6-19
In facility planning, the contractor Make Or Buy

should make a sufficient in-depth analysis of This section of the plan should

the demands on the facility to determine the daescrlbe the distribution of effort between the

most cost effective approach to production. prime and suhcontractor. Of specific Interest

This analysis should focus on the demands for during the evaluadon of the plan is the impect

services, and such things as power of the in-plant loadings on the prime

requirements, clean rooms, overhead contractor's overhead rates. This is of great

,.iearance, as well as special requirements for importance in the case of a faci.'y wihich Is

handling explosives and other hazardous involved with many programs, because the

materials. The results of such an analysis overhead rate to be appiled to the program of

and the plan to meet the demands on the interest can be greatly affected by the level of

facility are required data in some contracts. activity of the other programs planned for the

The requirement for such an analysis should facility. Specific attention shcu'" je given to

be considered for inclusion in any contract the contractor's rationale foi spe "Ic make or

where facility planning may have a major buy decisions because there may be

Impact on program success. differences between overall contractor goals In

structuring make or buy decisions and the

goal which a Program Manager considers

MANUFACTURING PLAN PREPARED BY appropriate for his/her specific program.

THE CONTRACTOR

Resources Anr Manufacturing Capability

Puorose This section of the plan should

The purpose of the manufacturing plan describe the resources to be applied to the

prepared by the contractor for a specific manufacturing task. The facilities to be used

program is to portray the method of employing should be described In detail, and the division

facilities, machines and tooling, and th6 of the government-furnished and contractorpersonnel resources of the contractor and furnished resources should be described,

selected subcontractors. The plan should including the relationship to any Industrial

reflect all time-phased actions which are Modernization Incentive Programs (IMIP) which

required to produce, test and deliver are pianned. If any Improvement or

acceptable systems on schedule and at rehabilitization of government-owned facilities

minimum cost. The general structure of the is required, these should be described and

plan should include, as a minimum, a justified.

description of the manufacturing organization,

the make or buy plan, resources and The layout of the facilities to be

manufacturing capability, and manufacturing utilized should be described along with the

planning data. work flows through the facility. Where there

are other programs In the facility, the

Manufacturing Organization integration of the work flow should be

This section of the plan should described. The key Issue is to assure that

address the contractor's organizational there is a reasonable expectation that

structure, i.e., the people responsible for the sufficient equipment and personnel exiOt in a

manufacturing task. It should include an form that will allow a manufacturing flow

organizational chart(s), identification of key reflecting minimum cost and reasonable

individuals, and descriptions of the functional probability of schedule attainment.

responsibilities of the key individuals. The

government review of this section of the plan The specific Akills of the personnel

will focus on assuring that responsibilities are required should be described in tek'ms of timeclearly defined and that all required tasks are phased requirements. Where personnel are

assigned to the appropriate organizations. not currently on-board, the contractor should

During the execution of the production phase describe how the required quantities and types

of the program, this document should identify of personnel will be acquired. The per3onnel

the points of contadt for information and requirements need t,. be analyzed in relation

action. to the other programs within the faclilly and

the local personnel market.

6-20
The contractor should describe the System. One of the more visible Indicators of

materials and components which will be the program during the production phase Is

utilized on the program. Where new materials delivery performance. An unrealistic initial

or components which are in short supply are schedule can force a program Into such things

to bo utilized, they should be justified. The as high cost priority efforts to attain schedule

relationship of material and component and acceptance of equipment through waivers

selection should be discussed in terms of the and deviations.

producibility studies which have been

accomplished (or are planned). The The success of the contractor In

contractor should provide a manufacturing meeting the defined schedule can be affected

breakdown - one that shows the relationship by the quality of the manufacturing control

betwoen manufacturing methods and system utilized. This control system should be

mateilals, tooling concepts, and facilities, described in the manufacturing plan so that

Also, the manufacturing risks on the program the PMO can assess its adequacy for detailed

should be assessed. shop release, manufacturing performance evaluation, and correctIve action.

The manufacturing breakdown should

be supplemented with a discussion of the plan It is often beneficial to have the

for tooling, including special tooling and contractor include In the manufacturing plan a

special test equipment (as defined in the chart that portrays the details of the process

FAR). The contractor should describe the of manufacture and assembly. These are

overall tooling concept and approach including often developed In formats such as tree charts

the planning, design, fabrication, and control of or "goes-into" charts.

tooling and test equipment. The mix of limited

life (often described as *soft) and durable The productivity of the industrial

(often referred to as "hard") tooling should be organization can have a significant Impact on

described along with the rationale. The the effectiveness and efficiency of the

government interest in the tooling and test manufacturing activity. Where possible, the

equipment Is motivated by the cost and by the manufacturing plan should describe the

potential for cost roduction through Investment measures planned to Improve organizational In tooling or test equipment capability, productivity. These measures may be directed

toward improvements in the effective utilization

Where a requirement exists for surge of personnel, equipment, or materials. Where

or mobilization, the production plan should these measures are described, the Impact of

describe the facilities and other resoi.-rýes their successful Introduction on the overall

required and the method of accomplishing the manufacturing effort should be defined.

required Increase in manufacturing output. Value Of The ManufacturinaPlan

Manufacturing Planning Data The contractor's development of a

This section of the plan should provide formal manufacturing plan contributes value to

the detailed delivery schedules for the total the program from two standpoints. A primary

program even though the specific contract may benefit accrues from the fact that the

be for only a portion of the program. The contractor has to crystallize the manufacturing

schedule shows the lead times required for planning to a point where It can be described

the major and critical elements of the program In the detail required. A well constructed plan

and the time phasing of the major milestones is the basis for the successful accomplishment

Involved with attaining the schedule. Detailed of the manufacturing effort. The secondary

schedule requirements for activities having benefit is the visibility the plan provides to the

potential Impact on the end Item delivery PMO personnel. It can serve as a basis for a

schedule such as engineering release, material structured review of the contractor's approach,

prccurement, tool fabrication, facility acquisition the expected cost of the production phase of

or improvement and government-furnished the program, and an assessment of risk.

property should be provided. The Program

Manager should carefully analyze the details Planning For Spares of the schedule to determine its attainability, Spare parts production places an

the Inherent risk, and the potential to use the additional demand upon manufacturing

Defense Materials System/Defense Priorities resources. Determining the quantity of

6-21
resources required must be based upon existence of other plant loading (such as other

supporting both the deliverable system systems produced at the same facility), and

hardware and the required spares. Spares the capabillty of the Industrial base Including planning adlses from two standpoints. The suppliers and vendors are other factors to be

first Is planning for those spare parts which considered.

must be produced concurrently in the weapon

system production quantities. The second Planning for economical production Involves planning for the continuing availability rates (EP~s) must begin early enough In a

of the spare parts during deployment. This program to Influence contractor decisions. As

requires establishing a way to acquire the early as the concept demonstration and

needed spares on a competitive basis. validation phase, decisions on production Competition can be based on a performance quantities and production funds availability specification or an acquisition data package influence the EPR. During the production and

with unlimited rights. If the latter approach is deployment phase, the production rate should

taken, it Is necessary that the PM take action be maintained at the predetermined EPA In

during the development phase to obtain a order to make the most efficient use of

contractor commitment to deliver a full available Industrial resources.

acquisition data package with unlimited rights. The production cost changes resulting

from a change In production rate may be

ECONOMICAL PRODUCTION RATES estimated either through direct discussion with

One of the major issues to be the manufacturer, or through a modeling addressed In the development of the technique, or both. There are several models

manufacturing plan is the determination of the that can be used to predict the effect ot a

rate of production. Recently, OSO emphasis production rate change on unit cost.

has been placed on determining and using Unfortunately, many models require data that

more economical production rates for system are very difficult to obtain, such as contractor

development programs. An economical variable and fixed costs.

production rate is one which makes effective

and efficient utilization of existing The economical production and

manufacturing plant and facilities. Generally procurement rates represent goals. In

speaking, the higher the rate, the lower the practice, contractors usually produce, and

unit production cost. program management offices usually procure, below the optimum rates. The prevalent Economical production rates can be reason for procuring (producing) a defense

analyzed by plotting unit cost versus quantity. system below the EPA Is affordability. Other

The maximum economical rate occurs just reasons Include keeping a "warm" production before the existing or planned plant capacity, base, and not having an Identified requirement (Including tooling or test equipment) Is for a follow-on defense system. exceeded; iLe., further Increase In quantity Incurs an increase In unit cost due to the

Inability to amortize further facilitization and M1ANUFACTURING PLANNING AND

rate tooling costs. The minimum economical CONTROL SYSTEMS

rate occurs at the knee of the unit The program manager must

cost/quantity curve while still effectively utilizing understand the type and extent of

existing manufacturing facilities or where computerization utilized by the contractor in

further reduction In quantity causes an the management of the day-to-day increase In unit cost with an unacceptable manufacturing planning and control activities.

return on Investment. Most DOD prime contractors and their

subcontractors have Implemented or are in

An economical rate for many process of Implementing Material

commodities Is one at '..hich the facility is Requirements Planning (MAP), Manufacturing operating nominally on a one-shift basis; Resource planning (M AP 11) or JIT systems however, programs can be structured to purchased from hardware/software vendors.

accommodate different bases (such as a two- Some contractor, have developed and

shift operation). The availability of personnel Implemented equivalent systems because of

In requisite numbers and skill levels, the

6-22
real or perceived weaknesses in commercially

available systems. The Master Production Schedule Is

crucial to the effectiveness of MRP. If the

Whatever the situation might be, the Master Production Schedule does not

program manager should acquire an accurately reflect the product, quantities, and

understanding of such systems. There are required need dates that satisfy contractual

vast differences between MRP and MRP II, for requirements, MRP will generate Invalid

example, and the program manager must priorities for manufacturing and purchasing.

recognize that the effectiveness of such Inventory records and bills-of-material must be

systems is limited, I.e., they are not "cure-alls." highly accurate for MRP to generate valid

Most important, the program manager should priorities.

recognize that valuable information relative to

program status can be obtained from such a Even with a Master Production

system If the system has been properly Schedule that identifies the correct mix of end

planned for, implemented, and utilized, products required, as well as the correct

quantities and timing of availability for those

The following is intended as a brief products, MRP may be Ineffective In today's

overview of MRP and MRP II which should dynamic manufacturing environment. MAP

provide a basic understanding of what each is, assumes that there Is infinite capacity

what each can provide, and requirements for available to accomplish the Master Production

successful implementation of such systems. schedule. MRP provides no built-in feedback

mechanism that reports back on the actual

Material Requirements Plannin status of planned activities throughout the

Material Requirement Planning (MRP) manufacturing and related functions. Today's

Is a computer-based priority planning dynamic manufacturing environment generates

trnchnique based on the theory of independent Information from many functional areas that

v,,rsus dependent demand. It is a time- needs to be gathered, stored, and formatted

phased explosion of the master production for easy access by a large number of users.

schedule utilizing bill-of-material and inventory MAP must be interfaced wllh many other data

^status data to calculate the answer- to these processes to be effective such as:

questions: - Customer demand activity

What parts do we need to make or

buy? - Production plans

e How many of these parts do we need? - Production schedules and their

execuilon

When must these pails be available? - Purchasing management

Figure 6-12 indicates the limited

information flow associated with an MAP - Inventory management

system. - Product cost reporting

When properly planned for,

implemented, and utilized MRP can reduce - Support of and financial Epplications of

Inventory because the contractor should only accounts receivable, accounts payable,

make or buy what is needed. It can help general ledger, and payroll.

improve on-time delivery of end products

because, as a priority planning technique, The more that MAP Is Interfaced to

MAP identifies which parts are needed to other data sources, the more It evolves into

make or buy, and when the parts must be Manufacturing Resources Planning (MRP i1).

available to support the Master Production

Schedule. MRP can also improve manpower Manufacturinq Resources Planning

and equipment utilization because, by knowing Today, the effective manager

what parts are needed, how many and when, recognizes the Interdependent nature of

It is possible to better plan and control the use functions, the need for interactive management

of resources. information systems, the need for accurate,

6-23
FORECASTS

&

BACKLOGS

BILLS OF MASTER

MATERIALS PRODUCTION INVENTORY DATA SCHEDULE SAU

MATERIAL

REQUIREMENTS

PLANNING

ITEMS TO ITEMS To

MAKE BUY

Figure 6-12 Materials Requirements Planning Information Flow

timely data reporting and storage for user- The program manager should be

friendly access, and the need to share sufficiently knowledgeable about an MAP II

common data In order to enhance day-to-day system to ensure that the following critical

management decision-mahing. requirements are met:

Current needs to go beyond managing - Top management understanding,

just Inventory, purchasing, and production, commitment and involvement

Planning needs in all areas of the company

must be Integrated into a plan which provides - Teamwork -- a company-wide system

feedback to keep the "company game plan"

up-to-date and which answers "what-if" - Common engineering and product data

questions through computerized simulation, definition

MRP II systems provide the answers when

prc~pedy planned for, Implemented, and - User education and training

utilized. - Realistic production plans

The magnitude of the integration

associated with an MRP II system is shown in - Valid master produ,,tion schedule

Figure 6-13. MRP II represents a significant

cultural change In that a company can utilize - Capacity planning, including simulaton,

such a system to help run its business, as well as timely and accurate

feedback regarding the status of plans

6-24
BUSINESS

PLANNING 

j

EMOINEERIN43

DATA

M - PRODUCTION

PLAN

CUSTOMER ROUGHýCUT

ORDER DATA CAPACITY -- 1-70TMAWER PRODUCTION 

ANALYS* j

SCHEDULE

MATL ROMTS.

PLANNING

CAP

,jACITY

EM P' 9REaUIREMENTS

PLANNINGITY

WORK ORDER PURCHASE 0RIXX

PREP & REL=EASE --- ,=PREP & RELEASE

SHOP FLOOR STORES PURCHASE ORDER

ACTIVMFS j COKTROL A.

LABOR &

NVENTORY

ACCOUNTING

L

-- t:

Figure 6-13 Manufacturing Resources Planning 11 Information Flow

6-25
Accurate bill-of-material, routing and Systems - a memorandum from Deputy

inventory data Assistant Secretary of Procurement, a

memorandum from the Assistant Director of

Shop activity report!ng DCAA, and a DCAA pro forms letter to

contractors."

Product costing reports by production

run, along with variances and As a result of the DCAA audits and

Inventory evaluation information exchanges with defense

contractors and MRP-MRP II vendors, and

Acc-urate maintenance of company because of concems axpressed by the

records and the taking of corrective Congress, the Office of the Assistant Secretary

actions to keep plans on target of Defense Issued "Policy guidance on

contractors MRP systems", December, 1987.

MRP II systems are normally of a It identified 10 key elements that contractors

modular design that facilitates implementation must demonstrate as pakt of their MRP-MRP If

of a few modules at a time. There is a vast systems in order for these systems to be

difference in the complexity of MRP ersus acceptable for government contracting

MRP i1. MAP is a group of mc.uuis which purposes. The "Final Policy Guidance on

can be viewed as the foundatir= ,ipon which Corotractors' MRP Systems" was published In

an MAP II sy3tem can be boilt. Until such the Federal Contracts Report, dated December

time that capacity planning including 14, 1987.

simulation, and shop floir and purchasing

feedback are in place, as well as the modules An AwDroach To MRP-MRP II System

normally associated wth MAP, the program Assessment

manager may view the Master Production Quite a bit of publicity has been

Schedule as a contractor "wish-list," directed at MRP-MRP II and equivalent

systems. Most of this publicity tends to lead

With proper understanding, the uninitiated to negative conclusions about

commitment, and Involvement of top MRP-MRP II in the government contracting

management; the proper selection and environment.

implementation of hardware and software;

adequate user education; training and Most of the perceived problems with

discipline, an MRP II system can be very MRP-MRP II are really only symptoms of the

helpful to the program manager. If any of the real problems. Symptoms which, when

above are missing on a program, the MRP II properly analyzed arid studied, would lead us

system as well as the program will be in to a proper diagnosis of the real proolems -

trouble. the lack of up-iront understawdIng of what it

takes (or r.11l1 take In the future) io operate a

MRP-MRP II Problems From The DOD And business from a total system standpoint and a

DCAA Perspective lack of education and training about MAPIn Aptil, 1987, the Defense Contract MRP II concepts and the Inherent disciplines

Audit Agency (DCAA) Identified 10 common required to effectively Implement such

"deficlencies" In MRP-MFIP II systems. The sy3tems.

DCAA indic&ted that the deficiencies "make

these systems unreliable fcr government Every company neods to do a

contracting and In violation of Cost Accounting thorough "top down" analysis of how It Is

Standards and other regulatnry requirements." doing business (the "as-is" er-vironment) and

how it will 69 doing business In the next 3 to

In May, 1987, the DCAA sent letters to 10 years (the "to-be" envircnment) before

196 major defense contractors, requiring them Implementing MRP II. As part of the analysis,

to assess their MRP-MRP Ii systems and each company needs to address, among nther

respond with plans to address the deficiencies tfings, the aJequacy of the current and

which were identified in the Iltter. The planned matedal management and accounting

perceived deficlenci3s, along with other system to ensure that It Is In compliance with

relevant background information, are external regulations and standards as well as

documented In the "DOD Position Paper On in'qrnal policies and procedures. If the "top

Contractors' Material Requirements Planning down" analysis uncovers areas of non6-26
compliance or other deficiencies In a current

or future-planned system, the deficiencies can

be remedied In an effective, well-planned

manner and all parties can become aware of

the existing problems.

Unfortunately, many major defense

contractors have MRP 11 or some equivalent system in place or are in-process of installing such a system without a thorough "top down"

analysis to assist and guide them from a

systems standpoint.

Each program manager must

understand the need to assess the

effectiveness of contractor MRP-MRP 11 or an

equivalent system. Just because a contractor

has such a "state of the art" system in place does not assure that the program is under

control and operating effectively. The

contractor's attention to management of

Information that is In, or is an output from,

such a system will ultimately determine the

effectiveness of the system.

Today, hardware and software vendors

can provide most of the functions required In

the defense contracting environment.

However, there will almost always be a need

to either tailor some of a vendor's product to

make it fit the contractor's business

environment or, to tailor the way the contractor

Is doing business to fit the vendor's product. It is Important to understand what and how

much tailoring was done and how it impacts the ability of the government to obtain

Information needed to monitor contractor

performance. The program manager must view the

Interface or interaction between the system

and the people who must understand and

utilize the information provided by the system

as a critical element to be analyzed as part of

any assessment of an MRP-1MRP 11 system.

6-27
CHAPTER SEVEN

PRODUCIBILITY

CONTENTS

OBJECTIVE 7-1

IN TRODUCTION 7-1

RELATION TO ENGINEERING ACTIVITIES 1-2

CONTRACT IMPLEMENTATION 7-3

Producibillty Objectives In Design 7-4

PRODUCIBILITY ENGINEERING AND PLAN4NING 7-6

The Focus of Producibility Englneering and Planning 7-6

Objectives and Funding 7-6

Contract Functions 7-7

Producibility Engineering and Planning Measures 7-7

Application of Producibility Eng!neerdng and Planning in the

Acquisition Process 7-8

Responsibility for Producibllty Engineering and Planning Effort 7-8

PRODUCIBILITY PROGRAM PLAN 7-10

Data Item: Producibility Program Plan 7-10

Data Item: Producibility Analysis 7-10

CONTRACTOR ORGANIZATION FOR PRODUCIBILITY 7-10

VALUE ENGINEERING 7-16

DOD Policy 7-16

Elements 7-17

Value Engineering In the Contractual Environment 7-17

Value Engineering Incentive Clause 7-17

Value Engineering Program Requliement Clause 7-17

Acquisition Savings 7-18

Collateral Savings 7-18
PRODUCIBILITY

OBJECTIVE

Much attention Is focused on the the complexity of systems Increases, so does

development of producible designs during the the acquisition cost. Therefore., producibillty

acquisition proce3s. This chapter builds on a programs are Imperative as a management

definition of proaticibility and Its relationship to means for assuring that practicality Is

the engineering design process. Approaches addressed and that the cost Increases

to the contractual Implementation of associated with the growing complexity of

producibility provide a basis for Integrating systems are minimized. It should be

Producibility Engineering and Planning into the recognized that the producibility analysis

acquisition process. The chapter also accomplished by the F'MO must be performed

provides a framework for evaluation of the by a team of specialists assembled from the

prime contractor's producibility program and program offict and zupportlng organizations.

organization and a description of the Value One functional organization cannot possibly

Engineering process and its role in accomplish the total oroducihility effort without

producibility. assistance from othe6 functkinal organizations.

Consequently, the PMO approach to

organizing for producibility Is of pr;me

INTRODUCTION Importance to a success-fJi defenso system.

Producibility is an engineering function

directed toward achieving a design which is Basically, the program manager hus

compatible with the realities of the responsibility for assuring that producibility is

manufacturing capability of the defense an integral c-ýnslceratlon during the design

industrial base. More specifically, producibility process. Generally, the discharge of thaW

is a measure of the relative ease of producing responsibility Involves the following basic

a product. Producibility is a coordinated effort elements:

by design engineering and manufacturing

engineering to create a functional design that 1) Establishing producibility requirements

can be easily and economically manufactured. in acquisition strategy and In system

The product must be designed in such a, development contracts ensuring a producible

manner that manufacturing methods and design, selection of available Industrial base

processes have flexibility in producing the resources, and availability of qualified

product at the lowest cost without sacrificing production proces.ies;

function, performance, or quality. Producibility

also supports the Total Quality Management 2) Creating support for producibllity efforts

(TQM) objectives by minimizing the likelihood throughout the entire afquisltloi,, process;

of defects and establishing compabitlilty

between the engineering design and tLhe 3) Ensuring that sufficient attention Is

manufacturing processes. given to technical areas involving risk and

needing corrective action;

Recently producibility, as a function,

has received greater attention both in 4) Review~ng designs for attained

commercial industry and in defense systems producibility; and

programs. Department of Defense policy on

major system acquisitions has made 5) Evaluating the contractor's producibility

producibility considerations a requirement prior program to ensure a continuum throughout

to the start of FSD, possibly as early as development, production, and operational

concept exploration validation phase if the support.

program plans call for production. Additionally,

a growing number of industrial firms have While evaluating contractor's

Initiated formal producibility functions. producibility program, the data and

documentation demands placed on the

Systems design and manufacture contractor should be held to a minimum.

should incorporate a structured producibility Evaluations should make use of contractor's

program. History has demonstrated that as internally prep.,red information required in the

7-1
execution of his produc!bllity efforts and design document descdbe the physical, functional,

review process. Specific information about and support framework for the system. These

requirements is discussed in succeeding statements operate as constraints on the

paragraphs along with contractor producibility design. The relationships between the

activity and approaches to the design review performance objectives and the constraints

process. Of the five elements listed above, establish the potential standards of

the program manager support of producibility producdbility for the design. If the statements

may be the most critical in achieving a of constraints rigidly specify the system,

successful producibility program. subsystem, componert, materials, and

manufacturing processes, the producibilIty of

Generally, the prime contractor the design Is essentially predetermined (even

attempts to respond to all of the requirements though It may not have been a primary

of the contract, but the degree of emphasis consideration in establishing the specification).

and management attention is a function of the The Issue of design produclbllity and

perception of tile priorities:; of 'the PM. Design capabilities of the production system should be

for producibility revolves around specifically considered when the PMO Is

communication. If the con'tractor believes that tailoring the system specification and cther

the requirement for produclbilit'; has a very cont'actual requirements for the development low priority, the emphasis will be minimal. In contract.

the typical system d3sign environment, where

producibility is not strongly supported, the The statement of physicel

need to create a design which meets characteristicks for the system reflocts the first

performance goals, (within the avai'able constraints plac'ed upon the dosigner. The

funding and development schedule), can statemets may Include the elements shown In

motivate the contractor to structure a Figure 7-1,

producibility program with form but little

substance. if the beneficial ef4

eots on the These characteristics place constraints

design process, unit production cost and upon the level of producibillty that can be

system producibility are to be realized, the attained, (The system might, for example, be

program manager will need to emphasize more ,3imply designed and more easily,

producibility activity and be willing to allow fabricated It the weight limitations could be

time and fund; for the accomplishment of increased by 5%.) Regardless of the deý'.ree of

design trade studies which are the foundation complexity of an item, the objecive of a

of the producibi'!ty effort, balanced design is to create ar. Item that will

satisfy all of the specified performance aiid

"RELATION TO ENGINEERING ACTIVITIES physical objectives and concurrently ma.latizDuring the creation of a design, the producibility. Certain design practices ,can

primary objective is to satisfy the specific make a substantial contribution to atlalirng a

functional and physical objectives establ!shed high level of produciblilty In the system.

in the requirement documents. Coordination Among these are the following:

of design engineering with manufacturing

engineering is effective in .reating a functional 1) Sicity ofl.._of esIegn; Eliminate

design: a product designed in such a manner components of an assembly by building thoir

that manufacturing methods and processes function into other components or Into Integral

allow for flexibility in producing the product at components through application of unique

the lowest cost without sacrificing performance manufacturing processes. In one case, th...,

or quality. The development of a successful objective may involve working with the desigii producibility program is dependent upon the engineer to identify arid eliminate excess comability of the PMO to inlegrate the producibility ponents. 'n another case, the focus may be

task into the mainstream of the acquisition on working with a manufacturing engineer to

program. combine components.

The requirement documents establish,

for the designer, what the system must

accomplish. These staternent., are the

performance objectives for the system.

Subsequent statements in the requirements

7-2
"* REQUIRED PHYSICAL LIMITATIONS OF THE PROPOSED SYSTEM

-- DIMENSIONS

-- WEIGHT

-- MAJOR ASSEMBLIES

" REQUIREMENTS FOR OPERATOR STATION LAYOUT

"* INTENDED MEANS OF TRANSPORT

"• ENVIRONMENTAL REQUIREMENTS

-- STORAGE

-- TRANSPORTATION

-- USE

"* POTENTIAL EFFECTS OF EXPLOSIVES

"• HAZARDS

BIOLOGICAL

-- MECHANICAL

-- RADIATION

-- OTHER

Figure 7-1 Physicei Characteristics

b) Standardization of Materials and CONTRACT IMPLEMENTATION

Components: A wide variety of off-the-shelf

materials and components are available. Designing for Produclbllity When those htem.3 ate incorporated in the The contract should Include specific design, cost Is generally rcduced and parts requirements for the integration of producibllity i•vallabillty gr(,'atly Increased. considerations into the design process. During

each stage of development, an organized and c) Manufacturig Process Capability systematic pattern of events must take place If

Analysis: Determinations of the available a design Is to meet fully all of Its objectives. nmanufacturing capacity, and Its capability to Implicit in these objectives Is the requirement produce the desired end item without special that a design achieve the highest possible controls, Is a critical aclivity In the producibility degree of producibil!ty. However, produciblity analysis. This normanly Includes analysis of goals are rarely defined In documents

the degree of process variability, the causes of describing the end Item.

variability ard the definition of methods to

reduce It. No fixed pattern of produclbllity activity

is applicable to all design programs. The d) Design Flexibjlt..ly The design should specific sequence and nature of events must

offer a number of alternative materials and be governed by factors such as system manufacturing processes to produce an complexity, the extent to which new processes acceptable end Item. Unwarranted limitations and techniques are to be employed, the

of materials or processes seriously constrain structure of the design organization, program the producibility analysis. schedule, and other variables. Even with an

effective approach, the design effort must

remain an iterative process In which all the

7-3
principal steps must be followed If an 4. Are special toolV or skills needed?

optimized design is to be achieved. There is

a substantial constraint on this iterative 5. Have unnecessi y functions and costs

process in most programs because been e!nminated?

manufacturing schedules are based on a time

limit on the release of the design, When these preliminary analyses have

been made and the approaches have been

As conditions depart from ideal, given a relative cost-effectiveness rating, the

Increasing consultation among the various approach to be developed can be selected.

specialists contrlbuting to the design is Relative ratings and the peculiarities of the

needed. Regardless of the design structure, it specific problem, schedule, funds, etc., will

is imperative that all of its special aspects be determine whether one or more approaches

considered simultaneously throughout the should be carried further in the design

entire design cycle. Only with such recurring process.

attention can optimum results be achieved.

Concern for producibility must be

The design process can be modeled exercised at the start of the concept

as sequential steps as shown in Figure 7-2. exploration phase and will influence the entire

The process Is not a one-pass operation but is deslin effort from that point on in every item

a chain of iterative loops and interactions, of the life cycle. Inherent producibility

With a number of posslbilities to consider, limitations must be recognized and addressed

analysis is required to choose the approach at each stage of the life cycle process. Broad

that shows the greatest promise. The nature producibility considerations might Include the

of the pailicular problem may dictate that selection of materials and manufacturing

several approaches be developed In parallel; processes. The iterative design process

however, the steps remain the same. This mapped In Figure 7-2 is filled with decision

phase requires, as a minimum, the analysis of points, each of which permits a potential

four items: (1) risk involved in design trade-off against some other requirement. aitematives; (2) functioni versus cost; (3) However, all demands upon the system such

schedule versus cost; (4) and components as reliability, availability, maintainability, safety, required versus manufacturing capability, or producibility heavily Interact with each other

throughout the design process, creating the

Sc!)edule is very much a produdbility need for trade-offs.

factor. An end item that must go into

production in six months cannot use a Producibility Objectives In DGsign

manufacturing technique that will not be Considerations should Include, but not

available for one year. However, a possible be limited to the Issues shown In Figure 7-3.

tradeoff of a potential manufacturing Too often, it is assumed that designing for the

development with substantial cost savings may use of existing tooling Is the most economical

justify rescheduling approach, without giving due consideration to

new more economical materials and

In analyzing components for processes. Further, designers also tend to

manufacturing capability, the contractor shouid design around their existing processes without

be considering factors sul as: due consideration to ongoing manufacturing

technology developments. This can have

1. Will the Item be manufactured in the detrimental effects on produlibllity which may

United States or overseas? result in excessive engineering change orders.

The producibility plan discussed later In this

2. Will a commemial component be Chapter should identify the contractor's system

available several years from now, or does the of review of engineering design to assure that

design specification greatly limit future off-the- the composite of characteristics which, when

shelf procurement, thus reducing its cost applied to equipmont design and

effectiveness'? manufacturing planning, leads to the most

effective and economic manufacturing

3. Is the component material on the approach.

critical list?

7-4
DETERMINE I REVIEW ENGINEERIN

REVIEW REQUIREMENTS CHARACTERISTICS OF MATERIAL

MATERIAL NEEDS PROPERTIES

SELECT POTENTIAL DO MATERIALS SATISFY ARE MATERIALS

MATERIAL CANDIDATES DESIGN REGUIREMENTS? STRATEGICALI.Y CRITICAL?

! HARDNESS Y

NO CORROSION RESISTANCE -YES YES NO

SOnTHER ARE MATERIALS

COMMERCIALLY

AVAILABLE?

NO

YES

NO - ARE THERE

SYES ALTERNATIVES?

LIST MANUFACTURING -ARE PROCESSE

PROCESSES SUITABLE FOR S-- OMPATIRLE REQUIREMENTS?

WITH MATERIAL.S

NIO QUANTrrIES YES HAVE PERSONNEL

CONSTRAINTS?

YES NO

UAFLE SCE-LES 'ES- ARE THERE SUFFICIENT

BE DEV'ELOPED? NO ALTERNATIVES?

NO YEIS

DOES MATERIAL AND PROCESS COMBINATION

PROVIDE MOST OPTIMUM ECONOMICS

AVAILABILITY AND QUALITY?

__NOI YES

Figure 7-2 Producibility Considerations During the Iteiative Design Process

7-5
MAXIMIZE MINIMIZE

- SIMPLICITY OF DESIGN • PROCUREMENT LEAD TIME

• USE OF STANDARD PARTS • USE OF CRITICAL (STRATEGIC) MATERIALS

- NUMBER OF POTENTIAL SUPPLIERS

AND PRODUCERS • SPECIAW PRODUCTION TOOLING

- PROCESS REPEATABILITY AND - SPECIAL TEST SYSTEMS

PREDICTABILITY - USE OF CRITICAL PROCESSES - USE OF PROVEN MANUFACTURING

TECHNOLOGY AT THE SCHEDULED - SKILL LEVELS REQUIRED IN

PRODUCTION START MANUFACTURING

- EASE AND SPEED OF ASSEMBLY • UNIT COSTS

- USE OF ECONOMICAL MATERIALS • DESIGN CHANGES DURING

MANUFACTURE * USE OF CAD/CAM - USE OF LIMITED CAPABILITY ITEMS - CONFIRMATION OF DESIGN AND PROCESSES

ADEQUACY

• USE OF PROPRIETARY ITEMS WITHOUT

"PRODUCTION iGHT" RELEASES

* REMOVAL OF EXCESSIVE MATERIAL

• UNREALISTIC TOLERANCES

Figure 7-3 Engineering Design Criteria

PRODUCiBILITY ENGINEERING AND purpose production equipment and perform

PLANNING computer modeling or simulation of the

The primary purpose of produclbllity manufacturing process from a produciblllty engineering and planning (PEP) Is to ensure a assessment standpoint, a Statement of Work

smooth transition from development to (SOW) must be developed to establish both

production, To accomplish this objective, the general and specific requirements. PEP effort must be an explicit part of the

developmental actIvfty and encompass those Objectives and Funding tasks necessary to assure weapon system or The objectives of PEP can be

element producibility prior to quantity segregated between producibility engineering production. It should be noted that DODD design criteria described above, and the

4245.6, "Defense Production Management," producibility planning data requirements as

requires a contractually authorized PEP activity shown In Figure 7-4. With approximately 60

as part of the engineering development. percent of weapons system acquisition dollars

expended In the production phase, It is

_rhe Focus of Producibility Engineering and Important that the Request for Proposal for

Plq nina earlier program phases clearly Identify the

The focus oi the PEP effort Is government's PEP needs. This Is especially

evaluation of the systems design as It evolves Important because contractor PEP efforts will

to Identify potential manufacturing problems be dependent on the level of funding provided and to suggest design trade-offs which would by the government In this area. Thus, the

facilitate the manufacturing process. In order early identification of design criteria and data

to ensure contractor availability of the requirement objectives, along with the

necessary disciplines, such as those required corresponding funding, will be Instrumental In

to develop data packages, design special achieving meaningful results. Clearly, the

7-6
"• MAKE OR BUY

"* MANUFACTURING AND PROCUREMENT LEAD TIME

"* FIRST ARTICLE LEAD TIME

"* MANUFACTURING SCHEDULES AND DELIVERY RATES

"* PARTS, MATERIALS, AND PROCESS PLANNING

"• QUANTITY MANUFACTURING SKILL LEVEL REQUIREMENTS

"* CRITICAL PATH ALTERNATIVES

' YIELD RATES FOR CRITICAL PROCESSES

Figure 7-4 Planning Data Requirements

requirements govern th4 level of contractor program management organization must

effort. The contractual prk:vlsions, as well as Include the flexibility to ensure focus on

corresponding Contract Data Requirements program goals. Government production

List and definitive data Items, should reflect engineers must be continuously Involved with

Individual program needs. Special emphasis contractor design engineering in order" to

should be placed on producibility training for evaluate design proposals (such as

design, manufacturing, and quality assurance specifica"ons, trade-off studies and

engineers. The training Is likely to eliminate producibility analyses), configuration

the chasm which often exists between these management, and production plans.

engineers. By Implementing an adequately

funded PEP effort early in the engineering Producibility Englneerino and Plannina

design cycle, a strong manufacturing program Measuies

will emerge. The purpose of PEP Is to ensure that

mawdral designs reflect good producibility

Contract Functions considerations prior to release for

The program menager should ensure manufacture. PEP measures Include the

that PEP objectives are identified early in the engineering tasks undertaken to ensure a

development cycle and that corresponding timely and economic transition from

levels of funding will be avallible. As development to production. PEP measures

Indicated by Figures 7-3 and 7-4, the SOW also include the confirmation of producibility

Items establishing the PEP effort may Involve during the latter stages of development. The

many specialized contract functions and objectives of PEP Include, but an not

monitoring organizations. For example, In necessarily limited to, the areas shown in

designing to meet prototype fabrication and Figure 7-5.

low rate Initial production schedules, special

hard and soft production tooling and special Producibility considerations can have

test equipment requirements will normally be extended horizons beyond conventional and

generated, requiring the use of attendant existing production capabilities. For example,

government property clauses. These clauses consider:

differ as a function of contract type (cost or

fixed-price), degree of competition (sole-source 1) Computer modeling or simulation of

or competitive), and category of government manufacturing processes to assess

property. Because contractors may be producibility.

Influenced by factors such as desire to use

contractor-peculiar capabilities and proprietary 2) Performing risk analysis of new

process/equipment, or to maintain a certain manufacturing processes.

work force skill mix, the government's

7-7
"* DEVELOP TECHNICAL DATA PACKAGES

"* DESIGN AND PROVE OUT SPECIAL-PURPOSE MANUFACTURING EQUIPMENT

AND TOOLING

"* COMPUTER MODELING/SIMULATION

"* ENGINEERING DRAWINGS

"* ENGINEERING, MANUFACTURING, AND QUALITY SUPPORT INFORMATION

". DETAILS OF UNIQUE PROCESSES

"* DETAILS OF PERFORMANCE RATINGS, AND DIMENSIONAL AND TOLERANCE

DATA

. MANUFACTURING ASSEMBLY SEQUENCE METHOD SHEET SCHEMATICS

"* MECHANICAL AND ELECTRICAL CONNECTIONS WIRING DIAGRAM

"* MATERIAL AND FINISHING INFORMATION

"* INSPECTION, TEST, AND EVALUATION REQUIREMENTS

"* CALIBRATION INFORMATION

"* QUALITY CONTROL DATA

Figure 7-5 Producibility Engineering Planning Objectives

3) Determining the need f o r sufficiently Into the low rate Initial production

manufacturing technology development efforts. phase to ensure producibility analysis of the

total end Item. Simultaneously, it will assure

4) Group technology considerations in the adequacy of the technical data package.

part design and fabrication plan. This includes changes resulting from low rate

initial production.

5) Planning for new plant layouts.

PEP should be treated as a separate

6) Exploitation of foreign manufacturing task in a research, development, test and

technologies for enhanced producibility. evaluation project and should have complete visibility and traceability during the project. To

Application of Producibility Engineering and ensure this visibility, the subject of producibility

Planning in the Acquisition Process should be an agenda Item at all program

PEP efforts are funded early enough reviews and production readiness reviews.

to be essentially complete by the end of the

full-scale development phase of a program. Responsibility for Producibility Engineering and

PEP should be started early in the acquisition Planning Effort

cycle as shown in Figure 7-6 to preclude The program manager Is responsible reiteration of designs resulting from changes for planning, budgeting and contractually

brought about by producibility analyses. The specifying PEP efforts. The contractor is

efforts accomplished during the full-scale responsible for the effective execution of the

development phase will primarily address PEP program. In achieving a producible produciblilty of critical components, and extend design, a contractor has numerous tools

7-8
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7-9
available to him; however, none Is more

Important than a well-engineered and well- 3. An Idernf Ication of the unit or persons

executed producbilli;" progrqm plan. having the task assignment and their

responsibility and authority.

PRODUCIBILITY PROGRAM PLAN 4. An assessment of known or potential

The producibility program plan details problem areas and their Impact on the

the organizational structure, authority, and progress of the program.

responsibilities of the personnel that will be

utilized to monitor producibility and perform the 5. A milestone planning chart or other

required analyses. Normally prepared by the graphic portrayal of scheduled events.

contractor for the PM, the p!an should outline

organizational functions, methodology, 6. The plan shall provide for and

objectives, and reporting procedures that will schedule produclbility analyses to be

be used to ensure producibility in the design conducted on each design concept being

of an item. The impcrtance of the program considered.

plan as a contractual clause cannot be

overemphasized. A producibility analysis will 7. Alternate approaches will be reported.

often Invulve data that will require a

predeterrnination of rights to proprietary data. 8. Detailed procedures and checklists for

Many manufacturers classify their accomplishing the producibility analyses

manufacturing process information as prepared for design reviews.

proprietary and it is ad,.isable to clarify this

point with a contract clause on the Data Item: Produclbli..v Analysis

predetermination of rights. It must be The producibility analysis plan permits

recognized that some processes are the evaluation of manufacturer's methods of

proprietary and will remain so. It will conducting the analysis to determine the most

frequently be necessary to purchase effective manufacturing methods of the end

producibility engineering as a dr,'a item under product. This data Item descriptlon can be

a research and development contract for an applied throughout the acquisition cycle of any

end item. To assist the progam office in the program whose end result is a production

preparation of the data item description, the program. The purpose Is to assure that the

Information in the following paragraphs may be systems, subsystems, and component dosigns

helpful. meet the standards of produciblilty.

Data Item: Producibility Program Plan In establishing a requirement for

The producibility program plan permits producibility analyses, the PM may require the

the determination of the manufacturer's ability contractor to develop an appropriate set of

to maximize the sy3tem, subsystem, and/or checklists applicable throughout all the

component producibility thrnugh the utilization program phases. The checklists In Figure 7-7

of an effective organization to identify, should aid manufacturers in performing

establish, and accomplish specific producibility productivity analysis.

tests and responsibilities. This data item

description is applied whon the producibility

task has been Included In the contract CONTRACTOR ORGANIZATION FOR

statement of work. PRODUCIBILITY

There are a number of alternatives for

The contractor's producibility program, the contractor when organizing to achieve

which is documented in the producibility producibility. Four approaches often used are:

program plan, should contain (but not be

limited to) these items: 1. Assign responsibility for the

achievement of producibility to those personnel

1. A detailed listing of tasks and in the various existing functions as a part of

procedures used to conduct the producibility their basic work tasking.

program.

2. A description of each task.

7-10
GENERAL ASPECTS QE 1NESIGN

a) Have alternative design concepts been considered and the simplest and most

producible one Selected?

b) Does the design exceed the manufacturing state-of-the-, £

c) Is the design conducive to the application of econnmV, processing?

d) Does a design already exist for the Item?

e) Does the design specify the use of proprietary "'jals or processes?

Q) Is the Item overdesigned or underdeslg - ?

0) Canr redesign eliminate anything?

h) Is motion or power wasted?

I) Can the design be simpliflec

J) Can a simpler manufacturin4. process be used?

k) Can parts with slight differences be r--de !Ientical?

I) Can compromises and trade-offT ' - used tr a greater degree?

m) Is there a less costly part that 'jli perform tha same function?

n) Can a part designed for other equipment be used?

o) Can weight be reduced?

p) Is there something slmllF- his design that costs less?

q) Can the design be made t. :.cure additional functions?

r) Are product assurance provil. ions toy rigorous for design or fPuctuations?

s) Chn multiple parts be combined into a singie net srape?

t) Have packaging and accessit' ,v of electronic components ar, .bilis

been given sufficient conslderr n?

SPECIFICATIONS AND STANDARD

a) Can the design be standardized to a grei iar ,o,,lgree?

b) Can the design use standard '-tting tols to a •yieater degree?

c) Is there a standard part thr .an replace a mLnufactured Item?

d) Can any specificatiors be n baxed or eiiminated?

e) Can standard hardwar' be usori to a grt -er degree?

1) Can standard gagas ,i ,jsa.d to a grepc.r clegree?

g) Are nonstandard !' o..ads Ased?

h) Can stock .' .s .- e uiJ to a gre&'•,r degree?

I) Should pa.-kaqlng speclflcatlon- ..d relaxed?

j) Are spAclic•,tlo , ',-r.." bancare consistent with the planned product envlronm.,.t?

Fiqcut 3 7-7 P.Roducibility Analysis Checklist

7-11
DRAWINGS

a) Are drawings properly and completely dimensioned?

b) Are tolerances realistic, producible, and not tighter than function requires?

c) Are tolerances consistent with multiple manufacturing process capabilities?

d) Is required surface roughness realistic, producible, and not better than

function requires?

e) Are forming, bending, fillet and edge radii, fits, hole sizes, reliefs,

counterbores, countersinks, o-ring grooves, and cutter radii standard and

consistent?

1) Are all nuts, bolts, screws, threads, rivets, and torque requirements

appropriate and proper?

g) Have requirements for wiring clearance, tool clearance, component space,

and clearance for Joining connectors been met?

h) Have all required specifications been properly Invoked?

I) Are adhesives, sealants, encapsulants, compounds, primers, composites,

resins, coatings, plastics, rubber, moldings, and tubing adequate and acceptable?

J) H&.s galvanic corrosion and corrosive fluid entrapment been prevented?

k) Are welds minimal and accessible? Are the symbols correct?

I) PHave design aspects which could contribute to hydrogen embrittlement, stress

corrosion, or similar conditions been avold-.d?

m) Are lubricants/fluids proper?

n) Are contamination controls of functional systems proper?

o) Have limited life materials been Identified, And zan they be replaced without

difficulty?

p) Have radio frequency Interference (RFI) shielding, electrical, and static bond paths

been provided?

q) Have spare connector contacts been provided?

r) Are Identification and marking schemes for maximum load pressure, thermal, noinfllght

items, color codes, power, and hazards on the drawings properly?

a) Do drawings contain catch-all specifications which manufacturing personnel would find

difficult to Interpret?

t) Have all possible alternatives of design configuration been shown?

Figure 7-7 Producibility Analysis Checklist (Cont'd)

7-12
INSPECTION AND TEST

a) Are Inspection and test requirements excessive?

b) Is special Inspection equipment specified In excess of actual requirements?

c) Is the Item Inspectable by the most practical method possible?

d) Have conditions or aspects anticipated to contribute to high rejection rates been

Identified ane. remedial action Initiated?

e) Have required mock-ups and models been provided?

f) Are special and slandard test and Inspection equipment on hand, calibrated, proofed,

and compatible with drawing requirements?

g) Are master and; special gages complete?

h) Have nondestructive testing techniques been Implemented?

I) Have adequate provisions been provided for the checkout, Inspection, testing, or

proofing of functional Items per operational procedures?

J) Is nonstandard test equipment necessa,-y?

MATIEALS

a) Have materials been selected which exceed requirements?

b) Will all materials be available to meet the required need dates?

c) Have special material sizes and alternate materials been Identified,

sources verified, and coordination effected with necessary organizations?

d) Do design specificationa unduly restrict or prohibit use of new or alternate

materials?

e) Does the design specify peculiar shapes requiring extensive machining or

special manufacturing techniques?

1) Are specified materials difficult or impossible to fabricate economically?

g) Are specified materials available In the necessary quantities?

h) Is the design flexible enough so that many processes and materials may be

used without functionally degrading the end Item?

I) Can a less expensive material be used?

J) Can the number of different materials be reduced?

k) Can a lighter gage material be used?

I) Can another material be used that would be easier to machine?

m) Can use of critical materials be avoided?

n) Are alternate materials specified where possible?

o) Are materials and alternates consistent with all planned manufacturing

processes?

Figure 7-7 Producibility Analysis Checklist (Cont'd)

7-13
FABRICATION PROCESSES

a) Does the design Involve unnecessary machining requirements?

b) Have the proper design specifications been used as regards metal stressing,

flatness, corner radii, types of casting, flanges, and other proper design standards?

c) Does the design present unnecessary difficulties In forging, casting, machining,

and other fabrication processes?

d) Do the design specifications unduly restrict production personnel to one

manufacturing process?

e) Can parts be economically subassembled?

f) Has provision been made for holding or gripping parts during fabrication?

g) Is expensive special tooling and equipment required for manufacturing?

h) Have the most economical manufacturing processes been specified?

i) Have special handling devices or procedures been Initiated to protect critical

or sensitive Items during fabrication and handling?

j) Have special skills, facilities, and equipment been Identified and coordinated with

all affected organizations?

k) Can parts be removed or disassembled and reassembled or reinstalled easily and

without special equipment or tools?

I) Is the design consistent with normal shop flow?

m) Has the consideration been given to measurement difficulties In the manufacturing

process?

n) Is the equipment and tooling list complete?

o) Are special facilities complete?

p) Can a simpler manufacturing process be used?

q) Have odd-size holes and radii been used?

r) in the case of net shape processes have alternate processes been specified?

a) Can a fastener be used to eliminate tapping?

t) Can weld nuts be used Instead of tapped holes?

u) Can any machined surfaces be eliminated?

v) Can roll pins be used to eliminate reaming?

w) Do finish requirements prohibit use of economical speeds and feeds?

x) Are processes consistent with production quantity requirements?

y) Are alternate processes possible within design constraint?

JOINING METHODS

a) Are all parts easily accessible during joining processes?

b) Are assembly and other joining functions difficult or Impossible due to lack of

space or other reasons?

c) Can two or more parts be combined Into one?

d) Is there a newly developed or different fastener to speed assembly?

9) Can the number of assembly hardware sizes be minimized?

f) Can the design be changed to Improve the assembly or disassembly of parts?

g) Can the design be Improved to minimize maintenance problems?

h) Have considerations for heat-affected zones been considered when specifying a

thermal joining process?

Figure 7-7 Producibility Analysis Checklist (Cont'd)

7-14
COATING MATERIALS AND METHODS

a) Are protective finishes proper.' specified?

b) Has corrosion protection been adequately considered from the standpoint of

materials, protective measures, and fabrication and assembly methods?

c) Have special protective finish requirements been identified and solutions defined?

d) Can any special costing or treating be eliminated?

e) Can precoated materials be used?

HEAT TREATING AND CLEANING PROCESSES

a) Is the specified material readily machined?

b) Are machining operations specified after heat treatment?

c) Have all aspects of manufacturing Involving heat treating and clenning processes and

their interaction with other manufacturing areas been reviewed?

d) Are heat treatments properly specified?

a) Are process routing. consistent with manufacturing requirments (straightness, flatness, etc.)?

SAFETY

a) Have static ground requirements been Implemanted In the design?

b) Have necessary safety precautions been Initiated for pyrotechnic items?

c) Have RFI requirements been Implemented in the design?

d) Have necessary safety requirements for processing materials such as magnesium and

beryllium copper been considered?

ENVIRONMENTAL REQUIREMENTS

a) Have adequate provisions been included to meet the thermal, humidity, or other special

environmental requirements?

b) Has adequate heating and/or cooling been identified and Implemented?

c) Are specifications overly stringent?

d) Can specifications be waived for unique conditions

Figure 7-7 Producibility Analysis Checklist (Cont'd)

7-15
2. Assign responsibility for producibility processes, for an organization which allows for

engineering to an existing product or design a close interaction between design and

engineering function. They already have manufacturing.

responsibility for product design and

consequently are In the best position to Considering the technology explosion

ensure producibility In the design. of recent years and the number of new

processes and materials that are currently

3. Assign responsibility for producibility to being developed, it would seem wise to bring

the production or manufacturing engineering materials specialists Into the areas of

function. They are already In the best position manufacturing and test and evaluation, as well

to understand the production1 processes and as specialty vendors, Into the design process

their effect on producibility. at an early stage. This can be done In

various ways and might involve such people

4. Establish a new function of as process engineers, cost analysts, tool

producibility engineering and staff it with engineers, industrial engineers, quality control

personnel of product engineering and engineers, chemists, and metallurgists.

manufacturing engineering background with Consequently, the form of the new

emphasis on the latter. organization is not Important to this discussion.

The main point is that detailed Interaction

Each of the listed allematives offers should occur between the product design

some benefits and each has Its limitations, engineers and such personnel having specific

Since producibility in an Interdisciplinary knowledge of the available maniffacturing

activity, the fourth alternative is strongly technologies and their relevant costs.

favored. However, it may not be entirely

suitable. Split responsibilities can be the

spawning ground of management VALUE ENGINEERING

indecisiveness. A division of responsibilities Value engineering (VE) Is kased on

for the achievement of a specific task not only the concept that a design will cost lees to

impedes the ability to address the task as a manufacture if It Is value engineered from Its

whole but at the same time undermines the Inception. However, Initial product design

assignment of accountability. The specific often precedes or is accomplished

approach to be utilized on any individual independent of selectior, of a manufacturing

program should be dictated by the facts and system and VE then operates as a reapprais~l

circumstances of that program. It should be of a design.

noted that the inclusion of the responsibility for

producibility within an organization with a VE brings together all the specialized

potentially incompatible function can result in a knowledge within an organization. If

less than acceptable execution of the representatives from eogineering, methods,

producibility responsibility. In this regard the manufacturing, and quality are brought

program manager might consider the potentia! together as a VE team activity, the value

benefits of the contractor establishing a new characteristics may be determined and

function for the producibility task. significant benefits in cost reduction, reduced

manufacturing time, and improved quality, may

The establishment of a new function be realized.

with primary responsibility for producibility

engineering can take many forms: (1) it can DOD Policy

be a completely new organization; (2) it can DOD po~kcy has always bean to

t-e a review team made up of personnel from encourage value engineering hecause It saves

currently assigned project functions, or; (3) It mon3y. Increasing emphasis in tho 1980's led

can be a permanently assigned committee to Congr'essional interest in 1517 and the

made up of personnel currently assigned to OMB Circular A-131 in January, 1IN, Poiicy

functional areas. Whether the organization has shifted from DOD encouragemsMt to OM3

consists of a permanent staff, or a part-time directed use of Value Engineering i-rugram

staff, is not significant, for such organizations Requirements Clauses for contracts in initle,ý

function in much the same manner. There is production or reseatrch and development.,

also a need, because of the accelerating unless a waivrst is justified. AgGnciens are iiow

advances being made on materials and required to "aw*.vely elicit" Vqlue Fi.glneedng

7-16
Change Proposals (VECP's) from contractors product:

and are to emphasize VE to government and

contractor personnel. I. What Is It?

Elements 2, What does It do?

There are seven basic elements of the

VE methodology, although they may r~ot 3. What Is it worth?

always be distinct and separate. In practice, they often merge or overlap. The seven 4. What does it cost?

elements referred to are:

5. What stse might do the job?

I1. Seleefflon of Produ~ct -- Selection of the

havdware system, subsystem, oi, component to 6, What would that cost?

which VE efforte we to be applied; Value EnginsedIng In the Contractual

2. Sppqificatiori of Function -- Analysis Environment

and definittrin of function(s) that must be The objective of VE In defense

performed by the hardware; conlracts Is to reduce the cost of acqýuisllion

and'ar ownership to the governrner~t. In

3, Collection of Inforinaticn -- 1 he puiling addition VE is also used to enhance the worth

together ot zý perinent facts concerning the of effectiveness of the system. To &ccomplish

product; i.e., present cost, quality and rellablilty these goals, mted~al contrac& clausefs can be

requia'ements, develaprn~n! history' and ihe utilized (FA9i 48.2). These clauses can either

liko;allow or require contractors !o Initiate, develop and submit cos~t reduction proposc~s during the 4. 9GVGJLrCq pg of Alternatives -- The promnefthcontract. Through the VE

creation of Ideas for alternatives t-.- established clause, the contractor is offered the

design; opportunity to share the attained savings with

tha DOD.

S. Sef-fv of Aiternatlve~s -- Estimation

of the coto raic~a 1 n election of It should be rnoted that a contractorone or more of the mc-.e attemnatives for generated value VEOP may be submitted, and

testli ~p of lochnic~al feasiblity; approved by the government, evern If the

contractcr did not use V~E techniques In

6, Test and Verification -- Test of developing the VEOP. however, In order for a

atermatives(a) to ensure ftlthey will not VEC P to be accepted, a d~iange to the

jeopardizG k~ifillmevot of performance -ontract must ba negotiated.

tA7nctiona) toquirements: Value Lfjplneering Incentive Ciausc&

7. Subo"ntt~o~PrcL,,sal and Follow-UD-- I-ve objective of this clause Is to

Preparation aond subm~skn of a formf I VE encourage contractors to develop and submit

char'qe proposal. VECPs by pioviding for tlhe sharing of any .4avings, although the contractor Is no, required

As at) organzv~d disopIk~e, the VE to do yE. The clause merely describes the

offort shtpuld comprise a03 sevell elements. Ini sharing that will U*~. place should the

some contraMting agencies or firms, tiese contrnctor submit a V E '"PP which the

elements 0f the '12 jctb are wsslgned as governri.,ntn accepts. Entirely permissive in

co'literal responsibilities to design engineers, Intent, it allows Vi e contractor to Ignore this

production engineers, purchasing spvcialists, provision and still othertilse perform under his

or enginefering ccst analysts under thq contract.

assumption that, coilect~vely, VE efforts arf) being accomplished. Value Engineering Prooram _Reqiulrement Clause

Annther means of de~scribing the The objective of the VE program substance of the above elements Is to point requirement clause is to reduce development,

out that rnrf'orming the offorA describes production, or use costs by requiring the

answ~rdr to the fofiowirig questions about a contractor to establish a VE program. This

7-17
clause should be used when a sustaineo VE In regard to computing instant cost

effort at a predetermined level Is desired. The savings and tho net amoun! to be shared,

VE program requirement Is a separately priced FAR provides that the government's cost to

line Item In the contract and may apply to all develop and Implement the change Is aao

or to selected phases of contract performance. Included In computing the net savings to be

shared.

There are two sources of savings to

be shared under the VE clauses. These .e Collateral Savings

acquisition savings and collateral savings. Collateral savings are those

Each will be described In the subparagraphs measurable net reductions in the cognizant

that follow. military department's overall documentable

proJ6,ted cost of operation, maintenance,

Acquisition Savings logistic support, or goveniment furnished

'The FAR provides guidance -n the property (GFP) when such savings result from

meaning of instant, concurrent, and future the VECP submitted by the contracor --

contracts. For computing Instant savings, the whether or not there is any change In the

Instant contract does not Include supplemental acquisition cost. The collateral savlngs may

agreements, options, add-ons, or other be excluded from a contract or class of

quantity modifications entered Into .After the contracts when it is determined that the oust

VEOP is approved. These savingi become of computing and tracking collateral savings

future acquisitions In which the contractor may will exceed tNt benefits to be dedved.

share if there is such a sharing arrangemnent

Included in his contract. Prior orders are

considered to be existing contracts;

subsequent orders, future contracts. For

muitiyear contracts, the instant cortract shall

be the funded contract at the time the VECP

is approved, and items purchased under

subsequent fund-ng under this contract shall be treated under the future contract VE

sharing provisions.

7-18
CHAPTER EIGHT

MANUFACTURING TECHNOLOGY

CONTENTS

Page

OBJECTIVE 8-1

INTRODUCTION 8-1

PROCESS PLANNING AND SELECTION 8-1

Doslgn Requiremen•s 8-1

Material Requirements 8-1

Finish Requirements 3-?

Shape a•ta Form 8-3

Operatir Sheets 8-3

FACILITY AI-R-NGEMENT 8-5

TECHNOLOGY TRENDS 8-5

MANUFACTURING rECHNOLOr3Y 8-5

INDUSTRIAL MODERNIZATION INCENTIVE PROGRAM (IMIP) 8-8

FACILITY MODERNIZATION 8-11

PRODUCTION INNOVATIONS 8.12

ROBOTK;S 8-13

The Nature of Industrial Robots 8-13

Growth of Industrial Robot Installations 8-13

Manufaciuring Cost Distribution 8-14

Robotic Integration 8-i5

Impediments to Appl-catlon of Robotics 8-16

OVERVIEW OF COMPUTER AIDED DESr3N AND MANUFACTURE 8-17

Computer Aide.1 Design 8-18

Computer Aided Manufacturing 8-18

Computer Aided Design and Computer Aided Manufacturing 8-18

Computer Integrated Manufacturing System 8-21
MANUFACTURING TECHNOLOGY

OBJECTIVE

This chapter describes the role and numerous, and selection of a particular

impact of manufacturing technology on the process requires corsideration of process

systems acquisition process. Manufacturing capabilities and limitations In order to reduce

process evaluation and selection establish the the number of alternatives to a reasonable

manufacturing cost and risk. The chapter number for a final selection. The variety of

treats both the physical processes and processes available for metal fabrication, as

management structure In which process an example, are Illustrated in Figure 8-1.

decisions are made. The impact of and tools

for encouraging induatrial modernization are Process selection Is based on the

described. Emphasis is also placed on the issues of economy, risk and the end

impact on computers on process selection and application of the product. The choice of a

control to prepare the Program Manager (PM) process is based on several requirements.

to deal with their program impacts. The following discussion provides an

introduction to the process selection procedure

based on dAsign requirements.

INTRODUCTIC N

Mantfactuudng processes are the Design Requirements

activities which change the form or properties Design requirements constrain process of materials to give them the physical and selection by establishing performance

functional characteristics which are required by requirements on the system and, by the end item design. To achieve production implivation, on the individual parts. For

phase objectives it is necessary to use example, metal parts which are highly stressed

efficient, shop-proven processes for material by directionally stable loads may require a

transformation. These two process descriptors forging operation so that the directional -- efficient and shop-proven -- often tend to be properties of the material can be aligned with

mutually exclusive. New processes and new the load paths.

approaches to menufacturing execution, such

as computer-aided manufacturing, often do not Material Requirements

have extensive shop experience. The The choice of raw material will be

challenge to the PMO is to obtain maximum determined by the mechanical characteristic

efficiency of manufacture within the risk levels desired. Ultimate strength, fatigue and

cJeemed awceptabie for the specific program. corrosion properties often lead to the selection

"This chapter identifies some of the of specific materials. There may also be

mechanisms for describing and proofing design limitations, such as weight and size,

manufacturing processes. There is also a which constrain the material selection. If the

discussion of the integration of advanced material to be used is specified in the design

manufacturing technolvgy Into the package this often limits, or even dictates, the

manufacturing program. it is impoitant to processes which can be used. Materials such

recognize that advanced manufacturing as magnesium and titanium Impose limitations

technology generally brings certain levIs of on the choice of processes which can be used

risk to a program along with the pCential for their transformation duo to the metals'

tyanerls of improved efficiency. special physical or chemical properties. For

example, grinding or welding magnesium

should be avoided due to the metal's

PROCESS PLANNING AND SELECTION flammability if not properly shielded from air or

In manufacturlng planlng, It is oxygen. Titanium tends to weld to steel

necessary to ;datine the specific process which surfaces of forming tools and Is more easily

will be used in marnufacturing the product. formed at elevated temperatures. When

Part geom-etry, size, material to bo used, materials thus limit the process selection, the

number of parts to be produced and dollar cost of the processes can be extremely high. value of the finý3hed product are important As another example, fracture toughness

factors to be considered. The variety of requirements In structures may lead to

processew, available lor producing the part are selection of a ceramic materda!, if brittleness Is

8-1
-cn 09 -

00 q.(40 g0L

2 C.Z Z z L > Z _.j

4 w C.) >MM U, 0 *w m 2 0:

ozoz

z VuZ

z 30 0 M ) 5 g F D 0)LJ4 -J~L 

J (n E CE

IL 0 ( zz "i

4

i~LL.

<0 cc r-0 zU 0j cc z 2

I-w u w II I

M0

zI 4

00 z 0

~~I,0n~a. 0~. U)n .OZ

8-2CL
not a problem. Generally, the least exponsive 4. Drawina number. Provide a record for

material which meets the requirement Is the part. Often, part numbers are based on a

chosen, but the Impact of high cost processing code to Indicate relationships, such as

may lead to selection of materials whose Initial subassemblies.

cost Is higher, but whose total processing cost

is less. 5. Drawn by. Identify the planning or

process engineer.

Finish Reguirements

In most cases, the design engineer will The body of the operation sheet

specify a particular finish for the part. In the provides the detail of the necessary operations

case of surface roughness, the impact of and Inspections through the shop to complete

requirements on process selection Is illustrated fabrication, and where necessary, final

in Figure 8-2. As the smoothness requirement assembly and test of the part being conon metal parts becomes more stringent, the sidered. Operation aheets are normally

processing cost Increases dramatically, structured to provdg the following data:

Shape and Form 1. Operation identification. Sequential

In the majority of manufacturing numbering of operations necessary to process

operations, parts go through a series of stages the part.

of processing. Manufacturing economies for

metal parts can often be obtained through 2. Required Descrhitlon. Brief, concise

selection of appropriate Initial product forms definition of each operation.

such as castings, forgings or extrusions. In

electronic parts, economies can be obtained 3. Matedal Required and Quantity.

by utilizing denser integrated circuits, thus Describe both type and quantity.

reducing the complexity of the circuit boards

which accomplish the final performance 4. Parts Required and Quantity. This

function. In this regard, it is critical that the information identifies the number of previously

series of manufacturing steps to be used be fabricated parts which will be required for the

considered in total to ensure that the cost of part being planned.

the total manufacturing sequence is optimized,

rather than optimizing Individual steps in the 5. Machine Assiqng•. Designation of

process. machine to be used.

Operation Sheets 6. Jilgs, Toots and Fixtures Requlred.

After selection of processes to be Any production equipment to be used for

used, process instructions must be fabrication or assembly. Tools required to

communicated within the facility. In many provide the specifically desired manufacturing

firms, operation or route sheets are used to operation. The method of feeding, holding,

Identify the processing methods for materials positioning, and/or releasing the work may

and parts through the manufacturing area, as require use of jigs or fixtures.

well as to provide the authorization for

requisitioning the necessary tools, materials, 7. Department. The department name or

and parts. The operation sheet also provides work center in which the work Is to be

the basis for detailed planning, estimating, and performed.

scheduling of the manufacturing effort. A

completed process sheet will normally provide 8. Standard Time. Standard times

Identification data including: determined by the company through use of

accepted estimating methods.

1. Pan number. Engineering drawing

number to identity the part. Care must be used In setting standard

times since these will be used later to

2. Part name. Noun to aid in identifying establish machine and personnel requirements.

of part. Setting required times may be delayed if there

is likelihood of routing change during later

3. Date. A record of when the document process planning. Regardless of when set,

was prepared. standard times must be established by

8-3
400

ISO MATERIAL- STEEL

360

t140

320 APPROXIMATE

MACHINiNG COSTS

300

280

260 -

240

220

200 -

160

180

140

120

100 . . .. . .

8o

60

40

20

FINISH

MICRO- 200 1000 500o 250 125 63 32 16

INCHES) MACHINING OPERATIONS NECESSARY

___ ___II

ROUGH TURN I T I

SEMI-I

FINISH I

ROUGH TURN TURN f J

SEMIFINISH FINISH

AS CAST, ROUGH TURN TURN _ TURN I SAW ED, ETC. SEMI

SEMI- SROUGH FINISH FINISH TURN TUR GRIND

SEMIFIN!SH FINISH

ROUGH TURN TURN TURN GRIND- HONE

SOURCE: GENERAL ELECTRIC COMPANY - MANUFACTURING SERVICES, SCHENECTADY, NY

Figure 8-2 Relative Machining Costs and Surface Finish

8-4
persons qualified in the techniques used. The developed If these technologies are to become

development and use of standard times are part of real developed deployed systems. If

described elsewhere In this guide. the system performance forecasts are based

on advanced applications such as those In

FACILIJY ARRANGEMENT Figure 8-4, the PM should ensure that

After preliminary decision as to the manufacturing technology development is

flow patterns for work in the facility, thought occurring in concert with the, specific

must be given to the development of work engineering development.

facilities to conform with the selected flow

patterns. The work station Is the combination

of equipment and people necessary to satisfy MANUFACTURING TECHNOLOGY

the requirements of an Individual work task The objective of the DOD manufacturing

assignment. The Individual work stations are technology (MANTECH), program, discussed

combined, by either process or product previously In Chapter 4, Is to develop or

arrangement, to form departments or cells Improve manufacturing processes, techniques,

which facilitate supervision and manufacturing materials, and equipment to provide timely, planning and control. These departments are reliable, and economical production of defense

then combined to provide the total manufac- material. It is designed to "bridge the gap"

turing facility, between research and development (R&D)

Innovations and production. The MANTECH

In evaluating facility layout, certain program was initiated to stimulate research In

conditions may be observed that indicate the modern manufacturing systems, processes,

facility arrangement is not as effective as it and equipment with the goal of reducing

should be. Some of the symptoms of poor system acquisition costs. It is a program to

layout are shown in Figure 8-3. establish, validate, and Implement advanced

* MATERIALS MOVE SLOWLY THROUGH THE PLANT

* MATERIAL HANDLINC COSTS ARE HIGH

* LARGE NUMBERS OF INTERNAL EXPEDITORS ARE USED

* STOCKROOMS AND WORKPLACES ARE CROWDED

* WORK IN PROCESS IS FREQUENTLY DAMAGED OR LOST

"* WORK MOVES IN ERRATIC FASHION THROUGH THE PLANT

"* FAILURES TO MAKE SCHEDULES ARE COMMON

Figure 8-3 Symptoms of Poor Facility Layout

TECHNOLOGY T9ENDS

A number of technology areas have manufacturing capabilities for: 1) producibility,

been identified by DOD as having significant 2) productivity, 3) cost/price reduction, and 4)

potc-.,tlal benefit to DOD systems. Thesa are quality assurance. An Important MANTECH

shown in Fig, ire 8-4. in each case, the program goal Is to ensure that the results of

application of 1he te,,finology will require that laboratory research and development

the underlying sclerlific problems in the investments can be translated Into the

tech nologles be solved. In addition, cost production of defense equipment at the factory

effective manufacturing processes must be level.

8-5
Vory High Speed Integrated Circults

Fos.al Plane Arrays

Uncoo;4d Detectors

MMW Seeke. iSensors

Multi-mode/mufti-color seekers

Fiber Optics

Advanced Algorithms Processing

Advanced Warhead Concepts Almable

• Explosively formed penstrato.

Directed energy/hign power MW

Low Observables

Passive Serising and Detection

Satellite Navigation Systems

Figure 8-4 Future Trends In Technology

The MANTECH program Is designed

to stimulate effective Industrial Innovation by o State-of-the-art must have

reducing the cost and risk of advancing and been demonstrated.

applying new and Improved manufacturing technology. The Integration of MANTECH and o Substantial benefit potential in

acquisition programs Is illustrated In Figure three areas: 1) improve responsiveness to

8-5. To obtain the maximum benefit on units current and projected requirements, 2) Improve manufactured using the Improved technology, the defense production posture, 3) reflect the

new manufacturing technology should be most advanced manufacturing state-of-the-art.

available, In proven condition, early IF the

production phase of a program. Information concerning the MANTECH

program and the results of the projects are

DOD funding of manufacturing made available through four methods.

methods and technology efforts Is Intended for

projects which meet the following criteria: First: End of Contract Briefings - Generally, MANTECH contracts require the contractor to

o Setasfies a current or demonstrate the results to its peers. A list of

anticipated roquirement for which the tentatively scheduled briefings is compiled manufacturing technology will Increase general early each calendar year and distributed to the

productivity, private sectcr through a numnber of societies

and associations which Interact with the

o Not a duplication of effort of Manufacturing Technology Advisory Group aither government or private programs. (MTAG).

o Emphasis should be on Second: Technical Reports - Each MANTECH

development of processes, techniques, or contractor is required to prepare a technical

equipment rather than R&D oriented efforts. accomplisnments report. The Services

distribute these reports to those cmmpanles

known to bs Interested in the particular

6-6
J a) wE

at z

Cb

Ch

LUU

8-7-
technology. In addition, copies are sent to the the case of the government's cost based profit

Defense Technical Information Center (DTIC), policy, a contractor may actually sce profits where the report is entered Into a bibliographic reduced as a resuit of eý.'orts to Improve

data base. DTIC's bibliographic data base is productivity and reduce costs.

accessible by remote terminals from many

government and contractor locations These factors have worked to

throughout the country. In addition, those accentuate what some hnve criticized as

reports which can be released to the public for contractor management's emphasis on short

unlimited distribution are automaticaoly sent to term profits and maximizing relum on Invested

the National Technical Information Service capital. Return on assets has often been

(NTIS) by DTIC where they can be purchased used as a yardstick in measuring corporate

by anyone for a nominal sum. progress and executive performance. This

management philosophy results in a reluctance

Third: The Manufacturing Technology to invest large sums of capital due to effects

Information Analysis Center (IAC) in Chicago on the current financial balance sheet. Figure

Is one of several Information Analysis Centers 8-6 graphically demonstrates the main problem

established by DOD in recognition that it might in justifying cost reduction Investments

be difficult to find specific technical information Involving large outlays of capital. The problem within the vastness of the DOD community. Is profits (cost savings/avoidances) do not

Flhis particular IAC focuses on manufacturing Increase In the short run, while costs (capital

technology. It has on-line access to the DTIC Invested) increase significantly because capital

data bases and has created Its own data base must be Invested in advance or "up-front" of

for other literature. It has also produced the expected benefits. This phenomenon can

technical reports of Interest to the DOD lead to extremely conservative capital asset

MANTECH community such as "High Order management, and long term productivity gains

Languages for Robotics" and "Uses of Artificial are often lost.

Intelligence in Manufacturing".

Tho IMIP provides a common

Fourth: Perhaps the most effective MANTECH framework for an extension of the military

program technology transfer vehicle Is the services' "TECHMOD" and MANTECH

organization known as the MTAQ. This group programs. MANTECH is a well established

provides inter-Service coordination of the program with objectives which are In some

MANTECH program. It consists of an ways similar to IMIP, i.e., making

Executive Committee and six Technical Improvements in manufacturing productivity.

Subcommittees (Computer Aided But there are some very significant

Manufacturing, Metals, Non-metals, Test and distinctions. The main focus under IMIP Is to

Inspection, Electronics, and Ammunition). The encourage contractors to make capital

MTAG maintains liaison with about a dozen investments which will result In Increased

;ndustrial societies and associations throughout productivity, Improved quality, reduced DOD

the year. The Subcommittees' interaction with acquisition costs and an enhanced Industrial

the groups provides the opportunity for the base. IMIP Is aimed at Improvements on a

technical experts to discuss and exchange factory-wide basis, and involves both well

Information of mutual interest. The MTAG established and state-of-the-art technology.

also holds an annual plenary meeting attended Perhaps the most Important distinction is that

by MTAG members and the industry groups. the main thrust of the IMIP is on contractor

funding for investments.

INDUSTRIAL MODERNIZATION INCENTIVE The IMIP Is Intended as a tool to

PROGRAM (IMIP) overcome the previously discussed

In the Defense Industry, two problems impediments to Increased capital Investment.

have been cited most frequently as Inhibiting Under the IMIP, incentives can be provided to

modernization and progress in the productivity motivate a contractor to Invest corporate funds

area. ThFese are program uncertainties and a which result in reduced acquisition costs. The

profWi. policy which, in co.lain cases, is based

on cost. ;n the first In tance, risks are

Introdticed which hinde; Investment

amortization and Inhibit long term planning. In

8-8
0 .. COST SAVINGS/AVOI DANCES LL 4-

0

0

jO CAPITAL INVESTED -4U1 2 3 4 5 6 7 8

YEARS

Figure 8-6 Cost Reduction Example

idea is to negotiate a business arrangement agreement was made to adjust the contract

with benefits to both parties that may not have target and ceiling amounts for savings

been possible otherwise. according to a prescribed formula. An award

fee of $1 million per year for four years was

The principal incentives are shared allowed. The potential F-16 manufacturing

productivity savings and contractor investment cost savings was calculated to be In excess of

protection. r'he shared productivity savings $370 million over 1388 aircraft, witn the Air

allow industry to share in the savings which Force share of this savings in excess of $220

are a product of making these capital million.

Investments. The contractor investment

protection permits amnortization of plant ancd Figure 8-7 Illustrates the effect an IMIP

equipment through a contingent liability would have on a program baseline. The

guarantee. program baseline, with a'id without the IMIP,

is shown during its varl,)us stages, and the

The Services and their program difference between the two as shared savings

managers must continua*ly identity programs is shown.

where application of advanced technology

would inorease productivity, result in savings The technical aspects ot the IMIP are

to the government and increase profits to the divided in three phases:

contractor. Some programs that have adopted

advanced man,rfacturing practices have 1. Analysis -and Planning. This

experienced significant results. The Air Force consists of identification of high cost

F-16 program is a• classic example. A $25 manufacturing areas, analyses, and

million Air Force investment in advanced development of Initial approaches to Improve

manufacturing technology was negotiated in factory manufacturing. Analyses are made of

conjunctiorn with a commitment of the advanced manufacturing technologies,

contractor to invest $100 miilion in severable contemporary equipment, quality assurance,

plant equipment. The government provided production control, and m3nagement

termination :oiotection for the $100 millior information systems. Cost saving potential,

contractor imestment over 1158 aikcraft. An return on investment and conceptual design of
factory layouts required to Implement specific and implementing these Into production must

Improvements are developed. be developed.

PROGRAM ACTUALS 7- (WHERE AVAILABLE)

BASELINE - PRE IMIP

COST 

IN

OR

LABOR

HOURS NEW BASELINE/

WITH IMIP SHARED

(ADJUSTED AS SAVINGS

NEW

ELEMENTS ARE

IMPLEMENTED)

III I I

TIME (PROGRAM PRODUCTION LIFE)

PHASE I

SSTUDY PHASE II

DEVELOP, VA-.JDATE PHASE III

IMI•PLEMENT SAVINGS (MODERiNIZATION)

Figure 8-7 IMIP and Program Baseline Adjustments

2. Technolog1es. This includes 3. Implementation. In this phase,

establishing and validating enabling detailed factory designs are completed and

technologies which are voids In the enabling technology programs are Integrated

manufacturing state-of-the-art that must be into manufacturing operations. Advanced

overcome to attain higher levels of factory management l.iformatlon systems,

Integration. A detailed definition of factory manufacturing planning tools, and the cost

enhancements and a plan for accomplishing aiialysis and performance assessment system

nre made ready for implementation.

8-10
FACILITY MODERNIZATION printed circuit boards may be more

The annual rate of productivity economicelly supported with a foam pad than

improvemen^ In the United States is lower a Class A holding fixture, and hand assembly

than any major industrial country of the may be less costly ihan developing a program Western World. This can be attributed largely for mechanially Inserting components In the

to the fact that our manufacturing plants are board. The economics of lot sizo Is a

operating with tools and processes that have fundamental consideration In too~ing and

not kept pace with emnerging technology. The mechanization decisions.

result Is that we are losing our position as the

wodtd leader for production of manufactured Scme processes seem natura;

goods of the highest quality. Peter Drucker, a r~andidates for numerical control. S3pot

founding father of th v discipline of welding, for example, has been automatedI In

management, has called for a restoration of the auto assembly plant. However, a case

our international competitiveness basid on where the part can't be moved to the marchine

three approaches: 1) moving to enore presents another set of condition3 to be

automation.. 2) the red-asign of ernire plants considored. Complote mechanization or

and processes as Integrated flow systems, and automation uray not be the most productive 3) the Integration of mini and( mlcrocomputers alternative in muany plants due to quantity

into our tools. roquirements, spclal product chftracteuistics or

a particular plant's equ'pment Inventory. In

The technology exists 'c., drastic some cases the most attractive alternative

advances In manufacturing proc~essea and may be to have the par# produced In anotlhor

companies that have Introduced I~nnovative plant or by another cootracior. Economics is

mnetiod-s such as Computer Aided Desigo and get,arally tha basis for a contractor to

Compuiter A-ided Manutnciuring (CAD/CAM) or subcontract to other companies and a critical

Conpuiter Numerical Control (ONC) sys~tma considpralion (as discussed earlier In this

are experiencirny phenornona: prcdjictiv~ty chapter) in any modernization or expsrusion

Increases. Advanced computer Ischr~ology program ?or a contraictor,

and the development of a trieor;- vf factory architec.turci has changed many O~a ways f7,1 The 10liowii).9 facors shoulci be

doing busiregs. The opportinity exists to 3tarl streissed with the Involved contractors: (1)

deosigning direct'y to the -.~apebihdti, of our edopt gýQater Innovation In the use of

manufactu.Ing and qvvality tools, rettier than materia~s and processezs; (2) develop a strong

ir~crarnentally adepling ;e. duaign to tnie link between manufactiring R&D and

limitations of a Itad~tuns' rnar~ulactunnig operations to ensure that technoiogy which Is

operation, ready for the manufacturing floor gets there; (3) Iintiate innovative approaches from the

Not all of the ob-tolenct tniat exists financial and contracting standpoint to develop

within Inie defense Industry car be attributed riz! sharing mechanIsn'v% effective over longer

io government poliuies. Ncr Is3 the use of periods; nnd (4) make a commitmen', lor

rtandard equ$prwent and tools which have capital investmnents !o update obsolescent

prover their value over a grbat many ,,ears a fac~itles and eq;upmrontO,

valid irtdicator of in !nefticfem~ factory. Some

changos are desirable; some should ho Companies that utilize very few new

undertaken wilth cautkivi: but any change has mranufanturing processes laick a potential for

to ioe justified In the eyes of the irv'estor. productivity improvement, a poteriVal for lowet

cost manufacturing and increasea

Thern is a -oritinuing need for basic. profit-making opportun~tIos. The high cost of

r~peratior!,ý 9ich is milling a flat surfaco; failure scares off many firms and Is the prime

broaching a ke'y s~ot; and number of casting, reason for management resistance to

foi-g1,.,7 and 'iwrming methods which will not implemrentation of potentially money-1-ving

justify at tomaiting. Production requirements projects that Involve view, mome expensive, and

rnusi justify 'he cost of Lpecial fixtures in orcior complex mantfacturing equIpmant, controls, or

io rea~lze reiurn on the investment. In a processes. The Department of Defense has

qcc- many casus, general purpose tools, such strongly advocated the utilization of advanced

as viA;es, wvill be adequate for securing parts technology as a means of reducing dur~cij milNrg, drillinf or grinc:?tig. Low volurn6 manufacturing costs and to help In the
resolution of other production base problems. R. Rework and scrap DOD MANTECH and IMIP have as basic rates.

bjrtilves the Improvement of produclivity and

responsiveness of the defense Mndustrial base

by sharing with Industry the risks and costs of PRODUCTION INNOVATIONS

establishing and applying new and Improved New methods In manufacturing manufacturing technologies. deveIoped in r.'cent years are drastically changing the production process, and the

A division ol one of the larger U.S. extent of their adoption will be the key factor

corporations, while preparing to instWl what is for most ccmpanila to remain competitive. reported to be the largest concentratilon of The advent of the computer has by far been

electron beam (EB) prcduction welding the single factor that has most influenced the

machines In the world, developed a set of shift toward an automated factory system. puldelines designed to minimize the risk Factory automation Includes the use of such

associated with the new process methods as: 1) numerical control machines, implementation. The gene;'aI nature of these 2) transfor machines, 3) robots, 4) automated

guidelines Is applicable to nearly any warehouse 3ystems, and 5) material handling prospective new process application: devices tnat are hardware systems for

processing, handling, or storing factory

1. Experiment wvin as many prooucts.

process alternatives as posslhle. Make eortaln

that, before the decision is made to select a Technologically we are at the dawn of

particular now process, it is the optimal choice amother Industrial revolution brought about by

for the task that must be accomplished, the inexpensive computer power available

Consideration should be given to reliability and through today's electronic tcchnology. The

malntainaNliky, return on Investment, sele',io, of proresses driv an by today's producilvit, Improvement potential, adaptability technology are d~scussed in this chapter.

to design changes, and any special feature Professor David Acker, DSMC, contributea the

that would enhance the manufacture of the information on robotics, and computer-aided r'4uired product. dusign and manufacturing which are Included

In this chapter a& well as the information on

2. Advice from product de3ign automated systems discussed in Chapter 14.

personnel musi tonfinual'y b' sought during

the decision process The areas that lend thems=elves most

readily to computer control or monitoring are

3 Obtain names of use's of the following:

processes under consideration f-om equlpment builders. Observe both suciessful and a. Direct Process Control --

unsucce.svul process applications. Utilization of cormponents for the direct control

of ma.hine tools, referred to as computer 4. Obtain from current users: numerical control (CNC). Such a system

a. Level of operator skiil usually containL a large computer as a part required, program generator, a medium-scale computer

b. Level of maintenance as the active supervisor, an Interpolator that

skill ro.vlred, feeds data to a number of machine tools, and

c. Cost of "consumables", a minicomputer as the controller of each

d. indirect kabor required, machine tool. Also, direct computer control is

e. Long term efficiency of utilized for the cor.trol of conveyors, stacker

the process, cranes, plating operations, heat treat furnaces

f. Most frequent causes and many other factory operations.

of breakdowns,

g. Expected number and b. Process Monitoring --

severity of breakdowns, Computers are used to collect data and

h. Cost of back-up tooling provide reports to management on process

and maintenance parameters, machine utilization and

hems, and maintenance status. Powerful minicomputers

and more sophisticated hardware have created

8-12
the ability to link computer hardware as a

means of providi~ng a broad--.ýased plant ROBOTICS

monitoring and control system, referred to ý-% lN~ustrial robots, for the most part, db~tributed prc.-essirg. perform simple, repetitive motions with some

degree of pi'ecsion. They perform such tasks

C. Testing and ASI~ection and as welding, forging, material haridling, machine

Comp ter AK qd T6,,iftQgAQAT -- Comrputers loading/unloading, pCletizing, grinding, test anda autormatlcaly adjust nlectical and deburring, polishing,. spraying, escerriblirig, mechanical comporntns and assemt~kos. machining, Inspecting, and packaging. Performance etatlstics; and overall quudlty lndo strial robots have the potential to increase

reports can be providedi to i-oianagement. productivity, provide manufacturing flext~ity, reduce manufacturing costs, and replace d& Plant Mtanageernet and workers In hot, dirty, hazardous, monotonous, lnfomtatioi Systems -- Data collection and fatiguing jobs.

syste~ms use shiop floor terminals for data

originated from fcremen, tool operations and The Naturep ofIndustrial Robots

othe' shop personn'el. Date collection is often In a~ factory, robots represent usec) In conjunction with the material off-the-shelf automation. They fill the gap requirements p inning (MFIP) function as well between specliol purpose autcmatlon and

as wilh Inventory control, r/cheduling, and work human endeavor. Practically vpealdng, they Inriprocoss reporting. are machines that are capable of duplicating hum~an skills and flexibility with both accuracy

e. F2gipýrnorgup~oq -- Special and prccision.

computer aids- to the manufacturing engineering lunction include interactk'e The Robot Institute of America (RIA) gratphics symtervs ýor priduct wit; tool design defines a robot au, "a reprogrammable, &~id toeranning, time study, m3chine tool multifunctional manipulator designed to move

capability anelysis, line talanciiig, and group material, parts, tools, or specialized devices

te~canult'gy packages. through va~iable programmed motionis for the

performance of a vailety of tasks." An

f. Environmrn(ll tal Control -- Induririal robot can control and synchronl~e Computer systems are used for monitoring the equipment with which it performs. With

and controlling heating and air conditior't og, air this kind of capability, It can eliminate the

and water purity, and pawer usage. need for people to work in environment that

may be dirty, dull, or dangerous. Svccessful factory utilization of the

above control 'techniques requires a systematic Typical tasks assigned to robotics are

planning process. Detailed planning mus-t shown In Figure 8-8.

property define the company's needs arnd

apply the appropriate solutions to the Growth of mrdustrial Robot Installations

problems. The following questions mnust be Although there are obvious advantages cor.sidered: to installation of robots In our factories, U.S.

industry has been relatively slow In adapting 1. What is toe present level of them. Reluctance to do so may atemn from

Putomation? management's perception that the average worker in a factory subconciuusly fears 7obots.

2. How well does the current Workers fear robots because, at first glance, system meet company needb? they appear to be part of tile ultimate scheme

of management to eliminate workers from the

3. What level of autormation Is work place. Actually, Industrial robots

needed to satisfy rcurrent demnands, future represent a long awaited advancament.

growth and productivity requirements? Ultimately, the robets will free workers from

tasks that (1) present serious health hazards, 4. What are the systemv uses? (2) require human agility and mnobility, but are

mundane and/or repetitive, 13) require human

5. Where can the current system skill, but which cannot be performed effectively be use9d? for long periods of time bc ~ause they cause

8-13
fatigue. In the future', workers will no! become motions to human arm movements. However,

obsolete, but some of their present skills wiTl the potential for cost savings Is greater If ways

are ,-also found to use robots to save materials.

aletnUI e Ma~hny Load/nlad ToolCarrying EI Glass LI Die casting LI Spot welding LI Metal E-] Pnjectlon molding LI Arc welding rI plastics El Blow moiding LI E011lls

DI Bricks LI Thermoset molding I FReuters

LICeramics EL Ultrasonic welders L tpegn

0] Yarn r. 0npc~ndvcsL Automatic nallers

ELI Furniture parts 0I Stamping presses El Flamed'rying gure

El Food products 01 Mach ine tools LIWater J ~ts

ELI ay products ELI Lasers

Housewares akgn

El Load ing into cartons LIOAt1.Tr baklo

62rilying LI Placing into strapers El Autome flu wilding

ELI Finish materials LI Glass h indlng EL Fiberglass polyester Post Opmallon LI Convey.ir load lngfun load Ing

0] Urethane, polyester arn ELI Degating LI Def lashing Fraifl~rEQ inc anin

Grindlnci/DeburrIng/PEJjhbjho ELI Rough trimming LI upset

ELI Metal parts [I Quenching LI Die forging

0I Plastic parts ED Press C.orglng

LI Wooden parts Assembly El Poll1 forging

ELI Small to large D]Sw'gl'ig

Sacigplastic products L] Heat treating LI Depalletizlng El Small to large CLI oadingluni oad Ing oxen

LI Pailetizirig metal products LI Handling parts through

prO3s30

LI Flame cutting

Figure 8-8 Typical Robot Tasks

Manufactur~ngi Cost Distribution For many years robots were mar~eted

It Is important to recognize today's as the answer to many of1 the problems faac)d manufacturing envlionment. Figure 8-9 by industry in the United States. ITS. Industry

presents a breakdown of typical manufacturing was beset ')y (1) rising direct labor costs. 12)

costs, by percentage. This breakdown is pressures to Improve productivity, (3) "ýepresentative of the situation In defense, challenges posed by envir-anenvrtai and

aerospace, electronics, and heavy Industries In occupational health and satety aut'vultles,

the United States. Materials account for the based upon unpleasant and h;Zrdous

biggest "slice of the pie.r working condition~s, and (4) need for better

product quality. A modest, but IncreasIag

The opportunity for reducing number of robots have .lot only bere able jo

manufacturing costs by Introducing robots has solve thes3 problems, but have beon able to

generally been In the area of direct and save materials and provide a mantiflacturfrng

Indirect labor tasks. With costs distributed as flexibility not available previously.

shown in Figure 8-9, the first Inclination Is to

consider replacing direct and indirect labor

with a robot due to the similarity of robot

8-14
ENGINEERING (V/%) FINANCE

(10%-

MANAGERIAL (10%)

MATERIALS (50%) INDIRECT

DIRECT LABOR (15%)

LABOR (10%

Figure 8-9 Typical Manufacturing Cost Distribution

Robotic InteGration

Industrial management generally we can recognize why tar-sighted industrial

recognizes that factories need to be designed miunagement Is Inclined to be more concerned

ac systems. Unfortunately, about with manufacturing centers than with Individual

three-quarters of the new robots are being robot applications.

integrated ilno existing production lines. The

robots are not being made a part of a new Robots are Justified within the

"system," i.e., a manufacturing center production volume ranges shown In Figure

com,)osed of cells, each having several work 8-10. When less than 200 parts are to be

stations. Robots will gain wider acceptance If manufactured per year, manual labor Is

they become a part if such work cells in usually less costly. Above 20,000 parts per

manufacturing centers instead. of becoming year, hard automation is generally more cost

just another piece of equipment in an existing effective.

production line. The centers provide

signfficantly greater efficiency, flexibility, and Today, aDout 80 percent of the U.S.

effectiveness In manufacturing operations than Industrial robots are being applied to welding,

do the production lines of older factodes. material handling, and machine

loading/unloading. The remainder of the

In the factory the hard-technology view robots are being used in such activities as

and th-, soft-technology view should form a spraypainting, machining, assembling, and

global perspective of manufacturing systems. pallhtizing. About 40 percent is divided almost

The hard-iechnotogy view will focus on the equaly between foundries and the light

production of tho product. This view will be manufacturing industry that is producing

represented by centers with cells containing nonmetal products. The remainder of the

robots and the o'her processing equipment as applications are in the heavy equipment,

Just discussed. The soft technology view will electrical/electronics, and aerospaco industries.

fncus on communicating the requhiements for

monitoring, controlling, and reporting the status Over the years, the capabilities of

of the systems. In other words, the technical robots have continued to increase. Much of

and business systems will be Integrated to the current robot technology was unknown just

become & part of the overall manufacturing a decade ago -- particularly control technology

sy.tem. If we understand this concept, then and programming. Now, robot manufacturers

have discovered electronic logic and computer

software. These technologies are making

8-15
robots adaptable to an Increasing variety of

complex tasks. Therefore, it Is very Important 1. Structures. The structures of

that each proposed application be carefully robots will have to be made sufficiently stiff

consIdered and that the robot selected be and rigid to overcome the fundamental

properly engineered to ensure success. Such problem of accuracy and repeatability.

a robot will Inherently Increase manufacturing

flexibility and Improve product quality and 2. Sensing. Robots In the factory

productivity, will have to be able to see, feel, hear and

measure the position of~ objects In many

different ways. Therefore, the data from

sensors will have to be processed, and

Information extracted that can be used to

successfully direct robot actions.

UNIT

COST RBT

MANUAL RBTMOTHARD

LABOR MOST COTEFCIEAUTOMATION

COST MOST COST

EFFECTIVE EFFECTIVE

PRODUCTION VOLUME PER YEAR

Figure 8-10 Comparison of Manufacturing Method Unit Costs, By Level of Production

Imp~ediments to Application of Robotics

James Albus of the National Institute 3. Control. Robots with sensors

of Standards and Technology Indicates there will have to be able to accept feedback data

are six problems associated with robotics that at a variety of levels of abstraction and have

have to be solved. The problems are control loops with a variety of loop delays and

Identified below: predictive intervals.

8-16
4. World Model. Robots will have CAD represents a significant advance

to store and recall knowledge of the world over manual design work in three subareas:

about them that will enable them to behave geometric and surface construction,

intelligently and show some insight regarding three-dimensional modeling, and structural or

the spatial and temporal relationships Inherent stress analysis. Manual design analysis in the work place. requires extensive ge*neration of mathemnatical

formulas to describe a surface or shape. With

5. Programming Methods. The a manual system, stress factor calculations are

tech~niques for developing robot software will accomplished by the computer. With CAD

have to be improved, graphics systems, the input process is aided

significantly by the computer, and the resulting

6. System Integration. Robots analysis data are presented graphically on the

will have to be integrated into the overall system screen, a significant advancement.

factory control system. Computer aided manufacturing (CAM)

Fortunately, the technical problems are has five subsets: production programming, amenable to solution. However, until the manufacturing engineering, industrial

problems are solved, robot capabilities will be engineering, facilities engineering, and

limited and robot applications will continue to reliability engineering.

be relatively simple. Production programming Involves the

Today, robots can handle parts that preparation of numerical control tapes or

are similar in size and orientation, and placed patterns to be used In the manufacturing In the same general location. And a few process. Manufacturing engineering relates to

advanced state-of-the-art robots can "look" for the design of the product and the tools

a part. However, future robots will be able to necessary for actual production. Industrial

find specific parts with "TV" eyes and orient engineering involves analysis of labor and

the parts as required. Also, sophisticated equipment utilization and process control

sensors will be able to "feel" the difference considerations. Facilities engineering involves

between various part sizes and/or orientations. equipment design and plan and equipment A memory, linked to the eyes, will be able to layout. Reliability engineering is onrerned

tell the arm which part to select Further, with quality control, coordinate measuring, and

robot memories will help In sorting out and failure analysis. These components of the

removing wrong or broken parts. The major manufacturing process represent a major problem that has Vb be overcome, before opportunity for the use of CAM graphics

these advances are rossible, Is to reduce the systems.

cost of vision sensor-,. Presently, the sensor

cost start at about $120,000. This Is usually Computer Integrated manufacturing

too high a price to pay, If one takes into (CIM), is an extension of CAD/CAM. CIM

consideration the length of the payback period. utilizes the database created through computer aided design. The manufacturing control

subsystem interfaces with numerically OVERVIEW OF COMPUTER AIDED DESIGN controlled machines, makes quality assurance

AND MANUFACTURE checks during process manufacturing, and

CAD - computer aided design - compiles time and attendance records.

represents the merger of computer technology Computer integrated manufacturing links

with mechanical drawing. The three essential computer aided design and manufacture. A

functions that can be better accomplished with corporate database unites business data

CAD are: line drawings that can be created processing; computer-aided designs and

and s¶1ored for !uture reference; libraries of reporting and control of manufacturing

common symbols used to create line drawings operations, including material control, quality that can be easily accessed; and plotting and assurance, and shipping and billing. dimensioning functions that save numerous

hours of manual drawing and computation and Computer aided design (CAD) and

establish a database for future reference. computer aided manufacturing (CAM) systems comprise a class of computer-driven systems that offers the potential for significant

8-17
productivity gains !n specific areas of simulation tools to allow the designer to

manufacturing and other labor-intensive design "stress and test" the design before finalization.

and documentation.

Figure 8- 1 Illustrates the

Graphlcs systems ae available for interrelationship between conceptual design,

integrated crrcuit design; design of automotive, preliminary design, and production design.

aircraft, and other manufactured parts; The shaded area through the middle is

numerical control applications; design of plants currently accomplished through CAD. As CAD

in automotive and aircraft industries, moves into Phase III the unshaded tasks will

be accomplished "real time" through CAD and

The CAD/CAM concept has gained the associated computer aided design

quick acceptance in the industrial and design analysis.

services marketplaces due to the resulting

Immediate gains in productivity. In addition to CAD has shown impressive payoffs In

dbrect cost savings, CAD/CAM graphics productivity as compared to manual methods.

systems can be justified on the basis of Among the reasons for enhanced productivity

greater accuracy, application to automatic are: complex constructions can be done

manufacturing processes, the reduction of faster with a computer; repetitive construction

errors through automatic error-checking entities do not have to be redrawn, but can be

procedures, reduced design turnaround time, instantaneously called from storage; geometric

unifoamity of design quality not achieved constructions are performed by the computer

through manual procedures, and reduced and do not have to be calculated, and the

dependence on highly skilled and highly paid concentration of a designer on the video

engineers for design. Three major advantages screen in an interactive mode is more Intense

for users of CAD/CAM graphics systems are than the designer is able to sustain on the

centralized database creation, data extraction drawing board.

capabilities, and documentation of engineering

drawings. Computer Aided Manufacturing

Computers have also been widely

The strong demand for CAD/CAM applied to manufacture and the term

systems is due to four factors. First, "computer aided manufacturing" (CAM) is used

productivity 1, increased from 3-10 times, to describe manufacturing procedures that use

depending on the task to be performed. computers to assist in the planning and

Second, the lack of trained dr&ftsmen and production process, from inventory control to

technicians is partly compens3ted through the the programming of machine tools.

use of turnkey systems. Third, the systems

can produce more complete and better quality Like CAD, CAM applications are

desIgns than existing design teams can almost limitless. Among them are computer

produce. Fourth, use of the CAD/CAM aided process planning (CAPP) to standardize

systems eilminates repetitive routine tasks for and optimize production methods by

designers. transferring decision making to the computer.

Also, a very close cousin to CAM is computer

Computer Aided Design aided material planning and processing

As currently applied in the defense (CAMPP) which eliminates much of the labor

industry, product design engirneering utilitizes intensive effort associated with these tasks. In

computer aided design (CAD) to provide the material planning and purchasing, the

descriptive geometry on an interactive graphics ultimate step in computer automation would be

terminai. This esseritially a'. ws the designer CAD generated data in a centralized product

to shape/si7e/dimension a given part via the definition data base which purchasing could

computer. CAD is currently moving into access such that purchase planning and order

Phase Ill of its evolution. Phase I can best be writing could be accomplished automatically.

characterized as the descriptive geometry

phase. Phase II added three-dimensional Computer Aided Design and Computer Aided

oriented methodologies to provide visualization Manufacturing

that facilitates the design effort. Phase III will Combining CAD with CAM (CAD/CAM)

encompass three-dimensional physical part Is the most active manufacturing Initiative

modeling along with the analysis and today, ahead of Flexible Machining Systems

8-18
(FMS) and even group technology. An many parts can be produced from start to

accurate in-depth unc,,rs!anding of CAD/CAM, finish by CAD/CAM; in some cases, drawings however, has fallen behind the popularity of and paperwork have been eliminated entirely.

the term. It really means Integrated product Overall lead time has been reduced by as

engineering and manufacture in the broadest much as two-to-one, and design time by

sense of the word, Too many users today five-to-one. it has also been found that the

have settled for CAD, or worse yet, a small efficiency of the approach has reduced

segment of CAD such as computer graphics. computing time itself by 25 percent. Designs

Similarly, some have seen CAM as numerical are improved because more alternatives can

control (NC) tools, others have seen it as be evaluated and communications have been

manufacturing resource p!anning (including Improved throughout the design/manufacture

material requirements). Fortunately, now process. CAD/CAM can have a major Impact these people are extending the lirmits oi their on management by providing better

thinking. They are looking to the high pay-out information on the use and productivity of

from the synergism of an integrated capital.

manufacturing system.

CONCEPTUAL DESIGN PRELIMINARY DESIGN PRODUCTION DESIGN

IREO4JIREMIENTS TRADE OFF BTIJIES TLF

S PECI FICAJT IONS• WE K9iT WODMEA •COSTTMCU MXEU

CONCEPTUAL CANDIDAThE T1 DSIGN "3 VIEWSl'• CcOFIGURATI1ONS CONFcIJ RAT) LAYOUT$ DESIGN L DS A, • DETAIL DRAWNGS

•ASSEJW4•Y

• INTEGRATED

CED STS AERODYNANCS TO SYN THESIS AND PRPUSINf MANUFACTURING

EVALUATION WEIGHTS

AItIOMECKANIC5TES ANALW•S ANALYSIS

VALUE E•GINEEMRIG AEIRODYNAMICS AERODYNAMICV AVIONICS PROPULSION PR OPLIN

WEMGT8 W180HT"

BASI LOADS BASIC LOADS STRIESS STRESSj

AEIROMECHANIS AEROMAECHANICS VALUE ENGINEERING VALUE BEIGIEERING CA AVIONICS AVIONICS

Figure 8-11 Interrelationships of Discrete Design Phases

CAD/CAM can revolutionize industrial Figure 8-12 is a schematic layout of

production. CAD/CAM has been kn.wn to cut the CAD/CAM process illustrating the functions

the entire design, drafting, manufacturing and procedures that take place. Computer

process time by factors of four, five and even aided design is a system for the design,

more. The companies that have pioneered problem solving and drafting phases of

with this revolutionary tool heve fuund that

8-19
CAD DESIGI] COMPUTER AIDED DESIGN .- PROBLEM-SOLVING

.- DRAFTING

GENERATE (BY DESIGN ENGINEERING) 1. SOLVE DESIGN PROBLEM

(USING COMPUTER) STRENGTH

WEIGHT

2. CONSTRUCT MATHMATICAL VIBRATION

MODEL OF THE PRODUCT'S ETC.

GEOMETRY DATA GEOMETRY

3 STORE.N COMPUTER

CAD /GEOMETR:C

ENTER DATA

CAM LTBASE

- EXTRACT

(BY MANUFACTURING) < GE0T

"NGENERATE DESIGNS

ID TOOLS BLFIXTURES

TEMPLATES

TEST SETS COMPUTER AND DATA CAM AIDED

MANUFACTURING

FROM SAME DATA TO MACHINE TOOLS

END PRODUCT]

Figure 8-12 CAD/CAM - How It Works

8-20
engineering. This system provides The services must continually Identify

computerized input to the manufacturing programs where application of computer and

process and its prime mission is the advanced machine tool technology would

manufacture of engineering drawings. A Increase productivity, resulting In savings to

graphics console (Interactive Computerized the government and Increased profits to the

Graphics (ICG)) terminal (consisting of a contractor.

special keyboard, cathode ray screen and a

cursor control) provides rapid drafting Computer Integrated Manufacturing System

capabilit,,. After solving design problems such An important element of a computer

as strength, weight, noise, vibration, etc, Integrated manufacturing system (CAM) is the

engineers construct a mathematical model of business Information system. Illustrated in

the product's geometry and store it in the Figure 8-13, this Is the system thet serves the

computer Geometric Data Base (GDB). information needs of the entire business.

The next step is the start of the Another element of a computer

manufacturing cycle. Tool programmers or integrated manufacturing system (CIMS) is the

part programmers retrieve a drawing data base management system. This has

previously created by the design engineer and been talked about and under development for

stored in the GDB. A part program is twenty years, but only in the late 1970s did it

developed using a large, arithmetically become a practical reality. It Is a powerful set

powerful computer as a part program of software programs that control complex file

generator. The program is then fed to a structures with a practical balance of Integrity,

smaller, medium-icp.e computer that performs security, resource costs, and ease of

the functions of active supervisor and understanding. These elements and the

Interpolator, feeding data to the controller of CAD/CAM inputs are no longer separable;

machine tools. Parts and even complete they must function together in a smooth

assemblies, are prcduced by instructions from running, total system. Together, these three

the part program with constant monitoring to are called 'Computer Integrated

enst:re that established tolerances are Manufacturing," (CIM) Integrating all of the

maintained. The results are a highar work manufacturing related funotions Into one

quality and a much more efficient neutral monolithic computer system. This Is

manufacturing operation, since errors are going well beyond the traditional CAD/CAM

reduced to a minimum, and scrap parts are all concepts, and really extending the limits of

but eliminated. today's systems.

The requirements for CAD/CAM The ultimate payoff of CAD/CAM in

utilization within a defense contractor company the defense industry will occur when the

are threefold: geometric definition and other product

definition Information are defined and stored in

1. Strong leadership must exist a data base which can be accessed directly

within the firm. Decisions to adopt CAD/CAM ty manufacturing in order that the large

will mean laige, Initial outlays of capital. Long variety and number of manufacturing

term dedication and support by top executi4es operationOs can benefit In "real time" from this

is essential. product definition. Advances have been

somewhat impeded by traditional methods and

2. There must be a willingness of the nature of the engineering/ manufacturing

management to take the risk of innovation, interface. Real success has resulted from the

Upper management must be convicea the introdu'ction of computer systems with data

bottom line risk of n( N technology is nzi too bases shared by both engineering and

great. manufacturing organizations. It has been

demonstrated, in a very practical way, that If

3. 4maginative government the engineering organization can define or

policies to stimulate production initiatives are describe a new weapon In terms of

required. 'The contract provisions,discussed in standardized machine language, that same

the MANTECH snciion of this chapter, under machine language can be used directly by

which the govert,: -nent assumes a portion of manufacturing in the creation of tooling, jigs,

the ri3k is a I;rst step. fixtures, and other means of production, as

8-21
BUSINESS PLANNING AND SUPPORT

Market Forecasting

C;ustomer Order Service

Fmnlshed Goods Inventory Management

Budgeting and FEnanclal Reporting

Englreerlg Design

Cornputer-Alded Product Design

To~l Design

Group Technology

Materials and Processing Data Base

Manufacturing Process Planning I

Manufacturing Methods and Standards

Order Scheduling

Production Planning -Methods, Materials,

Parts and Tooling Procurement Management

Production Scheduling Cost Accounting and Cost Management

Group Technology

Materials Order Service

- P Manufacturing Prqduciion Control F Purchasing/Receiving

Production Dispatching SProduction Control

Methods and Standards Data Base

In-Process Inventory Control

-4 Manufacturing Monitoring and Control

[Mahine Loading Performance Measurement

Maintenance

In-Process Quality Control

Stores Monitoring

-b Process Automation

Numerical Conrol

Adaptive Contro;

Automatic Inspection

Automatic Assembly

Computerized Testing

Figure 8-13 Integrated Manufacturing System

8-22
well as for quality control functions and the planning. It Is not uncommon in the

operation of numerically controlled machines. electronics Industry to go directly from a

Virtualy every major U.S. defense contractor computer simulated product design to

is Involved in various facets of modernization production without an Irtermedlate prototype or

and productivity enhancement. In anticipation prepr ,duction model.

of the dramatic changes sweeping through the

civilian defense establishment, the U.S. Air A number of experimental generative

Force has stepped in and committed millions plannin, systems are now undergoing

of dollars to bring order and consistency to the develop nent and testing, but It Is expacted

multi-billion dollar, industry wide automation that It will be several years before such

effort. A similar effort in the electronics systems are common in any except the

industry, entitled ECAM, is being sponsored by electronics Industry.

the U.S. Army with the support of a large

Industry coalition. It Is generally recognized that weapon

developments are often "time paced" by

There are economic advantages to be machine part structural elements. CAD and

derived from the integration, or at least the CAM offer the best solution to this problem by

Interfacing, of computerized engineering and significant reductions in engineering and

computerized manufacturing systems. Thus, it manufacturing planniing/tooling flow times on

logically follows that the benefits of generative critical tasks. CAD has demonsirated a

planning can he derived from these common greater potential for reducing programming

systems. Generative planning interactively time for parts fabricated on 3, 4, or 5 axis

interfaces the design engineer with the machines.

computerized system In such a way that the

designer is not only able to optimally design a The time planned to coordinate, tool

part, but concurrently subject that part to a proof, and produce an NC machined part has

performance evaluation, and plan for the most been cut in half. An additional

economical fabrication of the part within the non-quantifiable, but equaly Important, benefit

constraints of time schedules, availability of of CAD is that the designer can spend more

raw mnaterlals, and the varlability of materials time thinking about a technical problem ard

or manufacturing processes. Upon less time on mundane measuring, coding, and

conformance of the proposed part to the data preparation tasks. Also, the designer's

performance objectives, part production may ability to Immediately review loft drawings on a

then be automatically introduced into a video screen results In slnlflcant savings by

computerized fabrication, assembly, and avoiding the time required for Inputting curve

Inspection system. Printed circuit board and fitting programs. The continuity of the

Integrated circuit manufacturing are the best interactive iterative process allows many more

oxamples of current efforts to utilize generative trials to be made while eliminating time

required for manually coding each new trial.

8-23
CHAPTER NINE

MANUFACTURING COST ESTIMATING

CONTENTS

OBJECTIVE 9-1

INTRODUCTION 9-1

NATURE OF MANUFACTURING COSTS 9-1

Direct and Indirect Costs 9-1

ANALYSiS OF DIRECT COSTS 9-1

Classifying Direct Costs 9-1

Importance of Direct Costs 9-2

Fixed and Variable Cost 9-2

Recurring and Nonrecurring Costs 9-2

Tooling Costs 9-3

Special Test Equipment Costs 9-3

COST ACCOUNTING 9-3

Uniformity in Cost Accounting Systems 9-4

Cost Accounting Systems 9-4

Historical Cost Systems 9-4

Predetermined Cost Systems 9-5

CONTRACTOR ESTIMATING SYSTEM REQUIREMENTS 9-5

ESTIMATING 9-5

Estimating MethodologieT 9-6

ESTIMATES BASED ON ENGINEERED STANDARDS 9-7

Standard Cost 9-8

Variations of Standards 9-8

Realization Factors or Efficiency Factors 9-8

THE LEARNING CURVE 9-9

Concept 9-9

Components of Improvement 9-9

Characteristics of Learning Environment 9-9

Key Words Associated With Learning Curves 9-10

Unit Curve 9-12

Developing Slope Measures 9-12

Selection of Learning Curves 9-12

Manufacturing Breaks 9-14

The S-Curve 9-14

Learning Curves Applied to Standard Times 9-15

MANUFACTURING RATE/COST RELATIONSHIP 9-15

DESIGN TO COST 9-17

Commercial Practice 9-17

DOD Experience 9-17

SHOULD COST 9-18
MANUFACTURING COST ESTIMATING

OBJECTIVE

This chapter describes the structure of physical facillty (factory, personnel, and

man, ifacturing3 costs and the various equipment) used to build the design and the

techniques used to estimate cost. Emphasip ;r, management efticiency of the op- "tion. This

placed on undersianding thu basis for potential is illustrated In Figure 9-1. As such, the

variability in how !ndividual con;ractors may manufacturing cost for a product ohould be

present cost information. The Impact of viewed within the context of the factory in

standards and the learning, or mantifacturing which it will be built. Where the place of

improvement curve, is described to help the manufacture is not yet defined, assumptions Program Manager (PM) analyze manufacturing as to the physical facility and efficiency will

efficiency and improvement. i he ,inal ,ections need to be made to support the estimating deal with techniques which may be ap1'lied by activity.

the PM to establish programs for the

management and control of marufacturing DirGct and Indirect Costs

costs. The objective is to establish an A classic division of manufacturing

understanding of the composition of cost Is between direc* and indirect costs. A

manufacturing custs and discuss the direct cost can be defined as any cost that Is

manufacturing cost estimating process. specifically related to a particular final cost

objective, but not necessarily limited to Items

that are incorporated in the end item as

INTRODUCTION material or labor. The majority of the direct

Cost Is one of the primary measures cost is involved in the direct labor and direct

of management effectiveness, along with material used in designing and fabricating the

performance and schedule, applied to defense system or equipment. An Indirect cost is one

programs. The focus of this chapter is on the which is not directly Identified witti a single identificatio.i and characterization of final cost objectivo, but is identified with two or

manufacturing costs as they are estimated and more final cost objectives, oe with at least one

incurred by defense contractc.r.i Certain intermediate cost objective, on the basis of

gover-rnmnt and contractor policies and benefits accruing to *he several cost

actions, which c.an have significant impact on obikctives. An exampie of indirect cost Is

manufacturing cost, need to be crisioered manufacturing overhead which may Include

juring the planning and execution of weapon such things as supervision, matedal handling

system development programs. These and production engineering support. The

activ'ties include decisions on production rate, division of effort between direat and indirect is

long lead funding, and capital investment, a function of the particular contractoi's cost

The fin31 perspective developed in this chapter accounting standards and the relationship of

c,-)ncerns the use of cost as a management the specific contract to the total manufacturing planning and system design tool. With the effort within the facility. it Is Imperative that

increasing emphasis within the DOD on the program office and supporting government

system affordability, cost (both manrfacturing personnel develop a clear understanding of

and support) must be considered as a design the accounting and cost estimating approach

and program plannlng criterion throughout the In use by the contractor.

acquisition process. Only by explicit

consideration nf cost can the program

manager ubtain the optimal mix of weaoon ANALYSIS OF DIRECT COSTS

system performance and weapon sy.:tem

acquisition cost and operating and support Classifying Direct Costs

cost. While there are general guidelines

established in Cost Accounting Standards and

FAR Part 31, the contractor is given some

NATURE OF MANUFACTURING COSTS .ade in classifying costs as direct or

The cost to manufacture a weapon .. ,rect In all cases, it is very important that

system or equipment results from a costs are classified in a consistent manner

combination of the engineer;ng design, the

9-1
CENGINEERINýG 

DESIGN PHYSI1CAL FACILITY &D

MANAGEMENT EFFICIENCY

SYSTEM COST

Figure 9-1 Manufacturing Cost Genesis

within a specific contractor cost accounting as Production volume change, In the short

system. When compar'ng one firm with run. The short run is defined as a period too

another, remember that practice in direc, cost sloort Wo pormit facilities expansion or

classification does vary among contractors. contraction that might change the overall

Typlcallý, such Items as manufactudag labor, production reiationships. Fixed costs remain

production test and design engineering are relatively constant as production volume is

classified as direct costs. In the production varied over the short run. Examples of fixed

phase, some design engineering effort In costs include 'ire Insurance, depreciation, rent,

support of production may be classified as In- and property taxes. Of course, if production

direct. Quality control is classified as direct by req'iirements change significantly, even over

some contractors and Indirect by others. the short run, the fixed cost assUImptIon could

disintegrate. Variable costs fluctuate directly

Importance of Direct Costs and proportionately with volume. These

Direct costs are important elements of proportions remain relatively fixed between

cost, oft.i accounting for 30 to 60 percent of certain production limits. Costs such as direct

to^al cost. But equally important, direct cost !s labor and direct material illustrate variable

usually the basis for allocating most of the costs. Semivariable costs fluctuate Inegularly

Indirect (overhead) cost. Direct costs of with volume, often in a stepwlse manner.

material, manufacturing labor, and engineering Costs such as supervision Illustrate

labor, ho particular, often serve as bases for semivariable costs.

the application of costs from overhead pools. If we define price to the government as the Recurring and Nonrecurring Costs

total of direct cost, indirect cost, general and At the beginning of a production

administative cost, cost of facilties capital and program, the contractor expends certain funds

profit, a change !n dire^t cost can pro.uce a to asiablish tLe specific capability to

much larger change In price to the govern- manufacture the weapon system or equipment.

ment. These nonrecurring costs are one time

expenditures and generally include such things

Fixed and V triable Cost as special tooling, special test equipment,

Costs can also be described as fixed plant rearrangement and the preparation of

or variable based on their behavior as manufacturing instructions. The ccsts which

production volume changes within broad limits. must te incurred each time a unit of

Costs may be fixed, variable, or semivwriable equipment is produced, such as direct labor

and direct materials, are the recurring costs.

Tha relative levels of recurring and

9-?
nonrecurring costs can be evaluated In contractor's tool planning be based on the

Investment terms since the nonrecurring costs needs of present and reasonably predictable

provide the capability to manulicture the future purchases. Analysis of tooling cost

equipment with a lower direct labor input per requires evaluation of material requirements

unit. The objective of the contractor and recognizing that many contractors purchase all

program office should b,ý the definition and or a significant part of their basic tooling

achievement of a level of nonrecurring cost requirements. Analysis of the labor hours,

that will minimize total cost of manufacture. labor rates, and overhead rates applied to the

The investment .n nonrecurring costs can be tool design, fabrication and maintenance

evaluated as a tradeoff decision in that efforts is still a significant cost item to be

Improved tools, test equipment and planning examined, even though passed on to a

can result In lower recurring cost. The total vendor.

cost to manufacture is then the sum of the

recurring cost plus an amortized shara of the Special Test Equipment Costs

nonrecurring cost. As a result of the Special test equipment may present a

relationship, decisions on the level of unique problem. While it may b9 proper to

nonrecurring cost should be based on a evaluate it In the same manner as jigs, dies,

specific quantity to be produced and rate of and fixtures, the test equipment may be

production, modified standard commercial equipment. An

example of special test equipment might be a

Tooling Costs microprocessor linked to a printout device so

Preproduction (start-up) costs, such as that specific reliability data required by the

tooling, will usually be treated as nonrecurring contract can be accumulated. If the cost of

direct charges to the contract. Cost proposals this equipment is large and the equipment has

as well as cost analysis should separately a useful life beyond the contract, the

identify the amount of preproduction cost contractor should consider the equipment as a

included in the prograrm cost e3timate. capital investment subject to depreciation over

its useful life. While the capitalization of

'ooling is one of the major categories special test equipment may be determined by

of preproduction cost. As discussed here, a policy consistently applied by the contractor,

tooling refers to special tooling consisting of certain contracting rules will govern. The

jigs, dies, fixtures, and factory support contractor's policy on capitalization should be

equipment used In the production of end discussed with the Administrative Contracting

items, and does not Include machines, Officer (ACO) as to what practices would

perishable tool Items, or small hand tools. apply under the circumstances.

The key issue in estimating and

analyzing tooling costs !s the planned rate and COST ACCOUNTING

duration of production. The production rate When costs are eatimated, a close

and duration will establish whether there will looK at how a contractor accumulates cost

be hard (durable) or soft (limited life) tooling; data Is an important part of the manufacturing

whether the tooling will he lim!ted to the control process. Contractor decisions

production rate required under the proposed regarding estimuted kffort required for

contract, or whether It also an*cipates manufacturing a system will be largely production rates of future requirements or the influenced by the contractor'3 uost acc'-unting

need for surge or mobilization, If tooling is system and the data generated therefromr.

planned in anticipation of future orders, the Thus, projected effort in such manufacturing

justification for these plans should be verified, process efforts as faorication, asseinbly, and

Follow-on purchases should always be other cost categories which In turn can be

analyzed in light of the type and extent of broken down into specific cperations such as

tooling authorized by the government In prior welding, setup, windings, etc., must be

contracts. reviewed from an overall systems standpoint. This section, thus, focuses on cost accounting

There shou!d be an inverse systems from a manufacturing management relationship between the amount of tooling and viewpoint so that the process of cost

the number of direct labor hours expended per incurrence and measurement will be better

unit of product. It is Important that the understood.

9-3
cost system. Each can be classified as either

UniformIty In Cosi Accounting Systems a historical cost system or a predetermined

In the field of cost accounting there cost system, which makes possible four "pure"

are pressures for uniformity and comparability, types of cost systems: (1) the historical job orbut most of these arise from special der cost system, (2) the predetermined job

circumstances and they are of less force than order cost system, (3) the historical process

appear in the area of finan'ial accour.t !' cost system, and (4) the predetermined

This Is understandable, since ;'ost accounting process cost system. Most contractors,

Is a matter of managerial (internal) informatior, however, accumulate both historical data and

for the most part. When prices are predetermined data for rise In estimating

established under less 'dhan fully competitive contract costs, and many contractors apply

conditions cost data play a large role In their own variations to the job order cost

contract negotiation and settlement. Under system and the process cost system.

such conditions, the method of cost accounting

can make a substantial dIfferencr ;oi results, Under the lob order cost system, direct

and variations in cost assignment may beconie A.•nd overhead cost data are accumulated by

a matter for concern. each contract or order. ln . contractor's direct

employees identify on their time cards the jobs

Everý firm has its own characterist,,•3 on which they work, and a calculated

and individuality. These arise from sources overhead rate is applied "o the direct labor

that may even be somewhat beyond the time recorded for each job order. The direct

control of owners or managers and Pre useful material requirements for each job order can

In adapting to the environment as to markets, be identified by bills of materials and charged

products, supply or resources, and other to the particular job order.

factors. Further, the operation of systems to

collect and process data about operations is a The process co3t system is used when

part of the task of management, and the identifying each individual end product cost is

outputs of such systems are generally impractical Under a process cost system,

regarded as proprietary to the company. total cost for producing a group oi '

4ems and

the number of units produced are determined

The idea of standards is used to a for regula. a-counting periods, and an average

considerable extent in all business and unit cost for the period is determined. Under

accounting data. If cost ligures are to be a job order cost system, unit costs are not

used with confidence, they must meet available until tt-e job Is comp!,ted; In process

standards as to their content. Direct costs costing, average unit costs are deteri.-ned at

should be discernible from indirect costs, not the close of cost acc,_'unting periods and are

by how computations are made or by available, although a "lot" reqjzred by a

convenience In making such computations, but contract may not even be completed.

by some specified idea of what makes them

different. Historic il Cost Systems When actual cost data are

Until Public Law (PL) 91-379, 15 accumulated after operations have taken

August 1970, technical evaluators and place, the cost acounting system )s a

contracting personnel were required to historical cost system. To prevent distcrted

"decipher" the intricacies of the variations of projec:ions from historical data, the l'ilowing

cost accounting systems existing in the should be analyzed in determining expected

marketplace. PL 91-379 represented a major costs for new products.

step toward uniformity in c(st reporting This

law, essentially, requires contractors to ensure 0 Changes in plant layout and

consistency and uniformity in their cost equipment;

accounting practices in estimating,

accumulating, and reporting cost; and to o Changes in products, materials, and

disclose such practices to the government. -,. ::hods;

Cost Accounting Sý.tems 0 Changes in organization, personnel,

The two basic cos* accounting systems working hours, conditions, and

arc the job order cost system and the process efficiency;

9-4
o Changes in cost; subcontractor's estimating policies, practices

and procedures but also its organizational

o Changes in managerial policy; structure, internal controls and management revi-ws, among other functions. The new

o Lag between incurrence of cost and rules required that all contractors have

reporting of manufacturing; and estimating systems that consistently produce "well supported proposals," although the

o Random infl-iences such as strikes specific requirements apply only to large

and weather. volume contractors.

Historical data are used in all cost The new regulations require that the

accounting systems, at least as a base for accounting systems: establish clear

comparing actual results with predicted results. responsibility for preparation, review and

The accumulation and application of historical approval of cost estimates; have written

data are important ingredients of a reliable descriptions of the duties of persons Involved

cost estimate. in estimating; assure adequate personnel

training, experience and supervision; provide

Predetermined Cost Systems for consistent applications of established

Predetermined cost systems are cost practices and for safeguards to detect errors;

accounting systems In which data about the and protect against duplication and omissions.

manufacture of an end product are Adequate systems will also provide for

accumulated before the end product is management review of estimating practices produced. A contractor using a predetermined and methods, and for a program of internal

cost system uses process and material reviews, as well as procedures for updating information about a job to predict the costs for estimates as required. Adequate systems also

doing that job. When contractois use assign responsibility for review of subcontract

predetermined cost data, normally these data prices.

are substantiated by actual costs identified on

previous end products.

ESTIMAT!NG

Estimating is the method of generatingj CONTRACTOR ESTIMATING SYSTEM a measure of an amount of work to Le

REQUIREMENTS ac :omplished or resources required. It

The DOD promulgated new regulations re( ulres systematic study of the activity to be

in 1988 requiring major defense contractors to est mated and application of knowledge and

improve the systems they use In estimating skills to form a valid judgment regarding the

costs for negotiated procurements. These cost of that work. The resulting estimate

regulations apply to defense contractors who, provides management with quantitative data

in their last fiscal year, received prime for making decisions concerning these

contracts or subcontracts totaling $50 million programs.

or more for which certified cost and pricing

data were submitted. Partial coverage may The initial decision that must be made

apply to contractors and subcontractors in most estimating situations Is the selection of

receiving contracts totaling $10 million or an approach that will yield the most accurate,

more. timely and current cost estimate. The choice

of an estimating technique ýs not solely The regulations stem from hearings of dependent upon the estimator's preference but

the House Committee on Government is d~ctated by the estimating environment.

Operations, and from General Accounting The conditions that must be considered are:

Office (GAO) and Defense Contract Audit

Agency (DCAA) studies in the mid-1980's 1. Comprehensiveness ol the statement

which indicate that the government is routinely of work.

overcharged by 10-15% on negotiated

contracts as a result of deilcient contractor 2. Availability of pertinent actual cost data

estimating systems. The regulations define and product information.

the term "estimating system" broadly, to

include not only a contractor's or

9-5
3. Type of contract, program and estimating relationships and consider the

category of estimate. availability of statistical Information.

"wCost-to-noncostw estimating relationships 4. Customer and program requirements. (ERs) are frequently used to estimate costs for

equipment Items; for example, airframe

5. Time available for preparation, procurement cost estimated as a function of

airframe weight, and turbine engine 6. End use of the estimate. procurement cost estimated as a function of

engine thrust. A variant of this method, a

Estimating Methodologies snoncost-to-noncostw ER, may be used to

Cost estimating Is based on complete a system description, before

Interpretations of observed historical factors addressing the cost of the system. For

relevant to the task to be performed which are example, the number of administrative

then projected Into the future. These personnel required to support a system may projections can be made in several different be estimated as a function of the number of

ways as discussed below, personnel estimated to operate the system. "Cost-to-cost" ERs may be used to estimate

The selection of a particular cost development, Investment, and operating costs.

estimating method will be guided by the For example, equipment Installation costs may following considerations: be estimated as a percent of equipment procurement costs, or replacement personnel 1. Availability of historical data training costs as a percent of initial personnel training costs.

2. Level of estimating detail required

Specific Analogies 3. Adequacy of the technical description Specific analogies depend upon the

of the htem being estimated. known cost of an Item used In prior systems

as the basis for estimating the cost of a

4. Time constraints similar item In a new system. Adjustments

are made to known costs to account for

5. Purpose of the estimate differences In relative complexities of the

performance, design, and operational The manufacturing cost estimator characteristics. This Is a practical method

should consider using more than one method since many new systems involve essentially to generate the cost estimate. One may use new combinations of existing subsystems,

a catalog price or an estimate prepared by a major equipment, and components. A specific specialist to arrive at a cost estimate for a analogy Is frequently used In checking an

piece of equipment that represents a estimate developed through other methods.

technological advance over existing hardware.

The estimator may compare the cost of an Specialist Estimates

analogous system element wWn that derived Estimators may obtain an estimate

from using a Cost Estimating Relationship directly from an organization or person having (CER). Finally, even if one estimating method specialized knowledge, for example, an

will suffice to estimate the cost of an Item, the engineer, a program office, training or logistics estimator should, whenever possible, use a specialist, or other technical expert. This

different estimating method to check on the method is usually applied when ERs and other

Initial estimate. estimating methods are not available or

appropriate, or to verify other estimates. In Parametric Cost Estimating addition, specialists can often assist the

Costs of equipment may vary with estimator in applying or developing specific design/performance characteristics such as analogies. In applying this method, a cost

weight, speed, or range (cost-to-noncost) or estimator must describe the item to be costed

with costs of other Items (cost-to-cost). As an to the specialist. The description can take the

example of the latter, the cost of spares may form of work statements, technical parameter vary with the cost of the prime equipment. measures, design specifications, or analogies. The estimator must select the appropriate

9-6
Rates, Factors, and Catalog Prices to information contained in the various cost

Rates are usually based on historical reports, where contractually required, or

experience plus judgments relative to future available from internal contractor cost records,

price level trends. Factors represent average to analyze contract performance and

costs or ratios of costs for designated types of forecasting future costs. In this regard, such

products or services. The estimator can analysis of cost/schedule trend patterns during

develop factors or obtain them from the development and production phases of the

commercially ava-lable or government system life cycle has proven to be one of the

publications. Catalog prices represent most accurate methods of estimating cost of

published prices for siandard off-the-shelf the contract at completion for ongoing

products or services. When a specific type programs.

and quantity of a standard material or

component must be Identified, this method Inflation (escalation) indices are often

provides acceptable estimating data. used in conjunction with trend analysis to

ensure comparability of data In different time

Industrial Engineering Standards periods. Inflation/escalation Indices are used

Industrial Engineering Standards (IES) to estimate the effect on price of the changing

define and measure, in unit hours or dollars, value of the dollar over time. In forecasting

the work content of the discrete tasks to be escalation, the PMO should attempt to utilize

performed in accomplishing a given operation indices which reflect the realities of the

or producing an item. IES represent average specific program. The DOD or Office of

skills, times, and performance. These Management and Budget (OMB) Indices

standards are used primarily to estimate con- should be viewed In light of their past record

tractor functional costs such as tool fabrication, In predicting actual inflation for the economic

manufacturing, and product assurance. activities Involved in the individua; acquisition

program. Where there is a significant

Cost Model Applications difference in the historical data, the PM should

A cost model consists of the attempt to develop program-specific indices

estimating relationships and logic used to which can be presented to the decisionmakers

derive a cost estimate. The unique in the Services and DOD to illustrate the

contribution offered by a model exists within potential problems which may arise from use

the logic framework which structures the of the DOD or OMB indices.

application of the cost estimating techniques.

Additionally, the speed of manipulation of

computdrized models may be advantageous ESTIMATES BASED ON ENGINEERED

when many design alternatives are being STANDARDS

estimated. The cost model might be a Engineered standards are useful for

checklist of program elements, used to avoid deveho ing cost estimates once thre is a

omitting relevant elements from an estimate. clear definition of the detailed system conEach element would be estimated by the most figuration. Engineered standards are those

appropriate cost estimating techniques developed using a recognized technique such

available. The most complex form might be a as time study, work sampling, standard data

computerized model complete with estimating or a recognized predetermined time system.

relationships, factors, analogy matrices, These standards provide the benefit of

standards, and catalog prices. detailed description of required manufacturing

operations and provide a base line for the

Trend Analysis evaluation of actual Incurred costs. An

Trend analysis is a quantitative industrial engineering standard (IES) Is

method for relating a variable -- direct labor, developed as follows:

manufacturing overhead -- with time or other

measures and represents a common statistical 1. A work statement, set of drawings, or

technique employed for both monitoring and specification is received or developed.

estimating costs. Trend analysis, with costs

modified to reflect the reasonableness of past, 2. Each engineering or production

present, and future overhead expenditures, is operation required to produce the item

frequently used to forecast overhead or accomplish the designated task is

expenses. Similarly, trend analysis is applied specified.

9-7
involving human performance, the standard

3. The work stations where each time required to perform a task may be

operation will be performed are defined as the time necessary for a qualified

desigrated. worker working at a pace ordinarily used,

under capable supervision, and experden'ing

4. The kinds of labor and material normal fatigue and delays to do a defined

required to produce the item or amount of work of specified quality following a

accomplish the operation are given in prescribed method. It is obvious from the

detail, definition, that on a regular basis, actual shop

performance will not reflect the standard time.

5. Industrial Engineering studies In most cases, the time proposed by the

determine the most economical contractor will be greater than standard time,

method of performing each reflecting either realization factors or efficiency

manufacturing operation. factors representative of the facility and the

impact of tho learning or manufacturing

6. An estimated time standard for improvement curve. These two concepts are

performing each task is established discussed below. For operations which are

using time-and-motion studies or machine controlled, the standard time is

predetermined time systems plus dictated by the situation of the process and

experience in performing similar tasks. the equipmeni (including tooling). In most

cases machine controlled operations should be

.7. Labor standards for specific operations relatively consistent and reflect actual costs

may be combined to provide a labor close to standard. Standards can be

standard for a component, subas- developed through job analysis or based upon

sembly, major equipment, or hitorical costs, and sometimes are affected by

subsystem. constraints introduced in the contract with the

employee bargaining unit.

8. Labor efficiency factors are used to

adjust standard labor hours to actual Variations of Standards

labor hours. In general, labor When considering a standard cost, It is

efficiency, utilization, or effectiveness Important to understand that it is "standard"

measures represent the ratio of only within the confines of the system used to

standard hours planned to the actual develop it. Two different, yet valid,

hours expended for a given work approaches to establishing a standard may

operation, yield estimates for the same task differing by

as much as 25%. These difft-ences are

9. Periodically, time standards are Inherent in the various approaches to

adjusted to reflect changes in establishing standards, but they do not reduce

production methods. Over a period of the usefulness of the resultant standard. In

years some standards become looking at a particular contractor facility, the

stabilized to such an extent that they critical issue is that the system used In that

become plant, product, or industry facility be Internally consistent, I.e., the

standards. standard time for a particular task should be

independent of the estimator developing the

Standard Cost estimate. It is also Important to note that the

A standard cost basically represents estimate is driven by the particular

an expected value of the cost of a system. manufacturfng process utilized and the

Standard costs are used as a basis for the completeness of the description of that

development of proposal pricing and also as a process.

benchmark to monitor day-to-day performance

and signal when deviations from Realization Factors or Efficiency Facto's

predetermined policies are occurring. They Realization factors or efficiency factors

are based on a defined level of material usage are utilized to reflect the fact that standard

and a standard time for the manufacturing performance is seldom maintained during

operations. Our focus in this discussion will mnanufacturing. Unpredictable delays do occur

be on the time component of the standard and the criteria for standard performances

cost. When directed towards operations may not be found throughout the facility. For

9-8
estimating the time that will actually be successively doubled quantities of units

required, the contractor uses historical produced. This can be seen graphically In

relationships between standard and actual Figure 9-2.

times, As an example, a realization factor of

1.5 would indicate that actual time required for Components of Im:)rovement

a task is 50% greater than standard time. By its title, the learning curve focuses

The contractor determines realization factors attention on the worker learning, ,r job

by recording time actually spent on the familiarization. This Is just one ol the cornspecific tasks and comparing that to standard ponents which cotribute to the reduction of

for those tasks. By averaging hi3torical time requirements. Table 9-1 lists a number

realization factors, the contractor can then of elcments which have been shown to

determine an appropriate realization factor to contribute to the manufacturing Improvement.

use in forecasting actual time requirements. From Table 9-1 it can oe seen that the total

improvement is a combination of personnel

Some contractors use efficiency factors leaming and management action. While some

rather than realization factors. Whether the study has been done, there is no general rule

contractor uses realization or efficiency factors concerning the relative contribution of the

the approach reflects a reasonable method of specific elements. Figure 9-3 illustrates the

estimating the time which will actually be results of a study by the Air Force Materials

required to perform the tasks. There is, Laboratory on the components of learning In a

however, one major area of concern. There is production fight-r program. The critical Issue

a reasonably good understanding of "what" is to recognize the role of management In

-ealization factors are but "why" is not well un- achieving these reductions and to ensure that

derstood. It is generally accepted that appropriate management actions ate taken.

realization factors may represent shop

inefficiencies which could be cured by Characteristics of Learning Environment

appropriate management action. A critical While learning is found in almost all

issue is to assure that the contractor has elements of the defense industry, its impact is

taken action to identify arid remedy these most pronounced when certain characteristics

inefficiencies, are present. The first characteristic is the

building of a large complex product requiring a

large number of direct labor hours. The

THE LEARNING CURVE second is continuity of manufacturing to

preclude loss of accrued Improvements during

Concept production breaks. The third characteristic is

The learning curve was adapted from an element of continuing change in the

the historical observation that individuals product. This third characteristic can present

pernorming repetitive tasks exhibit an improve- some problems In analysis Usliig the

ment in performance as the task is repeated a manufacturing improvement curve.

Yumber of times. Empirical studies of this

phenomenon yielded three conclusions on The historical data on which a

which the current theory and practice is company's Improvement curve Is based

based: contain the effects of an engineering changs

activity which can be ch.racteiized as

1. The time required to perform a task "normal." During the analysis of the program

dacreases as the task is repeatod. of Interest, changes which are developeo need

to be evaluated to determine whether they are

2. The amount of improvement decreases "normal" and already accounted for by the

as more units are produced. learning curve, or major changes which must

be the subject of a contract modification. The

3. The rate of improvement has sufficient decision needs to be made on the basis of the

consistency to allow its use as a unique situation involved in !he program. This

prediction tool. should be done in the context of the nature oi

the historical contractor activity which was

Tne consistency in improvement has used to develop the learning curve used in the

been found to exist in the form of a constant contract negotiation.

percentage reduction in time required over

9-9
TIME REQUIRED

PER UNIT

NO. OF UNITS PRODUCED

Figure 9-2 Manufacturing Improvement Curve

WORKER LEARNING

SUPERVISORY LEARNING

REDUCTIONS IN CROWDED WORKSTATIONS

TOOLING IMPROVEMENTS

DESIGN PRODUCIBILITY IMPROVEMENTS

IMPROVED WORK METHODS

IMPROVED PLANNING AND SCHEDULING

INCREASED LOT SIZES

REDUCED ENGINEERING CHANGE ACTIVITY

REDUCTION IN SCRAP AND REWORK

BETTER OPERATION SEQUENCING AND SYNCHRONIZATIONS

Table 9-1 Factors Leading to Manufacturing Improvement

Key Words Associated with Leaminq Curves with an experiecence curve having an 80%

To utilize learning curve theory, certain slope, the value at unit two Is 80% of the

key phrases listed below are of importance: value of unit one; the value at unit four is 80%

of the value at unit two; the value at unit

o Slopp of the Curve -- A 1,000 is 80% of the value at unit 500; and so

percentage figure that represents the on.

steepness (constant rate of improvement) of

tMie curve. Using the unit curve theory, this o iJnit One -- The first unit of

percentage represents the value (e.g., hours product actually completed during a production

or cost) at a doubled production quantity in run. This is not to be confused with a unit

relation to the previous quantity. For example, produced in any preproduction phase of the

overall acquisition program.

9-10
0 LL P:C S r 0 0

0 LU FE

0u z :0 0

IL 0 L-- 0i

Jfl0 m0

w 2L W

Eu 0 0 0 0w0 (0 z - zo~~

:3 0

Ix CL w

AC ý z > m LCm 3

LU a, WRO w 3 no

CL a0U a 

w ) z9-11
o Cumulative Average Housto s." , . - ,

The average hours expended per util *fix_ a •s.,r ". - :',-

units produced through any given unit -'1i'r' . MeO Wu, 

o Unit Hours Tv' Pot V& . .'4g . i

labor hours expended to cornpT ' ae-4 '4: ,+ - t..., WVV4!•914 '1 , p .TI" t

unit. ,,. ,+, S%- W .-Ve -', ,," .,,• PtL4l0 Curnu Late ':*a -ct.rs *l~ i W'*N

total hours expended sfc• ..xv" ne, rr' r '' .' -1

througr any given -. r "# 'r', ",Mt.r'd 1t:0

Unit Curve -, - .-. •-,--9 ,r l

There are two fur'Wi'ent& ýr rt!ZAW. 4'i. ft; 

the learning curve ri ger, us- , e - , ,. ." r e,,

curve Ind the cumulaav average i-xi.* -,,q +',a- .' ,--- ,*, .. ,,-, &Uro

unit curve focuses on Owe h r .-• ,wv•r ?w '1W :*-- "'f

Involved In specific units of prodoctr '-e io ".rtie,-.rer . .

theory can be stated as toflows ", •- "' 0 V T"-,-.-,. 'ie

As the total quantity of units produced .. ages

doubles, the cost per unit decreases

by some constant percentage The aria- vy - " -,e slap.

of Ithe iwnwVg -urve Oot zi - te'of reasov's

The constant percentage by which the One is to facilitate conmu'-,, alon as it is pert

costs of doubled quantities decrease is of the language of the searning curve theory.

called the rate of learning. The steeper the slope (lower the percent), the

more rapidly the resource requirements (hours)

The "slope" of the learning curve Is will decline as production Incirestes.

related to the rate of learning. It is Accordingly, the slope of the learning curve Is

the difference between 100 and the usually an issue In production contract

rate of learning. For example, If the negotiation. The slope of the learning curve is

hours between doubled quantities are also needed to project follow-on costs using

reduced by 20% (rate of learning) it either the learning tables or the computational

would be described as a curve with an assistance of a computer.

60% slope.

Selection of Learning Curves

The difference or amount of labor-hour Existing experience curves, by

reduction is not constant. Rather, it declines definition, reflect past experience. Trend lines

by a continually diminishing amount as the are developed from accumulated data plotted

quantities are doubled. The amount of on logarithmic paper (preferably) and

change over the "doubling" period has been "smoothed out" to portray the curve. The type

found to be a constant percentage of cost at of curve may represent one of several

the beginning of the doubling period, concepts. The data may have been

accumulated by product, process, department,

A labor-hour graph of this data curve or by other functional or organizational

drawn on ordinary graph paper (rectangular segregations, depending on the needs of the

coordinates) becomes a hyperbolic line. user. But whinhever experience curve concept

Figure 9-4 pictures the relationship between or method of data accumulation is selected for

two variables, units produced In sequence and use, based on suitability to the experience

labor hours per unit. When labor hour figures pattern, the data should be applied

that conform to the learning process are consistently in order to render meaningful

plotted on log-log paper against the units of information to management. Consistency In

production to which they apply, the points thus curve concept and data accumulation cannot

produced lie on a straight line. be overemphasized because existing

experience curves play a major role in

9-12
2;80,000 8;51,200 32;32,766

1;100,000 4;46,000 16;40,960

100

7S

LABOR

HOURS

PER s JNrT ____

00O

0 5 10 15 20 25 30 35 40

UNITS PRODUCED

Figure 9-4 An 80 Percent Learning Curve Drawn on Arithmetic Graph Paper

determining the projected experience curve for --Changes in working conditions or

a new item or product. morale

When selecting the proper curve for a --Other comparable factors between

new production item when only one point of similar Items

data is available and the slope is unknown,

the following, in decreasing order of --Delvery schedules

magnitude, should be considered: --Availability of material and --Similarity between the new item and components

an item or Items previously produced. --Personnel turnover during pro iuction --Addition or deletion of processes and cycle of Item previously produc(d

components --Comparison of actual production data --Differences in material, if any with previously extrapolated or

theoretical curves to i d e n t I f y --Effect of engineering changes in deviations

items previously produced

It is feasible to assign weights to these --Duration of time since a similar item factors as well as to any other factors that are

was produced of a comparable nature in an attempt to

quantify differences between items. These --Condition of tooling and equipment factors are again historical in nature and only comparison of several existing curves and --Personnel turnover

9-13
their actuals would reveal the Impo lance of have been incurred had either the initial order

these factors. or the run continued through the duration of

the follow-on order or the restarted run).

When production is underway,

available data can be readily plotted, and the The S-Curve

curve may be extrapolated to a desired unit. The S-Curve is a formulation of the

However, if production has yet to be started, learning curve which has been supported by

actual unit one data would not be available actual cost experience observed in Industry.

and a theoretical unit one value would have to This S-Curve descibes the situation where the

be developed. This may be accomplished in initial units in the production cycle exceed the

one of three ways: anticipated "normal" learning curve values by a

significant percentage anJ at a relatively low

o A statistically derived relationship learning rate. This is Illustrated In Figure 9-5.

between the preproduction unit hours

and first unit hours can be applied to As the production cycle continues to

the actual hours from the produce units of the product, these unit costs

preproduction phase. begin to drop sharply, actually dropping below

the normal learning curve generally anticipated

o A cost estimating relationship (CER) at that point and then begin to proceed at a

for first unit cost based upon physical lesser improvement rate.

or performance parameters can be

used to develop a first unit cost This pattern may reflect the fact that

estimate. during the introduction of a new product,

intensive demands are placed upon the entire

o The slope and the point at which the organization. These demands are the result

curve and the labor standard value of frequent design changes and production

converge are known. In this case a interruptions causing new requirements for

unit one value can be determined, training production and supervisory personnel

This is accomplished by dividing the in new manufacturing techniques and possibly

labor standard by the appropriate unit reqi,idng the development of new procedures

value. for production planning and control.

Manufacturing Breaks If this situation exists and is not

A manufacturing break is the time recognized by using an analysis based upon

lapse between the completion of an order or the S-Curve rather than the standard learning

manufacturing run of certain units of curve, the result could be that sufficient funds

equipment and the commencement of a would not be available during the early part of

follow-on order or restart -f manufacturing for the program.

identical units. This time lapse disrupts the

continuous ilow of manufacturing and If the PMO decides to use the

constitutes a definite cost Impact. The time S-Curve approach, Figure 9-5 illustrates a

lapse under discussion here pnrtains to method that could be used for modeling this

significant periods of time (weeks and morths) procedure. The figure reflects an initial period

as opposed to the minutes or hours for of slow learning, fullowed by a period of more

personnel allowances, machine delays, power rapid learning, and then followed by a slower

failures, ard the like. learning level. To use this approach it would

be necessary to evaluate the specific

It is logikal to assume that becau ýe company's experience to determine where the

the experience curve has a time/cost break points would occur and the appropriate

relationship, a break will affect both timo and slopes for the curve segments. This

cost. Therefore, the length of the break illustration (Figure 9-5) indicates the first break

becomes as significant as the length of the point at unit 3; the actual break point may

initial order or manufacturing run. Because come much later in the program and some

the break Is quantifiable, the remaining factor research has indicated that near unit 30 Is the

to be determined is the cost of this lapse in most likely point for the first break.

manufacturing (that ;•, the additional cost

Incurred over and above that which would

9-14
HOURS/

UNITS__ _ __ _ __ __ _ _

UNITS PRODUCED

Figure 9-5 An S-Curve Model

Learning Curves Applied to Standard Times operations (a high proportion of task~s with

It should also be recognized that machine dictated times tends to appear different areas of the contractor operations will horizontal at a iower unit number). The

exhibit different learning patterns. In a potential Impact of variation In the unit

detailed evaiuation of the cost to perform, It determined as standard can be seen In Table

may be advisable for the contractor and 9-2. Contractor historical manufacturing data

program office to utilize these specific curves should be reviewed to select the appropriate (for areas such as assembly, fabrication, etc.) point for standard.

rather than a composite curve summarizing all

the differing types of activity within the facility. The appropriate slope for the curve

also should be developed from contractor

When utilizing the learning curve to experience. It should also be recognized that

develop program or contract estimates from the historical rate of learning may not be the

engineered standards, we rely on a model most appropriate for the program under

such as that shown In Figure 9-6. The time consideration.

required at standard is reflected by the portion of the learning curve which can be considered

to be essentially horizontal. In order to MANUFACTURING RATE/COST

estimate the costs of the early units, such as RELATIONSHIP

those to be purchased on the first production The rate at which Items are completed contract, three determinations are required: and delivered Is directly related to the

manufacturing cost of the program. Generally, 1. The hours required at standlard, higher manufacturing rates will allow for

greater economies of scale and result In lower

2. The unit number of which standard Is unit cost and lower program cost for a fixed

reached, and quantity.

3. The slope of the learning curve. The PM must be aware of

manufacturing rate characteristics impacting The determinations required in 2 and 3 cost. These characteristics include the extent

should be developed based on historical to which the manufacturing process Is machine

records for the specific manufacturing facility paced, the number of shifts employed or

Involved and the nature of the manufacturing avallable, and the mechanism by which

9-15
HOURS

STANDARD HOURS

UNIT

Figure 9-6 Learning Curve

STANDARD 10,000 HOURS 80% CURVE

STANDARD FIRST UNIT TOTAL HOURS:

AT UNIT HOURS FIRST 20 UNITS

400 68,810 721,510

500 73,940 775,250

1,000 92,400 968,810

Table 9-2 Cost impact of Varying Baseline Unit for Standard

different rates are accommodate~d. Each In evaluating the cost for either a unit program's manufacturing characteristics will or total DOD acquisition program, one of the beunique -- ranging froti low volume, labor most substantial Impacts has come from Intensive to highly automated scenarios. The Inflation. By running a program at an variety of circumstances encountered might accelerated rate, systems are produced e arlier Include steady manufacturing rates, breaks In and are subject to a lower Inflation effect. manufacturing, rates buffeted by multinational Within the context of a specific considerations, extended periods of low rate prod1uct/manufacturing environment set, other manufacturing while awaiting Improved version benefits can be operative. Within many approval, and the like. manufacturing facilities, total overhead Is

relatively insensitive to changes in

9-16
manufacturing rate. Increases In the rate thus them In needed quantities. The cost of

provide more units to which those costs can manning and maintaining these systems Is

be applied within a specific area. The facility also Increasing.

also benefits from some of the economies of

scale such as: Commercial Practice

In industry, design to cost Is not a new -- Increased specialization concept. It has been used by many -- Greater opportunity for tooling manufacturers of commercial products, ranging -- Increase use of shop aids from radios t

o automobiles. Managers and -- More inte wne facility usage engineers In commercial Industry are generally well aware of the Item cost target for a

Figure 9-7 defines some of the general manufactured Item, which must be achieved If

boundaries for the rate decision. If the the product Is to be competitive. Cost goals,

program has a high level of technical risk, It Is compatible with projected markets, are

generally better to hold to lower rates until the regularly established as design objectives.

risk Is reduced and the value of the

manufacturing output is known. There is a As the design evolves, anticipated boundary shown on the right side of the figure production costs are fed back to designers relating to the Issue of technological and managers io inform them of progress obsolescence. If the rate Is held too low, it Is toward the production cost goal and to Identify possible that units produced at the end of areas needing corrective action. When

production phase of the program will represent required, nice but less essential features may technology that Is obsolete in terms of Its be reduced or eliminated to achieve the cost

ability to meet the defined threat. goal.

There also tends to be a maximum DOD ExDerience

rate which can be supported by the defined In contrast, DOD had traditionally

manufacturing facility. These rates are rarely operated under the assumption that defense

reached in most DOD programs except for systems and equipment, on an Individual

short periods. This Is due to the effects of the basis, must have the best performance that

learning curve on the manufacturing technology can provide -- cost being, at best,

environment. a secondary consideration. This practice has

frequently resulted in a reduction in the

number of items to be purchased, and the

DESIGN TO COST advanced technology equipment has frequently The term "design to cost" means the had a lower field reliability than desired.

management and control of future acquisition, Extensive and costly modifications and delays operating and support costs during the design in upgrading the operational capability were

and development process under established not Infrequent.

and approved cost objectives. A design to

cost goal Is a specific cost number (in Because of the emphasis on

constant dollars for a specified number of performance, the subsequent costs of

systems at a specified production rate) manufacturing, operation and support were not

established as eariy as possible In the emphasized In the dasign and development of

acquisition process, but not later than the time defense systems and equipment. of entry into the full-scale development phase. Consequently, information obtained concerning such costs during the design phase was

The decision to apply design to cost seldom fed back to development managers principles to most defense system programs and design engineers. In addition, there was

was made In the light of hard realities of Iikelý little motivation for designers to consider future

future levels of DOD budgets and the ever manufactiring, operation and support costs,

Increasing costs of unit acquisition, manpower and to direct their efforts accordingly; yet the

and support. original requirements and the subsequent ei ~gineering design are the most Important In almost every area in the projected factors driving such costs.

DOD budget the estimated costs of new

systems substantially exceed the ability to buy

9-17
MAXIMUM RATE FOR EXISTING FACILITIES

MANUFACTURING

RATE/YEAR TECHNICAL

V IKENVELOPE OF REASONABLE TECHNOLOGICAL

TIME/RATE OPTIONS OBSOLESCENCE

YEARS

Figure 9-7 Manufacturing Rate Options

The application of the design to cost A should cost review uses an

concept attempts to recognize these economic Integrated team having a variety of skills and

and motivational realities. It recognizes that experience to conduct coordinated, in-depth the "best" system design Is not necessarily cost analysis at a contractor's plant. These

achieved by maximizing Individual unit reviews are normally accomplished on

performance only; rather, It Is a function of programs requiring DAB approval. The

need, performance, life cycle cost and purposes of the review are to Identify

quantities needed to address the threat. it Inefficient and uneconomical contractor pracrecognizes that actions in the engineering tices, to quantify the impact of these practices budget area significantly affect budgets in on system cost, and to use the findings to

other areas; and that all of these trade-offs develop a realistic price objective.

must be made within realistic total resource

constraints. The performance of a should cost

analysis represents a significant Investment by the government In time, resources and person- SHOULD COST nel. Its use Is justified In Instances where the

Should cost reviews provide an government anticipates a major retumn on

effective method for assessing contractor cost Investment. This return Is manifest In the

proposals. The In-depth analysis used in the negotiation of contract cost objectives which

should cost approach provides a basis for have Imbedded In themn attainable

clear understanding of the details of contractor Improvements In contractor economy and

operations. These details can be used In efficiency. The should cost approach Is most

making a comprehensive evaluation of attractive for application to production proposal costs. The evaluation can then be contracts with large dollar expenditures and a

used to reduce the cost to the gJovemment of potentln! for substantial follow-on, with no

the systems and equipments w~likh are competition, and with some production effort

required to meet DOD's worldwide operational already completed.

commitments.

In this environment, the should cost

Should cost evaluations are cost review offers an outstanding opportunity for

estimates done by the government and substantial benefits. Attaining these benefits

provided to buyers and contracting officers as requires that a team of highly qualified

a tool for use In price negotiations. They Individuals, who represent a large number of

consist of an engineering analysis, associated disciplines, be assembled to make an In-depth

drawings, and detailed reviews of all related evaluation of the contractor's proposal. This

cost elements which, together, represent an evaluation goes beyond the normal cost

Independent estimate of what an item should analysis in which the expected cost outcome

cost. of a planned series of contractor actions Is

9-18
validated. In the should cost approach those GAO has recommended that OSD

proposed actions which f ormn the basis of the revise its policy to require that the Military proposal need to be examined In a critical Departments perform at least one should cost

fashion to Identify and challenge Inefficient or analysis early In the production cycle for each

uneconomical practices within the contractor's major program and has better defined the

management and operations. As these conditions that Identify the applicability of

weaknesses are Identified, their cost Impact is these pricing techniques. These

quantified and reflected In the govemnment recommendations were Implemented through negotiation objectives. The objectives must changes to the Federal Acquisition Regulation then be supported with a clear description of and the DOD Supplement. Congress has

the basis for the positions taken, the rationale passed legislation which closely parallels DOD

underlying the positions taken, and a should cost audits.

description of contractor actions that can

Improve or eliminate Inefficient and Normavly, the manufacturing uneconomical practices. management group supporting the program

manager Is tasked to evaluate the

In a report Issued In September 1985, manufacturing material and labor costs.

GAO reported that when used, should cost

analysis was an effective tool In reducing contractors' proposed prices. GAO condluded

there were Inadequacies In DOD should cost

policy that resulted In under-utilization of the

should cost concept.

9-19
CHAPTER TEN

CONTRACTING ISSUES IN MANUFACTURING

CONTENTS

Paae

OBJECTIVE 10-1

INTRODUCTION 10-1

MANUFACTURING MANAGEMENT PROGRAM 10-1

Specific Requirements 10-1

INCENTIVE STRUCTURES 10-1

Contract Types 10-1

Contract Provisions 10-4

MAKE-OR-BUY PROGRAM 10-4

Contractor Actions 10-5

Government Evaluation 10-5

Post Award Changes 10-5

SUBCONTRACT MANAGEMENT 10-5

Consent 10-6

Contractor Purchasing System Review 10-6

Subcontractor Evaluation Support 10-7

CONTRACTOR DATA 10-7

Data Requirements Definition 10-7

Manufacturing Management Data Items 10-8

Progress Reporting 10-9

Technical Data 10-9
CONTRACTING ISSUES IN MANUFACTURING

OBJECTIVE

The contract is the vehicle used to One way of defining contractor

establish the formal relationship between the manufacturing management requirements Is to

government and a prime contractor. There include MIL-STD-1528A, Manufacturing

are two basic types of contractual provisions Management Program, in the contract.

which impact manufacturing--requirements and MIL-STD-1 528A requires the contractor to

incentives. Requirements establish minimum establish and maintain an effective

levels of performance which the contractor manufacturing management program. The

must achieve. Incen~tives reward the program must provide for detailed planning contractor for risk-taking or cost, schedule and and control of manufacturing functions and for

technical achievements beyond the minimum timely and effective transition from

requirements of the contract. This chapter will development to full-rate production. The

consider five issues which will significantly standard also provides for program review and

affect the relationship between the two approval by the government. General

management teams. manufacturing management program goals are

defined In Figure 10-1.

.INTRODUCTION Specific Requirements Because the vast majority of defense MIL-STD-1 528A defines specific

systems and equipment are produced by contractor manufacturing management

contractors, structuring of the contractual program requirements In five management relationship Is of critical importance. The areas: planning, design analysis, operations

issues of contracting approach and contract management, system manufacturing provisions need to be addressed early in the assessment, and contractor/government

acquisition planning cycle to ensure that interf ace. Figure 10-2 outlines the major

proper requirements are generated during requirements in each management area.

each phase of the systems acquisition process

and Included in the acquisition contracts. This

chapter provides information on a number of INCENTIVE STRUCTURES

manufacturing management issues from the Another vital element is contractor

perspective of the contract relationship. Each motivation. Contractual structure motivates

of the topics is independent and no attempt contractors by providing the opportunity to

has been made to tie them together. Many of earn larger profits through Improved the topics are treated elsewhere in the performance, effective cost control, reduced

handbook from a more general standpoint, lead time, and new or additional efforts that

would not have occuiTed without the

Incentives. Different types of Incentives may

MANUFACTURING MANAGEMENT be appropriate at different times during system PROGRAM development and/or production. Incentive

Aggressive and responsive contractor structures may be divided Into contract type

manufacturing management is essential and contract provisions that can be used

throughout the acquisition process. Such regardless of contract type. Figure 10-3

management does not just happen. Of depicts several important manufacturing

course, contra.,tor manufacturing management management elements commonly considered

must be considered during the Source in contract incentive structures.

Selection process, but more is required to

assure a positive ongoing relationship. The Contract Types contract must define what the government The primary means of motivating

expects from contractor manufacturing contractor performance is through appropriate

management. selection of contract type. There are two

hasic contract types, fixed pricA and cost

reimbursement but there are several variations

of each. The most common fixed price

10-1
Establish and maintain a manufacturing system which provides efficient and

effective manufacture of quality hardware.

Increase productivity and reduce production unit cost.

Identify and reduce the impact of critical and strategic materials.

Identify and reduce manufacturing risk.

Plan according to a consistent manufacturing strategy.

Figure lU-1 Manufacturing Management Program Goals

Management Area Requirement

Planning Identify and Obtain Production Resources

Identify and Resolve Risk

Identify and Obtain Capital Commitments

Identify and Obtain Tooling and Test Equipment

Verify Manufacturing System

Integrate Program and Factory Planning

Integrate Make-or-Buy Analysis

Integrate Industrial Material Management

Design Analysis Produciblilty Analysis

Process and Methods Analysis

Design and Manufacturing Engineering Integration

Production State-of-the-Art Analysis

Operations Management Production Scheduling and Control

Work Measurement

Manufacturing Surveillance

Control of Subcontractors and Vendors

System Manufacturing Assessments Manufacturing Feasibility

Manufacturing Capability

Contractor/Government Interface Manufacturing Management Program Review

Manufacturing Management/Production Capability

Figure 10-2, MIL-STD-1 528A Requirements

10-2
Cost Schedule Technical

Cost Reduction Expedited Development Quality

Design-to-Cost Early Delivery Reliability

Life-Cycle Cost On-Time Delivery Maintainability Product Improvement

Figure 10-3 Incentive Improvement Goals

predictable, and controliable by the contractor.

contracts are Firm Fixed Price (FFP) and In follow-on production, for example, where

Fixed Price Incentive Firm (FPIF). The most specifications and work methods are set, an

common cost reimbursement contracts are the FFP contract would normally be the preferred

Cost Plus Fixed Fee (CPFF), Cost Plus choice.

Incentive Fee (OPIF), and Cost Plus Award

Fee (OPAF). In situetions Involving greater risk,

FPIF or OPIF contracts provide contractor

There are two major differences incentives to control costs while sharing cost

between fixed price contracts and cost risk with the government. Both types have

reimbursement contracts. The differences target costs and government/contractor cost

relate to the contractor's acceptance of sharing arrangements If costs are above or

performance risk and cost risk. Under a fixed below those targets. If costs are less than

price contracts the contractor assumes target cost, contractor profit (fee In cost

substantial performance risk. The contractor is contracts) Increases. If costs are more than

required to deliver the specified product or target cost, contractor profit/fee decreases.

service; and final payment is not made until FPIF contracts Include a ceiling price. If total

after final delivery. Under a cost cost and profit reach this ceiling price, the

reimbursement contract, the contractor is only contractor must assumne all cost responsibility.

required to deliver a best effort to complete OPIF contracts Include a maximum and

the contract. Cost risk assumption is related minimum (which may be negative) fee. Cost

to assumption of performance risk. Normally responsibility remains with the government. In

under a cost reimbursement contract, fee may general the FPIF contract would be used In

Increase or decrease based on performance, situations where specifications and methods

but all allowable costs are reimbursed up to are somewhat defined, but substantial risk

the maximum amount specified In the contract. remains. OPIF contracts should be used

All fixed price contracts include a maximum where cost control Is important but there Is

amount that the government may be obligated less overall definition. The amount of risk and

to pay. If contractor costs plus profit exceed contractor ability to control that risk should be

this amount, the government Is not obligated the determining factor. A CPIF contract might

to pay more than this maximum. Additional be used for developmental units. An FPRIF

costs come from contractor resources. contract could be used for Initial production

Contract type selection should be based on after development.

the amount of performance/cost risk involved

and the ability of the contractor to control that While FPIF and CPIF contracts always

risk, include a cost incentive, they may include

multiple Incentives covering areas such as

In an FFP contract, a firm price is set schedule performance, technical performance

at the beginning of the contract. All cost risk and others. Each Incentive may be weighted

Is assumed by the contractor. In such by relative importance. One caveat -- as

situations, ^the contractor should have the many Incentives are combined within an

maximum motivation to control cost. This type Individual contract, the resulting complexity

of contract sh,,iuld be used In situations where may defeat the purpose of the Incentive. The

performance and cost risk are relatively low, goal of the Incentive Is to motivate contractor

effort In a specific direction. Highly complex

10-3
incentive structures often defeat this goal important are value engineering, warranty, and

because the contractor is unable to determine, capital investment Incentive provisions.

at any point in time, the behavior that is most

likely to result in earning higher profits. This Value engineering provisions may be

occurs hecause behavior that may improve the included in contracts to reward voluntary value

likelihood of earning one part of the Incentive engineering suggestions or to require value

may lead to outcomes which reduce the engineering analysis to Identify methods of

potential in other areas. For example, design performing more economically. Value

efforts to obtain better technical performance engineering attempts to eliminate, without

may result In higher costs and schedule Impairing essential functions or characteristics,

delays. anything that increases acquisition, operation,

or support costs. Value engineering Is

A OPAF contract provides a means of discussed in greater detail In Chapter 7.

applying incentives in contracts which are not

susceptible to the finite measurement of Warranties are required on all

performance necessary for structuring other weapons systems with' - unit cost of $100,000, Incentives. The fee established in a CPAF or total procurement cost of $10,000,000.

contract consists of a fixed amount called the Prime contractors must certify in writing that

base fee which does not vary with weapons systems provided conform to contract

performance, and an award fee amount for requirements, are free from defects, and meet

excellence in contract performance in areas performance requirements. If units fail to

such as quality, manufacturing technology meet requirements the government may implementation, and management Ingenuity. require the contractor to: repair or replace the

Award fee provisions involve the subjective Itein; reimburse the government for the cost of

measurement of performan~ce. The amount of repair; or equitably reduce the contract price

award fee to be paid Is based upon a considering the cost of repair. subjective evaluation by the government of

contractor performance, judged In the light of Capital Investment incentives are

criteria set forth In the contract. The number included as a major part of DOD profit of criteria used and the requirements which analysis. Industrial modernization Incentives

are represented will differ widely from one also may bo negotiated and Included In

contract to another. OPAF contracts have contracts for research, development, and/or,

been used to motivate contractors production of weapons systems, major

achievements in design to cost, design to life components, or materials. The purpose Is to

cycle cost, reliability and maintainability motivate the contractor to undertake

Improvement and other areas where Incentive productivity Improvement efforts it would not

goals may not bo precisely definable at the have otherwise undertaken or to Invest earlier

outset of the contract. than otherwise planned. More details on the

Industrial Modernization Incentives Program A CPFF contract provides no direct (IMIP) may be found in Chapter 5 and 8.

profit incentive to the contractor. A fixed fee

is negotiated at the outset and remains fixed

regardless of cost or performance. Still there MAKE-OR-BUY PROGRAM

are Indirect Incentives. In research and The prime contractor Is responsible for

development efforts, for example, contractors managing contract performance, Including

are motivated to accept risky contracts to do planning, placing, and administering such things as develop state-of-the-art subcontracts as necessary to ensure the

systems. The motivator is the potential for lowest overall risk to the government. future developmeit and/or production Although the government does not expect to

contracts. participate In every management decision, It

may reserve the right to review and agree on

Contract Provisions the -,ontractor's make-or-buy progi am when

In addition to incentives provided by necessary to ensure: negotiation of

the various types of contracts, there are a reasonable contract prices; satisfactory variety of contract provisions that may be performance; or Implementation of

Included in contracts to motivate contractors socio-economic policies. A make-or-buy toward desired objectives. Three of the most program is a contractor's written plan

10-4
Identifying major items to be produced or work must request the recommendations of

efforts to be performed in the prime appropri~ate personnel, Including technical and

contractors facilities, and major Items to be program management personnel, and the

contracted. small and disadvantaged business utilization

Mlake-or-buy programs are required spcait

only where the work is complex, the dollar In the evaluation, primary consideration

value is substantial, and price competition is must be given to the effect of the proposed

lacking. Regardless of the type of contract make or buy program on total contract price,

Intended, prospective contractor make-or-buy quality, delivery, and performance.

program Information is required for all Socioeconomic considerations, such as labor

negotiated procurements except when the surplus area and small business support, must

proposed prime contract: also be considered. The government will not

normally agree to proposed "make Items*

1) Is estimated to be less than $2 when the products or services are (1) not

million; regularly manufactured or provided by the

contractor and are available from another firm

2) Is f or research and at equal or lower prices or when they are (2)

development, unless the regularly manufactured or provided by the

contract Is for prototypes or contractor, but available from another firm at

hardware and it can lower prices.

reasonably be anticipated that

significant follow-on quantities Post Award Changes of the product will be procured. In addition to special provisions

containing the make-or-buy program features,

3) is determined by the the FAR clause 52.215-21, "Changes or

contracting officer to be priced Additions to Make or Buy Program," must be

based on adequate price Included in the contract. This clause

competition, or established describes procedures that must be followed to

catalog or market prices of make changes to the make-or-buy program

items sold In substantial described In the contract.

quantltie'q to the general public,

or on prices set by law or

regulation; or SUBCONTRACT MANAGEMENT

The prime contractor Is responsible for

4) Involves only work that the managing the planning, placing, and

contracting officer determines administering of subcontracts. Make-or-buy Is not complex. program analysis considers the prime

contractor's decisions In determining If certain

Contractor Actions components or services will be subcontracted.

In responding to the solicitation, the In this section, we will consider means

contractor identifies in the proposed available to the government to evaluate how

make-or-buy program work categorized as those decisions are Implemented. "must make," "must buy," or "can make or

buy." A make item is one produced, or work Weapon systems contractors have

performed, by the contractor or its affiliates, always needed support from other firms In

subsidlarieq, or divisions. The information meeting their contractual obligations. Prime

required to support this determination is contractors must purchase a wide variety of

detailed in Figure 10-4. raw materials, parts, subassemblies, and

Government Evaluation

Contracting officers must evaluate and

negotiate proposed make-or-buy programs as

soon as practicable after their receipt and

betore contract award. In preparing to

evaluate ared negotiate prospective contractor's

make-or-buy programs, the contracting officer

10-5
"* Description of each major Item or work effort

"* Categorization of each major Item or work effort as "must make," or "can

either make or buy"

"* For each Item or work effort categorized as "can either make or buy," a

proposal either to "make" or to' "buylo

"* Reasons for (1) categorizing Items and work efforts as "must make" or "must

bu yand (11) proposing to 'make" or to "buy" those categorized as "can

eith~er make or buy"

"* Designation of the plant or division proposed to make each Item or perform

each work effort

"* Identification of proposed subcontractors, if known

"* Any recommendations to defer make-or-buy decisions

"* Any other information the contracting off icer requires in order to evaluate the

program

Figure 10-4 Contractor Moice-or-Buy Program Support

services. While definitions vary, we wll~ subcontract and contractor purchasing system consider all these suppliers as subcontractors, review (CPSR). Increasingly, the government

is also becoming directly Involved In

In this age of Increasing specialization, supporting prime contractor subcontract

prime contractor reliancs on subcontractors management by directly participating In prime

has become increasingly Important. Typically, contractor evaluation of subcontractors.

one-third to two-thirds or more of total prime

contract dollars are eventually paid to Consent

subcontractors. Effective management of Government consent to subcontract

subcontractors therefore becomes essential to placement may be required when subcontract

effective contract performance. As a result work is complex, the dollar value Is

more government attention is being directed substantial, or the Government's Interests are

toward the prime-subcontractor relationship. not adequately protected by competition and

the type of prime contract or subcontract. The

Special care must be exercised when consent requirement is implemented through considering government Involvement in this the subcontract clause in the prime contract.

relationship. The government has no privity of This consent does not establish any direct

contract (direct contractual relationship) with contract relationship between the government

subcontractors. Any government efforts to and the subcontractor nor does It relieve the

control subcontractors must be accomplished prime contractor of any responsibility for

by affecting the prime contractor's selection-and management of subcontractors.

management of subcontracts. Subcontractors

should not be asked or expected to follow Contractor Purchasingi System Review

government direction. If they do and problems The Contractor Purchasing System

result, the government will likely be open to Review provides the Administrative Contracting substantial claims from both the prime and Officer (ACO) with the information needed to

subcontractors. Remember also that prime grant, withhold, or withdraw approval of the

contractors are paid to manage the entire contractor's purchasing system. The CPSR

contract effort indluding subcontractors. objective is to evaluate the efficiency and

effectiveness with which the contractor spends In addition to make-or-buy program government funds and complies with

analysis, examined in the last section, government policy when subcontracting. government Involvement In subcontracting has Approval of the contractor's purchasing system traditionally centered on consent to

10-6
significantly reduces requirements for review

and consent to individual subcontracts. CONTRACTOR DATA

Manufacturing Management activities

All contractors with more than $10 require accumulation and manipulation of large million annually in negotiated government amounts of data. To property manage system contiacts are subjeci to CPSF~s. Procedures development and production, the government call for an intensive initial review with annual must obtain and evaluate this Information

surveillance using on-site visits and more particularly: manufacturing management data; detailed subsequent reviews In alternate years. progress reporting data; and technical data.

These reviews devote special attention to the

items identifiled in Figure 10-5.

"* Degree of price competition obtained

"* Pricing policies and techniques

"* Methods of evaluating subcontractor's responsibility

"* Treatment accorded affiliates and other concerns having close working arrangements with the contractor

"* Policies and procedures pertaining to labor surplus area concerns and small

business concerns

"* Planning, award, and postaward management of major subcontract programs

"* Compliance with Cost Accounting Standards In awarding subcontracts

"* Appropriateness of types of contracts used

"* Management control systems, Including Internal audit procedures, to administer

p rog ress payments

Figure 10-5 Contractor Purchasing System Review Special Concerns

Data Requirements Definition

Subcontractor Evaluation Support Requirements to perform work tasks

Because subcontractors are performing such as manufacturing analyses, reviews, and

larger and larger portions of contract effort, preparation of plans, which result in the

government organizations are becoming more generation of data, must appear In the

directly involved In prime contractor evaluation contract Statement of Work (SOW). These

of subcontractor cost and price proposals and SOW requirements are based on the need to

subcontractor ability to manufacture systems. manage or support the manufacturing function

Government personnel have participated as as well as overall program management team members In prime contractor Should requirements. Data are generated by and

Costs, Manufacturing Management/Production directly traceable to the technical requirements Capability Reviews (MM/PCRs)1, and or other work effort established In the SOW.

Production Readiness Reviews (PRRs) at

subcontractor f acilities. Government While the SOW sets forth the

participation Is based on government contractual tasks required, an attachment or

responsibility to evaluate the total contract exhibit to the contract called the Contract Data

effort and special provisions in the prime Requirements List (CDRL), DD Form 1423,

contract. contains the list of data required to be

delivered under the contract. Properly

10-7
developed, the CDRL permits DOD managers to attain the data objectives described In

Figure 10-6.

"* Specify the minimum amount of data needed

"* Identify Individual data Item prices

"* Assure on-time acquisition of required data

"* Establish data requirements to meet manufacturing management needs

"* Specify data requirements In solicitations or proposals to provide full, understanding of total data requirements at contract award

"* Provide for administration of contracts requiring data to ensure that aii contract

data provisionsare fully satisfied

"* Provide quality assurance procedures to ensure the adequacy of the data for Its

Intended purpose

"* Provide for the continued currency of acquired data

- Prevent the acquisition of duplicate data

Figure 10-6 Contract Data Requirements~i-st Data Objectives

There Is considerable latitude In the

The CDRL should contain an amount of Information or data to be obtained explanatory Data hem Description (DID) for under the various contract vehicles.

each data Rem listed. DINs specifically Manufacturing data content and format should

describe the purpose of the diata hem, be tailored for each program phase. Tailoring applications involved, Interface references, and Is basically the exclusion of those sections, data preparation requirements. Accordingly, paragraphs, or sentences of standards, they play a key role In obtaining needed specifications or data items and the

Information In such critical areas as production substitution thereof, addition, or creation of

plan development and execution, production specific data requirements to meet the needs

capability and feasibility assessments, of manufacturing managers. production readiness review accomplishment, production progress reporting and engineering Manufacturing Management Data Items

data. The need for manufacturing data

exists throughout fth product life cycle and

An Individuai DID is required for each can be defined as recorded Information, data element. Detailed DiDs are listed In the regardless of form or characteristic, which may DOD Acquisition Management Systems and be retained by -the contractor or provided to

Deta Requirements Control Ust (AMSDL), the government. Whether retained and made

DODD 5000.19L, Volume 11. If a particular available for review or provided, data may be

data requirement Is not listed In the AMSDL, necessary for any number of purposes special Service or Agency approval will be Including those listed In Figure 10-7..

required.

10-8
"* Preparation for quantity manufacturing

"• Design adequacy review

"* Manufacturing feasibility

"* Manufacturing capability

"* Program visibility

" Risk assessment

"* Discipline interfacing

"• Manufacturing planning

"* Facilities planning

"• Subcontractor management

"• Manufacturing surveillance

Figure 10-7 Typical Manufacturing Management Data Items

Progress Reportina and budgeting, accounting, analysis, and

A number of different techniques and revisions. Other requirements, such as

reports are utilized by program managers to PERT/CPM and Gantt charts, are intended to

obtain status on manufacturing efforts. These ensure that manufacturing progress is

include: Cost Performance Reports (CPR); commensurate with the contract schedule.

Cost/Schedule Status Reports (C/SSR); This topic is treated in detail In Chapter 13.

Production Progress Reports (PPR); Line of

Balance (LOB); Performance Evaluation and Technical Data

Review Technique (PERT)!Crtical Path The term technical data Is defined as

Method (CPM) reports; Gantt or recorded information, regardless of the form or

phase-planning charts; and internal contractor method of the recording, of a scientific or

management information system outputs. No technical nature (Including computer software

one technique is applicable to all programs or documentation). The term does not Include

program phases. computer software or data incidental to

contract administration, such as financial

The information generated is targeted and/or management information. Examples of

for use at different levels of program technical data include: research and

management, procuring agency, or contract engineering data; engineering drawings and

administration office. System requirements, associated lists; specifications; standards;

such as the Cost/Schedule Control System process sheets; manuals; techn!cal reports;

Criteria (C/SCSC), are intended to provide catalog identifications and related Information;

criteria for the management system from which and documentation related to computer

data will be generated for management software.

visibility in five areas: organization, planning The Government has extensive needs

for many kinds of technical data and the rights

to use such data. Its needs may well exceed

those of private commercial customers. For

10-9
defense purposes, millions of separate systems, prior to entering full-scale

equipment and supply items, ranging from development. It is also important that

standard to unique types, must be acquired, contractors be required to provide early

operated, and maintained, often at points identification of any technical data that they

remote from the soruce of supply. Functions intend to deliver with any restrictions on

requiring varied kinds of technical data are Government use.

described in Figure 10-8.

"* PERSONNEL TRAINING . INSPECTION

"* OVERHAUL AND REPAIR • PRODUCT SURVEILLANCE

"* CATALOGING • PACKAGING

"• STANDARDIZATION • LOGISTICS OPERATIONS

"* MODIFICATION . REPROCUREMENT

"* INTERFACE CONTROL • SERVICE TEST

Figure 10-8 Uses of Technical Data

Normally, delivery of the technical

There is not necsssadly a correlation data package occurs at the end of full-scale

between the Government's need for technical development or during the production phase.

data and the contractor's economic Interest in Timing of the delivery is based on the planned

such data. Commercial and non-profit use of the data and the expected magnitude

organizations have property rights and a valid of design changes during the early part of the

economic interest in technical data pertaining production phase.

to items, components, or processes which they

have developed at their own expense. Such Of all these uses, the one which

technical data are often closely held in the provides the greatest difficulty Is

commercial sector because their disclosure to reprocurement. If DOD wishes to acquire

com~etitors could jeopardize the competitive systems or spare and repair parts for the

advantage they were developed to provide, systems under competitive procedures,

Public disclosure of such technical data could unlimited rights in data is normally required.

cause serious economic hardship to the Conflict with contractor economic interest is

originating company and would not be in the obvious. Most contractors are not anxious to

Interest of the United States in encouraging support future competition. The technical data

innovation as we,, as encouraging contractors package for reprocurement needs to contain

to develop at private expense hems, the Information necessary to enable a

components, or processes for use by the competent manufacturer to build the pFrt or

government, component. This should include such Items

as: purchase specifications, inspection and

Because of the possible different test requirements, and packaging data.

government/contractor views on technical data, Special care should be taken to assure that

it is particularly important for the government data packages do not contain restrictive

to Identify its various uses of and needs for markings. Data packages must Include

-technical data as early as is practicable in the explanations of references such as contractor

acquisition of any item, component, or specification numbers.

process. Such identification should be made

before contract award or., for major weapons

10-10
CHAPTER ELEVEN

TRANSITION FROM DEVELOPMENT TO

PRODUCTION

CONTENTS

OBJECTIVE 11-1

INTRODUCTION 11-1

TRANSITION PROCESS OVERVIEW 11-1

MAJOR CHALLENGES IN TRANSITION 11-6

Producibility 11-6

Design Maturhy 11-8

Quality Assurance Planning and Defect Prevention 11-8

Production Cost Analysis 11-8

Production Planning 11-8

Production Design Change Introduction 11-9

PRODUCIBILITY ENGINEERING AND PLANNING 11-10

;ntegrate Initial Production Facilities with Producibility

Engineering and Planning 11-10

Integrate Long Lead items with Producibility Engineering

and Planning 11-11

DEVELOPMENT/PRODUCTION GAPS 11-11

LOW RATE INITIAL PRODUCTION 11-12

ORGANIZATIONAL ISSUES 11-13

ENG'NEERING RELEASE OF THE PRODUCTION DESIGN 11-14

IMPACT ON PROGRAM MANAGEMENT 11-14
TRANSITION FROM DEVELOPMENT

TO PRODUCTION

OBJECTIVE

The challenge of program fundament~al principle that systems acquisition

management is to find the practical middle Is an Industrial process which demands both

ground between producing underdeveloped an understanding of that process and the

systems and extended development and implementation of basic engineering disciplines

testing to the nth degree of a few high cost and their control rriechanisms. The Defense

systems that never reach rate production. Science Board (DSB) Task Force on

Key guidelines 1o follow are: Transitioning from Development to Production,

In their May 1983 report "Solving the Risk

1. Select an acquisition strategy Equation In Transitioning from Development to

and risk management plan In context with the Production," provided abundant evidence that

Lnique aspects of the program. transition from full scale development Into

production places particular demands on

2. Avoid planning a development engineering design, test, and manufacturing, In

to production gap Into the program. both application and timing, and emphasizes

assurance of d*,aign stability and certification

3. Enter full-scale development of the manufacturing process. The Board

only with a solid technology base and a determined that the problems with the

management commitment for timely support acquisition process were not administrative,

and continuity of effort, provided that the need but Instead were technical. They further

still exists and satisfactory progress Is determined that this technical process focused

maintained, on three critical activities: design, test and

production. 4. Plan for transition to prviduction

starting at program Initiation.

TRANSITION PROCESS OVERVIEW

Transition from development to

INTRODUCTION production Is not an event with a readily

This chapter discusses some of the Identifiable starting point In the acquisition

organizational and functional issues which are process. The transition process Incorporates Involved In the transition from development to many activities shown in Figure 11-1. It Is a

production and the process for evaluation and continuum of Interrelated and Interdependent management. The changes In organizational activities. Military acquisition has time and

focus and activity are presented elong with a time again extended the product development discussion of the Impact of gaps between effort well Into the production phase. As a

development and production. The consequence, numerous product changes are

relationships among engineering design Introduced, planning essential for

release, Initial production facilities and manufacturing Is delayed, and the burden on

producdbility engineering and planning (PEP) manufacturing to "make up time" for

are discussed as they Impact the transition engineering delays Is a monumental task for

process. what =1~d otherwise be a successful

acquisitlio. program. "Fast tracking" Is a high Management of a major weapon risk venture. The transition process Is very

system from development throlugh production broad and it Is Impacted by activities that are

requires effective administration and or, more accurately, are not done in the eariy coordination of many activities. At the design and test activities.

production phase, large financial commitments

are made based on the detailed planning of Planning for production and

previous phases. The transition Is a highly manufacturing engineering, following the

visible, highly reactive time that Is design process, Is a major transition risk.

characterized by emphasis on preparation for Documented early producibility engineering production and change management. A and planning Integrated with advanced

program manager shouid recognize the development offers benefits of Increased

11-1
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end-item compatibility with the process and 0 Cost/schedule reports

procedures necessary to produce the item,

and reduces the number of changes In the 0 Trend reports

product configuration Introduced on the factory

floor. Acquisition costs and schedule delays 0 Product assurance

will be reduced whien the program Is

structured to accommodate the transition to 0 Fabrication plan

production. 0 Engineering release plan

Documented early planning focusing

on the specifics of the manufacturing practices Further, hems that represent new

and processes required to build the end Item processes may also be considered when

should be initiated while the design Is fluid, generating a manufacturing plan. They are

and completed before the start of rate usually driven by unique aspects of the

production. A manufacturing plan should be a acquisition, capabilities of the contractor, or

comprehensive document, provide guidelines initiatives of the military procurement agency.

for action, Identify and give visibility to high risk factors, and then provide direction by The transition process Is a very broad

which risk can be minimized. The report cited one and it Is very dependent upon certain

earlier, "Solving the Risk Equation in activities to take place In order for the

Transitioning from Development to Production," program to have a smooth, orderiy

lists the essential elements of a manufacturing progression. The activities that must take

plan which will significantly reduce the risk of place during the transition of a weapon

transitioning a program from development to system's programi are sp~cified by the

production, templates shown In Figure 11-2. The

templates can be thought of as wickets to

0 Master delivery schedule which pass through before the major template Identifies by each major function may be achieved. For example, the

subassembly the time spans, major template of Design has fourteen

need dates, and who Is supportive templates, each of which must be

responsible addressed In a disciplined manner before the.

design template can achieve design maturity O Hard tooling requirements to and thus fulfill the requirements for transition

meet Increased production from R&D to production.

rates as the program

progresses In the Introduction, we stated that the

DSB task torce Identifiled design, test, and

O Special tools production as the most critical functions of the

Industrial process, and thus they were

O Special test equipment identified as the original templates. Since that

time the DOD conducted an Industry - wide

"O Assembly flow charts review and additional templates have been

Identified. These additional templates of

0 Receiving Inspection funding, facilities, logistics, management and

requirements and yieid transition plan have joined the original three

thresholds as shown In Figure 11-3. They are arranged In what would be considered ý' logical

"O Production yield thresholds sequence from a program manager's viewpoint. For example, the Funding

O Producibllity studies templates Is shown In a position that

Infiuences each of the other templates and the

"O Design Improvements transition plan template is shown In a position of depending upon other, preceding templates.

"O Production control

O Critical processes

11-3
"Maw

WM4WAMO Lamy" MNArv 

SWM wayCE WDEF"Ct AMALl

-CHIHEY

-EE I - TUiChIWI.ýINCA

ass. Faue 12 Pt Tmlae

AS11-4
PROGRAM PHASE MNS DEPLOYMENT

TEMPLATE ACTIVITY 0 I N

Product•

Money Phlasing.,,,

Design

Design RFi. Mission Profile

Ossign Requirements

Trade Studies _

Design Policy

Design Process

Design Analysis

Parts and Materials Selection

Software Design

Computer-Aided Design (CAD)

Design for Testing

Built-in Test

Configuration Control

Design Reviews

Design Release

Test

Integrated Teat -

Failure Reporting System _

Uniform Test Report -,

Software Design Test Limit

LIfo

Test, Analyze, and Fix (TAAF) Field Feedback _

Production

Manufacturing Plan

Qualify Mfg. Process I

Place Part Control

Subcontractor Control

Defoe Control

Test Planning

Special Test Equipment (STE)

Computer-Aided Mfg. (CAM)

Manufacturing Screening

Transition Ptan

Facilities

Modernization

Factory Improvements

Productivity Center

Logistics

L.ogistics Support Analysis

Manpower and Personnel

Support and Test Equipment

Training Materials and Equipment

Spares"

Technical Manuals

Management

Manufacturing Strategy

Personnel Requirements

Data Requirements

Technical Risk Assessment

Production Breaks

iim -

PROGRAM RISK IS INTRODUCEER WHEN A PARTICULAR TEMPLATE ACTIVITY IS STARTED LATE OR CONTINUES BEYOND THE TIMELINE

Figure 11-3 Template Timellnes

11-5
By showing the template activities as a So the program continues, the

timeline chart In 11-3 one can see that the templates are applied, and the contractor's

template activities - which comprise an orderly progress Is evaluated in relation to milestone

iransition process - are interrelated and achievement through Production Readiness

Interdependent. The chart shows the activities Review (PRR) described above. The PAR

of the templates and their starting times In team structures the review according to the

relation to other template activities. For templates of DOD 4245.7M. Figure 11-4

example, one can see that the production shows the topics by which a PAR is

template activities are started after the initial structured, and the applicable template for that

activities of the Design template, but In topic.

conjunction with the design templates with

would affect producibility, i e., the activities of

tool planning, and qualification of the MAJOR CHALLENGES IN TRANSITION

manufacturing process happen in conjunction - The challenge of program

and coordination - with those of design management Is construction and

analysis, and parts and material selection. implementation of a program acquisitiorn

strategy that by a series of disciplined events

This chart also shows that design and and planning, results In the scheduled delivery,

production template activities have concluded performance, and required quality of the end

by Milestone Ill A, which is the start of low Item. The disciplined series of events

rate initial production (LRIP). The chart comprises the transition of a program from

Indicates a stable, mature, design release, design to production. A program manager

accompanied by manufacturing processes that should recognize that system acquisition

havg qualified for production, which Illustrates demands an understanding of the transition

a smooth transiticn from design to production. process and Its control mechanisms. The

The chart also shows the desired relationships transition process Is very board and It Is

of some templates whose activities continue Impacted by the activities that occur, or fall to

into the deployment phase, such as field occur, from the early design phase of a

feedback (Design) and logistics support program to the production phase. The control

analysis (Logistics). mechanisms, or disciplines, of the transition

process are called templates. The attainment

DOD Directive 4245.7M "Transition of, and compliance with the templates results

from Development to Production" consolidates In a disciplined transition process. DOD

established policy, prescribes procedures, and 4245.7M "Transition From Development to

assigns responsibilities on the application of Production", states that transition Is not a

fundamental engineering and technical discrete event In time, but rather a process

disciplines In acquisition programs to expedite composed of three elements: design, test,

the transition from development to production. and production. These three are joined by

it requires a rigorous, disciplined application of four other key elements - funding, facilities,

fundamental engineering principles, methods logistics, and management - to comprise

and techniques, and the identification and seven critical path templates which, along with

assessment of elements of program risk their respective risk assessment templates,

throughout the acquisition cycle, comprise a disciplined transition process applicable to any program.

Additional guidance on the transition

process Is contained In DOD 4245.7M There are certain factors and events

"Transition from Development to Proddction." that present challenges to the Implementation

It provides assistance to program managers In and success of the transition process. In

structuring technically sound programs, some cases these challenges are addressed

assessing risk, and identifying areas needing directly by the transition templates; in others

corrective action. DOD 4245.7M identifies and they are not. This chapter addresses some of

addresses the "templates" designed to those challenges. Introduce discipline Into the acquisition

process, to Identify and give visibility to high Producibility risk factors, and then to provide the tools by Producibiity. in the manufacturing

which risk can be minimized progressively, process, is the compatible result of an

interdependent relationship Involving the

11-6
PRR TEAM 01ETO

(REF: DOD 4245.7-M, CH 9, MGMT)

COORDINATOR - - - -U-P-- A--- 

PRODUCT PRODUCTON INDUSTRIAL MATERIALS AND QUALITY LOGISTICS CONTRACT

DESIGN ENGINEERING RESOURCES PURCHASED ASSURANCE| ADMINISTRATION

-(REF: DOD (REF: DOD 4245.7-

-(REF: DOD , 42457- 00057- DOD M 7EF: E(REF DOD 4245.7- 4245.7-M, CH M, CH 2 FUNDING)

M. CH 3, DESIGN) (REM CHD7 -(REF: DOD 4245D7-M, LOGISTICS) CH 5, 6 PRODUCTION FACILITIES) CH 5, PRODUCITON).. M, CH 4, TEST) SPECIFICATIONS,

ENGINEERING & TRANSITION) SCHEDULES ORGANIZATION SPARES REQUIREMENTS &

DRAWINGS PRODUCTION M UMANPOWER "EFFECTIVENESS CAPACITY STANDARDS

ADVANCE CONTROL -NAT'L REQ PLAN (MRP) MAINTENANCE

TECHNOLOGY COMPLIANCE TO PROCEDURES SUBCONTRACT

-NAT'L/SUBCONTRACT CONTRACT PROCEDURES SELECTIONG

PRODUCIBILITY PLANNING EOUIPMENT/ MGT SYS QA POEUSPLANNING &

MACHINES - OA PROCEDURES EQUIPMENT MGMT

SOFTWARE -PROCESSES VENDOR PERFORM- PRODUCTION METHODS ANCE SYSTEM CORRECTIVE TRAININGCT

CONFIGURATION ACTION/SCRAP/ COST

MANAGEMENT WORK -DEFENSE PRIORITIES REWORK/REPAIR

MEASUREMENT & ALLOC SYS (DPAS) -TEARDOWN

DESIGN REVIEWS

CONFIG AUDITS -VALUE MATERIALS AND

ENGINEERING PARTS CONTROL

QUALIFICATION PROGRAM

TESTING

-CRITICAL MATERIALS

RELIABILITY: TEST In AND MGT

ANALYZE AND FIX;

ENVIRONMENTAL

STRESS SCREENING

Figure 11-4 PRR Template Relationship

elements of Design, Test, and Production. provide Input regarding material selection,

Not everything that a designer puts on paper design producibility and other manufacturing

Is producible. To qualify as producible a related issues. If the design is so intricate

design must be such that It can be produced and detailed that it cannot be made by other

and tested by practical, cost-effective than expensive model-shop process when the

processes. requirements are for large, production-line

qu.ntitles, it is the responsibility of the

Producibility engineering and planning production engineer to work closely with the

is an integral element of the design process. design engineer to attain a more producible

In order to achieve this, close coordination design. The Design, Test, and Production

and communication between production, and templates include the fundamental elements by

design engineering must be established early which producibility can be attained when

in the design process. To simplify, production addressed in disciplined manner, as stated in

engineering should be looking over the DOD 4245.7M.

shoulder of the design engineer as the design

is being defined and stabilized, In order to

11-7
Design Maturity the failure. By the Implementation of FRACAS

A design is not mature unless It can those requirements can be met. FRACAS Is a

be produced, tested, function to requirements, closed-loop system that Initiates failure reports,

and be supported properly in the field. Before analyzes the failures, and provides corrective

these requirements can be met, the necessary actions for those failures back into the design, communication must take place during the manufacturing, and test processes In order to

design phase between the functional elements prevent that same type of failure from

of design engineering, test engineering, happening again. production, logistics, and procuroment. QA planning and defect prevention

In order to achieve design maturity, however, is an extremely wide requirement

producibility and testability must be designed - and Is present throughout the transition

Into the product. If a des!gn is so complicated template structure, as well as being a central

that it cannot be tested, then there is also an tenet of DOD Total Quality Management. excellent chance that it cannot be Without an effective QA planning and defect

manufactured; If the design cannot be prevention program the cost of rework and

manufactured, then It Is not a mature design. repair would be excessive; the "hidden factory"

would become larger and larger. Design maturity is almost synonymous Consequently, for a QA and defect prevention

with producibility. As the design matures, it program to be effective, It cannot be localized

reaches a higher level of producibility. An to just one or two templates, but It must

Indication of design maturity is a lack of, or extend to all concerned areas, or in this case,

decline, in the number of formal engineering templates. Those "concerned areas" are the

change notices (ECN) being processed. This three primary manufacturing risk areas of

Indicates that producibility and testability Design, Test, and Production, and each of

problems are becoming fewer. these templates is supported by templates that

share an ultimate goal to improve quality, and

Many of the same Design, Test, and prevent defects.

Production templates that are used to attain

program producibility are also used to achieve With the disciplined implementation of

design maturity because of the the transition templates the subject of Totrl

interdependency of the two functions. Quality Management and defect prevention

becomes more than a milestone, it becomes a

Quality Assurance Planning and Defect manufacturing "atmosphere." Prevention

Quality Assurance (QA) Planning and Production Cost Analysis Defect Prevention is another subject that is The Impact upon production cost as

very Interdependent with other program the result of the use of the templates for a

conditions, such as producibility and design successful transition from R&D Design to

maturity. The more producible the program, Production, is that production costs are

the higher the level of program QA and the ult.mately lower. As the template principles higher the resulting quality, and guidelines are applied to a program In a

disciplined manner, efficiency Is Increased and

Another significant template Is errors are reduced or eliminated, thereby Introduced with this subject; twe Failure greatly reducing the costs Incurred by the

Reporting System (Test) templafe. The "hidden factory" while performing rework

implementation of the Failure Reporting and and/or repair. The templates address risks

Corrective Action System (FRACAS) Is critical and situations that are technical, and not

to the Failure Reporting System template. administrative which have significant impact on

"The template Informs us of the need or production cost.

requirement to have a failure reporting system,

and FRACAS describes that system. Production Planning A successful, thorough production

A failure reporting system is necessary planning activity must be in place in order for

for the timely dissemination of accurate failure a program to successfully transition from

Information In order thal remedial actions may development to production. Production

be taken promptly to prevent the recurrence of planning is an element that comprises

1 1-8
activities that are critical to a disciplined Qualify Manufacturing Process have taken

program and Its transition to production, place.

These activities, along with the template3 to

which the relate, are shown In Figure 11-5.

Aglf TIamn 1

Policies and Procedures Management Strategy

Qualify Manufacturing Process

Master Phasing Schedule Manufacturing Plan

Manufacturing Lead Times Manufacturing Plan

Critical Component Identiflcation/

Control Manufacturing Plan

Production Schedule/Control Qualify Manufacturing Process

Manufacturing Plan

Bottlenecks & Work-Arounds Manufacturing Plan

Manufacturing Job Sheet Qualify Manufacturing Process

Design Release Risk Analysis Qualify Manufacturing Process

Machine/Plant/Loading Capacity Manufacturing Plan

Make or Buy Plan Manufacturing Plan

Figure 11-5 Production Planning - Template Relationship

The production planning Is usually Planning for resource availability must

based on documented procedures that take place during the very early phases of a

maintain consistency in planning from one program; and the transition templates of

project to the other. Although there are other Facilities, and Management assist the PM to

critical elements comprising production accomplish this. The Facilities template Is

planning, one of the most critical is the Master supported by three templates: Modernization,

Phasing Schedule. This Is used during the Factory Improvements, and Produdbility

Initial production planning and depicts a logical Center, all of which Impact Resource

time - phasing of program milestones Availability. The Personnel Requirements

established In order to comply with the template supporting the Management template

program schedule from contract Initiation to helps the PM plan to ensure personnel

product delivery. The Master Phasing availability when it will be needed. In

Schedule serves as a basis for establishment summary, the templates to assist the PM to

of the Manufacturing Plan. plan for resource availability are available.

Another example of Inter-dependency Production Design Chanue Introduction

between Production Planning and the Introduction of a design change after

templates is that the manufacturing job sheets, the production phase of a program has started

which are an Integral part of production Is always a cause for concern and caution.

planning, cannot be prepared until after the This Is something that should be avoided if at

template activities of Design Release, and all possible. When a design change is

Introduced after production has started, any

11-9
chance for a smooth transition from requirements as early In the program as In the

Development to Production that may have concept demonstration/validation phase, when

existed Is significantly reduced, If not only a small percentage of the total expected eliminated, program M'e cycle costs has been Incurred.

A Production Readiness Review (PRR) PEP Involves the engineering tasks

is conducted prior to the approval for the necessary to ensure timely, efficient and

contractor to start the production phase of the economic production of essential material and

program. At that time, the status of the Is primarily "software" In nature. It Includes

program design Is evaluated. If the design Is efforts related to development of the Technical

to be mature, It must be considered qualified Data Package (TDP), Quality Assurance (QA) and ready for production; if the design Is not procedures, and evaluation of special considered to be mature, the program should production processes through trade studies.

not be allowed to go into the production Also Included are development of unique phase. Theoretically, it Is reasonable to processes essential to the design and

assume that If a design change is Introduced manufacture of the material and details of

after production has started, the design was performance ratings; dimension and tolerance

not really mature at the time of the PRR. By data; manufacturing methods; sequences; the time that a program starts production, the assembly; schematics; physical characteristics

manufacturing process has been qualified and Including form, fit and function; Inspection test

tooling built. Consequently, any design and evaluation requirements; calibration

change Introduced after the start of production Information and quality control procedures. could require changes in process, new tooling, personnel retraining and a number of other PEP is, In effect, a qualification Impacts, all of which can be very costly, both process that will confirm the adequacy of the

from a financial and a schedule standpoint, production planning, tool design, manufacturing

process, and procedures before rate

So how do we avoid this undesirable production begins. activity? We avoid It by using the two

templates of Design Release, and Qualify It Is DOD policy that factors affecting Manufacturing Process. These templates producibilty and supportability shall be fully provide the Program Manager (PM) with tools Integrated during full scale development. The

by which to, avoid an undesirable production design and test cycle shall be structured to

design change Introduction. The templates, provide a continuum In development for

when used in conjunction with each other, can production, as opposed to d' crete phases that

do much toward the assurance of a smooth cause iterative and redundE ,t activities. The

transition from Development to Production. PEP program should be defined contractually and contain specific tasks and measurable

performance that will support an orderly PRODUCIBILITY ENGINEERING AND transition. PEP progress should be tracked by PLANNING (PEP) means of production readiness reviews

Initial production uncertainties need to required before Initial or full production be analyzed and contingencies addressed to decisions. The objective of a transition plan Is

avoid or minimize program disruptions and to provide visibility of how well each activity Is

associated cost overruns as a weapon system being executed. To be effective, progress

progresses from Development to Production, should be regulariy compared against the

The purpose of PEP Is to Insure that product transition plan. designs reflect good producibility considerations prior to release for Integrate Initial Production Facilities with

manufacturing. As In R&D, risks are Inherent Producibility Engineering and Planning In the system during early production. PEP Only minimum manufacturing tools are

begins with those activities and events required in the development phase to buiid

occurring perhaps three or tour years before and assemble prototype or test articles to be

Milestone Ill and extends to the state of used for testing and evaluatio 1of the

rotitine production. Although there is no engineering design. Off-the-shelf tools are

commonly accepted starting point for PEP, it is utilized as much as possible and often

prudent to anticipate production system prototype articles are, for all practical

11-10
purposes, hand assembled. At some point In Inventory. One need only to examine some of

the development phase, consideration must be the past directives to understand the reasons

given to production tooling requirements. The that such a gap Is inherent In our systems

Initial Production Facilities (IPF) effort Is acquisition cycle. The Deputy Secretary of

performed during the initiation of the Defense, David Packard, in a 31 July 1969

Production Phase and provides the special memo to the Service Secretaries stated,

tooling and test equipment needed to enter "There Is a general deficiency In the amount

the production phase. The design and of test and evaluation before we commit

supporting documents for special tooling and significant resources to production. While It Is

test equipment are provided under Producibility generally a mistake to schedule a complete

Engineering & Planning. IPF translates these break between development and production,

designs into a functioning production facility, we have tended to drift too far in the direction

Specific tasks Include: of concurrency, and this must be reversed." A

Blue Ribbon Defense Panel reported In July O Fabrication and validation of 1970, "guard against concurrent development

special manufacturing and production.... Defer production decision

equipment. until successful demonstration of

developmental prototypes." A GAO Report In

O Fabrication and validation of March 1973, "Cost Growth in Major Weapon

Special Acceptance and Systems," had the following recommendations:

Inspection Equipment (SAlE) "Avoid concurrent development and

and other special inspection production.... Adhere to orderly and sequential

equipment and gages. design, test, and evaluation," and, . . . clear

separation of development and production."

0 Initial set-up of the DOD Directives 5000.1 and 5000.2 clearly manufacturing line, If state that the production phase will not be

appropriate. initiated until all engineering Is reasonably complete and all significant design problems

0 Maintenance of special have been identified with solutions In hand,

equipment. These directives further specify that Initial

Operational Test & Evaluation (IOT&E) will be

Integrate Long Lead Items with Producibility accomplished prior to the first major production

Engineering and Planning decision. The current policy Is. that

Manufacturing documentation is concurrency will not be used unless there

prepared as a part of the PEP effort, and exists exceptional justification.

Includes the master tooling plan, the

manufacturing line layout and Identification of A development-production gap will

long lead time Items. Product design cause some additional delay In moving the

specifications should be relatively mature, at concept to deployment, but this could easily least with regard to special or scarce material be outweighed by the considerable potential

requirement, major production equipment and savings in resources that might result. Some

special purpose production tooling which has po te nt IalI b en e f Its o f th e

to be ordered well In advance of start-up time. development/production gap are:

The early stages of development

characteristically produce many Engineering 1. it bounds the government risk by

Change Proposals (ECPs) and the PM must preventing the Initiation of a costly

ascertain that the contractor Is doing the manufacturing program before all

necessary planning for manufacturing with engineering problems are solved and

special consideration for the long lead items. the design is proven.

2. It provides time to learn and evaluate

DEVELOPMENT/PRODUCTION GAPS the development results prior to the

Previous acquisition policies have been production start, thus preventing

such that a gap can be created between potentially costly mistakes in

phases In the acquisition cycle. The gap is manufacturing techniques.

most pronounced between the development

activity and the production of the system for

11-11
3. An Improvement In predictability of transition from the full-scale development

cost, schedule and performance will pha3e to the production phase. result.

Program planning In such a case

4. It allows for Incorporation of required would evaluate the trade-off between

changes that surface as a result of the probability of delay and waste. Risk

development and operational testing. assessment Is a means of estimating the

amount of potential waste, and the probability 5. Wasted effort, such as premature that the waste will occur. Usually advanced

planning, Incorrect tooling, Improper procurement of long lead items represents a

production line setup, and possible relatively small part of the total program retrofits are avoided, budget and Is an attractive program

alternative.

6. It presents a more conservative face

to the Congress who must approve Successful programs tend to be

commitment of funds to systems characterized by P, continuity of effort.

production. Initiation of a full production program does not

take place until after development Is There are also some potential Impacts completed but, by deft use of program that might negatively affect a program: acquisition strategy and skillful risk

management, the spirit of current policies can

1. During a period when there Is a high be accommodated and still avoid a significant rate of Inflation, a long gap would program gap between development and

severely escalate the cost of a system. production.

2. There would be a loss of the learning 1. Release for long Wead material

which was accrued in the development or effort which Is discussed In Chapter 6 of

phase. this guide

3. Overhead rates could Increase. 2. Pilot or Low Rate Initial

Production (LRIP) and

4. It could break up the management team approach that Is essential to a 3. Additional systems for test and

smooth-running acquisition, evaluation.

5. The program would be much more

vulnerable to budget cuts or LOW RATE INITIAL PRODUCTION

cancellation. Low rate Initial production (LRIP) Is a

term describing a low rate of output at the

What Is the net effect of the beginning of manufacture to reduce the

development production gap and what government's exposure to large retrofit

influence can the program manager have over programs and costs. LRIP has two major It? Undertaking production before purpses. First, It demonstrates that the

development Is completed greatly Increases production process and techniques are

program risk, it may substantially reduce the capable of producing the required quality and

time span from concept to deployment but It quantity of output. Second, It may provide Involves a commitment to Incurring substantial production representative Items for the

costs which may be wasteful In the event of completion of development (to Include live-fire)

program design modification, cancellation, or and/or operational testing. redirection. This kind of concurrency Is to be

avoided and will be approved by the Secretary If full scale-deveiopment or

of Defense only in rare Instances. Steps may pre-production prototypes are used for both

be taken In the development process that will development and Initial operational testing In

smooth the transition Into the production the FSD phase, they must be sufficiently phase. One example Is long lead time representative of the expected production materials which may have to be ordered In items to provide a valid estimate of operational advance to prevent an unbearable delay In the effectiveness and suitability. These prototypes

11-12
and any pilot line/tooling costs under a a. Assurance that risks have

development contract should be funded by the been resolved, including the threat.

RDT&E appropriation. Retention of the pilot

line capability for LRIP and production Is b. Cost, schedule, and

funded with the appropriate procurement performance estimates/requirements for

account. production phase are credible and acceptable.

Often, the prototypes are handmade c. Determination that: a practical

(albeit to government specification), then a engineering design has been completed,

production line manufacturing process changes tradeoffs have optimized production, the operating characteristics of the item, or it maintenance, and operating costs and

is discovered that the item can not be contractual aspects are sound.

successfully produced using methods different

from the hand-tooled artide. These problems Evaluating the production readiness of

lead to significant rework, additional testing, a weapon system prior to a production

producibility changes, and may cause decision point is an important element of the

schedule and cost growth. DOD weapon system acquisition process. Production readiness is assessed by means of

To reduce the risks mentioned above, a Production Readiness Review (PRR). The

it may be desirable to acquire a limited objective of a PRR Is to verify that the

number of LRIP items te% complete IOT&E. production design, planning and associated

However, an operational test assessment is preparations for a system have progressed to

still required prior to LRIP approval. There Is the point where a production commitment can

still the risk that the additional operational be made without incurring unacceptable risks

testing may reveal deficiencdes resulting in of breaching thresholds of schedule,

significant changes to the production line or performance, cost, or other established criteria.

article; however, these problems are mitigated The Production Readiness Review Is

by the ability to correct deficiencies prior to discussed In detail in Chapter 12 of this guide.

fielding. Tooling and other costs to start LRIP

should be borne by the appropriate Producing a system for inventory Is

procurement appropriation. LRIP items to be the ultimate goal of the weapon system

consumed in IOT&E should be funded by acquisition process and the success of

RDT&E. LRIP items to be used In 1OT&E, but transitloning from development to production is

returned to the operational inventory, should one key to how well this goal will be attained.

be funded by a procurement appropriation. In terms of resources, the production phase

consumes approximately haft of the Defense

For major defense acquisition budget and about three times what is spent in

programs, the OSD Director of Operational the development effort.

Test and Evaluation must provide an

operational test assessment to the SECDEF The OSD focused attention on

and to the Congress before the Secretary can minimizing the risks associated with

authorize full rate production. All production transitioning defense systems from the

line costs for follow-on-test and evaluation full-scale development phase to the production

(FOT&E) and inventory should be funded from phase by the issuance of DOD Directive

a procurement appropriation. 5000.34, "Defense Production Management." This document assigned specific production

management responsibilities within the OSD

ORGANIZATIONAL ISSUES and the Services. Among those assigned is

At the completion of the development the exercise of policy and operational control

process, a review is normally held at the of the DOD Product Engineering Services

Service level to determine If the system is Office (DPESO). The DPESO mission

ready to enter the production phase of the includes:

program. Approval to proceed into the

production phase is based upon: 0 Providing production

management assistance to

DOD components.

11-13
0 Providing independent the transition planning Involves planning for

assessments of produciblilty the design release.

and production readiness to

major programs. A specific design release plan should

be developed through a joint effort of the

Among the responsibilities assigned to manufacturing and engineering groups. The

the heads of DOD components (that Include plan should provide specific dates for release

the Services) and their program managers that of the Individual design details and the

relate directly to the transition process are: assembly concepts. The actual timing of the

release often represents a compromise O Assuring that consideration is between the manufacturing need date and the

given to the producibility of ability of the design function to complete and

proposed concepts during the review the design media. The manufacturing

concept demonstration and need date for engineering release Is based

validation phase. upon the lead time required to tool and make

the parts when the part will be used !., the

O Assuring that program funding assembly sequence. The delay In the design and schedule for reduction of engineering function Is a result of the workload

production risk through peak resulting from the need to complete, production engineering and review and release the total design. The

planning and manufacturing PMO snould evaluate the contractor ;.annlng technology activities, for engineering release to assure that , oper

set back times hqve been established and that

O Conducting production the release sched~ule will support the

readiness reviews In support of manufacturing planning. limited production and full

production decisions. These When the design release process Is

rev i ews may In ciu de initiated, contractor progress should be tracked

participation by consultants by the PMO. Delays In release often result In

and other DOD Components factory schedule slippages and/or Increased

and attendance by OSD cost as additional resources are applied to

representatives, regain schedule.

O Employing pilot production lines when necessary to IMPACT ON PROGRAM MANAGEMENT

validate production readiness, In accomplishing the transition, there Is

manufacturing operations and a need to change the basic focus of program

cost, and to provide production management. During design and

articles for test and evaluation, development, there is a premium placed on

direct Interaction between designers and the

floor manufacturing personnel. As the design ENGINEERING RELEASE OF THE test articles are being produced, there is a

PRODUCTION DESIGN continuing Inflow of design change which must

As the development and test effort be fed into the fabrication facility. As

nears completion, the design function must preliminary test data Identify problems, fixes

make the necessary revisions to the design are defined and Implemented. The control of

media such as drawings, schematics, and bills shop drawings tends to be somewhat loose,

of materials. These changes are the result of reflecting the primary thrust of this phase the outcomes of full and subscale tests, which is Interactive design. The fabrication

producibility studies and other design changes effort tends to be focused within the more

and refinements. As is discussed in Chapter experienced personnel, often Involving the use

6 on Manufacturing Planning and Scheduling, of highly skilled model shop personnel. the product design Is one of the bases of Quality requirements are specified via

planning development. In most cases, the drawings and Inspection and test

firm production design does not exist at the documentation to the production facility. time of transition and, consequently, part of

11-14
To achieve success In the production There Is often a need for the

phase, the operating style must change toward contractor to make basic changes in the

complete definition of the fabrication and manufacturing planning and control systems

assembly tasks and the transfer of those tasks reflecting a change from sma'l lots of parts

to the general factory work force. This results with relatively dynamic design, to economical

In a need for more detailed work Instructions lots with fixed design for quantity production. and a closely controlled system for changes to The measures of effectiveness of the

the documents used in the factory, such as manufacturing function also may change to

drawings and process specifications, to build reflect the efficiencies which would be

the quantities required to meet the acquisition expected In repetitive production and the

objective. Extensive documentation required balancing of work flow through the facility.

for production planning (discussed In Chapter The program manager should assure that the

8, Manufacturing Technology) must be based contractor has evaluated the planning and

on a stable design, quantity requirements and control systems used In the factory to

delivery schedule. The amount and timing of determine the need for changes to reflect the

engineering changes must be controlled to difference In the fundamental objectives of

minimize disruption to production development and production. Where change documentation and planned manufacturing is required, an attainable plan for the system

schedules. transition should be defined by the contractor.

11-15
CHAPTER TWELVE

MANUFACTURING SURVEYS AND REVIEWS

CONTENTS

OBJECTIVE 12-1

INTRODUCTION 12-1

Survey Objectives 12-1

TYPES OF SURVEYS 12-1

Product Centered Surveys 12-2

MANAGING THE SURVEY AND REVIEW TASK 12-2

PRODUCTION READINESS REVIEW 12-3

INDICATORS OF PRODUCTION READINESS ,2-3

Engineering Change Traffic Profiles 12-4

Yield Rates for Special Manufacturing Processes 12-5

Rate of Discovery of Software Errors 12-8

CONTRACTING FOR THE PRODUCTION READINESS REVIEW REQUIREMENT 12-7

SURVEY ISSUES FOR PRODUCTION READINESS REVIEWS 12-8

ROLE OF THE CONTRACT ADMINISTRATION OFFICE 12-8
MANUFACTURING SUF VEYS AND REVIEWS

OBJECTIVES

The material in this chapter Is directed 0 Supporting internal program

toward describing the nature and purpose of decisions

the various manufacturing surveys which are

required during the life of a defense program 0 Supporting milestone decisions

and the elements of planning and execution

which have historically been viewed as critical

to the successful attainment of survey TYPES OF SURVEYS

objectives. The major focus within this Manufacturing surveys can be divided

chapter Is on the Production Readiness into two broad categodes; system centered

Review (PRR), reflecting its Importance within and product centered. In most cases, the

the milestone review process. it should be PMO will be involved with the product

noted that the planning and procedural centered surveys since the PMO mission is to

guidance provided for the PRR are also manage development and production of a

applicable to other reviews and surveys. In specific system or product.

using the material for these purposes, it Is

necessary for the program management office A manufacturing management system

(PMO) to adjust the procedures to reflect the survey is concerned with the basic system

differences In objectives, scope, breadth of which has been developed by a contractor for

coverage and depth of involvement, planning, executing and controlling the

manufacturing function within the specific

facility. Except when the Cost/Schedule

ITRODUCTION Control Systems Criteria (C/SCSC) Is applied

Manufacturing surveys are conducted on a contract, surveys such as these are most

to obtain some measure of the capability of often accomplished by the designated Contract

defense contractors to perform the Administration Office (CAO) as a part of their

manufacturing tasks and to develop estimates continuing review and evaluation of contractor

of the production risk inherent in the design operations effectiveness. When C/SCSC is

and the proposed manufacturing approaches. applied, the CAO prov;des one or more

The ar.as of Interest generally reflect analysis members to the C/SCSC Review Team and,

of P physical, managerial and financial after acceptance of the contractor's

capability of the contractors to accomplish the management system, the CAO provides

work required, especially when other demands continuous surveillance. The basic thrust

•rý, )e placed upon the available production behind the accomplishment of system surveys 1,4 1ý, Ces. Manufacturing reviews are Is the hypothesis that the success of a

co. ,ted to focus on Issues related to the contractor on a specific program Is strongly

ade -y of the manufacturing management dependent upon the existence of a defined,

systumos, and the application of the systems to well operating management system.

the specific product to be produced.

The specific system to be used by the

SurvevS. eclives contractor will be unique to that company's

A survey may be conducted to identify business objectives, size, product mix and

and . Nlze the uncertainties Inherent in operating style. The focus on these types of

acquisition of major or complex defense reviews should be on the capability of the

systems. Specific objectives of a survey may management system to support effectively the

Include: current and planned levels of manufacturing

operation. To make this determination, the

"O Substantiating program review team needs to ensure that the system

adequacy Is structured, defined and communicated to the

individuals within the company who are

"O Selecting contractor sources charged with making it work. it is also

necessary to make a determination that the

"o Structuring contracts system is, in fact, functioning as it is

12-1
described. A company often has an system. These surveys are fundamentally

apparently well structured system which, similar In approach since they all seek~ to

unfortunately, is not used by its personnel. define Industry's capability to produce Where specific manufacturing management proposed systems or to measure the

requirements such as 0/5050 or manufacturing risk level Inherent In specific MIL-STD-1528, Production Management, are programs. The primary differences In the

established within the contract, there Is a need procedures for accomplishing the surveys are

to determine contractor compliance with these driven by differences In the:

requirements. For this type of system survey,

the team Is composed of both GAO and o Nature of the required output buying office personnel, but the basic thrust of the survey remains the same. Where these types of

surveys have been accomplished, the program 0 Depth of evaluation

office should use the findings as an element

of the manufacturing risk assessment and as 0 Breadth of evaluation

an input to the evaluation of schedule

attainablifty. Where management system o Degree of design definition

weaknesses are defined, the program existing at the time of the

manager should consider ways to motivate the survey

contractor to correct the problem. 0 Amount of completed

Product Ce~ntered Surveys_ manufacturing planning A number of surveys (reviews) are

accomplished on specific equipment or 0 Existence of competition In the

systems. Some of the more common ones program.

are listed In Figure 12-1 and defined In

Appendix B. In addition to these To define the management approach manufacturing based reviews, issues to product oriented surveys, the focus will be

concerning design, producibility and on the production readiness review. This

manufacturing planning are integral parts of review has been a relatively high visibility the continuing design review process and requirement during the system acquisition should be addressed at the reviews listed in process and Is expected to retain significance Figure 12-2.

" PRODUCTION READINESS REVIEW (PRR)

"* PRODUCIBILITY REVIEW

"* PRODUCTION FEASIBILITY REVIEW

"* PRE-AWARD SURVEY

"* PRODUCTION CAPACITY REVIEW

"* PRODUCTION PLAN REVIEW

Figure 12-1 Product-Centered Surveys

MANAGING THE SURVEY AND REVIEW in any service decision to Initiate the

TASK manufacture of defense systems. The PRR

As was noted earlier in the chapter, a procedures and techniques can be tailored for

number of product centered surveys may be use in other reviews by making appropriate required during the acq~uisition of a specific

12-2
"* SYSTEM REQUIREMENTS REVIEW (SRS)

"* SYSTEM DESIGN REVIEW (SDR)

"* PRELIMINARY DESIGN REVIEW (PDR)

"• CRITICAL DESIGN REVIEW (CDR)

"* FUNCTIONAL CONFIGURATION AUDIT (FCA)

"* PHYSICAL CONFIGURATION AUDIT (PCA)

Figure 12-2 Design Reviews

adjustments based upon the differences problems early and solve them prior to

described previously, production start. A number of program offices

have taken an incremental approach to PRR

risk assessment by starting early in the

PRODUCTION READINESS REVIEW development phase. The review Is

A Production Readiness Review (PRR) accomplished Incrementally as the design

Is a formal examination of a program to evolves and the testing is accomplished. The

determine If the design is ready for production, PM office continually rolls the knowledge from

If production engineering problems have been those efforts into the assessment of readiness

resolved, and if the producer has and the assessment of risk identification and

accomplished adequate planning for the resolution. The second Issue is whether the

production phase. Because adequacy is an assessment Is in support of a limited release

Imprecise issue, the degree of adequacy for manufacture or a full release. For full

should be addressed within the context of the production release, a complete evaluation of

specific program, In terms of the risk levels system readiness, problem resolution, and

that have been determined to be acceptable adequacy of planning are needed. Where

for that program. The production readiness possible, the objective is to quantify the

review attempts to verify that the production validating data.

design, planning and the associated

preparations for producing the oystem have in

fact progressed to the point where a INDICATORS OF PRODUCTION READINESS

manufacturing commitment can be made A number of Indicators have been

without Incurring unacceptable risks of identified by the DOD Product Engineering

breaching ti',e established thresholds of cost, Services Office (PESO) which can be used to

schedule, per'ormance or other criteria, develop meaningful and measurable data

concerning readiness of the product to enter

Obvioushl, there Is no such thing as a production based on Information that is

risk-free program. The objective of the PRR normally required as a part of defense

is to measure the level of manufacturing risk. contracts. In the development of the

After measuring the risk, the next step Is to Indicators, the following factors should be

Identify actions that will resolve that risk. Two considered:

key Issues should be noted: First, the extent

of conformance with a model state of 1. Each system Is made up of a

production readiness is related to the time at number of factors which make it unique in

which the assessment is made. While it is terms of Its problems, time scales, state of the

possible to accomplish the PRR Immediately art applications, budget restraints, and the

prior to Initiation of the Production Phase, so necessity for change during development.

doing loses the opportunity to Identify 2. Data for the individual

Indicators should be available either in the

program office or at the contractor's facility as

12-3
a result of nornsilly Imposed contractual subcontracted equipment, or in system requirements. No now data htems should be specifications. When the number of

required. engineering changes made Is plotted against a

time scale which Includes the development 3. The Indicators should be cycle, a patiemn such as that shown In Figure simple In concept and easily understood. 12-4 will normally occur.

4. Because numerical values for The number of changes starts at a

the Indicators are variable In time, trend data zero point prior to the engineering release. As

are considered to be of more value than point hardware fabrication Is Initiated, the number of

data. changes Increases to a maximum and should

decline as engineering problems are resolved.

Based on these considerations, At the completion of the prototype build, the

hardware and software Indicators listed In number of changes should have followed a

Figure 12-3 may be evaluated.

HARDWARE INDICATORS

"* ENGINEERING CHANGE TRAFFIC

"* RELIABILITY GROWTH PATTERNS

"* YIELD RATES FOR SPECIAL MANUFACTURING PROCESSES

"* YIELD RATES FOR TEST OPERATIONS

"* SCRAP AND REWORK LEVELS

"* LEVEL OF EFFORT ON NONCONFORMING MATERIALS

"* OUT-OF-STATION WORK PERFORMED

SOFTWARE INDICATORS

"* RATE OF DISCOVERY OF ERRORS

"* RATE OF CHANGE OF REQUIREMENTS

"* RATE OF CHANGE OF REVISION LEVEL

"* PERCENT MEMORY AND SPEED CAPACITY UNCOMMITTED

Figure 12-3 Production Readiness Indicators

Data from current and past progr'ams downward trend to a reasonable level. During

can be analyzed to develop basic trend prototype testing an Increase in changes Is

patterns for each of these Indicators. These noticed due to problems detected during the

patterns can then be used as E, baseline for tests. The curve depicting the number of

comparison with new programs and to Identify changes versus time sotould, again, follow a

areas which may represent problems or risks downward trend to a reasonable level, based

to success In production. An approach to use on the program complexity. three of these Indicators Is described below to

indicate the types of analyses required. Sustained levels of high change rate

Indicate a risk to cost, schedule, and/or

Engineering Change Traffic Profiles performance. The appearance of an

Examination of the engineering change excessive number of changes at the

traffic profile can be revealing in tvrms of the completion of the prototype build should raise

design maturity of a systsm, as well as questions as to cause. It Is obvious that both

symptoms of specific problems In the areas of cost and schedule requirements would be

fabrication, Inspection and test operations, extremely difficult to meet with an extended

12-4
NUMBER OF

ENGINEERING

CHANGES

DEVELOPMENT PHASE % COMPLETE

PROTOTYPE FABRICATION TESTING

Figure`12-4 Projected Profile for Engineering Change Traffic

period of high change rate. Empirical data electrical discharge machining, vacuum plasma Indicated that the shape of the engineering coating, and advanced methods for

change traffic profile was of a similar shape nondestructive testing. for different kinds of systems Including aircraft, electronic systems, tracked vehicles, and gun Low yilid rates for any of the special systems. The profile Is sufficiently defined processes could have adverse effects on

such that anomalies can be Identified and program cost and/or schedule and, therefore, investigated. could represent a program risk. The projected profile for special process yield rates Is shown

Yield Rates for Special Manufacturingi In Figure 12-5. As a new process Is

Processes developed, the initial yield rate will be lower

A significant problem In meeting cost than the ultimate yield rate as the process and schedule can result from low yield rates variables are being defined and controlled.

for manufacturing processes. Also, it would Normally, the major process variables are

be unusual to find a new weapon system In controlled first, leading to significant gains In

which one or more Ostate of the art" the yield rate. In the later stages of

manufacturing processes was not employed, development, the "fine tuning" of the process Under the sponsorship of contractor R&D takes place. The "fine tuning' generally leads

programs, and under the sponsorship of the to smaller gains In yield. Because of this, the

Department of Defense (DOD) Manufacturing process yield approaches an ultimate yield Technology Program, a significant number of value asymptotically. special processes are under development at

any given time. This constant development Is A plot of the process yield rate

necessary in order to reduce costs, Increase versus time should have the following performance, Increase productivity, and characteristics:

advance the technology base. Examples of

these special processes In the electronics field 1. A significant growth should be

Include methods for producing very high speed evident In the yield rate as a function of time

Integrated circuits, muitilayer printed circuit or units processed. boards, and high density memory devices.

Examples of these processes In the 2. *The yield rate attained during mechanical area Include laser machining and the latest period should be acceptable In

joining, Inertia welding, ellectroct~emicall and terms of dollar risk. It Is difficult to place Ilmits

on the yield rate from a special process since

the economic consequences represent a wide

variation from one process to another.

12-5
ACCEPTABLE PRODUCTION YIELDS

% YIELD

DEVELOPMENT PHASE (% COMPLETE)

4d PROTOTYP E FABRICATION

Figure 12-5 Projected Profile for Test/Process Yields

Restated, the cost of a reject from one changes and to correct deficiencies In other

process may represent a few cents, while a subsystem areas. Excessive requirement

reject from another process may represent changes in software can Indicate potential

thousands of dollars. hardware problems and a lack of maturity In

the system requirements. Figure 12-6 depicts

Rate of Discovery of Software Errors the normal behavior pattern for Engineering

Experience on a number of software Change Orders Issued against the Design

development programs Indicates that the rate Specification. This experience curve Is

of discovery of errors appears to follow analogous to the engineering traffic curve for

predictable patterns. Starting with coding hardware, In that it follows a downward trend,

checks and proceeding Into each successive and then experiences smaller and smaller

test phase, error discovery starts out at a peaks as each successive level of testing Is

relatively high level and follows a downward undertaken. Significant deviations from this

slope as problems are corrected. Errors general form should be Identified as to cause.

typically are discovered during system Engineering Change Orders Issued against Mhe

Integration testing. The contractor test team Design Specification may cause the revision

should show an Initial high rate of error level of the software to be changed, and thus

discovery which rapidly decreases as the rate of change of revision level can also

corrections are made. These relationships are be used as an Indicator of program

shown In Figure 12-6. development maturity.

Because of the ease of changing If a program Is approaching the point

software, as opposed to hardware, software where It Is time to address readiness Issues, it

changes are frequently used to effect mission Is worthwhile to review the current position of

the DOD as to what elements describe the

status of readiness for production. The PMO,

12-6
CODING REVISIONJS

CHANGES

SPECIFICATION

CHANGES

CODE CHECKOUT SYSTEM

INTEGRATION

TESTING

DEVELOPMENT PHASE % COMPLETE

Figure 12-6 Projected Profile for Requirements Changes, Error Discovery, and

Coding Revisions

CONTRACTING FOR THE PRODUCTION

READINESS REVIEW REQUIREMENT

when It goes to the Service Source Acquisition Since there Is a certain amount of

Review Council (S)SARC) or Defense necessary contractor cost associated with

Acquisition Board (DAB) for release for supporting a Production Readiness Review, it

production, must cover production readiness Is Important to assure that appropriate

findings in its advocacy paper. DOD may requirements are Included In the Statement of

perform an independent assessment of the Work (SOW) covering PRR support. The

readiness of programs that go before the success of the PRR Is dependent upon a

DAB. Also PESOs in the Services and at proper environment being created through

DOD are charged with the responsibility of appropriate contract language. The specific Independent assessments of production SOW terms need to be tailored to reflect the

readiness, submitting information separately to program objectives, the funds available for

the decision making organization. it Is accomplishing the PARI task, and the prime

generally beneficial to have the DOD PESO and subcontract structure of the program. The

arnd the Service PESO involved with planning language should be as specific as possible to

and executing the PAR and with determining minimize future conflict In the understanding of

the method and style of presenting production the requirement. Whenever posstble, the

readiness Issues. That leads to the question, types of contractor preparation required for

H1-ow do we achieve the requirements for PAR team visits, the PAR team size, number

production readiness reviews?" of planned visits and their duration should be

specified.

1 2-7
SURVEY ISSUES FOR PRODUCTION and surveys which are accomplished during READINESS REVIEWS the life cycle of a system acquisition. With

In Identifying the npecif ic areas to be respect to one of these reviews, the preaward evaluated, the focus should be on those areas survey, the CAO Is the action office for the

which could have the maximum Impact on assessment of contractor capability. readiness. Developing this focus can be

started with Identification of the high value or The CAQI as a result of its continuing critical Items. In most cases, a large portion Involvement with the specific contractors, can

of the cost and risk Is In a small percentage make major contributions to the successful

of the items. These are the Items on which to accomplishment of the PRR. Where the

focus effort. The review should explore the specific Service has plant cognizance, the

production implications of the design. Given CAO organization, Air Force Plant

the details of the design, how c2an it be built? Representative Office (AFPRO), Navy Plant

What are the limitations on the productive Representative Office (NAVPRO) or Army processes? What process limits the Plant Activity will normally have developed production capacity? What kind of fabrication procedures for supporting the survey effort.

approaches can be used? What will it cost to For the purposes of this guide, the focus will

do It? Given a pre-existing unit production be on the support available from the Defense

cost goal and a breakdown of that goal Contract Administration Services (DOAS). through the work breakdown structure, the This will provide a framework for cooperation current subsystem and part estimates can be sirmilar to that which would be Involved In a

compared to the goals and an engineering situation Involving service plant cognizance. trade-off study can be conducted. If the

desIgn Is not acceptable from either a cost With proper notice of the requirement and/or performance standpoint, It will be for a PRR or other survey, the Program

necessary to go back and look at alternative Manager can expect DCAS personnel to be

designs. What design alternatives might yield on-site and ready to assist the survey team

the same or Improved performance? The when it arrives. He can expect an In-briefing design needs to be evaluated In terms of the from the assigned DCAS engineer on the

three basic parameters of cost, schedule and strengths and weaknesses of thz contractor

quality. (As used here, the quality of the involved. The DCAS Engineers, Industrial

design is the broader term Including Specialists and Quality Assurance Specialists performance, reliability and maintainability.) will be prepared to answer quest~ons After this evaluation, there is a need to define pertaining to the topics listed In Figure 12-8.

actions such as design changes or process changes. The design cannot be forced to In most cases, the personnel assigned meet the constraints o, a specific contractor's to DCAS are highly trained and experienced production environment nor can the professionals. They constitute a considerable

government force this production environment body of technical expertise familiar with the

to meet a noncompatible design. Often trades capacity and capability of the contractors

must be made, so both the design and the involved in acquisition programs. They production process selection must be represent a substantial resource to program somewhat flexible during the design evolution, managers which should be utilized to get the

The survey team should see evidence of most effective use of our limited Defense

contractor trade studies which compare Budget. In many cases, these resources can

altemnative approaches to the fabnication and be used to offset the problems of finding production tasks. The specific Issues sufficient numbers of qualified personnel at the

addressed during the product design PM or buying activity. evaluation are shown in Figure 12-7.

When, utilizing CAO personnel, it Is

incumbent on the PM to provide to the GAO

RO0L E O F T HE CONTRACT personnel an understanding of the specific ADMINISTRATION OFFICE objectives and risks Inherent In the acquisition The Contract Administration Office program. Th.'s will provide the necessary (CAO) can make a significant contribution to "program focus" to the review. It should also

most, If not all, of the manufacturing reviews b59 noted that the CAO personnel can provide

12-8
Design Simplicity

Standardized Parts

Early Design Confirmation

Use of Efficient, Proven Manufacturing Technology

Process Repeatability and Inspectabllity

Safe Work Environment

Lead Times

Critical Processes

Special Tooling

Personnel Skills

Mialmum Design Change Activity

Availability

Figure 12-7 Product iesign Evaluation Issues

Plant Resources/Facliitles

Adequacy for Rate

Timely Acquisitlona-nstallatlon

Automated Productlan Techniques

Contractor Persona431

Personnel Levels

Skills Development/Trraving

Certification

Production Enginserint..Patining

Schedw.it Compt-Ibility

Cost Reduction

Alternative Capacities

Configuration Management

Handling of Engineering Changes

Management Information System Adequacy

Materials/Purchased Parts

Long Lead Items

Procurement Plan

Selection of Subcontractors

Visibility of Subcontractors

Quality Assurance

Integration with Production Planning Corrective

Action

Contract Adminietration

Attitudes

Character

Working Relationships

Figure 12-8 Contract Administration Office Expertise

12-9
significant value in the post review time

period. Since they continue In residence at

the contractor's facility, they can melke major

contributions to the surveillance of status on

action Items and periodic reporting of

contractor progress.

12-10
CHAPTER THIRTEEN

MANUFACTURING CONTROLS

CONTENTS

OBJECTIVE 13-1

INTRODUCTION 13-1

MANUFACTURING MANAGEMENT SYSTEM EVALUATION 13-1

Scope and Functions 13-1

Manufacturing Operations 13-1

PERFORMANCE EVALUATION 13-3

Progress Evaluation 13-3

Monitoring Contractor Progress 13-4

Financial Progress Information 13-5

CONFIGURATION MANAGEMENT 13-5

Policies and Objectives 13-7

Configuration Identification 13-7

Configuration Audits 13-8

Configuration Control 13-8

Configuration Status Accounting 13-9

MEASURES OF CONTRACTOR EFFECTIVENESS 13-9

Time Measures 13-9

Conformance Measures 13-9

Cost Measures 13-9

WORK MEASUREMENT 13-10

DOD Policy 13-10

Objectives 13-10

Measurement System 13-11

COST/SCHEDULE CONTROL SYSTEM CRITERIA 13-11

DOD Requirements and Guidelnes 13-12

Work Breakdown Structure 13-13

Relationship to Contractual Schedules 13-13

Implementation 13-13

Reporting 13-14

C/SCSC Summary 13-14

LINE OF BALANCE 13-16

Objective Chart 13-16

The Production Plan 13-16

The Progress Chart 13-18

Comparison ot Program Progress to Objecve 13-19
MANUFACTURING CONTROLS

OBJECTIVE

Throughout this guide, the control systems which, when property

manufacturing management functions are Implemented and managed, lead to successful

discussed within the context of the defense manufacturing management.

systems acquisition process. Government

policies, requirements, and guidance are Scope and Functions

described to ensure that the program The degree of program management

managers, and their support personnel, are Involvement with manufacturing operations Is

aware of the many interrelations Involved In predicated upon the Importance of the specific

this Important discipiine. product. Manufacturing directly Impacts both

cost and DOD capability. Unnecessarily high

This chapter concentrates on the cost due to manufacturing Inefficiency may be

manufacturing controls necessary to ensure reflected In the reduction of vitally needed

that the type of problems listed In Figure 13-1, weapons and equipment. Acquisition

which are symptomatic of the complex programs often are constrained to a specific

manufacturing environment, do not disrupt the total expenditure. If manuifacturing costs

acquisition program. While Figure 13-1 Is far Increase, typically the expenditure constraint

from exhaustive, these problems exist in many causes a reduction In the number of systems

manufacturing plants. Thus, manufacturing acquired, which results In a negative Impact

surveillance can assist the program manager on DOD capability to achieve Its operational

In determining progress In meeting milestones objectives. Manufacturing Inefficiency also

and delivery schedules, and identifying factors reduces the capability of the Industrial base to

that may adversely Impact delivery, respond to basic DOD needs as well as surge

performance or cost. and mobilization. Regardless of the type of

contract Involved, the manufacturing

management effort Including program office,

INTRODUCTION contract administration, and contractor

Control of the manufacturing system Is Involvement, must be structured to meet

critical to ensuring that high quality products defined program objectives related to

are produced on-time and at reasonable cost. efficiency, capacity and capability.

A well defined management system needs to

be established and Implemented within the Government manufacturing engint~rs

factory and supporting organizations. As the and Industrial specialists are the Individuals

manufacturing system is accomplishing the primarily concerned with surveillance of the

production task, control systems must exist to contractor's accomplishment of the

Identify variances from plans or targeted manufacturing objectives and with the

performance. These variances alert efficiency and economy of manufacturing

management to take action to correct the operations. This requires the consideration of

causes of the problems before major program a wide range of Issues involving manufacturing

Impact resuits. planning and control, personnel and equipment

scheduling and loading, production equipment

maintenance, In-process Inventory control,

MANUFACTURING MANAGEMENT SYSTEM analysis of manufacturing operations, scrap

EVALUATION prevention, and manufacturing management

Manufacturing resources consist of techniques.

facilities In which equipment, human

resources, and capital convert raw materials Manufacturing Operations

and component parls Into end products for Manufacturing management Involves

internal or external users. Contractors must pianning for, controlling and executing

have an effective combination of people and manufacturing operations. Accomplishing

systems In order to plan and control these manufacturing objectives requires that the

manufacturing resources. The government, In contractor establish baslc manufacturing

recognition of this objective, requires policies, Implement those policies through

contractors to Implement proven manufacturing manufacturing procedures, and develop

13-1
"* INVENTORY INVESTMENT IS EXCESSIVE, YET THERE ARE SHORTAGES OF

NEEDED MATERIAL

"* CRASH PROGRAMS TO REDUCE INVENTORY INVESTMENT TO SOME ARBITRARY

LEVEL OCCUR FREQUENTLY AND ARE BASED ON EDICTS

"* DELIVERY DATES ARE OFTEN MISSED AND OVERTIME IS USED TO MEET NEW

NEED DATES

"* PRODUCTION CONTROL, PURCHASING, PLANT SUPERVISORY PERSONNEL AND

OTHERS ARE IN CONSTANT MODE OF EXPEDITING

"* MANY MANUFACTURING AND PURCHASE ORDERS ARE PAST DUE BUT ARE

NEEDED TO FILL CURRENT SHORTAGES

"* WORK IN PROGRESS IS CLOGGING THE SHOP FLOOR AND MANUFACTURING

ORDERS ARE SOMETIMES LOST, ALBEIT TEMPORARILY

"* REJECTED MATERIAL ACCUMULATES AND ITS DISPOSITION IS USUALLY MADE

WHEN A PART IS SHORT ON THE ASSEMBLY FLOOR

"* THERE IS A LACK OF RAPPORT AND COMMUNICATION AMONG PRODUCTION

CONTROL, INVENTORY CONTROL, PURCHASING, SALES, ENGINEERING, DATA

PROCESSING, ACCOUNTING, AND SHOP FLOOR PERSONNEL

"* BILLS OF MATERIAL AND ROUTING AND INVENTORY RECORDS ARE INACCURATE

OR INCOMPLETE

"* OVERHEAD COST LEVELS ARE EXCESSIVE BECAUSE CURRENT PLANNING AND

CONTROL SYSTEMS ARE NOT TIMELY

"* PRODUCTIVITY IS LOW BECAUSE OF EXCESSIVE SHOHiTAGES, CAUSING IDLE

TIME AND FREQUENT EQUIPMENT CHANGEOVERS

"* DATES ON WHICH ENGINEERING CHANGES BFCOME EFFECTIVE ARE NOT HIGHLY

VISIBLE TO EVERYONE AND CONFIGURATION CONTROL IS LOST

"* THE MAJORITY OF SHIPMENTS ARE MADE DURING THE LAST WEEK OF THE

MONTH

Figure 13-1 Typical Manufacturing Problem Areas

13-2
detailed work Instructions. In evaluating the magnitude of surveillance effort arnd the priority contractor's ability to attain such objectives, of that eff ort. This decision should be

the following questions can serve as a basis Influenced by: for the DOD evaluation:

a. The size of the program In

a. Are the contractor's terms of:

manufacturing objectives and assignment of -- length of time

responsibilities satisfactorily described In -- estimated cost

policies and Implementing procedures? -- extent of the effort

Involved.

b. Does the contractor have a

system for establishing functional performance b, The significanc of the effort In

goals, measuring performance against goals relation to overall organization objectives. and identifying causes for failures to achieve

goals? C. The nature and complexity of

the work.

c. Are manufacturing plans and

procedures designed so that personnel d. The type of contractual

requirements can be determnined by number, relationship. skills, and training? The kind and degree of surveillance

d. Are the contractor's Internal and evaluation will also depend upon the

audit practices and procedures designed to degree of certainty or uncertainty associated

Identify manufacturing management with the extent of the contract work.

deficiencies and is there a requirement for Associated with this Is the confidence that the

prompt corrective action? government and the contractor have In the

estimate of the amount of effort that Is

It mnust be emphasized that necessary to accomplish the contract task

manufacturing management evaluation Is within the time and technical constraints.

system oriented. While each of the parts comprising the manufacturing operations Proaress Evaluation

system may be individually acceptable, Most of the effort In performance contractor Integration of the parts Is critical to evaluation focuses on the technical aspects of

overall success. the work to Identify foreseeable technical

problems as they bear on the extent of work.

In research and development work, the

PERFORMANCE EVALUATION contract effort Itself Is concerned with the

Performance evaluation Includes the advancing of the state of knowledge. A clear

periodic examnination of the contractor's efforts statement of what Is to be accomplished,

to perform the contract; appraisal of the extent expressed In terms that can be measured, Is a

to which these efforts have moved forward necessary requirement for planning a research

toward completion of the total effort; and a or development program. When the objective Judgment of the probability of the total effort Is explicitly expressed the technical or Internal

being completed as required by the agreement uncertainty of a program can be Identified;

(the contract). experimental procedures, scientific or

engineering skills determined; and work plan The kind of performance evaluation, developed with subtasks Identified which will

c-nd the depth and extent of the evaluation, be most effective In achieving the R&D

depend upon a variety of considerations. The objective. In research and developme~nt.

program office must assess these variables in measuring tile achievement against a standard

order to determine the actions necessary and of performance for the technical objective is

appropriate to enhance the probability of possible when each of the subta-sks Is

successful contract performance. Identified and the program objective clearly

stated.

The evaluator must determine the

Importance of the contract activities being The status of study and experiment for

evaluated in order to arrive at an order of a research contract is often hard to gauge

13-3
before completion. Objective scheduling o Helping to Identify and Isolate

criteria may be minimal; parameters may be contractor performance broad and flexible. Researchers may problems;

encounter breakthroughs or setbacks that

negate earlier progress data. Research or o Generating data on cost of

development program difficulties of this nature specific areas of performance cannot be eliminated but can be significantly (these data are often needed

reduced with a well developed work plan. In for cost analysis of change research contracts, monitoring consists largely orders, or approval of progress

program along with planned schedules. The contracts); other main progress controls are costs

incurred and the contractor's level of effort and o Identifying the need to allocate

accomplishment, government property to various

programs requiring it; Progress measurement becomes

easier In the developmental phase of 0 Aiding In making an early acquisition. Though the work Is not yet decision about when to

repetitive and detailed specifications are still Incorporate. new components In

not completely formiulated, much of the major equipment; Indefiniteness of research is gone. The

experience gained on earlier contracts should 0 Determining the government's provide some standard for comparison, rights under the contract - for

However, success still depends on the Instance, when questions of

contractor's ability to cope with obstacles not default arise;

met before. Thus, technical evaluation Is still

very Important in determining the status of 0 Determining future funding development work. requirements by comparing

a ct ualI c o st wIIt h

On production contracts, the end Item accomplishments. design Is reasonably firm. The manufacturing

process and a manufacturing schedule are, Progress Information comes from many established at the outset of the procurement. sources; however, the primary ones are:

Technical evaluation Is not paramount since schedules, monthly cumulative progress the product design Is relatively fixed. The reports, Tiaterial Inspection and receiving emphasis shifts to the more usual production reports, special progress reports, and cost

control and financial status data. performance reports or cost/schedule status

reports. Monitoring Contractor Progress The purpose of monitoring progress Is The contractor may be required to

to obtain the Information the government submit a phased schedule for review by the

needs about a -articular procurement. government. This requirement appears in the

Monitoring may Alose defects In the Statement of Work and the Contract Data

contractor's systumn end, In turn, show the Requirements Ust (CDRL). These schedules

need for monitoring subcontract performance. usually show the time required to perform the

Monitoring provides a variety of Information fabrication cycle of planning, purchasing, plant serving many purposes: rearrangements, tooling, component manufacture, subassembly and final assembly, 0 Providing up-to-date delivery testing, and shipping. The degree to which

Information; each function is subdivided depends on

considerations of the nature of the end Item,

0 Helping determine the the type of fabrication process, the size and

adequacy of w,% contractor's complexity of the contractor's organization, and

nwr- - _orirv tam; the established schedule. The approved

schedule serves as a basis for reporting and

measuring contract performance.

13-4
The monthly progress report Is used to parts during the provisioning process. In order

obtain performance progress Intormatlon from to relate configuration management to

contractors. On this report the contractor manufacturing management, a number of

shows actual ard forecast deliveries (as definitions are provided.

compared with the contract schedule); delay

factors, if any; and the status of prefabrication Configuration means the physical

work (design and engineering lacilities, tooling; and/or functional characteristics of hardware

receipt of government furnished property and software as set forth In technical

(GFP) and construction of prototypes. These documentation and achieved In a system or

data are shown In terms of scheduled and component. Configura )n management, then,

estimated starting and completion dates and can be defined as a discipline applying

percentage of completion. The report form technIcal and administrative direction and

should also contain narrative sections. The surveillance to identify and document the

contractor uses these sections to explain any functional and physical characteristics of a

difficulties, or delay factors, action taken or configuration item; to control changes to those

proposed to overcome these difficulties, and characteristics, and to record and report

any assistance required from the government, change processing and Implementation status.

These simple words describe a complex

Financial Progress Information process essential to the successful

For other than FFP contracts, effective management of a production program and

program management depends on receiving highlight three major areas of effort -- cost information and ensuring that the Identification, control, and status accounting --- contractor's system Is capable of generating comprising the configuration management

timely and accurate cost Information. The discipline. Figure 13-2 shows the relationship financial data furnished by the contractor between configuration mrnnagement and the

normally indudes: cumulative expenditures on product development cycle.

the contract, forecasts of future expenditures

and commitments, and an estimate of the total Two other concepts should be

costs at contract completion. This information mentioned - configuration hems and baselines.

helps in forecasting cost underruns or The basic unit of configuration management is

overruns on cost reimbursement and the configuration item (CI) which Is defined as

fixed-price-incentive contracts. Cost an aggregate of hardware/computer programs,

performance reports (CPR) and the or any of their discrete portions, which satisfy

cost/schedule status report (C/SSR) provide end-use functions.

the bases for measuring the contractor's

overall performance on the contract. This breakdown of Cis is critical to

successful application of the configuration

In evaluating cost information, the rate management discipline and Impacts of expenditure can be compared with the performance and functional compatibility of the

percent completion. On cost reimbursement weapon system sub-elements. Specifications

contracts, costs should, as a rule, be must be prepared to document the

assessed against Individual work elements, characteristics of each Cl; design reviews and

even though the cost limitation applies to the audits must be performed for each CI;

entire job. Looking at progress from this engineering change proposals are prepared standpoint should give a picture of the status Individually for each CI; and status accounting

of the work and indicate any special problems tracks the Implementation of changes to each

that might exist. Cl.

The second concept -- baselines --

CONFIGURATION MANAGEMENT refers to the authorized and documented

The configuration management (CM) technical description specifying the functional

discipline spans the product life cycle and and physical characteristics of a

contributes toward ensuring sustained system system/component. Functional characteristics

performance, minimizing the effects of design describe the performance requirements the

changes -- functional or physical -- reducing item is expected to meet. Physical

the incidence of system incompatibility, and characteristics relate to the material

avoiding the procurement of obsolete spare composition and dimensions of the

13-5
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OCWL.mm (- C)0

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z wcn L

U- _j U

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ill 

IIIW

II'

p13-
manufactured Item. An item is governed of specific Interest to the program manager. primarily by the Intended functional During each phase, configuration management

characteristics during development. As the decisions will be required. These decisions

item enters production, it should be defined In Impact beth the weapons system and

terms of its physical characteristics with fuii manufacturing process designs and are critical

consideration for materila requirements, part to thod attainment of program objectives.

tolerancing, quantities to be produced and

delivery schedule. It becomes obvious that Policies and Obiectives

the configuration management process must DOD has established polcides and

be tailored to a number of configuration Item guidance governing the configuration factors -- program size, complexity, life cycle management of systems/components.

state -*and the fact that no single set of MIL-STD-490 covers specification practices

management procedures will meet every (configuration Identification). DOD-STD-480A

program need. Since the physical design and MIL-STD-481 cover configuration control

evolves from the system performance design and establish requirements for submitting engirequirements, it Is necessary to control both neering change proposals (ECPs) deviations,

the functional and the physical configuration, and waivers, as well as the amount arnd type

This is accomplished through configuration of Information that should be Included In the

baseline management. submittals. Finally, M IL-STD-482 provides

guidance on configuration management status

Baseline management deals with accounting. In addition to these primary

defining and documenting, for each standards, there are numerous DOD and

configuration item, the system requirements Service documents highlighting associated

and the requirements for each Cl. These areas Including contractual requirements for

baselines reflect the development status and those areas not Included In the basic

are intended to control the implementation of standards.

system changes while retaining design and

development flexibility. The translation of Configuration Identification

technical requirements In a baseline Configuration Identification (Cl) Is

management function permits contracting for defined as the current or conditionially

needed engineering and production support approved technical documentation of an item

(producibility, risk analyses, process as set forth In specifications, drawings and

development, tool design, testing, Inspection) associated lists, and documents referenced

in a cleariy definable, priceable and therein. Configuration Identification Is

manageabl., progression, established by baseline configuration Identification documents and all affected

Three baselines are generally changes. Configuration Identification

considered in configuration management. documents include all those necessary to

These are the functional, allocated, and provide a full technical description of the

product base lines. The functional baseline Is characteristics of the Rtem that require control

the initial baseline and Is defined by the at the time that the baseline Is established.

system specification prepared during the

concept exploration phase. As the system Functional Configuration Identification

specification Is expanded and refined, (FCI) (functional baseline and approved

contractor specifications are prepared for all changes) will normally Include a Type A,

new configuration items comprising the total system specification, or a Type B, product

system configuration. These development specification supplemented by other

specifications define the allocated baseline for specification types as necessary to specify: (1)

the system Cis. As the program proceeds all essential system functional characteristics;

through full-scale development, system as well (2) necessary interface characteristics; (3)

as Cl design and development continues and specific designation of the functional

results In Item product specifications. The characteristics of key configuration Items; and

product specification then becomes the (4) all of the tests required to demonstrate

product baseline for use during production. achievement of each specified characteristic.

Figure 13-2 is intended to summarize Allocated Configuration Identification

visually those configuration management areas (ACl) (allocated base line and approved

13-7
changes) normally consists o! a series of Type reviews Is to validate the contractor's system B specifications defining the functional design and test engineering efforts while

requirements for each major configuration progressive Increments of the configuration item. These may be suppiemented by other Identification and test documentation are being types of specifications, engineering drawings generated. and related data, as necessary, to specify: (1) all of the essentiai configuration Item functional Configuration Control

characteristics, Including delineation of Configuration control Is the systematic Interfaces; (2) physical characteristics evaluation, coordination, approval, and

necessary to assure compatibility with implementation or disapproval of all changes associated systems, configuration items and In the configuration of a system or end

Inventory Items; and (3) all of the tests product after formal establishment of Its conrequired to demonstrate achievement of each figuration Identification. Simply stated, specified functional characteristic. configuration control maintains the functional,

allocated, and product Cl baselines and

Configuration Audits regulates all changes thereto. Change control

Two kinds of configuration audits are prevents unnecessary or marginal engineering performed -- functional and physical. changes while expediting the approval and

Functional configuration audits represent the Implementation of those that are necessary or

formal examination of the Cl's functional test offer significant benefits.

data, before acceptance of the development effort, to verify tha,. the Item has achieved the Both DOD-STD-480A and

performance specified In Its functional or MIL-STD-481 delineate configuration control

allocated configuration Identification. The requirements and provide Instructions for

functional configuration audit also verifies that preparing and submitting proposed engineering the Cl's technical documentation accurately changes and related Information. One of the

reflects the Cl's functional characteristics and two standards, DOD-STD-480A, covers the

the documentation of the physical configuration broader area and requires a more complete from which the test data was obtained. This analysis of the Impact If the engineering is necessary for determining the adequacy of 'change described by an engineering change production acceptance tests. proposal (ECP) were implemented. DOD-STD-480A requires that the data

The physical configuration audit package submitted with an ECP contain a

represents the formal examination of the "as description of all known interface effects and

built" configuration of a Cl against Its technical Information concerning changes required in the

documentation. The physical configuration functional, allocated and product configuration audit helps ensure that the production Identification (FCI/ACI/PCI). It Is Intended that

acceptance testing requirements are adequate DOD-STD-480A be Imposed on prime and Includes a detailed audit of engineering contractors who (1) have participated or are

drawings, specifications, computer program participating in the engineering or operational listings, flow charts, and other technical data systems development of a system or high used In producing hardware and computer level Cl, or (2) are being supplied with copies

program Cis. This audit typically occurs at of the system specification and/or development selected points after the development phase specification(s), or (3) have extensive

and involves first production items, new experience In the preparation of ECPs relative

production after a long break In production, to high level Cis. Such contractors have the

contractors producing a Cl for the first time capability of providing to the government the

and first production units of a significantly majority of the information needed to properly changed Cl. It should be recognized that the evaluate the merits of a complex engineering product specification must be available to the change, possibly involving interrelated changes

program office In sufficient time to plan the in other Cis. DOD-STD-480A also covers

audit. requirements for submittal of deviations,

waivers and notices of revision (NORs). Configuration audits and system engineering design reviews are MIL-STD-481 is intended for use in

complementary. The purpose of the contracts involving either multi-application configuration audits and engineering design items not peculiar to specific systems or

13-8
procurement from a contractor who cannot Time Measures

reasonably be expected to know all of the When a delivery schedule has been

consequences of an engineering change. An established, the effectiveness of the

example of such a contractor Is one who Is manufacturing organization to meet that

required to fabricate an Item to a PCI which schedule should be evaluated. In most DOD

he did not prepare, or one who did not acquisitions, the delivery schedule Is Integrated participate In engineering development and with deployment and training schedules and

hence Is not familiar with requirements of the failure of the manufacturing organization to

system or higher level Cl. When achieve and maintain schedule can have

MIL-STD-481 rather that DOD-STD-480A is significant Impact on the operational forces.

prescribed, the major portion of the analysis of Schedule attainment also tends to be a rather

the Impact of an ECP on associated Items Is visible program element and Is often used as

transferred from the contractor to the procuring a measure of program status by the DOD and

activity. Service Headquarters as well as Congress and the public. In evaluating schedule

Configuration Status Accounting performance, the fundamental Issue Is on-time

Configuration status accounting Is delivery of acceptable end items to the

defined as the recording and reporting of the government. In many cases, the program information that is needed to manage office will be unwilling to measure only past or

configuration effectively, including a listing of current performance against the end Item

the approved configuration identification, the delivery schedule. Generally, the PM should

status of proposed changes to configuration, establish, or have the contractor establish,

and the Implementation status of approved some system which will support projections of

changes. schedule attainment In future periods. This

provides an opportunity to take actions to

Configuration status accounting minimize the Impact of delays on the

represents the process of recording the deployment process. A very useful tool for

documented changes to an approved baseline this future perspective Is the Line of Balance

and results In the maintaining of a continuous (LOB) technique which Is discussed in detail

record of the configuration status of the Indi- later In this chapter.

vidual Cis comprising the system.

Additionally, valuable management Information Conformance Measures

concerning both required and completed When systems or equipments are

actions resulting from approved engineering presented for customer acceptance, it Is

changes Is provided. Status accounting generally assumed that they meet the

Information Includes an index consisting of the technical requirements. Many times, this

approved configuration and a status report assumption does not reflect reality. Equipment

detailing the current configuration. All Items of Is presented accompanied by waiver and/or

the Initially approved configuration are deviation requests (or approved waivers or

Identified and tracked as authorized changes deviations). There are also departures from

to the baseline occur. technical documentation below the level of the

government's configuration control which are

handled by Material Review Board (MRB)

MEASURES OF CONTRACTOR action. Reducing the number of these

EFFECTIVENESS occurrences Is a basic element of a strong

During the production phase of the Total Quality Management (TOM) program. product life cycle, some measures of the

effectiveness of the manufacturing organization Cost Measures

should be established. The objective of this Manufacturing cost estimates are

phase is to produce, in a timely fashion, normally based on the assumption that the

systems and equipment which conform to the design is fully specified and that the

technical documentation at a minimum cost. manufacturing process will be relatively

Measures of effectiveness for each of these straightforward with operations being

areas should be established, and performance successfully accomplished as planned.

tracked against the measure to Identify Consequently, any deviation from this plan opportunities for Improvement for the Indicates the potential for cost problems. As

manufacturing organization, such, time and conformance measures can

13-9
give some Indication of cost aberrations since WMS should be tailored to the

there Is normally a direct correlation between requirements of Individual programs. Several

late delivery or conformance problems and categories of contracts are specifically

cost. In addition, the following measures may exempted from the requirement. These

also Indicate the existence of cost problems: Include contract3 that:

1) Scrap and rework rates, 1) Procure commercial or

non-developmental Items;

2) Percentage of out, of-station

work, 2) H a v e I o w v o I u m e,

non-repetitive production runs, such as ship 3) Engineering change volume, construction and ship systems;

4) Yield rates en manufacturing 3) Do not require the submission

operations, and of certified cost or pricing data; or

5) Reliability growth profiles. 4) Will not realize a cost benefit

as a result of WMSs; however, the cost-benefit

These Indicators do not replace normal decision must be documented and approved.

management control systems but can be used

as supplementary Information or aids In In addition, the WMS should be

predicting and Isolating causative factors. compatible with existing contractor technical

They are also valuable measures In assessing and management processes and procedures,

the effectiveness of the contractor's TQM such as the principle of continous

program. Improvement of the total quality management

process. If WMS Is required, DOD policy also

requires !hat established WMS be actively

WORK MEASUREMENT used In contract and program managem rnt.

Work measurement is an Important

tool which can be of great value In cost 1) WMS data must be considered

estimating, production planning, and contract in contract pricing objeýtives and contract

management. A work measurement system negotiation.

uses engineered labor standards in most

phases of the manufacturing operation. A 2) WMS must be used to provide

labor standard describes the time allowed for data for use In planning, cost estimating, and

a normally skilled operator following a monitoring contract performance In all

prescribed method, working at a normal appropriate contracts.

all-day level of effort, to complete a defined

task with acceptable quality. An engineered Obiectives

standard Is one established using a Experd•nce has shown that excess

rcognized technique, such as time study, personnel and lost time can be identified and

predetermined time system, standard data, or reduced through WMS application.

work sampling to derive ait least 90% of the Furthermore, continued method Improvements

total time associated with the labor effort can be more easily Identified and

covered by the standard. Non-engineered Implemented.

standards are those not meeting the above

criteria and are usually determined by Work measurement arnd the reporting

estimates or based on historical data. of labor performance are not considered ends

in themselves, but a means to more effective

DOD Policy management. When properly understood and

The use of approved work used by management, the benefits described

measurement systems (WMS) is required for in Figure 13-3 typically accrue from an

all production contracts for major weapon effective WMS.

systems and subsystems costing more than

$20 million annual!y or a total of $100 million.

WMS may also be required on full-scale

development contracts over $100 million.

13-10
"* GREATER OUTPUT FROM A GIVEN AMOUNT OF RESOURCES

"* LOWER UNIT COSTS B~ECAUSE PRODUCTION IS MORE EFFICIENT AT ALL

LEVELS

"* REDUCING WASTED TIME IN PERFORMING OPERATIONS

"* CONTINUED ATTENTION TO METHODS AND PROCESS ANALYSIS BECAUSE

OF THE NECESSITY FOR ACHIEVING IMPROVED PERFORMANCE

"* IMPROVED BUDGETING AND COST ESTIMATING

"* IMPROVED BASIS FOR PLANNING FOR LONG-TERM PERSONNEL, EQUIPMENT,

AND CAPITAL REQUIREMENTS

"* CONTINUAL CONTROL ACTIVITIES AND DELIVERY TIME ESTIMATES

"* HELP IN SOLVING LAYOUT AND MATERIAL HANDLING PROBLEMS BY

PROVIDING ACCURATE FIGURES FOR PLANNING AND UTILIZATION OF SUCH

EQUIPMENT

Figure 13-3 Benefits of Work Measurement Systems

Measurement System MIL-STD-1567A also covers the use of

Current contracting regulations do not trade-off analyses relating savings attainable

require the specific use of MIL-STD-1567A. through improved productivity and

Defense Acquisition Circular (DAC) 88-5 slates simplification of work methods to the cost of

that either the military standard or a developing engineered standards, schedules

contractor's own WMVS may be used, provided for conversion of non-engineered to

the latter Is acceptable to the govemnment. engineered standards, use of touch labor

However, MIL-STD-1 567A Is frequently cited standards In the development of price

as an example of an acceptable WMVS. MIL- proposal9, contractor generated change order

STD- 1567A establishes certain requirements proposals or for estimating the prices of Initial

which must be met for a contractor's work spares and replenishment spares, and

measurement system to be considered production count methods to ensure accurate

acceptable. These requirements are Intended measurement of the work completed. to permit maximum contractor flexibility In the

application to the standard, rather than

providing rigid methodology by which work COST/SCHEDULE CONTROL SYSTEM

measurement should be accomplished. The CRITERIA

contractor's WMVS must be documented and The Cost/Schedule Control Systems Include the elements described In Figure 13-4. Criteria (C/SCSC), aire a set of criteria which

describe the capabilities which must be

Specific MIL-STD-1 567A requirements present for a contractor's cost and schedule

set goals for coverage, accuracy, allowance control systems to be acceptable for use on

development, realization factor development, contractors for major programs. The

and WMS review. Realization factor objectives of C/SCSC are twofold:

development and analysis are particularly Important, because it Is the realization factor For contractors to use effective

that is used to compare the WMVS ideal to internal cost and schedule management what Is actually happening on that plant iloor. control systems, and

Identification and elimination of Inefficiencies is

a vital element of WMVS application.

13-11
"* WORK MEASUREMENT PLAN AND SUPPORTING PROCEDURES

"* CLEAR DESIGNATION OF THE ORGANIZATION AND PERSONNEL

RESPONSIBLE FOR EXECUTING THE SYSTEM

"* PLAN TO ESTABLISH AND MAINTAIN ENGINEERED LABOR STANDARDS

OF A KNO WN ACCURACY

"* PLAN OF CONTINUED IMPROVED WORK METHODS IN CONNECTION WITH

THE ESTABLISHED LABOR STANDARDS

*PLAN FOR THE USE OF LABOR STANDARDS AS AN INPUT TO BUDGETING, ESTIMATING, PRODUCTION, PLANNING, AND TOUCH LABOR PERFORMANCE

EVALUATION

Figure 13-4 Elements of a Contractor's Work Measurement System

For the Government to be able to DOD Reguirements and Guidelines

rely on timely and auditable data produced by DODI 7000.2, first issued in 1967,

those systems for determining product oriented requires that on major contracts, contractors

contract status. use management control systems that comply with the 0/8050. Major contracts are defined

The 0/SOSO are not a management jointly by the Military Departments as: $40

control or an accounting system. Due to million or more or R&D, $160 million or

variations In organizations, products, and greater for procurement; and subcontractors

working relationships, it Is not feasible or that exceed $25 million for R&D, $60 million

prescribe a universal system for cost and for procurement. This dollar amount Is

schedule controls. Therefore, the DOD expressed in current/then year figures and

adopted an approach to identify general includes the "full" planned value of the

criteria that contractor's management control contract, including options.

systems must meet.

The 0/S050 will not be construed as

The criteria are Int.onded to be general requiring the use of specific systems or

enough to allow their use In evaluating changes In accounting systems that will

development, construction and production adversely affect: the equitable distribution of

contracts. Since these contracts differ cost to all contracts, or compliance with the

significantly, it is unwise to specify detailed standards, rules and regulations Issued by the

guidance applicable In every circumstance. Cost Accounting Standards Board. Further, it

Use of the criteria must be based upon Is not Intended to affect the basis on which

common sense and practical interpretations contract funding or cost reimbursements are

that maintain the capabilities for adequate paid. performance measurement. The contractor's management control

system must provide data that: (a) relate time

Uniform implementation of the criteria phased budgets to specific contract tasks

will avoid Imposing multiple cost and schedule and/or statements of work; (b) Indicate work

systems on contractors. Application of progress; (c) properly relate cost, schedule

management control systems acceptable to and technical accomplishment; (d) are valid,

both the DOD and contractor to contracts at a timely and auditable; (e) supply managers with

given contractor's facility, will provide a information at a practicable level of

common source of information for all summarization; (f) are derived from the same

management levels, internal management control systems used by the contractor to manage the contract.

13-12
which serve as the summary level for

C/SCSC improves on the budget \,s. reporting purpose.

actuals (spend plan) management technique

by requiring that work progress be quantified The contractor extends this structure

through "earned value", an objective measure to the cost account and work package levels

of how much work has been accomplished on (Figure 13-6). At that level, organizational

the contract The C/SCSC require the elements are actually assigned to do the work.

contractor to plan, budget, and schedule The work package must have discrete starting

authorized effort in time phased Increments and completion points which are compatible

that form a performance measurement with upper level schedules. The work

baseline (time-phased budget). As work is package must be the responsibility of a single

accomplished, the earned value concept organizational unit.

allows comparisons to be made against the

plan which identifies schedule and cost Relationship to Contractual Schedules

variances. The C/SCSC performance

measurement baseline represents the

The schedule variance (SV), compares contractor's Internal work plan, the timethe budgeted value of work accomplished phased schedule expressed In dollars for

(earned value) to the budgeted value of the performing the contract. This internal plan

work scheduled to be done, i.e., a difference generally provides some cushion or slack

from the plan expressed in budget ($) terms. calendar time with respect to the contract

Likewise, a comparison of earned value deliveries and milestones and anticipates

against the actual costs generated to do the typical problems such as late vendor deliveries

work provides a measure of the cost and/or time required for rework of materials. If

variances, I.e., the amount of cost under or not understood, setback schedules can cause

overrun from the plan for the work confusion. Negative (unfavorable) schedule

accomplished. Planned or scheduled value of variance may not affect contract delivery If

work, earned value, and the actual cost of sufficient slack is available in the schedule to

work performed provide an objective measure absorb the delay. Schedule variance is

of performance, thus enabling a performance expressed In dollars worth of work ahead or

trend analysis to be done and cost estimates behind the plan and must be analyzed in

at completion to be developed at various conjunction with other schedule information

levels of the contract. such as network, Gantt, and line-of-balance

charts. By itself, the C/SCSC schedule

In addition to emphasizing the concept variance reveals no critical path Information

of earned value, the C/SCSC requires and may be misleading because unfavorable

thorough integrated contract planning, realistic accomplishment in some contract WBS areas

baseline establishment and control, my be offset by favorable accomplishment In

performance information to be segregated by other areas.

both product and performing organization, and

that measurement of accomplishment at Implementation

relatively low levels within the contract be Implementation of the C/SCSC begins

summarized and provided to higher with the requirement being placed In the

management. Request for Proposal (RFP) using DFAR

52.234-7000, Notice of Cost/Schedule Control

Work Breakdown Structure Systems. The offeror's proposal Is then

The task of defining the contract work evaluated In terms of its ability to meet the

is accomplished through the use of a work criteria. The contractor either offers to use a

breakdown structure which is essentially a previously accepted system or to make

"family tree" subdivision of work to changes in the existing system to attain

successively lower levels of detail. Figure 13- compliance with the criteria. The negotiated

5, extracted from MIL-STD-881A, Work contract will contain DFAR 52.234.7001,

Breakdown Structures for Defense Material Cost/Schedule Control Systems.

Items defines three levels of identification.

The PMO, in conjunction with the contractor, When a contract is awarded to a

determines the upper levels of this WBS, contractor that has not previously

demonstrated an acceptable management

13-13
Level 1. Level 1 Is the entire defense materiel item; for example, the

Minuteman ICBM System, the LHA Ship System, or the M-109A1

Self-Propelled Howitzer System. Level 1 is usually directly Identified in the

DOD programming/budget system either as an integral program element or

as a project within an aggregated program element.

Level 2. Level 2 elements are major elements of the defense materiel item;

for example, a ship, an air vehicle, a tracked vehicle, or aggregations of

service, (e.g., systems test and evaluation), and data.

Level 3. Level 3 elements are elements subordinate to Level 2 major

elements; for example, an electric plant, an airframe, the power package/drive

train, or type of service (e.g., development test and evaluation); or item of

data (e.g., technical publications).

Figure 13-5 Work Breakdown Structure Level Identification

control system, the contractor's system is excessive reporting requirements impose an

reviewed by the Government to ensure that it unnecessary burden and additional cost on the

meets the criteria. Successful demonstration contract. Knowledgeable C/SCSC personnel of the contractor's management control system should be consulted during the preparation of

generally results In a td-service acceptance the RFP, the data call and during negotiations.

that remains in effect as long as the system continues to met the criteria. In the case ReRorting

above, wherein the contractor had a previously There are no explicit external reporting accepted management control system and requirements in the C/SCSC. The criteria

proposed to use It on the contract, the require that contractors have and use effective

Government performs a Subsequent internal control systems. Summary data from

Application Review (SAR). The purpose of the internal systems are reported to the

the SAR is to determine whether the Government through the Cost Performance

contractor is properly and effectively using this Report (CPR) as specified on the Contract

accepted system for the new contract. It Is Data Requirements Ust (CDRL).

not a redemonstration of the previously accepted system. C/SCSC Summary

C/SCSC is the best tool available to

Typical points of contention betwee,," assure that contractors hRve and use

the GovAmment and Industry concerning adequate cost and schedult management C/SCSC Implementation Include: time control systems. It provides better overall

required to Implement, levels designated for planning and control discipline on defense

management and reporting, variancc contracts. The associated reports summarize

thresholds, and system discipline objective data from the contraclor's internal

requirements. These sensitive areas can system for both contractor and government

affect the cost of Implementing and operating managers to use. Improvements in contract

a C/SCSC compliant system. The cost of management can be achieved by management C/SCSC, sometimes alleged to be excessive, attention to developing and using good cost

has defied quantification. However, there is and scheduie management control systems

no dispute that Improper implementation and and taking timely actions when problems are

identified from the data generated.

13-14
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13-10
LINE OF BALANCE schedule calls for three Items In Decembeir, Line of Balance (LOB) Is a production five In January, seven more in February and

control technique which combines features five each month thereafter through June. The

from a critical path scheduling time chart with delivery schedule should reaiisticaiiy reflect

a required delivery schedule, and presents In attainable production capability taking Into

graphic form Information relating to time and account learning associated with a new

accomplishment of production, it shows the product (if this Is an Initial production activity) delivery objective, sequence and duration of all anticipated methods Improvements, or other

activities required to produce a product, a factors expected to Influence productivity.

progress chart of the current status of

production items, and, from these charts, an The other curve on the Objective LOB to show the relationship of actual Chart shows actual delivery of parts. The

component production to schedule. horizontal difference shows how far actual

deliveries lag scheduled deliveries In terms of

LOB Is most appropriate for assembly time, the vertical difference shows the

operations Involving a number of discrete variance, In numbers of units, from schedule.

components and has proven most useful In

production programs from the point when raw The Production Plan

materials or Incoming parts arrive, to the Following the development of the

shipment of the end product. objectives, the second step Is to chart the

planned process of production. The

Without a computer controlled production plan Is a graphic flow chart of the

production process, Line of -Balance does not operations required to complete a unit.

lend itself readily to day-by-day updating, but Selected production activties are plotted

a weekly or monthly check Is usually frequent against the lead time required before

onough to keep the process on schedule. If shipment. For example, Figure 13-8 Illustrates

the project fails behind schedule, management the key plant operations In the manufacturing will know it, and know why, far enough In sequence of a rocket.

advance to make smooth adjustments. The production plan Is developed by Reporting to customers or top setting down the selected events and

management Is quick, Inexpensive and operations In their proper sequence, graphic. The charts used for analysis and commencing at the point of delivery and

trouble shooting are suitable for at-a-giance moving backward through the en~tle production status reporting. A set of clear, simple charts process. The control points are numbered

Is easier to understand than a list of facts anid from left to right and from top to bottom as

figures, and charts are faster and more shown In Figure 13-8. This will usually result

reliable than oral reports. In four or more general sequential phases as

follows: the final assembly process, preceded A Line of Balance study has four by major subassembiy work, preceded by elements: (1) the objectives of the program; manufacture of parts, preceded by acquisition (2) the production plan, and a schedule for and preparation of raw materials and

achieving it; (3) the current program status; purchased parts. and (4) a comparison between where the

program Is and wher i it's supposed to be. In Figure 13-8, the receipt of

The first step In using LOB is to gather and purchased parts Identified as event 1 mrust

organize the needed material for the three start 24 working days In advance of final

charts which comprise an LOB report. Once delivery for that unit. The gyro components this Is done you can "strike the line of must enter the production stream at cr'ntroi

balance" whenever necessary to keep track of point 2 on day 22, as must the guidanc(. and

the program. control components at control point 3 in order

to assure start of the assembly of the

Obiective Chart guidance section (event 5) on day 16. If the

The objective chart Is designed to required material or number of parts Is not at

display planned and actual deliveries In each control point or any critical event In the

cumulative ind Items per unit of time. In production flow of a unit Is not started on time

Figure 13-7, for example, the delivery (or compieted on schedule), the delay Is

13-16
50-

40-

UNITS

DELIVERED

(CUMULATIVE)

30-

SCHEDUL

20- -. o ýý ý.

ACTUAL PRODUCTION

10 10 l - DELIVERY

MONTH DEC JAN FEB MAR APR MAY JUN

SCH CUM 3 8 15 20 25 30 35

ACT. DEL 3 5 10 15 20

DATE

OF

STUDY

Figure 13-7 Objective Chart

DATE OF STUDY __ 1 ,MY PRODUCTION PLAN

O FABRJCATE BALUSTIC SHELL PROCURE ROý.LT ENGINE

I ASSEMBLE AIR 0 PURCHASED PARTS

4 AFCT IS7 VEHICLE BODY s ICOMPANY-MADE 2 E SUBCONTRACT PART

2 ASSEMBLE GYRO V ASSEMBLY

ASSEMBLE G&lC

[i 3 COMPONENTS S ASSEMBLE GUIDANCE SECTION

TEST

10 FINAL 11 12 GOVT

ASEBY V---u ACCEPTANCE

26 25 24 23 22 21 20 19216 17 16 15 14 13 12 11 10 96 7 6 5 4 3 2 1 0

WORKING DAYS PRIOR TO SHIPMENT • 22 WORKDAYS PER MONTH

Figure 13-8 Production Plan

13-17
symptomatic of a problem which should be Production progress Is depicted In

Investigated; corrective action should be taken terms of quantities of materials, parts, and

to forestall continuing delays and late subassemblies which have passed through the

deliveries, individual check points or control points of the

production plan, Including those contained In

The Progress Chart end items already completed. This information

The progress chart, example shown in is derived from production records or

Figure 13-9, pertains to the status of actual accumulated by a physical Inventory for each

performance and comprise a bar chart which control point.

shows the quantities of materials, parts, and

subassemblies available at the control points

at a given time.

THE OBJECTIVE PROGRESS CHART UNITS

". T P S 7

CONTRACT SCHEDULE

1T O0 STUNE OF BALANCE

1 

-

P

ACTUAL DELIVERY

MONTH JAN FEB MAR APR MAY JUN JUL AUG BARI 34588 10 Ill 12 113 114 11511 16

SCH.CUM 10 20 3 40 so 6ý 170 8

ACTDEL 0 0 3

DATE OF STVDY 30---.--- 3APFRI

-0 1 77

3 26

3r

II I i I i 1

13-18
Comparison of P~rogra Progjress to Objective Two final points should be noted.

Development of the objective chart, While the LOB technique offers Insight Into

the production plan, and program progress future delivery problems, the technique shows

chart completes the accumulation of physical only where the problem Is and does not

Information. There remains the task of characterize Its nature. It Is necessary for

relating the facts already gathered. This is contractor or government management action

accomplished by striking a "Line of Balance, to be taken to Identify the causes and Initiate

(LOB)" which Is the basis to be used for appropriate corrective action. The second

comparing the program progress to the point deals with manner of presentation of the

objective, output products of the technique. For

expository purposes we have emphasized the

The balance line quantity depicts the graphic mode utilizing charts. For large quantities of end Item sets for each control acquisitions it Is often more appropriate to

point which must be available as of the date have the data provided In tabular form

of the study to support the delivery schedule. (particulariy when the contractor utilizes

In different words, it specifies the quantities of computer analysis for preparation of the data). end item sets for each control point which The key Is to find the most cost-effective

must be available In order for progress on the manner of portraying Information for

program to remain In phase with the objective, management action.

Figure 13-9 is illustrative of the procedure for

striking the LOB.

The balance line quantity depicts the

quantities of end Rem sets for each control

point which must be available at the end of

the reporting period to support the delivery schedule. The required quantities are then

compared with the actual completions by control point. Where the actual completions

are less than the required quantity, this would

Indicate that there is a strong probability that

deliveries will not be n.9t at some future point. The timing of the potential delivery shortfall

can be determined from the lead time data

displayed In the LOB. If the behind schedule

control point Is 20 weeks flow time prior to

final delivery, we would expect to see the

impact In 20 weeks If corrective action is not

taken.

13-19
CHAPTER FOURTEEN

FACTORY OF THE FUTURE

CONTENTS

OBJECTIVE 14-1

INTRODUCTION 14-1

FACTORY TECHNOLOGY 14-2

Automated Factory Structure 14-2

Flexible Manufacturing Systems 14-3

Expert Systems 14-3

Machine Vision and Tactile Sensing 14-3

Communication Li-nKs 14-3

Changing Role of the Manufacturing Engineer 14-4

Future Expectations 14-4

THE HUMAN ELEMENT 14-6

FACTORY NETWORKS 14-6

CONCURRENT ENGINEERING 14-9

COMPUTER AIDED ACQUISITION AND LOGISTICS SUPPORT 14-11

Objectives 14-11

Organization 14-12

Integrated Weapon System Data Base Concept 14-12

FUTURE OF ROBOTICS 14-15
FACTORY OF THE FUTURE

OBJECTIVE

Planning for system production is the 20th Century as computer aided

driven primarily by the existing and expected design/computer aided manufacturing

near term (less than 5 year) improvements in (CAD/CAM). The National Science Foundation

factory technology. Consideration of the has stated that, "CAD/CAM has more potential longer term factory technologies may be to improve productivity than any technological

necessary especially for those programs in development since electricity." Concept Exploration /Definition or Concept DemonstrationNalidation. This chapter The factory of the future will be a

describes the environment and major totally Integrated business and manufacturing influences operating to change the nature and system. The system will include modular

role of the factory. The primary areas of subsystems for managing all functions from

change in the factory of the future are marketing to product shipment. A f ully described and a brief summary of the current Integrated system will provide business

status is discussed. planning and support Including customer order

processing, finished goods Inventory

management; engineering design Including INTRODUCTION computer assisted drafting, design arid

The transition from hand crafted simulation; manufacturing planning Including products to mechanization of the factory was process planning, materials planning, inventory

seen as a significant Industrial accomplishment record control, order scheduling, dispatching during World War 11. Since then, more and and machine loading control, and computer

better machines have contributed to improved controlled machine operation, testing and

precision and a better quality, lower cost process automation.

product. Mechanization has continued to play

a leading role in the Industrial economy but Technologically we are at the dawn of

"modernization" has had an even greater another industrial revolution brought about by

Impact as the emerging computer technology the inexpensive computing power available

has been applied to industrial equipmnent. For through today's electronic technology.

Instance, mechanical tool control devices, such Computer aided design (CAD) and computer

as special cams for automatic lathes, have aided manufacturing (CAM) are the

been replaced by direct numerical controls applications of this computing power to

which eliminate the need for a special set of manufacturing and the selection of

cams for each new part configuration. This manufacturing processes driven by this

innovation not only eliminated a costly tool technology.

component but drastically reduced set-up time

for each new part. While maintaining the To date, no one has implemented a

same capability to accurately reproduce many completely integrated CAD/CAM system.

parts, greater freedom for part variation was However, each of the elements and cells

provided. With machine control centered In a which collectively make up a plant and the

computer program, a relatively minor computer communication and control system modules for

program change Is needed to affect a change directing plant operation have been

in part configuration compared to two to three successfully Implemented in today's Industry. hours previously required to change cams. Even though a completely automated factory does not now exist, all the essential

Similar examples can be cited for components exist and we can describe the

equipment used in a variety of industrial factory of the future as a collection of

processes where computer control or computer computerized or computer aided subsystems aided control systems have been Incorporated capable of Lially no direct labor

!n new equipment designs for more efficient operation. performance.

No single technological advance will

have as great an impact on industry during

14-1
FACTORY TECHNOLOGY machine control unit does electronically what

The extent of automation will vary an operator has been doing visually, then

widely from Individually autcmnated numerical machine Instructions can be computer control (NC) machine tools to a completely directed. At the cell level, full machine control

Integrated computer aided manufacturing has been achieved for a wide range of

(ICAM) system. The size and type of Sie machines, enabling them to be controlled and

business, the manufacturing methods monitored much closer than by human control.

employed, and the economic state of affairs For instance, adaptive control units (for which

are some of the factors that dictate the level fixed speeds and feeds are not programmed) of automation appropriate for each Industry or utilize feedback sensors to optimize

company. The trend of manufacturing In this operational conditions by sensing pressure

country Is "written on the wall" when we see conditions at a cutting tool position and

machine tools which operate entirely free of automatically adjusting feeds and speeds

operator Intervention, And, what Is more within a desired range. The control will also

amazing, perform a great variety of tasks reduce feeds and speeds If adverse conditions

taking their instructions from computer are met. This permits operation to optimize generated design specifications, cutter life and/or lower machining cost.

Adaptive controls can oe applied to sense

Factory automation includes the use of loads, temperature or other phenomena.

such equipment as: 1) numerical control Control systems are not limited in the number

machines, 2) transfer machines, 3) robots, 4) of control actions which can be managed. automated warehouse systems, and 5) They are used to: turn on a machine, check

material handling devices (hardware systems Initial condition, through to even signaling a

for processing, handling, or storing factory malfunction and Indicating the location of the

products). Japan leads the world today In the problem. In turn, a number of elements can

use of automated manufacturing. be Interconnected (i.e.. work centers) to form

a cell where many machines perform a variety In order to visualize the factory of the of operations. future, let's examine each of the components

of automation, the element, the cell, and The cell arrangement may be

automation at the plant level: sequential, where parts flow along In the

manner of an assembly line; complementary The elemental level or work center is machines, performing similar operations on a

the basic unit of automation and involves two variety of parts; or machine groups dedicated

components. These are the process to processing a special material, such as In a

mechanization component and Its plastic molding shop. Work flow to, through corresponding Information component. A and from the cells, and a continuous

computer-based automation element always monitoring of parts for each order Is

Includes both the process mechanization maintained according to a predetermined

component and the Informational component. schedule. A cell can be utilized to produce a

specific part In a dedicated operation or to

The next higher level of automation Is produce several different parts. A family of

a cell. The cell provides automation for a parts or similarly shaped parts can be grouped functional segment of a plant consisting of a for effective machine utilization. Radically

group of machines or work stations which different shape parts also can be produced,

perform similar operations or a series of but maximum productivity and operating operations, efficiency are obtained when similar parts are

collected on a job order to minimize set-ups The highest order of automation is at and tooling changeovers. the plant level. Automation at the plant level

Includes computerized management of any Interconnecting a number of cells

number of automated cells. through a computer network will provide the

highest level of automation. Support services

such as Inventory control, quality control

Automated Factory Structure records, special test requirements and

The element level is where the basic performance records for any and all work

concept of automation begins. When a

14-2
stations will be available as a record of the Current research Is focusing on the

automated factory's operation, development of a theory and practice for

Every part of the factory of the future mechanical and electrical design and selection

Is here now. An example of a computer of manufacturing processes. Some of this

integrated manufacturing system Illustrates the research is being fostered under the AF

versatility of automation. Computer control of Concurrent Design program, but the majority

one plant's gear machining cell has, for over of It Is sponsored by the commercial industry.

ten years, been used to monitor machine Some of the major objectives of the research

operations with an outstanding record of are to develop expert systems to:

machine utilization. One Important feature Is

the diagnostic capability designed Into the o Do on-line evaluation of designs for

system. In the event of a machine manufacturing demands

malfunction, which requires operator attention,

the maintenance operator (not a machine o Support manufacturing process

operator) is alerted and a video screen display planning

In the area indicates the difficulty and displays

the appropriate maintenance procedure for o Utilize new languages for the

corrective action. The result has been more representation of manufacturing

efficient maintenance and an outstanding knowledge.

record of machine utilization.

These systems are also being

Flexible Manufacturing Systems explored to develop the capability to analyze Flexible manufacturing systems (FMS) the logistics implications of the design and

started with attempts to combine several support the design of the logistics support

numerically controlled machine tools with an elements.

automated materials handling system ali

operating under computer control. More Machine Vision and Tactile Sensing

current Applications of FMS handle palletized Current applications of vision systems

workpieces of different types which randomnly are primarily for the control of manipulation

travel among and are processed by a group of tasks such as sorting, ass~embly, welding and

programmable, multi purpose machine tools riveting. Machine vision has also been

and work stations. Many of these applications applied to inspection, evaluating characteristics

include automated inspection, adaptive control such as dimensions, color, and orientation.

systems, sensors and vision or other tactile Research is currently being pursued to expand information processing equipment. the capability of vision system primarily In the

speed of pattern discrimination and the ability

As the Integration of FMS continues, to discriminate shading, texture, color and

future appiicat'ons will feature a number of motion. The keys Improved performance of

cells operating under a general command vision systems appear to be In parallel

computer, buffered but some Intermediate processing and application of Very Large

work in process Inventory by operating with a Scale Integrated Circuit (VHSIC) technologies

high degree of synchronization among the to this task. The development and economic

cells. While the Introduction of FMS in the US application of machine vision may well be the

has been slow (estimate of 4 In 1975 to 46 in prerequisite to achieving the full benefits of

1985), a recent forecast by the Yankee Group truly computer Integrated fifth generation

estimates that this could grow to 280 factory automation.

installations by 1990.

Communication Links

Expert Systems Communication links are essential In

Expert systems are computer based an automated plant to assure that coordinated

decision or analysis aids which apply rules operations run according to an overall plan.

developed by drawing on the knowledge base Equally Important are the communications

of experts in a specific field. The knowledge which link manufacturing with its related

base Is structured in rules or representations business functions. Examination of the factory

which can assist the designer in developing of the future by Its functions (Figure 14-1)

and specifying a design which will be well illustrates the variety of Information processing

adapted to the manufacturing environment. activities which must be provided to

14-3
successfully Implement a fully integrated o Operations Integrator production system. The ttaditional distinction o Manufacturing strategist between product design and manufacturing a Technical specialist

engineering will be minimal or no longer exist.

The truly computer Integrated factory of the To meet these roles, the

future will provide for the output of one system manufacturing engineer will have at their

to serve as the Input to another. For disposal much more advanced tools Including example, the business planning and support communications devices, expert systems and

provided by the sales force relating to product other software. The emphasis on how work

descriptions serves as an Input to the will be accomplished will be far different with

engineering design function. If the product more Importance being placed on the human

contains previously designed components, a aspects of production and less on the

computer assisted drafting system would technical. Teamwork rather than Individual

output the engineering drawing Information to effort will be the key to suocess.

the Bill of Materials Processor and to

ManL'facturing Process Planning for Order, Major changes in the basic and

Scheduiing. If the product description contains continuing education of the manufacturing

new features or new components, the engineer will be required to respond effectively description would serve as Input to a CAD to these major challenges.

system where interactive graphics could be

used as a design technique to produce Future Expectations

engineering and manufacturing information. A In the future, the truly integrated CAM system Interacting with CAD would manufacturing system will provide assistance

provide the full compliment of functions to to all business functions from order entry to

process the ordered product through the product shipment. Productivity In developing

system. and producing affordable and supportable

weapons Is the "New Era" of the 1 990s and

Changing Role of the Manufacturing Engineer beyond. CAD and CAM have taken the first

In 1988, A.T. Keamney, Inc. conducted steps. The advancing computer and data

a study commissioned by the Society of systems technologies (data base management, Manufacturing Engineers to explore the future data distributed networks, distributed

role of the manufacturing engineer. This study' processing) afford the fmeans to move toward

concluded that the manufacturing engineer ol the Integrated system with Its attendant

the year 2000 will be faced with a new set of benefits. The DOD and its supporting Industry challenges In the form of: have taken some Initial steps but there Is still

a long way to go. 0 An environment exploding In scope

0 Multiple roles A market study published late In 1988

0 Advanced tools by Automation Research Corp of Me, ifleld, MA

0 Changed work emphasis forecasts that the price of factory automation

systems Is reducing. The study, titled Factory The dominant causes of the changes Management Systems: Cell, Area, and

In the challenges faced by the manufacturing Factory Levels, reports that the number of

engineer arise from: manufacturing software tools available today Is

on the rise, making It more cost effective for

0 Increased product sophistication and software developers and end-.users to develop variation specialized manufacturing software. As a

0 A global manufacturing environment result we can expect to see more new and

0 A multitude of social and economic affordable manufacturing packages over the

changes next few years.

The role of the manufacturing engineer According to this study, the trend has

will also change dramatically. The AT. already begun to have an Impact. For

Kearney study Indicates that the three primary example, while the US market for factory roles that manufacturing engineers will play by management software was worth more than

the year 2000 are: $475 million 1987, these shipments are

projected to grow at an average annual rate of

14-4
BUSINESS PLANNING AND SUPPORT

Engineering DesignI

Manufacturing Process Planning

Manufacturing Methods and Standards

Order Scheduling

Production Planning - Methods, Materials,

Parts and Tooling

Procurement Management

Production -Scheduling Cost Accounting and Cost Management

Group Technology

Materials Order Service

SManufacturing ProdcssoPlanningol

Purchasing/Receoving

Production Dispatching

Production Control

Methods and Standards Data Base

In-Process Inventory Control

Manufacturing Monitoring and Control

Machine Loading

Performance Measurement

Maintenance

In-Process Quaioty Control

Stores Mcaitoring

Process Automation

Numerical Control

Adaptive Control

Automatic Inspection

Automatic Assembly

Computerized Testing

Figure 14-1 Integrated Manufacturing System

14-5
nearly 1 2%/ through 1992, when they will rise describes It In "Megatrends" "The more

to more than $830 million. About $525 technology around us, the more the need for

mlillionworth of factory management software Is human touch.* Technology raises the level of

expected to be shipped this year alone, knowledge required. In addition, the world

class competitors have learned that providing

The study also groups manufacturing all employees the opportunity to contribute to

software Into seven categories and predicts decision making Is critical to success. Mr.

growth rates for each. Some of these are: Rene McPherson, Chairman of the Dana

Corporation, has said: "Until we believe that

O Cell Control: About $16 million the expert In any particular lob Is most often

worth was shipped In 1987, and more than the person performing it, we shall forever limit

$80 million worth will be shipped In 1992. the potential of that person In terms of both

his contribution to the organization and his

o Quality Control: About $21 million personal development . . . Within a 25 square worth wes shipped In 1987, and more than foot area, nobody knows more about how to

$34 million worth will be shipped 1992. operate a machine, maximize its output, Improve its quality, optimize the material flow,

0 Production Management and and keep It operating efficiently than to the

Scheduling: Around $35 million w.orth was machine operators, material handlers and

shipped In 1987, and nearly $120 million worth maintenance people responsible for it." This

will be shipped In 1992. philosophy Is the basis for employee Involvement programs such as quality circles,

O Factory Simulation: About $25 one of the major contributors to the success of

million worth was published in 1987, and $90 Japanese Industry. million worth will be shipped In 1992.

The second force motivating Industry Significant US Government effort is to increase education and training Is the

being applied to developing manufacturing perceived performance of American schools.

communications toois and systems. As reported In the July 4, 1988 Issue of

Fortune, "In the United States, 30 percent of

THE HUMAN ELEMENT all high school students - one million

A major environmental characteristic of teenagers each year - drop out before

the factory of the fuiure is the changing nature graduating. Most are virtually unemployable. and role of the workforce. As the "baby And of those who do graduate, many do not

boom" of the 50's and 60's is replaced by the have the problem-solving skills necessary to

"baby bust" generation of the 70's, the supply function in an increasingly complex Information

of new workers entering the job market will society." Industry Is reacting by Increasing drop substantially. This employee shortage Is support to and Involvement In public education

already Impacting the fast food Industry with and by adding education to their Internal

its heavy reliance on part time high school employee development programs. and college age employees. As this shortage begins to Impact the industrial entry process, The forces of much management major changes In the role of the employee will attention In the factory of the future will be on

follow. In addition to the obvious Impact of the human contribution to progress. Increasing wages and salaries as industry Motivating, educating and empowering the full

competes for a decreasing pool of talent, the work force combined with application of new

relationship of the firm and the worker will manufacturing and Information technologies

change. Greater emphasis will be placed by will be critical elemnents In factory success.

Industry on developing long term employment

relationships. Education and training will be

provided by Industry. FACTORY NETWORKS

Digital Equipment Corporation was one

The need for this education and of the first computer vendors to perceive then

training will be driven by two forces. First, need for enterprise-wide communications In

success In the future factory will be driven by corporate Amer'rna. To communicate this

Industry's success In harnessing the creative perception Digital came up with the slogan

power of the worker. As John Naisbit "The network Is the system." At about the

1 4-6
same time, Sun Microsystems announced that everything. From now on, economic value will

it too saw a networked future and, further, that be added in the MAP/TOP networks

In its vision, "The network is the computer." themselves, not on any traditional factory IBM has adapted its System Network floors.

Architecture (SNA) design into the peer-to-peer Systemn Application Architecture (SAA) system. The MAP/TOP duo is the heart of all

Chairman John Akers has stated that preproduction technologies In the next

"transparent access to remote data" is now industrial age now taking shape worldwide, the

required, and is among the company's top so-called CIM (computer- Integrated three R&D priorities, manufacturing) age. MAP and TOP are two

distinct networking schemes, but, by deliberate

A key question currently being design, they work together and share five

addressed is whether the order-entry and layers (layers 6, 5, 4, 3, and 2) of the

control systems are the end point of seven-layer OSI architecture. (See Figure networking for corporate America? What will 14-2). all the new networks of the 1990s connect to,

and what will they do? TOP is aimed at engineering and

business activities; its CIM partner, MAP, Is

Manufacturing managers have come to designed to tie into and control activities on

realize that one of the key ,:,ources of their the factory floor. To best perform their diverse

productivity woes is not with their inability to roles, MAP and TOP remain distinct and

automate the manufacturing process but with specialized at OSI layers 7 (the application their link between what's designed and what's layer) and 1 (the physical layer). manufactured. Getting 10% improvement our

of a ma, hining station may cost a lot more Already, Boeing, one of the prime

than motivating engineers to design movers behind TOP, uses integrated components using common parts and getting design/build teams instead of design and build

engineers to design parts that are easy to teams as before. Boeing refers to Its

manufacture, assemble, and service. MAP/TOP networks as "enhanced Information

systems" and places them at the core of Its

This is no easy task. The design that CIM effort. General Motors, a major supporter

feeds manufacturing has traditionally been a of MAP, currently has 20 facilities under or

stand-alone function, discrete even from the going under MAP.

engineering analysis that determines whether

a part will actually work. And that's a Worldwide, there are now about 100

traditionally separate activity from the known installations using MAP and about a

engineering that determines who the dozen using TOP. Virtually all these

manufacturing floor should tool up to make the installations are world-class competitors,

parts. including the likes of BMW, Deere &

Company, British Aerospace, Ford, Eastman

The ENE 88i (Enterprise Networking Kodak, Du Pont and Lockheed. In addition,

Event '88 International) conference strongly the U.S. Government has issued Its

indicated that the next generation of Government OSI Profile (GOSIP) requiring 051

networks-the open generation built on Open standards in the 1990s. In GOSIP, the

Systems Interconnection (051) standards will government has virtually committed Its $300

revolutionize the production of goods billion per year defense procurement budgets worldwide. These networks will lead to and to companies that favor MAP/TOP systems. from all factory floor around the world,

The major CIM leaders in Europe are

The factory floor is where the big one or two years ahead of their U.S.

payoffs will be, the places where more human counterparts. And the Japanese are

knowledge will be turned into more useful somewhere In between the leaders In Europe products than anywhere eise. But the factory and the United States.

floors will not be where they used to be; in

fact, they won't even be what they used to be. ENE 88i provided demonstrations of

Manufacturing Automation Protocol/Technical MAP/TOP 3.0, the latest version of that

and Office Protocol (MAP/TOP) will change combined preproduction technology.

14-7
AYER 7

API UCATION

L IkYER

LAN EI1 6

PRESENTATION

LAYER

LAYER5

SESSION

LAYER

LAYER 4

TRANSPORT LAYER

LAYER 3

NETWORK LAYER

LAYER 2

DATA LINK LAYER

I ~LAYER 1

PHYSICAL LINK

Figure 14-2 Open Systems Interconnection Model

Applications had been previously tested in the vendor environment; MAP takes the electronic

United States or in Europe, and they all information onto the factory floor within one

worked. Many were more flexible and more enhanced Information stream. With MMS, the

powerful than proprietary networks. There is same software can drive similar Industrial

now a six-year compatibility freeze on devices from any manufacturer. In CIM, the

MAP/TOP; all applications and improvementi computer is used to design and manufacture

for the next six years will be compatible with products with machines anywhere around the

MAP/TOP 3.0 today. world.

MAP 3.0 Incorporates a technology The use of networks in the future can

called Manufacturing Message Specification be a significant change. The handful of

(MMS). MMS is a very robust manufacturing leaders in each industry In each country will

description language (MDL) with the power to not only adopt MAP/TOP 3.0, they may also

revolutionize factory floors. MMS can be use it in building extensive private

described as an Industrialized and networked communications networks to tie together their

variant of the PostScript page-description customers and suppliers. These networks will

language (PDL). Whereas PostScript utilize fiber optics and will be based on OSI

describes images for publishing, MMS is an standards. To get maximum effectiveness, the

MDL that describes the handling and shaping industry leaders will require that suppliers and

of products in manufacturing. No matter what customers adopt MAP/TOP technology.

tho devices are on the factory floor, robots,

machining devices, or assembly devices, and The Air Force has developeo a

no matter which vendors made them, a Product Definition Data Interface (PDDI), which

product designer can Interface all of them Is a standarL format for adding parts

using MMS. Information to CAD designs. A common

encoding technique would allow better

MMS can have potentially significant Intersystem communication of design and

Impact on manufacturing. First, TOP creates manufacturing information. The Air Force has

and shares design information in a multi used PDDI to electronically transmit CAD and

14-8
manufacturing data directly to the factory floors in the design process before detailed drawings of manufacturing subcontractors. The National are released.

Institute of Standards and 'Technology (N 1ST) and the Initial Graphics Exchange Standard Companies must learn this new way of

(IGES) organizations are working on a rtiore developing products. In the future, engineers universal Product Data Exchange Standard will need to have a fundamental understanding (PDES) less focused on aerospace of a broader scope of product and process

manufacturing than PODI. development. The prototype *proof of

concept" tools used on early Concurrent

The Air Force and majo. suppliers are Engineering projects have defined a new

working on an extension of PDDI - a generation of integrated tools. These tools

Geometric Modeling Application Program span the spectrum of functions from Marketing (GMAP) - that will be sufficient to describe a to Quality while providing the engineer with a

part all the way through its life cycle. Design common, user-friendly interface. Relieved of

data will automatically generate test the burden of learning a myriad of tool

sequences, for Instance, under GMAP. In Interfaces and Interface quirks, the new

addition, the DOD Computer Aided Acquisition engineer will have time to spend finding and Logistics Support (CALS) program will solutions to actual product and process substantially impact communications standards. development problems.

Mr. Del Lucas, Vice President of

CONCURRENT ENGINEERING International Techne Group Inc. has modeled

Concurrent engineering is a systematic this process as shown in Figure 14-3.

approach to product design that considers all

the elements of the product life cycle during This integrated process Includes:

the design process. 0 Developing product alternatives and

The traditional development prc"nes". is then using computers to simulate them

basr I on a serial approach. Design engineers complete a design and analyze it. o Developing manufacturing alternatives

Then, they pass the details to manufacturing and the manufacturing analysis and

engineers. Processing, ,outing, tool fixture simulation of those alternatives

design, shop floor control and quality

programming steps are completed in a series o Identifying what the customer wants

prior to the start of production. and how many. Will It be profitable to

supply what he wants?

This serial process generally results in

engineering change traffic well into the o The multi-functional team

production phase. It also introduces penalties

and limitations in that the design does not 0 Next-generation tools

reflect the realities and constraints of the

manufacturing environment resulting in Product alternative evaluation Involves

expensive design changes. the creation of concepts which are then

analyzed, and simulated. Selective testing Is

The goal of Concurrent Engineering, performed to validate the simulation models.

also referred to as Concurrent Product/Process A comparison of predicted results versus

Development is to move design iterations requirements is made for each concept.

forward in the development cycle. A mulftifunctional development team made up of Process alternative methods Include

Marketing, Engineering, Manufacturing, and the creation of manufacturing and assembly Finance people looks at all of the product and concepts. Analysis and simulation of these

process alternatives. They then simulate and concepts and validation of simulation models

model product and related process alternatives by selec, ye testing allow comparison of

In the computer. Simulation helps develop a predicted results vs. cost, production flexibility,

fundamental understanding of each alternative and investment requirements. Each product

and allows the various functions to be involved concept Is analyzed for Its potential to be

14-9
grouped with similar parts across families The manufacturing and assembly

within each concept application, layouts and process simulation provide the

OPPORI"UNrITY KANUAC ING

HOOEL ANALYSS

MARKET VOLUL4ES -WX FORECAST •. 'BUSINESS•I•.. COSTS

N00E PRICES 

Figure 14-3 Concurrent Engineering Model

Exploded views of a concept applied team with feedback on how relatively difficult it

to a family of applications to a common scale is to produce a given product concept

provide a good way to scope the size range of alternative. They also provide an early look at

the application family. A common type of the types of manufacturing and assembly

automation which makes sense for the automation that the product must be "designed

application family is the primary criterion for for."

scoping the limits of rationalization.

Projects using Concurrent

Simulation and analysis of each Product/Process Development Methodology

product concept and each volume and have produced very favorable results.

automation alternative produces estimates of However, these results have not been won

product costs and capital requirements. The easily. Each functional area requires its own

system which must be Integrated to produce specialist to Interface with the computer aid.

the necessary simulation and analysis is Even within functional area, the engineer who

shown In Figure 14-4. models on one software package may not be

able to simulate a system on another software

Additionally for each concept, package. The two programs may interface

alternative CIM interfaces are considered. differently and may not be "user-friendly."

These inci'de Networks and Controllers, RealTime Scheduling and Monitoring, Support With the advent of next-generation

Systems, and Quality. The need for tools, interfaces between different functional

consistency with corporate systems must be models will become easier. These tools will

considered at this stage of the development provide a common Interface to different

process. Supplier links to access statistical functional models. Interface requirements of

process control and other types of information, the different functional tools will be transparent

Including graphics, must be included. Links to to the user. As a result, users need to

customers are an even more important understand little of the mechanics of the

consideration because different customers may individual functional tools. For example, an

dictate different types of interface needs. engineer can go from building a solids model

to building a manufacturing cell using a "part

14-10
flow analysis" model and then to finding a Objectives

forecast volume niche from the market model The CALS program has three broad

at the same terminal. The same interface objectives as outlined in a policy memorandum

by the Deputy Secretary of Defense, William

H. Taft, IV, in September 1985:

Figure 14-4 System Integration in Concurrent Engineering

format will be used and there will be outward 0 To accelerate the integration of

indication that the engineer is switching from reliability and maintainability design tools into

one system to another. contractor CAD systems. The payoff will be

more reliable, supportable weapon systems

with a lower life cycle cost. COMPUTER AIDED ACQUISITION AND

LOGISTICS SUPPORT 0 To encourage the automation and

Computer Aided Acquisition and integration of contractor processes for

Logistics Support (CALS) is a DOD strategy to generating weapon system technical

accomplish the transition form the current information. The payoff is more consistent

paper intensive design, manufacturing and data, less duplication of effort, and ultimately

support processes to a highly automated, lower data costs.

Integrated mode of operations for future

weapon systems. 0 To rapidly increase DOD capabilities

to receive, store distribute, and use technical

Information in digital form.

14-11
The DOD and Industry have Information to DOD Components and Industry eslablished and effective organization for throughout the lifetime of a weapon system. planning and Implementing CALS. Key organizational entities and functional area

assignments are depicted In Figure 14-5.

INDUSTRY DOD CALS

STEERING GROUP STEERING GROUP POLICY AND (ImmUs. ASSNS., (06D. SERVICES, EXECUTIVE DIRECTION PRAOF. SOCIETIES) - - AGENCIEQ)

SDOD CAkLS OFFICE. CORPORATE PLANNING

AND PROGRAM REVIEW

,(OSO) I

NATIONAL INSTITUTE STANDARDS INUTY----- - - - AND OF STANDARDS TECHNOLOGY DEVELOPMENT

IDOD COMPONELNTS PROGRAM PLANNING

L CAL$ OFFICES AND COORDINATION

(MILITARY DEPTS

DeFENSE AGENCIES)

DEFENSE

CONTRACTORS 

PENTIO

"PROGRAM MANAGERS IN R&D AND

, (A.M. DARP,) AF, DLA, PROCUREMENT PROGRAMS

Figure 14-5 CALS Management Organization

Organization The two major components of the IWSDB data CALS, of course, Is not a system, but base are product data and support data. rather a strategy to link together a system of Theli' planned transition phases and ultimate systems In DOD and industry to achieve the culmination In the IWSDB are illustrated in objectives and payoffs described. The target Figure 14-6. This distributed data base will

system for GALS Integration Is one whose support a full range of life cycle applications primary purpose Is to process (create, modify, shown in Figure 14-7.

store, distribute, or use) weapon system technical Information In digital form. CALS provides a unique opportunity to actlieve major productivity and quality Integrated Weapon System Data Base improvements through carefully planood and

pC m managed investment by both Government and The long term goal of CALS is the industry. As the cumulativo Impact of CALS development of an Integrated Weapon System implementation is experienced through the Data Base (IWSDB) which Incorporates digital process of Infrastructure modernization In DOD engineering product data and logistic support and industry, major savings will occur as DOD data Into a shared, distributed data base. The and industry Incorporate more far-reaching IWSDB will provide rapid availability of functional chlanges made possible by

14-12
PRODUCT DATA

DIGITGL DIIA 3- PRANUACTURN

DRAWINGS TECHNICAL DATA DATA BASEE

PACKAGES

INEI

ENTERATE

WEAPON SYSTEM

DATA BASE

[ITCSORT LOGISTICS SUPPORT INTEGRATED ANALYSIS ANALYSIS DATA SUPPORT

RECORD DICTIONARY DATA BASEr

G 

-

_ýUSTOo N.o -*• . OITC~

Figure 14-7 Integrated Weapon System Data Base

14-13
weapon system life cycle cost, shortened portion of the life cycle. The technical Issues

acquisition times, and improvements in (communications, distributed database

reliability, maintainability and readiness. Information Integration. These changes

represent the ultimate goal of CALS

Figure 14-8 Illustrates the current flow Implementation and will result In a lower

of logistics support information. While much technology), the legal and policy Issues (rights

progress has been made In CAD/CAE and to data, security, competition), and the cultural

CIM systems, data must still be converted to changes (realignment of some current

hard copy (paper, vellum, aperture cards) for functions) combine to make achievement to

use In the DOD logistics systems. this target system a challenging goal Indeed.

GOVERNMENT PAPER USERS

ENGINEERING EN E

DATA

D A A B SE DRA IN G R EPO SITO R IES

DESIGNER APERTURE

CARDS

DESIGN

INFLUENCE

Figure 14-8 Current Data Transfer

The evolutionary part to effective The CALS program is committed to

communication sought by CALS is shown In establishing a unified Interface with Industry for

Figures 14-9 and 14-10. Already some prime digital data exchange. The mechanism for

contractors are ,tarting to integrate some of this unified Interface will be a set of private

their stand-alone data systems, eliminating sector data exchange standards and DOD

redundant data and making timely information applications subsets. The same standards will

more accessible to users. This reduces the be used to ensure the compatibility of systems

number of paths for data transmission to the within DOD for technical data Interchange.

govemrnment, fnereby simplifying the translation

problem. In the longer term, the goal is an Due to the importance of this

environment of distributed databases standardized Interface, DOD has obtained the

connected by local area and wide area support of the National Institute for Standards

networks thlat provide DOD and industry users and Technology (NIST) of Gaithersburg, MD,

with direct access to the information they In the selection and implementation of CALS

need. This scenario opens the possibility of standards. In 1987, the NIST effort Is focused

relying on specified government access to the on developing tightly defined application

contractor's database rather than delivering subsets and compliance testing approaches In

data to a DOD repository, at least for a the following are:

14-14
GOVERNMENT

RASTER SCAN USERS

CAD/CAE ENGINEERING ENGINEERING ENGNEEIN

S RAM CAD !I DRAWINGS REPOSITORE SDATBASS • DATABDATA f.__..j [REPOSITORIES

I LIMITED VECTOR

DESIGNER TRANSFER

DESIGN !

INFLUENCE

INTERACTIVE

TURNAROUND

Figure 14-9 Near Term Improvements

Product definition data. The primary Text processing. The primary near

standards involved are the Initial Graphics term standards in this area is Standardized

Exchange Specification IGES and the Product Generalized Markup Language. Other

Data Exchange Specification (PDES). IGES standards, such as Office Document

will be used as a near-term mechanism for Architecture/Office Document Interchange transferring data among CAD systems. Early Format, Text Composition Language, and Text

difficulties in the completeness of transfer are Presentation Metaflie, are being considered for

being addressed by narrowly defining DOD longer-term Implementation.

application subsets and establishing validation

tests. For the Iong('r term, CALS will make a Database management. To support

substantial commitment to the development of the goal of neutral access of distributed

PDES. Product data is the common ground databases, CALS applications of the

for CALS and CIM, and coordination with the Information Resource Dictionary Standard,

CIM community will be essential. Structured Query Language, and Network Data

Language are being examined.

Computer graphics. The primary data

exchange standards are the international

Consultative Committee for Telephone and FUTURE OF ROBOTICS

Telegraph Group 4 raster scan standard and The U.S. industry and the government

Computer Graphics Metafile. Also of interest should foster more widespread use of

to achieve device-independent graphics Industrial robots. The application of robots

presentation capabilities are Computer was one of the keys to the remarkably high

Graphics Interface, Graphical Kernel System, levels of productivity achieved by the

and Programmers Hierarchical Interactive Japanese in the 1970's. The Robot Institute

Graphics Standard. of America (RIA) suggests that U.S. Industry

14-15
V. 01-0 (.

1- 00

m Z 

0 Z 0

<2 ww

OrEr

uJ <

0

wwC I-CL

0 M

ZLLJ

> Li:

zo- W4I 0.C 

1) o >-I - )< 0C 0 c a

<: c1- 0 

UJ 0

<LL 0 0m w ClC ,

14-1
assign high priority to the Installation of robots, The robots of the late 1 980s and early

especially In dangerous, dirty, and dull jobs, 1990s will be more economical, reliable, and "recognizing that robots are one of the versatile (as well as programmable) than those

quickest and cheapest ways to Increase In use today. They will continue to provide a

productivity." Also, industry must accept the solution to the problems that are encountered

responsibility for retraining workers who are when manufacturing takes place In hazardous,

displaced by robots. Industry managers will unpleasant, or monotonous environment.

have to communicate with the work force and Robot qualities and benefits will exert a

help the workers to understand the positive Influence on the robot market, a

advantages of using robots. Further, Industrial market that may reach $3 to $4 billion In sales

managers will have to develop plans so by the mid-i 990s, with the heaviest demands

workers will share In the benefits of Increased coming from the electronics, automobiles and

productivity, aerospace/defense industries. Because the

benefits available through the application of

Someone has said that "if robots are robots ,vithin specific ranges, industrial

becoming the tireless arms and eyes of managers will find ways to accommodate them

production, then computers are their minds." In the fact )rles. Products will be designed for

The versatility of the computer has made it robot hanr ling. Massive shifts In the nature of

one of the principal elements leading to the factory skills will be made with little, If any,

automation of the factory. According to the loss In the work force. These events, of

National Institute of Standards and course, will increase the size of the market for

Technology, computer-aided design (CAD), educational robots . . . robots that tend to

computer-aided manufacturing (CAM) and mimic their Industrial counterparts.

computer-aided testing (CAT) have more

potential to radically increase productivity. Other advances In robots on the

horizon are those with the following

The new flexible manufacturing characteristics:

systems In which several numerically controlled production machines are grouped, 1. Higher speeds, better stability, and

along with a transport system, under a control Improved controls.

of a main computer, are Impacting productivity

substantially. Using this type of manufacturing 2. Multiple-armed configurations.

system, machine tool utilization has increased

as much as 45 percent in some companies. 3. Off-line programming In a nigh-order language.

Robot manufacturers have been

reluctant to talk about "smart" robots - those The potential advances show great

capable of decision-making -- because, for the promise. However, the greatest &dvance in

most part, Industry has only started to utilize robot use may come about as a result of more

the capabilities of existing robots. If industry's effective manufacturing management Interest in robots grows as expected, smart techniques. For example, "group technology"

robots will be used in many U.S. factories In will be a boom to robots. This technique

the 1 990s. The smart robots will be able to Involves classifying parts to be manufactured

understand spoken commands, or they will be Into families. Parts are never placed In bins

able to convert printed language Into operating for storage or transferred to other areas. The

commands. Also, the elementary Intelligence parts maintain their orientation throughout the

available in some robot programs will be able entire manufacturing process. In addition to

to give the robot the ability to change a group technology applications, robots will be

program on Its own, or to modify a program to used In CAM, product assurance systems, and

cope with a new situation. Fortunately, the automatic-warehousing.

more sophisticated robot designs will not make

the earlier designs obsolete. The new robot As we prepare for the coming age of

designs will be capable of performing more robots, it Is important to keep the following

demanding tasks, and older robots will points in mind. First, the Initial cost and

continue to perform their previously assigned possible benefits of using robots may be

tasks. difficult to establish. Second, there may be

surprises and setbacke along the way. Third,

14-17
a structured environment and thoughtful Robotic technology will be integrated

approach to robot applications will usually into flexible manufacturing systems. In the

ensure success. production of products, there will be a

movement back to the concept of a general

Forward-looking industrial managers purpose robot with many human-like attributes.

recognize that the Introduction of robots will In the final analysis, robots will continue to

bring about major changes In manufacturing present industrial management with a

operations. These managers are looking tremendous challenge. The Industrial firms in

beyond the simple one-for-one replacement of which management meets the challenge

workers and toward understanding the successfully will prosper; the firms In which

interactions within the manufacturing management fails to meet the challenge

operations so they can Identify those head-on may fall by the wayside.

applications where robots can be applied

successfully. Further, these forward-lookIng

managers are calling for a systems approach

to conceive, define, and build robotic cells.

Such an approach will ensure that three goals

for successful manufacturing operations

efficiency, flexibility, and effectiveness will be

met.

14-18
APPENDIX A

LIST OF ACRONYMS

A & P -Analysis and Production

A & T -Assembly and Transport

ACl -Allocated Configuration Identification

ACM -Authorized Corntrolled Material

AGO -Administrative Contracting Officer

ACWP -Actual Cost of Work Performed

ADM -Acquisition Decision Memorandum

ADP -Automated Data Processing

AE -Acquisition Executive

AFPRO -Air Force Plant Representative Office

AFSARC -Air Force System Acquisition Review Council

AGE -Aero~uace Ground Equipment

Al -Artificial Intelligence

AlP -Acquisition Improvement Program

AMC -Army Material Cor,mmand

-Acquisition Method Code

AMSDL -Acquisition Management System and Data Requirements Control Ust

AQAP -Allied Quality Assurance Provision

AQL -Acceptable Quality Level

ASARC -Army System Acquisition Review Council

ASPPO -Armed Services Production Planning Officer

ATE -Automatic Test Equipment

tA -Budget Authorization

BCE -Baseline Cost Estimate

BCWP -Budge-ed Cost of Work Performed

BCWS -Budgeted Cost of Work Scheduled

BES -Budget Estimate Submission

BGM -Bill of Material

BPAC -Budget Program Account Code

C-V-P -Cost-Volume-Profit

C/SCSC -Cost/Schedule Control Systems Criteria

CAD -Computer Aided Design

CAIG -Cost Analysis Improvement Group

CALS -Computer Aided Acquisition and Logistics Support

CAM -Computer Aided Manufacturing

CAMP -Computer Aided Manufacturing Planning

CAMPP -Computer Aided Material Planning & Processing

CAO -Contract Administration Office

CAP -Cost Account Package, Contractor Acquired Property

CAPP -Computer Aided Process Planning

CAPS -Computer Aided Planning System

CAS -Cost Accounting Standard,

-Contract Administration Service

CASB -Cost Accounting Standards Board

CAT -Computer Aided Testi.ig

CATM -Computer Aided Technical Management

CCB -Configuration Control Board

CCDR -Contractor Cost Data Report

CCN -Contract Change Notice

CDR -Critical Design Review

CDRL -Contract Data Requirements Ust

CEO -Chief Executive Officer

CER -Cost Estimating Relationship

A-1
CFC -Cost of Facilities Capital

CFE -Contractor Furnished Equipment

CFM -Contractor-Furnished Material

CFSR -Contract Funds Status Report

CI -Configuration Item

CIL -Critical Item List

CIM -Computer Integrated Manufacturing

CIMS -Computer Integrated Manufacturing System

CINC -Commander in Chief

CLIN -Contract Line Item Number

CM -Configuration Management

CMF -Cost of Money Factor

CNC -Computer Numerical Control

CO -Change Order

COo -Cost of Quality

CPAF -Cost Plus Award Fee

CPCI -Computer Program Configuration Item

CPFF -Cost Plus Fixed Fee

CPIF -Cost Plus Incentive Fee

CPM -Critical Path Method,

-Contract Performance Measurement

CPR -Cost Performance Report

CPSR -Contractor Purchasing System Review

CR -Cost Reimbursement

CSCI -Computer Software Configuration Item

C/SSR -Cost Schedule Status Report

CWBS -Contract Work Breakdown Structure

CY -Calendar Year

DAB -Defense Acquisition Board

DAC -Defense Acquisition Circular

DAE -Defense Acquisition Executive

DAL -Data Accession List

DAR -Defense Acquisition Regulation

DARPA -Defense Advanced Research Projects Agency

DCAA -Defense Contract Audit Agency

DCAS -Defense Contract Administration Services

DCASMA -DCAS Management Area

DCASPRO -DCAS Plant Representative Office

DCASR -Defense Contract Administration Services Region

DCN -Design Change Notice

DCP -Decision Coordinating Paper

DCPR -Defense Contractor Planning Report

DEFCON -Defense Condition

DEMVAL -Demonstration/Demonstration

DG -Defense Guidance

DIB -Defense Industrial Base

DIBA -Domestic and International Business Administration

DIBP -Direct Industrial Base Planning

DID -Data Item Description

DIDS -Data Item Description System

DIN -Deutschland Industrial Norm

DIPEC -Defense Industrial Plant Equipment Center

DLA -Defense Logistics Agency

DLACAS -Defense Logistics Agency, Contract Admin. Services

DMB -Defense Manufacturing Board

DMO -Defense Mobilization Order

DM8 -Defense Materials System

A-2
DMSMS -Diminishing Mfg. Sources and Material Shortages

DNC -Direct Numerical Control

DOD -Department of Defense

DODD -Departme it of Defense Directive

DODI -Department of Defense Instruction

DOE -Department of Energy

DP -Development Plan

DPA -Defense Production Act

DPCCP -Defective Parts & Components Control Program

DPESO -DOD Product Engineering Services Office

DPS -Defense Priorities System

DR -Deficiency Report

DSARC -Defense System Acquisition Review Council

DSB -Defense Science Board

DT&E -Development Test & Evaluation

DTIC -Defense Technical Information Center

DT/OT -Development Testing/Operational Testing

DTC -Design to Cost

DTLCC -Design to Life Cycle Cost

DTUPC -Design to Unit Production Cost

EB -Electron Beam

EON -Engineering Change Notice

ECP -Engineering Change Proposal

EIA -Environmental Impact Assessment

EIS -Environmental Impact Statement

ELS -Engineered Labor Standards

EOQ -Economic Order Quantity

EPA -Economic Price Adjustment

EPA -Extended Planning Annex

EPR -Emergency Production Requirements

-Economic Production Rate

ER -Estimating Relationship

ERDA -Energy Research and Development Agency

FAB -Fabdication

FAR -Federal Acquisition Regulation

FCA -Functional Configuration Audit

FCI -Functional Configuration Identification

FEMA -Federal Emergency Management Agency

FFP -Firm Fixed Price

FIFO -First In - First Out

FMC -Flexible Manufacturing Cell

FMS -Flexible Manufacturing System

FOT&E -Follow-On Test & Evaluation

FP -Fixed Price

FPAF -Fixed Pdoe-Award Fee

FPIF -Fixed Price Incentive Fee

FPR -Federal Procurement Regulation

FQR -Functional Qualification Review

FRACAS -Failure Recording and Corrective Action System

FSD -Full-Scale Development

FSTE -Factory Support Test Equipment

FTBO -Flow Time Between Orders

FTE -Factory Test Equipment

FY -Fiscal Year

FYDP -Five-Year Defense Program

G&A -General and Administrative

GAO -General Accounting Office

A-3
GAQA -Government Acquisition Quality Assurance

GBL -Government Bill of Lading

GDB -Geometric Data Base

GFE -Government Furnished Equipment

GFF -Government Furnished Facilities

GFI -Government Furnished Information

GFM -Government Furnished Material

GFP -Government Furnished Property

GIDEP -Government industry Data Exchange Program

GMAP -Geometric Modeling Application Program

GMR -Graduated Mobilization Response

GOCO -Government Owned, Contractor Operated (facilities)

GOGO -Government Owned, Government Operated (facilities)

GOSIP -Government Open Systems Interconnection Profile

GPOA -Government Procurement Quality Assurance

I&A -integration and Assembly

I&CO -Integration and Checkout

IAC -information Analysis Center

ICAM -Integrated Computer Aided Manufacturing I&SC -Integration and System Checkout

I/ NS -htem/Weapon System

IB -Industrial Base

IC -integrated Circuit

ICA -Independent Cost Analysis

ICD -Interface Control Document

ICE -Independent Cost Estimate

ICG -interactive Computerized Graphics

IDWA -Inter-Divisional Work Authorization

IE -Industrial Engineer

IEB -Industry Evaluation Board

IER -Industry Equipment Reserve

IES -Industrial Engineering Standard

IFAC -Integrated Flexible Automation Center

IGES -Initial Graphics Exchange Standard

IL -International Logistics

ILS -Integrated Logistics Support

ILSP -Integrated Logistics Support Plan

IMIP -Industrial Modernization Incentives Program

IMS -Integrated Manufacturing System

10C -Initial Operational Capability

IOT&E -Initial Operational Test & Evaluation

IP -Industrial Preparedness

IPB -Illustrated Parts Breakdown

IPE -Industrial Plant Equipment

IPF -Initial Production Facilities

IPL -Indentured Parts List

IPM -Industrial Preparedness Measures

IPP -Industrial Preparedness Program

IPPL -Industrial Preparedness Planning List

IPPP -industrial Preparedness Program Planning

IPPS -Industrial Preparedness Program Planning System

IPR -Industrial Plant Representative

IPSG -Invest nent Policy Study Group

IR&D -Independent Research and Development

ISO -International Standardization Organization

JAMAC -Joint Aeronautical Materials Activity

JIT -Just In Time

A-4
JMPAB -Joint Materials Priorities and Allocations Board

JMSNS -Justification for Major System New Start

KFL -Key Facilities List

LCC -Life Cycle Cost

LIFO -Last In - First Out

LLTI -Long Lead Time Items

LOA -Letter of Offer and Acceptance

LOB -Line of Balance

LOE -Level of Effort

LRIP -Low Rate Initial Production

LRU -Line Replaceable Unit

LSA -Logistics Support Analysis

LSAR -Logistic Support Analysis Record

LSI -Large Scale Integrated (Circuit)

LTPD -Lot Tolerance Percent Defective

iMAA -Mission Area Analysis

MAP -Manufacturing Automation Protocol

MANTECH -Manufacturing Technology

MDL -Manufacturing Description Language

ME -Manufacturing Engineering

-Mission Element

MEL -Master Equipment List

MIPR -Military Interdepartmental Purchase Request

MITI -Ministry ot International Trade and Industry

MM/PCR -Manufacturing Management/Production Capability Review

MMS -Manufacturing Message Specification

MNS -Mission Need Statement

MOA -Memorandum of Agreement

MC)U -Memorandum of Understanding

MRB -Material Review Board

MRP -Materials Requirement Planning

MRP II -Manufacturing Resource Planning

MS -Milestone

MSC -Major Subordinate Command

MSR -Minimum Sust.-0ning Rate

MTAG -Manufacturing Technology Advisory Group

MTBF -Mean Time Between Failure

MTIAC -Manufacturing Technology Information Analysis Center

MIP -Master Tooling Plan

MTIF -Mean Time to Failure

MTTR -Mean Time to Repair

MUL -Master Urgency List

MVT Module Verification Test

MYP -Multi-Year Procurement

NADIBO -North American Defense Industrial Base Organization

NATO -North Atlantic Treaty Organization

NC -Numerical Control

NIST -National Institute for Standards and Technology

NMTBA -National Machine Tool Builders Association

NOR -Notice of Revision

NSARC -Navy System Acquisition Review Council

NSC -National Security Command

NSN -National Stock Number

NTIS -National Technical Information Service

O&O -Organizational and Ope,,ational

O&S -Operation and Support

ODC -Other Direct Costs

A-5
OFPP -Office of Federal Procurement Policy OIM -Office of Industrial Mobilization

OJT -On-the-Job Training OMB -Office of Management and Budget

OPE -Other Plant Equipment

OR -Operational Requirement ORLA -Optimum Repair Level Analysis

OSD -Office of the Secretary of Defense

OSHA -Occupational Safety and Health Act

OSI -Open Systems Interconnection

OT&E -Operational Test and Evaluation

P&A -Price & Availability

PA -Product Assurance

PBA -Production Base Analysis PCA -Physical Configuration Audit

PCC -Primary Controller Card

PCDA -Plan, Do, Check, Act

PCI -Product Configuration Identification

PCO -Principal Contracting Officer

PCR -Production Control Records

PCWBS -Preliminary Contract Work Breakdown Structure

PDES -Product Data Exchange Standard

PDDI -Product Data Definition Interface

PDL -Post-script Page Description Language PDM -Program Decision Memorandum

-Programmed Depot Maintenance

PDP -Procurement Data Package

PDR -Preliminary Design Review

PEP -Plant Equipment Package

-Producibility Engineering and Planning PERT -Performance Evaluation and Review Technique PESO -Product Engineering Services Office

PIDS -Prime Item Development Specification PIECOST -Probability of Incurring Estimated Cost

PIF -Provision of Industrial Facilities

PIN -Plant Index Number

PIP -Product Improvement Plan/Proposal/Program

PL -Public Law

PM -Program Manager PMC -Procurement Method Code

PMD -Program Management Directive

PMO -Program Management Office

POM -Program Objective Memorandum

POM/BES -Program Objective Memorandum/Budget Est. Submission

PPBS -Planning, Programming and Budgeting System PPE -Preproduction Proposal Evaluation

PPPI or P31 -Pre-Planned Product Improvement

PPR -Production Progress Report

-Production Plan Review

PR -Purchase Request PRAM -Production Risk Assessing Methodology PRAT -Production Reliability Acceptance Testing

PROC -Procurement

PROD -Production

PRR -Production Readiness Review

PRVT -Production Reliability Verification Test

PVT -Product Validation Test

A-6
QA -Quality Assurance

OAR -Quality Assurance Representative

QFD -Quality Function Deployment

QrT -Qualification Test

R&D -Research and Development

RAM -Reliability, Availability, and Maintainability

RD&E -Research, Development & Engineering

RDT -Reliability Development Testing

RDT&E -Reliability Development, Test & Evaluation

RFP -Request for Proposal

RIA -Robot Institute of America

RIW -Reliability Improvement Warranty

R&M -Reliability and Maintainability

ROC -Required Operational Capability

ROI -Return on Investment

RPEP -Register of Planned Emergency Producers

S/M -Surge/Mobilization

SAA -System Application Architecture

SAE -Service Acquisition Executive

SAlE -Special Acceptance and Inspection Equipment

SAR -Selected Acquisition Report

SAR -Subsequent Application Review

SARC -Service Acquisition Review Council

SCN -Specification Change Notice

SCP -System Concept Paper

SDL -Software Development Laboratory

SDR -System Design Review

SDTR -Supportability to Design Requirement

SECDEF -Secretary of Defense

SEMP -Systems Engineering Master Plan

SERD -Support Equipment Requirements Document

SF -Standard Forms

SNA -System Network Architecture

SON -Statement of Need

SOW -Statement of Work

SPC -Statistical Process Control

SRR -System Requirements Review

SSA -Source Selection Authority

SSAC -Source Selection Advisory Council

(S)SARC -Service Source Acquisition Review Council

SSEB -Source Selection Evaluation Board

ST -Special Tooling

STE -Special Test Equipment

SV -Schedule Variance

SVT -Software Verification Test

T&E -Test and Evaluation

TAAF -Test, Analyze and Fix

TACP -Technical Analysis of Cost Proposal

TCO -Termination Contracting Officer

TDP -Technical Data Package

TECHMOD -Technology Modernization

TEMP -Test and Evaluation Master Plan

TMU -Time Measurement Unit

TOP -Technical and Office Protocol

TPMR -Transfer of Program Management Responsibility

T&PP -Tool and Production Planning

TQC -Total Quality Control

A-7
TQM -Total Quality Management

TRACE-P -Total Risk Assessing Cost Estimate, Production

TRR -Test Requirements Review

TSE -Test Support Equipment

TTF&T -Technology Transfer, Fabrication & Test

UBO -Unit Buy Off

V&V -Verification and Validation

VE -Value Engineering

VECP -Value Engineering Change Proposa,

VRP -Variability Reduction Program

WBS -Work Breakdown Structura

WIP -Work In Progress

WMS -Work Measurement System

WP -Work Package

WRM -War Reserve Materials

A-8
APPENDIX B

GLOSSARY OF TERMS

ACCEPTANCE -- The act of an authorized representative of the government by which the

government assumes for itself, or as agent of another, ownership of existing and Identified supplies

tendered or approves specific services rendered, as partial or complete performance of the contract

on the part of the contractor.

ACQUISITION PLAN -- A document which records program decisions, contains the requirement,

provides appropriate analysis of technical options and the life cycle plans for development,

production, training and support of materiel items.

ACTUAL COST -- The sum of the allowable direct and Indirect costs (allocable) Incurred as a result

of producing a part, product, or service.

ACTUAL TIME -- The time taken by a worker to complete a task or an element of a task. j

ADVANCE BUY DOLLARS -- The time lapse between ordering key defense components and their

delivery (lead time) has increased dramatically in recent years. The direct effect of this Is that

obligation authority, to finance long lead items in advance of the end item buy year, is required

earlier and in greater amounts. This obligation authority is normally referred to as "advance buy

dollars."

ADVANCE BUY FUNDING -- Advance buy funding is funding obl!gated/expended to procure long

lead material/components in advance of the fiscal year in which the related procurement a~on Is

initiated.

ADVANCED DEVELOPMENT -- Includes all projects which have moved into the development of

hardware for experimental or operational test.

ADVANCED ENGINEERING MODEL -- A prototype.

ALL.OCATED CONFIGURAT ION IDENTIFICATION (ACI) -- Currently approved performance oriented

specifications governing the development of configuration items that are a part of a higher level

configuration item (CI) in which each specification; 1) defines the functional characteristics that are

allocated from those of the higher level CI, 2) establishes the tests required to demonstrate

achievement of its allocated functional

characteristics, 3) delineates necessary interface requirements with other Cls, and 4) establishes

design constraints, if anysuch as component/part standardization, use of invontory items and

integrated logistic support requirements.

ALLOWANCE -- A time increment included in the standard time for an operation to compensate the

worker for production lost due to fatigue and normally expected ;nterruptions, such as personal and

unavoidable delays. It is usually applied as a percentage of the normal or leveled time.

ANALYSIS OF MANUFACTURING OPERATIONS -- The review and evaluation of assembly and

fabrication processes to determine how effectively and efficiently the contractor's manufacturing

operations have been planned or accomplished.

ASSEMBLY -- Two or more parts or subassemblies joined together to form a complete unit,

structure, or other article.

ASSEMBLY CHART -- Portrays the proposed sequence of assembly operations constituting the

assembly process in the production of goods that are composed of many components.

B-1
ASSESSMENT REPORT -- The report generated by an independent assessment of a major system

during any phase of the acquisition and support process to provide an examination and evaluation of

technical requirements, status toward achievement of those requirements, Identify problems and

problem causes and make recommendations for correction of the problems or to Improve either the

requirements or the actions to achieve the requirements.

ATTRITION -- The loss of a resource due to natural causes in the normal course of events such as

a turnover of employees or spoilage and obsolescence of material.

AVAILABILITY -- A mneasure of the degree to which an item is in the operable and committable state

at the start of the mission,when the mission is called for at an unknown (random) point In time

(MIL-STD-721).

AVOIDABLE DELAY -- Any time during an assigned work period which Is within the control of the

worker for idle time or for doing things unnecessary to the performance of the operation. Such time

does not include allowance for personal requlrements,fatigue, and unavoidable delays.

BALANCED LINE -- A series of progressive related operations with approximately equal standard

times for each, arranged so that work flows at a steady rate from one operation to the next.

BANK -- A planned accumulation of work-in-process to permit reasonable fluctuations In performance

times of coordinated or associated operations.

BARCHART -- The detailed graphical working plan of a part providing sequence and time for the job

scheduled ahead and progress to date.

BASELINE COST ESTIMATE (BCE) -- A document which provides a detailed estimate of acquisition

and ownership costs.

BRASSBOARD -- An experimental device used to determine feasibility and to develop technical and

operational data, sufficiently hardened for use outside the laboratory for use in demonstrating the

technical and operational principles of immediate interest.

BREADBOARD -- An experimental device used to'determine feasibility and to develop technical data,

normally only configured for laboratory use to demonstrate the technical principles of Immediate

Interest.

BUDGET -- A planned program for fiscal periods In terms of estimated costs, obligations, expenditures, source of funds for financing, reimbursements anticipated and other resources to be

applied.

BUDGETING -- The process of translating approved resource requirements into time-phased financial

requirements.

CALIBRATION -- The comparison of a measurement system or device of unverified accuracy to a

measurement system or device of known or greater accuracy to detect and correct any variation from

required performance specifications of the unverified measurement system or device.

CAPACITY ANALYSIS -- An analysis most frequently employed in a machine or process area to

project the ability to absorb additional business.

CONCEPT DEMONSTRATION/VALIDATION -- The period when major program characteristics are

refined through extensive study and analysis, hardware development, test and evaluations. The

objective Is to validate the choice of alternatives and to proviide the basis for determining whether or

not to proceed into full-scale development.

B-2
CONCEPT DEVELOPMENT -- The Initial period when the te-chnical,milftary, and economic bases for

acquisition programs are established through comprehensive studies and experimental hardware

development and evaluation. The outputs are alternative concepts and their characteristics

(estimated operational, schedule, procurement, costs, and support parameters) which serve as Inputs

to the System Concept Paper (SCP) on major systems, Program Memoranda (PM) on smaller

systems/equipment, and to Service decision documents (Program Management Directives) for

programs that do not require OSD decisions.

CONCURRENT ENGINEERING -- A method for Integrating and design manufacturing.

CONFIGURATION -- The functional and/or physical characteristics of hardware! computer programs

as set forth In technical documentation and achieved in the product.

CONFIGURATION ITEM (Cl) -- An aggregation of hardware/computer programs or any of Its discrete

portions which satisfies an end use function and is designated by the government for configuration

management.

CONFIGURATION MANAGEMENT -- A discipline applying technical and administrative direction and

surveillance to; 1) Identify and document the functional and physical characteristics of a configuration Item, 2) control changes to those charactedlstics,and 3) record and report change processing and

implementation status.

CONTRACTOR-ACQUIRED PROPERTY (CAP) -- Property procured or otherwise provided by the

contractor for the performance of a contract, title to which Is vested in the government.

CONVERGENCE POINT -- The value (on the X-axis) where the experience curve crosses the

horizontal line representing the labor standard. The point In time (unit number) when workers, on a

leamning curve, attain standard performance.

COOPERATIVE DEVELOPMENT -- Cooperative development includes any method by which

governments cooperate to make better use of their collective research and development resources to

Include technical Information exchange, harmonizing of requirements, codevelopment, Interdependent

research and development, and agreement on standards. Many of these elements occur prior to

appointment of the program manager or occur outside the program management environment, but

their results Impact programs which have multinational Involvement.

COST ACCOUNTING -- A system of methods and records which organizes and displays the actual

costs associated with a given production contract.

COST ANALYSIS IMPROVEMENT GROUP (CAIG) -- An advisory body ostablished to advise the

DAB on all matters concerning the estimation, review and presentation of cost analysis of future

weapon systems.

COST CENTER -- Any subdivision of an organization comprised of workers, equipment areas,

activities, or combination of these that is established for the purpose of assigning or allocating costs.

Cost centers are also used as a base for performance standards. Synonym: burden center, cost

pool.

COST ESTIMATING RELATIONSHIP (CER) -- The curve of a cost function which relates the cost of

a product to some measurable characteristic of its physical characteristics or manufacture and from

which extrapolations and Interpolations may be extracted for estimating purposes.

COULD COST -- A cooperative government and Industry process of eliminating all non-essential

(labor, material and other)costs while ensuring at the same time product performance and quality.

CREW LOAD -- The number of workers assigned to complete the work on a defined production

component.

B-3
CRITICAL DESIGN REVIEW (CDR) -- Determines that thp detail d'hge •,t,.t'• Pp pprlorman-c

and engineering specialty require:.ients of the development specificat-n totar t- detail dpsIQrr

compatibility among the item and other items of equipmnnt faiiii•'. ,'w" ',grarný and

personnel; assesses producibility and risk areas and reviews tl, - m•, " JIC.,fcat,

CRITICAL ITEMS LIST (CIL) -- A prioritized list of er, '-... • ..

essential to sustained comhot operations. This list ser', -.

Industrial Preparedness Planwi,,ig List, and is used as a g •

CRITICAL MATERIAL -- A material tha. has been da1

There are approximately 40 minerals in this cate•go.

dependent on foreign sources for over half of those

CRITfAL WEAKNESS RELIABILITY TEST Th s

equilnrent Is exposea to environments in excess o# •--

critical levels can be determined from vibratv• w'wraa'

affect the component In subsequent tests of the .ota

expected limits, an evaluation of the cnocal w.*'nes"

may have been damaged or what carw be ex•c'ted•1ý 'i

CUTTING SPEED - f relative v'e:oc usuaIN e,;, -

tool and the surface oi Ire material from w*9N ,?-t I '9wiCYCLE -- T'me required to cormplte a predleferrr'we -,-

DEFENSE ACQUISITION BOARD ýDAB -- An ad~isor. -

SECDEF to appraise the SECDEF of the program sa - , ,. -.-

system to proceed to the next phase in the acquistion pi• .

DEFENSE ACQUISITION EXECUTIVE (DAE) -- The -

SECDEF and the focal point In OSD for system acquisitioDEFENSE CONTRACTOR PLANNING REPORT WEIGHT Th,- ,-". ,, -

1) wheels, brakes, tires and tubes, 2) engines, 3) startet 4 coolnc: i•i• k. " r0'o- 1,e'

cells, 6) instruments, 7)batteries and electric power supply ano conversion ,,'4.ipenlt 8ielech-rn•,tc

equipment, 9) turret mechanism and power operated gunmounts. 10 rernot, t

!rq owthanism and

sighting and scanning equipment, 11) air conditioning units and fluid, 12) au.ih~v, power plant unit

and 13) trapped fuel and oil.

DEFENSE SYSTEM -- See Weapon System

DELAY ALLOWANCE -- A time Increment included in a time standard to allow for predictable

contingencies and minor delays beyond the control of the workers.

DESIGN TO COST (DTC) -- A process utilizing unit cost goals as thresholds for managers and

design parameters for engineers normally in terms of a single cumulative "average flyaway cost."This

cost represents what the government has determined it can afford to pay for a unit of military

equipment which meets established and measurable performance requirements at a specified

production quantity and rate during a specified period of time.

DESIGN TO COST GOAL -- A specific cost established as a goal for a specific configuration,

established performance characteristics and a specific number of systems at -. defineu production

rate.

DEVELOPMENTAL TESTING AND EVALUATION (DT&E) -- DT&E is conducted to demonstrate that

the engineering design and development process Is complete and that the design risks have been

B-4
minimized, that the system will meet specifications and that the system's military utility when

introduced to operating units is estimated.

DIRECT COST -- Those costs which can be traced directly to a specific piece-part, subassembly or

product.

DIRECT ENGINEERING -- Engineering effort directly traceable to the design, manufacture, or control

of specific end products.

DIRECT LABOR STANDARD -- A specified output or a time allowance established for a direct labor

operation.

DIRECT MANUFACTURING LABOR -- Work which alters the composition, condition, conformation, or

construction of the product; the cost of which can be identified with and assessed against a particular

part, product, or group of parts or products accurately and without undue effort and expense;

colloquially called "direct labor."

DIRECT MATERIAL -- All material that enter into and becomes part of the finished product (including

waste) the cost of which can be identified with and assessed against a particular part,product, or

group of parts or products accurately and without undue effort and expense.

DOD COMPONENTS -- The Military Departments, the Defense Agencies,the Organization of the

JCS. and the OSD and activities administratively supported by OSD.

EARNED HOURS -- The time in standard hours credited to a worker or group of workers as a result

of their completion of a given task or group of tasks.

ECONOMIC LOT SIZE -- That number of units of material or a manufactu,'ed item that can be

purchased or produced within the lowest unit cost range. Its determination involves reconciling the

d,=ceasing erenc' in preparation unit costs and the Increasing trend in unit costs of storage, interest,

insurance.depreciation, and other costs incident to ownership, as the size of the lot Is increased.

ECONOMIC ORDER QUANTITY (EOQ) -- EOQ is the most economical quantity of parts to order at

one time to support a defined production rate considering the applicable procurement and inventory

costs.

EFFICIENCY FACTOR -- The ratio of standard performance time to actual performance time, usually

expressed as a percentage.

ENGINEERING DEVELOPMENT -- Includes those development programs being engineered for

service use but which have not yet been approved for procurement or operation.

EQUIPMENT -- A major subdivision of a weapon system or subsystem that performs a function

impacting the operational capability and readiness of the weapon system/subsystem. It is grouped

Into two general categories, that is, mission equipment and support equipment. Equipment does not

denote bit part pieces or components elements that comprise an equipment entity.

EQUIPMENT SCHEDULING AND LOADING -- The effective and efficient loading of machines

according to their capabilities to perform defined operations utilizing their maximum capability to

assure attainment of the manufacturing schedule.

EXPLORATORY DEVELOPMENT -- Includes all effort toward the solution of specific military

problems, short of major development projects.

FABRICATION -- The construction of a part from raw material.

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FACILITIES -- Industrial Property (other than material, special tooling, military property, and special test equipment for production, maintenance, research, development, or test) Including real property and rights therein, buildings, structures, Improvements and plant equipment.

FAILURE -- The event in which any part of an item does not perform as required by Its performance specification.

FATIGUE -- A physical and/or mental weariness, real or imaginary, existing In a person, adversely affecting the ability to perform work.

FATIGUE ALLOWANCE -- Time included in the production standard to allow for decreases or losses

In production which might be attributed to fatigue (usually applied as a percentage of the leveled, normal, or adjusted time.)

FINAL ASSEMBLY -- The joining together of the major sections to perform a complete unit.

FIVE-YEAR DEFENSE PROGRAM (FYDP) -- The publication that records, summarizes and displays the decisions that have been approved by the SECDEF as constituting the DOD program.

FIXED COST -- Those costs which remain relatively constant Irrespective of volume.

FLOW DIAGRAM -- The paths of movement of workers and/or materials superimposed on a

graphical representation of a work area.

FLOW PROCESS CHART -- A graphic representation of the sequence of all operations,

transportations, inspections, delays, and storages occurring during a process or procedure.

FLOW TIME -- The time required for a defined amount of work to be completed.

FOLLOW-ON OPERATIONAL TEST AND EVALUATION (FOT&E) -- That T&E which Is necessary during and after the production period to refine the estimates made during the IOT&E, to evaluate

changeq,and to reevaluate the system to ensuire that it continues to meet operational needs and

retains its effectiveness In a new environment or against a new threat.

FOREIGN MILITARY SALES (EMS) -- An FMS agreement is the document by which the U.S.

Govemnment agrees to sell defense articles and services to a foreign government or International

organization.

FULL FUNDING POLICY -- This general policy prescribes that the annual appropriation of funds for

the total estimated costs to be Incurred In the delivery of a jliven quantity of a usable end Item are to

be available In the fiscal year in which the procurement action Is Initiated for that end Item.

FULL-SCALE DEVELOPMENT PHASE -- The period when the~ system/equipment and the principal ihems necessary for its support are designed, fabricated, tested, and evaluated, the Intended output is, as a minimum, a preproduction system which closely approximates the final product, the

documentation necessary to enter the production phase, and the test results which demonstrate that

the production product will myeet stated requirements.

FUNCTIONAL CONFIGURATION AUDIT (FCA) -- The formal examination of functional characteristics

test data for configuration item, prior to acceptance, to verify that the item has achieved the

performance specified In its functional or allocated configuration identification.

FUNCTIONAL CONFIGURATION IDENTIFICATION (FCI) -- The current approved or conditionally approved technical documentation for a configuration item as set forth in specification, drawing and

associated lists and documents referenced therein which prescribes; 1) all the necessary functional

characteristics, 2) the tests required to demonstrate the achievement of specified functional

characteristics, 3) the necessary lnterf ace characteristics with associated configuration Items (Cls),

B-6
4)CI's key functional characteristics and its key lower level Cis,if any, and 5) design component

standardization, use o! inventory items and Integrated logistic support policies.

GANTT CHART -- A graphic representation of a time scale of the current relationship between actual

and planned performance.

GENERAL AND ADMINISTRATIVE (G&A) COSTS -- An overhead cost category for accumulation of

such costs as personnel department, accounting, purchasing, etc.

GOVERNMENT ACQUISITION QUALITY ASSURANCE -- The function by which the government

determines whether a contractor has fulfilled his contract obligations pertaining to quality and quantity.

GOVERNMENT-FURNISHED MATERIAL (GFM) -- Government property which may be Incorporated

into or attached to an end hem to be delivered under a contract or which may be consumed In the

performance of a contract. It includes, but is not limited to; raw and processed material, parts,

components, assemblies, and small tools and supplies.

GOVERNMENT-FURNISHED PROPERTY (GFP) -- Property in the possession of or acquired directly

by the government, and subsequently delivered to or otherwise made available to the prime

contractor.

IDLE TIME -- A time interval during which either the workman, the equipment, or both do not perform

useful work.

IN-PROCESS INVENTORY CONTROL -- The process whereby materials and parts are planned and

controlled to assure their availability at the required stage of production.

INDUSTRIAL FACILITIES -- Industrial property (other than material, special tooling, military property,

and special test equipment) for production, maintenance, research and development, or test, Including

real property and rights therein, buildings, structures, improvements, and plant equipment.

INDUSTRIAL MODERNIZATION INCENTIVES PROGRAM (IMIP) -- A partnership between DOD

agencies and their prime contractors to stimulate Industry capital Investments Implementation of

advanced manufacturing technologies, and productivity.

INDUSTRIAL PLANT EQUIPMENT (IPE) -- That part of planned equipment, exceeding defined

acquisition cost thresholds, used for the purpose of cutting, abrading, grinding, shaping, forming,

joining, testing, measuring, heating, treating, or otherwise altering the physical, electrical or chemical

properties uf materials, components or end Items, entailed in manufacturing, maintenance, supply,

processing, assembly, or research and development operations.

INDUSTRIAL PREPAREDNESS (IP) -- The state of preparedness of industry to simultaneously

produce essential materiel and support the sustained operational requirements of U.S. and approved

Allied Forces.

INDUSTRIAL PREPAREDNESS PROGRAM (IPP) -- A coordinated system of plans, actions, and

measures for the transformation of the Industrial base, both government-owned and civilian-owned,

from Its peacetime activity to the emergency program necessary to support the national military

objectives. It Includes Industrial preparedness measures such as modernization, expansion, and

preservation of Industrial facilities.

;NHERENT R&M VALUE -- Any measure of reliability or maintainability that includes only the effects

of item design and installation, and assumes an ideal operating and support environment.

INTEGRATED LOGISTICS SUPPORT (ILS) -- A composite of all support considerations necessary to

assure the effective and economical support of a system for its life cycle.

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INfITAL OPERATIONAL TESTING AND EVALUATION (IOT&E) -- That T&E performed during a

development program Intended for acquisition.

INSPECTION -- The examination and testing of supplies and services (including, when appropriate,

raw materials, components, and intermediate assemblies) to determilne whether they conform to

specified requirements.

INTERFERENCE TIME -- A period of time during which one or more machines are not operating

because the worker or workers assigned to operate them are busy operating other machines In their

assignment or are performing necessary duties related to operating machines such as making

repairs, cleaning the machines, or Inspecting completed work.

JIG -- A device which holds components In a required position for assembly and guides the

equipment which performs the necessary operations.

JOB -- A group of contiguous operations related by similarity of functions that can be completed by

one or more workers without Interference or delay.

JOB ANALYSIS -- A detailed examination of a job to determine the duties, responsibilities and

specialized requirements necessary for Its performance.

JOB LOT - A relatively small number of a specific type of part or product that Is produced at one

time. The part or product maybe a standard Item that has been and will again be produced, or It

may be a special item destined for a specific customer who has not ordered It before and may not

order It again.

JOB ORDER COST SYSTEM - Direct and overhead cost data are accumulated by each contract or

order.

JOB SHOP -- A manufacturing enterprise devoted to producing special or custom made Pats or

products usually In small quantities for specific customers.

KAIZEN -- A Japanese term for continuous Improvement. When properly applied, companies

experience significant Importance In quality, Increased productivity and ultimately, greater profits,

without the expense associated with Innovation.

LABOR PRODUCTIVITY -- The rate of output of a worker or group of workers per unit of time,

compared to an established standard or expected rate of output.

LABOR STANDARDS -- A compilation of standard time for each element of a given type of work.

Once element standards have been established, the standards are applied to work containing similar

elements without making actual time studies of the work.

LEARNING CURVE -- The learning, or manufacturing Improvement, curve Is a quantitative technique

used to predict resource requirements In a manufacturing operation. The primary application has

been the prediction of the direct manufacturing hours required to produce a known quantity of a

specific product.

LEVELED TIME -- The average time adjusted to account for the difference In operator performance;

such as skill, effort and conditions.

LIFE CYCLE COST (LCC) -- The Life Cycle Cost of a system Is the total cost to the government of

acquisition and ownership of that system over Its full life. It Includes the cost of

development,acquisition, support and, where applicable, disposal.

LIFE UNITS -- A measure of use duration applicable to the Item (such as, operating hours, cycles,

distance, rounds fired, attempts to operate).

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LINE OF BALANCE (LOB) -- A graphic display of scheduled units versus actual units over a given

set of critical schedule control points on a particular day.

LINE PRODUCTION -- A method of plant layout In which the machines and other equipment required, regardless of the operations they perform, are arranged In the order In which they are used

In the process (layout by product).

L INE STOCK -- Parts or components (for example, screws, washers, solder, common resistors, etc.) which are physically Identifiable with the product, but which are of very low value, and therefore, do

not warrant the usual item-by-item costing techniques.

LONG LEAD MATERIAL -- Long lead materials are those material items or components whose lead

times are significantly longer than other material Items/components of the same end Item.

LOT -- Order quantity released for production.

LOT ACCEPTANCE TEST -- This test is based on a sampling procedure to assure that the product retains its quality. A specified number of items from each lot or group are withdrawn, at random,

and tested to establish that the functions, tolerances, and materials have not been degraded. No

acceptance or Installation should be permitted until this test for the lot has been successfully completed.

LOW RATE INITIAL PRODUCTION (LRIP) -- A term describing a low rate of output at the beginning

of production to reduce the government's exposure to large retrofit programs and costs.

M-DAY -- Termn used to designate the day on which mobilization is to begin.

MACHINE CONTROLLED TIME -- That part of a work cycle that Is entirely controlled by a machine

and, therefore, Is not Influenced by the skill or effort of the worker.

MACHINE ELEMENT -- A work cycle s-ubdivislon that Is distinct, describable and measurable, the

time for which Is entirely controlled by a machine, and, therefore, not influenced by the skill or effort

of the worker.

MAINTAINABILITY -- The ability of an item to be retained in or restored to specified condition when

maintenance Is performed by personnel having specified skill leveis, using prescribed procedures and

resources, at each prescribed level of maintenance and repair.

MAJOR ASSEMBLY -- An operation in the construction of a section which joins a number of

subassemblies.

MAKE OR BUY -- Analysis performed "-I a contractor to determine whether an item should be made

"in house" or purchased from an outside supplier.

MANPOWER SCHEDULING AND LOADING -- The effective and efficient utilization and scheduling of

available manpower according to their skills to ý4nsure that required manufacturing operations are

properiy coordinated and executed.

MANTECH (MANUFACTURING TECHNOLOGY) -- Manufacturing Technology refers to any action

which has as Its objective, 1) the timely establishment or Improvement of the manufacturing

processes, techniques, or equipment required to support current and projected programs, and 2) the

assurance of the ability to produce, reduce lead time, ensure economic availability of end items,

reduce costs, Increase efficiency, Improve reliability, or to enhance safety and anti-pollution measures.

MANUAL ELEMENT -- A distinct, describable, and measurable subdivisior of a work cycle or

operation performed by one or more humat, motions that are not controlled by process or machine.

B-9
MANUFACTURING ENGINEERING -- Preproduction planning and operation analysis applied to

specific projects. Other similar functions Include sustaining (on-going) engineering, production engineering, and production planning.

MANUFACTURING MANAGEMENT PRODUCTION/CAPABILITY REVIEW -- A review accomplished by the program office during source selection to determine each competing contractors existing and

planned manufacturing management system and production capability/ capacity to meet all known

production requirements of the proposed system considering all current firm and projected business.

MANUFACTURING OVERHEAD -- A form of indirect costs -- accumulated manufacturing costs

prorated over all products In process, generally as a percent of direct labor and/or material.

MATERIAL -- Property which may be Incorporated into or attached to an end Item to be delivered

under a contract or which may be consumed or expended in the performance of a contract. it

Includes, but is not limited to, raw and processed material, parts, components, assemblies, fuels and

lubricants and small tool and supplies which may be consumed In normal use In the performance of

a contract.

METHODS ENGINEERING -- The technique that subjects each operation of a given piece of work to

close analysis In order to eliminate every unnecessary element or operation and In order to approach the quickest and best method of performing each necessary element or operation. It includes the

Improvement and standardization of methods, equipment, and working conditioi,s; operator training; the determination of standard times; and occasionally devising and administering various incentive

plans.

METHODS STUDY -- Systematic recording of all activities performed In a job or position of work

including standard times for the work performed. Work simplification notes are written during the

study.

METROLOGY -- The science of weights and measures used to determine conformance to technical

requirements Including the development of standards and systems for absolute and relative

measurements.I

MILITARY PROPERTY -- Military property is government-owned property designed for military operations. ft Includes end items and Integral components of military weapons systems, along with

the related peculiar support equipment which Is not readily available as a commercial ihem. It does

not Include government material, special test equipment, special tooling or facilities.

MINIMUM BUY -- The purchase of material In standard bulk quantities even though the contract

requirement Is less than the standard quantity. This Is done when price does not Increase

proportionately for quantities less than the standard quantity.

MISSION AREA ANALYSIS (MAA) -- Continuous analysis of assigned mission responsibilities In the

several mission areas to identify deficiencies In the current and projected capabilities to meet

essential mission rieeds and to Identify opportunities for the enhancement of capability through more

effective systems and less costly methods.

MISSION EQUIPMENT (ME) -- Any item which Is a functiona! part of a system or subsystem and Is

required to perform mission operations.

MOBILIZATION -- The act of preparing for war or other emergencies through assemblying and

organizing national resources; and the process by which the Armed Forces or part of them, are

brought to a state of readiness for war or other national emergency. This includes assembling and

organizing personnel, supplies, and material for active military service.

MULTI-YEAR PROCUREMENT (MYP) -- A procurement of more units of product than can be funded

by the government In a single year. The total purchase Is divided Into annual segments which are

B- 10
larger buys; however, the contractor Is protected from annual cancellations through clauses in the

contract.

NATIONAL EMERGENCY -- A condition declared by the President or Congress by virtue of powers previously vested In them which authorizes certain emergency actions to be undertaken In the

national interest. Actions to be taken may Include partial or total mobilization of national resources.

NONRECURRING -- A descriptive term applied to a type of work, operation, part, or the like that

does not recur frequently or In any reasonable regular sequence (also nonrepetitive).

NORMAL PACE -- The work rate usually used by workers performing under capable supervision but

without the stimulus of an Incentive wage payment plan. This pace can easily be maintained day In

and day out without undue physical or mental fatigue arid Is characterized by the fairly steady

exertion of roasonabie effort.

NUMERICAL CONTROL (NC) -- Tape controlled machine operation which provides high repeatability for multiple process steps.

OPERATION -- The Intentional changing of an object In any of its physical or chemical

characteristics; the assembly or disassembly of parts or objects; the preparation of an object for

another operation, transportation, Inspection or storage; planning, calculating, or the giving or

receiving of information.

OPERATION PROCESS CHART -- Identifies the successive operations,in their required sequence, for producing a prc-duct.

OPERATIONAL R&M VALUE -- Any measure of reliability or maintainability that includes the

combined effects of item design, quality, Installation, environment, operation, maintenance, and repair.

OPERATIONAL TEST AND EVALUATION (OT&E) -- T&E participated in or performed by operational personnel focusing on opeiatioiial effectiveness and suitability.

OTHER PLANT EQUIPMENT (OPE) -- That part of plant equipment, regardless of dollar value, which

Is used In or In conjunction with the manufacture of components or end Items relative to

maintenance, supply, processing, assembly or research and development operations; but excluding Items categorized as industrial plant equipment. OUTPUT STANDARD -- Specifies the number of items or amount of services that should be

produced in a specific amount of time by a specific method.

PERSONAL ALLOWANCE -- Time included In the production standard to permit the worker to attend

the personal necessities such as obtaining drinks of water, making trips to the restroom, and the like.

Usually applied as a percentage of the leveled, normal, or adjusted time.

PERT -- PERT (Program Evaluation and Review Technique) Is a management tool applied to

planning complex and high priority research and development programs.

PHYSICAL CONFIGURATION AUDIT (PCA) -- A technical examination of a designated configuration item to verify that the Item 'as built" conforms to the technical documentation which defines the item.

PILOT PRODUCTION -- The controlled manufacture of limited numbers of an item for service T&E

purposes using manufacturing drawings and stoecIfications which have been developed for quantity production and with tooling that Is representative of that to be used in unlimited production.

PLANNED PRODUCER -- An industrial firm/activity which has indicated Its willingness to produce military items during a surge oi- mobilization under industrial preparedness planning procedures by

consummating a production planning schedule.

B-1Il
PLANNING ITEM -- Any Item/critical component selected for Industrial preparedness planning.

Critical components of any Industrial Preparedness Planning I-st (IPPL) end Item, which are not

separately planned or listed in the IPPL, are considered planning Items when they meet all of the

following criteria: 1)components are produced in the same plant as the end item which Is listed in

the IPPL, 2) a list of these components is included as a part of the approved planning data (DID, DD

1519, Sector Study), and 3) the components have been validated by the designated ASPPO and/or

acquisition activity as critical for end item production capability.

PLANNING, PROGRAMMING, AND BUDGETING SYSTEM (PPBS) -- An Integrated system for the

establishment, maintenance and revision of the FYDP and the DOD budget.

PREAWARD SURVEY -- A review accomplished by the Contract Administrative Office of a

prospective contractor's physical, financial and managerial capability to accomplish the work Included

in a specific contract effort.

PRELIMINARY DESIGN REVIEW (PDR) -- Conducted on each configuration item to evaluate the

progress, technical adequacy and risk resolution of the selected design approach, determine Its

compatibility with performance and engineering specialty requirements of the development

specification and establish the existence and compatibility of the physical and functional Interfaces

among the Item and other items of equipment, facilities, computer programs ano personnel.

PREPRODUCTION MODEL -- An article in final form employing standard parts, representative of

articles to be produced subsequently in a production line.

PREPRODUCTION TEST -- This is a test of design qualified hardware that Is produced using

production tooling and processes which will be used to produce the operational hardware. No

production hardware should be accepted prior to satisfactory completion of this test. Test objectives

Include gaining confidence that production hardware is going - works It will be reliable; it can be

maintained and supported by the user and is not over designed.

PRIORITY RATINGS - DO AND DX -- the two types of priority ratings contained In Defense Priorities

System Regulation that specify rules relating to the status, placement, acceptance and treatment of

priority rated contracts and orders. DO ratings have equal preferential status and take priority over

all unrated orders. DX ratings have equal preferential status and take priority overall DO rated and

unrated orders.

PROCESS -- 1) A planned series of actions of operations which advances a material or product from

one stage of completiot to another, and 2) a planned and controlled treatment that subjects materials

to the influence of one or more types of energy for the time required to bring about the desired

reactions or results.

PROCESS COST SYSTIEM -- Total costs for oroducing a type of unit and the number produced are

determined for regular accounting periods. An average unit based on that data is determined.

PROCESS LAYOUT -- A method of plant layout in which the machines,equipment, and areas for

performing the same or simflar operations are grouped together, i.e., layout by function.

PROCESS SHEET -- A document, originating in manufacturing engineering and sent to the

production floor, which describes and illustrates methods and tools' to be used in fabricating or

assembling specific parts or subassemblies.

PRODUCIBILITY -- The relative ease of producing an item or system which is governed by the

characteristics and features of a design that enable economical fabrication, assembly, Inspection, and

testing using available production technology.

B-12
PRODUCIBILITY ENGINEERING AND PLANNING (PEP) -- The production engineering tasks and

production planning measures undertaken to ensure a timely and economic transition from

development to the production phase of a program.

PRODUCIBILITY REVIEW -- A review of the design of a specific hardware item or system to

determine the relative ease of producing it using available production technology considering the

elements of fabrication, assembly, inspection and test.

PRODUCTION CAPACITY REVIEW -- A review of a contractor's currently available and planned

availability of production resources to determine the resources which could be committed to a

proposed program and the expected facility utilization level.

PRODUCT CONFIGURATION IDENTIFICATION -- The current approved technical documentation

which defines the configuration of a configuration item (Cl) during the production, operation, maintenance and logistic support phases of its life cycle and which prescribes that necessary for: 1) fit and function characteristics of a Cl, 2) the selected functional characteristics seleced for

production acceptance testing, and 3) the production acceptance tests.

PRODUCT MANUFACTURING BREAKDOWN -- The product manufacturing breakdown takes the

product physical description and decomposes It into demands for specific types of manufacturing capability. This establishes the baseline for determination of the types of personnel and

manufacturing facilities which will be required. It can also serve as the basis for establishing the time

requirements for the individual manufacturing operations involved In developing the required schedule

relationships.

PRODUCTION CENTER -- The area containing the machine or mac 'hines operated by a worker or

workers as well as the space required for the storage of matorials at the machine and for loading and unloading it; auxiliary tools, benches jigs, and the like; and the free and safe movement of the

worker while working which, for administrative and accounting purposes, Is considered a unit.

PRODUCTION CONTROL -- The procedure of planning, routing,scheduling, dispatching, and

expediting the flow of materials partts, subassemblies, and assemblies within the plant from the raw

state to the finished product in an orderly and efficient manner.

PRODUCTION ENGINEERING -- The application of design and analysis techniques to produce a

specified product. Included are the functions of planning, specifying, and coordinating the application of required resources; performing analyses of producibility and production operations, processes, and

systems; applying new manufacturing methods, tooling, and equipment; controlling the Introduction of

engineering changes; and employing cost control techniques.

PRODUCTION EQUIPMENT MAINTENANCE -- The task of Inspecting, servicing, and adjusting the

production equipment to achieve minimum Interruption of the manufacturing flow.

PRODUCTION FEASIBILITY -- The likelihood that a system design concept can be produced using existing production technology while simultaneously meeting quality, production rate, and cost

requirements.

PRODUCTION FEASIBILITY REVIEW -- A review of a system design concept to estimate the

likelihood that the concept.can be produced using existing production technology while simultaneously meeting quality, production rate and cost requirements.

PRODUCTION LINE BALANCING -- Balancing a production line means to plan its operation so that

the rate of materials which flow through all the work stations is as nearly uniform as practicable.

PRODUCTION MANAGEMENT -- The effective use of resources to produce on schedule the

required number of end items that meet specified quality, performance, and cost. Production

management includes bu! is not limited to industrial resource analysis, producibility assessment,

B- 13
producibility engineering and planning, production engineering, Industrial preparedness planning, postproduction planning, and productivity enhancements.

PRODUCTION MANAGEMENT TECHNIQUES -- The technique utilized by the contractor to plan for

and determine the progress of the production program.

PRODUCTION PHASE -- The period from production approval until the last system/equipment Is

delivered and accepted. The objective Is to efficiently produce and deliver effective and supportable

systems to the operating units. It Includes the production and deployment of all principal and support equipment.

PRODUCTION PLAN -- The production plan is the vehicle which describes the employment of the

manufacturing resources to produce the required products or systems, on time, and within cost

constraints.

PRODUCTION PLAN REVIEW -- A review conducted to approve or disapprove a contractor prepared

arid submitted production plan.

PRODUCTION PLANNING -- The systematic scheduling of workers, materials, and machines by

using lead times, time standards, delivery dates, work loads, and similar data for the purpose of

producing products efficiently and economically and meeting desired delivery dates.

PRODUCTION PLANNING AND CONTROL -- The planning of operations that accomplishes

coordination of workers, material, and facilities to achieve effective and efficient production goals.

PRODUCTION READINESS -- The state or condition of preparedness of a system program to

proceed Into production. A system Is ready for production when Industrial resource capability

completeness and producibility of the production design and the managerial and physical preparations

necessary for Initiating and sustaining aviable production effort have progressed to the point where a

production commitment can be made without incurring unacceptable risks that thresholds of schedule,

performance, cost, or other established criteria will be breached.

PRODUCTION READINESS REVIEW (PRR) -- 'A formal examination of a program to determine

whether the design is ready for rroduction, production engineering problems have been resolved, and

the producer has accomplished adequate planning for !he production phase.

PRODUCTION SCHEDULES -- Chronological controls used by management to regulate efficiently

and economically the operational sequences of production.

PRODUCTIVITY -- The relationship of the quantity and quality of pfoducts, goods and services

produced to the quantity of resources (personnel, captial, facilities, machine tools and equipment, materials and information) required to produce them.

PRODUCTIVITY ENHANCEMENT -- The use of contract incentives and other techniques to provide

the environment, motivation and management commitment to Increase production efficiencies.

PRODUCTS -- All hems, materiel, material, datp, software, supplies, systems, assemblies,

subassemblies, or portions thereof which are produced, purchased, developed or otherwise used by DOD.

PROGRAM DECISION MEMORANDUM (PDM) -- A document which provides decisions of the

Secretary of Defense on Program Objective Memoranda (POMs) and Joint Force Memoranda.

PROGRAM EXECUTIVE OFFICER -- Officials responsible for administering a defined number of

major anid/or non-major acquisition programs who report to and receive direction from a Service

Acquisition Executive.

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PROGRAM OBJECTIVE MEMORANDUM (POM) -- A memorandum in prescribed format submitted to

the Secrntary of Defense by the Secretary of a Military Department or the Director of a Defense

Agency which recommends the total resource requirements within the parameters of the published

Secretary of Defense fiscal guidance.

PROGRAM MANAGEMENT DIRECTIVE -- The official management directive used to provide

direction to the implementing and participating commands and satisfy documentation requirements. it

will be used during the entire acquisition cycle to state requirements and request studies as well as

Initiate, approve, change, transition, modify or terminate prigrams.

PROGRAM MANAGEMENT PLAN -- The document developed and Issued by the program manager

which shows the Integrated time phased actions and resources requk ed to complete the task

specified In the program management directive.

PROGRAM MEMORANDUM -- An OSD document prepared with similar format, content and

coordinating as the DOP but documents program guidelines and thresholds for those significant

development programs which are not subject to specific DOP action.

PROTOTYPE -- An original or model on which a later Item Is formed or based. Usually built during

Concept DEMNAL and tested prior to the Milestone 11 decision.

QUALIFICATION TEST -- This test simulates defined environmental conditions with a predetermined

safety factor. The results of this test Indicate whethier a given design can perform Its function within

the simulated environment of a system; tests at this time are usually not made on models using

production tooling and processes.

QUALITY -- The composite of material attributes including performance features and characteristics of

a product or service to satisfy a given need.

QUALITY ASSURANCE (QA) -- A plann~*d and systematic pattern of all actions necessary to provide

confidence that adequate technical requirements are established; products and services conform to

established technical requirements; and satisfactory performance Is achieved.

QUALITY AUDIT -- A systematic examination of the acts and decisions with respect to quality In

order to independenily verify or evaluate the operational requirements of the quality program or the

specification or contract requirements for a product or service.

QUALITY OF CONFORMANCE -- The extent to which the product or system conforms to design

criteria or requirements.

QUALITY OF DESIGN -- The adequacy of the product or system design to meet the needs of the

user.

QUALITY PROGRAM -- A program which Is developed, planned, and managed to carry out,

cost-effectively, all efforts to effect the quality of materiel and services from concept through

vaiid~ition, full-scale development, production, deployment, and disposal.

N~&M ACCOUNTING -- That set of mathematical tasks which establish and allocate quantitative R&M

requirements, and predict and measure quantitative R&M achievements.

R&M ENGINEERING -- That set of design, development, and manufacturing tasks by which R&M are

achieved.

RATING FACTOR -- That percentage of skill and effort and method displayed by an operator during

the period of the study with 100% representing normal skill and effort.

B- 15
RDT&E ACTIVITIES -- Consists of all effort funded from the RDT&E appropriation regardless of

program category.

RDT&E PROGRAM CATEGORIES -- Consists of nix divisions that the RDT&E program Is divided

Into, namely; research, exploratory development, advanced development, engineering development,

management and support, and operational system development.

REAL PROPERTY -- Real property is land and rights therein, ground "'nprovements, utility distribution

systems, buildings, and structures. it excludes foundations and other work necessary for the

Installation of special tooling, special test equipment and plant equipment.

RELIABILITY -- The duration or probability of failure free performance under stated conditions.

RELIABILITY, MISSION -- The ability of an Item to perform Its required functions for the duration of a

specified mission profile.

REALIZATION FACTOR -- The ratio of actual performance time to standard performance time,

usually expressed as a decimal number.

RECURRING EFFORT -- An effort repeated regularly during a contract's duration.

RESEARCH -- Scientific study and experimentation directed towards increasing knowledge and

understanding In those fields directly related to explicitly stated long term national security needs.

REWORK -- Any corrections of defective work either before, during or after Inspection.

SCHEDULING -- Prescribing when and where each operation necessary to the manufacture of a

product is to be performed.

SCRAP -- Residual material resulting from machine or assembly processes, such as machine

shavings, unusabie lengths of wire, faulty parts.

SCRAP PREVENTION -- The program developed to assure that minimum scrap Is generated during

the manufacturing process.

SELECTED ACQUISITION REPORT (SAR) -- A document prepared for the SECDEF by a DOD

component which summarizes current estimates of technical, schedule, and cost performance in

comparison with the original plans and current program.

(SERVICE) SYSTEM ACQUISITION REVIEW COUNCIL ((S)SARC) -- A council established by the

Head of a MIlitary Department as an advisory body to and through the Military Department to the

SECDEF on major system acquisitions. The (S)SARC is chaired by the Sezretary/Under Secretary of

the Military Department and is similar In functional composition, responsibilities and operation to the

DAB. In application the term (Service) is replaced by the designation of the applicable Military

Department, i.e., ASARC.

SETUP -- Making ready or preparing for the performance of a Job or operation. Machine setup

Involves equipping a machine with the appropriate accessories, tools, and fixtures, setting the proper

feed, speed, and depth of cut, and so forth. In• manual work, setup Is the arrangement prior to

commencing the work, of the tools, accessories, component parts, arid details Involved. It &lso

Includes the teardown to return the machine or work area to its original or normal cond'tion.

SETUP TIME -- The time required to arrange locating fixtures and equipment in order to begin

productive work; including adjustments and take down of the original setup.

SHRINKAGE -- An additional quantity of material added to the quantity listed on the Bill of Material

to provide for spoilage, scrap, waste and na',qral attrition.

B-16
SOFT'7,IARE FAILURE -- The inability, due to a fault In the software, to perform an Intended logical operation In the presence of the specified/date environment.

SOFTWARE K7MINTA INABILITY -- The probability that the software, can be retained In or restored to

a specified status in a prescribed period compatibie with mission requirements.

SOFTWARE RELIABILITY -- The probability that the required software will perform the Intended

lc~gicai operations for the prescribed mission(s) and period(s) In the specified data/environment,

without failure.

SOURCE SELECTION -- The process wherein the requirements, facts, recommendations and

government policy relevant to an award decision in a competitive procurement of system/project are

examined and the decision made.

SPECIAL TEST EQUIPMENT (STE) -- Single or multipurpose Integrated test units engineered, designed, fabricated, or modified to accomplish special purpose testing in the performance of the

contract. Such testing units comprise electrical, electronic, hydraulic, pneumatic, mechanical, or other

Items Interconnected so as to become a new function entity, causing the Individual Item or Items to

become Interdependent and essential In the performance of special purpose testing In the

development or production of particular supplies or services. The term "Special test equipment" does

not Include: 1) material, 2) special tooling, 3)buildings and nonseverable structures (except foundations and similar improvements necessary for the Installation of special test equipment), and 4) plant equipment Items used for general plant testing purposes.

SERVICE ACQUISITION EXECUTIVE -- The sonlor acquisition executive within each Military Department, designated by the Component Head, responsible for administering acquisition programs In accordance with DOD policies and guidelines.

SPECIAL TIME ALLOWANCE -- A temporary time value applying to an operation In addition to or In

place of a standard allowance In order to compensate for a specified, temporary, nonstandard

production condition.

SPECIAL TOOLING (ST) -- All jigs, dies, fixtures, molds, patterns, taps, gauges, other equipment and

manufacturing aids, and replacements thereof, which are of specialized nature that, without

substantial modification or alteration, their use is limited to the development or production of particular services. The term includes all components of such items, but does not include: 1) consumable

property, 2) special test equipment, and 3) buildings, nonseverable structures (except foundations and

similar Improvements necessary for the Installation of special tooling), general or special mactkne

tools, or similar capital Items.

SPOILAGE -- A form of waste material resulting from misuse of material or errors In workmanship.

STANDARD -- A term applied, in work measurement, to any established or accepted rule, model, or

criterion against which comparisons are made.

STANDARD COST -- The normall expected cost of an operation, process, or product including labor,

material, and overhead charges, computed on the basis of past performance costs, estimates, or

work measurement.

STANDARD TIME -- The time which Is determined to be necessary fora qualified worker, working at

a pace which is ordinarily used under capable supervision and experiencing normal fatigue and

delays, to do a defined amount of work of specified quality when following the prescribed method.

STANDARD TIME DATA -- A compilation of all the elements that are used for performing a given

class of work with standard elemental time values for each element. The data Is used as a basis for

B- 17
determining time standards on work similar to that from which the date was determined without

making actual time studies.

STANDARDIZATION -- The process by which various defense forces achieve the closest practicable

cooperation and the most efficient use of research, development and production resources.

SUBASSEMBLY -- Two or more parts joined together to form a unit which Is only a part of a

complete machine, structure, or other article.

SUPPORT EQUIPMENT -- Includes all equipment required to perform the support function, except that which is an integral part of the mission equipment. Support equipment should be Interpreted as

Including tools, test equipment, automatic test equipment (ATE) (when ATE Is accomplishing a

support function) organizational, field and depot support equipment, and related computer programs and software.

SURGE -- The accelerated production, maintenance, and repair of selected items, and the expansioqi of logistics support services, to meet contingencies short of a declared national emergency utilizing

existing facilities and equipment. Only existing peacetime program priorities will be available to

obtain materials, components, and other Industrial resources necessary to support accelerated

program requirements; however, Increased emphasis may be placed on use of these existing authorities and priorities.

SYNTHETIC TIME STANDARD -- A time standard developed for an operation by utilizing predetermined elemental time data or standard data rather than by making a time study.

SYSTEM AVAILABILITY -- The probability (or proportion of operational time) that the hardware and

software is in the required operable and committable state when the mission is required with a

specified date/environment.

SYSTEM CAPABILITY -- The probability that the hardware and software can achieve the required

mission objectives given the operational conditions, including data environment, during the mission.

SYSTEM DEPENDABILITY -- The probability thait the hardware and software will peniorm successfully

during one or more required sequences of a mission, given the hardware and software status at the

start of the mission (availability).

SYSTEM DESIGN REVIEW (SDR) -- Evaluates the optimization, correlation, completeness and risks

associated with the allocated technical requirements.

SYSTEM EFFECTIVENESS -- The measure of the degree to which the hardware and software

achieve the mission requirements in the operational environment as evidenced in system availability, dependability and capability.

SYSTEM R&M PARAMETER -- A measure of reliability or maintainability In which the units of

measurement are directly related to operational readiness, mission success, maintenance manpower

cost, or logistic support cost.

SYSTEM REQUIREMENT REVIEW (SRR) -- Evaluates the adequacy of the contractor's efforts in

defining system requirements.

TECHNICAL DATA PACKAGE -- Those documents, drawings, reports, manuals, revisions, technical

orders, or other submissions as set forth as a CDRL line item to be delivered as required by the

contract.

TECHNOLOGY MODERNIZATION -- The coupling of modernization with the implementation of

advanced manufacturing technology by providing incentives for contractor (and subcontractor) capitalization.

B- 18
TESTING -- An element of inspection. Generally denotes the determination by technical means of

the properties or elements of supplies, or components thereof, including functional operation, and

Involves the application of established scientific principles and procedures.

TIME PHASED ACTION PLAN -- The time phased action plan represents the schedule for the

employment of the manufacturing facilities, processes, and personnel necessary to meet the end Item

delivery date.

TIME STUDY -- The procedure by which the actual elapsed time for performing an operation or

subdivisions or elements thereof is determined by the use of a suitable timing device and recorded.

The procedure usually but not always includes the adjustment of the actual time as the result of

performance rating to derive the time which should be required to perform the task by a worker at a

standard pace and following a standard method under standard conditions.

TOLERANCE -- A measure of the accuracy of the dimensions of a part or the electrical

characteristics of an assombiy or function.

TOOL STUDY -An instrument that makes or assists in the production of fabricated parts, other tools

and assemblies.

TOUCH LABOR -- Defined as production labor which can be reasonably and consistently related

directly to a unit of work being manufactured, processed, or tested. It Involves work affecting the

composition, condition, or production of a product; It may also be referred to as hands on labor or

factory labor. It Includes such functions as machining, welding, fabricating, painting, assembling, and

functional testing of production articles.

UNAVOIDABLE DEL1AY -- A production delay that the operator cannot prevent.

UNAVOIDABLE DELAY ALLOWANCE -- Time Included In the production standard to allow for time

lost which is essentially outside the worker's control; as, interruption by supervision for Instruction,

waits for crane, or minor adjustments to machines or tools (usually applied as a percentage of the

leveled, normal, or adjusted time).

VARIABLE EXPENSE -- Expenditures that vary In proportion to the volume of production, such that

an Increase/decrease In production causes an Increase/decrease In the variable cost.

VARIANCE -- The difference between any standard or expected value and an actual value. For

example, the difference between the established standard cost and the cost actually Incurred In

performing a job or operation.

WEAPON SYSTEM -- Technically complex items such as aircraft, missiles, ships and tanks Including

not only the major Item of equipment Itself, but the subsystems, logistical support, softwvare,

constniction and training needed to operate and support It. Sometimes used Interchangeably with

"defense system".

WORK AID -- A device such as a pattern, template, or sketch used to enhance workers aWlhy to

learn and perform a task efficiently.

WORK CYCLE -- A pattern of motions and/or processes that Is repeated with negligible variation

each time an operation Is performed.

WORK SAMPLING STUDY -- A statistical sampling technique employed to determine the proportion of delays or other classifications of activity present In the total work cycle.

B- 19
APPENDIX C

INDEX

A

Acceptable Quality Level, 5-3

Acker, David, 8-12

Acquisition Decision Memorandum, 3-21

Acquisition Method Code (AMC), 3-20

Acquisition Process: defense systems, 3-4

Acquisition Strategy, 4-1

Acquisition Streamlining, 5-26

Advance Buy Regulations, 6-18

Air Force Logistics Command (AFLC), 1-3

Air Force Systems Command (AFSC), 1-3

Albus, James 8-16

Authorized Controlled Material (ACM) Orders, 2-18

Army Material Command, 1-2

Automation factory, 14-2

Award Fee, 1-6

B

Baselines,

types considered In configuration management, 13-5

Batten, Frank, 2-9

Bearings industry, 2-3

Best Practices, 4-6

Bodek, Norman, 2-8

Business Structure, 6-1

C

Capacity (of production):

decisions, 2-5, 3-19

definition, 6-3

Capital Investment, 2-8

Cell, Factory, 14-2

Changes engineering,

software, 12-6

traffic profile, 12-4

Claimant agency, 2-17

Competition

design, 4-6

production, 4-2, 4-5

Component Breakout, 3-17, 4-8

Computer Aided (or Computerized)

engineering, 8-17

material planning and purchasing, 8-18

process planning, 8-18

C-1
Computer Aided Acquisition and Logistics Support (CALS)

data transfer, 14-14

objectives, 14-11

organIzation, 14-12

Computer Aided Design, 8-17

Computer Aided Design/Computer Aided Manufacturing (CAD/CAM), 8-18

benefits, 8-19

process, 8-19

requirements for, 8-21

Computer Aided Manufacturing, 8-17

subsets, 8-17

Computer Integrated Manufacturing, 8-17, 8-21

Computer Numerical Control (CNC), 8-11

Concept DemonstrationNalidation, 3-8

Concept Exploration/Definition, 3-6

Concurrent Engineering, 5-24, 14-9

Configuration:

audits,

Functional configuration audit, 13-8

Physical configuration audit, 13-8

baselines, 13-5

control, 13-8

defined, 13-5

Identification, 13-7

allocated configuration Identification (ACI), 13-7

functional configuration Identification (FCI), 13-7

item (CI), 13-5

management: definition, 13-5

policies and objectives, 13-7

status accounting, 13-9

Contract Administration Offices (CAOs), 3-21, 5-17, 12-8

Contract Data Requirements Ust (CDRL), 10-7

Contract Manufacturing Plan,

manufacturing organization, 6-20

purpose, 6-20

resources and manufacturing capability, 6-20

Contracting Support, 3-21

Corntractor-Furnished Equipment (CFE), 4-5

Contractor Purchasing System Review (CPSR), 10-6

Critical materials, 2-16

Communication links in automation, 14-3

Component Breakout, 4-8

Contract requirements, 4-5

concept demonstration/validation phase, 3-8

full scale development phase, 3-12

production phase, 3-15

Contract types, 10-1

Control Charts, 5-8

Controlled Material: 2-18

allotments, 2-18

set-asidos, 2-18

Cost account, 13-13

Cost Accounting, 9-3

standards, 9-4

systems, 9-4

uniformity, 9-4

C-2
Cost Control,

monitoring, 13-9

Cost Estimating, 9-5

considerations, 9-5

cost models, 9-7

definition, 9-5

industrial engineered standards, 9-7

methodologies, 9-6

parametric, 9-6

rates, factors, and catalog prices, 9-7

relationship (CER), 9-6

specialist estimates, 9-6

specific analogies, 9-6

system requirements, 9-5

trend analysis, 9-7

Cost of Quality, 5-3

Cost Performance Report (CPR), 13-5, 13-14

Cost Risk, 10-3

Cost/Schedule Control System Criteria (C/SCSC), 13-11

criteria requirements, 13-12

DOD requirements, 13-12

implementation, 13-13

verification compliance, 13-13

Cost Schedule Status Report (CSSR). 13-5

Cost Variance, 13-13

Could Cost, 1-6

Critical:

design review (CDR) (see Reviews)

item list (CIL), 2-12, 2-13

hems/weapon systems list (CINCs List), 2-12

materials and components, 2-9, 3-8

D

"*D to P" Concept, 2-12

Data Item Description (DID), 10-8

Data Items, manufacturing, 10-8

progress reporting, 10-9

Decision Coordinating Paper, 3-5

Defect Prevention, 5-16, 11-8

Defense Acquisition Executive (DAE), 1-2

Defense Acquisition Board, 1-2

Defense Advanced Research Projects Agency, 2-2

Defense Contract Audit Agency, 6-26

Defense Management Board, 1-4

Defense Materials System (DMS),

description, 2-16

priority rating, 2-18

requirements, set asides and allotments, 2-18

Defense Priorities System (DPS),

description, 2-16

priority rating, 2-17

rated order/contract (DO and DX), 2-17

requests for special assistance, 2-18

C-3
Defense Production Act (DPA), 2-16

Defense Science Board (DSB), 11-1 Defense Technical Information Center (DTIC), 8-8

Demand Capacity Analysis, 6-3

Deming, W. Edwards, Fourteen Points, 5-2

Design:

change Introduction, 11-9

competition, 4-6

discipline, 4-7

maturity, 11-8

producibility objectives In, 7-7

release of production design, 3-14, 11-14

Design of Experiments, 5-8

Design Reviews, 12-2

Design to Cost,

definition, 9-17

in Industry, 9-17

In the Department of Defense, 9-17 Development to Production Transition, 11-1

challenges, 11-6

gaps, 11-11

Impact on program management, 11-14

organizational Issues, 11-13

templates, 11-3

Direct Cost,

classification of, 9-1

definition, 9-1

Importance of, 9-2

recurring and nonrecurring costs, 9-2

special test equipment costs, 9-3

tooling costs, 9-3

Direct process control, 8-12 Domestic and Intemational Business Administration (DIBA), 2-17

E

Earned Value, 13-13

Economical Production Rates (EPR), 6-22

Efficiency Factors, 9-8

Engineering Change:

activity (management), 12-4

orders, 12-4

traffic profiles, 12-4

Engineering Release of the Production Design, 11-14 Engineering support, 8-13

Enterprise Networking Event '88 International, 14-7

Environmental control, 8-13

Estimating Relationships (ERs),

cost-to-cost, 9-6

cost-to-noncost, 9-6

Expert systems, 14-3

Extended Product Design, 3-3

C4
F

Fadlitizatlon Guidelines, 8-12

Facility Arrangement, 8-5

symptoms of poor facility layout, 8-5

Fadlity Modernization, 8-11

Computer aided testing, 8-13

factors In, 8-11

productivity Improvement, 8-9

Facility Planning, 6-19

Factory Automation, 14-2

Factory Loading, 6-11

Factory networks, 14-6

Factory technology, 14-2

Feasibility, Production, 6-1

assessment, 6-2

Federal Emergency Management Agency, General Services Administration (FEMA/GSA), 2-17

Fisher, Dr. R.A., 5-10

Fixed Cost, 9-2

Flexible manufacturing system, 8-19, 14-3

Functional Configuration Audit (see Configuration)

a

Goometric Data Base (GDB), 8-21

Government-Furnished Property, 3-17, 4-5, 6-1

Government Open System Interconnection Profile (OOSIP), 14-7

Government Procurement Quality Assurance (GPQA), 5-18

Graduated Mobilization Response, 2-15

Guzzi, MaJ James F., 5-22

H

House Subcommittee on Economic Stabilization, 2-3

Human element In manufacturing, 14-6

Incentives, 10-1

Indirect Cost,

classification, 9-1

definition, 9-1

Indusrial Base, 2-1, 3-8

background, 2-1

contractors/subcontractors/suppllers, 2-5

DOD policy on the Defense, 2-4, 2-11

objectives to Improve the, 2-11

planning process, 2-13

C-5
Industrial Engineering Standards (IES), 9-7

Industrial Mobilization, Office of, (0IM), 2-19

Industrial Modernization Incentives Program (IMIP), 4-11, 5-25, 8-8

in manufacturing strategy, 4-3

Incentives, 8-9

inhibiting factors, 8-8

phases, 8-9

program baseline, 8-9

Industrial Preparedness Measure-, (IPMs), 2-15

Industrial Preparedness Planning (IPP):

definition, 2-12

list of references on, 2-11

measures, 2-12, 2-15, 3-17

program manager's role, 2-15

Industrial Preparedness Planning Ust (IPPL), 2-12

Industrial Preparedness Planning Schedule, 2-12

Initial Graphics Exchange Standard (IGES), 14-9, 14-15

Initial Production Facilities, 3-16, 11-10

Intergrated Weapon System Data Base (IWSDB), 14-12

Inventory Control, 6-14

Investment Decisions, 2-5

Investment Policy Study Group (IPSG), 2-6

Iskikawa (Dr. Kaoru) Diagram, 5-7

J

Just In time (JIT), 6-14

L

Labor Standard, 9-8

Lead 11me,

analysis, 6-18

background and definition, 2-4

capacity syndrome, 2-4

determinaits of, 6-15

requirements (long lead time), 6-18

Leader/Follower Contracting, 4-6

approaches, 4-6

objectives, 4-6

Learning, Loss of, 9-14

Learning Curves,

application to standard time, 9-15

concept, 9-9

characteristics of environment, 9-9

components, 9-9, 9-11

cumulative average curve, 9-12

production breaks, 9-14

S-curve, 9-14

slope, 9-12

selection of, 9-12

unit curve, 9-12

C-6
Life of type buy, 3-21

Umited Production, 3-11, 11-12

Une of Balance (LOB), 13-16

comparison of program progress to objective, 13-19

the objective chart, 13-16

the production plan, 13-16

the progress chart, 13-18

Long Lead Items, 3-11, 11-11

Loss function (Taguchi). 5-10

Loss of Learning, (see Learning)

Lot Tolerance Percent Defective, 5-3

Low Rate Initial Production, 3-11, 11-12

Lucas, Del, 14-9

M

Machine tool industry, 2-3

Machine vision, 14-3

Machining cost, 8-4

Maintainability, 5-18

Make or Buy, 6-20, 10-4

factors, 10-3

program, 10-5

Manufacturing:

activities,

concept exploration/definition phase, 3-6

contracting support, 3-20

concept demonstration/validation phase, 3-8

fuNl-scale development phase, 3-12

production and deployment phase, 3-15

breaks, 9-14

capacity, 2-5

cost estimating, 3-7, 3-11, 3-14

background, 4-1

nature of manufacturing costs, 9-1

methods, 9-5

data items, 10-9

description language (MDL), 14-8

engineer, 14-4

feasibility assessment, 3-6, 3-10

human element In, 14-6

management:

definition, 1-1, 6-2

documents, 1-7

DOD organizational structure, 1-2

objectives of DOD, 1-1

overview of DOD, 1-4

phases, 1-1

program manager responsibllties, 1-5

system evaluation, 13-1

message specification (MMS), 14-8

operations, 13-1

operation sheets, 8-2

organization, 6-20

plan, 3-9, 3-13, 6-4, 6-20, 11-3

C-7
planning, 6-22, 8-1

data, 6-21

problem areas, 13-2

processes,

CAD/CAM, 8-18

CNC, 8-11

Introduction of now, 8-12

proofing, 3-12, 4-5

yield rates, 12-5

(production) defined, 1-1

rate/cost relationship, 9-15

reference documents, 1-7

resource planning (MRP-lI), 6-23

resources, 3-14, 6-2, 6-20

risk assessment, 3-7, 3-8, 6-3

identification, 6-4

schedules, 6-6

and factory loading, 6-11

first unit flow chart, 6-7

hierarchy, 6-11

master, 6-7

master phasing, 6-7

strategy, 3-7, 4-1

constraints, 4-2

decisions, 4-4

definition, 4-1

elements, 4-1

surveys and reviews (see Surveys and reviews)

technology needs, 3-7, 3-9

technology program (MANTECH), 8-5

funding criteria, 8-6

in manufacturing strategy, 4-3

objective of, 8-5

Manufacturing Automation Protocol (MAP), 14-7

Manufacturing Technology Advisory Group (MTAG), 8-6, 8-8

Manufacturing Technology Information Analysis Center (MTIAC), 8-8

Master Schedule, 6-7

Master-Phasing Chart, 6-7

Material Review Board (MRB), 5-3, 13-9

Material Requirements Planning (MRP), 6-23, 6-26

McPherson, Rene, 14-6

Measures of contractor effectiveness, 13-9

Meyer, Herbert E., 2-9

MIL-STD-881 Work Breakdown Structures for Defense Material Items, 13-13

MIL-STD-1528 (USAF) Production Management, 10-1

MIL-STD-1567 Work Measurement, 13-10

Ministry of International Trade and Industry, 2-3

Mobilization:

capability, 2-6

planning, 2-12

Multlyear Contracting, 4-9

N

Naisbit, John, 14-6

C-8
Navy System Commands (SYSCOMS), 1-2

New Process Introduction,

guidelines for, 8-12

Noise factors (In process quality), 5-11

Nonrecurring cost, 9-2

North American Defense Industrial Base Organization (NADIBO), 2-4

0

Office of Industrial Mobilization, 2-18

Office of Secretary of Defense (OSD), 1-2

Open system Interconnection architecture, 14-7

Operation (Route) Sheets, 8-3

Optics Industry, 2-2

Out of production systems, 3-20

P

Packard Commisslor, 1-2

Pareto Analysis, 5-7

Performance evaluation, 13-3

purposes, 13-4

Personnel Planning, 6-19

Physical Configuration Audit, (see Configuration)

Plan, Do, Check, Act, 5-6

Planned Value, 13-13

Planning, Programming, and Budgeting System (PPBS), 1-6

Post production support, 3-18

Postscript page description language (PDL), 14-8

Preaward Survoy, 3-23, 12-2

Preliminary Design Review (PDR), (see Reviews)

Preplanned Product Improvement (P31), 3-23

Process monitoring, 8-12

Process Planning and Selection,

definition, 8-1

design requirements, 8-1

finish requirements, 8-3

material requirements, 8-1

shape and form, 8-3

Process Sheet, 8-3

Produclbility, 7, 11-6

analysis, 3-9, 3-13, 7-10

checklists,

coating materials and methods, 7-15

drawings, 7-12

environmental requirements, 7-15

fabrication processes, 7 14

general aspects of design, 7-11

heat treating and cleaning, 7-15

Inspection and test, 7-13

Joining methods, 7-14

materials, 7-13

safety, 7-15

C-9
specifications and standards, 7-11

considerations, 7-2

contract implementation, 7-3

contractor o;ganization for, 7-10

definition, 7-1

design approaches, 7-2, 7-4

program manager responsibilities, 7-1

program plan, 3-10, 7-10

relation to engineering activities, 7-2

Producibility Engineering and Planning (PEP), 3-13, 7-6 thru 7-10, 11-10

application in the acquisition process, 7-8

focus, 7-6

integrate Initial production facilities with, 11-10

integrate long lead Items, 11-11

in manufacturing strategy, 4-6

measures, 7-7

objectives of, 7-6

responsibility for, 7-8

Producibility program plan, 7-1

Product Data Exchange Standard (PGES), 14-9, 14-15

Product Definition Data Interface (PDDI), 14-8

Product Development Process,

candidate concepts, 3-1, 3-2

budgets and schedules, 3-1

need/opportunity, 3-1

system design, 3-3

Product Engineering Services Office, DOD, (DPESO), 11-14, 12-7

Product Improvement, 3-4, 3-16, 3-24

Production Base Analysis, 2-13

Production competition, 3-10, 4-2, 4-5

Production Cost Analysis, 1 1-8

Production Feasibility, 3-6, 3-10

Production Innovations, 8-12

Production Plan, (see Manufacturing Plan)

Production Planning, 11-8

Production rate, 9-15

in manufacturing strategy, 4-5

Production Readiness Review (PRR), 3-12, 3-14, 11-10, 12-3

contracting requirements, 12-7

Defense Contract Administration Services (DCAS), 12-8

indicators of production readiness, 12-3

survey issues, 12-8

Production risk, (see Manufacturing Risk)

Production Scheduling, (see Manufacturing Schedules)

Production surveillance, 3-16

Productivity,

definition, 2-7

factors that influence, 2-7

Productivity Measurement, 2-7

Program Management Office (PMO), personnel selection, 1-6

Program Manager (PM), contractor and government relationship, 1-5

Program Executive Officer, 1-2

Program Transition, 3-18

Progress Information, Manufacturing,

contract reports, 13-4

cost/schedule control systems criteria (C/SCSC), 13-14

evaluation, 13-3

C-10
Prototype, Fabrication of, 3-3

production, 3-4

a

Quality: characteristics, 5-15

Contract Administration Office role, 5-17

contract provisions for, 5-16

definition, 5-1

DOD Posture on 5-5

feedback, 5-17

objectives, 5-14

source selection, 5-24

Quality Assurance, 5-16

planning, 4-3

Quality of Conformance, 5-16,

Quality of Design, 5-14

Quality Function Deployment, 5-11 thru 15-14

R

R&D/Productlon Gaps, 11-11

Rated Contracts, (see Defense Priorities System (DPS))

Realization Factors, 9-8

Recurring cost, 9-2

Reliablity,

activities during the design phase, 5-18

growth, 5-20

In manufacturing, 5-21

of design, 5-18

testing, 5-19

Reliability and Maintainability 15-18

objectives, 5-19

Reliability and Maintainability Quality Team Concept, 5-21 ttru 5-24

Reviews (see Survey):

critical design review (CDR), 12-3

design evaluation, 12-2

Issues, 12-8

preliminary design review (PDR), 12-3

system design review, (SDR), 12-3

system requirements review (SRR), 12-3

Risk: assessment, 6-3

In production readiness reviews (PRsF,), 12-3

manufacturing, 6-3

schedule attainability, 6-18

Rework, 5-3

Robot:

definition and background, 8-13

Impediments to application, 8-16

Robot Institute of America (RIA), 8-13

C-11I
Robotics,

future, 14-15

Industrial applications, 8-14

Industrial growth, 8-13

Integration, 8-15

relationship with the work force, 8-13

"smart", 14-17

typical tasks, 8-14

S

Schedule Integration, 6-11

Schedule variance, 13-13

Second Sourcing, 3-17, 4-6

Secretary of Defense (SECDEF), 1-2, 1-5

Semivarlable Cost, 9-2

Senate Subcommittee of Defense Industry and Technology, 2-2

Service Acquisition Executive, 1-2

Should Cost Review, 9-18

Software, Changes, 12-6

Source selection, 5-25, 10-1

Spares Parts:

planning for, 3-16, 3-20, 6-21

procurement, 10-10

Special Assistance Request, 2-18

Standard Cost, 9-8

Standards,

development of, 9-7

time, 9-8

variations, 9-8

Start-Up Costs, 9-2

Statistical Process Control, 5-6

Steingraber, Fred G., 2-7

Strategic and Critical Material Stockpiling Act, 2-9

Stockpile, 2-9

Subcontract Management, 10-5

consent, 10-6

contractor purchasing system review (CPSR), 10-6

Subsequent Application Review (SAR), 13-14

Supplier base, 2-5

Surface finish, 8-4

Surge Capabilities, 2-12

Survey, Manufacturing,

contractor compliance, 12-2

management system, 12-2

objectives, 12-1

procedures for accomplishing, 12-2

Survey and reviews:

differences in procedures for accomplishing, 12-2

manufacturing (background), 12-1

objectives, 12-1

types of, 12-2

System Design Review (SDR), (see Reviews) System Requirements Review (SRR), (see Reviews) Systems Commands (SYSCOMs), 1-2

C-12
T

Tactile sensing, 14-3

Taguchi (Genichl) Method, 5-8 thru 5-11

Technical and office protocol (TOP), 14-7

Technical data, 10-9

Technical Data Package (TDP), 10-9

Technology Modernization (TECH MOD), 8-6

Technology trends, 8-5

Templates, 11-3

Tooling/Test equipment, 9-3

In manufacturing strategy, 4-5

Total Quality Management,

Integration, 5-23

Overview, 5-1

Principles, 5-4

Program Manager requirements 5-14

Tools, 5-4 thru 5-14

Transition from Development to Production

Challenges, 11-6

Impact in program management, 11-14

Organizational Issues, 11-13

Overview, 11-6 thru 11-10

Transition templates, 11-3

relationship to PRR, 11-7

timelines, 11-5

V

Value Engineering (VE), 3-17, 5-26, 7-16, 10-4

acquisition savings, 7-18

collateral savings, 7-18

elements of, 7-17

In the contractual environment, 7-17

Incentive clause, 7-17

policy, 7-16

program requirement clause, 7-17

Variable Cost, 9-2

Variability Reduction Program, 5-3

Variation reduction, 5-10

Vergoz, J., 5-11

Vice Chairman, Joint Chiefs of Staff, 1-2

W

Warranties, 5-25, 10-4

Wheeler, William A., 6-15

Wolfe, Tom, 2-9

Work Breakdown Structure (WBS), 3-14, 13-13

Work force quality, 2-7

C-13
Work Measurement,

benefits, 13-11

DOD policy, 13-10

elements, 13-11

engineered labor standards, 13-10

objectives, 13-10

trade-off analysis, 13-10

Work package, 13-13

Work Station:

definition, 8-5

layout, 8-5

Y

Yield rates for processes, 12-5

C-14
SECURITY CLSIFATMION OF THIS TA

Form Approved

REPORT DOCUMENTATION PAGE OMB No. 0704-0188

la. REPORT SECURITY CLASSIFICATION lb. RESTRICTIVE MARKINGS

Unclassified

2a. SECURITY CLASSIFICATION AUTHORITY 3. DISTRIBUTION /AVAILABILITY OF REPORT

, DApproved for public release.

2b. DECLASSIFICATION / DOWNGRADING SCHEDULE DDistribution unlimited.

4. PERFORMING ORGANIZATION REPORT NUMBER(S) S. MONITORING ORGANIZATION REPORT NUMBER(S)

6a. NAME OF PERFORMING ORGANIZATION 6b. OFFICE SYMBOL 7a. NAME OF MONITORING ORGANIZATION

(if applicable)

Modern Technologies Corp. MTC Defense Systems Management College

6c. ADDRESS (City, State, and ZIP Code) 7b. ADDRESS (City, State, and ZIP Code)

Dayton, Ohio 45432-3035 Fort Belvoir, Virginia 22060-5426

8a. NAME OF FUNDING/SPONSORING 8b. OFFICE SYMBOL 9. PROCUREMENT INSTRUMENT IDENTIFICATION NUMBER ORGANIZATION (if applicable)

Defense Systems Mgt College DSMC NDA903-88-C-0105

8c. ADDRESS (City, State, and ZIP Code) 10. SOURCE OF FUNDING NUMBERS

PROGRAM I PROJECT TASK WORK UNIT

Fort Belvoir, Virginia 22060-5426 ELEMENT NO. NO. NO. ACCESSION NO.

11. TITLE (Include Security Classification)

Defense Manufacturing Management Guide

12. PERSONAL AUTHOR(S)

Thomas M McCann (MTC David.D. Acker DDSMC S

13a. TYPE OF REPORT 13b. TIME COVERED 14. DATE OF REPORT (Year, Month, Oay) 15. PAGE COUNT

FROM _ TO Anril 1989 -144

16. SUPPLEMENTARY NOTATION

17. COSATI CODES 18. SUBJECT TERMS (Continue on reverse if necessary and identify by block number)

FIELD GROUP SUB-GROUP Manufacturing Management; Industrial Base-, Product

Development; Manufacturing Strategy; Total Quality -

I QnacPmtnt Mnrif grt-i-j-n P1.nning _ (rnn, mir .'

19. ABSTRACT (Continue on reverse if necessary and Identify by block number)

This guide was designed to provide the user with an understanding of, and a basic working

familiarity with, the newest and most effective manufacturing management methods used in

d~fense systems acquisition programs today. It is intended that the guide be particularly

useful in preparing for and executing the production phase of a defense system program.

The guide includes a discussion of DOD policies, directives, methodologies, and practines -

along With a list of acronyms and a glossary of terms - applicable to the management of the

manufacturing efforts of defense contractors.

20. DISTRIBUTION /AVAILABILITY OF ABSTRACr - 21. ABSTRACT SECURITY CLASSIFICATION

M UNCLASSIFIED/UNLIMITED 0 SAME AS RPT. 0L DTIC USERS Unclassified

22a. NAME OF RESPONSIBLE INDIVIDUAL 22b. TELEPHONE (Include Area Code) 22c. OFFICE SYMBOL

David D. Acker (703) 664-3385 DSMC-DRI-R

DD Form 1473, JUN 86 Previou; editions are obsolete. SECURITY CLASSIFICATION OF THIS PAGE
Block 18 -.continued

Manufacturi~ng Scheduling .

Quality Assurance,

Producibility

Manufacturing Engineering,

Manufacturing Technology

Cost Estimating :

Contracting Issues'

Manufacturing Controls,

Program Management

Manufacturing Automationi

Robot ics'

Computer Aided Manufacturing,

Configuration Control ,

Computer Integrated ManufacturingCritical Path Method

Defense Manufacturing Board

Economic Order Quantity

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