© 2021 Auburn University
© 2021 Auburn University
Aerospace Machine Shop’s Move Towards Digital
This company is a small aerospace and defense contract manufacturer with the capability to Senior leadership is heavily engaged in the customer programs and operations, working closely with less than 100 employees to make decisions about new or improved technologies and processes.
CHALLENGES
While faced with many challenges common to most manufacturers, following are some of the higher priority issues that impact the company’s drive toward developing digital capabilities.
Customer’s secure Proprietary Information protection restricts the ability and willingness to automate and digitalize business processes. With a large portion of the company’s value being derived from security of IP, Bluetooth and wireless capabilities are removed from all equipment. Technical Data Packages (TDP) is also kept on a server that is separated from the server that contains business process information.
Compliance with NIST 800-171 (companies currently self-assess) guidelines are not prescriptive, and the company is not sure if it is doing enough or too much on the Information Technology (IT) for government contracts.
When making the transition from corporate-owned to employee-owned, no business systems were transferred to the ESOP. Former systems were patched together to run the business, but were time-consuming for data entry, required manual intervention, and had one-directional data flow. Accounting was run from several spreadsheets, each on individual computers based on the employee’s personal knowledge and was not tied to job processing data. It was the general consensus that revenue reporting was not very accurate until the end if the project.
The company functions primarily as a subcontractor to the Original Equipment Manufacturers (OEMs) and limited contracts with the government directly. Current Manufacturing Resource Planning (MRP) system had an extension for Enterprise Resource Planning (ERP), but the system was not approved to handle government contracts. Metrics required for government contracts were also not tracked by the company or the company’s systems.
The quoting process was generating large amounts of quotes and winning only 7% of quotes produced. The quoting department was three employees, each with an individual method of producing quotes. Some quotes were below the break-even cost for the company.
Contract extensions were incurred regularly, and the shop floor was constantly running on overtime. Contracting, quoting, engineering, and programming was drawing out the time to complete a job with an average over two weeks from Purchase Order (PO) to job release to the shop floor. The company had an unacceptable on-time delivery (OTD) rate for the year 2018.
Jobs were quoted and contracted for parts that possessed manufacturability issues. (the company was not given ample time to quote project). Customer engineers were designing parts without consideration to manufacturability, and the company did not have a Material Review Board (MRB) authority to change parts.
Tooling costs are a large expenditure for the shop floor. Machinist had a habit of storing tools in their toolbox for future jobs.
Employees were trained in a narrow field of experience and the aging workforce is leaving the company open to skill gap vulnerability.
MOTIVATION
The company saw the trends of advanced manufacturing, market competitiveness, and government requirements for OEMs. The company foresaw impending closure if it did not update its practices quickly. The action had to take place to improve overall operations and become more profitable. The company changed CEO leadership in 2016, and the new CEO started to update and improve on the limited finances that the company had available, which led to the in-house development of major systems.
The company has been using CNC and CAD systems for a long time, but the drive for digital manufacturing has been mainly customer-driven. Cybersecurity and the emphasis on IP protection started with the 2014 cybersecurity requirements and the 2015 NIST Special Publication.
RESULTS
This manufacturer has been focusing on implementing digital capabilities incrementally for the past 3 years. Management foresaw pending closure if systems were not updated to compete with other small-to-medium aerospace manufacturers. Some of the results realized by the manufacturer include the following.
Improved confidence in revenue reportingImproved confidence in revenue reporting by standardizing their program management processes.
Increased Quote Win RateWin rate of quotes improved from 7% to 30%.
Reduced OverheadReduced overhead in quoting department by 1/3 by moving one quoting employee back to the shop floor.
Decreased lead timesImproved time from PO to job release from over two weeks to one week.
Increased ManufacturabilityReduced the number of un-manufacturable parts by screening companies and specific designers in the bidding process.
Saved $ on ToolingOver $100,000 already saved on tooling, and the number is still growing while the company is able to prevent purchasing tools that are already on hand.
SOLUTIONS
The company began its digital transformation in 2016 and is working to standardize, digitize, and digitalize with the little capital budget, which has led to in-house development of systems and increased employee responsibility for improvement.
The company’s viewpoint is standardization has to be driven into the system before improvements can be made. If the process is not standardized and improved before digitization and digitalization, it will only move bad information around more efficiently. The company set out to first understand what each part of the business was doing by value stream mapping each department’s work and data flows.
The company established a minimum bid to cut down on non-profitable jobs and focus on projects with higher profitability.
The company developed an in-house process to standardize the consolidation of information, thus initiating the removal of information silos throughout the company.
The company developed an in-house ERP system to standardize processes and make it accessible to everyone in the company. The company started with having a required kick-off meeting for every job that would have a quoting employee, project manager, shop scheduler, and other required personnel in a single meeting to determine responsibilities, exceptions, and actions needed to be taken on each job and documented. This allowed standardization of the job release procedure and helped drop the average by more than half the time.
To address many of the workforce challenges, the company is developing a career path development for all employees and already cross-training newer employees to other roles. For example, machinist training in Numerical Control (NC) programming.
The next big digital capability the company is pursuing is an automated tool crib where tools are retrieved instead of tools being located at each machine. The company is also updating its existing MRP system.