Applying LSS And Process Reengineering To Achieve Consolidation And Organizational Restructuring

Rick Hefner of Northrop Grumman gave the last full presentation of the conference before the brainstorming and wrapup. At this point in the schedule, a lot of the material that he was going to cover has already been said, leaving him free to ignore most of his slides and give more of an anecdotal talk about their journey with Six Sigma. He was originally part of TRW before their acquisition by Northrop Grumman, and acquisitions have continued to occur regularly; this meant that multiple implementations and cultures of LSS within the acquired organizations collided head on, and that constant restructuring necessitated a more consistent view of how LSS is to be applied across the organization.

Organizational restructuring, because it involves significant changes to goals, practices and operations, is a perfect opportunity for LSS and process improvement: although the initial goal of the restructuring is usually cost cutting, the long term goal is providing the greatest customer value for the least cost. LSS provides with a number of tools that can be used during restructuring, for everything from determining overall strategy to measurement and control to employee needs. The problem, however, is that everyone is caught up in the reorganization itself (or ensuring that they still have a job), and it’s difficult to get people’s attention for process improvement at the same time. LSS and process improvement teams can feel threatened by the lack of focus on their contributions, as well as not necessarily know where they’ll end up within the restructured organization.

They created a number of tools that could be used in the business areas for process improvement: value stream maps, process maps and flowcharts (similar ideas, different perspectives and level of detail, although it’s not clear where the distinctions lie). Some of this required defining “value” – which is really something that only the customer can define, and is usually something for which they are willing to pay – especially in their world of cost-plus contracts where they are not really financially incented to make processes more efficient. The cost-plus contract model is slowly being phased out in the defense industry, being replaced by fixed-price contracts; this will drive them to look for more process improvements in the future.

His summary:

  • Current economic problems have caused many companies to focus on consolidation and organizational restructuring.
  • Proper use of LSS tools (and LSS professionals) can help a company balance tactical cost-cutting with long-term strategic change programs.

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