Lockheed: Lean Cuts Costs

Lockheed Martin Commercial Space Systems has years of experience in lean-manufacturing processes on the factory floor. Now it's creating an IT infrastructure that will support them. For CIO Fred Musco, that means doing away with a mixture of best-of-breed systems and centralizing all operations on SAP. The goal: data integration.

"All the data is segregated from system to system and also segregated among the users," Musco says. "Will each of the systems perform their particular specific function? Of course. But will they share that data quickly and accurately with others? No."

Without real-time collaboration and data sharing among the company's applications, the commercial and government satellites maker would have to rely on batch processes. "If you run [the manufacturing-resource-planning program] once a week, you'll only get signals to buy materials once a week," Musco says.

Consolidating its manufacturing and other enterprise systems onto the SAP platform lets Lockheed Martin run the information systems in real time, mirroring its faster, more-efficient, real-time assembly lines, Musco says.

Systems consolidation also has simplified job functions. "When we had legacy systems, we had a parts planner and a totally different person called a parts buyer. One worked in the execution system and one in the procurement system," Musco says. "When you consolidate the two systems, you can consolidate the job." As a result, since embarking on lean manufacturing, the company has reduced labor head count by 25%.

Lockheed Martin started its lean-manufacturing initiative in 1997, when it built a manufacturing plant in Newtown, Pa. The plant was built with lean in mind, so materials would move through a U-shaped line starting with receiving, through inspection, manufacturing, assembly, final inspection, and out the door. Lockheed Martin isn't stopping there: It's working to receive materials directly on the factory floor to cut out some steps in the manufacturing process.

At the time, legacy systems were used to support the processes. In May 1999, however, Lockheed Martin began using its SAP manufacturing software throughout the plant and product-life-cycle- and development-management software from UGS PLM Solutions.

Ultimately, Lockheed Martin wants all its enterprise apps consolidated onto a single SAP platform. "Today we use SAP as our manufacturing execution tool and our financial tool. It is clear to me that SAP is looking to provide a [product-life-cycle-management] tool," Musco says. "Over a period of years, I want to pull all of this into one tool. The absolute underlying aspect is data integration."

Lockheed Martin will continue to expand lean-manufacturing processes and the SAP apps at plants in Colorado and California, and it's helping suppliers implement lean manufacturing. "If you're going to be a supplier, you're going to be lean, too," Musco says. "We want to get rid of waste."

Illustration by Dave Plunkert

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