Navy Harnesses Untapped Depot Potential with AFIT CCPM Course – LOG 238 By: Karl Kuwik

Approximately three years ago the Air Force Institute of Technology, School of Systems and Logistics (AFIT/LS), teamed up with Command Fleet Readiness Center (COMFRC) to improve aircraft flow through the Navy’s aircraft depots. These depots are called Fleet Readiness Centers (FRCs) and report to the Commander of COMFRC.

COMFRC is the Navy's shore-based off-aircraft and depot level aviation maintenance providers.

The FRCs had experienced significant delays in aircraft flow transitioning through the depot repair process. Navy leadership was concerned because aircraft repair schedules were not being met. The approach being used was not effective and they needed a high quality solution quickly. The Navy’s choice to solve this growing crisis was an application of the Theory of Constraints called Critical Chain Project Management (CCPM). They used CCPM, Lean and Six Sigma in harmony with each other to improve aircraft depot repair cycle times. In order to improve flow, each aircraft must be managed as a project. The CCPM approach is a relatively new project management methodology. In order to achieve sustained outstanding results specific actions must be taken that are counterintuitive to most people’s expectation and therefore, must be taught to those individuals using the process. This is where AFIT’s LOG 238 course provided tremendous help. Below is a comment made by a depot leader after the CCPM course had been taught to students at Lemoore Naval Air Station, CA.

Having both leadership support and a course taught to the masses proved to be a very powerful force for positive change for the entire command.

According to CAPT Steve Leehe, Commanding Officer of FLEET READINESS CENTER WEST,

"LOG 238 works! With an optimal WIP of 10, our challenge is sometimes keeping schedule and inductions up with the flow. In FY16 we completed 18 F/A-18 Super Hornets. We implemented CCPM in Jan 2017 and now this year we expect to complete 36 aircraft with the same amount of crew, facilities and tooling. CCPM has been a real difference maker for us." - May 2018

Capt Leehe’s organization is providing quality aircraft back to the warfighters faster than ever.

FY17 COMFRC Global Improvements:

80% improvement in F-18 aircraft throughput 40% improvement in V-22 aircraft throughput In FY17 the Navy’s COMFRC began implementing CCPM across all aircraft depot repair lines and has achieved impressive results. That year ended with 100 fewer aircraft possessed by their depots each of which were delivered back to the flightlines This was greater than a 40% increase in performance (equates to over eight squadrons with “Ready Basic Aircraft”).

BACKGROUND – Prior to AFIT’s Involvement

While a handful of leaders at COMFRC understood and supported the CCPM approach, their dilemma was how to get this knowledge out to the masses: supervisors, planners, schedulers and people doing the work. Simply telling people to start using CCPM would not be an effective approach. The right people must have a good understanding of CCPM and be able to apply that methodology correctly. They lacked education in the CCPM process. This is where AFIT came into the picture. AFIT/LSM had developed a CCPM course that instructors had been teaching at Air Force depots for several years.” The course matured very nicely with inputs from every Air Force depot (and then Navy/Marine air depots).

The key to success is keeping the weak link loaded with the appropriate amount of work.

The COMFRC commander sent an email to all members of the Navy’s aircraft maintenance community espousing CCPM as the approach the Navy planned to use to improve aircraft depot flow.

"Those of us who help produce Naval Aviation readiness are working hard to reduce the number of F/A-18s in out-of-reporting status. Initiatives like Critical Chain Project Management enable us to focus efforts on accelerating aircraft deliveries back to the flightlines."

Rear Adm. Paul Sohl Commander Fleet Readiness Centers (COMFRC) June 2015

When AFIT’s CCPM course director saw this email from the Navy exchange officer and fellow CCPM instructor, a light bulb went off. Could the Navy use AFIT to help teach CCPM knowledge to FRC personnel? Naval officials were presented with the idea and then evaluated the course (LOG 238 – Critical Chain Project Management Foundational Concepts) by having two offerings taught to senior FRC leadership. Afterwards, they asked AFIT to teach this course to the Navy’s FRC bases. After two years of teaching the course to the FRCs, over 700 students have graduated. These students were taught the foundational concepts of CCPM. Understanding these concepts was a critical success factor to improving aircraft flow through the FRCs.

One of the worst performing Navy FRCs became one of the best in only a few months. Having both leadership support and a course taught to the masses proved to be a very powerful force for positive change for the entire command. When one of the best performing FRCs implemented CCPM, it too became even better. CCPM helps all “project” oriented organizations become better by finding the organization’s hidden capacity and using it to achieve more of the system goal.

Theory of Constraints (TOC) / CCPM background-history

Dr. Eliyahu Goldratt, the originator of TOC, developed CCPM. He taught that every system has a goal and every system will be limited by a small number of constraints. The key to increasing productivity is to understand the system and know where the system constraints are located.

An organization will always have at least one constraint. Unfortunately, some assume they have removed all of their organization’s constraints with successful Lean events. They fail to understand that as soon as one constraint is eliminated, it is replaced by another constraint. If an organization removed all of its constraints, then this organization would have unlimited capacity.

Although designed to be applicable to the manufacturing environment, Dr. Goldratt found that TOC logic and processes could, with some modifications, be extended into the area of project management. This led to the development of CCPM. Just as in the manufacturing sector, the CCPM approach has proven to be highly successful in many different types of business sectors doing project management. These commercial organizations regularly report schedule success rates of 90% or better—far in excess of that achieved by other methods.

Why is CCPM so successful? In two words, “systems thinking.” CCPM practitioners view a system as a chain; it is only as strong as the weakest link. The key to success is keeping the weak link loaded with the appropriate amount of work. The weak link must not be over or under tasked otherwise the whole process/system will suffer. It seems like we have to learn this lesson over and over again the hard way.

The more variation there is in a process, the less output (aka throughput) that process will deliver.

Mabin and Balderstone in their meta-analysis of seventy-eight published case studies on CCPM, found that implementing CCPM resulted in:

a. Mean reduction in lead-times by 69%

b. Mean reduction in cycle-times by 66%

c. Mean reduction in inventory levels by 50%

d. Improved due date performance by 60%

e. Increased revenue by 68%

Inhibitors to Flow

So what are the inhibitors to the flow of products and/or services organizations experience? Many professionals claim most organizations throughout the world waste between 25% and 50% of their capacity! Why? What are the reasons? Below are just some reasons causing organizations to lose some of their capacity:

1. Not knowing the location of the system constraint. The system constraint is the factor that keeps an organization from achieving more of the system goal. An organization will improve simply by eliminating system constraints when possible, and then managing them. Some will simply ignore the system constraint because they do not understand it is the control mechanism for throughput. Others may misidentify the constraint. Many process improvement experts recommend using Work-In-Process (WIP) as a tool to locate the system constraint. This may be true most of the time, but it certainly is not true all of the time. The WIP levels in a process will change frequently especially in a balanced line. Just because the highest WIP level changes from one station to another does not mean the system constraint has changed. Identifying the system constraint is the first step in improving flow. If the constraint is misidentified, then our process improvement events being used to increase flow will be useless because improvements will be accomplished on non-bottlenecks rather than the system constraint. The result is no return-on-investment while making the situation worse in some cases. How many Lean events to improve “process flow” have been accomplished on non-bottlenecks in your organization?

2. The system constraint is idle. Every minute the system constraint is sitting idle is equivalent to a minute of lost productivity for the entire system. If you do not know where your system constraints are, then these constraints have a high probability of sitting idle when there are opportunities for them to be productive. A well thought out schedule minimizes down-time at system constraints which translates into much more productivity for the organization.

Lean and Six Sigma are very powerful and necessary process improvement tools to increase flow. But are they sufficient by themselves? Do they identify system constraint(s)? Do they encourage decision makers to focus on and leverage the constraint each day? Do they encourage buffers to help mitigate variation like TOC and CCPM? TOC and CCPM certainly added more value for the Navy’s air depots that have great Lean and Six Sigma programs. CCPM is a powerful tool to help improve project flow and improve readiness.

3. Too much WIP. One of the keys to successful project management is having the appropriate amount of WIP. This is where Little’s Law can help you understand your process. The formula for Little’s Law is: WIP = Throughput x Cycle Time. Stated another way, WIP = Exit Rate x Flow Days. Basically it tells us the higher the level of WIP there is in a process, then the longer the cycle time or flow days will be for projects going through a stable system. Simply reducing WIP to the correct level will translate into shorter project cycle times. Historically, our intuition for dealing with project schedule slips is to induct another project into the system on the scheduled induction day without considering the consequences the system faces without the capacity for extra workload. If the system does not have capacity for this new project, then project cycle times will become longer and longer as we exponentially increase work to an overloaded system. This approach puts stress on the entire system. Some of our maintenance technicians have coined a new term, “Visual Progress.” This occurs when an aircraft (a project) is scheduled to move from one cell to another cell on a specific date. On this date the aircraft is moved to the next cell, even when it is not ready to move because not all of the required work will have been accomplished. This action of moving the aircraft to the next cell compounds the schedule problem by adding more stress to the system (much more activity) without improving the schedule. In reality, this approach actually makes the problem worse; a late project will now be even later. This approach is repeated over and over again throughout the year simply because “Visual Progress” looks good on a chart presented during production meetings. This is a clever way to temporarily hide a problem when we should be looking for ways to overcome lost schedule time. Hiding a project schedule problem does not help reduce the late scheduling.. Too much WIP is not limited to aircraft. For example, when the Air Force depot component scheduling system, EXPRESS, is forced to induct too much WIP, then Little’s Law is applicable here too. Too much WIP in a commodities shop will result in late deliveries back to the aircraft and will thus increase risk of longer aircraft repair cycle times.

4. Schedule Conflicts. Projects frequently experience at least two types of conflicts embedded within a schedule: resource conflicts and sequence conflicts. We should never schedule “known” conflicts! When this happens, at some point the constraint will become overloaded with work. When the overloaded worker asks which project or task is the number one priority, many times he or she is told, “They are all priority!” There is an old saying that seems to be true, “if everything is a priority, then nothing is a priority.” When a system has reached maximum capacity and is further forced to accept more work, system deadlines will continue to shift back. There is a strong correlation between too much work being placed on a process and the amount of stress the workers, supervisors, customers, suppliers etc., experience. With increased stress levels, mistakes usually follow, which will make a late project even later. This is the situation we find ourselves in far too often.

5. Metrics. Metrics drive behavior and must be used to align the goal of an organization with the activities of the organization. It is extremely helpful if a metric is a leading indicator and also drives the correct behavior. A very successful leading indicator used by TOC and CCPM is Buffer Status. As the buffer enters the red, yellow or green zone, it will signal the action required by the system. First and second line supervisors need to monitor progress daily at the tactical level and take the necessary actions while in the yellow and green zones every day to keep the project on schedule. Management gets involved when the red zone is breeched. The Fever Chart’s buffer status will help answer the question, “How do you know if you had a good day?” Buffer management will help you put the right workers on the right jobs.

Bad metrics drive bad behavior! An example would be the “efficiency” metric where a resource that is not the system constraint is expected to produce the maximum amount of work possible. Doing so creates too much WIP and as mentioned earlier, results in longer repair cycle times. This is not what the system needs. The “efficiency” metric has been used in all DoD depots. High efficiency rates on the system constraint are good, but not on non-bottlenecks. While “efficiencies” are important, they should not be used to degrade our system “effectiveness.”

6. Deadline management. This is when project managers simply focus on the project’s due date when they should focus on the project’s status. In other words, they focus on the aircraft with the next due date while ignoring other projects that are slipping and are in trouble now. This type of project manager would put extra resources on the “wrong” project! Thus the aircraft that is in trouble due to a schedule slip will be ignored during a critical period and the outcome will be a late delivery. When significant recovery actions are finally taken, they are usually taken too late to make a significant improvement in the schedule.

A very similar approach was being used by a highly respected, proud and successful maintenance manager. He stated he was not going to use CCPM because he had a better approach. He considered aircraft in the depot as “chickens in a pot.” He was going to put the majority of his workforce on the aircraft that had been in the depot process the longest duration. Once this aircraft left the depot, focus would be shifted to the next one in line.. While this approach seemed to work for him in the short term, several months later, all aircraft under his control were being delivered late. His depot repair cycle time, the metric of greatest concern to his customer, was moving in the wrong direction…a metric he was not even monitoring.

Buffer management would have been a much better approach for him; it has a very successful track record when the CCPM methodology is followed correctly.

7. Parkinson’s Law. This law contends that work time expands and consumes extra time given for task completion. It is rare for completed tasks to be turned in early when extra time is still available for task completion. Adding more and more time for task completion does not result in shorter or more predictable schedules. Amazingly, new employees are informally taught to “bank” work. This simply means, “Do not turn completed work in early.” This type of action slows down progress and makes us less competitive!

8. Cheerleader approach. Some project managers do not provide the needed leadership, structure or environment to be successful. They simply make their way around the different work centers encouraging everybody to work hard and meet the target for the year. These organizations usually end up with too much WIP and missed deliveries. WIP must be maintained at the correct level when possible.

The problems mentioned will actually induce more and more variation into the process which will create more and more confusion. The more variation there is in a process, the less output (aka throughput) that process will deliver. This is even more pronounced when variation occurs at the system constraint. One must understand variation and how to mitigate and/or manage it, especially variation at the system constraint.

"Variation is the enemy. It’s the enemy to quality. It’s the enemy to improvement. It’s the enemy to management. There is perhaps no more misunderstood concept in business today than the concept of variation. This misunderstanding is the root cause of knee-jerk reactions, over control, micromanagement, and tampering with results."

Harry Rever Director of Lean Six Sigma International Institute for Learning Dallas/Fort Worth Area

Frequently TOC applications like CCPM are ignored simply because decision makers think Lean and Six Sigma are sufficient by themselves. This is a huge mistake because there is a synergistic effect when all three work together. Without all three, the gains are marginalized. The American Production and Inventory Control Society May 2006 magazine reported a case study accomplished over a period of 2.5 years, where a corporation had twenty-one plants using Lean or Six Sigma or a combination of TOC, Lean and Six Sigma (TLS). The four Lean plants had a 4% cost reduction in 2.5 years. The eleven Six Sigma plants had a 7% cost reduction in 2.5 years. The six TLS plants had an 89% cost reduction in 2.5 years. If the complete financial picture was looked at (increased profits and reduced costs), the TLS approach would be even better. Gaining more productivity on the system constraint(s) significantly increases system productivity by improving flow. This allows the process to achieve more of the system goal! The best results occur when TOC, Lean and Six Sigma (TLS) are all working together to improve flow.

The best results occur when TOC, Lean and Six Sigma (TLS) are all working together to improve flow.

Generating Flow

CCPM provides tools for dealing with such problems. Two of these are the concepts of “Buffers” and “Buffer Management.” Some people incorrectly assume that buffers make project schedules longer. Schedules are a key communication tool and should represent reality. An unrealistic schedule is not a useful tool for anyone. CCPM uses aggressive but possible task durations and then identifies and adds appropriate time and resource buffers at key leverage points in the project schedule to ensure the system constraint is fully utilized, but not overloaded. Buffers are there to help mitigate and manage harmful variation in the project as it occurs—not after the fact. If a project does not have buffers and buffer management, the unintended consequence is lost productivity when variation occurs at the system constraint. This is different from previous approaches that relied on “safety time” at the end of each task. Safety time at the end of each task approach has not been very successful and virtually guarantees excessive project duration and inefficient use of resources due to Parkinson’s Law. When understood, the critical chain and buffer management provides the right structure to prioritize work and achieve more of the system goal with same amount of resources. This structure enables managers to specifically target their actions to maximize the organization’s ability to deliver projects on time. Schedule slips must be addressed as soon as possible, not hidden until the “eleventh” hour. Many want to “hide” problems when the best approach is to identify challenges and then rally the team to help resolve them.

These are only a few of the challenges faced by project managers every day in every country in the world. Sometimes the best approaches are counter-intuitive. Using systems thinking, we stand a much better chance at being successful. As stated earlier in this article, having both 1.) leadership supporting CCPM; and 2.) a CCPM course taught to the masses proved to be a very powerful force for positive change at the Navy’s COMFRC. One FRC leader commented on the Air Force course being taught at a Navy base. He said, “These instructors have never been to our base, but they opened several closet doors that contained skeletons. We thought we were doing the correct thing, but they pointed out many things we were doing that was killing productivity.” If these were the same types of problems other depots and project management organizations had experienced, then our FRC should at least give CCPM a chance to succeed. They did give CCPM a chance and the FRC doubled their output in only a year. They are still flying high over eighteen months later.

Organizations that correctly follow the CCPM approach all see improved process flow and achieve more of the system goal. These organizations are disciplined and know how to use the right tool at the right time. Even with a successful track record, there are people who still dislike this approach. When visiting one depot repair facility, the following statement was made, “I know CCPM says not to do this ______, but we do it anyway.” Additionally, many LOG 238 students have made the following statement, “My supervisor will not let me do this (CCPM).” Another student said his supervisor thinks buffers are, “BS.” Based on comments from numerous students over several years, it seems many (leaders, supervisors, planners, schedulers) are confused about the necessary and sufficient actions that must be taken to optimize flow through a process. Most constraints are not physical; they are either beliefs and/or policies (management constraint). The result of these types of constraints is an entrenched system of making decisions that achieves less of the system goal. Sadly, in this type of system “bad” results are rewarded while “good” results are punished.

Log Truth #6 – “All good Logistics work is done in process.” Good work is accomplished in a process, however, we simply cannot force large amounts of work into an overloaded process and expect more output. Every system’s output will be the same as the output of its constraint.

Organizations that correctly follow the CCPM approach all see improved process flow and achieve more of the system goal.

It has been said that, “Speed is King.” If you are struggling to deliver projects, products or services on time, within budget and with high quality, then consider taking a deep look at TOC Applications (CCPM, Drum Buffer Rope, etc.). Including them with your Lean and Six Sigma programs just might provide you with the breakthrough solution you are looking for. TOC can and has provided the framework for achieving more of the system goal, simply by identifying key leverage areas to focus on. Focusing on these areas daily, will help improve flow for the project, product, or service your organization is providing. COMFRC has made significant gains in their depot process by doing this.

About the Author: Karl Kuwik is the Course Director at AFIT/LSM (karl.kuwik@afit.edu).

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Photo 1-Navy photo by Mass Communication Specialist 3rd Class Grant G. Grady Photo 2-U.S. Marine Corps photo by Cpl. N.W. Huertas Photo 3-U.S. Navy photo by Mass Communication Specialist 1st Class Andrew Brame Photo 4-U.S. Navy photo by Mass Communication Specialist 1st Class Frank L. Andrews/Released Photo 5-U.S. Navy photo by Mass Communication Specialist 3rd Class Grant G. Grady

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