Achieve the Mission Decrease Inventory Decrease Cycle Time

Achieve the Mission Decrease Inventory Decrease Cycle Time Improve Reliability Decrease Operating Expenses Naval Aviation Enterprise AIRSpeed: Transforming the End-to-End Value Stream presented to 15 th Annual Conference on Quality in Space & Defense • Dale L. Moore • NAVAIR AIRSpeed • Deputy Corporate Deployment Champion • 27 March, 2007

Do. N Lean Six Sigma (LSS) Journey Cultural Institutionalization Do. D Senior Leadership Directs Use of LSS ASN RD&A Directs Use of LSS 2006 2005 Navy and USMC Industrial Base Shows Output From LSS 2004 2003 2002 TQL/TQM ISO 9000 2001 Transactional Projects Yield Output 2000 1999 1990 NAVAL AVIATION ENTERPRISE Striving for: 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 2 LEAN Events on Three AIRCRAFT CARRIERS DEPOTS and SHIPYARDS COMMENCE LEAN NAVSEA Task Force Lean NAVAIR HQ AIRSPEED “LSS - Business as Usual”

Do. N Total Obligation Authority (TOA) FY 07 Do. N Budget CVN-21 DDX LCS JSF MMA V-22 ACS LPD-17 EFV LHA(R) HLR FY 06 TOA $125. 6 B Procurement 26% RDT&E 13% $127. 3 B 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 3 O&M 31% M&P 30% 65% is people

Continuous Process Improvement Ingrained At The Senior Level of Navy Leadership • “…faced with executing two great tasks simultaneously…fighting today’s war and positioning our Force for an uncertain future… • We face additional fiscal pressures that lead us to better stewardship of taxpayer dollars…where greater efficiency leads to improved effectiveness. . • …I found that both buyers and sellers who employed Lean Six Sigma (LSS) experienced greater efficiencies, increased morale and higher levels of performance… • LSS is a proven business process…several elements of the Navy/Marine Corps Team have engaged… 4: 1 return on investment… • The mission is clear: create more readiness and assets within our budget through LSS…I expect you, my Leadership Team, will personally support this initiative…injecting it into our performance objectives… • …establish the next steps toward more fully employing LSS in our organization. “ Donald C. Winter 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 4

SECNAV’s Guidance for Senior Executive’s Performance Align Leadership Expectations With Workforce Accountabilities SECNAV Values Leaders Who… • Excel At Business / Process Improvement • Deliver Solutions At Best Cost • Are Change Agents • Lead Based On Insightful Metrics • Use LSS To Improve • Cascade / Measure SECNAV Guidance Penetration Throughout Organizations

The Dilemma AVERAGE 20 -year-old Aircraft Are Costly To Maintain… Maintenance Man-hours Per Flight Hour 20 Increasing… 15 …And We Can’t Afford To Buy The Number Of New Aircraft We Need 10 5 98 00 02 04 06 08 10 12 14 FISCAL YEAR The Problem: We Need To Buy An Average Of 200 New Aircraft Each Year To Maintain Our Average Aircraft Age. 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 6

Key Organizational Concepts Three Major Concepts Converging: • Naval Aviation Enterprise (NAE) Construct • Competency Aligned/Integrated Product Team Concept of Operations • NAE AIRSpeed Deployment of Lean Six Sigma and Theory of Constraints Continuous Process Improvement (CPI) 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 7

NAE BOD LOGOS 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 8

Enterprise Principles • Start With the Outcome (Readiness / Cost), Improve Your Processes (AIRSpeed), Implement Residual Organization • Utilize A Set Of Consistent, Integrated, And Hierarchical Metrics • Ensure Full And Consistent Transparency Of Data And Information Throughout • Establish And Maintain Process Discipline Throughout • Establish And Maintain Accountability For Actions And Results Throughout • Apply An Integrated Governance Structure A Deliberate, Disciplined Process To Achieve Aviation Units Ready For Tasking At Reduced Cost. . . Today And In The Future 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 9

NAE Mission • “Facilitate business process transformation and foster a culture of productivity and continuous improvement enterprise-wide. Develop and advocate high potential, crossfunctional enterprise initiatives and ensure enhanced performance and organizational efficiencies are not lost in the ‘white space’. Ensure savings are harvested and returned to the corporation for reallocation against other corporate Navy priorities. ” 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 10

THE NAE ORGANIZATION NAE BOARD OF DIRECTORS (BOD) VADM ZORTMAN, CNAF (CEO) * VADM VENLET, NAVAIR (COO) * LTGEN CASTELLAW, USMC AVN RADM STARLING, CNAL * RDML SHANNON (TFR) * RADM STONE, NAVSUP RADM BOZIN, N 82 MS. HARRELL, CFFC N 4/7 RADM KILCLINE, N 88 (CFO) * RADM MOFFITT, NSAWC MR. BALDERSON, DASNAIR RDML LEMMONS, RES / N 43 * MR. KUNESH, DASNLOG RDML QUINN, CNATRA RDML MCCARTHY, OPTEVFOR VADM MORAN, NETC VADM HARVEY, NPC VADM SULLIVAN, NAVSEA VADM MCARTHUR, NETWARCOM VADM CONWAY, CNI VADM MCCARTHY, N 4 RDML BACHMANN, SPAWAR * NAE CORE LEADERSHIP NAVRIIP CFT RADM STARLING CARRIER READINESS TEAM CAPT DONEGAN ACQUISITION & LIFE CYCLE SUPPORT RADM VENLET 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 11 READINESS, STANDARDS & POLICY CAPT PLATAMONE MAINT & SUPPLY CHAIN MGT RADM ROESNER / RDML WILLIAMS TOTAL FORCE READINESS CFT RDML SHANNON TOTAL FORCE READINESS STANDARDS & POLICY RDML SHANNON TOTAL FORCE TRAINING DEVELOPMENT & DISTRIBUTION RDML QUINN / SES HOLCOMB TOTAL FORCE SHAPING RDML LEMMONS / CAPT BARAN COST MGMT CFT RADM KILCLINE (CFO) SES NEWTON PLANNING CAPT PORTER METRICS MR. COCHRAN EXECUTION CAPT MCALOON UPDATED: 1 MAR 06

ORGANIZATIONAL STRUCTURE ASN (RD&A) COMSPAWAR CNO ASSISTANT SECRETARY OF THE NAVY SPACE & NAVAL WARFARE SYSTEMS COMMAND CHIEF OF NAVAL OPERATIONS (RESEARCH, DEVELOPMENT, AND ACQUISITION) COMNAVSUP NAVAL SUPPLY SYSTEMS COMMAND PROGRAM EXECUTIVE OFFICES OPERATING AGREEMENT COMMANDER AIR-00 PEO (T) VICE COMMANDER NAVAL RESERVE AIR-09 AIR-00 A NAVAIR HEADQUARTERS AIR ASW, ASSAULT & SPECIAL MISSION PROGRAMS ** ** AIR-1. 0 PEO (W) AIR-2. 0 AIR-4. 0 PROGRAM MANAGEMENT STRIKE WEAPONS & UNMANNED AVIATION CONTRACTS RESEARCH & ENGINEERING TEST & EVALUATION ACQUISITION EXEC ASST. COMMANDER AIRCRAFT DIVISION (NAWCAD) JOINT STRIKE FIGHTER ECHELON IV SLIDE PARTIALLY UPDATED 13 JUN 06 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 12 ** PATUXENT RIVER COMMANDER ** DUAL HATTED ECHELON III AIR-5. 0 AIR-7. 0 AIR-6. 0 LOGISTICS & INDUSTRIAL OPERATIONS CORPORATE OPERATIONS ASST. COMMANDER PEO (JSF) ECHELON II STAFF COMPTROLLER AIR-10. 0 LEGAL AIR-11. 0 SAFETY DIRECTOR AIR-09 F IG AIR-00 G JAG AIR-00 J CMC AIR-00 W CIO AIR-7. 0 CTO AIR-4. 0 X SMALL BUSINESS AIR-09 D DEPUTY COMMANDER AIR-09 R DEP ASST CDR / DIRECTOR PEO (A) NAVICP NAVAL INVENTORY CONTROL POINT PATUXENT RIVER NAVAL AVIATION ENTERPRISE TOTAL FORCE READINESS TACTICAL AIRCRAFT PROGRAMS ADDU NAVAL AIR SYSTEMS COMMAND HEADQUARTERS WEAPONS DIVISION (NAWCWD) ** CHINA LAKE COMMANDER NAVAL TEST WING ATLANTIC NAVAL TEST WING PACIFIC PATUXENT RIVER COMMANDER PT MUGU COMMANDER TRAINING SYSTEMS ORLANDO COMMANDING OFFICER NAVAL AIR WARFARE CENTERS AVIATION DEPOT COMMANDER ASST. COMMANDER NAVAL AIR DEPOT (NAVAIRDEPOT) NAVAL AIR PACIFIC REPAIR ACTIVITY (NAVAIRPRA) NAVAL AIR DEPOT (NAVAIRDEPOT) NAVAL AIR MEDITERRANEAN REPAIR ACTIVITY (NAVAIRMRA) NORTH ISLAND COMMANDING OFFICER JACKSONVILLE COMMANDING OFFICER NAVAL AIR DEPOT (NAVAIRDEPOT) CHERRY POINT COMMANDING OFFICER ATSUGI, JAPAN COMMANDING OFFICER NAPLES, ITALY COMMANDING OFFICER NAVAL AIR TECHNICAL DATA & ENG SERVICE COMMAND (NATEC) NORTH ISLAND COMMANDING OFFICER NAVAL AIR DEPOTS & LOGISTICS SUPPORT ACTIVITIES

INTEGRATED CONCEPT OF OPERATIONS FOR LIFE CYCLE SYSTEMS MANAGEMENT COMPETENCY ALIGNED ORGANIZATION INTEGRATED PROGRAM TEAMS (TEAM STRUCTURE TO PERFORM WORK) • MULTI-DISCIPLINED • FLEET / PRODUCT FOCUSED • FULL LIFE CYCLE SYSTEM SUPPORT (FORMAL STRUCTURE) LAKEHURST AIRCRAFT CHINA LAKE PATUXENT RIVER WEAPONS NAVAIR HQ, PEOs, AIRCRAFT PT MUGU WEAPONS NORTH ISLAND CHERRY POINT NAVAIRDEPOT, NATEC DEMAND JACKSONVILLE NAVAIRPRA - ATSUGI, JAPAN NAVAIR TOTAL WORKFORCE ORLANDO NAVAIRMRA - NAPLES, ITALY 30 SEP 04 • COMPETENCIES SPAN ALL SITES • LINKED BY COMMON ORGANIZATION & PROCESSES • CAPABILITY / ASSET VISIBILITY NAVAIRDEPOT SUPPLY TRAINING 35, 437 COMPETENCY ALIGNED WORKFORCE MIL 2, 484 CIV 24, 178 CSS 8, 775 TOTAL WITH PEOS PRODUCTS & SERVICES FLEET 36, 839 PROGRAM EXECUTIVE OFFICERS PROGRAM MGMT CONTRACTS RESEARCH & ENGINEERING TEST & EVALUATION LOGISTICS & INDUSTRIAL CORP OPS / COMPT / COUNSEL ANALYSIS CUSTOMER / PRODUCT FOCUSED DEPLOYMENT PEO(T) PEO(A) PEO(W) PEO(JSF) NAWC • AIRCRAFT DIVISION • WEAPONS DIVISION INTEGRATED PROGRAM TEAMS DEPOTS EXTERNAL CUSTOMERS 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 13 ENTERPRISE EFFORTS

OUR PRODUCTS. . . SEA BASED AIRCRAFT AND SYSTEMS MARITIME WEAPONS MARINE EXPEDITIONARY AVIATION SYSTEMS AIR ASW / ASUW OUR CORE PROCESSES. . . WE EXECUTE (ON BEHALF OF THE USER) ACQUISITION MANAGEMENT AIRCREW / MAINTENANCE TRAINING SYSTEMS TEST AND EVALUATION REPAIR / MODIFICATION IN-SERVICE ENGR & LOGISTICS SUPPORT PERFORM ACQUISITION MANAGEMENT FOR THE DEVELOPMENT, PRODUCTION, AND IN-SERVICE SUPPORT OF AIRCRAFT AND WEAPONS SYSTEMS TEST AND EVALUATE AIRCRAFT, WEAPONS AND INTEGRATED SYSTEMS, SCIENCE AND TECHNOLOGY FOR TEST AND EVALUATION PROVIDE FOR THE REPAIR AND / OR MODIFICATION OF AIRCRAFT, ENGINES, SYSTEMS AND COMPONENTS PROVIDE FOR IN-SERVICE ENGINEERING AND LOGISTICS SUPPORT TECHNOLOGY, R&D, HW / SW PRODUCTS SUPPORT OPERATIONS 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 14 CONDUCT EFFORTS FOCUSED ON THE ADVANCEMENT OF SCIENCE, TECHNOLOGY, RESEARCH AND DEVELOPMENT AND DELIVERY OF HARDWARE / SOFTWARE PRODUCTS DEVELOP / MAINTAIN COMPETENCY POLICIES, PROCEDURES & SUPPORT SERVICES. FACILITATE EFFECTIVE UTILIZATION OF INFRASTRUCTURE, SECURITY, LEGAL, FINANCIAL, HUMAN & INFORMATION RESOURCES

Naval Aviation Enterprise AIRSpeed Depot AIRSpeed (Lean, Six Sigma, TOC) • Depot production processes • Led by COs/AIR-6. 0 • Rollout to 3 sites (Lean, Six Sigma, TOC) • Fleet-Wide Repair Sites & Processes • Led by O-6 ESC • O-I-D + Supply Chain • Links to NAVRIIP • AIR-3. 3 Coord Office • • (Lean, Six Sigma, TOC) Corporate/Competency Processes and Other Productivity Initiatives Led by AAG/EDB Guidance Enabled by Core Team Links with Enterprise & Depot AIRSpeed • There are FOUR AIRSPEED programs with One Goal and One Metric: – Depot AIRSPEED which began in 1999 – Enterprise AIRSPEED which began in 2003 – NAVAIR AIRSPEED which began in 2004 – NAVICP AIRSPEED which began in 2005 • All four drive productivity through process improvement using industry-proven tools, and help establish a self-sustaining culture of continuous improvement. 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 15 NAVICP AIRSpeed NAVAIR AIRSpeed Enterprise AIRSpeed • • (Lean, Six Sigma, TOC) Corporate/Competency Processes and Other Productivity Initiatives Led by NAVSUP Guidance Enabled by Deployment Team Links with Enterprise & Depot AIRSpeed

NAVAIR AIRSpeed Deployment Team Corporate Deployment Champions RDML Mark Skinner CDC Stu Young (SES) Executive Director Capt. Bob Novak PM/Dale Moore (GS-15) Dep. CDC Capt. Mike Stabile Core Team Phil Zalesak JJ Perryman Bobby Jenkins Monique Johnson Allen Heim Susanne Johnson Deployment Champions • AIR 1. 0: Ken Mcilhenney • AIR 2. 0: Pam Gray • AIR 3. 0/6. 0: Joe Incorvia Denise Gontarek • AIR 4. 0 Denise Breckon • AIR 5. 0 Rick Quade • AIR 7. 0/11. 0: Chuck Cathcart • AIR 10. 0/7. 8: Joel Carey/ Chris Cummings • CIO: Carol Ecklund • PEO(A): Glenn Perryman • PEO(T): Randy Allen • PEO(W): Audie Dennis • JSF: TBD Black Belts & Black Belt Candidates 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 16 Candidate Selection & Retention Barb Ward/Allen Heim Financial Control TBD Communications & Change Mgmt Phil Zalesak Training Coordination & Support Allen Heim Project Realization JJ Perryman Project Mgmt and LSS Deployment Tracking JJ Perryman/Dick Logue MBB Support George Group Consultants Deployment Team Activities: u Develop recommendations for deployment approach u Execute on-going deployment of Lean Six Sigma u Develop and manage Lean Six Sigma results objectives, guidelines, and measures u Establish and manage Lean Six Sigma management processes u Ensure integration between LSS and other NAVAIR productivity efforts u Manage internal and external NAVAIR Lean Six Sigma communications

NAVAIR AIRSpeed Roles (Updated for FY 07) AIRSpeed Core Team • Enables successful deployment / execution • Develops and reports metrics • Coordinates training • Leads change management and internal / external cross-communication Executive Leadership • Owns vision, direction, integration, business results • Leads change New Role Evolving Value Stream Managers • Manage Value Stream Project Sponsors • Project owner • Implements solutions • Owns financial results • Part time as part of job • Develops Project Charter Project Team Members • Provide project-specific support • Can be Yellow or Green Belt and includes Financial Representation • Part time on projects Green Belts All Employees • Understand vision • Apply concepts to their job and work area Black Belts • Participate on Black Belt teams and/or lead projects • Execute AIRSpeed projects • Part time on projects • Train and coach Project Teams • Full-time assignment 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 17 performance improvement • Prioritize VS projects • Full time assignment Deployment Champions Master Black Belts • Lead organizational performance improvement • Prioritize projects • Full time assignment • Train Black Belts/Green Belts • Coach Black Belts/Green Belts • Lead Complex/Large projects • Full-time position

NAVAIR AIRSpeed Implementation Process 2004 IMPLEMENTATION & EVOLUTION RESOURCE & PROJECT SELECTION INITIATION YEAR 1 2005 SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG BENCHMARKING & DEPLOYMENT DESIGN EXECUTIVE ENGAGEMENT EXECUTIVE LAUNCH ONGOING REVIEWS, INVOLVEMENT AND COMMUNICATION SELECTION OF CHAMPIONS, BLACK BELTS AND SPONSORS PERSONNEL IDENTIFICATION & ROLE-SPECIFIC TRAINING PROJECT SPONSORSHIP WORKSHOPS BB PROJECT ID, PROJECT CHARTERING & SPONSORING PROJECT IDENTIFICATION & SELECTION MOBILIZATION ONGOING PROJECT PORTFOLIO MANAGEMENT BY CHAMPIONS / MASTER BLACK BELTS DEPLOYMENT WORKSHOPS & LEADERSHIP COORDINATION LEADERSHIP REVIEWS OF BLACK BELT PROJECTS AND PROCESSES WAVE 1 • • WAVE 2 BLACK BELT LEAN SIX SIGMA WAVES • • WAVE 3 WAVE 4 WAVE 5 • • • WAVE 6 BENEFITS REFERENCE: LEAN SIX SIGMA, BY MICHAEL L. GEORGE 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 18 • $ $ • $

WHAT WE EXPECT • Eliminate non-value added activities. • Reduce cycle times. • Improve quality and productivity. • Develop a workforce with the right skills, focused on the right workload, at the right time, at the right cost, to deliver the right capability to the Warfighter. • A fundamental cultural transformation that will help our workforce become more efficient and more productive, while facilitating the cost-wise decisions that will help us deliver Fleet aircraft ready for tasking at reduced cost. 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 19

NAVAIR AIRSpeed Service/Transactional Environments Unique Attributes/Differences • Fundamentally Knowledge-based “Creative” Work • Value-Added Less Tangible/Quantifiable • More Difficult to “Walk-the-Process” than on the shop floor • Bounded within: Data, Information, Knowledge Domains • Highly Complex & Inter-dependent “adhoc” Social Networks • Strongly IT dependent/facilitated/institutionalized – Collaboration, databases/repositories, work flow mgmt etc. • High Variance: Dependent on Knowledge Capital – Learning, experience, sharing, culture, knowledge mgmt etc. 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 20

VALUE STREAM LIFE CYCLE MANAGEMENT FUTURE READINESS RQMTS / RISKS FROM FLEET / OPNAV CONCEPT REFINEMENT SYSTEM DEVELOPMENT S&T & DEMONSTRATION & TECHNOLOGY DEVELOPMENT CORE FUNCTIONS / PROCESSES WARFARE CENTERS CURRENT READINESS PRODUCTION & DEPLOYMENT HEADQUARTERS / PEOs / OPERATIONS & SUPPORT DEPOTS ACQUISITION MANAGEMENT TRANSLATE AND ANALYZE MISSION REQUIREMENTS, DEVELOP ACQUISITION STRATEGY, CONTRACT AWARD / MANAGEMENT, PROGRAM MANAGEMENT OVER LIFE CYCLE S&T, R&D, HARDWARE / SOFTWARE PRODUCTS / DESIGN IN-SERVICE ENGINEERING & LOGISTICS SUPPORT PROVIDE NEW WARFIGHTING TECHNOLOGY AND SYSTEMS ANALYZE SYSTEM DATA, DETERMINE / IMPLEMENT CORRECTIVE ACTIONS TO SUSTAIN IN-SERVICE SYSTEMS AND TO ENSURE SAFETY, AFFORDABILITY, AND AVAILABILITY; PERFORM ENGINEERING INVESTIGATIONS, ENGINEERING CHANGE PROPOSALS TEST AND EVALUATION PLAN AND CONDUCT DEVELOPMENTAL TESTS; SUPPORT OPERATIONAL TESTS REPAIR / MODIFICATIONS PLAN / MANAGE / EXECUTE REPAIRS AND MODIFICATION PROJECTS CORPORATE OPERATIONS 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 21

Common Process Design Issues Poor Understanding of Customer RQMTS Unclear/Undefined Responsibilities & “Checklist” Expectations Upfront Lack of Performance Measures/Tollgates Poorly Documented/ Defined Procedures Feedback Loop Emphasis on Inspection & Correction vice Prevention METRICS INPUTS DECISION POINTS REVIEW/ APPROVAL POINTS TASK OUTPUTS METRICS Scope is not clearly defined or bounded Duplicated Activities 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 22 TASK Excess Complexity: Lack of Standardization & Reuse Ref: Enterprise Process Mapping, C. Cobb Inadequate Focus on critical objectives Nonvalue Added activities vice CVA External Dependencies/ Undefined Linkages

TYPICAL PROCESS IMPROVEMENT EXPERIENCE W/O LSS 1. Problems are not well “defined, ” scoped or bounded; typically a “boil-the-ocean” or “grand slam” approach & challenges are too big and take too long to effectively tackle 2. Data gathering or “measurement” is rarely or poorly conducted around root causes of specific problems 3. Limited “analysis” tools to available 4. Limited “improvement” tools available to develop and implement desired changes 5. Little or no follow-through for institutional lockin and “control” of required changes 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 23

LSS “DMAIC” METHODOLOGY (the scientific “data driven” method to improve existing processes) 1. DEFINE: Properly define, decompose and scope the problem to a manageable size for a small team to tackle 2. MEASURE: Gather pertinent, useful, statistically significant data to address the specific problem 3. ANALYZE: Conduct analysis on the data to understand the well-defined problem and gain insights into specific solution recommendations 4. IMPROVE: Design and prototype improvements 5. CONTROL: Lock-in improvements w/metrics, SOPs, Institutionalization and Change Management 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 24

AIRSpeed Project Development Process Success Recipe: Right Project, Right Leader, Right Support and Right Resources REALIZATION AIRSpeed PROJECT INPUTS MATCHING PROJECT SELECTION BLACK BELT W/BB (or GB) & 5 STEP PROJECT DMAIC PROJECT FORMING TEAM SELECTION PROCESS TRAINING/EXECUTION ACQ CFT Value Stream Mapping 1 PS Project ID & Selection Workshop BB YB 3 4 5 TA D/M M/A A I/C Project Sponsor Training Grass Roots Ideas/ My. Idea Network 2 V GB ST YB Challenge Areas: • Generating Enough Well-Scoped Projects w/Type I Savings GG D M A I C V • Following the 5 Step Process to Select Project Portfolios CHARTER • Engaging Project Sponsors in Charter Devmt, Tollgates & Process Mgmt TOLLGATES APPROVAL • Linking Savings to Intelligent Targets/SES Accountabilities • Forming Teams (BB) and Committing Team Members (PS) • BB Project Mgmt: Scheduling Events/Reviews, Team Devmt, Data Mining, Mastering LSS & IT Tools • The “Follow-Through” on Implementation & Control for Type I/II Savings Realization 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 25

What Is High Impact Core Value Stream Mapping? • HICVS Analysis Is A Top-Down Approach Tying Specific Activities Occurring Along a Value Stream for a Product or Product Family • HICVS Mapping And Analysis Provides An End-to-End Value Stream View To Effectively Identify And Address Barriers And Constraints To Program Success • Value Stream Analysis Provides A Common Framework For Decomposition And “Drill-Down” To Executable Projects – Addresses Systemic Problems – Attack Tactical Process Problems 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 26

Why Are We Conducting High Impact Core Value Stream Analysis? • SECNAV Directed The PEOs & SYSCOMs To Conduct High Impact Core Value Stream Mapping • NAVAIR’s HICVS Approach Approved By EDB On 30 October 2006 • PEO’s & SYSCOMs Report Monthly Status To SECNAV Via ASN(RDA) On Progress And Results Of LSS Training, Projects And HICVS Activity • Ultimate Goal Is To Improve Program Execution NAVAIR / AVIATION PEO LEAN SIX SIGMA 3 -YEAR ACTION PLAN PHASE I YEAR 1 CY 06 PHASE II YEAR 2 CY 07 PHASE III YEAR 3 CY 08 LEADERSHIP • HIGH IMPACT CORE VALUE STREAMS AND ID’D, MAPPED, AND ALL APPLICABLE PERSONNEL ARE PREPARED TO DMAIC 1) NAVAIR VALUE STREAMS MAPPED / SINGLE PROCESS OWNERS IDENTIFIED; NAE HIGH LEVEL VALUE STREAMS MAPPED BY ACQ / MSCM / TFR CFTS 2) APPLY AIRSpeed CPI TOOLS TO NAE / NAVAIR HIGH LEVEL VALUE STREAMS TO ADDRESS CURRENT / FUTURE READINESS IMPROVEMENT OPPORTUNITIES 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 27 • HIGH IMPACT CORE VALUE STREAMS ARE DMAIC 1) CONTINUE REFINEMENT OF NAVAIR / NAE STRATEGIC “BUSINESS YS” TO FURTHER INTEGRATE CROSS-FUNCTIONAL HORIZONTAL IMPROVEMENT OPPORTUNITIES • HIGH IMPACT CORE VALUE STREAMS ARE REVISITED 1) EXECUTE CPI TO ADDRESS NAVAIR / NAE STRATEGIC BUSINESS Y S

NAE CFT / HICVS ALIGNMENT Current Readiness CFT Future Capability CFT NAVAIR / PEO HICVS CONCEPT & TECHNOLOGY DEVELOPMENT SYSTEM DEVELOPMENT & DEMONSTRATION PRODUCTION & DEPLOYMENT OPERATIONS & SUPPORT Navy and Marine Corps Weapons Systems HICVS Warfighter Requirements F L E E T J C I D N N N S 8 8 8 / 1 2 5 6 7 8 J R O C Development and Acquisition Research D O S O A N B T R R I H P R E A R S I N D U S 1. 0 2. 0 4. 0 5. 0 6. 0 7. 0 T R Y A I R A I R Sustainability and Disposal C N A F / 6. 0 F R C A I R F L E E T OPNAV $24 BILLION FLEET $16 BILLION 15, 000 ~ 17, 000 MIL/GOVT/CSS ~165, 000 – 167, 000 MIL/GOVT/CSS Total Force Readiness CFT 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 28 25 MBBs / 140 BBs 48 MBBs / 363 BBs

High Impact Core Value Stream Development Process DAU ACQ Map + ALCS CFT Inputs Generic High Impact Core Value Stream of Acquisition Process from Concept Decision to IOC CONCEPT & TECHNOLOGY DEVELOPMENT SYSTEM DEVELOPMENT & DEMONSTRATION + PEO/DC SME Inputs + NAVAIR/GG MBB Skills 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 29 PRODUCTION & DEPLOYMENT OPERATIONS & SUPPORT One Single Integrated “Complexity” HICVS map: • ID Variation • Apply Available Data • ID Critical Nodes

High Impact Core Value Stream Development Process Integrated HICVS map, including 224 identified nodes Top four focus areas 4 -Quad developed Prioritized critical node list During the individual program family HICVS mapping event, the PEO staffs identified & prioritized nodes that impacted their ability to deliver to the KPPs, on-time, and on budget 3/16/2018 5: 55 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 30 Focus area evaluation The 41 prioritized critical nodes were narrowed to 8 focus areas based on PEO prioritization, grouping of related nodes, and degree of commonality between PEOs. PEO staff members then evaluated each for benefit, likelihood of success, interdependencies

The “HICVS” View Acquisition High Impact Core Value Stream INPUTS • RQMTS • BUDGET • AP CONCEPT & SYSTEM DEVELOPMENT TECHNOLOGY & DEMONSTRATION DEVELOPMENT PRODUCTION & DEPLOYMENT OUTPUT METRICS: • PRODUCT(s) • COST • CYCLE TIME • QUALITY • SAFETY OPERATIONS & SUPPORT S&T Innovation Strategic Data Analysis EVM, HICVS, S&T, SCM, T&E BOD FC CFT Pilots & Strategic. Thrusts Roadmap Thrust Areas EVM HICVS S&T SCM EVM PR-09/IWP S&T HICVS T&E BOD PR-09/IWP S&T EVM HICVS EVM ERP ABC Identified Processes to “Improve, ” “Replicate” and “Control” 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 31 SCM ERP ABC

HICVS: “Clipping the Peaks” of EVM Drivers & Productivity Barriers/Degraders HICVS Focus Areas Round 1 Total Cost ($) Impact Round 2 Round 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22…… 224 HICVS Processes HICVS VOC/DATA SCM NAE Costs PR 09 IWP Labor Budgeted ERP ABC Labor Today EVM Red Programs 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 32 T&E BOD S&T Innovation Systems Impact Continuous Improvement Driving Down Total Cost Drivers

Acquisition Program Cost Growth “Attacking the Cost Challenges with a Balanced Focus for Today and Tomorrow” PEO/PMA Red Program Prototypes Operational Focus “Get Well” Plans Acquisition Costs (FYDP) + $M/day Cost Growth HICVS Strategic/Systemic Focus “Root Cause Plans” +$B Bow Wave Budget Baseline Today Time 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 33

HICVS Productivity Improvement Process HICVS/ AIRSpeed Integrated Analysis HICVS ERP ABC SCM PR 09 IWP Thrust Areas Strategic Thrust Area 1 Strategic Thrust Area 2 EVM S&T T&E BOD Input Data HICVS Configuration Control 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 34 PEO/PMA Get-Well Pilots Benefit/ Effort Assessment Project Portfolios (BB/GB/Kaizen) Prioritized D E C O M P O S I T I O N Project Approved Execution Roadmaps Project Execution B Project E Project B Project Project E Replicate Successes Codify, Control & Train Process Updates R E S U L T S

NAE AIRSpeed – The Power of Replication Total Savings $x 200 X 150 X AIRSpeed’s return on investment increases rapidly as replication expands Savings/Project ~ Same 100 X Cumulative Project Savings Feedback Loop for continuous improvement increases savings from existing projects over time 50 X Cumulative Project Execution Costs 10 X Project 1 -5 Savings 5 X Project #1 Savings X NAVAIR PEO/PMA Project 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 35 Replicate Cost Est Project Across PMA’s Replicate Cost Est Project Across with additional PEO’s Industry SYSCOMs

NAE AIRSpeed INDUSTRY/GOVERNMENT COLLABORATIVE OPPORTUNITIES AT THE SEAMS “ATTACKING THE NON VALUE-ADDED WORK/PROCESSES BETWEEN THE CUSTOMER & THE SUPPLY CHAIN” ACQUISITION LIFE CYCLE VALUE STREAM PROCESS IMPROVEMENT GOVMT INPUTS • RQMTS • VOC • VOS • VOP • VOB CONCEPT & TECHNOLOGY DEVELOPMENT SYSTEM DEVELOPMENT & DEMONSTRATION PRODUCTION & DEPLOYMENT OPERATIONS & SUPPORT “SWEET SPOT” FOR HIGH VALUE-ADD LSS/TOC INDUSTRY INPUTS • RQMTS • VOC • VOS • VOP • VOB CONCEPT & TECHNOLOGY DEVELOPMENT SYSTEM DEVELOPMENT & DEMONSTRATION PRODUCTION & DEPLOYMENT OPERATIONS & SUPPORT ACQUISITION PROGRAM VALUE STREAM OUTPUTS: • COST • CYCLE TIME • QUALITY • SAFETY UNDERSTANDING & IMPROVING THE AEROSPACE END-TO-END “VALUE CHAIN”: FROM REQUIREMENTS & INNOVATION TO PRODUCT DELIVERY AND SUSTAINMENT 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 36

AIRSpeed Deployment Management System (Power. Steering) Initial Project List (Future Phase) Dashboards & Reports Idea Tracking Add Ben efits &E ffor t Financial & Non. Financial Metric Tracking Project Charter Problem Statement, Goal Statement Project Selected & Team assigned to project 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 37 Project Documents Project Status, Deliverables & Dates

AIRSpeed Systems & Tools Evolution Discrete LSS Systems ADMS Interfaced LSS Systems (in work) Integrated LSS Systems (conceptualizing) ADMS i. Grafx Crystal Ball i. Grafx Minitab Crystal Ball Minitab ERP Minitab LSS Curriculum ERP Foundation: High Impact Core Value Stream Mgmt & Process Owner Leadership 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 38

Top Deployment Challenges • Cultural Transformation & Change Management – Significant “Information/Knowledge Diffusion” Challenge: Tools & Methodologies – Ensuring Alignment/Engagement, Follow-through & Constancy of Purpose – Driving Standardization & Re-use coupled with Continuous Improvement – Thinking in terms of Value Streams vice Organizational Stovepipes • Workforce – “Breaking Lock” on Embedded Behaviors & NVA Activity Awareness – Work-in-Progress (WIP) mgmt re. “Little’s Law” & Balancing Workload Priorities – Project Sponsor/ Team Member Availability on Project Teams • LSS/TOC in the Transactional “Knowledge” Environment vs. Manufacturing – Deployment in the Federal Workplace – Training Alignment & Tailoring • Inefficient Project Identification – General Lack of Process Related Data: Cost, Cycle Time, Quality – Business Y/Strategic “North Stars” Difficult to Determine: Step 1 to Step 2 Translation • Deployment Management System (DMS) – Deploying DMS capabilities across the NAE • AIRSpeed Infrastructure Institutionalization – Organization Structure/Governance, Financial Strategies, NAE AIRSpeed Activities • Institutionalized Replication Strategy 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 39

Areas of Emphasis • Commit to the Change – Make it Last Through Leadership Turnover – Include in Performance Evaluations / FITREPs – Incentivize Group Performance Goals for Senior Leadership – Include Productivity Improvement Training in Leadership Development Programs • Participate in the Effort – Provide Executive Sponsorship for Projects – Get Trained as a Green Belt – Demand Data and Metrics …… Stamp Out Obfuscation • Provide Resources - Vision Without Money Equals Hallucination – Provide Stable Funding To Ensure Success – Demand Validated Return on Investment Leadership Commitment And Accountability Make Cultural Change A Reality 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 40

Do. N Lean Six Sigma (LSS) Continuous Process Improvement Summary • Do. N is fully committed to deployment of LSS CPI – Extensive 2 day SECNAV Leadership training (>1300) – SECNAV Monthly Metrics Reporting – SECNAV Monthly Strategic Management Reviews – Tracking Progress to 3 Year LSS CPI POA&M • LSS CPI contains all the necessary tools – Lean, Six Sigma, Theory of Constraints – Leveraging enabling IT – Baselining DMAICV for existing processes – Leveraging High Impact Core Value Streams • Self-Sustainment to drive institutionalization & results • Continuous Process Improvement for Continuous Process Improvement – Maximize ROIC 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 41

BACKGROUND The Do. N’s LSS CPI consists of methodologies and tools, and associated knowledge, skills and abilities (e. g. , Strategic Planning, Communications and Change Management, Knowledge Management, Information Technology Management, Quality Management, and Supply Chain Management etc. ). This procurement will be processed as an unrestricted, competitive, performance-based, Fixed Price Indefinite-Delivery-Indefinite-Quantity (IDIQ) contract with Time-and-Material provisions. This contract is for 60 months during which time orders may be placed. 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 42

BOTTOM LINE The Do. N Wants: 1. “Best-of-the-Best” LSS CPI Knowledge/Capabilities 2. Fully Integrated LSS CPI Organizational System 3. Self-Sustainment & Cultural Transformation 4. Innovation for LSS CPI Transformation Acceleration 5. Do. N Enterprise LSS/CPI Commonality 6. Maximized LSS CPI Value Proposition 7. Quality, Speed, Cost & Safety Results 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 43

Do. N Lean Six Sigma (LSS) Continuous Process Improvement (CPI) Go to: www. navair. navy. mil b) DOING BUSINESS WITH US c) OPEN SOLICITATIONS d) 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 44 a) N 00421 -07 -R-0012 Do. N LSS CPI

QUESTIONS?

Contact Information Dale L. Moore dale. moore@navy. mil 301 -342 -8000 3/16/2018 5: 56 AM 00 A 1 KC 00 A_AIRSPEED_STRUCTURE_4 OCT 04. PPT 46