U.S. ARMY ARMAMENT RESEARCH, DEVELOPMENT AND ENGINEERING CENTER (ARDEC) LEAN/SIX-SIGMA

1. U.S. ARMY ARMAMENT RESEARCH, DEVELOPMENT AND ENGINEERING CENTER (ARDEC) LEAN/SIX-SIGMA Presented to 32nd National Energy & Environmental Conference PAUL E. CHIODO Director, Quality Engineering & System Assurance, RDECOM-ARDEC Chair, AMC Quality Federation Certified Lean/Six Sigma Master Black Belt 20 September 2005

2. LEAN/SIX SIGMABOTTOM LINE UP FRONT • The Integration of Lean and Six Sigma has Provided ARDEC with a Proven Commercial Best Practice for Continuous Improvement • In Partnership with its Customers, ARDEC has: • Increased Awareness • Improved RD&E, Manufacturing and Administrative Processes • Integrated Lean/Six Sigma into the Business Culture Culture Change is Occurring!

3. LEAN/SIX SIGMABOTTOM LINE UP FRONT(Continued) • ARDEC Stood Up a Lean/Six Sigma Competency Office to Assure Consistent, Effective and Efficient Deployment, Consulting and Training • ARDEC is Integrating Lean/Six Sigma with a Quality Management System (QMS) and Voice of the Customer (VoC) Protocols on its Journey to Enterprise ExcellenceSM Culture Change is Occurring!

4. ARDEC L/6sTraining & Certification Belt Train Cert Master • Data from Inception (2000) to Present • Includes ARDEC, Program Executive Offices (PEO), Contractors, and Other Government Activities • Black-Belts have Green Belt as Prerequisite Green 1025 427 N/A Includes Approx. 3.3% of ARDEC Workforce Includes Approx. 27.4% of ARDEC Workforce Black 133 78 6 Goal: 240 Training Incidents/Yr

5. ARDEC L/6s ROI 2,660 • $2.66B Savings/Avoidance to Date • 20:1 VE Validated Returns • Value Engineering Adds Rigor • Recognized Standard • Independent Verification • Hard Numbers Only • All Aspects of Q$SR • Q: Quality/Customer Satisfaction (91% of Projects) • $: Cost (70% of Projects) • S: Schedule (67% of Projects) • R: Risk (84% of Projects) • Improvement Projects in: • Engineering (35%) • Production (32%) • Business/Admin (23%) • Management (10%) Figures in $M 67.3 3 Estimated Life-Cycle Avoidance Training Costs VE Validated Savings

6. ARDEC L/6s Timeline Phase III – Self Sustain for Continuous Improvement JAN 2006+ GB Training to In-house ARDEC Enterprise ExcellenceSM Plan Complete APR 2005 JUN 2004 L/6s Office Established May 2003 3rd Ceremony, 500th person trained to date at ARDEC Phase II – Full Scale Deployment First Integrated Lean/Six-Sigma Course OCT 2002 JUN 2002 Industry Benchmark Studies AUG 2001 First Certification Ceremony Phase I – Launch & Management Buy-In APR 2001 Leadership Transitioned to ARDEC JUL 2000 Six-Sigma Initiated by PM CAS

7. Operation Levels Executive Champions ARDEC L/6s Board Master Black Belts/L6s Comp Office Black Belts Green Belts Team Members

8. EE EE EE EE EE EE EE EE EE EE EE EE EE EE EBB Projects Enterprise Excellence CI CI CI CI CI CI CI CI CI CI CI CI CI CI TT TT TT TT Customer Integration RB RB RB RB Rapid Battle-types DT DT DT Disruptive Technology Technology Transfer RP RP RP RP Resource Planning ARDEC Process/EBB Project Map Enterprise Excellence ARDEC Mission Critical Processes • Business Development • Configuration Mgmt • IPT/PM • System Engineering • Rapid Prototyping • Modeling & Sim VOC QMS VOC L/6s Competency Office Customer • Training • Consulting • Deployment • Program • Management • Funding Discipline Adaptability Speed • Innovation & • Engineering • Technology • Transition • High Quality • Products & Services Products ARDEC Mission Aiding Processes • Process Management • Budgeting Process • Funds Flow • Strategic Management • Technology Transfer • Workforce Development • Procurement Label signifies Executive Black Belt (EBB) Projects that impact ARDEC Processes

9. Executive BB Projects • ARDEC Enterprise Excellence • Integration of E2 (QMS, Lean/SS, VOC) with ARDEC Strategic Plan and Development of the ARDEC E2 Deployment Plan • ARDEC Requirements to Execution Framework & Integrated Prioritization Process • Process for prioritizing and allocating ARDEC resources consistent with ARDEC strategic plan and customer requirements • Rapid Battletypes • Identify opportunities to quickly deploy innovative solutions directly to the soldier • Enterprise Resource Planning • Increase customer satisfaction across all users that access financial reporting • ARDEC Technology Transition • Increase technology transitions from ARDEC tech base to PEO/PM for fielding

10. Some L/6s Success Stories • M795 155mm Artillery Projectile Quality • Reduced Critical Defects from 5.0% to 0.5% • $250K Annual Cost Avoidance • Safety Risk Reduction • Smart/Precision Munitions Development • Increased use of Modeling & Simulation and Lab Testing for Risk Reduction • $35M Cost Avoidance through Reduced Excalibur Ballistic Testing • PAX-2A Insensitive Explosive Quality • Increased Yield from 13% to ~ 100% • $169M Potential Life Cycle Cost Avoidance • PAX-2A Explosive Large-Scale Production • Developed Alternate Large-scale Manufacturing process • Cost reduced from $65/lb. to $30/lb. (Savings: $349M lifecycle Army-wide) • Implementation on next contract

11. Some L/6s Success Stories (continued) • Tank Training Ammunition Joint Reliability • Process Re-design • $6-14M Annual Cost Avoidance • Artillery Ammunition Digital X-Ray Equipment • Integrated Contractor & Government’s Approval Processes • 6 Months Reduced to 4 Months (Savings: $120K) • M734A1 Mortar Fuze Production Yield • Analysis identified Design Deficiency • Re-design Reduced Scrap from 5.0% to 0.1% (Savings: $50K/month) • 120mm Mortar Fin Malfunction Investigation • Developed Corrective Actions to Release Suspended Mortar Ammunition (Stockpile worth $200M) • Reduced Risk in Future Procurements

12. Some On-Going L/6s Projects • Green Small Caliber Ammunition • Elimination of Lead – Environmentally Friendly • Producibility of Tungsten-Tin • Missile/Artillery Grenade Fuze Removal • New Fuze Meets UXO Requirements • Grenade Recapitalization • Estimated Savings of $41.5M

13. Some Administrative L/6s Success Stories • Excalibur/TCM Procurement Acquisition Lead Time • 54% Reduction • Insensitive Munitions Waiver Process • Streamlined Approval Process • 2+ year cycle Reduced to 7 Months • ECP Review & Approval • Cycle Time Compliance Increased from 89 to 100% • New-hire Integration • $78K Estimated Yearly Savings • Printer Cartridge Recycling

14. PAX-2A Explosive Quality Improve the yield of PAX-2A Manufacture at Lab-Scale by developing an alternate mix process that meets high-speed LAP requirements.

15. M80/PAX-2A High-Speed Load, Assemble & Pack (LAP) Increase the yield of “LAP-compatible” PAX-2A explosive production and increase the production rate of Dual-Purpose Improved Conventional Munitions (DPICM) between maintenance cycles.

16. Procurement Acquisition Lead Time (PALT) Combined the two existing PALT processes into one streamlined (Alpha) process for XM982.

17. The E2 Framework Culture Reqm’ts VoC QMS Lean 6s Efficiency Effectiveness Concepts from paper by VSE Corp.

18. Why Change to “Lean/Six-Sigma Way of Doing Business”? • ARDEC Reorganization led to Transformation from a Traditional Product-Driven Structure to an Integrated ‘Continuous Measurable Improvement’ Process-Driven Way of Doing Business • Positive Impact Obtaining Faster, More Comprehensive, Fact Based Solutions in support of GWOT, OIF, OEF • Need to Promote Enterprise Excellence (QMS, L/6s, VOC) • A disciplined, structured approach for process and product optimization that is focused on the effectiveness' and efficiency bottom line of the organization

19. ARDEC Lean/Six-SigmaTake-a-Ways • Needs to be Driven from Top Management for an Effective Organizational Culture Change • Assure L/6s Projects are Properly Aligned to Customer Requirements • Provides resources and commitments • ARDEC L/6s Competency Office Provides: • Centralized Management • Organic GB Consulting & Training Activities • VSE Partnership Still Essential • Limited Black Belt Pool (Black Belt Distributed to Organization) • All Phases of the Acquisition Life Cycle and All Business Processes Offer Opportunities for Improved Effectiveness & Efficiency • L/6s is a Fundamental Component of ARDEC’s Enterprise ExcellenceSM • Structured and Disciplined Approach to Meet Mission Objectives • Lean/Six Sigma is a Commercial Best Practice that is Providing the Army Meaningful Savings … Every Quality, Reliability and Process Improvement Equates to Real Dollars!!