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PAST EVENT: 2nd Annual Lean Six Sigma Summit in Manufacturing, Services & Transactional Environments
Hyatt Regency Dallas (November 16-18, 2005) |
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| March 2005 |
Bring Lean Systems Thinking to Six Sigma
Used Together These Methodologies Improve Each Other
by Paul Mullenhour and Jamie Flinchbaugh
Quality Digest
For years companies have struggled with the dilemma of which quality improvement program to use: lean or Six Sigma. While some are still debating the either/or issue, others have come to realize that lean tools and Six Sigma
work well together to achieve quick process improvements and greater product consistencies. This is true particularly if you subscribe to a top-level and often misunderstood and misaligned definition of each. Lean equals zero waste. Six Sigma equals zero variation. Certainly there’s some overlap here because lean includes variation elimination as well, but the point is, you really can’t separate the two when it comes to developing an overall improvement effort.
Lean encourages action along a broad front by empowering people at all levels to contribute. This allows organizations to welcome challenges and implement improvement initiatives. Of course, improvement starts by using the appropriate tools. We’re all familiar with the results of lean tools and practices such as process mapping, kanban, kaizen and 5S. Kaizen can help us standardize a process or eliminate waste, and often we see results within days. 5S can help us structure our environment so that problems can be identified more quickly.
Six Sigma brings the discipline of define, measure, analyze, improve and control, as well as the rigor of statistical analysis, to identify a root cause, sustain improvement and provide the solid measurements that create a balanced scorecard. Most of us know by experience that Six Sigma is a solid, scientific methodology for reducing process variability. Process variability affects quality because the more you reduce variation, the more likely it is that the process will produce a good product. It’s not just quality, though. Variation reduction also affects the entire value stream (a uniquely lean view) because reducing variation will provide more consistent yields, which means that you can predict what you will get out based on what you put in. Therefore, you can design your process to flow more continuously, with less just-in-case inventory and improved lead times. Very often this is an underappreciated benefit of reducing variation.
If we look at improvement through both lean and Six Sigma lenses, we have the necessary tools, methods and strategies to not only uncover root causes, but also to pay attention to the obvious. In the old days, this was known as “common sense,” and as Mark Twain once observed, “There’s nothing common about common sense anymore.”
A winning combination
For many of us, it’s no longer a matter of lean vs. Six Sigma, but one question still remains: How do we integrate the various efforts at improvement to deliver sustainable results?
To answer this question, we have to know how companies fail at integrating lean and Six Sigma. One major way of failing is to do this improvement work strictly for the sake of lean or the sake of Six Sigma. These are the wrong reasons. Companies should execute lean and Six Sigma for the sake of business results. If leaders don’t clearly provide a “why” and “how” for lean and Six Sigma, the focus will not be on leveraging the methods for business results.
The second most common way companies fail is in choosing a few tools—whether lean, Six Sigma or something else—and drastically overusing them. An example of this is the overuse of kaizen. There are no magical tools that can do all things. It takes the right tool at the right time. If you can’t find a tool to do what you need, you shouldn’t force-fit one. Develop your own tool to accomplish what you need.
A major utility company that leveraged its improvement project selection criteria for business results used the right combination of lean tools and Six Sigma to solve a problem with respect to third-party billing. Challenged with improving the billing process, eliminating the defect and retrieving lost revenue, the company assembled a team consisting of a lean Six Sigma Black Belt from finance, a Green Belt from the pole yard, a pole yard foreman and various yard personnel. One of the first steps was a kaizen workshop where the current state was documented through a series of process maps. Next, waste and nonvalue-added activities in the current state were identified. From that information, the team worked to redesign a more ideal state. At that stage, specific lean tools such as one-piece flow, 5S, visual control, control point standardization and error proofing were used. Proving that Six Sigma can be equally effective outside the manufacturing arena, the company also used tools such as FMEA and hypothesis testing to understand, measure and systematically reduce the variations in the billing process. The result? A $1.4 million revenue enhancement.
Another example is that of a food company that wanted to improve its processing. Like the utility company, this organization was focused on business results and used both lean tools and Six Sigma to realize them. For the Six Sigma initiative, one of its suppliers even loaned it a Black Belt to help establish baseline data on its equipment.
This company was faced with a regulation that required it to completely purge, clean and check its system every 72 hours to test for bacterial growth before running production again. This cleaning process was taking too long, chewing up capacity and resulting in back orders and quality issues. The challenge was to reduce the 10-hour cleaning cycle time without sacrificing the quality of the product or equipment.
The company mobilized the key people involved with the process and attacked the problem like a NASCAR racing team pit crew. The crew was coached by a lean Six Sigma Black Belt using process mapping, lean layout, visual management with digital cameras and process capability analysis in the product packing area. Cycle time was reduced by more than two hours, and improvement in the overall capability of the packaging line equaled an additional increase in annual production of more than 30 percent. All backlog was eliminated.
Lean systems thinking
Chances are you’ve never sat on a two-legged stool, and with good reason: It’s tough to do when you can’t find the right balance.
Balancing lean and Six Sigma in your operation might give you the best of both worlds, but not the best of all worlds. Without a third essential component, real success doesn’t have a leg to stand on (pardon the pun). The cultural transformation brought on by lean leadership and lean systems thinking within an organization provides the long-term stability—or balance—necessary to sustain your quality improvement efforts.
Whatever combination of lean tools and Six Sigma you’re using, when it comes to quality improvement, they work. This is good news, but it’s not the whole story.
The real “Aha” moment for companies comes when lean systems thinking is factored into the quality improvement equation. Lean systems thinking is about empowering people to drive change. This is accomplished by following these five key principles:
Directly observe work as activities, connections and flows
Systematically eliminate waste
Establish high agreement of both what and how
Systematically solve problems
Create a learning organization
The fundamental message here is simple, yet not universally understood. No technique, tool or methodology alone can improve a process or system and sustain that improvement long-term. It takes lean systems thinkers to successfully implement lean tools and drive Six Sigma change.
To see lean systems thinking as a distinct leg in our stool analogy—separate from lean tools and as a companion to Six Sigma—is to understand that it’s not just a series of events or methodologies that contribute to problem fixes. These efforts often lead to what we call the three Fs of improvement: frustration, flavor of the month and, ultimately, failure to deliver sustainable results.
Lean rules provide the guidance needed to implement improvement, explaining the “why” behind lean tools and the Six Sigma methodology. Lean rules also help develop new solutions to problems. For everyone in an organization, these rules help structure activities, connect customers and suppliers, specify and simplify flow paths, and bring improvement through experimentation at the right level.
Imagine driving in your car. You have all the tools at your disposal: an easy-to-read speedometer, a clear windshield with an accurate view of the speed limit sign, a smooth accelerator pedal and even cruise control. However, if the principles or beliefs of the driver are inconsistent with the correct use of these tools, there’s very little chance that individual will stay within the speed limit. No amount of tools or rules will change people’s behavior. They can guide, coax, constrain and aid, but they cannot change how someone acts. Only by changing their beliefs can you change their actions for good.
Lean tools and Six Sigma initiatives can help us change the way we do things, but without a mechanism such as lean systems thinking to align the organization’s goals and objectives for the most effective application of these tools, an improvement strategy won’t be complete.
The best of all worlds
Consider one plant manager who recently bought a new piece of equipment designed to increase production by 30 percent and free up 3,000 square feet of floor space. While he couldn’t wait to get it into his shop, he wondered how he would get the equipment up and running without causing order delays or increasing his number of defects, which averaged about 2.5 percent.
With the assistance of a lean Six Sigma specialist, the plant manager trained, engaged and empowered a cross-functional team to accomplish this mission. On the lean side, the team’s efforts included a kaizen workshop, waste walks and process mapping. As for Six Sigma, the team performed process capability studies, looked at quality data for defect identification and did baseline metrics for all product lines.
The team was also introduced to lean systems thinking. With an understanding of the current state, the team established an ideal vision and developed an action plan. This process improvement plan encompassed input measurements around safety, delivery and cost—all of which directly affected output. The team is now implementing a complete relayout of the shop floor and undertaking a substantial 5S effort to uncover other improvement opportunities. All of this has been done, by the way, during the company’s SAP implementation, which included the introduction of bar coding on the shop floor.
It seems like an impossible task, but the balanced effort provided by lean tools, Six Sigma and lean systems thinking is helping to accomplish it in a smooth, undisruptive manner. Thanks to the third leg of our proverbial stool, the team approached the challenge systematically, with a shared vision.
Successful quality improvement involves using all the tools and methodologies at your disposal. Traditional lean efforts will help you reduce flow time and waste, leading to improvements that will boost overall quality. Six Sigma, with its focus on statistics, will help you deliver a more consistent product. But to fully support your long-term goals, you need the all-important third component: the cultural change that comes with adopting lean rules, principles and vision.
About the authors
Paul Mullenhour is a senior management consultant with Achievement Dynamics and a partner of The Lean Learning Center. He provides consulting services, training and education in a wide variety of areas, specifically lean manufacturing and Six Sigma. He has more than 20 years of experience in all aspects of developing and implementing quality improvement. Mullenhour is a graduate of the Goldratt Institute and is a certified Master Black Belt
Jamie Flinchbaugh is a founder and managing partner of The Lean Learning Center (www.leanlearningcenter.com) and has become one of the nation’s top thinkers and leaders in lean transformation and lean manufacturing. Through years of research and application, including previous stints at DaimlerChrysler Corp., DTE Energy and research at MIT, Flinchbaugh has created, presented, and successfully implemented new and powerful approaches to lean.
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| February 2005 |
After Lean, What Next?
by Fran LeFort
Business Strategies Magazine
So, you've reorganized, automated, outsourced, improved assembly lines, created just-in-time warehouses and, as a result, enjoyed greater profits. Now what? With ever-increasing global competition and a shrinking marketplace, you can't just stop there. "It's pretty clear you can't maintain the status quo. People who've tried it are no longer here, so you're always needing to look at new strategies," says Dick Webb, president and CEO of Rochester-based Pierce Industries, LLC. "Lean is not the only strategy that allows you to survive."
It's just the beginning, in fact.
Having evolved through the years (once known as cellular manufacturing, just-in-time, and now also Six Sigma), the goal of Lean manufacturing is simply to improve profits and reduce costs by increasing efficiencies.It's an approach James Tabbi has implemented throughout his career at Tabtronics, a Geneseo-based electromagnetics company.
"It doesn't really matter what you call it...I look at it as just a combination of all the good tools that have been utilized up until the point they decided to call it Lean or Six Sigma. But there is no 'after Lean'. Lean is, in my mind, a continuous improvement strategy. You Lean it out and get it where it's really good, but there are always going to be mistakes made and the need for continuing improvement," says Tabbi, who started his career at Tabtronics in 1980 on the shop floor doing various production assignments, which led to positions in quality assurance, and is now president and CEO.
"I like to use the term Lean management, instead of Lean manufacturing because it implies you're not just Lean on the shop floor. With entropy things tend to fall back where they were if you're not diligent on sustaining the improvements," says Tabbi, who looks to implement a Lean accounting system in the future to complement other Lean approaches.
Indeed, once you've gone Lean you can't go back. Lean principals are so important to the survival of companies in today's marketplace that many, like Tabtronics, have taken advantage of grants for bringing in experts to help train workers and identify areas for improvement.
Tabtronics, which employs 75 people, used a $100,000 New York State grant to hire CMS Consulting of Rochester to help retrain its work force on basics such as math and computer skills and for continuous improvement.
Resources for companies are plentiful and include High Tech Rochester as well as Rochester Institute of Technology.Rich Gizzi, project manager at High Tech Rochester, a not-for-profit organization affiliated with the Rochester Business Alliance, helps train companies in Lean manufacturing principles.
"In many cases it's critical to their survival. Manufacturing has taken a real beating by the economy and at the same time a lot of manufacturers are facing significant threats from not just China but other offshore outsourcing. Companies like Kodak and Xerox, for example, are outsourcing a lot of work to the Pacific Rim," Gizzi says.
He says he noticed an increase in companies asking for help with long-term strategies in recent years. "The issues that are facing our manufacturers are becoming a little bit more strategic and, although we'll go in there still to help them with their tactical solutions, we'll do so with the eye of looking at how to help on that long-term strategic level," Gizzi says.
"A lot of guys were so good at something that they went out and started their own businesses and in the heyday were successful. Now this thing called outsourcing and the condition of the economy of the last couple of years have negatively impacted them. They have to start thinking strategically about what kind of companies represent their most valuable customers and how can they attract more of that type of business so they can remain in business and remain competitive. So those conditions have forced them to think strategically a little bit further into the future."
Part of thinking long-term is pursuing what is called value-added options. For example, a business may focus on a different set of customers or providing some additional services to existing customers. "The guy who is really good at manufacturing parts might want to consider providing as a value-added service an assembly operation. It's whatever value-added services may make sense to that business," Gizzi says. RIT is home to the Center for Integrated Manufacturing Studies, a 170,000 sq. ft. facility that helps businesses.
"We all woke up one day and discovered it's no longer a national economy or regional economy. It is a global economy, and a lot of companies have seen
severe competition coming from the Far East. And everybody had to find a way to improve their efficiencies, and you just don't stop. It becomes cultural," says Nabil Nasr, director of the RIT center and assistant provost of academic affairs.
"But Lean applications do not solve all of a company's problems. If they have a problem with shrinking markets they've got to look into innovation and other things," Nasr says. Vince Buonomo is one of RIT's Lean manufacturing experts who conducts onsite training and consulting with companies.
"It's kind of a cycle if you will. Being more competitive you're afforded the luxury of passing on those savings, and ultimately you want to grow and grow in market share. It's tied to getting more market share. The ones who don't tie in to their key objectives are the ones who get spotty results," he says. Still, despite the advantages of Lean manufacturing, companies likely wouldn't go to the trouble if there were no competitive pressures to do so, Tabbi says.
"I've expected for years in our industry, which is really low-tech, to see massive consolidation and shrinking. But we haven't seen a lot of it. I think none of us are making as much money as we'd like to or used to so maybe that consolidation will happen. We're all playing the low-cost foreign game now. The competitive pressures are definitely increasing," he says. While American companies are finding ways to change their existing facilities into Lean operations, Chinese companies are building them from the ground up.
"We have a customer who has been very diligent about Lean and really pushing Lean for quite a long time. Even with that they've been practically moving operations overseas, so that says to me to be able to compete on a global basis, Lean is not enough."
Roger Reiner, vice president of Rochester-based Pro-Mold Inc., agrees.
"There is no amount of Lean manufacturing that can offset unfair trade, and that's what China is doing, and the multinational American companies are getting rich off that," says Reiner, whose company hasn't implemented Lean practices because, for the most part, they wouldn't fit into a good portion of the business, which makes one-of-a-kind molds.
"We have a global program set up where we do work with China but my experience has been that I've gotten prices from China for finished, delivered products for less than I can buy the raw materials, and there is no amount of Lean that can fight that," Reiner says. "It's a grim picture for manufacturing. The tool-and-die trade, as the ability to make things, is as important to our country as agriculture is to supper tonight."
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| June 6 2005 |
Cheaper, faster, better programs
The new management trend that could transform your agency
By STEVEN WATKINS
Federal Times
Top Army managers plan to use one of industry’s best management practices to cut in half the 18-month annual budgeting process.
The same technique, Navy managers say, will allow them to trim $20 million and 10 percent from the work force dedicated to a submarine overhaul.
A NASA chief financial officer is applying it to streamline financial processes.
The Homeland Security Department’s top immigration lawyer is using it to manage his office’s caseload more efficiently.
All these managers are employing a process-improvement strategy that long ago caught fire in the private sector but is only now creeping its way through federal buildings and facilities across the country — so far mostly at the Defense Department. It’s called Lean Six Sigma, although some managers refer to it as Lean.
“Lean” embodies methods for removing waste from a process and making it flow faster. “Six Sigma” aims to improve quality, reduce variability and more accurately measure performance of a process. If you haven’t heard of it at your agency, chances are good you will soon. Lean Six Sigma is a method of dissecting and re-engineering virtually any kind of process — manufacturing, logistics, administrative, service-related or transactional — to remove wasteful steps and to streamline value-added steps to be more efficient.
In recent months, top military leaders — scrambling to find cost savings they can apply to new weapon systems — began using Lean Six Sigma to cut costs and speed up virtually every process they can think of.
And the trend is spilling over into other quarters of government. A handful of civilian departments and agencies — including the Homeland Security Department, NASA and the CIA — have experimented with Lean Six Sigma projects.
Previous process-improvement approaches — such as total quality management — have failed to take hold in government. But there are a few reasons why Lean Six Sigma could be different. First, its results tend to be dramatic and quick, impressing skeptics. Second, the military services and Defense agencies are so encouraged by the results they see, they are applying the method on much larger scales than they ever dared try with total quality management or other approaches. All the service branches have rolled out commandwide Lean Six Sigma projects, and the Army this year is the first to launch a series of ambitious departmentwide projects with an aim to transform virtually everything it does.
Finally, unlike previous process-improvement methods designed for manufacturing and logistics, federal managers are applying Lean Six Sigma tactics to streamline all sorts of administrative and service processes, such as financial transactions, legal affairs, installation management and budgeting.
From waste to results
Most savings come from eliminating wasteful steps or idle time in a given process. Defense Department managers say past Lean Six Sigma projects have revealed that between 57 percent and 90 percent of the time it takes to accomplish a given process is time wasted — that is, time not spent on something a customer is actually waiting on. It is time spent waiting for a problem to be solved, a technical glitch to be fixed, for a tool, parts or information to arrive, or duplicative work to be completed.
Lean Six Sigma shines a spotlight on that wasted time and roots it out quickly to show results as rapidly as possible. Solutions include making sure work is done right the first time, tools are easy to find, policies and procedures are changed to eliminate needless steps, work to fix frequent problems is predefined to avoid needless consulting, and bottlenecks are avoided by focusing work on one product at a time instead of on batches of products.
Proponents predict that as departments eventually expand their Lean Six Sigma efforts, the likely impact will be huge. Already, existing plans in government — mostly now in the Defense Department — call for tens of thousands of managers and employees to get new training, ranging from a single day to six months, on how Lean Six Sigma works. Those trained will be enlisted to lead and participate in hundreds of improvement projects, both big and small. Many staffs will almost certainly be downsized. Workplaces will be reorganized and traditional ways of doing things will be overhauled. Managers will be appraised on how well they meet Lean Six Sigma goals. And hundreds of millions — if not billions — of dollars in savings will be redirected to other priorities.
“The larger issue is not Six Sigma, it’s transforming the way the Army does business,” said Maj. Gen. Ross Thompson III, director of the Army’s program analysis and evaluation office, and the Army’s most forceful Lean Six Sigma advocate.
Thompson previously ran the Army’s Tank, Automotive and Armaments Command and said he witnessed dramatic improvements in quality, cost and schedule wherever he applied Lean Six Sigma practices.
“We started with depots and arsenals, which is part of what my responsibilities were. But it applies just as equally to administrative and service processes,” he said.
Government managers who’ve seen it work say Lean Six Sigma holds the promise of delivering significant cost savings and staff efficiencies at a time when budgets are tight and departments are being asked, more than ever, to do more with less.
But in the big picture, the federal government has a long way to go.
“The federal sector is at a tipping point in terms of its evolution in applying Lean Six Sigma,” said IBM consultant George Byrne. “While a number of agencies and organizations have dipped their toe in the pool to test the water, there really has been no enterprisewide deployment of Lean Six Sigma that I am aware of.”
A faster Army budget
That’s about to change.
Army Secretary Francis Harvey and Chief of Staff Gen. Peter Schoomaker have drawn up plans and enlisted top commanders to spread Lean Six Sigma doctrine throughout the service and roll out dozens of projects.
“We’ve already identified well over 20 processes that are Army-wide processes that we want to take on using Lean and Six Sigma. . . . We’re on the very beginning of making Lean and Six Sigma, and the disciplined approach that comes with that, a major part of the way the Army does business,” Thompson said.
The first process the Army hopes to tame is a doozy: the planning, programming and budget execution (PPBE) system.
Each year’s budget is the culmination of two years of work by thousands of people. It starts with field commanders calculating their funding requirements two years in advance. Six months after that, the budget arrives at Army headquarters at the Pentagon where it winds its way through countless computer terminals for another 18 months of hammering, prodding and tweaking. Army officials calculate each budget takes about 600,000 hours of labor, gets handed off from one office to the next 11,402 times, and survives 5,108 approvals before it passes muster at the highest ranks. And the first-time approval rate by Pentagon leaders? Nearly zero percent.
“The challenge I gave to folks who are working through this is I want to take half of the steps and half of the time out of the PPBE process, which people would say, ‘It’s impossible.’ And I say it’s very doable,” Thompson said.
He explained: “You’ll find that most of the steps in any process — from the time you identify the beginning to when you actually hand something over to the next person for the follow-on process — most of the steps you do are non-value-added from the standpoint of the person that you’re handing over that output to. That person really doesn’t need all of the information, or if they were a customer, they wouldn’t pay for what you’re doing to that.”
Thompson argues he can streamline things considerably just by allowing budget decisions to be made one at a time and not in large batches, which cause bottlenecks that can hold up work. “It’s a batch process, and a batch process is inherently inefficient.”
Among other targets in the Army’s sights this year: processes for managing installations; recruiting, managing and financing spare parts; and managing weapons through their entire lifecycles.
Navy looks for employee buy-in
The Navy is similarly gung-ho about Lean Six Sigma, but, unlike the Army, most of its efforts remain at the command level, not the department level. The commander of Naval Sea Systems Command, Vice Adm. Phillip Balisle, in January ordered the launch of 600 Lean Six Sigma projects this year across its shipyards, warfare centers and other installations — and another 1,200 projects next year.
In all, the command aims to save at least $250 million, which it hopes to redirect to other priorities in the 2007 budget being planned now. That’s enough to buy an additional Littoral Combat Ship — quite an accomplishment, if successful, considering the Navy can only afford four new ships a year, said James Brice, director of the command’s Lean Six Sigma efforts. Each project now under way across the command is yielding savings between $140,000 to $150,000 on average; Brice said he hopes to get that figure up to $200,000 per project.
Most of the expected savings, Brice said, are in labor: smaller staffs and fewer overtime hours to do the command’s work.
“If we’re really going to be successful at reapplying funds toward buying more hardware, we’re going to have to figure out how to reduce the number of people. There’s just no way around it,” Brice said. “If we can do Lean right, we can do our work with fewer people.
“So that sets up a dilemma, right?” he added quickly. “Now, you’re a person working in a warfare center or a shipyard [asking yourself], ‘Why would I want to do this Lean? I’m going to have fewer people down here and one of them may be me. Why would I want to do this?’”
Brice’s solution: “We have a strategy that says if we are successful here, we will not fire people, we will not RIF them,” he said. Cutting payrolls can be done through normal attrition, rather than reductions in force, since many command employees are nearing retirement age.
People who get re-engineered out of a job will be redeployed to whittle down work backlogs, fill in where overtime budgets are running high, take over work that is contracted out, or be retrained for another job.
Already, Sea Systems Command has set in motion plans to trim the 19,000-person work force over the next couple of years at its warfare centers, which make and repair weapon systems. Command managers estimate that between 5 percent and 7 percent of that work force will leave through attrition over the next two years, and the command plans to hire only between 1 percent and 2 percent to fill critical positions.
“And they are counting on Lean freeing up the resources from process improvement to make up that 5 percent delta so we can still get all the work done,” Brice said.
Same thing at the Navy’s four public shipyards, which employ about 25,000 people. The shipyards, Brice said, are overloaded with work to keep up with today’s high pace of military operations, and the workload is adding pressure to grow, not shrink, the shipyard staffs. Nevertheless, the Navy plans to trim its shipyard staff 10 percent in future years starting in 2007, he said. Again, the Navy views Lean Six Sigma process improvements as a way to do that.
Brice adds that his success in reaching the $250 million savings goal will depend not only on finding labor savings, but also on how well Navy acquisition executives convince private shipyards to roll out Lean Six Sigma projects to streamline their contracted work.
But Sea Systems Command is aiming for more than cost savings — it wants culture change. Command managers aim to launch enough projects within three years so that every one of the command’s 45,000 civilian employees and 5,000 military members will play a role in making the command leaner and more efficient. And to advance that culture change, the command started a homegrown Lean Six Sigma school at Norfolk Naval Shipyard in Virginia, where it is sending hundreds of future leaders to become experts — known as black belts.
Managers in other quarters of the Defense Department are similarly hiring private-sector black belts or training their own and unleashing them on their most cumbersome operations. The Navy is doing this with its acquisition process and supply operations. The Air Force is counting successes at its air logistics centers where aircraft undergo depot maintenance.
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