Saving Money on Submarine Procurements

Naval Sea Systems Command believed that the price it was paying for Virginia class submarines was too high. The Command used Lean Six Sigma process mapping methods to study the overall procurement process and make improvements. Fourteen subordinate processes were identified and analyzed. Inefficiencies were eliminated; communication methods were improved; the number of reports was reduced; performance standards were added and approval times were shortened. All of these improvements saved approximately $15 million per submarine. This LSS project also set the stage for follow-on improvement projects to further reduce submarine cost

Problem

Naval Sea Systems Command (NAVSEA) provides program management and engineering support for procurement of maritime vessels of all kinds for the U.S. Navy.  NAVSEA is organized into program executive offices (PEOs) that align with the various types of vessels.  One of these offices--PEO Submarine-- identified the need to reduce costs in the procurement of Virginia class submarines.  The Virginia class is a new, multi-mission, nuclear powered submarine that is 377 feet long and carries a crew of 134. Its procurement was under evaluation due to high recurring unit cost.  It was believed that these cost issues could prevent procuring a sufficient number of submarines to sustain required national capability.  PEO Submarine executive leadership identified the goal to reduce the cost of each submarine by using Lean Six Sigma (LSS) methodologies; with a focus on Lean process mapping tools to identify and eliminate waste. 

Approach

NAVSEA formed a team of cross functional individuals to complete the project and reduce procurement costs.  An Executive Planning Session was held to define 14 major Enterprise Level processes.  Each of these processes was value stream mapped to define the current state.  These value stream maps were organized into four main groups-- Shipbuilder, Design Yard, Government, and Integration-- to show the scope of the overall submarine building process, and the hand-off points between subordinate organizations and processes.  The team captured Voice of the Business and Voice of the Customer needs in order to assess individual steps in the value streams for effectiveness in the delivery of a Virginia class submarine. 

Based on these value stream assessments, the team was able to analyze the current state and identify process inefficiencies (wastes) and areas for improvement.  The team developed improvement and implementation plans to eliminate the waste and reduce costs.  The key improvements included integration of program teams to reduce approval times, reduction and integration of reports, improved communication methods between organizations, and standards to reduce cycle time of processes. 

The team produced future-state value stream maps that included the improvements and contained status and milestone points to assist in program management.  Process improvements included controls to maintain the improvements and identify future process issues.  In addition to providing a new process, the team used subject matter experts from across the enterprise to effectively break down communication barriers between organizations involved in the process.  Throughout the project, executive and team leadership consistently supported and drove the efforts.  

Results

Across the 14 value streams, the team identified improvements to the current state; thereby allowing quick-win cost reductions of approximately $15 million per submarine.  The improvements were typical of a first-pass process improvement project which included modified acquisition strategies, elimination of non-value-added activities (process waste) and information flow improvements.  Additionally, the team developed detailed process maps for the major value streams which will enable training and further improvements.