Benefits of Implementing Lean Practices and the Impact of the Lean Aerospace Initiative in the Defense Aerospace Industry and Government Agencies

In the 1980’s, many United States industrial organizations started developing new production processes to improve quality, reduce cost, and better respond to customer needs and the pressures of global competition. This new paradigm was coined Lean Production (or simply “Lean”) in the book The Machine That Changed The World published in 1990 by researchers from MIT’s International Motor Vehicle Program. In 1993, a consortium of US defense aerospace firms and the USAF Aeronautical Systems Center, together with the AFRL Materials and Manufacturing Directorate, started the Lean Aircraft Initiative (LAI) at MIT. With expansion in 1998 to include government space products, the program was renamed the Lean Aerospace Initiative. LAI’s vision is to “Significantly reduce the cost and cycle time for military aerospace products throughout the entire value chain while continuing to improve product performance.” By late 1998, 23 industry and 13 government organizations with paying memberships, along with MIT and the UAW were participating in the LAI.

The Benefits of Re-Evaluating Real-Time Fulfillment Decisions

At the time of a customer order, the e-tailer assigns the order to one or more of its order fulfillment centers, and/or to drop shippers, so as to minimize procurement and transportation costs, based on the available current information. However this assignment is necessarily myopic as it cannot account for all future events, such as subsequent customer orders or inventory replenishments. We examine the potential benefits from periodically re-evaluating these real-time order-assignment decisions. We construct near-optimal heuristics for the re-assignment for a large set of customer orders with the objective to minimize the total number of shipments. We investigate how best to implement these heuristics for a rolling horizon, and discuss the effect of demand correlation, customer order size, and the number of customer orders on the nature of the heuristics. Finally, we present potential saving opportunities by testing the heuristics on sets of order data from a major e-tailer.

Logistics Network Design with Differentiated Delivery Lead-Time: Benefits and Insights

Most logistics network design models assume exogenous customer demand that is independent of the service time or level. This paper examines the benefits of segmenting demand according to lead-time sensitivity of customers. To capture lead-time sensitivity in the network design model, we use a facility grouping method to ensure that the different demand classes are satisfied on time. In addition, we perform a series of computational experiments to develop a set of managerial insights for the network design decision making process.