1. © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 Raytheon Six Sigma (R6  ) ASEE Meeting 4 December 2001 1-1

2. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 2 The software engineering community has been placing a great deal of emphasis lately on metrics and their use in software development. The following metrics are probably among the most valuable for a software project: The Pizza Metric How : Count the number of pizza boxes in the lab. What: Measures the amount of schedule under-estimation. If people are spending enough after-hours time working on the project that they need to have meals delivered to the office, then there has obviously been a mis-estimation somewhere. Software Metrics Example

3. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 3 The software engineering community has been placing a great deal of emphasis lately on metrics and their use in software development. The following metrics are probably among the most valuable for a software project: The Aspirin Metric How: Maintain a centrally-located aspirin bottle for use by the team. At the beginning and end of each month, count the number of aspirin remaining in the bottle. What: Measures stress suffered by the team during the project. This most likely indicates poor project design in the early phases, which causes over-expenditure of effort later on. In the early phases, high aspirin-usage probably indicates that the product's goals or other parameters were poorly defined. Software Metric Example

4. © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 Agenda R R6  Overview R6  Process R6  Principles R6  Roles & Responsibilities R6  Software Example Questions & Answers 1-4

5. © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 Raytheon Six Sigma (R6  ) Overview 1-5

6. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 6 Raytheon Six Sigma – Definition: Raytheon Six Sigma is a Knowledge Based Process we will use to Transform Our Culture in order to Maximize Customer Value and Grow Our Business

7. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 7 A Historical Perspective on Six Sigma? n Motorola: Six Sigma Producibility Analysis –Ability to reproduce units of product identically and without waste n Raytheon: Six Sigma Umbrella (per Dan Burnham) –Philosophy of continuous improvement –Defect reduction and cycle time improvements in all business processes and products

8. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 8 n The classical 6 Sigma approach, utilized by Motorola, has its underpinnings in Hardware design and manufacture. n The Raytheon 6 Sigma Approach is based on benchmarking with Allied Signal and General Electric and is more broad in scope – –Includes all processes and functions –Integrates Proven Philosophies and a Number of Continuous Improvement Techniques and Tools –Supported by a full time Six Sigma Expert Network –Leads to a Culture Change Motorola 6 Sigma Approach Raytheon 6 Sigma Approach Raytheon Six Sigma versus Traditional Six Sigma

9. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 9 Raytheon Six Sigma... An Integrated Business Strategy It defines our culture — How we will work Alignment Involvement Leadership

10. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 10 A Continuum of Opportunity –Everyone –Common Sense –Empowerment –Specialists –Some Tools –Some Training and experience –Experts –Multi-disciplined tool set –Lengthy training and experience SimpleComplex Bureaucracy Busting

11. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 11 Knowledge Based Management n Ask the right questions n Act based on facts, not opinions –Get data, use data –Make it visual n Have a closed loop process n Capture lessons, share them widely In God we trust, all others bring DATA!

12. © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 R6  Process 1-12

13. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 13 Achieve Prioritize Characterize Improve Commit Visualize R6s Process Visualize the Future Commit to Change Determine Improvement Opportunities Define Current State Design & Implement Changes Celebrate & Plan for the Future

14. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 14 Visualize — Imagine the Future Create a vision of the future with a clear and pressing need for change. Align sponsorship throughout the business to maximize our benefits.

15. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 15 Current State Clear & pressing need for change Stakeholder demand Customer perceptions & Desires Market position & pressures Aspirations, Values, Goals Visualize – IPO n Tool Chest –Survey Questions –Assessment Models –Change Management Techniques –Quality Function Deployment (QFD) Tools –Balanced Scorecard –Analysis Tools –Value Stream Analysis –Catchball –Benchmarking Vision of the Future Need for Change Strategy Accountable Sponsor 1) Assess the current state. 2) Visualize alternate future states “blue sky” with stakeholders. 3) Converge to a common vision & validate (create need & generate excitement). 4) Draw the mental image that excites people and creates a need for change that demonstrates it. 5) Align and validate throughout the value stream: Customer Employees Suppliers Shareholders 6) Develop strategy (1st steps): Identify Sponsor / Change Agent 1) Assess the current state. 2) Visualize alternate future states “blue sky” with stakeholders. 3) Converge to a common vision & validate (create need & generate excitement). 4) Draw the mental image that excites people and creates a need for change that demonstrates it. 5) Align and validate throughout the value stream: Customer Employees Suppliers Shareholders 6) Develop strategy (1st steps): Identify Sponsor / Change Agent OutputsInputsProcess

16. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 16 Commit – Commit to Change Develop a committed sponsor and team aligned with the vision, accountable and energized to make change.

17. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 17 1) Sponsor personalizes vision, agrees that there’s a need, accepts the strategy & commits to change. 2) Sponsor characterizes a multifunctional team & captures resources. 3) Sponsor shares current reality & future vision with the team. 4) Team personalizes vision by exploring, understanding & accepting what’s in it for them & their organization. 5) Team education in Raytheon Six-Sigma Process. 6) Team validates need to change & translates vision into goals & objectives. 7) Team identifies target areas & shares need to change with them. 1) Sponsor personalizes vision, agrees that there’s a need, accepts the strategy & commits to change. 2) Sponsor characterizes a multifunctional team & captures resources. 3) Sponsor shares current reality & future vision with the team. 4) Team personalizes vision by exploring, understanding & accepting what’s in it for them & their organization. 5) Team education in Raytheon Six-Sigma Process. 6) Team validates need to change & translates vision into goals & objectives. 7) Team identifies target areas & shares need to change with them. Vision of the Future Need for Change Strategy Accountable Sponsor Committed Sponsor Committed, aligned & knowledgeable team Identified & Informed Target Areas Defined Goals & Objectives Commit – IPO n Tool Chest –Team Building Exercises –Raytheon Six Sigma Training –Internal/External Benchmarking Data –Strategic Vision/Mission –Customer & employee surveys –Competitive market analysis information –Internal Financial Data –Reality Tree –Win/Win Negotiation –Example Case studies OutputsInputsProcess

18. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 18 Prioritize – Determine Improvement Priorities Using facts and data, discover improvement opportunities, readiness and resources. Define goals and high level action plans. Commit resources to focused improvement project(s) in order to realize significant results.

19. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 19 Prioritized list of improvement projects Contract for change Transferred Knowledge Outputs 1) Understand Value Stream. 2) Perform Assessment(s). 3) Identify opportunities/high-leverage points: Encourage discovery Find interdependencies Identify root causes 4) Estimate expected results and prioritize opportunities. 5) Document improvement plan. 6) Obtain commitment to support plan (Contract for Change). 1) Understand Value Stream. 2) Perform Assessment(s). 3) Identify opportunities/high-leverage points: Encourage discovery Find interdependencies Identify root causes 4) Estimate expected results and prioritize opportunities. 5) Document improvement plan. 6) Obtain commitment to support plan (Contract for Change). Committed Sponsor Committed, aligned & knowledgeable team Identified & Informed Target Areas Defined Goals & Objectives n Tool Chest –Reality Trees & Fishbone Diagrams –Quality Function Deployment (QFD) –Pareto Charts –Process Flow Charts & Spaghetti Charts –Financial forecasting & Cost estimating models –Market analysis (customer care-abouts) –5 Why’s –Affinity Diagrams –Normal Group Technique –Common sense –Theory of Constraints Inputs Process Prioritize – IPO

20. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 20 Characterize – Define Existing Process and Plan Improvements Understand and document current state performance & translate the current state opportunities into a plan for improvement.

21. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 21 Prioritized list of Improvement Projects Contract for Change Transferred Knowledge Allocated Resources Characterized Process Documented Expectations with expected Benefits & Improvements Approved Project Plan Transferred Knowledge Characterize – IPO n Tool Chest –Form Team: < Team building < Raytheon Six-Sigma Training < Contracting –Validate the Problem: < Pareto < 7 Problem Solving Tools < Raytheon Six-Sigma Process –Plan the Approach: < Planning Tools < Brainstorming < Reality Trees < Affinity Diagrams –Characterize the Process: < Change Readiness Evaluations < Theory of Constraints (TOC) < 7 Problem Solving Tools < Process Flow Diagrams & Spaghetti Charts < Capacity Analysis < ANOVA, SPC, Takt, 5S < Metrics & Information Systems –Determine the Implementation Plan: < Resource Loading < ROI / Benefit analysis Tools < Planning Tools < Brainstorming –Communicate the Implementation Plan: < Message Mapping < Presentation & Interpersonal Communication Skills < Influence w/o authority OutputsInputs Process 1) Form Team. 2) Validate the Problem. 3) Plan the Approach. 4) Understand (Characterize) the Process. 5) Determine the Improvement Plan. 6) Communicate the Improvement Plan. 1) Form Team. 2) Validate the Problem. 3) Plan the Approach. 4) Understand (Characterize) the Process. 5) Determine the Improvement Plan. 6) Communicate the Improvement Plan.

22. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 22 Improve – Design and Implement Improvements Design and implement integrated improvements and control systems to maximize value.

23. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 23 Management & Control Systems Improved Process Performance Transferred Knowledge Allocated Resources Characterized Process Documented Expectations with expected Benefits & Improvements Approved Project Plan Transferred Knowledge Improve – IPO n Tool Chest –Statistics: DOE, SPC –Waste Reduction: < JIT < Level Schedules < Workplace Organization < Visual Controls < Error Proofing < Set-up Reduction –DTC –Tolerancing: < Tolerance Allocation –Defect Reduction: Performance, Process, Pareto –Problem Solving: < Brainstorming < Cause / Effect < Scattergram < FMEA –Manufacturability: < DFMA < Defect Budgeting < PCAT –Change Management Techniques. OutputsInputs Process [Use appropriate tools based on project for each step]: 1) Identify Resources… train/educate as necessary. 2) Detail Action Plan and Schedule. 3) Pull in required Tools. 4) Design the solution. 5) Execute the Plan / Implement. 6)Monitor changes. 7)Implement Controls. 8)Measure Results. [Use appropriate tools based on project for each step]: 1) Identify Resources… train/educate as necessary. 2) Detail Action Plan and Schedule. 3) Pull in required Tools. 4) Design the solution. 5) Execute the Plan / Implement. 6)Monitor changes. 7)Implement Controls. 8)Measure Results.

24. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 24 Achieve – Celebrate Achievements, Build for Tomorrow Deliver measurable results that change the way people think and act, create knowledge, build momentum for continuous improvement, celebrate success, and get people excited about doing Raytheon Six Sigma repeatedly.

25. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 25 Management & Control Systems Improved Process Performance Transferred Knowledge Embedded New Process Delivered Results to the Organization Documented Success: Case Study Lessons Learned Next Steps Recognition & Rewards Captured & Shared Knowledge Expanded R6s Community Achieve – IPO n Tool Chest –Knowledge Management System (transfer) –New Financial/ Accounting Systems –Change Management Tools –Control Charts –Organizational Development –Employee Satisfaction Monitoring Systems –Communication Systems –Data Analysis Tools OutputsInputs Process 1) Define responsibilities to support & enable process. 2) Train, education & communicate new process. 3)Measure and compare results and expectations… take appropriate action. 4) Create Success Summary. 5) Reward,& recognize change agent team. 6) Capture & Share knowledge. 7)Monitor and analyze process for Continuous Improvement Opportunities. 1) Define responsibilities to support & enable process. 2) Train, education & communicate new process. 3)Measure and compare results and expectations… take appropriate action. 4) Create Success Summary. 5) Reward,& recognize change agent team. 6) Capture & Share knowledge. 7)Monitor and analyze process for Continuous Improvement Opportunities.

26. © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 R6  Principles 1-26 4-1

27. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 27 Raytheon Six Sigma – Principles  Specify value in the eyes of the customer  Identify value stream; eliminate waste and variation  Make value flow at pull of the customer  Involve, align & empower employees  Continuously improve knowledge in pursuit of perfection 4-

28. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 28 I see waste, it’s everywhere. People are creating it and they don’t even know they’re doing it.

29. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 29 R6  - Roles & Responsibilities n Champions –Senior leaders who plan and execute the deployment in their organizations n Master Experts –Fully-trained, highly-experienced, full-time leaders responsible for planning, training, mentoring, and results n Experts –Fully-trained, full-time experts who lead improvement teams, work complex projects across the business, and mentor Specialists n Specialists –Trained for applying skills to projects in their job areas

30. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 30 Software team struggles to over come 13-month delay in defining requirements Software schedule showing 64 days negative float to contract delivery Software effort is critical path on the program Customer (U.S. Army) views software as top risk on the program CPI =.61 SPI =.79 Case for Action Project: TRACER S/W Location: Plano, TX “Software development is behind schedule”

31. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 31 After determining the planned S/W build incorporation on TRACER was at risk, this team visualized the need for a shared program purpose and use of Critical Chain Program Management. The team committed to use R6 Sigma and CCPM to identify key issues and barriers. Looking at the current state of the program, the team prioritized making improvements in the various Software Configuration Items (SCIs). R6 Sigma applications - Use of Visuals, Run Rules, Critical Chain, and Constraint Management tools were implemented. Work on SCI IC&C was stopped due to variability in requirements. The team achieved its goal to streamline the process, reduce cycle time, and free up valuable engineering effort to enable the incorporation of $720K cost avoidance. The team met daily in the All Hands Planning meetings to communicate status and barriers. They saw progress in completing tasks improved by: Use of Visuals of the SCI Inchstones Establishment of the Run Rules for Critical Chain Implementation of Constraint Management Better communication and transitioning SCI folks to support task in need. After characterizing these processes, the team found they could make significant gains by focusing on : Improving Program Communications Prioritization of the SCIs - InfoDev, EEOS, and IC&C Streamlining the SCI process and include the hardware dependencies in the work flow Project: TRACER S/W Location: Plano, TX

32. Prioritize Characterize Improve Visualize Achieve Commit © 2000, Raytheon Company. All Rights Reserved. ST, 1 March 2001 1 - 32 n SPI =.95CPI =.73 n $720K cost avoidance in software implementation stage n Software schedule reduced to 24 days negative float n Prime customer no longer considers Raytheon software as top risk item on the program n Customer says “Raytheon software is now under control” n Prompted rest of program and prime to apply Critical Chain n Spawned 6 Sigma Specialist project for “Out of the Box Rewards” as incentives to meet schedule Results (as of April 2001) Entire team is focused on Critical Chain