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New Horizons for Shipbuilding Process Improvement

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Journal of Ship Production, Vol. 22, No. 2, May 2006, pp. 87–98

New Horizons for Shipbuilding Process Improvement

Bahadir Inozu,*† M. J. “Nick” Niccolai,‡ Clifford A. Whitcomb,*†§ Brian MacClaren,*† Ivan Radovic,*† and
David Bourg*¶
*School of Naval Architecture and Marine Engineering, University of New Orleans, New Orleans, Louisiana, USA
†
Novaces, LLC, New Orleans, Louisiana, USA
‡
Northrop Grumman Ship Systems, Pascagoula, Mississippi, USA
§
Naval Postgraduate School, Monterey, California, USA
¶
David M. Bourg & Associates, LLC, Kenner, Louisiana, USA
“In 2004, we start an Initiative—Lean Six Sigma Initiative to achieve our Op Ex Goals. We will be conducting a number of on
boarding sessions for Six Sigma with senior leaders in DOD, NAVY, and most importantly Defense Contractors. We will require
Six Sigma training for direct reports.”
John Young, Assistant Secretary of the Navy (Research, Development, and Acquisition)

The announcement of NAVSEA’s Lean Six Sigma initiative has ushered in a new era
in the ways that naval combatants are designed, built, and operated. As the Navy’s
budgetary constraints increase in the coming years, the challenges they face in the
21st century will grow. New levels of process performance are mandated. This paper
first highlights the opportunities that the Lean Six Sigma roadmap brings to shipbuild-
ing process improvement and then details the efforts to adopt Lean Six Sigma and
align it with the continuous improvement initiative at Northrop Grumman Ship Sys-
tems. Aspects of management strategy, design for Six Sigma, and replicating pro-
cess improvements as part of integrating Lean Six Sigma with Knowledge Manage-
ment are discussed.

1. Introduction
THE GEOJE SHIPYARD of Samsung Heavy Industries in Korea
builds over 40 ships per year, which is a benchmark as the world’s
greatest production efficiency in shipbuilding. In comparison, the
productivity of US shipyards is only a small fraction of this world-
class benchmark. It has been claimed that one can buy a “foreign
built vessel at a third of the cost of domestic shipyards” (ICAF
2001) and “Korea can sell a vessel for less than what domestic
shipyards pay for materials” (ICAF 2002).
Presented at the 2005 Ship Production Symposium, Society of Naval Ar-
chitects and Marine Engineers, October 19 to 21, Houston, Texas.
The productivity gap between the Geoje shipyard and US ship-
yards not only illustrates the potential for process improvements
but also the extreme competitive pressure to the US shipbuilding
base. In response to the pressure, numerous methodologies are
now being implemented in US shipbuilding to accelerate innova-
tion to products and processes. Six Sigma, Lean, and Theory of
Constraints (TOC) emerged as the dominant process improvement
models of today. In addition, Design for Six Sigma (DFSS) is
gaining wide acceptance as the fourth model, especially where
incremental process improvements are not sufficient to bring the
process capability to the desired level, necessitating complete re-
design of the process and/or product. There are two other initia-
tives that are critical for successful implementation and sustain-
ability of process improvement: Change Management and

MAY 2006 8756/1417/06/2202-0087$00.49/0 JOURNAL OF SHIP PRODUCTION 87

Knowledge Management. Both of these approaches are evolving
as process improvement methodologies mature and converge.
Various companies are embracing Lean, Six Sigma, or TOC and
are passionate about the one they implement. However, these com-
panies increasingly recognize the complementary and overlapping
aspects of these methodologies as well as their shortcomings.
Thompson (2003) directly correlates the current state of the meth-
odologies to the Utterback-Abernathy Technology Innovation
Model. This innovation model “starts with a fluid phase when
many uncertainties are in the environment and many possible
solutions are developed and tried. The second phase is a transi-
tional phase when the technology begins to converge on common
benefits and features. During this phase ineffective techniques are
discarded and in the third or specific phase a dominant technology
design emerges with ongoing incremental improvements”
(Thompson 2003). Thompson argues that “the broad range of
innovation and improvement techniques practiced from the 1960’s
through the 1980’s represents the fluid phase.”
As success stories emerge from the implementation of these
methodologies, shipbuilders will be encouraged to take advantage
of cutting edge, maturing process improvement initiatives in the
extremely competitive global shipbuilding enterprise. The National
Shipbuilding Research Program (NSRP) has played a major role in
the introduction of Lean Manufacturing to the US shipbuilding
base since 1999. NSRP has been involved in Lean projects with
resulting successful implementations in US shipyards since 1999.
Initial spot improvements have evolved into industry-wide Lean
efforts. It was reported that “of the $377M in cost reductions
recently reported by the U.S. shipbuilding industry, over half were
from their Lean efforts. As the industry exploits this technology
more cost reductions are to be expected” (Whiddon 2005).
While application of Lean is expanding in US shipyards, imple-
mentation of Six Sigma and its relatively recent integration with
Lean remain limited to only a few shipyards. At the same time, Six
Sigma and Lean-Six Sigma are embraced by corporations world-
wide, from finance to health care, both in manufacturing and
transactional processes, as shown in Table 1 (Liu 2005, www
.isixsigma.com).
Evolution of Lean Six Sigma and DFSS in US shipbuilding is
shown in Fig. 1. During the 2000–2002 period, pilot Six Sigma
studies were conducted at Norfolk Naval Shipyard and Northrop
Grumman Newport News Shipyard (NGNN). In the summer of
2002 Northrop Grumman Ship Systems (NGSS) began transition-
ing their Lean program to a Lean Six Sigma (LSS) program in
conjunction with the LSS in Shipbuilding project. This project is
sponsored by the Office of Naval Research (ONR) ManTech Pro-
gram and conducted at Advanced Maritime Technology Applica-
tion Center (AMTAC) at University of New Orleans (UNO). This
project has enabled implementation of LSS at NGSS approxi-
mately 12 months earlier than originally planned. In 2003, General
Dynamics Electric boat started Six Sigma training, which now
includes participants from Bath Iron Works (BIW) as well (Thax-
ton & Bollentin 2004).
In 2004, Assistant Secretary of the Navy, Research, Develop-
ment, and Acquisition (ASN RDA) and NAVSEA attached ur-
gency to adapting Lean Six Sigma process improvements and
tools to shipbuilding and ship repair. Vice Admiral Phillip Balisle,
NAVSEA commander, stated that “the necessity of applying
⬘Lean Six-Sigma⬘ principles to both production and administration
processes at Naval Sea Systems Command becomes more acute
88 MAY 2006
with each passing day” (Copeland 2005). NAVSEA’s implemen-
tation of Lean Six Sigma in earnest is expected to accelerate
industry-wide acceptance of Lean Six Sigma methodology in US
shipbuilding.
Further integration of Lean Six Sigma with TOC appears to be
led by Enterprise AIRSpeed. NAVSEA is also using TOC along
with Lean and Six Sigma through Task Force Lean. Formed in
August 2004, Task Force Lean is designed to support Lean proj-
ects in the Navy’s NAVSEA command structure. John Young,
ASN (RDA) from Navy/Marine Corps Acquisition Source Docu-
ment, stated in Blueprint for the Future that “Each [Navy] program
will seek to hold at least three LEAN events and seek to apply six
sigma and theory of constraints as appropriate” (Young 2004).
Genesis of this task force can be traced back to the formation of
the Naval Aviation Enterprise 3 years ago and the subsequent
implementation of a host of Six Sigma, TOC, and Lean projects
according to Smith. In addition, on May 11, 2004, the Committee
on Armed Services of the US Senate urged the Department of
Defense “to place greater emphasis on LEAN manufacturing tech-
nologies and processes, and to consider experimentation with the
wholesale adoption of such technologies and processes across the
spectrum of an entire acquisition program.” In particular, the De-
partment was asked to “consider the potential of incorporating
LEAN manufacturing technologies and processes to reduce total
ownership cost beginning with concept development and continu-
ing through developmental testing for an acquisition program.”
This paper first highlights the opportunities that the Lean Six
Sigma roadmap brings to shipbuilding process improvement and
then details the efforts to adopt Lean Six Sigma and align it with
the continuous improvement initiative at NGSS. Aspects of man-
agement strategy, Design for Six Sigma, and replicating process
improvements as part of integrating Lean Six Sigma with Knowl-
edge Management are discussed.
2. Comparison and integration of Lean, Six Sigma,
and Theory of Constraints
Each of the above-mentioned process improvement models
have their strengths and weaknesses. Knowledge Management and
Change Acceleration are complementary for sustainability, insti-
tutionalization, and for increasing the return on investment from
process improvement projects. Nave’s comparison (2002) of
Lean, Six Sigma, and TOC is shown in Table 2.
The origin of Six Sigma can be traced back to the 1980s, when
Motorola first introduced the concept. It originally focused on
reducing variation in processes. However, Six Sigma has evolved
into one of the most powerful management strategies to funda-
mentally change the way corporations do business and to improve
their bottom line.
Six Sigma began as a quality improvement effort to identify and
reduce all sources of variation. It then evolved into an overall
management strategy for measuring and improving performance
across different processes. The main emphasis of Six Sigma is the
application of statistical tools in a disciplined manner, which re-
quires data-driven decision making. Six Sigma is about controlling
processes to get the desired results. The target process can be any
process critical to customer satisfaction and bottom-line benefits.
Each process has a number of inputs, and each input has various
degrees of impact on the output. It focuses on the process and
suppliers’ inputs and outputs that are received by customers of the
JOURNAL OF SHIP PRODUCTION
 Table 1 Six Sigma applications

Manufacturing Financial services Medical

Motorola Citibank Commonwealth Health Corporation
Caterpillar JP Morgan Chase Mayo Clinic
Northrop Grumman Bank of America Good Samaritan Hospital
Lockheed Martin Merrill Lynch Virtua Health
Raytheon DTCC Valley Baptist Health System
Samsung Allstate Financial Yale-New Haven Medical Center
LG American Express Boston Medical Center
Seagate SunTrust Mount Carmel Health System
Sharp, Indonesia Deutsche Bank Charleston Area Medical
Toshiba HSBC Heritage Valley Health System
General Electric Maybank Berhad Aultman Hospital
Honeywell Scope International Bay Medical Center
Ansell Malaysia SinoPac International Bank Thedacare, Inc.
COB Technology Taishin International Bank Alexandra Hospital, Singapore
Kumpulan Jebco Taiwan Security Baxter Healthcare
ABB Xiamen Switchgear Bausch & Lomb
Electronics
AMD The Women and Infants Hospital of Rhode Island
Sony
EPCOS (Siemens) Alexandra Hospital, Singapore
3M
TCL Group
Agilent Telecommunications
Giant
GIT Celcom, Malaysia
Boeing
HTC Electronics Testing Center, Taiwan
Allied Signal
Wistron ZTE Corporation, China
Bombardier
CMCS Motient Corporation
Eastman Kodak
Corning Telekom Malaysia
Johnson & Johnson
USI
Automotive
Food, beverage, and tobacco WUS
Ford Motor Company
Pepsico Foxconn
Brilliant Automotive
Calbee Japan
Utilities BMW China
IMC
Entergy
Singapore Food Industries Leisure
Dominion Resources
Starwood Hotels & Resorts
Information technology Singapore Power
Ritz-Carlton
Microsoft
Metals and mining
Lenove Computer, Haiter, China Pharmaceutical
Elementis
Tata India Aventis Pharma
EDS Retail Eli Lilly
Sears Roebuck & Company McKesson
Energy
Viridian Group Farming Construction/engineering
Singapore City Gas Golden Hope, Malaysia Bechtel
Fluor Daniels
Chemicals Real estate
Siebe PLC
W. R. Grace Sallie Mae
Ranhill, Malaysia
Crompton
Transportation
Hercules Pulp & Paper
CSX Corporation

process. The challenge is to make the necessary adjustments in
processes so that the impact of noise or uncontrollable input vari-
ables are minimized to limit variation, that is, to control your
process. Six Sigma tools enable the identification of critical input
parameters with the biggest impact on product or process varia-
tion. Interestingly, experience has shown that in many cases these
critical parameters are not intuitive.
One of the most powerful tools that Six Sigma offers to an
organization is a structured approach to problem solving. A
project’s success depends on the careful planning and completion
of each phase. The core phases of the Six Sigma strategy are:
define, measure, analyze, improve, and control (DMAIC). A pro-
cess that attains Six Sigma level capability means it has 3.4 defects
per million opportunities, an almost error-free process.
In a broader business sense, Six Sigma is the pursuit of world-
class quality. It is the quest for providing a better product or
service, faster, and at a lower cost than the competition. In par-
ticular, there are three basic goals pertaining to business, technol-
ogy, and culture that are part of this pursuit for world-class quality.
First, Six Sigma supports the long-term business plan to achieve
customer satisfaction while simultaneously increasing market
share and profit margin. Next, leaders are trained to use state-of-
the-art technology to meet performance goals. Finally, Six Sigma
breeds a world-class culture to maximize competitive advantage
(Inozu 2003).
TOC was originally developed by Eliyahu Goldratt and pub-
lished in his book The Goal (1992). This approach makes two
assumptions: First, “it is a form of systems thinking that looks at

MAY 2006 JOURNAL OF SHIP PRODUCTION 89

 Fig. 1 Evolution of Lean Six Sigma and DFSS in shipbuilding

an enterprise as a complete and complex system where any num-
ber of constituent parts interact with one another.” Second, if a
constraint “is anything that limits a system from achieving higher
performance versus its goal,” then every system must have at least
one and at most no more than a few constraints or limiting factors.
Recognizing the existence of constraints offers an opportunity for
improvement because it focuses efforts on the most productive
area: identifying and managing the constraints. TOC also refers to
a series of tools called “thinking processes” and the sequence in
which they are used. These tools allow people “to analyze their
systems to determine what to change about the system, what to
change the system to, and a way to cause the change” (Breen et al.
2002).
2.1. Integration of Lean and Six Sigma
In the past 3 years many organizations realized that Lean and
Six Sigma methodologies complement each other. The integration
of Lean and Six Sigma provides a rapid process improvement
strategy for attaining organizational goals. When separated, Lean
Manufacturing cannot bring a process under statistical control, and
Six Sigma cannot dramatically improve cycle time or reduce in-
vested capital (Mendes 2004). Together, synergistic qualities are
created to maximize the potential for process improvement. Figure
2 shows the combined power of Lean and Six Sigma. M. L.
George describes LSS as “a methodology that maximizes share-
holder value by achieving the fastest rate of improvement in cus-

Table 2 Comparison of Lean, Six Sigma, and Theory of Constraints

Program Six Sigma Lean Thinking Theory of Constraints

Theory Reduce variation Remove waste Manage constraints

Application guidelines 1. Define. 1. Identify value. 1. Identify constraint.
2. Measure. 2. Identify value stream. 2. Exploit constraint.
3. Analyze. 3. Flow. 3. Subordinate processes.
4. Improve. 4. Pull. 4. Elevate constraint.
5. Control. 5. Perfection. 5. Repeat cycle.
Focus Problem focused Flow focused System constraints
Assumptions A problem exists. Waste removal will improve business Emphasis on speed and volume.
Figures and numbers are valued. performance. Uses existing systems.
System output improves if variation in Many small improvements are better Process interdependence.
all processes is reduced. than system analysis.
Primary effect Uniform process output Reduced flow time Fast throughput
Secondary effects Less waste. Less variation. Less inventory/waste.
Fast throughput. Uniform output. Throughput cost accounting.
Less inventory. Less inventory. Throughput—performance measurement
Fluctuation—performance measures for New accounting system. system.
managers. Flow—performance measure for managers. Improved quality.
Improved quality. Improved quality.
Criticisms System interaction not considered. Statistical or system analysis not valued. Minimal worker input.
Processes improved independently. Data analysis not valued.

90 MAY 2006 JOURNAL OF SHIP PRODUCTION


Fig. 2 Integration of Lean and Six Sigma
tomer satisfaction, cost, quality, process speed, and invested capi-
tal” (Nave 2002). Once the projects are selected, depending on the
nature of the problem, the most appropriate methodology mix will
be used. The integration of Lean and Six Sigma provides a
complementary strategy for attaining organizational goals.
Lean Six Sigma provides the tools to reduce production steps
(parts) and to increase process capability. As shown in Fig. 3, the
Six Sigma approach becomes more appropriate as more complex
problems are addressed using sophisticated tools (Mendes 2004).
Today’s complex commercial ships and naval warfighters require
large volumes of material, parts, and equipment. As the amount of
material, parts, and equipment increases, so does the opportunity
for defects and variation within the shipbuilding process. This
situation is further complicated by the number of different pro-
cesses that occur before a single assembly becomes a part of the
ship. Table 3 compares the overall yield and sigma level attained
based on the number of steps, or the number of defect opportuni-
ties, in any given process. Conceptually, the arrow indicates the
direction of improvement attained with Lean Six Sigma efforts.
The large volume of material, parts, and equipment must also be
moved from one place to the next until it finally makes its way to
the ship. The cost of waste and lead time is potentially very high.
Likewise, the complexity of ship system design and the cost to
Fig. 3 Comparison of Lean and Six Sigma (Mendes 2004)
MAY 2006
rework these defects leaves little room for error. A design defect
in some scenarios can result in serious setbacks. As shown in Fig.
4, domino effects of design defects can have a serious impact on
the final product.
The integration of Lean and Six Sigma is a relatively new
concept in shipbuilding and is still evolving. Northrop Grumman
Ship Systems has pioneered the integration of Lean Six Sigma in
each of its shipyards in 2001, and the results have been impressive.
In 2004, the Quality and Process Improvement department of
NGSS initiated or sponsored 94 Lean and Six Sigma projects
throughout the sector. The total value of these projects has resulted
in an estimated cost benefit of $32 million. Pending or incomplete
Lean and Six Sigma projects are expected to increase this benefit
estimate to nearly $46 million (Winter 2005).
2.2. Examples of Lean Six Sigma implementation
Since 2000, the authors have been involved in Six Sigma imple-
mentation, starting with the Continuous Improvement of Drydock-
ing Project sponsored by the Office of Naval Research via the Gulf
Coast Region Maritime Technology Center at the University of
New Orleans. Pilot projects included reduction of growth work
during dry-docking, ship repair specification development, crane
availability improvement, paint cost reduction, ship repair contract
development, error reduction in shipyard accounts payable pro-
cess, as well as tow tank process improvement. The first wave of
LSS implementation included accuracy of deflanging I beams and
accuracy of stiffener fitting process at panel line. These projects
are summarized below (Radovic et al. 2004).
2.2.1. Accuracy of deflanging I beams. A baseline study was
conducted to identify the performance of the current process and
adherence to accepted hull standards. The focus of the project was
on deflanging I beams after data from the baseline study revealed
JOURNAL OF SHIP PRODUCTION 91
 Table 3 Comparison of overall yield and sigma level with number of process steps

From Six Sigma Research Institute, Motorola University.

excessive variation in the process. This variation creates welding
rework and results in added weight to the ship’s structure. The
standard procedure for the process was analyzed and found to be
inefficient in some areas. This increased cycle time and added to
process variation. Maintenance practices were also studied to
identify the effectiveness of the current maintenance policy and to
examine the availability of the machine. To reduce the variation of
the deflanging process and more effectively meet hull standards,
several improvement areas were identified. A modification to the
web sensor that controls the plasma cutting torches was completed
to reduce deflanging variation. The modification significantly im-
proved process controllability and also reduced the amount of
material left on the structure after being cut (Radovic et al. 2004).
2.2.2. Accuracy of stiffener fitting process at panel line. To
improve the accuracy of structural placement and neat edge align-
ment measurements, the researchers conducted several multifunc-
tional department meetings to come up with a new tool that will

Fig. 4 Domino effect of design defects

92 MAY 2006 JOURNAL OF SHIP PRODUCTION

improve measurement accuracy. Several designs were presented,
and a decision was made to build a new tool. The application of
the new measurement tool is expected to significantly improve
panel line accuracy. In addition, it was also decided to implement
a Lean tool called “visual factory” to help people working in the
panel line manage measurement data collection through display-
ing the data as soon as collected. A bulletin board displaying both
neat edge alignment and structural placement measurements was
placed in the panel line to help the production team see how the
process performs over time. The bulletin board will give manage-
ment a picture of the processes without interfering with production
(Radovic et al. 2004).
2.2.3. Validation of savings. Accounting for all cost of poor
quality costs (CopQ) represents a major challenge when trying to
quantify the benefits of LSS projects. Financial indicators are
based on investment and savings. For shipyard LSS projects, there
are two investors: shipyard and ship owner (customer). If a project
is successful, the savings accrue to the shipyard or ship owner or
both. This situation results in two indications of financial worth,
one to each investor. To better illustrate validation of savings, we
will show the example stiffener welding project (Radovic et al.
2004).
2.2.3.1 Shipyard savings. Savings to the shipyard include:
• Reduced rejection of stiffener due to quality
• Increased processing speed allowing less labor
• Reduced cost of welding wire due to smaller weld size
• Reduced cost of weld rework due to improved quality
• Reduced beam setup time
• Reduced inspection time.
It should be noted that weld-grind and grind costs were deter-
mined by timed experiment for sample panels undergoing rework.
Defects and defect rates with associated cost before improvements
and after improvements were computed.
2.2.3.2. Shipowner savings. Cost savings that are available to
the ship owner include improved ownership costs, and in the case
of stiffener deflanging and welding, these ownership costs are
principally derived from reduced dead weight of the vessel. Using
methods developed by a ship program office to estimate the ben-
eficial effects of weight reduction, the savings to the ship owner
for that weight reduction can be found, over the life of the ship.
However, this is only part of the weight reduction. Improvements
to the stiffener quality resulted in reducing its weight. A formula
developed by the ship program office includes calculations of fuel
savings for the ship owner resulting from the weight reduction.
When the ship contract is a cost plus contract, savings to the
shipyard are also savings to the ship owner. So, the net savings to
the ship owner include both the ownership costs and the cost of
construction. However, the timing of these costs is different. Sav-
ings from decreased ownership costs occur for every year of ship
operation, and savings from decreased cost of construction repre-
sent one-time savings, occurring when the ship is constructed.
2.2.4. Project costs. Project costs are principally salary costs and
training costs with a small amount of supplies expended. Since
MAY 2006
employees may have multiple roles and multiple LSS projects, the
time devoted to each project is used to develop a percent of time
devoted to this project. This percent is then used to obtain a pro
rata basis for the employee time. Each employee who is a Black
Belt candidate is expected to complete three six sigma projects per
year, so the training cost needs to be amortized over the three
projects. Supplies are also used on projects with a pro rata ab-
sorption estimate. The salary and training costs dominate. Some
other costs include the cost of hourly participants and material
costs for the fabrication of test panels. Each of these costs is
determined in the order outlined here. Table 4 illustrates the cost
categories experienced by the shipyard during the life of the proj-
ect.
Using this method, the shipyard return on investment (ROI) for
the above-mentioned projects is calculated to be 2,409.7%. The
ship owner ROI is determined to be 486.7% as a result of the
stiffener welding LSS project.
3. Design for Six Sigma
Current research into the theory and practical application of
Lean Six Sigma is based on identifying hard data and minimizing
metric variation in processes, eliminating waste and reducing
cycle time, and implementing proven best practices in the domain
at hand. Many successful implementations have been accom-
plished in the health care, automotive, telecommunications, and
aerospace communities, to name a few. Although the gains from
Lean and Six Sigma have been impressive, many organizations
using Six Sigma processes reported that a 4.5 to 5 sigma wall
limited full realization of benefits due to as-designed product and
process aspects. In order to overcome this wall, Six Sigma ex-
panded beyond the original aspects applied to production pro-
cesses and moved into the front end—the design of the product—
as the DFSS methodology.
DFSS is fundamentally a systems engineering-based product
development process methodology that focuses on stakeholder
(customer) satisfaction. In the ship system design context, DFSS
has the following characteristics:
• Domain (and even organization) specific collection of
“best practices”
• Optimization of cost to quality (CTQ) metrics for best
system performance
• Translation of voice of the customer (VoC) into a design
while quantifying the design’s uncertainties (risk, schedule,
cost, technical) based on output metrics
• Uses tools to understand and control key factors that de-
liver critical customer attributes robustly in the face of “noise”
(variation).
Table 4 Template of Lean Six Sigma project cost categories
Type of Cost Amount
Black belt candidate
Hourly meeting costs
Fabrication costs: labor
Fabrication costs: material
From Radovic et al. 2004.
JOURNAL OF SHIP PRODUCTION 93
 As highlighted in many commercial sector deployments, a
DFSS-based product development process leads to payoffs. The
payoffs of DFSS implementation in ship design, acquisition, and
production are:
• Improvement of ship production and operational capabil-
ity through early stage intervention and consideration
• Improved stakeholder (customer) satisfaction
• Reduced development cycle times
• Better matched product capability (e.g., operational effec-
tiveness)
• Reduced life cycle cost.
DFSS is used by major corporations to reduce time to market,
increase consumer satisfaction, improve quality, and incorporate
service and manufacturing issues within the design process. Suc-
cessful implementations of DFSS in the industrial arena result in
savings of millions, an increase in market share, and a decrease in
manufacturing and quality problems. Corporations successfully
employing DFSS include General Electric (GE), Ford, Johnson &
Johnson, AlliedSignal, Dow Chemical, Boeing, Lockheed Martin,
Cummins Engine, Maytag, and 3M Corporation, to name a few.
By implementing DFSS, a team from GE used DFSS to improve
on-time delivery and increase productivity by changing the test
and repair process for refrigerators. As a result, GE saved $4
million on this process improvement alone. When Ford Motor
Company started using DFSS in their product development pro-
cesses, they discovered that they could use 50% fewer engineering
resources by designing the product right the first time. Dow
Chemical uses DFSS in their product design and development,
realizing significant benefits not only to production, but also to
customer satisfaction, thus saving millions of dollars.
DFSS in the shipbuilding application leverages Six Sigma pro-
gram savings by extending the philosophy to the design and en-
gineering phases in the shipbuilding arena. DFSS involves imple-
menting procedures and methods to understand stakeholder
desires, needs, and requirements in order to design products that
are responsive to the customer. Fundamentally, DFSS processes
help the engineer to optimize those parameters that are critical to
product quality, resulting in products and processes that are sim-
pler, more reliable, and have reduced variation (Mader 2002,
Gupta 2001, Harry & Schroeder 2000, Eckes 2001, Creveling et
al. 2003). DFSS complements existing enterprise implementations
of Lean Thinking, Six Sigma, and TOC by expanding consider-
ation to everything associated with the ship system, in a holistic
sense, out from production and manufacturing in both directions:
upstream into the fuzzy front end of ship concept development
based on customer needs and downstream into the projected op-
erational outcomes envisioned for the ship system in the end-user
environment. Table 5 outlines the relationship of DFSS to the
other initiatives.
For the shipbuilding enterprise, DFSS depends on the applica-
tion of methods and tools to the earliest stages of the ship product
development process (PDP). These tools include both those from
Lean Six Sigma, as well as several from quality management and
decision analysis areas. The most widely applied methods in the
earliest stages of the ship PDP are the Voice of the Customer
Tables (VOCT), Critical to Quality (CTQ) matrix, Quality Func-
tion Deployment (QFD), and multiple criteria decision making
(MCDM).
94 MAY 2006
Table 5 Expansion of Table 2: aspects to Design for Six Sigma
Program Design for Six Sigma
Theory Right product
Application 1. Identify opportunity
guidelines 2. Define stakeholder (customer) needs
3. Design right product
4. Optimize product and process
5. Validate outcome
Focus Stakeholder needs
Assumptions Voice of the customer can be defined
Requirements won’t change
Meeting defined stakeholder expectations results in
improved outcomes for all
Primary effect Stakeholder satisfaction
Secondary Appropriate application of resources
effects Incorporation of service and manufacturing issues within
design process
Requirements traceability
Reduced development cycle times
Better matched product capability (e.g., operational
effectiveness)
Variation centered on right aspects
Improved stakeholder value
Criticisms Multiple conflicting criteria require complex balancing of
stakeholder expectations
Requirements traceability difficult to manage for complex
products
Stakeholder a priori preference capture may not yield
highest satisfaction outcome
These methods allow the capture of stakeholder preferences, the
identification and priority ranking of the most critical product and
process attributes, the capability to trace needs to requirements to
specifications from the highest level of stakeholder need definition
down to the detailed specification of critical product metrics and
appropriate tolerances, and the application of methods to allow
explicit trade-off among multiple conflicting objectives, resulting
in providing the highest quality ship system product outcome for
all stakeholders involved.
Important Six Sigma methods used in ship systems DFSS in-
clude process capability and tolerancing, as they apply both to the
definition, measurement, and validation of product production as-
pects, and the quantification of supply chain integration effects.
By providing methods and tools to enable the quantification of
process and supply chain capabilities, engineers can now define
process and product characteristics to enable Six Sigma levels of
process capability to be defined during the earliest PDP design
stages before the ship construction process begins, thus making it
possible to break through the 4.5 to 5 sigma wall that Six Sigma
implementations alone cannot seem to exceed.
NGSS is now exploring new frontiers as they test the applica-
tion of DFSS in the design of next-generation programs, such as
DD(X) and the Integrated Deepwater System (IDS). UNO has
been collaborating with NGSS in pioneering these efforts since
2003 in its Ship Systems Design for Six Sigma project. This
project involves a joint team of researchers from NGSS and the
UNO Gulf Coast Region Maritime Technology Center. Research-
ers work on how the ship product design process can be defined to
mitigate production problems before they occur.
JOURNAL OF SHIP PRODUCTION
 4. Knowledge Management and Lean Six Sigma
The marriage between Knowledge Management and Lean Six
Sigma has been recognized as a valuable way to capitalize on
gains generated by continuous process improvement programs.
This approach works by transferring lessons learned and best prac-
tices among multiple business units as part of the enterprise ex-
cellence tool kit, as shown in Fig. 5. Moreover, Booz Allen Ham-
ilton state that a well-developed best practices transfer program
helps a company unlock hidden value within the company and
drives step-change improvements in performance (Dehoff et al.
2001). Critical to the success of a replication or best practices
program are identification of replication opportunities and best
practices, transfer of those capabilities among business units,
adoption and adaptation of those practices by specific business
units, and finally monitoring results.
The 2003 American Productivity and Quality Center (APQC)
benchmarking study (2003), entitled “Replicating the Gains from
Six Sigma and Lean: Capturing and Transferring Knowledge and
Best Practices,” discussed key strategies taken by five partner
companies for replicating gains from Six Sigma. These partner
companies include DuPont, Ford Motor Company, Intuit, Johns
Manville, and Raytheon.
All these companies report success in their replication initia-
tives, and they all share common themes. For example, they use
information technology (IT) tools to facilitate sharing and not to
replace direct communication. They encourage communication
through various mechanisms, such as face-to-face meetings, com-
munities of practice, and subscription services. They make efforts
to raise awareness of replication and process improvement initia-
tives through company newsletters, bulletins, and other means.
They educate their employees on the benefits of knowledge shar-
ing. They have integrated sharing and replication into their process
improvement work flows. If there is one area where there exists
some disagreement, it is in terms of offering incentives to em-
ployees to encourage sharing and replication. For example, Ford
Fig. 5 Integrating a culture of continuous improvement
MAY 2006
expects employees to share and replicate their results. They cite
that the benefits of doing so are incentive enough, whereas other
companies, such as Johns Manville, provide financial incentives.
Other companies fall somewhere in between.
Based on this benchmarking study, the APQC summarized sev-
eral key elements for successful replication. These include strong
leadership support, accountability, integration, training, metrics,
and recognition. These findings are supported by results realized
by other companies. For example, Texas Instruments reports simi-
lar strategies to enable sharing of best practices.
Another underlying theme discussed in the literature is the need
to adapt these strategies to the business under consideration. All
companies are different with different cultures, resources, and
capabilities. What works for one may not be the best solution for
another. Indeed, several of the companies, discussed in the litera-
ture, have dedicated staff ranging from a few dozen to a few
hundred whose sole job is knowledge transfer and best practices
replication. Not all companies have this luxury. At the same time,
much of the literature on knowledge transfer and best practices
replication contains attempts to condense successful strategies
down to a single bulleted list of things to do, or a single process
flow diagram (Ford Motor Company 2005, Uygur 2004, Vestal
2004, Schleicher 2002, Smith & McKeen 2003, Leavitt, O’Dell &
Grayson 2001, Leahy, Lundin & Magnusson, Lee et al. 2002,
Yeung & Holden 2000).
It is tempting to take these and attempt to force fit the company
and work strategies into these frameworks. However, it is recog-
nized that cultural changes are hard to force. Further, companies
with a lot of inertia make this extremely difficult. This is espe-
cially true if there is little to no upper leadership and funding to
support such changes. Moreover, replication and knowledge trans-
fer efforts are not as simple as a single bulleted list or chart but
instead consist of various levels from strategic to tactical. It is
important to custom tailor replication frameworks for each com-
pany. Existing infrastructure and culture should be leveraged to
the fullest extent. Once momentum builds in the right direction,
JOURNAL OF SHIP PRODUCTION 95
then new tools and processes can be introduced in a phased ap-
proach. This implies that knowledge transfer and replication ef-
forts are not static but should evolve along with the evolving
requirements, capabilities, and culture of the company.
4.1. Recommendations for replication
The recommendations presented here span multiple levels of
activity from specific recommendations to the Six Sigma training
and work flow to broader outreach efforts to raise corporate-wide
awareness. These recommendations have been divided into five
distinct categories considered key elements to successful replica-
tion. These key elements are integrate, facilitate, advertise, re-
ward, and measure.
4.1.1. Integrate. As with Knowledge Management, replication
should be a formal part of the process improvement work plan.
Successful knowledge transfer strategies make sharing and trans-
fer an integral part of everyday work so that it is a natural part of
work activities and not an afterthought. The same applies for
replication in Six Sigma process improvement efforts. One way to
integrate replication into the Six Sigma process is to make iden-
tification of replication opportunities part of the project deliver-
ables. Literature suggests that successful transfer of information
for best practices and replication should be both a push and pull
effort.
At the start of all Six Sigma projects, black belts or green belts
should examine past and ongoing process improvement projects to
determine which of those projects—their methods, findings, rec-
ommendations, results, and so forth—can be leveraged in the cur-
rent project. Questions to ask at this stage include: What has been
done in terms of methodologies and results in other projects that
can be leveraged for this project? How can I adapt those method-
ologies or results for this project? What lessons can I learn from
other projects to make this one more efficient and effective?
During the final phase of a Six Sigma project, belts should
identify replication opportunities for the results of their current
project. They should specifically ask the following questions: Is
this replicable? Who can benefit from it? How can I help make it
happen?
At the completion of a process improvement project, the per-
son(s) responsible should formally inform potential business units/
personnel about the resulting replication opportunities. Follow-up
should take place to see if the informed party has assessed the
opportunity. If so, how and how successfully; if not, why not. This
may involve working with the informed party to help assess the
opportunity, secure funding, and adapt the change.
The integration step should be made part of the formal deliv-
erables of the process improvement project. The status of integra-
tion should be discussed during tollgate reviews and belts held
accountable.
A replication champion should be designated in the Six Sigma
office. This person should be part of Six Sigma project teams to
help solidify the role of replication in process improvement ini-
tiatives. Further, this person can act as liaison with the Knowledge
Management and IT workers to help leverage existing and evolv-
ing Knowledge Management tools and techniques in the replica-
tion process.
Integration of replication into the Six Sigma process necessi-
tates additions to the Six Sigma training material. Training for
96 MAY 2006
green belts and black belts should include topics on replication,
such as the importance and benefits of replication, how replication
has been integrated into the Six Sigma process, who is responsible
for replication, how to use available IT tools, and what are com-
munities of practice and how to get involved.
4.1.2. Facilitate. It would be difficult to hold belts accountable
for replication without providing the resources necessary for their
success. These resources include both IT tools and communica-
tions opportunities. NGSS has recently launched its Start It data-
base system for documenting and tracking Six Sigma projects.
This is an important step toward facilitating replication. The next
step is to integrate the use of this and other tools in the Six Sigma
work flow as discussed earlier.
IT tools are used for storing, categorizing, and recalling infor-
mation. However, IT tools are not necessarily the most effective
means of sharing knowledge. Face-to-face communication is still
one of the most effective ways people transfer knowledge, which
includes both explicit and tacit knowledge about best practices and
replication opportunities. Opportunities should be created for
people to communicate regarding process improvement and rep-
lication opportunities so they can share gems, best practices, and
lessons learned. Such opportunities include regular business meet-
ings, training seminars, workshops, and executive briefings.
Another very effective way to promote communication and
sharing is the formation of Communities of Practice (CoPs). Some
companies call these peer groups or learning communities. In their
most basic form, these groups exist, at one level, as loosely regu-
lated groups of individuals with a common interest and vision. At
another level they can be top-down driven, very organized, and
formal. In either case such groups have proven effective for fa-
cilitating knowledge sharing, and they are particularly valuable
where participants are in disparate locations and do not have the
opportunities to communicate face to face. Such companies as
Compaq, Chevron, and Texas Instruments report great success
with CoPs and in fact suggest that sharing efforts were effectively
stalled before implementation of CoPs.
4.1.3. Advertise. Much of the literature on replication uses the
buzz words push and transfer or raising awareness to describe
pushing information on replication opportunities and best prac-
tices to appropriate people. The bottom line is that this is adver-
tising. A product will not sell if no one knows about it. Likewise,
gems cannot be replicated if no one knows about them. Cultural
changes will not take place if no one knows about them, and so on.
All these aspects of replication discussed herein—gems trans-
fer, lessons learned, success stories, rewards, and recognition—
should all be advertised. Further, advertising should occur at both
local and global levels. Second, these gems and success stories
should be advertised company-wide through appropriate, existing
channels. This is analogous to a branding and can help instill and
foster global awareness and acceptance of process improvement
initiatives and sharing of best practices and replication opportu-
nities.
4.1.4. Reward. It is recognized that strong leadership is a key
factor for successful implementation of process improvements and
knowledge transfer. However, people need some form of incen-
tive. Sharing should be a formal part of employee compensation
and reward programs. It does not necessarily have to be monetary
JOURNAL OF SHIP PRODUCTION
reward, but some form of reward and/or recognition should be in
place to encourage a broader acceptance of knowledge sharing.
This will require appropriate middle and upper management sup-
port and consistency across all business sectors. Some companies
offer cash rewards, others recognition, still others tie these aspects
to promotion opportunities. Key elements to a reward program,
whatever it is, include acceptance by management, consistency,
and awareness by employees.
Another effective form of recognition does not involve mon-
etary rewards but instead involves paying tribute to good work.
For example, employees who execute a successful replication ef-
fort could be interviewed by having an article written about them
and published in a corporate newsletter along with their picture.
This gives the employees and their accomplishment a certain level
of prestige and will go a long way toward raising awareness
among other employees, giving them an incentive to participate in
replication efforts.
4.1.5. Measure. In order to track the effectiveness of a replica-
tion effort, some measures of progress and results are required.
These can range from soft measures to more quantitative measures
of success. We recommend the following measures be monitored
to gauge effectiveness of the replication effort:
• Measure the growth of CoPs, in both number of newly
formed CoP membership growth and activity levels, as a means
of monitoring the effectiveness of efforts aimed at increasing
awareness of process improvement and sharing initiatives.
• Measure the number of replication opportunities identified
along with the number that were adopted.
• Measure the cycle time between identification of a repli-
cation opportunity and final adoption.
• Measure the number of process improvement projects
spawned from replication opportunities and their resulting im-
pact on the corporate bottom line.
• Track the number of articles, presentations, seminars, and
so forth related to sharing and replication as a means of gaug-
ing the level of effort associated with “advertising” efforts.
• Track the number of awards, recognitions, and honors
given to those who successfully implement a replication proj-
ect.
5. Conclusions
The announcement of NAVSEA’s Lean Six Sigma initiative
has ushered in a new era in the ways that naval combatants are
designed, built, and operated. As the Navy’s budgetary constraints
increase in the coming years, the challenges they face in the 21st
century will grow. New levels of process performance are man-
dated. Lean, Six Sigma, Theory of Constraints, and DFSS have
been integrated into a Lean Six Sigma program that is a new ship
design and production initiative. This initiative has been instituted
by shipbuilder organizations as a way to meet the challenge related
to delivering cost-effective ships on time with first-time qualities
to customers.
Acknowledgments
The authors gratefully acknowledge the contributions of the
Office of Naval Research ManTech Program, Gulf Coast Region
MAY 2006
Maritime Technology Center at University of New Orleans,
Northrop Grumman Lean Six Sigma Program Office, Steve Strom,
Diane Gergen, and Wes Koehl.
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