One of the best applications of Affordability occurred as part of a project I was involved at Northrop Grumman in El Segundo, California.  In May 2007, Dr. Beth Cudney and I kicked off a project for the IIE at the F/A-18 “Super Hornet” jet factory.  Northrop Grumman provided 60% of the statement of work for the Super Hornets that Boeing was completing and selling to the U.S. Department of Defense for a price of $55,000,000.00.  The effort was focused on increasing plant capacity, increasing quality and reducing the cost and price.  Most of the effort was targeted at applying Lean Principles throughout the system, even upstream to the suppliers to increase speed, reduce defects and reduce wasted expense.  The results were impressive;

­Metrics/Measures                        2006                               2010

­Production Capability                    42                                   62

­Cycle Time                              1 per 5.5days                1 per4.0days

­Quality                                           5s                                   6s

­Customer Price                           $55M                             $49.9M

­Customer Base                             US                    US, Australia and others

In august of 2010, the U.S. Government purchased 124 units … saving the tax payer more than $600,000,000.00!

In fact on September 14, 2010, Assistant Secretary of Defense, Dr. Ashton Carter distributed a memo to all D.o.D. acquisition personnel titled: “Better Buying Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending.” … on page 7, paragraph 3, Dr. Carter sites the Northrop Grumman project as a model and example for achieving Better Buying Power.

As an example of the need for Affordability, the U.S. Government can obviously use it.