Defining Core Manufacturing Capabilities at Raytheon Missiles & Defense
Raytheon Technologies makes a diverse array of products ranging from microelectronic components to fully integrated exo-atmospheric missiles and jet engines. In order to better rationalize its operations strategy, the organization is implementing a methodology to identify its manufacturing technolog...
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| Format: | Thesis |
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Massachusetts Institute of Technology
2023
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| Online Access: | https://hdl.handle.net/1721.1/151439 https://orcid.org/0009-0008-3495-4482 |
| _version_ | 1811074355951566848 |
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| author | Stuart, Thomas R. |
| author2 | de Weck, Olivier L. |
| author_facet | de Weck, Olivier L. Stuart, Thomas R. |
| author_sort | Stuart, Thomas R. |
| collection | MIT |
| description | Raytheon Technologies makes a diverse array of products ranging from microelectronic components to fully integrated exo-atmospheric missiles and jet engines. In order to better rationalize its operations strategy, the organization is implementing a methodology to identify its manufacturing technologies and products that are (i) most financially attractive and (ii) most technically complex. With respect to technical complexity, Raytheon Technologies would like to prioritize production of technically complex products, all else being equal. This aligns with the company’s competitive strategy and value proposition to its customers. This thesis examines two alternative methods by which Raytheon Missiles and Defense, a business unit of Raytheon Technologies, can measure the (i) financial attractiveness and (ii) technical complexity of its products or manufacturing technologies. Four products, supporting the same program (referred to as Program X), are then measured with both methods as part of a pilot study. The results of the pilot study are used to assess the reasonableness of each methodology and to compare the two methods.
The first method, referred to as the RTX Framework, uses metrics developed by Raytheon Technologies. The technical metrics are (T1) Product Impact to End Item, (T2) Future Demand, (T3) Manufacturing Complexity, (T4) Sourcing Alternatives, and (T5) Intellectual Property. Each of these metrics are measured, scored based on a projection of each measure, and then combined via a weighted average into a single technical score. The financial metrics are (F1) Operations Labor Cost, (F2) Operations Labor Cost Certainty, (F3) Capital Invested, (F4) Manufacturing Utilization, and (F5) Scrap, Rework and Repair costs. Again, each of these metrics measured, scored based on a projection of each measure, and then combined via a weighted average into a single financial score. The author develops the approach by which each of these metrics can be measured, measures the pilot study products with these metrics, and, most importantly, analyzes and critiques each metric. The author utilizes Delphi survey methodology to conduct technical assessments of the Product Impact to End Item and Manufacturing Complexity metrics. Subject matter expert interviews are used to measure the Sourcing Alternatives and Intellectual Property metrics. Business system data are used to measure the Future Demand metric. Data from business systems are used to measure the five financial metrics. The analysis reveals that the financial metrics are either potentially misleading or suffer from logical fallacies such as giving weight to sunk costs. The analysis reveals stronger justification for the technical metrics.
Based on these insights, the author develops a second method, referred to as the Alternative Framework. It is based, in part, on Baldwin and Clark’s work regarding the economic value of system modules. It functions as a three-level decision tree. At the first level, the product (or manufacturing technology) is measured with the Product Impact to End Item, Manufacturing Complexity, and Intellectual Property technical metrics. A sufficiently high score in any of these three metrics designates the product as “core” from a technical perspective. At the second level, the Sourcing Alternatives metric is measured only if the business wants to consider moving the product or manufacturing technology to another location within or outside of the company. This is a strategic decision that must consider factors beyond what can be accounted for in a framework. At the third level, if suitable production alternatives are found to exist, then the Alternative Framework compares the alternatives and status quo via a net present value comparison. Essentially, the Alternative Framework eliminates the financial metrics inherent in the RTX Framework and instead relies on a net present value comparison at the end of the process.
A comparison of the pilot study results obtained by using the two methods indicates that the Alternative Framework yields reasonable results and avoids the pitfalls of the financial metrics used in the RTX Framework. By comparison, the RTX Framework results appear to be reasonable from a technical perspective, but are potentially problematic with respect to the financial metrics. The Alternative Framework is the primary output of this document and its approach should be extendable to organizations other than Raytheon that are interested in developing highly technical manufacturing capabilities as a source of competitive advantage. |
| first_indexed | 2024-09-23T09:47:46Z |
| format | Thesis |
| id | mit-1721.1/151439 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T09:47:46Z |
| publishDate | 2023 |
| publisher | Massachusetts Institute of Technology |
| record_format | dspace |
| spelling | mit-1721.1/1514392023-08-01T04:09:17Z Defining Core Manufacturing Capabilities at Raytheon Missiles & Defense Stuart, Thomas R. de Weck, Olivier L. Spear, Steven Massachusetts Institute of Technology. Department of Aeronautics and Astronautics Sloan School of Management Raytheon Technologies makes a diverse array of products ranging from microelectronic components to fully integrated exo-atmospheric missiles and jet engines. In order to better rationalize its operations strategy, the organization is implementing a methodology to identify its manufacturing technologies and products that are (i) most financially attractive and (ii) most technically complex. With respect to technical complexity, Raytheon Technologies would like to prioritize production of technically complex products, all else being equal. This aligns with the company’s competitive strategy and value proposition to its customers. This thesis examines two alternative methods by which Raytheon Missiles and Defense, a business unit of Raytheon Technologies, can measure the (i) financial attractiveness and (ii) technical complexity of its products or manufacturing technologies. Four products, supporting the same program (referred to as Program X), are then measured with both methods as part of a pilot study. The results of the pilot study are used to assess the reasonableness of each methodology and to compare the two methods. The first method, referred to as the RTX Framework, uses metrics developed by Raytheon Technologies. The technical metrics are (T1) Product Impact to End Item, (T2) Future Demand, (T3) Manufacturing Complexity, (T4) Sourcing Alternatives, and (T5) Intellectual Property. Each of these metrics are measured, scored based on a projection of each measure, and then combined via a weighted average into a single technical score. The financial metrics are (F1) Operations Labor Cost, (F2) Operations Labor Cost Certainty, (F3) Capital Invested, (F4) Manufacturing Utilization, and (F5) Scrap, Rework and Repair costs. Again, each of these metrics measured, scored based on a projection of each measure, and then combined via a weighted average into a single financial score. The author develops the approach by which each of these metrics can be measured, measures the pilot study products with these metrics, and, most importantly, analyzes and critiques each metric. The author utilizes Delphi survey methodology to conduct technical assessments of the Product Impact to End Item and Manufacturing Complexity metrics. Subject matter expert interviews are used to measure the Sourcing Alternatives and Intellectual Property metrics. Business system data are used to measure the Future Demand metric. Data from business systems are used to measure the five financial metrics. The analysis reveals that the financial metrics are either potentially misleading or suffer from logical fallacies such as giving weight to sunk costs. The analysis reveals stronger justification for the technical metrics. Based on these insights, the author develops a second method, referred to as the Alternative Framework. It is based, in part, on Baldwin and Clark’s work regarding the economic value of system modules. It functions as a three-level decision tree. At the first level, the product (or manufacturing technology) is measured with the Product Impact to End Item, Manufacturing Complexity, and Intellectual Property technical metrics. A sufficiently high score in any of these three metrics designates the product as “core” from a technical perspective. At the second level, the Sourcing Alternatives metric is measured only if the business wants to consider moving the product or manufacturing technology to another location within or outside of the company. This is a strategic decision that must consider factors beyond what can be accounted for in a framework. At the third level, if suitable production alternatives are found to exist, then the Alternative Framework compares the alternatives and status quo via a net present value comparison. Essentially, the Alternative Framework eliminates the financial metrics inherent in the RTX Framework and instead relies on a net present value comparison at the end of the process. A comparison of the pilot study results obtained by using the two methods indicates that the Alternative Framework yields reasonable results and avoids the pitfalls of the financial metrics used in the RTX Framework. By comparison, the RTX Framework results appear to be reasonable from a technical perspective, but are potentially problematic with respect to the financial metrics. The Alternative Framework is the primary output of this document and its approach should be extendable to organizations other than Raytheon that are interested in developing highly technical manufacturing capabilities as a source of competitive advantage. M.B.A. S.M. 2023-07-31T19:39:55Z 2023-07-31T19:39:55Z 2023-06 2023-07-14T20:00:12.145Z Thesis https://hdl.handle.net/1721.1/151439 https://orcid.org/0009-0008-3495-4482 In Copyright - Educational Use Permitted Copyright retained by author(s) https://rightsstatements.org/page/InC-EDU/1.0/ application/pdf Massachusetts Institute of Technology |
| spellingShingle | Stuart, Thomas R. Defining Core Manufacturing Capabilities at Raytheon Missiles & Defense |
| title | Defining Core Manufacturing Capabilities at Raytheon Missiles & Defense |
| title_full | Defining Core Manufacturing Capabilities at Raytheon Missiles & Defense |
| title_fullStr | Defining Core Manufacturing Capabilities at Raytheon Missiles & Defense |
| title_full_unstemmed | Defining Core Manufacturing Capabilities at Raytheon Missiles & Defense |
| title_short | Defining Core Manufacturing Capabilities at Raytheon Missiles & Defense |
| title_sort | defining core manufacturing capabilities at raytheon missiles defense |
| url | https://hdl.handle.net/1721.1/151439 https://orcid.org/0009-0008-3495-4482 |
| work_keys_str_mv | AT stuartthomasr definingcoremanufacturingcapabilitiesatraytheonmissilesdefense |