Client Case Study

Transformative Approach to Product Cost Reduction in Aerospace

Discover how Project4 Learning Lab partnered with a leading engineering service provider to implement a transformative approach to product cost reduction for a major aerospace client.

Our client, a prominent provider of managed services and engineering consultancy, was tasked by a large aerospace Tier 1 company with developing a novel methodology for product cost reduction. The existing approach resulted in over 80% of initiatives failing due to issues with technical viability, insufficient business cases, or a lack of alignment with strategic objectives. Project4 Learning Lab collaborated with our client to design and implement a new, systemic approach aimed at identifying at least £10 million in benefits within 12 weeks and creating a standardized, scalable model for deployment across the client's entire product portfolio.

We provided expert coaching and industry knowledge to empower our client's team in developing and leveraging this new model for complex aerospace projects and their broader product range. This engagement successfully introduced an agile way of working and a top-down analytical method to create cost 'DNAs,' enabling data-driven insights for strategically aligned cost interventions.

Proposed Programme

Slow to Flow

Rapid team-based improvements to accelerate flow based on the principles of scientific thinking by learning about a topic, planning a change, implementing it and reflecting on it in each cycle.

Challenges Identified

Familiar Faults

Teams are "solving" the same problems today as the ones that they "solved" yesterday.

Process Variability

High variability in the way that processes are performed and in process outcomes & performance (e.g. cycle time, quality, cost).

Missing Materials

Excessive time spent looking for data, information and materials and can't be sure it's the latest version when something is found.

Normalised Deviance

Mistakes are possible, likely and are expected and accepted.

Our 4 Step Process

Release Valve ®

1Finding Flow

Finding Flow

In the initial phase, focused on "Finding Flow," we collaborated closely with our client's team to understand the specific challenges hindering effective product cost reduction. The primary obstacles identified included the high failure rate of initiatives due to technical non-viability, weak business cases, and poor strategic alignment. The traditional approach of focusing on individual part numbers rather than broader product families also contributed to the limited success.

To address these challenges, we introduced a standard agile operating framework, structuring the 12-week project into four 3-week sprints. We implemented standard scrum rituals and facilitated the initial sprint to demonstrate how an agile approach could effectively manage the project's inherent ambiguity. Utilising a digital collaboration tool, iObeya, we enhanced planning and transparency, clearly articulating the required outcomes for each sprint to ensure the team remained aligned throughout the project duration.

2Taming Turbulence

Taming Turbulence

During the "Taming Turbulence" phase, we focused on implementing the first critical changes identified in the "Finding Flow" stage. Having established the agile framework, our attention shifted to developing a structured approach for analysing the provided cost data. We demonstrated how to analyse cost data over a 5-year business plan to pinpoint the key drivers of expenditure and identify areas with the greatest potential for value and return on investment through targeted interventions.

This new approach shifted the focus from individual part numbers to four key product family groups, which were agreed upon with the client as the primary areas for in-depth analysis. We then demonstrated to the engineering teams various techniques for delving deeper into the cost drivers within each product family group. Using Power BI-based analytics, we visualised the biggest value levers for each group, effectively creating their cost DNAs.

3Accelerating Flow

Accelerating Flow

In the "Accelerating Flow" phase, we empowered the client's engineering teams to take ownership and accelerate the implementation of changes. Following our demonstration of the analytical approach, the teams independently analysed the four prioritised product family groups during sprint 3. We provided continuous coaching and feedback throughout this process, guiding the teams in deriving insights and identifying opportunities for strategic cost interventions within each group.

The teams developed hypotheses based on their analysis, which were then rigorously tested and validated with the client and relevant subject matter experts. This collaborative effort led to the identification of several potential interventions with the capacity to yield up to £10 million in benefits for the organisation within a single value stream. These high-impact interventions were subsequently transitioned to the client's cost-out office for further progression and implementation.

4Keeping Pace

Keeping Pace

The "Keeping Pace" phase focused on embedding the new methodology and ensuring the client's team could sustain continuous improvement beyond our direct involvement. Throughout all four sprints, our consultants provided ongoing coaching and support to both our client's engineering and project management teams and the end aerospace client's organisation. This coaching was instrumental in enabling a fundamentally different and more effective approach to product cost reduction.

Our hands-on guidance and expertise significantly upskilled our client's team. As a result, this new systemic approach to product cost reduction is now being successfully leveraged across other products and engineering organisations within their business, demonstrating the lasting impact of the knowledge and capabilities transferred during the project.

Results

Cost Savings

The implementation of the new product cost reduction methodology yielded significant results, demonstrating a strong return on investment and establishing a repeatable process for future savings. The project successfully identified interventions projected to deliver £10 million in cost benefits.

£10m Cost Benefit

Significant Return on Investment

Based on this identified benefit, the project achieved an impressive ROI of over 40:1. This was a direct result of the structured, data-driven approach that allowed for the identification and prioritisation of initiatives with the highest potential impact, overcoming the previous challenges of technical non-viability and misalignment with strategic needs. The successful transfer of knowledge and capability to the client's team ensures that the benefits of this new approach will continue to be realised across their organisation.

40:1 ROI

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