Page 1

Command, Control, Communications

& Information Systems

PSM PRESENTATIONEngineering Process and

Tools Organization (EP&TO)

Dr. Aaron N. Silver

(720) 858-5258

ansilver@raytheon.com

Cost-Effective Process Modeling & Simulation Using the Balanced Scorecard & Raytheon Six Sigma Methodology

July 18, 2003

Seventh Annual PSM Conference

Keystone, Colorado

Page 2

Command, Control, Communications

& Information SystemsPROCESS MODELING

COST EFFECTIVE PROCESS MODELING & SIMULATION USING THEBALANCED SCORECARD & RAYTHEON SIX SIGMA METHODOLOGY

Dr. Aaron N. SilverRaytheon Systems CompanyIIS: Intelligence & lnformation SystemsDenver Site OperationsEngineering Process & Tools Organization (EP&TO)16800 East CentreTech ParkwayBuilding S77, M/S 3026Aurora, CO 80011

Phone: (720) 858-5258Fax: (720) 858-5953

title01.stg

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Command, Control, Communications

& Information Systems

LeadLag

FinancialStrategic Objective

Measurement ProcessStrategic Objective Measurement

Customer Learning

• Growth Orientation&

Financial StrengthCashRevenue -2004MarginAnnual growthROIC

• Process Improvement Defect RateROI on ImprovementsProductivity Improvement (O/H)• Integrated Planning &

Forecasting% Functional Groups in PlansPerformance to Plan• FEOTB - Market, Capture,

Propose Funnel of OpportunitiesBalance of Business PortfolioCapture RateROIC

• Develop Business Solutions /Products & Services Product Development Cycle Time

% License & Maintenance Fees / Sales

• Meet Commitments, ExpectationsEasy to do Business with

Gate 5 reviewsComposite award fee SPICPI

Strategic Objective Measurement

• Protect, Expand, Diversify Customer Base

# of New Acquisition SourcesMarket Share

Strategic Objective Measurement• Share Best Practices and

Lessons Learned Build / Reuse RatioGate II Completion

• Focused People Strategy Strategic Job Coverage Ratio# Successors / Critical PositionsRetention Rate

• Skill Development Critical Skill / Need RatioSkill Training PlanPerformance to Plan

• Investment - People, Assets,Technology

Targeted R&D to SalesActual R&D to SalesROIC

BALANCED SCORECARD

Negotiation metric

Page 4

Command, Control, Communications

& Information Systems

BALANCED SCORECARD SIMULATION

Page 5

Command, Control, Communications

& Information SystemsBALANCED SCORECARD

TOP LEVEL MODEL

Page 6

Command, Control, Communications

& Information Systems

BALANCED SCORECARD ANALYSIS MODEL

Page 7

Command, Control, Communications

& Information SystemsBALANCED SCORECARD

ANALYSIS MODEL

Page 8

Command, Control, Communications

& Information SystemsBALANCED SCORECARD

ANALYSIS MODEL

Page 9

Command, Control, Communications

& Information SystemsBALANCED SCORECARD

ANALYSIS MODEL

Page 10

Command, Control, Communications

& Information SystemsBALANCED SCORECARD

SIMULATION OUTPUT

Page 11

Command, Control, Communications

& Information SystemsBALANCED SCORECARD

SIMULATION OUTPUT

Page 12

Command, Control, Communications

& Information SystemsBALANCED SCORECARD

SIMULATION OUTPUT

Page 13

Command, Control, Communications

& Information SystemsBALANCED SCORECARD SIMULATION ANALYSIS

DR. AARON N. SILVER--BALANCED SCORECARD--DATA(CUSTAB01.STA)REGRESSION MODEL--FILE#:BALLIN01.STG--DECEMBER 13, 2002

CU

STO

MER

S (P

OTE

NTI

AL

& "

DER

IVED

")

AC

QU

IRED

& L

OSI

NG

CU

STO

MER

S

05101520253035404550556065707580

050

100150200250300350400450500550600650700750800850900

Cas

e 3

Cas

e 4

Cas

e 5

Cas

e 6

Cas

e 7

Cas

e 8

Cas

e 9

Cas

e 10

Cas

e 11

Cas

e 12

Cas

e 13

Cas

e 14

Cas

e 15

Cas

e 16

Cas

e 17

Cas

e 18

Cas

e 19

Cas

e 20

Cas

e 21

Cas

e 22

Cas

e 23

Cas

e 24

Cas

e 25

Cas

e 26

POTENTIAL CUST.=940.4-149.037*x+5.534*x^2+0.3*x^3-0.025*x^4+4.726e-4*x^5+epsACQUIRED (WORD)=-4.855+22.707*x-4.904*x^2+0.406*x^3-0.015*x^4+2.043e-4*x^5+epsCUSTOMERS=75.489+153.334*x-23.13*x^2+1.626*x^3-0.054*x^4+6.949e-4*x^5+epsLOSING CUST.=-52.919+60.37*x-10.441*x^2+0.729*x^3-0.023*x^4+2.688e-4*x^5+eps

POTENTIAL CUSTOMERS (LEFT SCALE)ACQUIRED CUSTOMERS (WORD)--RIGHT SCALECUSTOMERS (LEFT SCALE)LOSING CUSTOMERS (RIGHT SCALE)

LOSING CUSTOMERS (RIGHT SCALE)

CUSTOMERS (LEFT SCALE)

POTENTIAL CUSTOMERS (LEFT SCALE)

ACQUIRED CUSTOMERS (RIGHT SCALE)

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Command, Control, Communications

& Information SystemsBALANCED SCORECARD

“OPM” OUTPUT

Page 15

Command, Control, Communications

& Information SystemsBALANCED SCORECARD SIMULATION ANALYSIS

DR. AARON N. SILVER--BALANCED SCORECARD--DATA(CUSTAB01.STA)QUADRATIC PREDICTION MODEL--FILE#:BAL3D1A.STG--DECEMBER 13, 2002

Case 3

Case 4

Case 5

Case 6Case 7

Case 8

Case 9

Case 10

Case 11

Case 12

Case 13

Case 14

Case 15Case 16Case 17Case 18Case 19Case 20Case 21Case 22Case 23Case 24Case 25Case 26

0100

200300

400500

600700

800900

05

1015

2025

3035

40

010203040506070

80

z=3.406+0.4*x-0.787*y-4.322e-4*x*x-0.004*x*y+0.051*y*y

-1.818 6.364 14.545 22.727 30.909 39.091 47.273 55.455 63.636 71.818 above

LOSIN

G C

USTO

MER

S

ACQUIRED (WORD)POTENTIAL CUSTOMERS

Page 16

Command, Control, Communications

& Information SystemsBALANCED SCORECARD SIMULATION ANALYSIS

DR. AARON N. SILVER--BALANCED SCORECARD--DATA(CUSTAB01.STA)QUADRATIC PREDICTION MODEL--FILE#:BAL4D1A.STG--DECEMBER 13, 2002

POTENTIAL CUST.: <= 90

Case 13

Case 14

Case 15Case 16Case 17Case 18Case 19Case 20Case 21Case 22Case 23Case 24Case 25Case 26

0100

200300

400500

600700800900

05

1015

2025

3035

40

01020304050607080

POTENTIAL CUST.: > 90

Case 3

Case 4

Case 5

Case 6Case 7

Case 8

Case 9

Case 10

Case 11

Case 12

0100

200300

400500

600700800900

05

1015

2025

3035

40

01020304050607080

POTENTIAL CUST.: <= 90 z=9.078-0.5*x+3.95*y+0.026*x*x-0.401*x*y+1.878*y*yPOTENTIAL CUST.: > 90 z=0.171+0.441*x-0.869*y-4.722e-4*x*x-0.004*x*y+0.051*

-0.909 7.182 15.273 23.364 31.455 39.545 47.636 55.727 63.818 71.909 above

LOSIN

G C

USTO

MER

S

LOSIN

G C

USTO

MER

S

ACQUIRED (WORD)

ACQUIRED (WORD)POTENTIAL CUSTOMERS

POTENTIAL CUSTOMERS