Monthly Archives: June 2016

Discussion Questions

Ch10 Fundamentals of the Theory of Constraints
Discussion Questions
Describe the possible special challenges to implementing TOC in a make-to-order environment.
Describe the possible implications of a major change in product mix or a major change in design to a TOC-run operation. How would you approach dealing with those implications?
Compare and contrast the design of the drum-buffer-rope system and the pull system described in Chapter 9. What are the similarities and differences, and why do they exist?
Comment (with supporting reasons) on the following overheard statement, stated by an operations manager: “We don’t have any constraints in our company. Our capacity plans show we have plenty of capacity to produce the master schedule for some time to come.”
Discuss the implication that TOC can bring to a company when they develop their business strategy. How will it possibly impact the approach taken to the Sales and Operations Planning process?
Do you believe that TOC will have any impact on other functions in the organization? If so, what might they be? In specific, comment on the possible implications to:
Engineering
Human Resources
Accounting
Information Technology
Marketing
Sales

Management Accounting-

Management Accounting:
A Road of Discovery
Management Accounting:
A Road of Discovery
Chapter 12 Which process should we improve first?
Decision-focused management using the theory of constraints
Key Learning Objectives

Overview
Consider a company that processes and sells peanuts. It has these characteristics:

Traditional management
Functional areas of specialization
Areas of responsibility
òOne best way’ work standards
Cheap labor, easy to learn activities
Cost centers
òEach manager has their own budget’
Overview (Continued)
The company has three functional departments.
Husk Pack Sales
& &
Bake Ship
Each department is like a òsilo’ surrounded by walls of inventory or time buffers.
Each department has separate budgets, responsibility centers, and variance reports that promote a strategy to optimize each individual department.
Coordination using budgets creates and maintains the value of the whole company.
Creating a Cost World
You are the manager of the òhusk and bake’ department.
Your objective as a good manager is to create and maintain value.
Your problem:
You have no influence on the òSales’ or òPack&Ship’ departments.
You can only influence your costs.
How does this fit into your TQM efforts?
TQM Says:

DO IT RIGHT THE FIRST TIME
CONTINUOUS IMPROVEMENT
ELIMINATE NONVALUE ADDING ACTIVITIES
FIX òALL’ ACTIVITIES NOW
What Can I Do?
What can you as the manager of the òHusk & Bake department do under TQM? The only thing you control is costs.
You can only decrease costs while providing the same level of production or service.
The objective is to increase productivity or òdo the same for less’ .
TOC argues that accounting systems create a òcost world’ approach to improvement.
The Problem
The problem is that in most cases the largest cost savings to improve productivity is to reduce labor content.
òJust-in-Time’ becomes interpreted by workers as òJobs-in-Trouble’ .
Creating a Value World
TOC supporters argue that this cost world emphasis is inefficient, wasteful and undermines support for continuous improvement.
Managers need to focus on creating value for the company and not necessarily decreasing costs.
How Can This be Done?
Pareto management, or the 80:20 rule, claims that only a few activities are responsible for most of a company’ s profits.
The TOC version is that there is always some activity that limits or constrains increasing value.
Continuous improvement with TOC management focuses on increasing value by finding and improving constraints limiting throughput.
Throughput is defined as sales revenue less direct materials.
Constraint activities limit short-term value. Thus removing constraints converts us from a òcost world’ to a òvalue world’ .
TOC

TOC ARGUES THAT òSILO’ MANAGEMENT ACTUALLY LEADS TO CONSTRAINTS, ESPECIALLY WHEN PRODUCTION PROCESSES VARY FOR DIFFERENT PRODUCTS.

Our Peanut Company
Remember we fist òhusk&bake’ , then we òpack&salt’ and finally we òsell’ our peanuts.
We must complete one activity before we can start the next activity.
TOC assumes there is always one activity that constrains value.
Question and Answer
Question.
What is the company’ s maximum daily production and sales?
Answer.
Sales sets the capacity for the company at 100 lbs per day. Sales is the constraint. The constraint sets the capacity (short-term value) for the entire company.
Discussion.
The first steps for TOC continuous improvement is to identify the activity that is the constraint to increasing immediate value (not necessarily long-term value).
Improving this constraint is the only way to guarantee immediate value improvement.
Let’ s Improve the Constraint
If peanuts sell for $10 per pound, then what is the maximum daily revenue?
100 lbs @ $10 per lb = $1,000 per day.
Suppose that for spending $1,000 for training in each department, we can increase productivity by 10%.
How much money should we spend to maximize short term value, $3,000, $2,000, or $1,000?
The Improvement
Rather than spending $3,000, TOC says only spend $1,000. The extra $2,000 is wasted in the short-term.
Using TQM logic, we would improve all three departments for $3,000 and justify this based upon long-term value creation.
TOC Rule: only increasing capacity at the constraint will guarantee short-term value increases.
TQM Rule: Long-term value improvements will justify all $3,000.
Both are correct!
Results
If we spend the $1,000, how much value have we added daily?
10 extra pounds x ($10 – $2) = $80 per day.

What is the appropriate value added per unit of production?
Value Added
Explanation
Results
Throughput from the productivity improvement = 10 lbs x $8 = $80 per day.
Should we make the productivity improvement at the constraint?
The cost of the productivity investment is $1,000.
How long will it take to recover or payback the investment?
Payback period = $1,000/$80 per day = 12.5 days

TOC’ s Five Steps for Continuous Improvement
Identify the most important constraint.
Exploit it by optimally using the current constraint to maximize profits (drum-buffer-rope management).
Don’ t worry too much about the non-constraints.
Eliminate the constraint.
A new constraint will exist, so start all over.

Definitions
The constraint activity is the DRUM that sets the pace for all operations.
The BUFFER is the inventory maintained in front of the constraint to insure all available capacity will be utilized.
The ROPE is the schedule for work activity that is based upon the needs of the constraint. Thus, the pace of the constraint pulls work through the activities in front of it.
Control: What Do We Want People to Do?

TOC Decisions and Cost Categories
Decisions are limited to the comparison of Throughput against the cost of increasing the Throughput. Positive Throughput dollars will increase value. Projects are ranked by Throughput value.
Costs that will continue are grouped together as òOperating Expenses’ . If Throughput is greater than the Operating Expenses then value will increase.
Costs that will not continue are grouped together as òInvestments’ (sometimes called òInventories’ ). The Payback period will determine how long it takes for the increase in Throughput to recover the investment.

Goals for the TOC Accounting System (Keep your eye on the ball.)
Measure how well we use the constraint.
Management goal î maximize constraint output.
TOC accounting provides information for improving the constraint’ s value only.
Don’ t emphasize efficiency measures in the bottlenecks.
Management goal î non-constraints should work only to the beat of the drum, not at their own maximum rates.
Accounting provides overall budget-to-actual department costs only.
WIP information should be for the buffer inventory in front of the constraint
Management goal î monitor the buffer and minimize WIP at the non-constraints.
Cost Organization in Different Income Statements
Exhibit 12-9, p. 444, provides a comprehensive illustration of the relationship of TOC, Functional, and Activity-based Income Statements.
Review and assure an understanding of the different structure of the statements and how they contain essentially the same information, structured and formatted differently.
Payback Period for Nailing Machine Improvement
TOC Continuous Improvement Ratios
TOC Performance Ratios î Short-Term Measures
TOC Performance Ratios î Long-Term Performance Measures

Why Supply Chain Management Scm

Why Supply Chain Management (SCM)?
Background
What is Supply Chain Management?
The integration of materials and information amongst
Centers and Programs, suppliers, other govt. agencies,
and international partners to plan, execute, and operate space
programs with a common spare and repair philosophy in
order to minimize system-wide life-cycle costs and risks
while satisfying program level requirements

How is SCM different from Logistics?
Embeds Technology Insertion in the Process
Production Processes -vs- Material flow focus
Integrated end-to-end
Greater supply base situational awareness
Focused on product life cycle management
Reduces Cost
(SCM impacts 90% of a Program’ s recurring cost)
Manufacturing processes -vs- material flow focus
Reduces proliferation
Part number and procurement duplication
Number of qualified suppliers needed
Cost of holding Inventory
Reduces unit and overhead cost with larger buys
Integrated end-to-end,
Embeds Technology Insertion
JIT practices (Pay-as-you-go)
Focused on Product Lifecycle Management
Enables collaborative forecast demand planning
Supports changing hardware TRL
Reduces Schedule Risks
(Suppliers account for 75% of Space R&D)
Greater supply base situational awareness
Identifies risk of capability loss
5 year gap for ~1500 Shuttle active suppliers
Manufacturing Processes -vs- Material flow focus
Maps supplier capabilities to future requirements
Integrated end-to-end
Embeds technology insertion
Allows for more flexible design characteristics
Improves manufacturing readiness levels
Improves Reliability/Quality
(Supplier health impacts reliability/quality)
End-to-end integration,
Embeds Technology Insertion
Improves cross-program impact assessments
Cross Program/Agency DMSMS mitigation
Manufacturing Processes -vs- Material flow focus
Enables supplier stability/viability forecasting
Greater supply base situational awareness
Increases ability to address counterfeit parts
Increases ability to identify problem suppliers in a timely manner

The Modern Evolution of Supply Chain Management

Als Management Plan

??Westinghouse Non-Proprietary Class 3
ALS Management Plan
6002-00000-NP Rev. 7
October 2012 APPROVALS
???Function
?????Name and Signature
????Author
?Kevin Neumann* ALS Project Manager
????Reviewer
???Dave Dunsavage*
Operations Manager, Scottsdale Operations
???Approver
???Scott Roberts*
Director Scottsdale Operations
?*Refer to Release Record for Electronic Approval
WESTINGHOUSE NON-PROPRIETARY CLASS 3
©2012 Westinghouse Electric Company LLC All Rights Reserved
ALS Management Plan
?LIST OF CONTRIBUTORS
???Revision
???Name
????0
?????Steen Sorensen
????1
?Fred Lane
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???Joe Lorson
????3,4
???Mandy Knievel
???5,6,7
???Kevin Neumann
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?REVISION HISTORY RECORD OF CHANGES
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ALS Management Plan
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Author
Description
Completed
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Section
TABLE OF CONTENTS
Title Page
LIST OF CONTRIBUTORS ……………………………………………………………………………i REVISION HISTORY ……………………………………………………………………………………ii TABLE OF CONTENTS…………………………………………………………………………………iv LIST OF TABLES………………………………………………………………………………………….vi LIST OF FIGURES ………………………………………………………………………………………..vi ACRONYMS AND TRADEMARKS……………………………………………………………….vii GLOSSARY OF TERMS………………………………………………………………………………..viii REFERENCES ………………………………………………………………………………………………ix
PREFACE ……………………………………………………………………………………………………..1-1 OVERVIEW ………………………………………………………………………………………………….2-1
PROJECT SUMMARY …………………………………………………………………………………..2-1 Purpose, Scope and Objectives …………………………………………………………………………2-1 Objectives and Scope ………………………………………………………………………………………2-1 Assumptions and Constraints……………………………………………………………………………2-2 Project Deliverables ………………………………………………………………………………………..2-3 Requirements and Design Specification Documents ……………………………………………2-8 Schedule and Budget Summary ………………………………………………………………………..2-9 EVOLUTION OF THE PLAN …………………………………………………………………………2-10
PROJECT ORGANIZATION ………………………………………………………………………….3-1
EXTERNAL INTERFACES ……………………………………………………………………………3-1 INTERNAL INTERFACES …………………………………………………………………………….3-2 ROLES & RESPONSIBILITIES………………………………………………………………………3-3
MANAGERIAL PROCESS PLANS…………………………………………………………………4-1 PROJECT START-UP PLAN ………………………………………………………………………….4-1
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SECTION 1 SECTION 2
2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.2
SECTION 3
3.1 3.2 3.3
SECTION 4
4.1 4.1.1 4.1.2 4.1.3 4.1.4 4.2 4.2.1 4.2.2 4.2.3 4.2.4 4.3 4.3.1
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SECTION 5
5.1 5.1.1 5.1.2 5.1.3 5.1.4 5.1.5 5.1.6 5.1.7 5.2 5.3 5.4
SECTION 6
6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9
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TECHNICAL PROCESS PLANS …………………………………………………………………….5-1
ALS Management Plan
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??????????SUPPORTING PROCESS PLANS …………………………………………………………………..6-1
CONFIGURATION MANAGEMENT PLAN …………………………………………………..6-1 VERIFICATION AND VALIDATION PLAN…………………………………………………..6-1 DOCUMENTATION PLAN ……………………………………………………………………………6-1 QUALITY ASSURANCE PLAN……………………………………………………………………..6-1 REVIEWS AND AUDITS PLAN …………………………………………………………………….6-1 PROBLEM RESOLUTION PLAN …………………………………………………………………..6-2 SUBCONTRACTOR MANAGEMENT PLANS ……………………………………………….6-2 PROCESS IMPROVEMENT PLAN ………………………………………………………………..6-2 SOFTWARE SAFETY PLAN …………………………………………………………………………6-2
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TABLE OF CONTENTS (cont.) LIST OF TABLES
Table Title Page
Table 2-1: ALS Platform-Level Documents………………………………………………………………………………2-5 Table 2-2: ALS Platform Component-Level Documents …………………………………………………………….2-7 Table 3-1: Project Leadership Team…………………………………………………………………………………………3-2 Table 3-2: Roles & Responsibilities …………………………………………………………………………………………3-3
LIST OF FIGURES
Figure Title Page
Figure 2-1: Document Diagram ……………………………………………………………………………………………….2-9 Figure 3-1: Project Organization Structure………………………………………………………………………………..3-1 Figure 5-1: ALS Platform Project Life-Cycle Process Model ………………………………………………………5-2
ALS Management Plan
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ACRONYMS AND TRADEMARKS
Acronyms used in the document are defined in 6002-00040 – ALS Terms and Abbreviations, or included below to ensure unambiguous understanding of their use within this document.
Acronym Definition
ABD ALS Bus Diagnostic
ABTS ALS Board Test System
ALS Advanced Logic System
ASE ALS Simulation Environment
ATCT ALS Test and Configuration Tool
ATS Automated Test Software
ATU Automated Test Unit
CITE CS Innovations Test Engine
CLB Control Logic Board
CM Configuration Management
CSI CS Innovations
EMC Electro-Magnetic Compatibility
EMI Electro-Magnetic Interference
EQ Equipment Qualification
FDR Final Design Review
FMEA Failure Mode Effects Analysis
FPA Failure Path Analysis
FPGA Field Programmable Gate Array
IEEE Institute of Electrical and Electronics Engineers I&C Instrumentation and Control
IPB Input Board
IV&V Independent Verification and Validation
NRC Nuclear Regulatory Commission
NVM Non-Volatile Memory
OPB Output Board
PCA Printed Circuit Assembly
PDR Preliminary Design Review
PIT Product Integration Test
QA Quality Assurance
RAI Review Action Item
RPS Reactor Protection System
RSR Requirements Specification Review
RTM Requirements Traceability Matrix
SAT Site Acceptance Test
WEC Westinghouse Electric Company
All other product and corporate names used in this document may be trademarks or registered trademarks of other companies, and are used only for explanation and to the owners’ benefit, without intent to infringe.
ALS Management Plan
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GLOSSARY OF TERMS
Standard terms used in the document are defined in 6002-00040 – ALS Terms and Abbreviations, or included below to ensure unambiguous understanding of their use within this document.
ALS Management Plan
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REFERENCES
Following is a list of references used throughout this document.
ALS Management Plan
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SECTION 1 PREFACE
This Management Plan addresses two aspects of ALS Platform management: 1) development project management and 2) overall product life-cycle management. A project management plan addresses a set of unique activities that have a precisely defined start date, end date and deliverables. An overall life- cycle management plan addresses an on-going set of activities that occur over the life of a product that may or may not have precise, pre-defined dates and deliverables. The ALS Management Plan follows the intent of two related IEEE standards as follows: To address development project management, this plan follows the intent of IEEE Std. 1058-1998 “IEEE Standard for Software Project Management Plans”. To address product life-cycle management, this plan follows the intent of IEEE Std. 1074-1995 “IEEE Standard for Developing Life Cycle Processes” which is endorsed by Regulatory Guide 1.173 “Developing Software Life Cycle Processes for Digital Computer Software Used in Safety Systems of Nuclear Power Plants”.
The project will maintain independence between the development team and the QA, IVV, and Test teams.
ALS Management Plan
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2.1 PROJECT SUMMARY
2.1.1 Purpose, Scope and Objectives
The Advanced Logic System (ALS) is the CS Innovations (CSI) product name for a standardized platform that satisfies the needs of Class 1E safety critical Instrumentation & Control (I&C) applications in the nuclear power plant industry. The objective of the ALS Platform project is to deliver a modern, Class 1E safety-related platform that can span across a variety of Class 1E applications such as reactor protection systems (RPS), engineered safeguards features actuation system (ESFAS) and other safety system applications. The ALS targets applications where reliability and integrity are of the highest importance.
The Platform incorporates advanced features to allow for diagnostics, testability, and modularity. The ALS Platform is designed to be at the appropriate level of complexity to achieve high reliability and integrity while allowing flexibility to target multiple safety critical applications within a given nuclear power plant. Diagnostics and testing capabilities are designed into the ALS Platform to ensure there is a systematic approach to maintaining and testing systems in the field.
The ALS platform is highly customizable to support a wide variety of safety applications. The ALS architecture is based on the NRC-approved MSFIS system (refer to NRC approval under Docket 50-482, Amendment 181 to License No. NPF-42). The ALS Platform provides many improved installation and support features including increased testability, advanced diagnostics, increased integrity and reliability.
The ALS platform is an analog and digital platform based on solid-state devices, such as opto-couplers, field- programmable gate arrays (FPGA’s), line drivers, and field effect transistor (FET) power transistors. ALS utilizes solid state technology that provides a high level of integration and reliability. The high level of integration minimizes the number of logic components and reduces overall system hardware requirements. A simple system directly translates into increased reliability by having fewer components to fail and low power dissipation that increases system longevity. The fundamental ALS design philosophy is simplicity, integrity and reliability.
2.1.2 Objectives and Scope
The key project deliverables are listed below. These deliverables will be defined in-depth in Section 2.1.4.
ALS Management Plan
?SECTION 2 OVERVIEW
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??Key project activities include:
The ALS Platform project’s official statement of product requirements is contained in the following documents:
2.1.3 Assumptions and Constraints
ALS Management Plan
????????????????????????????????????• The ALS Platform is based on the generic ALS system architecture and therefore, its components share a range of characteristics and commonalities, such as:
o Commonboardcommunication,powermanagement,boardlayout,deviceselection,etc. o Common‘PlatformRequirements’and‘PlatformSpecifications’
o CommonConfigurationManagement(CM),Verification&Validation(VV)andQuality
Assurance (QA)
o CommonEquipmentQualification(EQ)
o Commonandconsistentdocumentationbase
• This ALS Platform project reuses and extends technology from a previous application-specific project of an earlier instantiation of the ALS Platform (Docket 50-482, Amendment 181 to License No. NPF-42).
• Platform constraints are documented in 6002-00008, ALS Application Guidance.
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2.1.4
The ALS Platform Project will deviate from the WEC 23.20 Section 4.2 which calls out 9000- 00340 and the Westinghouse level 2 procedures NSNP 3.6.1, NSNP 3.6.2, NSNP 3.6.5 and NSNP 3.6.7. The project is following 9000-00313, FPGA Development Procedure. WEC 23.20, Section 6.1, calls out QMS training for CSI. CSI is under transition to this new system.
Project Deliverables
The ALS Project delivers the following primary platform deliverables. The detailed list of all project deliverables is defined in the Configuration Status Accounting documents (6002-xxx50 – Configuration Management Plan). There is one Configuration Status Accounting document per ALS board type and a platform specific document.
ALS Management Plan
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ALS Management Plan
?Table 2-1: ALS Platform-Level Documents
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?Table 2-2: ALS Platform Component-Level Documents
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?2.1.5 Requirements and Design Specification Documents
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SECTION 3 PROJECT ORGANIZATION
3.1 EXTERNAL INTERFACES
ALS Management Plan
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?3.2 INTERNAL INTERFACES
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?????3.3 ROLES & RESPONSIBILITIES
A matrix of the project’s major work activities and responsible entities is presented in Table 3-2: Roles & Responsibilities. The matrix covers the development activities for the generic ALS Platform. Future application-specific projects may expand the matrix. The decision to add additional activities shall be made during the planning stage and documented in the application-specific management plan.
Table 3-2: Roles & Responsibilities
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4.5 PROJECT CLOSEOUT PLAN
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?SECTION 5 TECHNICAL PROCESS PLANS
5.1 PROCESS MODEL
This chapter describes the different stages in the ALS Platform project and product life-cycle process model. The ALS Platform project life-cycle model is defined in 9000-00000 – QA Manual and is illustrated in Figure 5-1: ALS Platform Project Life-Cycle Process Model. It consists of the following stages:
• Planning
• Development
• Manufacturing
• System Test
• Installation
• Maintenance
• Retirement
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ALS Management Plan
?????????Figure 5-1: ALS Platform Project Life-Cycle Process Model
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ALS Management Plan
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ALS Management Plan
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ALS Management Plan
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ALS Management Plan
?SECTION 6 SUPPORTING PROCESS PLANS 6.1 CONFIGURATION MANAGEMENT PLAN
The Project’s configuration management plan is specified in 6002-00002 – ALS Configuration Management Plan.
6.2 VERIFICATION AND VALIDATION PLAN
The Project’s verification and validation plan is specified in 6002-00003 – ALS VV Plan.
6.3 DOCUMENTATION PLAN
??????????6.4 QUALITY ASSURANCE PLAN
The Project’s quality assurance activities follow the 9000-00000 – QA Manual. The project’s quality assurance plan is specified in 6002-00001 – ALS Quality Assurance Plan.
6.5 REVIEWS AND AUDITS PLAN
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6.6 PROBLEM RESOLUTION PLAN
ALS Management Plan
????????????????6.7 SUBCONTRACTOR MANAGEMENT PLANS
6.8 PROCESS IMPROVEMENT PLAN
6.9 SOFTWARE SAFETY PLAN
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Efficient Agile Global

Efficient, Agile, Global
CoCreate’ s Vision for Product Development
Introduction
Situation today
Remove implementation complexity
Improve the complete process
Bring in other disciplines
Effect partnering
Summary
OneSpace: 3g PLM
from CoCreate