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LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Presentation on theme: "LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract."— Presentation transcript:

1 LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract Management & Procurement Lockheed Martin

2 2 Agenda Lockheed Martin Space Systems Company Supply Chain Landscape Lockheed Martin Space Systems Company Supply Chain Landscape Lockheed Martin Space Systems Company Product Assurance/Mission Success Landscape Lockheed Martin Space Systems Company Product Assurance/Mission Success Landscape – What is Big “Q”? Remedy underlying causes of mishaps, near misses, escapements, process errors, etc., across the enterpriseRemedy underlying causes of mishaps, near misses, escapements, process errors, etc., across the enterprise Product Assurance/Supply Chain Partnership Product Assurance/Supply Chain Partnership Summary Summary Lockheed Martin is “Raising the Bar”

3 3 Lockheed Martin Space Systems Company Supply Chain Landscape

4 4 Subcontract Impact Typically 50-60% of Revenue Typically 50-60% of Revenue Brings technology and expertise to the team Brings technology and expertise to the team Suppliers bring innovation, speed and agility to the table Suppliers bring innovation, speed and agility to the table Source of Competitive Advantage Source of Competitive Advantage “Supply Chain as strong as the Weakest Link” “Supply Chain as strong as the Weakest Link” Supply Chain is a “Valued Asset” Supply Chain is a “Valued Asset” Strong supply chain critical to success Strong supply chain critical to success Supplier Performance is Lockheed Martin Performance

5 5 Spend Profile Subcontracts Program Driven Program Driven Early Involvement Key Early Involvement Key Internal & external suppliers Internal & external suppliers Supply Chain strategies Supply Chain strategies 60% 40% Custom Products Indirect Direct Commodities IT Commodities Supplier Agreements Supplier Agreements e-Business Enabled e-Business Enabled Standardization Standardization Diverse Portfolio of Supplier Participation

6 6 Procurement Process Government Acquisition Policies Federal State Laws Sound Procurement Practices Corporate Policy Statements Corporate Policy Statements LM Acquisition Procedures Business Unit Command Media Compliant Procurement Systems Buyers ChecklistChecklist DocumentationDocumentation Governance Compliance Corporate Officer LM Internal Audits LMAP Council DCMA Review LM Internal Audits CPSRs Peer Review Mgmt Approvals Program Audits Compliance Training Ethics Training Peer Review Mgmt Approvals Program Audits Compliance Training Ethics Training Rigorous Acquisition Process

7 7 Audits to baseline standards conducted Command media procedures established Validation of contract and technical requirements Compliance and sub-tier flow down / verification Production, test, and inspection instruction Personnel training Configuration control methods Quality Management System effectiveness Sub-tier supplier management controls First article and source inspection The Warfighter LMSSC (Prime Contractor) Supplier (1 st Tier) Supplier (2 nd Tier) Supplier (3 rd Tier) Supply Execution & Risk Management Production Process Baseline (PPB):

8 8 Lockheed Martin Space Systems Company Product Assurance/Mission Success Landscape

9 9 In Aerospace & Defense Quality Failure Could Mean: 2 nd / 3 rd quality escapes discovered by our Prime customer at Integration Test Launch failure On-orbit failure Missile fails to arm Intelligence information not conveyed War fighter in harm’s way We don’t get a second chance

10 10 The Quality Journey... Continued Evolution From Little “q” to Big “Q” Increasing System Complexity Sample Inspection 100% Inspection Process Control Tools Statistical Process Methods Mil-I-45208 Mil-Q-9858 Mil-Std-1520 ISO 9000 AS 9100 Baldrige Award 100% Mission Success Concurrent Engineering Acquisition Reform 6 Sigma Deming Ishikawa Taguchi Juran Faster, Better, Cheaper Lean Manufacturing TQM High-Performance Work Teams Peer Reviews Operational Excellence Error-Free Environment Big “Q” Focus Driving Force Decade 1940s 1950s 1960s 1970s 1980s 1990s 2000 2010 Beyond

11 11 What is Big “Q”? A recognition that the quality of our procedures and products depends on the up-front (early life cycle) design processes being error-free A recognition that the quality of our procedures and products depends on the up-front (early life cycle) design processes being error-free Achieving Big “Q” requires a holistic systems approach by each program and functional group to seek out problems, analyze causes and take effective corrective and preventive actions throughout the entire contract life cycle Achieving Big “Q” requires a holistic systems approach by each program and functional group to seek out problems, analyze causes and take effective corrective and preventive actions throughout the entire contract life cycle Forcing Retirement of Future Potential Problems in the Present in the Present

12 12 Future State Bringing the future to the present Big “Q” focused 100% mission success Operational excellence Process-centric Error-free environment Past State Bringing the past to the present 100% mission success Mil-Q-9858A Inspect to find defects Sort good from the bad Creating a Big “Q” Environment Today We cannot forget our past while we build the future Moving forward

13 13 Research IR&D Research IR&D Concept Refinement Concept Refinement Systems Development & Demo Systems Development & Demo Production, Integration & Test Production, Integration & Test System/ Mission Deployment System/ Mission Deployment Quality improvements throughout life cycle Beyond the plant, a cross-phase and functional view All functions participate continuously Force “Up-Stream” Improvements Converge on Big “Q” improvements via design team Diagnosing cross-phase and multi-functional misalignment for quality Improvements Diagnosing cross-phase and multi-functional misalignment for quality Improvements Engineering Design & Release Engineering Design & Release Big “Q” Spectrum of Opportunities Technology evolution and increased complexity demand Big “Q” improvements

14 14 Impetus for Raising the Bar The driving needs for Operational Excellence? Increasing need for an integrated, end-to-end set of improved processes for development and recurring work Increasing need for an integrated, end-to-end set of improved processes for development and recurring work Space Systems Company defect rate Space Systems Company defect rate – 76% of mission failures attributed to engineering defects and escapements SSC enterprise experience on recent programs SSC enterprise experience on recent programs – Latent engineering defects have significant negative impact on technical, schedule and cost performance Being proactive to sustain 100% Mission Success Being proactive to sustain 100% Mission Success Increasing system complexity and technology evolution requires change

15 15 Error Prevention For Each Mishap / Near Miss Multiple Things Go Wrong At The Same Time Multiple Defenses (Plates) Fail: Cert Product Eng (CPE), Resp Area Super (RAS) Supply Chain Product Assurance Test Discipline Infrastructure System Safety Supervision Employee Process / Equipment Etc. Incident Risk Intended Deflection

16 16 Operational Excellence Lockheed Martin’s Operational Excellence Program provides: Lockheed Martin’s Operational Excellence Program provides:  Roadmap, principles & tools to cut costs  Eliminates waste & enhance customer satisfaction Operational Excellence Program Objectives: Operational Excellence Program Objectives:  Drive process capability  Delivers on customer value  Provides common focus for productivity Today's environment leaves little room for error… End State Goal… Lean processes with Six Sigma capability throughout the enterprise and supply chain

17 17 Key Elements of Operational Excellence Creating an error-free environment Creating an error-free environment – Big “Q” focus – Peer reviews – Every process, product and paper... is perfect – Zero defects throughout product life cycle One Company enterprise-wide processes One Company enterprise-wide processes – CMMI at all SSC locations Partnerships: customer to prime and prime to supply chain Partnerships: customer to prime and prime to supply chain – Communications – Relationships – Transparency Forecasting cost, schedule and evolving technology Forecasting cost, schedule and evolving technology – Program management Operational Excellence is an imperative toward ensuring 100% Mission Success

18 18 Operations Excellence & 100%MissionSuccess100%MissionSuccessEngineering Product reuse Product reuse End-to-end systems effec. End-to-end systems effec. Peer Reviews Peer Reviews SME/Fellows program SME/Fellows program Software/systems integration Software/systems integration Production Manufacturing & Supply Chain Excellence Manufacturing & Supply Chain Excellence Common subcontract flowdown Common subcontract flowdown Talent Management Talent Management PA&SS Operational mishaps Operational mishaps Supplier councils/summits Supplier councils/summits N/C reduction initiatives N/C reduction initiatives Linked CAB Linked CAB Error prevention Error prevention Finance & Operations LM21 excellence LM21 excellence Suspended loads analysis Suspended loads analysis Big “Q” Program Execution Program Execution Operations Excellence: Error-Free Environment Throughout Program Life Cycle Big “Q” Engineering processesEngineering processes Requirement definitionRequirement definition Functional and LOB partnershipsFunctional and LOB partnerships Process discipline, adequacy, integrityProcess discipline, adequacy, integrity Little “q” Inspection of hardwareInspection of hardware SortingSorting AcceptanceAcceptance TestTest MFG MFG ATLO ATLO I&T I&T Supplier Supplier Human Resources Skill certifications Skill certifications Knowledge management & transfer Knowledge management & transfer Future labor force Future labor force 76% Escapes are due to…

19 19 Lockheed Martin Space Systems Company Product Assurance/Supply Chain Partnership

20 20 LMSSC Supplier Expectations Supply Base Expectations CommitmentsQualityDeliveryCost Meet them all 100% in everything you do On time, every time Meet targets, deliver value 12 Our customers expect and the war fighter relies on 100% mission success of “our” products and services

21 21 Sourcing is a “Team Sport” ‘Functional Silo’ Syndrome CONTRACTS DESIGN / EngineeringMATERIALSPURCHASINGQUALITYMANUFACT-URING Operational silos or “Over the transom” is no longer acceptable Build Effective Relationships

22 22 Risk Management – Subcontracts Corporate & Site PoliciesCorporate & Site Policies o Early Involvement o Identifying o Planning o Assessing o Handling (Mitigate, Transfer, Avoid, Assume) Personnel TrainingPersonnel Training Risk “Waterfall”Risk “Waterfall” Lean LM21 Operating ExcellenceLean LM21 Operating Excellence Supplier AssessmentSupplier Assessment Customer PartneringCustomer Partnering MetricsMetrics ReviewsReviews AuditsAudits Process AssessmentsProcess Assessments Best Practices MonitorRequirements Every Program has risk. Identification and management facilitates success. Failure to manage or predict ensures failure. Proactive, Collaborative Engagement is Key

23 23 Risk Management - Subcontracts Excel based, point and click, results tallied and summarized Excel based, point and click, results tallied and summarized Risk Based Subcontractor Assessment Tool

24 24 Subcontracts Operational Risk Supplier “comparison” using configurable measurements Predicting trends & performance Suppliers current information in online databases

25 25 Subcontractor Performance Based Specification KPP: “Spacecraft transmit/receive time” “Mux shall have <2dB insertion loss” KPP: “Filter shall have <1.5 dB insertion loss” KPP: “Waveguide shall have <0.5 dB insertion loss” KPP: Surface Risk - Prioritize - VOC Surface Risk - Prioritize - VOC Register Risk Manage Risk “What could go wrong? … possible failure modes? … severity, P(o), P(c)?” Requirements Analysis Lockheed Martin Supplier Risk Management 

26 26 0 4 0 1182 0 0 0 1 13 May 2005 Programs Trend Analysis Process LOB 1 SSC Lines Of Business LOB 2 LOB 3 LOB N Programs Generate Causals Supplier Occurrences ActiveSuppliers Trend States G, Y, R Ratings Materials Risk Management Programs

27 27 Big “Q” Drives Disciplined Innovation & Operational Excellence ProductionEngineering Operations Finance PA&SS Process Control Board Corrective Action Board Responsible Area Supervisor Mission Success Senior Management Review Team Integrated Process Group Lessons Learned Mission Success Bulletins Internal Audit GIDEP Doc Rockit Mission Success IOR Rapid Notification Common Integrated Process System (CIPS) Approved Supplier Processes Failure Review Boards Anomaly Engineering Review Board (AERB) Insight/ Oversight Process Certified Test Conductor Certified Principal Engineer Corrective Action Board Internal Operations Review LOB Reviews Program Management Internal Operations Review Corrective Action Board Internal Operations Review Environmental Safety & Health Continuous Process Improvement Foreign Object Elimination LM21 Integration & Transformation Finance & Business Operations Employee Skills Financial Reviews Training Certifications Qualifications Internal Operations Review PA&SS Corrective Action Board Operations Product Assurance Review Joint Insight Working Group Management Council Return To Green Meetings Stock Sweep Verification & Assessment Error Prevention Council SSC Corrective Action Board Flash Notices Early Warning Metrics Certification Board A Fishbone Approach to Big “Q” Functional cause & effects analysis performed Peer Review ERP FICO Suspended Loads Capital Equipment Future Work Force Full Spectrum Leadership Mentoring Knowledge Transfer Human Resources Operational Mishaps

28 28 Supplier Quality Corporate Supply Quality Council established Corporate Supply Quality Council established LMSSC Supplier Quality Councils established LMSSC Supplier Quality Councils established LMSSC Supplier Assessment/Rating System LMSSC Supplier Assessment/Rating System Working with AIA / DCMA / Industry groups on lower-tier quality escapes Working with AIA / DCMA / Industry groups on lower-tier quality escapes Critical performance and alert system established Critical performance and alert system established Line-of-Business & Program quality program and focus Line-of-Business & Program quality program and focus

29 29 Product Assurance & System Safety Responsibilities Across the Product Life Cycle Assess Customer Requirements Participate in IPT’s & other design teams Assess Supplier Capability - Use LM Corporate System Review Production Plans for Product Assurance & System Safety Requirements Verify System Ready for Deployment/ Shipment Verify Post Deployment Activities in Compliance with Requirements Develop & Acquire New Business Design & Development AcquisitionProduce System Deploy & Operate System Quality EngineeringSystem Safety Operations Quality Procurement Quality Software Quality Perform Process Assessments Perform Inspections & Tests Accept Product Product Assurance & System Safety Applies Preventive Measures, Oversight, System Safety, Control of Nonconformities, Error Prevention, and Corrective/Preventive Action Throughout the Product Life Cycle Develop Product Assurance & System Safety Proposal Inputs Develop Budget Estimates Identify Risks Use PA Proposal Focused Training Module Assess Hazard Analysis Requirements Assess Design, Validation & Verification Inputs for Product Assurance/ System Safety Requirements Mistake Proofing Test Like You Fly Validation Determine Quality Flowdown Requirements Assess Supplier Performance Using Vendor Rating Accept Supplier Products/Services Track Corrective Actions Control Nonconforming Material Apply Error Prevention Techniques Coordinate Range Safety Requirements Apply Error Prevention Techniques

30 30 Supplier Network Successful Program Execution requires an integrated supply network with all suppliers focused on: Quality Products & Services, on-timeQuality Products & Services, on-time Cost Reduction and Continuous ImprovementCost Reduction and Continuous Improvement Service and Customer SatisfactionService and Customer Satisfaction Innovation & CreativityInnovation & Creativity Anticipating our NeedsAnticipating our Needs Using e-technologyUsing e-technology Actively using lean processesActively using lean processes

31 31 Contractor Environment Program Pressure Program Pressure – Flawless Execution Cost Pressure Cost Pressure – Real cost reduction & continuous improvement Complex Systems Integration Complex Systems Integration – Interdependent system elements – Cross-discipline execution – Greater reliance on Subcontract performance

32 32 Subcontract Excellence Our role as a systems integrator increases subcontractor’s role and criticality More responsibility for technical development Collaboration with LM –Early involvement –Risk management –EVM and schedule Predictive Risk and Performance modeling We manage our subcontractors as an extension of our business

33 33 … Raising the Bar … Raising the Bar Optimize Core Process & Efficiency Optimize Core Process & Efficiency Share Knowledge Rapidly and Freely Share Knowledge Rapidly and Freely Early involvement Early involvement Provide world-class tools to manage Suppliers Provide world-class tools to manage Suppliers Enhance personnel skills and understanding Enhance personnel skills and understanding Speed and agility Speed and agility Defining full life-cycle supply chains Defining full life-cycle supply chains Innovation Innovation End Game: Optimized Supply Chain Skilled Teams Armed with Information to Manage

34 34 Enterprise Big “Q” Focus Areas Peer reviews Peer reviews Subcontract management Subcontract management Error prevention – near miss and mishap reporting Error prevention – near miss and mishap reporting Non-conformance reduction initiatives Non-conformance reduction initiatives – Manufacturing, engineering and suppliers Product reuse analysis Product reuse analysis End-to-end specialty engineering End-to-end specialty engineering Software and systems integration Software and systems integration Enhanced applications and procurement of EEE parts Enhanced applications and procurement of EEE parts Certified test conductor briefings Certified test conductor briefings

35 35 Supplier Expectations Supply Base Expectations CommitmentsQualityDeliveryCost Meet them all 100% in everything you do On time, every time Meet targets, deliver value LMSIS West-Hatch-15Dec0512 Our customers expect - and the war fighter relies on - 100% mission success of “our“ products and services

36 36 Summary An SSC enterprise-wide plan; all sites, all programs An SSC enterprise-wide plan; all sites, all programs Strategic and systematic approach toward continuous improvement Strategic and systematic approach toward continuous improvement – Focus priority of all LOBs, programs and functional groups Operational Excellence/Big “Q” improvements will eliminate: Operational Excellence/Big “Q” improvements will eliminate: – Latent hardware anomalies and non-conformances – Latent process escapes, near misses and mishaps – Unacceptable schedule and cost performance Will raise the bar with 100% Mission Success! Will raise the bar with 100% Mission Success! Proactive plan to improve our performance!

37 37 What Can You Do? Continue on the “Journey” Continue on the “Journey” – Continuous improvement in quality & cost Flow the same principles and expectations to your supply base Flow the same principles and expectations to your supply base Manage the ‘multi-tier’ Manage the ‘multi-tier’ – Take time to strategically plan to achieve competitive advantage in your supply chain Adopt “Big Q” Thinking

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