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Presentation on theme: "Lockheed Martin RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE"— Presentation transcript:

March 2008 Gary Bartmann, Vice President Subcontract Management & Procurement

2 Lockheed Martin is “Raising the Bar”
Agenda Lockheed Martin Space Systems Company Supply Chain 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 enterprise Product Assurance/Supply Chain Partnership Summary Lockheed Martin is “Raising the Bar”

3 Supply Chain Landscape
Lockheed Martin Space Systems Company Supply Chain Landscape

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

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

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

7 Supply Execution & Risk Management
LMSSC (Prime Contractor) Supplier (1st Tier) (2nd Tier) (3rd Tier) The Warfighter Production Process Baseline (PPB): 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

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

9 In Aerospace & Defense Quality Failure Could Mean:
2nd / 3rd 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 The Quality Journey 1940s s s s s s Beyond Decade Mil-I-45208 Mil-Q-9858 Mil-Std-1520 ISO 9000 AS 9100 Acquisition Reform TQM Faster, Better, Cheaper Driving Force Concurrent Engineering Sample Inspection Operational Excellence Lean Manufacturing Process Control Tools Error-Free Environment 100% Inspection 6 Sigma Peer Reviews High-Performance Work Teams Statistical Process Methods Big “Q” 100% Mission Success Focus Baldrige Award Deming Juran Ishikawa Taguchi Increasing System Complexity Continued Evolution From Little “q” to Big “Q”

11 Forcing Retirement of Future Potential Problems
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 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

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

13 Big “Q” Spectrum of Opportunities
Diagnosing cross-phase and multi-functional misalignment for quality Improvements Research IR&D Concept Refinement Systems Development & Demo Engineering Design & Release Production, Integration & Test 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 Technology evolution and increased complexity demand Big “Q” improvements

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 Space Systems Company defect rate 76% of mission failures attributed to engineering defects and escapements 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 Increasing system complexity and technology evolution requires change

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. Risk Intended Deflection Incident

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

17 Key Elements of Operational Excellence
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 CMMI at all SSC locations Partnerships: customer to prime and prime to supply chain Communications Relationships Transparency Forecasting cost, schedule and evolving technology Program management Operational Excellence is an imperative toward ensuring 100% Mission Success

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

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

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

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

22 Risk Management – Subcontracts
Every Program has risk. Identification and management facilitates success. Failure to manage or predict ensures failure. Requirements Best Practices Monitor Corporate & Site Policies Early Involvement Identifying Planning Assessing Handling (Mitigate, Transfer, Avoid, Assume) Personnel Training Risk “Waterfall” Lean LM21 Operating Excellence Supplier Assessment Customer Partnering Metrics Reviews Audits Process Assessments Proactive, Collaborative Engagement is Key

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

24 Subcontracts Operational Risk
Predicting trends & performance Supplier “comparison” using configurable measurements CTPAT effort manifested gaps international transportation/freight, and ex-process…action items being tracked and worked with benefits beyond C-TPAT Supply Chain Security Council has formed committees targeted to reviewing current compliance training modules, incorporating self-policing into existing audit programs and investigating benefit of periodic background checks. Committee work nearly complete Suppliers current information in online databases

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

26 Trend Analysis Process
Materials Risk Management Trend Analysis Process SSC Lines Of Business Programs G, Y, R Ratings May 2005 118 2 Programs LOB 1 4 1 13 LOB 2 Programs Supplier Occurrences Trend States LOB 3 Programs Active Suppliers LOB N Programs Generate Causals

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

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

29 Product Assurance & System Safety Responsibilities Across the Product Life Cycle
Quality Engineering System Safety Procurement Quality Operations Quality Software Quality Develop & Acquire New Business Design & Development Acquisition Produce System Deploy & Operate System 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 Use PA Proposal Focused Training Module Assess Design, Validation & Verification Inputs for Product Assurance/ System Safety Requirements Determine Quality Flowdown Requirements Develop Product Assurance & System Safety Proposal Inputs Perform Process Assessments Assess Supplier Performance Using Vendor Rating Accept Supplier Products/Services Perform Inspections & Tests Accept Product Develop Budget Estimates Identify Risks Coordinate Range Safety Requirements Apply Error Prevention Techniques Assess Hazard Analysis Requirements The Product Assurance & System Safety function involved in the entire product life cycle from proposal to final acceptance and delivery. There are tasks in each phase of the life cycle designed to ensure quality requirements are met and Mission Success is achieved. Track Corrective Actions Control Nonconforming Material Apply Error Prevention Techniques Test Like You Fly Validation Mistake Proofing Product Assurance & System Safety Applies Preventive Measures, Oversight, System Safety, Control of Nonconformities, Error Prevention, and Corrective/Preventive Action Throughout the Product Life Cycle

30 Supplier Network Successful Program Execution requires an integrated supply network with all suppliers focused on: Quality Products & Services, on-time Cost Reduction and Continuous Improvement Service and Customer Satisfaction Innovation & Creativity Anticipating our Needs Using e-technology Actively using lean processes We expect a lot from our suppliers just as we do from ourselves In our business, we often do not get a second chance Looking to deliver cost effective solutions and operations excellence Lot of suppliers in the world – ones who do these things are truly “special” Communication is key

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

32 Subcontract Excellence
More responsibility for technical development Collaboration with LM Early involvement Risk management EVM and schedule Predictive Risk and Performance modeling Our role as a systems integrator increases subcontractor’s role and criticality Now let me give you some tips on what will differentiate you as a supplier And what Lockheed Martin is looking for… We manage our subcontractors as an extension of our business

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

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

35 Supplier Expectations
Supply Base Expectations Commitments Quality Delivery Cost Meet them all 100% in everything you do On time, every time Meet targets, deliver value Our customers expect - and the war fighter relies on - 100% mission success of “our“ products and services LMSIS West-Hatch-15Dec05 12

36 Proactive plan to improve our performance!
Summary An SSC enterprise-wide plan; all sites, all programs Strategic and systematic approach toward continuous improvement Focus priority of all LOBs, programs and functional groups 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! Proactive plan to improve our performance!

37 What Can You Do? Adopt “Big Q” Thinking Continue on the “Journey”
Continuous improvement in quality & cost Flow the same principles and expectations to your supply base 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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