COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 Raytheon Six Sigma March, 2002

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 Our Knowledge Based Process for Transforming Our Culture to Maximize Customer Value and Grow Our Business R6  – Definition

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 R6  – Focused on Customer Value R6  – Integrated Improvement Thinking Traditional Six Sigma Value Stream Customer Value Defect Reduction LSLUSL

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 R6  – A Knowledge Based Process Same Process – Across Our Business Prioritize Characterize Improve AchieveCommit Visualize

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 Bring Values and Goals To Life R6  – Vision Build New Culture –Customer Focus - High Satisfaction –Process and Value Oriented - Eliminate Waste –Knowledge Based Decisions - All Levels –Empowered/Motivated Workforce - Be Employer of Choice Increased Productivity Growth

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 R6  – An Integrated Business Strategy It Defines Our Culture – How We Will Work Customers ToolsCulture

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 Champion: Senior leader who is a primary catalyst for planning and executing R6s deployment within their organization Master Expert: Full time, experienced leader who integrates R6s planning, training, mentoring and highly complex projects in their organizations Expert: Full-time individual trained to lead complex projects and train/mentor others in R6s activity Specialist: Individual trained in basic R6s concepts and productivity improvement skills to transform their work area Champion: Senior leader who is a primary catalyst for planning and executing R6s deployment within their organization Master Expert: Full time, experienced leader who integrates R6s planning, training, mentoring and highly complex projects in their organizations Expert: Full-time individual trained to lead complex projects and train/mentor others in R6s activity Specialist: Individual trained in basic R6s concepts and productivity improvement skills to transform their work area Key R6  Roles Experts Champions Specialists

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 How We Get Improvements Plan & Implement Improvement Plan Improvement Plan Root Cause Analysis “Big-Hitters” % % Pareto Analysis Pareto Analysis Categories Performance Gap $ $ Goal Projected Achieve & Improve

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 R6  -- A Continuum of Opportunity –Everyone –Common Sense –Empowerment –Specialists –Some Tools –Some Training and Experience –Experts –Multi-Disciplined Tool Set –Lengthy Training and Experience SimpleComplex Everyone Can be Involved!

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 Why is R6s Different? Built on Legacy Knowledge & Talent Combining Tools, Customer Focus and Culture Passionate Leadership Support Applies to Every Part of Our Business Intensive Communication, Education & Training Built Into Operational Fabric Part of Performance Measurement Focused on Empowerment Becoming How We Operate Everyday!

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 Our Scorecard, January Master Experts identified 1036 Experts into training 890 Experts completed training 281 Experts certified 14,667 Specialists in development* 6,306 Specialists qualified* 7,000+ Leaders educated 62,300 People through orientation $150M in Op Income in 2001 $300M in Cash in 2001 * As of 12/31/01

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 Raytheon Six Sigma Evolution Germination –Figure out how to do R6s –Build an infrastructure and supporting tools –Get some ground troops –Have early successes –Prove it works Institutionalization –Make it ours Raytheon Language, examples, teachers –Tool focus to change leadership focus –Proven, repeatable success across all elements of the business –Machine-like deployment –Significant financial results –“It’s the way we do things” 1999   2001 Optimization –Strategic Leadership Energized, impatient leaders strategically leveraging R6S in identifying and closing gaps –A Raytheon competitive advantage –Integrated thinking –Externally biased, internally collaborative –Leading edge knowledge sharing system –Unconscious focus on the Value Chain 2002 & Beyond

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 Raytheon Six Sigma – Lessons Learned A passionate leader makes all the difference Involve the entire senior staff –Train them first –Establish Executive Steering Committees –Measure business success – not functional Consultants help – but! –Should have Product Development six sigma experience –There is a beginning and an end –Ultimately the company must own and grow it

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 Lessons Learned (cont’d) A centralized “Learning Center” is a plus Sustain and encourage existing process improvement activities during launch Start in Engineering and Operations simultaneously Choose your “Experts” (Black Belts) wisely –The best of the best Ensure experts are team players –Avoid elitest environment

COPYRIGHT © RAYTHEON. ALL RIGHTS RESERVED. 2/2002 Lessons Learned (cont’d) Measure sustained impact –Cash –Cycle time –But finish the job Leave knowledge behind – very important Cost avoidance counts Integrate into your business strategy Communicate – communicate – communicate Celebrate – have fun