Managing the Supply Chain Using the Malcolm Baldrige Model

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Managing the Supply Chain

Using the Malcolm Baldrige Model

Lockheed Martin Missiles and Fire Control

Supply Chain Environment

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Facts

• 70% of product costs in the supply chain • Seasoned generations retiring • External pressures… off-shore competition • Technology obsolescence

Environment

• Increased government oversight • Domestic & foreign budget constraints • Poor performing programs at risk • Increased regulatory requirements Focus on Supply Chain

• Greater visibility into the supply chain • US government

• Lockheed Martin • Risk sharing

• Supply chain collaboration

Cultural and Environmental Transformation Of Supply Chain

Supply Chain Engagement Model

Partner with supplier leadership to positively impact supplier culture Invest in supply chain short and long term sustainment & affordability

Demonstrate partnership with our customers & suppliers by hosting & participating in collaborative initiatives

Use analytics to drive organizational excellence

Maximize workforce potential through cultural optimization

Share best work practices to improve operational performance

Expect 100% quality and delivery from ourselves and supply chain

3 Goal: Increase Velocity of Knowledge to Increase Product/Service Quality Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results

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Leadership

• Partner with supplier leadership to drive quality culture • Strategic Focus

– Collaborative continuous improvement approach – Culture of treating product/process escapes as jewels • Tactical Focus

– Functional & program executive leadership – Commitment & accountability

– Open & candid two-way communication

4 Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results Obsolescence Budget Pressures Counterfeit Parts

Strategic Planning

• Invest in supply chain short and long term growth,

sustainment and affordability

• Strategic Focus

– Forecast to long range plan – Baseline suppliers against world class – Partner with suppliers to close gaps • Tactical Focus

– Improve supply chain analysis tools • Risk Assessment Tool

• Global Disaster Analysis Tool • Trend Tool

• Characteristics of Supplier Excellence • Other collaborative tools and strategies

– Invite suppliers to where their products/services are

integrated to leverage end user insight

5 Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results

Joint Improvement Team (JIT)

6 Proactively Protect the Brand, Strengthen Relationships & Reduce Non-conformances Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results

• Joint customer/supplier cross-functional team to proactively

detect, resolve & prevent production line impacts

– Partner with customer & suppliers at multiple tiers to

eliminate escapes through continuous improvement

• Tactical Focus

– Executive Engagements, Focused Production Process

Baseline, Requirements Crosswalks, Controlled Builds

JIT enacted July 2012

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Characteristics of Supplier Excellence

“ “What Good Looks Like”

7 Provide all LMMFC suppliers with a clear set of expectations so that our partners can align their culture with LMMFC’s focused vision to meet all customer requirements and support us on the “journey to excellence”

“Good Suppliers” will embrace / demonstrate all of the characteristics “Poor Performing Suppliers” will clearly display a lack of these characteristics

High Level Overview

• Supplier surveys cross-functional leadership team • Evaluate perspective differences of organization

• Brainstorm improvements

• Develop 2-3 year strategic plan to align culture and organization with imperatives

Benefits

• Provides a universal set of imperatives to reinforce values and behaviors that are important to LMMFC both internally and externally

• CMMI maturity approach identifies organizational improvement opportunities for suppliers • Improvements create environment for lasting

performance improvements Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results Company Supplier Customer

Customer Focus

• Demonstrate partnership with our customers & suppliers by

hosting & participating in collaborative initiatives

– Foster a culture of partnering and disclosure – Remove barriers

– Lead by example • Tactical Focus

– Partner with customer and industry

associations

– Supplier conferences, webinars &

workshops 8 Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results

Measurement

• Data measurement & analysis drives operational excellence • Strategic Focus

– Understanding that when something is measured and

focused on by leadership the measure will improve

• Tactical Focus 9 Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results

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Measurement

– Measuring the supply chain to drive performance

Measurement

– Deploy and embed resources within supply base – Deeper understanding of “voice of the process” through

supplier surveillance

– Additional level of risk mitigation

31 CONUS Supplier Quality Field Engineers

Workforce Focus

• Supply chain is an extension of the workforce • Strategic Focus

– Leverage internal talent development tenets to improve

supplier talent and diversity

• Tactical Focus 12 Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results

Supplier Development is Synonymous with Talent Development Attract Talent

Develop and Grow Talent

Evaluate and Improve

Retain High Performers Talent Development Strategy

Enablers: Collaboration, Evaluation and Tool Sets Supplier Development Strategy

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Operations Focus

• Operations: Share best work practices to improve

operational performance

– Teaming relationship with supply chain – Sharing best operational practices • Tactical Focus – Benchmarking – Webinars – Structured Improvement Activities – Supplier Performance Management Teams 13 Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results

Supply Chain Performance

Delete

Develop / Invest

Benchmarking Topics

• Key Quality Metrics • Escape Process / System • Corrective Action System • Supplier IT Tools

• Supplier Management Strategy • Counterfeit Parts Strategy • Lean Six Sigma Strategy

Topics are added as requested by our supply chain

Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results

Results

• Expect 100% quality and delivery from ourselves and supply

chain •Supplier Trend Tool •Action Teams •Common Processes •Metric Sets •Supplier PMT •Performance Reviews •Enhanced Trend Tool •Supplier Data Gateway •Reverse Report Card •Financial Risk Monitoring •Sub-tier Monitoring •SHAPE •SCORE •Disaster Warnings •Supplier Improvement Conferences

•Red Flag Reviews

•EPRI •Enhanced Supplier Report Card •WGLL •Benchmarking •Webinars •JIT

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Results

• Expect 100% quality and delivery from ourselves and supply

chain 16 Malcolm Baldrige Model Leadership Strategic Planning Customer Focus Measurement, Analysis & Knowledge Management Workforce Focus Operations Focus Results

Return On Investment Substantially Exceeds Industry Benchmarks 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

Supply Chain Engagement Model

Share best practices to improve operational performance

Supply chain is an extension of the work force

Demonstrate partnership through collaborative initiatives Partner with supplier leadership for short and long term growth Drive culture of excellence

through leadership engagements

Use analytics to drive organizational excellence