2. AgendaIntroductions
Supplier Management – What Does It Mean?
The Defense Business – What’s Driving the Transformation?
Northrop’s Model – “Strategic Relationships, Strategic Alliances”
Key Success Factors
Future Vision – Where Do We Go from Here?
Questions and Answers2Copyright 2003 Northrop Grumman Corporation
3. Mary Simmerman, VP, MaterielOversee Domestic and International Procurement and Subcontract Management
VP, Supplier Management and Procurement at Boeing Space and Communications
Co-Lead Supplier Mgmt. Process Council at Boeing
Past Life at Northrop in Advanced Systems Division and Grumman Aerospace
SME for Material Operations of Boeing Airlift and Tanker 1998 Malcolm Baldridge Award
MBA, Keller Graduate School, BA in Business Mgmt., University of Phoenix3Copyright 2003 Northrop Grumman Corporation
4. Cost-Based
Adversarial
“Vendor”
“Tug of War”
Non-Evaluative
Short-Term
Event-Based
Collaboration
Joint investment
Sophisticated Evaluation Tools
Long-Term Focus
Continuous improvement
True PartnershipsQuality
IssuesPoor
Communic.TQM6
SigmaMetricsIntegrated
SystemsNew
Tech.SCM
FocusPastPresentSupplier Management – What Does it Mean?4Copyright 2003 Northrop Grumman Corporation
5. What Do We Mean Today?A Formal Process by Which Suppliers Are Evaluated and Categorized by Their Ability to Add Value to Our Business Via Investment, Collaborative Planning & Design, Risk-Sharing and Product EnhancementSupplier Management Is Enabling Relationships with Providers of Goods and Services to:
Attain Business Objectives
Expand Business Opportunities
Reduce / Transfer Business Risks5Copyright 2003 Northrop Grumman Corporation
6. Market ShareSignificantly
Enhanced revenueBenefits from Supplier ManagementNew Products/
ItemsBroader
Name RecognitionReduced CostsNew Distribution
ChannelsNew
CustomersWhy Manage Suppliers?60-70% of What We Build Is Procured!Customer
Satisfaction6Copyright 2003 Northrop Grumman Corporation
7.
Industry Consolidation
War Tactics
Cultural Issues
Enhanced Communications
Weapons Technology
The GenesisThe Defense Business – What’s Driving the Transformation?
“Integrated Network”
True Partnerships
“Systems, Services, Support”
Precision Weapons & “Real-Time” Communications
GoalsCollaboration7Copyright 2003 Northrop Grumman Corporation
8. The Northrop Model – Supplier EngagementPossess Technology That Would Be Beneficial to Our Future Business Aspirations
Align with Our Future Strategies (e.g. NHA, JIT)
Have R&D Expenditures That Are Relevant to Technologies We Believe Are Gaps in Our Portfolio
Select Potential Strategic Partners (Industry / Geography) with Characteristics That Would Be Critical Differentiators for Us in Future Competitions (e.g. Skills, Political Strengths, Technologies)8Copyright 2003 Northrop Grumman Corporation
9. The Northrop Model –Hawkeye Case StudyIssues:
Radar Approach & Team Solidified Within the Navy (NAVAIR, OPNAV, CNO, ASN)
Navy Funding Profiles to Support RMP SD&D and Post Multiyear Production
RMP SD&D Proposal Submission in June and Contract Award by December
FY 2004 NTE Production Proposal Submission in November and AAC Award by December (3 Hawkeye 2000 Aircraft)Strategies:
Preserve FY 2003 Budget for SD&D and Production and Preservation in POM-04
Continue Hawkeye 2000 and Advanced Hawkeye/RMP Advocacy Campaigns
Work with the Customer for Post MYP Production Via Affordability Options
FY 2004-2005 (Hawkeye 2000)
FY 2006-TBD (RMP LS / TAMD)Hawkeye Industry TeamTactics:
Leverage the Strength of a “Team” in USN, OSD, Congress and the Media
Propagate “Value of RMP” as Highest Priority of Advocacy Campaign
Stress “Value of Hawkeye 2000/CEC” to Near–term Fleet Operations
Develop Affordability Posture on RMP SD&D and Post Multiyear Production
Target Key OPNAV Flags
Promote Team AccomplishmentsStrategic Intent: Joint Marketing of the E-2C Hawkeye and USN AEW&C Roadmap9Copyright 2003 Northrop Grumman Corporation
10. The Northrop Model –F-35 Case StudyStrategic Intent: Collaborative Design and Engineering while pursuing “Best Value”Issues:
Cost containment is key for the program
Investment structure requires sourcing strategy for participating countries
RFB/RFQ are “model” based
Design and production specs are evolving as the bid process progressesStrategies:
Exploit technologies which support collaborative design and engineering to address weight and configuration challenges
Employ “ePMO” for document and data sharing for global team
Deploy common engineering standards (CATIA)F-35 Global TeamTactics:
Developed JSL “Virtual PMO” for global project management support
Balance “best value” and collaborative engineering capabilities to meet cost and design challenges
Develop specific incentives for team to address center fuselage and weight challenges.10Copyright 2003 Northrop Grumman Corporation
11. Continuous Review Process Based on Performance Measures Reflecting Total Cost of Ownership Must Be in Place to Provide Ongoing Monitoring of the Supplier's Effectiveness
“Platinum Source” Case Study
Key Success Factors – Supplier Relationship Management11Copyright 2003 Northrop Grumman Corporation
14. Key Success Factors – Supplier Relationship ManagementSuppliers / Contractors Are Selected Strategically, with a Long-Term Focus, Rather Than Historic Short-Term, Transaction-Based. Organization Must Commit the Resources to Develop Mutually Beneficial Relationship. Demands on Suppliers Requiring Capital Investments Necessitates the Sharing of Plans and Schedules
Utilize Suppliers As a Knowledge Source and Share Benefits of Expanding Into New Markets, Assessing Value-Based Opportunities, Discovering New Cost Savings, and Extending Current Functionalities14Copyright 2003 Northrop Grumman Corporation
15. Key Success Factors – Supplier Relationship Management (Cont)Involve Key Suppliers in Long-Term Strategic Alliances, Where Specific Capabilities May Need to Be Developed. MWBEs May Be a Good Source for This. Align Suppliers, IR&D to Technology Maps15Copyright 2003 Northrop Grumman Corporation