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Lockheed Martin. RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008. Gary Bartmann, Vice President Subcontract Management & Procurement . Agenda. Lockheed Martin Space Systems Company Supply Chain Landscape

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slide1

Lockheed Martin

RAISING THE BAR:

ACHIEVING SUBCONTRACT EXCELLENCE

March 2008

Gary Bartmann, Vice President

Subcontract Management & Procurement

agenda
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”

slide3

Lockheed Martin

Space Systems Company

Supply Chain Landscape

subcontract impact
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

spend profile
Spend Profile

40%

Commodities

  • Supplier Agreements
  • e-Business Enabled
  • Standardization

IT

Indirect

60%

DirectCommodities

Custom Products

  • Subcontracts
  • Program Driven
  • Early Involvement Key
  • Internal & external suppliers
  • Supply Chain strategies

Diverse Portfolio of Supplier Participation

procurement process
Procurement Process

Government

Acquisition

Policies

Business Unit Command Media

Corporate

Policy

Statements

LM Acquisition Procedures

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

slide7

LMSSC

(Prime Contractor)

Supplier

(2nd Tier)

Supplier

(3rd Tier)

Supplier

(1st Tier)

Supply Execution & Risk Management

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
slide8

Lockheed Martin

Space Systems Company

Product Assurance/Mission Success Landscape

in aerospace defense quality failure could mean
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

the quality journey
The Quality Journey . . .

1940s 1950s 1960s 1970s 1980s 1990s 2000 2010 Beyond

Decade

ISO 9000

AS 9100

Mil-Std-1520

Mil-I-45208

Mil-Q-9858

Acquisition

Reform

TQM

Faster, Better, Cheaper

Concurrent

Engineering

Driving Force

Sample Inspection

Operational

Excellence

Lean

Manufacturing

Error-Free

Environment

Process Control

Tools

100% Inspection

6 Sigma

Peer Reviews

High-Performance

Work Teams

Statistical Process

Methods

Big “Q”

100% Mission Success

Focus

Baldridge

Award

Taguchi

Juran

Ishikawa

Deming

Increasing System Complexity

Continued Evolution From Little “q” to Big “Q”

what is big q
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

creating a big q environment

Bringing the past to the present

Bringing the future to the present

Today

Past State

Future State

  • 100% mission success
  • Mil-Q-9858A
  • Inspect to find defects
  • Sort good from the bad
  • Big “Q” focused
  • 100% mission success
  • Operational excellence
  • Process-centric
  • Error-free environment
Creating a Big “Q” Environment

Moving forward

We cannot forget our past while we build the future

big q spectrum of opportunities
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

impetus for raising the bar
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

error prevention
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

operational excellence
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

key elements of operational excellence
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

operations excellence

Engineering

  • Peer Reviews
  • SME/Fellows program
  • Software/systems integration

76% Escapes are due to…

  • Product reuse
  • End-to-end systems effec.

Production

  • Talent Management
  • Manufacturing & Supply Chain Excellence
  • Common subcontract flowdown
  • MFG

PA&SS

  • ATLO
  • Operational mishaps
  • Supplier councils/summits
  • N/C reduction initiatives
  • Linked CAB
  • Error prevention
  • I&T
  • Supplier

Human Resources

  • Skill certifications
  • Knowledge management & transfer
  • Future labor force

Finance & Operations

  • LM21 excellence
  • Suspended loads analysis

Little “q”

Big “Q”

  • Inspection of hardware
  • Sorting
  • Acceptance
  • Test
  • Engineering processes
  • Requirement definition
  • Functional and LOB partnerships
  • Process discipline, adequacy, integrity

Operations Excellence:

Error-Free Environment Throughout Program Life Cycle

Big “Q”

Operations Excellence &

Program Execution

100%

Mission

Success

slide19

Lockheed Martin

Space Systems Company

Product Assurance/Supply Chain Partnership

lmssc supplier expectations
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

functional silo syndrome

Sourcing is a “Team Sport”

‘Functional Silo’ Syndrome

CONTRACTS

DESIGN /

Engineering

MATERIALS

PURCHASING

QUALITY

MANUFACT-

URING

Operational silos or “Over the transom” is no longer acceptable

Build Effective Relationships

risk management subcontracts
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)
  • Metrics
  • Reviews
  • Audits
  • Process Assessments
  • Personnel Training
  • Risk “Waterfall”
  • Lean LM21 Operating Excellence
  • Supplier Assessment
  • Customer Partnering

Proactive, Collaborative Engagement is Key

slide23

Risk Management - Subcontracts

Risk Based Subcontractor Assessment Tool

  • Excel based, point and click, results tallied and summarized
subcontracts operational risk
Subcontracts Operational Risk

Predicting trends & performance

Supplier “comparison” using configurable measurements

Suppliers current information in online databases

requirements analysis
Requirements Analysis

“What could go wrong? … possible failure modes? … severity, P(o), P(c)?”

Subcontractor

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

trend analysis process

Materials Risk Management

Trend Analysis Process

SSC Lines Of

Business

Programs

G, Y, R Ratings

May 2005

0

118

2

Programs

LOB 1

0

4

0

1

0

0

13

Programs

LOB 2

Supplier Occurrences

Trend States

Programs

LOB 3

Active

Suppliers

Programs

LOB N

Generate Causals

slide27

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

Rapid

Notification

Integrated Process Group

Mission

Success

IOR

Corrective

Action Board

Responsible

Area Supervisor

Failure

Review

Boards

LOB Reviews

Program

Management

Lessons Learned

Common Integrated

Process System (CIPS)

Approved

Supplier

Processes

Doc Rockit

Insight/

Oversight

Process

Early Warning

Metrics

Anomaly Engineering

Review Board (AERB)

Internal

Audit

Certified Principal

Engineer

Big “Q” Drives

Disciplined Innovation

&

Operational Excellence

GIDEP

Certified Test Conductor

Continuous Process

Improvement

PA&SS Corrective

Action Board

ERP FICO

Finance &

Business

Operations

SSC Corrective

Action Board

Corrective

Action

Board

Operations Product

Assurance Review

Capital Equipment

Mentoring

Stock Sweep

Financial

Reviews

LM21 Integration

& Transformation

Employee Skills

Joint Insight

Working Group

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

Return To Green

Meetings

Environmental

Safety & Health

Future Work Force

Management

Council

Operational Mishaps

Full Spectrum Leadership

Finance

Human Resources

Operations

PA&SS

Functional cause & effects analysis performed

supplier quality
Supplier Quality
  • Corporate Supply Quality Council established
  • LMSSC Supplier Quality Councils established
  • LMSSC Supplier Assessment/Rating System
  • Working with AIA / DCMA / Industry groups onlower-tier quality escapes
  • Critical performance and alert system established
  • Line-of-Business & Program quality program and focus
slide29

Product Assurance & System Safety Responsibilities Across the Product Life Cycle

Develop & Acquire New Business

Design & Development

Acquisition

Produce System

Deploy & Operate System

Quality Engineering

System Safety

Procurement Quality

Operations Quality

Software Quality

  • Verify System Ready for Deployment/ Shipment
  • Verify Post Deployment Activities in Compliance with Requirements
  • 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
  • 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
  • Coordinate Range Safety Requirements
  • Apply Error Prevention Techniques
  • Develop Budget Estimates
  • Identify Risks
  • Assess Hazard Analysis Requirements
  • 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

supplier network
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
contractor environment
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
subcontract excellence
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

We manage our subcontractors as an extension of our business

raising the bar
… 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 ChainSkilled Teams Armed with Information to Manage

enterprise big q focus areas
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
supplier expectations
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

summary
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!

what can you do
What Can You Do?
  • 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