Original Date: 08/20/2001
Revision Date: 12/14/2006
Best Practice : Consolidated Purchasing
Lockheed Martin created three consolidated purchasing organizations, one of which is the Material Acquisition Center Mid-Atlantic Region at Lockheed Martin Naval Electronics & Surveillance Systems-Surface Systems. As a result, the corporation has increased the speed, agility, and services of its acquisition process while improving product quality and reducing costs.
In the past, each individual business unit of Lockheed Martin maintained and operated a complete and independent purchasing department. Few common practices spanned across these units, resulting in inconsistent sourcing and quality practices. Opportunities for increased buying efficiencies and overall cost effectiveness were often lost. Multiple organizations increased the number of suppliers as well as variation in the products. Lockheed Martin resolved this situation by consolidating the business units into three purchasing organizations, one of which is the Material Acquisition Center Mid-Atlantic Region (MAC-MAR) at Lockheed Martin Naval Electronics & Surveillance Systems-Surface Systems (NE&SS-SS).
MAC-MAR provides full service sourcing for Lockheed Martin and some non-Lockheed Martin companies. The sourcing services include direct, major subcontract, and indirect buying; supplier management; technology engineering; receiving; supplier quality assurance; inspection; freight management; cost estimating; and compliance. The role of MAC-MAR goes beyond basic research/new production development, through production, and into lifetime support after the product reaches the market. In addition, MAC-MAR actively participates in the shared corporate goals of Lockheed Martin NE&SS-SS such as Lockheed Martin 21 Operating Excellence, the Six Sigma Program, and Information Technology (IT) E-Commerce. Consolidation is also making it possible to do more within the Lockheed Martin NE&SS-SS’ acquisition community such as technology roadmapping, global supplier base, and systems integration.
Additional services and buying centers are being developed for 2001 and beyond. These services include material cost estimating, field quality, freight-in, assessments, and subcontract agents. Commodity, indirect, and IT buying centers are also beginning to emerge, and MAC-MAR is initiating an automated buying process. A consolidated purchasing approach provides tremendous leverage with suppliers while greatly reducing the cost of doing business. Since being established, MAC-MAR has improved total manpower productivity by 26.4% over four years; improved material quality by 128%; obtained the highest buyer productivity in Lockheed Martin; and reduced overall procurement costs by 32%. The administrative surcharge alone on acquisition services dropped from 10% in the early 1990s to 5% in 2000.
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