Original Date: 08/20/2001
Revision Date: 12/14/2006

In 1999, Lockheed Martin Naval Electronics & Surveillance Systems-Surface Systems revised its Material Request Process. As a result, the company resolved material analysis problems that had resulted in a $3.5 million misclassification of direct materials and related inappropriate burdens.

Previously at Lockheed Martin Naval Electronics & Surveillance Systems-Surface Systems (NE&SS-SS), material requests were used to order non-production direct and indirect materials. Approximately 300 employees were eligible to issue material requests; however, no formal training or packaged guidelines existed for these Material Request Analysts. The result was continuous monitoring and journal entry adjustments, and a significant misclassification of direct materials and related inappropriate burdens. In 1999, Lockheed Martin NE&SS-SS implemented a revised Material Request Process that consolidated the 300 Material Request Analyst positions into 18 positions.

The 18 Material Request Analysts serve functional disciplines across the entire business. Site Material Requesters use on-line forms to document material request data. These forms are sent electronically to the Material Request Analysts who process them into the corporate Consolidated Purchasing System. The Analysts track the ordered material from the time they are logged into the system through to the approval cycle. Tracking provides visibility to the Finance/Manager through the Sourcing Buyer’s queue. Each week, the Material Request Analysts e-mail status reports to the related requesters. The Material Request Process also includes a responsibility matrix for both Analysts and Approvers. The procedure, a Material Request Approver listing, and training documents are now accessible through the company’s web site.

Since implementing the Material Request Process, Lockheed Martin NE&SS-SS resolved material analysis problems that had resulted in a $3.5 million misclassification of direct materials, internal audit oversight, and related inappropriate burdens. The process also enables the company to efficiently monitor and train its Material Request Analysts. A cost auditing monitoring process revealed that direct material misclassification has been significantly abated, and metrics exist to alleviate engineers’ fears that their processes would be delayed by strict adherence to the Material Request Process.

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