Original Date: 05/01/2000
Revision Date: 01/18/2007
Best Practice : Supplier Teaming
Previously, Northrop Grumman Defensive Systems Division’s (DSD’s) primary communications with suppliers involved either negotiating new business or visiting them when schedule/performance issues occurred. Products were designed without supplier input, and issues were traditionally resolved within the company. Business continued in this manner until 1993 when Northrop Grumman DSD conducted a feedback survey with its 700 suppliers. The survey results rated the company as a below average customer. Suppliers’ concerns included lack of trust, little loyalty to good suppliers, emphasis on low price versus total incurred cost, lack of supplier involvement in design, and scheduling issues. To improve its relationship with suppliers, Northrop Grumman DSD began developing a multi-faceted Supplier Management System which became fully implemented in 1996.
One element of the Supplier Management System is the Supplier Certification (or Vision) program, which highlights key suppliers from various product disciplines. Through the Vision program, Northrop Grumman DSD teams with suppliers to establish performance characteristics of materials and services; utilizes their engineering and technical resources to develop or improve products; and helps leverage new programs and business opportunities. The Vision program also recognizes top performing suppliers. Northrop Grumman DSD awards gold, silver, and bronze status to suppliers who meet award criteria in performance, advanced quality practices, and business assessment. The company may further reward a supplier who achieves a gold award by waiving incoming inspections or extra documentation.
Procurement, Engineering, and Quality Assurance (QA) nominate suppliers under the Supplier Management System. Meetings are held with these suppliers to discuss inclusion into the program and to identify key areas for improvement. Procurement and QA representatives are responsible for working with suppliers to resolve performance issues and address actions generated by the Supplier/Northrop Grumman DSD team. Suppliers may propose design, test, data, and quality initiatives that will improve products and/or reduce costs. The process features technology transfers, and minimizes inspection, test, and data requirements to the suppliers. Another aspect of the Supplier Management System is the involvement of Northrop Grumman DSD’s top management. The Vice President of Program Management and other top managers personally visit suppliers’ sites to foster communications and discuss performance status. Northrop Grumman DSD also shares corporate goals and strategic plans with its suppliers, enabling them to plan future business endeavors with the company.
Through the Supplier Management System, Northrop Grumman DSD has established good working relationships with its suppliers. As a result, suppliers are more willing to invest in new equipment and share technology. Suppliers have also benefitted from long-term agreements; involvement in product design; reduced inspection, test, and data requirements; and consideration on future procurements. Likewise, Northrop Grumman DSD’s benefits include lowered costs, improved quality, decreased time to market, and increased technical resources. The Supplier Management System has been a factor in reducing the company’s overall manufacturing cycle time (from order placement to product ship out) by 62%.
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