Original Date: 10/20/1997
Revision Date: 01/18/2007
Best Practice : Integrated Material Parts Management
Approximately three years ago, Northrop Grumman was experiencing more than 600 part shortages per week. To address this issue, the company implemented an Integrated Material Parts Management process consisting of process documentation; a closed-loop metrics collection and reporting system; root cause determination; and detailed management reviews.
Through documentation, Northrop Grumman was able to identify the triggers for starting the parts process and the key elements of the process which affected delivery efficiency and accuracy. From this information, the company established a closed-loop metrics collection and analysis methodology (Figure 2-11) to measure and understand the performance of all key elements of the process. Data obtained through these techniques led to the development of both trend and level charts of key element performances. Validation of the data and root causes of poor performance were also accomplished. Through pareto charts, Northrop Grumman identified the most common root causes. These were graphed on weekly and yearly bases, and used to compare the company’s 1997 performance to the previous year. Timely corrective actions were also instituted to prevent problem recurrences. By performing regular management reviews of the metric results, the company could identify areas which needed resources and/or attention. In addition, Northrop Grumman established ownership of the performance process by integrating improvement goals into each manager’s and team leader’s performance appraisal records.
By implementing the Integrated Material Parts Management process, Northrop Grumman significantly reduced its parts shortages to about 18 per week and achieved a $29 million savings in inventory. Through this more efficient management process, the company also reduced the personnel who manage the parts by more than 50%.
Figure 2-11. Parts Management Closed-Loop Process Metrics
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