Original Date: 10/10/2005
Revision Date: / /
Best Practice : Raytheon Integrated Logistics Community of Practice
Raytheon founded the Raytheon Integrated Logistics Community of Practice in 2003 to establish a Virtual Supply Chain organization across its enterprise of seven business units that includes the participation of many active Raytheon logistics professionals. Since 2003, this virtual supply chain has achieved cost savings and cost avoidances of more than $50 million. Savings have been achieved largely by the adoption of company-wide single process initiatives in the logistics functions of Supply Chain Management (e.g., transportation optimization, material tracking implementation, electronic processing of Department of Defense Inspection and Acceptance documentation, Raytheon Six Sigma™ projects, and Department of Defense Unique Identification and Radio Frequency Identification compliance).
Prior to 2003 Raytheon had a Logistics Council, which focused predominantly on the leveraging of logistics spend. There was no common system in place to collaborate among the business units to promote the use of best practices and to automate and optimize Supply Chain Management logistics functions across the enterprise. Each Raytheon business unit operated independent of any logistics enterprise system.
In 2003 the Raytheon Enterprise Director of Logistics and logistics leadership throughout Raytheon founded the Raytheon Integrated Logistics Community of Practice (RILCOM) to foster the use and standardization of best practices across the company’s seven business units. One of the key objectives of RILCOM was to establish a virtual supply chain organization that would bring best practices to Raytheon’s logistics functions through knowledge sharing, world-class benchmarking, and driving process improvements through Raytheon Six Sigma™ (R6σ). From 2003 to 2005, RILCOM focused on 12 active enterprise-wide initiatives and customer requirements, achieving a cost savings of more than $50 million. These initiatives included:
MTrak – a web-based materials tracking and handling optimization tool to track materials within the plant that has resulted in a savings of $8.6 million. PowerTrack – a web-based transportation optimization tool for scheduling, invoicing, and payment remittance. The implementation of PowerTrack replaced 38 other systems in use, with savings totaling more than $2.4 million.
Wide-Area Work Flow (WAWF) – a web-based customer interface system to process Department of Defense (DoD) inspections and acceptances (DD250s), shipping reports and invoices, and DoD payment transactions. WAWF electronic transaction processing replaces paper and manual processes, shortening the order-to-payment cycle for savings totaling approximately $2.9 million.
Vendor- and Supplier-Managed Inventory (VMI/SMI) – partnering with suppliers to optimize supply support functions and reduce costs associated with managing and warehousing vendor and supplier materials for a savings of approximately of $1.5 million
Enterprise Agreements – partnering with transportation providers UPS, DHL, and other carriers to establish enterprise-wide agreements that significantly reduce transportation costs across the enterprise, providing a savings of $17.6 million.
Raytheon Six Sigma™ (R6σ) project savings – combines cost savings and cost avoidances of multiple R6σ™ logistics project savings implemented by nearly 100 logistics and Integrated Supply Chain (ISC) professionals across Raytheon. The $9.8 million savings reflects the combined efforts of the entire Integrated Defense Systems (IDS) Logistics staff, with every IDS Logistics employee participating in one or more R6σ™ projects from 2003 to 2005.
Other standardized approaches implemented across the Raytheon enterprise include:
Unique Identification/Radio Frequency Identification (UID/RFID) compliance with DoD requirements for attaching Unique Identifiers (UIs) to individual items and RFID tags to packages at multiple levels (i.e., cases and pallets). Raytheon is implementing a common enterprise-wide approach to meet UID/RFID requirements levied on its DoD contracts. The Logistics Metrics Tool, a metrics collection and reporting tool provided by Partner Inner Circle Logistics used by all Raytheon business units to report cost metrics, logistics initiative savings, and common logistics performance metrics such as dock-to-stock, pack-to-ship, pick-to-kit, lost days, and recordable accidents.
Raytheon’s approaches to knowledge-sharing, logistics benchmarking, and driving process improvements through RILCOM initiatives have been featured in 2004 industry and trade articles and publications including the February and May issues of Information Week, the June and July issues of Computer World, the June issue of Logistics Management as well as on the website of the American Productivity and Quality Center (APQC) in August 2004.
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