Original Date: 10/10/2005
Revision Date: / /
Best Practice : Strategic Partnerships in the Integrated Supply Chain
Raytheon Integrated Defense Systems transformed its Strategic Partnership processes and tools to support the transformation of the Integrated Supply Chain Cross Business Team. Strategic Partnership, a foundation building block for achieving mission assurance, includes integrated source selection process tools aligned with customers who require vendor and supplier materials. Strategic Partnerships has transformed processes for establishing commodity strategies, strategic supplier lists, and subcontract partnerships that focus on efficiency, effectiveness, capability, and capacity.
In 2004 Raytheon Integrated Defense Systems (IDS) initiated a major Integrated Supply Chain (ISC) transformation effort in its management and organization to realign its supply chain from one based on a product/customer focus to one with a System Integrator customer focus. The goal was to achieve a Mission Systems Integration focus within four years. Strategic Partnering is the first foundational building block in a series of connected blocks that must be established to achieve Mission Assurance capability. The first phase of the transformation established a foundation of Strategic Partnerships and connected these partnerships to Performance Management. This was followed by Seamless Integration and technical connections for system collaboration. Manufacturing Resource Planning (MRP) and other systems were addressed in a follow-on phase to achieve Mission Assurance to establish commodity strategies, supplier selection lists, subcontractor partnerships, and the associated processes needed to integrate the source selection processes.
Commodity strategies in the pre-transformation phase were reactionary in practice and focused on order placement and tactical versus strategic considerations. The transformation changed commodity management to a strategic focus, incorporating supplier reviews with conferences and workshops, and initiating Raytheon Six Sigma™ (R6σ) engagements with commodity suppliers. Suppliers are viewed as key partners with the company to achieve efficiency, effectiveness, capability and capacity (E2C2) needed to achieve customer-focused management results. Source selection processes and tools are developed and/or selected to ensure the company selects supplier partners that maximize E2C2 objectives. Supplier Performance Excellence Engineers (SPEEs) replace traditional materials inspections. Unlike materials inspectors who inspect incoming materials at the plant, SPEEs are deployed to the field to interface collaboratively with the suppliers to achieve the timely delivery of quality material that meets current and future material requirements. Early supplier engagements also include selected implementation of the design for Six Sigma for suppliers.
Commodity strategies are validated by a sourcing council that includes representatives from Engineering, Operations, Material Acquisition, Performance Excellence, and Commodity Management. The Sourcing Council guides the Commodity Teams (CTs), which include representation from the same disciplines. CTs use common processes and metrics that include a sourcing template with commodity profiles, supplier evaluations, performance and capabilities, market analyses, and technology road maps. The process establishes commodity strategies and identifies strategic suppliers to determine early supplier involvement, to establish enterprise agreements, to implement relevant strategies (e.g., R6σ™ engagements and supplier-managed inventory), to identify preferred parts, and to serve as a basis for supplier communications and for measuring supplier performance. All commodity category areas – electrical, mechanical, interconnect, and subassembly – use the process to develop commodity strategies for each commodity within those areas. CTs are provided tools that use sourcing risk and cost factors to guide them to the right strategy for their commodity. A common supplier rating tool is used to rate all suppliers, with scores that reflect each supplier’s quality and delivery performance.
The Preferred Supplier List (PSL) is another key strategic partnership web-based tool that provides sourcing decision-makers easy access to Preferred Supplier information (e.g., Preferred Suppliers, CTs, and Commodity Strategies). This tool is integrated with the existing engineering tool set and greatly facilitates the use of preferred and strategic suppliers in new designs. The primary user of this tool is the engineer who is selecting a commodity to use in a design application. The PSL ensures only qualified sources are considered and greatly simplifies the process to select needed parts and sources. This tool has been well received by the Engineering staff.
The Master Supplier Database (MSDB) tool provides easy access to supplier information and enables the implementation of new tools (e.g., the PSL, Supplier Activity Manager, and Electronic Request for Quotations). Prior to 2004 this tool consisted of a spreadsheet updated manually by three individuals. Data was constantly out of date, resulting in individually created and private supplier contact databases. The MSDB tool has been significantly enhanced by web/portal presentation to all users, incorporation of security roles for multiple update capabilities, and linkage to redundant information databases. In the fourth quarter of 2005, the MSDB was updated to provide a supplier self-service capability.
Subcontract management under Strategic Partnerships has been enhanced dramatically by the implementation of Integrated Subcontracts Electronic Requirements Tool (InSERT). This off-the-shelf on-line tool is used to manage and automate the subcontracting process to establish subcontractor partners. Organized by process modules and based on an Oracle database, InSERT provides appropriate best practices and work instructions at applicable points in the process, offers real-time status and management metrics, and reduces the reliance on subject matter expert (SME) support and on-the-job training (OJT). InSert provides speed and standardization effectiveness in the execution of contracts and supports mass customization and the lean principles that create efficiency.
InSERT was deployed at the Integrated Air Defense Center (IADC) in 2005 as the 80% solution that will continue to be expanded and improved. It deployed with the capability for engineers to use it to quickly draft the basic framework of the subcontract needed to support their contracting requirement. It includes three modules for the creation of the Proprietary Information Agreement (PIA), the subcontract launch and management, and the compliance procurement checklist.
The cycle time to develop PIAs has been reduced by more than 50% from the pre-InSERT process – from an average of 18 days to 8 days. The criteria input in the other InSert modules enhances development subcontract preparation with its expert capability features that limit pertinent choices to only those based on engineering inputs. The system features automatic e-mail reminders to engineers or other personnel when source data entries are not yet completed and is also useful in providing metrics on the key problem areas. InSERT also captures data for the mail merge process and PIA tracking, ensures required documentation and tracks status, automates compliance review and reporting, connects and automates processes, and provides measurable data for process management.
Under the guidance of a multi-discipline sourcing council, the commodities strategy was developed and implemented through tools such as the PSL and the MSDB. Strategic Partnerships was developed with suppliers and is enhanced by field-deployed SPEEs. Cycle times have been reduced with quality-controlled systems that better meet customer expectations.
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