Original Date: 10/10/2005
Revision Date: / /
Best Practice : Supplier Performance Management
Raytheon’s performance management process fosters a proactive relationship with its suppliers and provides a relatively efficient means to assess and manage the supplier selection process using the Supplier Rating System and Supplier Activity Management tools.
In the past there was little supplier involvement at Raytheon’s Andover Integrated Air Defense Center (IADC). Attitudes were predominantly reactive to change – if the process was not broken, no response was needed. When the system did not work or when inventories became low, people went into action and items were acquired. There was no standardized method for assessing suppliers. Furthermore, the buying power of the corporation was not being used to influence the supply base. There was no structured way to share knowledge of suppliers across the business units throughout the company. Orders that could be consolidated for greater efficiency were often provided to multiple suppliers.
Raytheon’s IADC facility is establishing proactive relationships to work with it suppliers to improve their performance. This collaborative approach to performance improvement uses frequent contacts by geographically deployed Supplier Performance Excellence Engineers (SPEEs). This creates more detailed contact and a high level of both supplier and customer satisfaction.
Andover has also established a proactive review for approval of supplier performance. This improved supplier rating and approval process raises the bar for supplier qualification and promotes earlier Integrated Supply Chain (ISC) and Performance Excellence-Integrated Supply Chain involvement in the selection process that includes the Supplier Rating System (SRS) and the Supplier Activity Management (SAM) tools. The selection process provides a uniform corporate approach for assessing suppliers that identifies the supplier’s capabilities and recent performance prior to supplier selection and provides a clear communication method to ensure the supplier receives, understands, and complies with all contractual requirements.
This business assessment process provides a cohesive and uniform enterprise tool for assessing suppliers and promoting educated and informed decisions. It also supports strategic sourcing, supplier visibility within the corporation, an optimized supplier base, improved performance, improved cost and delivery, rewards outstanding supplier performance, decreases time to market, provides real-time supplier data access, creates satisfied customers and suppliers, and drives lowest cost of ownership.
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