Original Date: 10/10/2005
Revision Date: / /
Information : Seamless Supplier Integration
Raytheon Andover’s close working relationship with its suppliers and the tools that have been developed and are being implemented provide the means for significant savings in the procurement of material.
Raytheon is realigning its interaction with suppliers to reduce transactions and make the supplier a strategic partner, replacing a former relationship that was tactical and reactionary and focused on order placement, with few supplier agreements in place and limited use of electronic tools. In early 2003, Raytheon Integrated Defense Systems (IDS) implemented the Seamless Supplier Integration process to transform its existing process and address supplier problems.
Prior to 2003, approximately 100,000 purchase orders were being processed annually. The number of C-Hub (Exostar) suppliers increased from 871 in January 2005 to 1779 in October 2005, with a corresponding increase in the number of transactions from approximately 2,400 to 3,100 per month. One of the keys to Seamless Integration is the supplier-managed inventory process. Supplier-managed inventory eliminates most of the labor involved in the normal procurement process. In one particular program, a total business benefit of $1.8 million above implementation costs was realized during a three-year period. An external supplier portal has been deployed to provide a communication link between Raytheon and the supplier base. Suppliers can access their supplier rating, drawings, quality notes, and contract flow-down information. Requests for quotes are now produced electronically, and suppliers submit quotes electronically. Raytheon has begun using FastXchange to process purchases of less than $25,000. Three manned vendor terminals are currently located within the Andover Integrated Air Defense Center (IADC) facility that can directly submit orders, and additional terminals will be added in the near future.
The close working relationship with suppliers and the tools that simplify the purchasing process are creating significant savings in time and money for the Andover facility, with additional savings anticipated when the program is fully implemented.
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