Original Date: 09/14/1998
Revision Date: 01/18/2007

Approximately 80% of the materials used by the Phalanx and RAM Launcher programs are provided by subcontractors. The IPTs of these programs recognized that in order for Raytheon Missile Systems Company (RMSC) to become a world-class provider, the company needed to implement a more disciplined approach for material procurement. The teams identified three key elements which needed to be addressed: material requisition release date; purchase order placement date; and subsequent receipt of the purchased material.

In the past, the practice of managing these key elements by using existing reports proved unsuccessful, due to the structure and format of the reports being generated. Gathering all the information for these reports was also time consuming. To resolve these problems, RMSC developed a planner code. Each part, listed on the purchase bill of material, is identified to the user via a planner code. This approach enables users to generate a team report that only lists those materials needed by a specific team. These team reports are generated weekly, and provide a schedule activity requirement list, based on task priority, which allows RMSC to monitor the activity levels for each team’s materials. The company also developed Subcontractor Management Reviews, which is a process for determining and monitoring the supplier’s production readiness. By using these reviews, RMSC can identify situations up-front which may hinder the subcontractor’s ability to deliver on-time materials. This process also allows for additional time, so corrective actions can be implemented before a shortage becomes a major problem.

Prior to adopting these changes, RMSC had significant money tied up in residual material for the Phalanx and RAM Launcher programs. At any given time, late procurement requisitions and purchase orders each ran well over 500, and parts late-to-dock were in excess of 350. After implementing the new practices over a 12-month period, RMSC reduced its residual material by 80%. Procurement requisitions, purchase orders, and parts late-to-dock numbered less than 70 each. By applying these simple concepts to the procurement process of the Phalanx and RAM Launcher programs, RMSC has been able to provide these products to its customers consistently ahead of schedule.

For more information see the Point of Contact for this survey.