Original Date: 09/14/1998
Revision Date: 01/18/2007
Information : Supplier Base Reduction
The supplier base at Raytheon Missile Systems Company (RMSC) had grown quite large due to the Raytheon/Hughes merger and the restructuring of the company’s product and manufacturing lines. To address this situation, RMSC established a Supplier Base Reduction process to effectively control and reduce its supplier base. This process focuses on using supplier certifications, supplier improvements, and economic support of agile manufacturing to streamline the base. The company also considers economic procurement efforts, inventory management, and on-time/quality delivery issues of each supplier.
RMSC set up Technology Roadmaps to identify preferred suppliers; utilize a supplier-managed inventory where feasible; and eliminate inactive or poor performing suppliers. The company also wanted to increase business transactions with those suppliers who demonstrated timeliness, reasonable costs, and quality performance. Technology teams were set up to develop preferred supplier lists, which include performance history. The information on suppliers is readily available electronically to all RMSC personnel. Meetings are held with suppliers to ensure that purchase orders are fully understood, and oversight is provided as required. Records of supplier quality, over the past two years, are also available on-line and have been effectively used to streamline the supplier base. RMSC reduced the number of production suppliers from 3,119 in 1995 to 1,742 in 1997. The company’s goal for 1998 is 1,480.
Besides reducing the administrative workload associated with a larger base, RMSC’s process provided the company with a more responsive and economically viable supplier base. The Supplier Base Reduction process also improved the hardware acceptance rates and on-time delivery measures, and provided cost benefits to RMSC.
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