LOCKHEED MARTIN PROPRIETARY INFORMATION
Lockheed Martin
RAISING THE BAR:
ACHIEVING SUBCONTRACT EXCELLENCE
March 2008
Gary Bartmann, Vice President
Subcontract Management & Procurement
K7108_Hamel
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Agenda
• Lockheed Martin Space Systems Company
Supply Chain Landscape
• Lockheed Martin Space Systems Company
Product Assurance/Mission Success
Landscape
–
What is Big “Q”?
• Remedy underlying causes of mishaps, near
misses, escapements, process errors, etc.,
across the enterprise
• Product Assurance/Supply Chain
Partnership
• Summary
Lockheed Martin is “Raising the Bar”
2
Lockheed Martin
Space Systems Company
Supply Chain Landscape
3
Subcontract Impact
• Typically 50-60% of Revenue
• Brings technology and expertise to the team
• Suppliers bring innovation, speed and agility to
the table
• Source of Competitive Advantage
• “Supply Chain as strong as the Weakest Link”
• Supply Chain is a “Valued Asset”
• Strong supply chain critical to success
Supplier Performance is Lockheed Martin Performance
4
Spend Profile
40%
IT
60%
Custom
Products
Indirect
Direct
Commodities
Commodities
•
•
•
Supplier Agreements
e-Business Enabled
Standardization
Subcontracts
• Program Driven
• Early Involvement Key
• Internal & external
suppliers
• Supply Chain strategies
Diverse Portfolio of Supplier Participation
5
Procurement Process
Government
Acquisition
Policies
Corporate
Federal State
Laws
Statements
LM
Acquisition
Procedures
Corporate
Officer
LMAP
Council
LM Internal
Audits
LM Internal
Audits
DCMA
Review
CPSRs
Policy
Sound
Procurement
Practices
Governance
Compliance
Business Unit
Command
Media
Compliant
Procurement
Systems
Buyers
• Checklist
• Documentation
• Peer Review
Mgmt
• Approvals
• Program Audits
• Compliance
Training
• Ethics Training
Rigorous Acquisition Process
6
Supply Execution & Risk Management
Supplier
(3rd
Tier)
Supplier
(2nd
Tier)
LMSSC
Supplier
(1st
Tier)
(Prime Contractor)
The Warfighter
Production Process Baseline (PPB):
•
•
•
•
•
•
•
•
•
•
Audits to baseline standards conducted
Command media procedures established
Validation of contract and technical requirements
Compliance and sub-tier flow down / verification
Production, test, and inspection instruction
Personnel training
Configuration control methods
Quality Management System effectiveness
Sub-tier supplier management controls
First article and source inspection
7
Lockheed Martin
Space Systems Company
Product Assurance/Mission Success Landscape
8
In Aerospace & Defense
Quality Failure Could Mean:
• 2nd / 3rd quality escapes discovered by our Prime
customer at Integration Test
• Launch failure
• On-orbit failure
• Missile fails to arm
• Intelligence information not conveyed
• War fighter in harm’s way
We don’t get a second chance
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Decade
The Quality Journey . . .
1940s
1950s
1960s
1970s
1980s
ISO 9000
Mil-I-45208 Mil-Q-9858 Mil-Std-1520
Driving Force
TQM
Focus
1990s
2010
AS 9100
Concurrent
Engineering
Lean
Manufacturing
Process Control
Tools
100% Inspection
Statistical Process
Methods
Juran
6 Sigma
High-Performance
Work Teams
100% Mission Success
Ishikawa
Taguchi
Beyond
Acquisition
Reform
Faster, Better,
Cheaper
Sample Inspection
Deming
2000
Operational
Excellence
Error-Free
Environment
Peer Reviews
Big “Q”
Baldrige
Award
Increasing System Complexity
Continued Evolution From Little “q” to Big “Q”
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What is Big “Q”?
• A recognition that the quality of our procedures and
products depends on the up-front (early life cycle)
design processes being error-free
• Achieving Big “Q” requires a holistic systems approach
by each program and functional group to seek out
problems, analyze causes and take effective corrective
and preventive actions throughout the entire contract
life cycle
Forcing Retirement of Future Potential Problems
in the Present
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Creating a Big “Q” Environment
Bringing the past
to the present
Past State
•
•
•
•
100% mission success
Mil-Q-9858A
Inspect to find defects
Sort good from the bad
Today
Bringing the future
to the present
Moving
forward
Future State
•
•
•
•
•
Big “Q” focused
100% mission success
Operational excellence
Process-centric
Error-free environment
We cannot forget our past while we build the future
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Big “Q” Spectrum of Opportunities
Diagnosing cross-phase and multi-functional misalignment
for quality Improvements
Research
IR&D
Concept
Refinement
Systems
Development
& Demo
Engineering
Design &
Release
Production,
Integration
& Test
System/
Mission
Deployment
Quality improvements throughout life cycle
• Beyond the plant, a cross-phase and functional view
• All functions participate continuously
• Force “Up-Stream” Improvements
• Converge on Big “Q” improvements via design team
Technology evolution and increased complexity demand
Big “Q” improvements
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Impetus for Raising the Bar
The driving needs for Operational Excellence?
• Increasing need for an integrated, end-to-end set of
improved processes for development and recurring work
• Space Systems Company defect rate
–
76% of mission failures attributed to engineering defects and
escapements
• SSC enterprise experience on recent programs
–
Latent engineering defects have significant negative impact on
technical, schedule and cost performance
• Being proactive to sustain 100% Mission Success
Increasing system complexity
and technology evolution requires change
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Error Prevention
For Each Mishap / Near Miss
Multiple Things Go Wrong At
The Same Time
Multiple Defenses (Plates) Fail:
Cert Product Eng (CPE), Resp Area Super
(RAS)
Supply Chain
Product Assurance
Test Discipline
Infrastructure
System Safety
Supervision
Employee
Process / Equipment
Etc.
Incident
Risk
Intended
Deflection
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Operational Excellence
Today's environment leaves little room for error…
•Lockheed Martin’s Operational Excellence Program
provides:
 Roadmap, principles & tools to cut costs
 Eliminates waste & enhance customer satisfaction
•Operational Excellence Program Objectives:



Drive process capability
Delivers on customer value
Provides common focus for productivity
End State Goal…
Lean processes with Six Sigma capability
throughout
the enterprise and supply chain
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Key Elements of Operational
Excellence
• Creating an error-free environment
–
–
–
–
Big “Q” focus
Peer reviews
Every process, product and paper . . . is perfect
Zero defects throughout product life cycle
–
CMMI at all SSC locations
• One Company enterprise-wide processes
• Partnerships: customer to prime and prime to supply
chain
–
–
–
Communications
Relationships
Transparency
–
Program management
• Forecasting cost, schedule and evolving technology
Operational Excellence is an imperative toward
ensuring 100% Mission Success
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Operations Excellence & Big “Q”
Program Execution
Engineering
• Product reuse
• End-to-end systems effec.
• Peer Reviews
• SME/Fellows program
• Software/systems integration
Production
• Manufacturing & Supply Chain Excellence • Talent
• Common subcontract flowdown
Management
PA&SS
• Linked CAB
• Error prevention
• Operational mishaps
• Supplier councils/summits
• N/C reduction initiatives
Human Resources
• Skill certifications
• Knowledge management & transfer
• MFG
• ATLO
• I&T
• Supplier
100%
Mission
Success
• Future labor force
Finance & Operations
• LM21 excellence
• Suspended loads analysis
Big “Q”
Little “q”
• Engineering processes
• Requirement definition
• Functional and LOB partnerships
• Process discipline, adequacy, integrity
• Inspection of hardware
• Sorting
• Acceptance
• Test
Operations Excellence:
Error-Free Environment Throughout Program Life Cycle
18
Lockheed Martin
Space Systems Company
Product Assurance/Supply Chain Partnership
19
LMSSC Supplier Expectations
Supply Base Expectations
Commitments
Meet them all
Quality
100% in everything you do
Delivery
On time, every time
Cost
Meet targets, deliver value
Our customers expect and the war fighter relies on
100% mission success of “our” products and services
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Sourcing is a “Team Sport”
CONTRACTS
DESIGN /
Engineering
MATERIALS
PURCHASING
QUALITY
MANUFACTURING
Build Effective Relationships
Operational silos or “Over the transom” is no longer acceptable
‘Functional Silo’ Syndrome
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Risk Management – Subcontracts
Every Program has risk. Identification and management
facilitates success. Failure to manage or predict ensures
failure.
Requirements
• Corporate & Site
Policies
o Early Involvement
o Identifying
o Planning
o Assessing
o Handling
(Mitigate, Transfer,
Avoid, Assume)
Best Practices
Monitor
• Personnel Training
• Metrics
• Risk “Waterfall”
• Reviews
• Lean LM21 Operating
Excellence
• Audits
• Supplier Assessment
• Process
Assessments
• Customer Partnering
Proactive, Collaborative Engagement is Key
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Risk Management - Subcontracts
Risk Based Subcontractor Assessment Tool
Penetration
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Jump to Top
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Topic
Requirements Management
Project Planning
Project Monitor and Control
Supplier Agreement Management
Measurement and Analysis
Process and Product QA
Configuration Management
Requirements Development
Technical Solution
Product Integration
Verification
Validation
Process Management
Organizational Training
Integrated Project Management
Risk Management
Decision Analysis and Resolution
General Topics
Tailored Topics
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Excel based, point and click, results tallied and summarized
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Subcontracts Operational Risk
Predicting trends & performance
Supplier “comparison” using
configurable measurements
Suppliers current information in online databases
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Requirements Analysis
Field
I&T
0
Supplier
LMC
Customer
Ac
tio
ns
TRR
“Waveguide shall have
<0.5 dB insertion loss”
SPM focus
PRR
KPP:
50
CDR
“Filter shall have <1.5 dB
insertion loss”
100
PDR
“Mux shall have <2dB
insertion loss”
KPP:
M
iti
ga
tin
g
150
SRR
KPP:
Risk Management Plan
“Spacecraft transmit/receive
time”
Risk Level
KPP:
Manage Risk
Baseline "Kick-Off"
Performance Based
Specification
“What could go wrong? …
possible failure modes? …
severity, P(o), P(c)?”
PreAward
Subcontractor
PM focus
Lifecycle Milestones
Surface Risk
- Prioritize
- VOC
Likelihood Indicator
5
Register Risk
PMR
4
TER
3
AR
MR
2
1
1
BR
PR
QR
FR
2
3
PDR
TR
4
5
Consequence of Occurrence
Lockheed Martin Supplier Risk Management 
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Materials Risk Management
Trend Analysis Process
SSC Lines Of
Business
Programs
G, Y, R Ratings
May 2005
LOB 1
Programs
0
118
2
0
4
0
0
1
0
13
LOB 2
Programs
Supplier
Occurrences
Trend States
LOB 3
Active
Suppliers
•
•
•
LOB N
Programs
•
•
•
Programs
Generate
Causals
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A Fishbone Approach to Big “Q”
Production
Engineering
Mission Success
Peer Review
Corrective
Action Board
Internal
Operations
Review
Corrective
Action Board
LOB Reviews
Program
Management
Approved
Supplier
Processes
Capital Equipment
Lessons Learned
LM21 Integration
& Transformation
Internal
Operations
Review
Foreign
Object
Elimination
Suspended
Loads
Environmental
Safety & Health
Operations
PA&SS Corrective
Action Board
Operations Product
Assurance Review
Joint Insight
Working Group
Certification
Board
Common Integrated
Process System (CIPS)
Management
Council
Early Warning
Metrics
Internal
Audit
GIDEP
Certified Test Conductor
SSC Corrective
Action Board
Stock Sweep
Verification &
Assessment
Finance &
Business
Operations
ERP FICO
Big “Q” Drives
Disciplined Innovation
&
Operational Excellence
Mentoring
Financial
Reviews
Employee Skills
Training
Internal
Operations
Review
Return To Green
Meetings
Certifications
Knowledge
Transfer
Qualifications
Future Work Force
Operational Mishaps
PA&SS
Doc Rockit
Anomaly Engineering
Review Board (AERB)
Error Prevention
Council
Flash Notices
Mission
Success
IOR
Responsible
Area Supervisor
Certified Principal
Engineer
Corrective
Action
Board
Rapid
Notification
Integrated Process Group
Insight/
Oversight
Process
Continuous Process
Improvement
Mission
Success
Bulletins
Process Control Board
Internal
Operations
Review
Failure
Review
Boards
Senior Management
Review Team
Full Spectrum Leadership
Finance
Human Resources
Functional cause & effects analysis performed
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Supplier Quality
• Corporate Supply Quality Council established
• LMSSC Supplier Quality Councils established
• LMSSC Supplier Assessment/Rating System
• Working with AIA / DCMA / Industry groups on
lower-tier quality escapes
• Critical performance and alert system established
• Line-of-Business & Program quality program and
focus
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Product Assurance & System Safety Responsibilities
Across the Product Life Cycle
Quality Engineering
Operations Quality
Develop &
Acquire New
Business
System Safety
Procurement Quality
Software Quality
Design &
Development
• Assess Customer • Participate in IPT’s
Requirements
& other design
teams
• Use PA Proposal
Focused Training • Assess Design,
Validation &
Module
Verification Inputs
• Develop Product
for Product
Assurance &
Assurance/ System
System Safety
Safety
Proposal Inputs
Requirements
• Develop Budget
• Assess Hazard
Estimates
Analysis
• Identify Risks
Requirements
• Test Like You Fly
Validation
• Mistake Proofing
Acquisition
• Assess Supplier
Capability - Use LM
Corporate System
• Determine Quality
Flowdown
Requirements
• Assess Supplier
Performance Using
Vendor Rating
• Accept Supplier
Products/Services
• Track Corrective
Actions
Produce
System
• Review Production
Plans for Product
Assurance &
System Safety
Requirements
• Perform Process
Assessments
• Perform Inspections
& Tests
• Accept Product
• Control
Nonconforming
Material
• Apply Error
Prevention
Techniques
Deploy &
Operate
System
• Verify System
Ready for
Deployment/
Shipment
• Verify Post
Deployment
Activities in
Compliance with
Requirements
• Coordinate
Range Safety
Requirements
• Apply Error
Prevention
Techniques
Product Assurance & System Safety Applies Preventive Measures, Oversight, System Safety, Control of
Nonconformities, Error Prevention, and Corrective/Preventive Action Throughout the Product Life Cycle
29
Supplier Network
Successful Program Execution requires an integrated
supply network with all suppliers focused on:
• Quality Products & Services, on-time
• Cost Reduction and Continuous Improvement
• Service and Customer Satisfaction
• Innovation & Creativity
• Anticipating our Needs
• Using e-technology
• Actively using lean processes
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Contractor Environment
• Program Pressure
–
Flawless Execution
• Cost Pressure
–
Real cost reduction & continuous improvement
• Complex Systems Integration
–
–
–
Interdependent system elements
Cross-discipline execution
Greater reliance on Subcontract performance
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Subcontract Excellence
Our role as a
systems integrator
increases
subcontractor’s
role and criticality
• More responsibility for technical
development
• Collaboration with LM
– Early involvement
– Risk management
– EVM and schedule
• Predictive Risk and Performance
modeling
We manage our subcontractors as an
extension of our business
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… Raising the Bar
•
•
•
•
•
•
•
•
Optimize Core Process & Efficiency
Share Knowledge Rapidly and Freely
Early involvement
Provide world-class tools to manage Suppliers
Enhance personnel skills and understanding
Speed and agility
Defining full life-cycle supply chains
Innovation
End Game: Optimized Supply Chain
Skilled Teams Armed with Information to Manage
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Enterprise Big “Q” Focus Areas
•
•
•
•
Peer reviews
Subcontract management
Error prevention – near miss and mishap reporting
Non-conformance reduction initiatives
–
Manufacturing, engineering and suppliers
• Product reuse analysis
• End-to-end specialty engineering
• Software and systems integration
• Enhanced applications and procurement of EEE parts
• Certified test conductor briefings
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Supplier Expectations
Supply Base Expectations
Commitments
Meet them all
Quality
100% in everything you do
Delivery
On time, every time
Cost
Meet targets, deliver value
Our customers expect - and the war fighter relies on 100% mission success of “our“ products and services
LMSIS West-Hatch-15Dec05
35
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Summary
• An SSC enterprise-wide plan; all sites, all programs
• Strategic and systematic approach toward continuous
improvement
–
Focus priority of all LOBs, programs and functional groups
• Operational Excellence/Big “Q” improvements will
eliminate:
–
–
–
Latent hardware anomalies and non-conformances
Latent process escapes, near misses and mishaps
Unacceptable schedule and cost performance
• Will raise the bar with 100% Mission Success!
Proactive plan to improve our performance!
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What Can You Do?
• Continue on the “Journey”
–
Continuous improvement in quality & cost
• Flow the same principles and expectations to your
supply base
• Manage the ‘multi-tier’
–
Take time to strategically plan to achieve competitive
advantage in your supply chain
Adopt “Big Q” Thinking
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