Oregon Productivity Matrix
(OPM)
Supplier Briefing
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Objectives
At the conclusion of the training, the participant should be
able to:
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Understand the definition of Oregon Productivity Matrix
Understand the benefits and concept of OPM
Analyze and conduct an OPM event
Define Supplier Responsibilities
Identify the value and goals of OPM
Understand Supplier Responsibilities regarding the
OPM webportal
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Defining OPM
• Is a single-page view of a supplier’s overall performance
– schedule, quality & customer satisfaction
• Non-recurring effort up front
• OPM uses key metrics / statistical data employed by the
supplier
– Often already existing company metrics
– Referred to as Key Performance Indicators (KPIs)
• OPM provides trend-data analysis to predict
performance
• Can be summarized by program
Supplier’s data is not shared with any competitors
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OPM Benefits
• Outstanding managerial tool
• Promotes awareness at all levels
– Publish it in the work areas
• Often uncovers problems at sub-tiers
• Can be adapted to any supplier or company
• Identifies problems early allowing for preventive action response
• Summarized data in all categories shows highly visible trends
• Sublevel data used to define trend root causes
• KPIs weighted based on importance and against a scale of 100%
Suppliers are not measured against one another, but against their own previous
performance
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Process Insight for Predicting
Impact to LM Aero
SUPPLIER PROCESS
Purchase Order
Issued
Scrap
or
RTV
REJECT
MRB
&
C/A Fix
REJECT
ACCEPT
Design,
Change Review,
Planning
INPUT
Supplier
Production
Process
....to Here
OPM provides continuous evaluations of a
supplier’s procurement and manufacturing
processes.
These tools help predict impact to LM and
trigger early problem solving.
OUTPUT
Inspect
ACCEPT
Final
Acceptance
To Stock
Or
Customer
Validation
From here...
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Is OPM a Customer Report Card?
OPM is a report card that summarizes and grades
Supplier’s Line of Balance
Line of Balance:
A visual control of how production is aligned with
customer demand and can:
• Be used to evaluate work flow
• Be a process for collecting and measuring data
against a specific plan
• Expose process bottlenecks, allowing focus on
those points responsible for slippage
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Line of Balance
Applies to the following key areas:
• Material Availability
• Measurement of receiving parts/service on time from sub-tier
suppliers, processors, or any incoming material.
• Manufacturing Performance
• Measurements of scheduled vs. actual
• Measurements of productivity
• Internal Quality
• Measurement of internal performance of processes/products
meeting customer's requirements
• Customer Satisfaction
• Measurement of customer’s level of satisfaction with the
provided product and/or service
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1. Understand the Value Stream (current state reality) 2. Identify KPI’s, build OPM (may require
extrapolation from data) 3. Develop Future State & Improvement Plan 4. Execute 5. Manage
Supplier
Sub Tier Control
Sub-tier Delivery
On-time from
Processor
Sub-tier Quality
Shortages
Material
Availability
Supplier
Production Control / MRP
On time
work order
release
On-time kit
release
% on-time
marry-ups
Internal
schedule
detail Fab
Critical Path
Cycle Time
Inventory
Turns
Machine
Process
Capability
Efficiency
Utilization
Sched. Vs, Act Lead Time
Start / Comp.
Hours per Unit On-time
delivery
Aged work
in process
Repair Turn
(WIP)
Time
Manufacturing Performance
LM Aero
Scrap Rate
COPQ
DPMO
QARs
Cust. Complaints
Field Returns
SQARs
Rwk Frequency
First Pass Yield
First Article
Internal Quality
Customer
Satisfaction
Value Stream (Flow)
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Material Availability
Lockheed Martin Aeronautics Company
Do you have material available to meet customer demand?
How do you know?
 Do you use outside special processors?
 Do you know whether or not you receive raw material or components?
 Do they deliver material to the floor in kits? Is kit release on time
measurement? Who puts them together?
 Will you release kit short?
 Is material availability the trigger to start production?
 Do they receive material from LM?
 Do you receive components from internal fabrication dept.? IS it from a
sister facility?
 Do you inspect on receipt?
 Do have source inspectors at sub-tier?
 Is raw material or hardware receipt a problem?
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Manufacturing Performance (Line Of Balance)
Lockheed Martin Aeronautics Company
Are you releasing build to package and material
to meet customer demand?
How do you know?
 Are you measuring Work In Process (WIP)?
 Are you measuring Shortages?
 Are you measuring complete/on-time Build To Package (Eng,
tools, job sequence, bill of material)?
 Are you measuring on time release of kits?
 Are you measuring on time release of Work Orders?
 Do you measure actual start vs. scheduled start?
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Manufacturing Performance (Line Of Balance)
Lockheed Martin Aeronautics Company
Are you meeting your planned schedule?
How do you know?
 Are you measuring complete/on-time Build To Package (Eng, Are you
measuring WIP (aged WIP))?
 Are you measuring Inventory Turns?
 Are you measuring Machine/Process Capability?
 Are you measuring Cycle times (planned vs. actual)?
 Are you measuring Takt time?
 Are you measuring kanban performance?
 Are you measuring hours/unit?
 Are you measuring productivity/realization/efficiency/utilization/std vs.
actual hrs?
 Are you measuring sub-assy on-time completion (% on time)?
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Quality
Lockheed Martin Aeronautics Company
Are your internal processes capable of meeting
internal customer quality requirements?
How do you know?
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Are you measuring First Pass Yield (FPY)?
What is your Cost of Poor Quality (COPQ)?
What is your Scrap rate?
What is your Repair hours per unit?
What is your Defects Per Million Opportunities (DPMO)?
Do you have SPC data?
How do you measure internal defects?
Do you measure process capability?
Do you measure Rework frequency?
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Customer Satisfaction
Lockheed Martin Aeronautics Company
Are your customers satisfied?
How do you know?
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Do you know your Repair turn around time (TAT)?
Do you measure customer returns?
Are you measuring customer complaints?
Are you measuring response time to customer (CARS, quote)?
Are you measuring Delivery/quality rating for all customers?
Examples of Key Performance Indicators
(KPIs)
Material Availability
• Sub-tier QA Rating
• Sub-tier Delivery Rating
• Shortages (including raw material)
• On-time back from Processor
Manufacturing Performance
• Actual vs. Planned Production
– Start
– Completion
• Cycle Time
• In-house detail Fab schedule
• Machine/Process Capability
• Lead Time
• Inventory Turns
• On time work order release
• On-time kit release
• On-time delivery to internal customer
• Aged work in process (WIP)
• Hours per Unit
• % on-time marry-ups
• Takt Time
Internal Quality
• First Article
• Final Acceptance Yield
• First Pass Yield
• Rework Frequency
• Defects per Million Opportunities
• Production Scrap Rate
• SQARs
• Site Rejections (QARs)
Customer Satisfaction
• Customer Complaints / Field Service Return
• Training Requirements Fulfilled
• RTV Repair Turnaround Time
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How is PQA Going to React to the Data?
• It is in PQA’s best interest to not over react!!!
– Data and charts are indicators
– PQA is interested in supplier acting on trends
• Individual product non-conformances will continue to be
handled under currently established methods
• We will provide help if poor performance causes product
level performance issues
We are looking to see that the supplier is using OPM as a
preventive tool and reacting to the data appropriately
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OPM Event Methodology
Typical Team composition will include
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Supplier QA
Supplier Program Management
Supplier Manufacturing
Supplier Contracts
LM SQE(s)
LM Procurement
Typically a one to two day event at the supplier’s facility
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OPM Implementation Event
The following activities occur as a joint PQA and Supplier Team
– Map the ‘typical’ manufacturing process if necessary for
KPI determination
– Identify metrics already collected
– Jointly determine KPIs
– Develop OPM
– Review the selected metrics and OPM chart with
management for adjustment and weighting
– Develop Bar Charts for three months past history if data
available
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Construction of an OPM
Steps
1. Identify the KPIs and their
grouping
2. Establish the Baseline
3. Set Goals
4. Calculate Increments
5. Weight the KPIs
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Identify the KPIs
The most important step in the construction of an OPM is
the identification and selection of the 5 to 10 KPIs.
• Early or predictive measures are emphasized
• PQA/Supplier mutually agree on KPIs
• Data selection for the KPIs may come from existing
supplier data however the data shall provide a complete
predictive flow and line of balance
• Must be quantitative
• Use of statistical data preferred
• Initially chosen KPIs not “locked in”
• Fewer criteria focuses energy and resources better
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Categories and Grouping of KPIs
Grouping KPIs
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Creating a Baseline at a Score of
3
Average of 3 to 6 months data equals baseline performance
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Setting Stretch Goal at a Score of
10
• Stretch goal is a long-term goal
– 2 to 3 years out (Not a goal to be reached within the
first quarter or this year)
• Stretch goal is to be set at a level which drives
continuous improvement
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Setting Goals at a Score of 10
Stretch Goals
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Establishing the Increments
(Hurdles)
• Once we’ve determined where we are --- and where we are going
(Baseline and Stretch Goal)
– We then establish intermediate hurdles or mini-objectives by
filling in the rest of matrix from 0 to 10.
• Allows for 7 levels of achievement to be measured en-route to
stretch goal (focuses on improvements)
• Providing several declining increments allows for occasional
underperforming periods and helps to show any inverse
relationships between metrics
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Establishing the Increments
(Hurdles)
KPI Hurdles: Even increments for Scores 0 through 10 are established
using the Baseline and Stretch Goal inputs. For this KPI, Supplier Quality
Index, the increment between hurdles was calculated using the difference
between the Stretch Goal (Score of 10) and the Baseline (Score of 3) and
dividing by 7 (the number of steps between Score 3 and Score 10).
Increment = (100 – 98.54) / 7 = 0.21. Therefore, each successive hurdle for
this KPI is 0.21% greater than its predecessor.
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Weighting the KPIs
• Weighting based on 100% scale
• In effect, weighting defines the mission. It establishes the
importance of each KPI and has a direct impact on the
score and trend.
• Methods for determining weights
– Emotional
– Decision matrix
• Critical to have upper management buy-in for weights
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Weighting the KPIs
Weight
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Measure Current Performance
The chart is basically built and can now be used to
measure current months performance:
• Enter current months data for each KPI
• Score the data
• Determine the value for each KPI
• Determine the overall OPM value
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Measure Current Performance
Current Month’s Performance
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Score the Data
KPI Score: The current month's performance for this KPI is
98.56%. This clears the KPI hurdle of 98.54% (Score of 3),
but does not clear the KPI Hurdle of 98.75% (Score of 4).
Therefore, the KPI Score for the Supplier Quality Rating
metric is 3 for this reporting period.
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Determine the Value for Each KPI
KPI Value: Determined by multiplying
the KPI Score by the KPI Weight input.
Calculation: 3 x 3 = 9
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Determine the Overall OPM Value
Overall Value: Calculated by summing the individual KPI Values.
Calculation: 9 + 21 + 130 + 64 + 0 + 0 + 15 + 52 + 84 + 44 = 419
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Trend Analysis for OPM
• Bar charts provide quick visual of performance trends
• Helps focus resources on areas requiring Root Cause Analysis
and Corrective Action
• Useful for senior management review
• Reveals impact of functionally grouped metrics on overall
score, for example:
– Material Availability
– Manufacturing Performance
– Internal Quality
– Customer Satisfaction
• Measures individual supplier trends; not a comparison tool
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KPI Grouping and Group Actuals
Grouping
Metric Group Actual Total Value: This is the actual total value of all
KPIs in a metric group during the reporting month. In this example the
metric group Material Availability is made up of two KPIs: Supplier
Quality Index and Supplier On-time Delivery. The actual total value for
these KPIs is the sum of their individual calculated values.
Calculation: 9 + 21 = 30
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Bar Chart for KPI Group
Metric Group Bar Charts: This bar chart plot actual values for the KPI metric
groups. The third bar on the Material Availability chart represents this month's
actual value of 30. The y-axis range for this bar chart should be ranged from
zero to the metric group stretch goal value (100 for this metric group).
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Overall OPM Bar Chart
Overall Value Bar Chart: This bar chart plots overall matrix values. The third bar
on this chart represents this month's actual value of 419. The y-axis range for this
bar chart should be ranged from zero to the overall stretch goal of 1000. The blue
line represents the baseline score of 300.
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Internal Quality-Focused OPM
• This OPM is to focus specifically Quality Performance Indicators
and will roll-up to the high level OPM chart
• Example KPIs:
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First Article
Final Acceptance Yield
First Pass Yield
Rework Frequency
Defects per Million Opportunities
Production Scrap Rate
SQARs
Site Rejections (QARs)
Sub-tier supplier (X) QA Rating
Cost of Poor Quality
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Top Level Internal Quality
OPM
Internal Quality Focused
Sub OPM
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Does Implementation of OPM Cost
Money?
• You already use metrics to measure yourselves
• Remember, existing supplier metrics are typically used to
develop summary matrix
• OPM implementation involves a non-recurring up-front effort
– Recurring costs offset by decreased LM Aero oversight
Tailoring existing supplier metrics to OPM format
is virtually cost free
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Does OPM Provide Value?
• Provides concise trend metrics data which reports performance
• OPM can help identify small, insidious problems before they
become major cost problems
• OPM provides an effective and efficient tool for data collection
and decision making
• Resulting process improvements can increase competitive
edge
• OPM can be used at multiple levels
– Lower level charts roll up as a Top Management tool
Positive or negative performance in OPM metrics
impact your bottom line
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Why should the Supplier employ
OPM?
• The evolving aerospace supply chain demands just in time methodology
– Flexibility
– Continuous flow
• Today’s competitive environment requires a new way of thinking and
managing…OPM can provide this edge
• OPM provides quantitative method of validating cost reduction initiatives
and can highlight new opportunities for further improvement
• Tools learned under contract requirements translate to more competitive
bids to your other customers
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Supplier’s Commitment
• Cross functional team for a one to two day event.
• Facilities for the event
• Availability to existing data
• Management commitment to attend an out brief
• Commitment to provide monthly inputs to LM Aero by the 15th of
every month.
• Commitment to review the OPM and take appropriate action.
Provide comments for negative trends (a 3-month decline in OPM
categories, a decrease in 3 or more scores in from the prior
month, and KPI below baseline performance). Comments should
include, as a minimum, root cause, corrective action and a
recovery ECD.
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Goals of Implementing OPM
• Reducing Supplier Non-Conformances
• Increasing Process Stability and Predictability
• Limiting PQA End-Item Acceptance Activity
OPM is a living document that can and should be
adjusted based on supplier performance,
improvements, declines, process changes,
product additions, etc. to assure their complete
value to our customer.
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