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LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract Management & Procurement Lockheed Martin
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LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Page 1: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

LOCKHEED MARTIN PROPRIETARY INFORMATION

1K7108_Hamel

RAISING THE BAR:RAISING THE BAR:ACHIEVING SUBCONTRACT EXCELLENCEACHIEVING SUBCONTRACT EXCELLENCEMarch 2008

Gary Bartmann, Vice President Subcontract Management & Procurement

Lockheed Martin

Page 2: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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AgendaAgenda

• Lockheed Martin Space Systems Company Lockheed Martin Space Systems Company Supply Chain LandscapeSupply Chain Landscape

• Lockheed Martin Space Systems Company Lockheed Martin Space Systems Company Product Assurance/Mission Success Product Assurance/Mission Success Landscape Landscape

– What is Big “Q”?What is Big “Q”?

• Remedy underlying causes of mishaps, near Remedy underlying causes of mishaps, near misses, escapements, process errors, etc., misses, escapements, process errors, etc., across the enterpriseacross the enterprise

• Product Assurance/Supply Chain Product Assurance/Supply Chain PartnershipPartnership

• SummarySummary

Lockheed Martin is “Raising the Bar”Lockheed Martin is “Raising the Bar”

Page 3: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Lockheed Martin Lockheed Martin Space Systems CompanySpace Systems Company

Supply Chain LandscapeSupply Chain Landscape

Page 4: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Subcontract ImpactSubcontract Impact

• Typically 50-60% of RevenueTypically 50-60% of Revenue

• Brings technology and expertise to the teamBrings technology and expertise to the team

• Suppliers bring innovation, speed and agility to Suppliers bring innovation, speed and agility to the tablethe table

• Source of Competitive AdvantageSource of Competitive Advantage

• ““Supply Chain as strong as the Weakest Link”Supply Chain as strong as the Weakest Link”

• Supply Chain is a “Valued Asset”Supply Chain is a “Valued Asset”

• Strong supply chain critical to successStrong supply chain critical to success

Supplier Performance Supplier Performance isis Lockheed Martin Performance Lockheed Martin Performance

Page 5: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Spend ProfileSpend Profile

SubcontractsSubcontracts• Program DrivenProgram Driven• Early Involvement KeyEarly Involvement Key• Internal & external Internal & external supplierssuppliers• Supply Chain strategiesSupply Chain strategies

60%60%

40%40%

Custom Products

Indirect

DirectCommodities

ITCommoditiesCommodities• Supplier AgreementsSupplier Agreements• e-Business Enablede-Business Enabled• StandardizationStandardization

Diverse Portfolio of Supplier ParticipationDiverse Portfolio of Supplier Participation

Page 6: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Procurement ProcessProcurement Process

GovernmentAcquisition

Policies

Federal State Laws

Sound Procurement

Practices

Corporate

Policy

Statements

Corporate

Policy

Statements

LM Acquisition Procedures

LM Acquisition Procedures

Business Unit Command

Media

Business Unit Command

Media

Compliant Procurement

Systems

Compliant Procurement

Systems

BuyersBuyers• ChecklistChecklist• DocumentationDocumentation

Governance Compliance

Corporate Officer

Corporate Officer

LM Internal Audits

LM Internal Audits

LMAP CouncilLMAP

Council

DCMA ReviewDCMA Review

LM Internal Audits

LM Internal Audits

CPSRsCPSRs

• Peer Review Mgmt

• Approvals • Program Audits• Compliance

Training• Ethics Training

• Peer Review Mgmt

• Approvals • Program Audits• Compliance

Training• Ethics Training

Rigorous Acquisition ProcessRigorous Acquisition Process

Page 7: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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• 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

The Warfighter

LMSSC(Prime Contractor)

Supplier(1st Tier)

Supplier(2nd Tier)

Supplier(3rd Tier)

Supply Execution & Risk ManagementSupply Execution & Risk Management

Production Process Baseline (PPB):

Page 8: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Lockheed Martin Lockheed Martin Space Systems CompanySpace Systems Company

Product Assurance/Mission Success LandscapeProduct Assurance/Mission Success Landscape

Page 9: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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In Aerospace & Defense In Aerospace & Defense Quality Failure Could Mean: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 chanceWe don’t get a second chance

Page 10: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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The Quality Journey . . . The Quality Journey . . .

Continued Evolution From Little “q” to Big “Q”Continued Evolution From Little “q” to Big “Q”

Increasing System ComplexityIncreasing System Complexity

Sample Inspection

100% Inspection

Process ControlTools

Statistical Process Methods

Mil-I-45208 Mil-Q-9858 Mil-Std-1520 ISO 9000 AS 9100

BaldrigeAward

100% Mission Success

Concurrent Engineering

Acquisition Reform

6 Sigma

Deming Ishikawa TaguchiJuran

Faster, Better, Cheaper

Lean Manufacturing

TQM

High-PerformanceWork Teams

Peer Reviews

Operational Excellence

Error-FreeEnvironment

Big “Q”

Fo

cus

Dri

vin

g F

orc

eD

ecad

e 1940s 1950s 1960s 1970s 1980s 1990s 2000 2010 Beyond

Page 11: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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What is Big “Q”?What is Big “Q”?

• A recognition that the quality of our procedures and A recognition that the quality of our procedures and products depends on the up-front (early life cycle) products depends on the up-front (early life cycle) design processes being error-freedesign processes being error-free

• Achieving Big “Q” requires a holistic systems approach Achieving Big “Q” requires a holistic systems approach by each program and functional group to seek out by each program and functional group to seek out problems, analyze causes and take effective corrective problems, analyze causes and take effective corrective and preventive actions throughout the entire contract and preventive actions throughout the entire contract life cyclelife cycle

Forcing Retirement of Future Potential ProblemsForcing Retirement of Future Potential Problems in the Presentin the Present

Page 12: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Future StateFuture State

Bringing the future to the present

• Big “Q” focused• 100% mission success• Operational excellence• Process-centric• Error-free environment

Past StatePast State

Bringing the past to the present

• 100% mission success• Mil-Q-9858A• Inspect to find defects• Sort good from the bad

Creating a Big “Q” EnvironmentCreating a Big “Q” Environment

TodayToday

We cannot forget our past while we build the futureWe cannot forget our past while we build the future

Moving Moving forwardforward

Page 13: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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ResearchIR&D

ResearchIR&D

Concept Refinement

Concept Refinement

SystemsDevelopment

& Demo

SystemsDevelopment

& Demo

Production,Integration

& Test

Production,Integration

& Test

System/ Mission

Deployment

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

Diagnosing cross-phase and multi-functional misalignment for quality Improvements

Diagnosing cross-phase and multi-functional misalignment for quality Improvements

EngineeringDesign &Release

EngineeringDesign &Release

Big “Q” Spectrum of OpportunitiesBig “Q” Spectrum of Opportunities

Technology evolution and increased complexity demand Technology evolution and increased complexity demand Big “Q” improvementsBig “Q” improvements

Page 14: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Impetus for Raising the BarImpetus for Raising the Bar

The driving needs for Operational Excellence?The driving needs for Operational Excellence?

• Increasing need for an integrated, end-to-end set of Increasing need for an integrated, end-to-end set of

improved processes for development and recurring workimproved processes for development and recurring work

• Space Systems Company defect rate Space Systems Company defect rate

– 76% of mission failures attributed to engineering defects and 76% of mission failures attributed to engineering defects and

escapementsescapements

• SSC enterprise experience on recent programsSSC enterprise experience on recent programs

– Latent engineering defects have significant negative impact on Latent engineering defects have significant negative impact on

technical, schedule and cost performancetechnical, schedule and cost performance

• Being proactive to sustain 100% Mission SuccessBeing proactive to sustain 100% Mission Success

Increasing system complexity Increasing system complexity and technology evolution requires changeand technology evolution requires change

Page 15: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Error Prevention Error Prevention

For Each Mishap / Near Miss For Each Mishap / Near Miss Multiple Things Go Wrong At Multiple Things Go Wrong At The Same TimeThe 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

IntendedDeflection

Page 16: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Operational ExcellenceOperational Excellence

•Lockheed Martin’s Operational Excellence Program Lockheed Martin’s Operational Excellence Program provides:provides:

Roadmap, principles & tools to cut costsRoadmap, principles & tools to cut costs Eliminates waste & enhance customer satisfactionEliminates waste & enhance customer satisfaction

•Operational Excellence Program Objectives:Operational Excellence Program Objectives: Drive process capability Drive process capability Delivers on customer value Delivers on customer value Provides common focus for productivityProvides common focus for productivity

Today's environment leaves little room for error…Today's environment leaves little room for error…

End State Goal…End State Goal…Lean processes with Six Sigma capability Lean processes with Six Sigma capability

throughout throughout the enterprise and supply chainthe enterprise and supply chain

Page 17: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Key Elements of Operational Key Elements of Operational ExcellenceExcellence• Creating an error-free environmentCreating an error-free environment

– Big “Q” focusBig “Q” focus– Peer reviewsPeer reviews– Every process, product and paper . . . is perfectEvery process, product and paper . . . is perfect– Zero defects throughout product life cycleZero defects throughout product life cycle

• One Company enterprise-wide processesOne Company enterprise-wide processes– CMMI at all SSC locationsCMMI at all SSC locations

• Partnerships: customer to prime and prime to supply Partnerships: customer to prime and prime to supply chain chain – CommunicationsCommunications– RelationshipsRelationships– TransparencyTransparency

• Forecasting cost, schedule and evolving technologyForecasting cost, schedule and evolving technology– Program managementProgram management

Operational Excellence is an imperative toward Operational Excellence is an imperative toward ensuring 100% Mission Successensuring 100% Mission Success

Page 18: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Operations Excellence &Operations Excellence &

100% 100% MissionMissionSuccessSuccess

100% 100% MissionMissionSuccessSuccess

EngineeringEngineering• Product reuse Product reuse • End-to-end systems effec.End-to-end systems effec.

• Peer ReviewsPeer Reviews• SME/Fellows programSME/Fellows program• Software/systems integrationSoftware/systems integration

ProductionProduction• Manufacturing & Supply Chain ExcellenceManufacturing & Supply Chain Excellence• Common subcontract flowdown Common subcontract flowdown

• Talent Talent ManagementManagement

PA&SSPA&SS • Operational mishapsOperational mishaps• Supplier councils/summitsSupplier councils/summits• N/C reduction initiativesN/C reduction initiatives

• Linked CABLinked CAB• Error preventionError prevention

Finance & OperationsFinance & Operations• LM21 excellenceLM21 excellence• Suspended loads analysisSuspended loads analysis

Big “Q”Big “Q”Big “Q”Big “Q” P

rog

ram

Exe

cu

tio

nP

rog

ram

Exe

cu

tio

n

Operations Excellence:Operations Excellence:Error-Free Environment Throughout Program Life CycleError-Free Environment Throughout Program Life Cycle

Big “Q”Big “Q”Big “Q”Big “Q”• Engineering processesEngineering processes• Requirement definitionRequirement definition• Functional and LOB partnershipsFunctional and LOB partnerships• Process discipline, adequacy, integrityProcess discipline, adequacy, integrity

Little “q”Little “q”Little “q”Little “q”• Inspection of hardwareInspection of hardware• SortingSorting• AcceptanceAcceptance• TestTest

• MFGMFG• ATLOATLO• I&TI&T• SupplierSupplier

Human ResourcesHuman Resources• Skill certifications Skill certifications • Knowledge management & transferKnowledge management & transfer

• Future labor forceFuture labor force

76% Escapes 76% Escapes are due to…are due to…

Page 19: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Lockheed Martin Lockheed Martin Space Systems CompanySpace Systems Company

Product Assurance/Supply Chain PartnershipProduct Assurance/Supply Chain Partnership

Page 20: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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LMSSC Supplier ExpectationsLMSSC Supplier Expectations

Supply Base ExpectationsSupply Base ExpectationsSupply Base ExpectationsSupply Base Expectations

CommitmentsCommitments

QualityQuality

DeliveryDelivery

CostCost

Meet them allMeet them all

100% in everything you do100% in everything you do

On time, every timeOn time, every time

Meet targets, deliver valueMeet targets, deliver value

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Our customers expect and the war fighter relies on Our customers expect and the war fighter relies on 100% mission success of “our” products and services100% mission success of “our” products and services

Page 21: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Sourcing is a “Team Sport”Sourcing is a “Team Sport”

‘‘Functional Silo’ SyndromeFunctional Silo’ Syndrome

CONTRACTSCONTRACTS DESIGN /DESIGN /EngineeringEngineering

MATERIALSMATERIALS PURCHASINGPURCHASING QUALITYQUALITY MANUFACT-MANUFACT-URINGURING

Operational silos or “Over the transom” is no longer acceptableOperational silos or “Over the transom” is no longer acceptable

Build Effective RelationshipsBuild Effective Relationships

Page 22: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Risk Management – SubcontractsRisk Management – Subcontracts

• Corporate & Site Corporate & Site PoliciesPolicies

o Early InvolvementEarly Involvement

o IdentifyingIdentifying

o PlanningPlanning

o AssessingAssessing

o Handling Handling (Mitigate, Transfer, (Mitigate, Transfer, Avoid, Assume) Avoid, Assume)

• Personnel TrainingPersonnel Training

• Risk “Waterfall”Risk “Waterfall”

• Lean LM21 Operating Lean LM21 Operating ExcellenceExcellence

• Supplier AssessmentSupplier Assessment

• Customer Partnering Customer Partnering

• MetricsMetrics

• ReviewsReviews

• AuditsAudits

• Process Process AssessmentsAssessments

Best Best PracticesPractices

MonitoMonitorr

RequirementsRequirements

Every Program has risk. Identification and management Every Program has risk. Identification and management facilitates success. Failure to manage or predict ensures facilitates success. Failure to manage or predict ensures failure.failure.

Proactive, Collaborative Engagement is KeyProactive, Collaborative Engagement is Key

Page 23: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Risk Management - SubcontractsRisk Management - Subcontracts

Click to jump to that Risk Area Worksheet

Risk Area Topic Score ActualMax

Possiblex 1 Requirements Management 0 0x 2 Project Planning 0 0x 3 Project Monitor and Control 0 0x 4 Supplier Agreement Management 0 0x 5 Measurement and Analysis 0 0x 6 Process and Product QA 0 0x 7 Configuration Management 0 0x 8 Requirements Development 0 0x 9 Technical Solution 0 0x 10 Product Integration 0 0x 11 Verification 0 0x 12 Validation 0 0x 13 Process Management 0 0x 14 Organizational Training 0 0x 15 Integrated Project Management 0 0x 16 Risk Management 0 0x 17 Decision Analysis and Resolution 0 0x 18 General Topics 0 0x 19 Tailored Topics 0 0

Jump to Top 0%Allocated

Penetration

Weighting Factor (%)

Weighted Score

x to include

• Excel based, point and click, results tallied and summarizedExcel based, point and click, results tallied and summarized

Risk Based Subcontractor Assessment ToolRisk Based Subcontractor Assessment Tool

Page 24: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Subcontracts Operational RiskSubcontracts Operational Risk

Supplier “comparison” using configurable measurements

Predicting trends & performance

Suppliers current information in online databasesSuppliers current information in online databases

Page 25: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Subcontractor

Performance Based Specification

KPP:KPP: “Spacecraft transmit/receive time”

“Mux shall have <2dB insertion loss”

KPP:KPP:

“Filter shall have <1.5 dB insertion loss”

KPP:KPP:

“Waveguide shall have <0.5 dB insertion loss”

KPP:KPP:

Surface Risk Surface Risk - Prioritize- Prioritize- VOC- VOC

Surface Risk Surface Risk - Prioritize- Prioritize- VOC- VOC

PMR

TER

ARMR

PDRTR

BRPR

QRFR

5

4

3

2

1

1 2 3 4 5Consequence of Occurrence

Lik

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Register Risk Register Risk Register Risk Register Risk

Risk Management Plan

0

50

100

150

Pre

-A

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"Kic

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SR

R

PD

R

CD

R

PR

R

TR

R

I&T

Fie

ld

Lifecycle Milestones

Ris

k L

eve

l

Supplier

LMCCustomer

Mitigating Actions

Mitigating Actions

SPM focus

PM focus

Manage Risk Manage Risk Manage Risk Manage Risk

“What could go wrong? … possible failure modes? … severity, P(o), P(c)?”

Requirements AnalysisRequirements Analysis

Lockheed Martin Supplier Risk ManagementLockheed Martin Supplier Risk Management

Page 26: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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0

4

0

118 2

00

0 1

13

May 2005

Programs

Trend Analysis ProcessTrend Analysis Process

LOB 1

SSC Lines OfBusiness

LOB 2

LOB 3

LOB N

Programs

Programs

Programs

Generate Causals

Supplier Occurrences

Active Active SuppliersSuppliers

Trend States

G, Y, R Ratings

Materials Risk ManagementMaterials Risk Management

Programs

•••

•••

Page 27: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Big “Q” Drives Disciplined Innovation

& Operational Excellence

Production Engineering

Operations FinancePA&SS

Process Control Board Corrective Action Board

ResponsibleArea Supervisor

Mission Success

Senior Management Review Team

Integrated Process Group

Lessons Learned

Mission Success Bulletins

Internal Audit

GIDEP

Doc Rockit

MissionSuccessIOR

Rapid Notification

Common IntegratedProcess System (CIPS)Approved

SupplierProcesses

FailureReviewBoards

Anomaly EngineeringReview Board (AERB)

Insight/OversightProcess

Certified Test Conductor

Certified Principal Engineer

Corrective Action Board

InternalOperationsReview

LOB ReviewsProgram Management

InternalOperationsReview

CorrectiveAction Board

Internal Operations Review

EnvironmentalSafety & Health

Continuous ProcessImprovement

ForeignObjectElimination

LM21 Integration& Transformation

Finance &BusinessOperations

Employee SkillsFinancialReviews

Training

Certifications

Qualifications

Internal Operations Review

PA&SS CorrectiveAction Board

Operations ProductAssurance Review

Joint InsightWorking Group

ManagementCouncil

Return To GreenMeetings

Stock Sweep

Verification &Assessment

Error PreventionCouncil

SSC CorrectiveAction Board

Flash Notices

Early WarningMetrics

CertificationBoard

A Fishbone Approach to Big “Q”A Fishbone Approach to Big “Q”

Functional cause & effects analysis performedFunctional cause & effects analysis performed

Peer Review

ERP FICO

Suspended Loads

Capital Equipment

Future Work Force

Full Spectrum Leadership

Mentoring

Knowledge Transfer

Human Resources

Operational Mishaps

Page 28: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Supplier QualitySupplier Quality

• Corporate Supply Quality Council establishedCorporate Supply Quality Council established

• LMSSC Supplier Quality Councils establishedLMSSC Supplier Quality Councils established

• LMSSC Supplier Assessment/Rating SystemLMSSC Supplier Assessment/Rating System

• Working with AIA / DCMA / Industry groups onWorking with AIA / DCMA / Industry groups onlower-tier quality escapeslower-tier quality escapes

• Critical performance and alert system establishedCritical performance and alert system established

• Line-of-Business & Program quality program and Line-of-Business & Program quality program and focusfocus

Page 29: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Product Assurance & System Safety Responsibilities Across the Product Assurance & System Safety Responsibilities Across the Product Life Cycle Product Life Cycle

• Assess Customer Requirements

• Participate in IPT’s & other design teams

• Assess Supplier Capability - Use LM Corporate System

• Review Production Plans for Product Assurance & System Safety Requirements

• Verify System Ready for Deployment/ Shipment

• Verify Post Deployment Activities in Compliance with Requirements

Develop & Acquire New

Business

Design & Development

Acquisition Produce System

Deploy & Operate System

Quality Engineering System Safety Operations Quality

Procurement Quality Software Quality

• Perform Process Assessments

• Perform Inspections & Tests

• Accept Product

Product Assurance & System Safety Applies Preventive Measures, Oversight, System Safety, Control of Nonconformities, Error Prevention, and Corrective/Preventive Action Throughout the Product Life Cycle

• Develop Product Assurance & System Safety Proposal Inputs

• Develop Budget Estimates

• Identify Risks

• Use PA Proposal Focused Training Module

• Assess Hazard Analysis Requirements

• Assess Design, Validation & Verification Inputs for Product Assurance/ System Safety Requirements

• Mistake Proofing

• Test Like You Fly Validation

• Determine Quality Flowdown Requirements

• Assess Supplier Performance Using Vendor Rating

• Accept Supplier Products/Services

• Track Corrective Actions

• Control Nonconforming Material

• Apply Error Prevention Techniques

• Coordinate Range Safety Requirements

• Apply Error Prevention Techniques

Page 30: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Supplier Network Supplier Network

Successful Program Execution requires an integrated Successful Program Execution requires an integrated supply network with supply network with allall suppliers focused on: suppliers focused on:

• Quality Products & Services, on-timeQuality Products & Services, on-time

• Cost Reduction and Continuous ImprovementCost Reduction and Continuous Improvement

• Service and Customer SatisfactionService and Customer Satisfaction

• Innovation & Creativity Innovation & Creativity

• Anticipating our NeedsAnticipating our Needs

• Using e-technologyUsing e-technology

• Actively using lean processesActively using lean processes

Page 31: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Contractor EnvironmentContractor Environment

• Program Pressure Program Pressure – Flawless ExecutionFlawless Execution

• Cost Pressure Cost Pressure – Real cost reduction & continuous improvementReal cost reduction & continuous improvement

• Complex Systems IntegrationComplex Systems Integration– Interdependent system elementsInterdependent system elements– Cross-discipline executionCross-discipline execution– Greater reliance on Subcontract performanceGreater reliance on Subcontract performance

Page 32: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Subcontract Excellence 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 We manage our subcontractors as an extension of our businessextension of our business

Page 33: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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… … Raising the BarRaising the Bar

• Optimize Core Process & EfficiencyOptimize Core Process & Efficiency

• Share Knowledge Rapidly and FreelyShare Knowledge Rapidly and Freely

• Early involvementEarly involvement

• Provide world-class tools to manage Suppliers Provide world-class tools to manage Suppliers

• Enhance personnel skills and understandingEnhance personnel skills and understanding

• Speed and agilitySpeed and agility

• Defining full life-cycle supply chainsDefining full life-cycle supply chains

• InnovationInnovation

End Game: Optimized Supply ChainEnd Game: Optimized Supply ChainSkilled Teams Armed with Information to ManageSkilled Teams Armed with Information to Manage

Page 34: LOCKHEED MARTIN PROPRIETARY INFORMATION 1 K7108_Hamel RAISING THE BAR: ACHIEVING SUBCONTRACT EXCELLENCE March 2008 Gary Bartmann, Vice President Subcontract.

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Enterprise Big “Q” Focus AreasEnterprise Big “Q” Focus Areas

• Peer reviewsPeer reviews

• Subcontract management Subcontract management

• Error prevention – near miss and mishap reportingError prevention – near miss and mishap reporting

• Non-conformance reduction initiativesNon-conformance reduction initiatives– Manufacturing, engineering and suppliersManufacturing, engineering and suppliers

• Product reuse analysisProduct reuse analysis

• End-to-end specialty engineeringEnd-to-end specialty engineering

• Software and systems integrationSoftware and systems integration

• Enhanced applications and procurement of EEE partsEnhanced applications and procurement of EEE parts

• Certified test conductor briefingsCertified test conductor briefings

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Supplier ExpectationsSupplier Expectations

Supply Base ExpectationsSupply Base ExpectationsSupply Base ExpectationsSupply Base Expectations

CommitmentsCommitments

QualityQuality

DeliveryDelivery

CostCost

Meet them allMeet them all

100% in everything you do100% in everything you do

On time, every timeOn time, every time

Meet targets, deliver valueMeet targets, deliver value

LMSIS West-Hatch-15Dec05 12

Our customers expect - and the war fighter relies on - Our customers expect - and the war fighter relies on - 100% mission success of “our“ products and services100% mission success of “our“ products and services

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SummarySummary

• An SSC enterprise-wide plan; all sites, all programsAn SSC enterprise-wide plan; all sites, all programs

• Strategic and systematic approach toward continuous Strategic and systematic approach toward continuous

improvementimprovement

– Focus priority of all LOBs, programs and functional groupsFocus priority of all LOBs, programs and functional groups

• Operational Excellence/Big “Q” improvements will Operational Excellence/Big “Q” improvements will

eliminate:eliminate:

– Latent hardware anomalies and non-conformancesLatent hardware anomalies and non-conformances

– Latent process escapes, near misses and mishapsLatent process escapes, near misses and mishaps

– Unacceptable schedule and cost performanceUnacceptable schedule and cost performance

• Will raise the bar with 100% Mission Success!Will raise the bar with 100% Mission Success!

Proactive plan to improve our performance!Proactive plan to improve our performance!

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What Can You Do?What Can You Do?

• Continue on the “Journey”Continue on the “Journey”

– Continuous improvement in quality & costContinuous improvement in quality & cost

• Flow the same principles and expectations to your Flow the same principles and expectations to your

supply basesupply base

• Manage the ‘multi-tier’ Manage the ‘multi-tier’

– Take time to strategically plan to achieve competitive Take time to strategically plan to achieve competitive

advantage in your supply chainadvantage in your supply chain

Adopt “Big Q” ThinkingAdopt “Big Q” Thinking

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