Building the 21st Century Supply Chain Organizationthrough CMMI

John J. NortonRaytheon Company

Our Approach

• Evaluate the Current Process– Six Sigma framework– Vision. (Frankly, what are we trying to do? Where are we

trying to go?)• Process Development: Compare CMMI Acquisition

– Vs:• Integrated Product Development System (IPDS)• Policies and procedures• Best practices• Resultant “gap analysis”

• Build on SCM tenets of People, Process, Systems• Institutionalize for Success

– “Fluoride in the drinking water”

Our Vision

• How We Are Going to Do It– Utilize the Tenets of CMMI and Raytheon IPDS– Exceed Customer Requirements– World Class Personnel – Common World Class Process and System– Leverage the Power of the Enterprise– Achieve and Surpass Business Unit Goals and Targets– Ensure

• Timely Delivery• Lowest Cost• Highest Quality Materials, Services and Logistics

To be recognized globally by the Supply Chain Profession as a major provider of excellence in Materials and Logistics Management.

Proc

ess

Man

agem

ent

Proj

ect

Man

agem

ent

Engi

neer

ing

Supp

ort

5 Optimizing ContinuousProcessImprovement

Focus on ProcessImprovement

OIDCAR

Organizational Innovation and DeploymentCausal Analysis and Resolution

XX

4 QuantitativelyManaged

QuantitativelyManagement

Process Measuredand Controlled

OPPQPM

Organizational Process PerformanceQuantitative Project Management

XX

3 Defined ProcessStandardization

ProcessCharacterized forthe Organizationand is Proactive

RDTSPIVerValOPFOPDOTIPMRSKMDARITOEI

Requirements DevelopmentTechnical SolutionProduct IntegrationVerificationValidationOrganizational Process FocusOrganizational Process DefinitionOrganizational TrainingIntegrated Project ManagementRisk ManagementDecision Analysis and ResolutionIntegrated TeamingOrganizational Environment for Integration

XXX

XX

X

XXXXX

X

X

2 Managed BasicProjectManagement

ProcessCharacterized forProjects and isoften Reactive

REQMPPPMC

MAPPQACM

Requirements ManagementProject PlanningProject Monitoring and Control

Measurement and AnalysisProcess and Product Quality AssuranceConfiguration Management

XXX

X

XXX

1 Initial Processunpredictable,poorly controlledand reactive

Process Categories

Maturity Level Focus Process AreasCharacteristic

X

CMMI (A) Process Areas

SAM Supplier Agreement Management

ISM Integrated Supplier Management

C apability M aturity M odel In tegra tion (C M M I) Project:____________

S upplie r Se lection and M on ito ring S ite:______________C M M I Topics

(Bo ld Item s are required o r expected)O b jective Ev idence

V erificationTYP IC AL E XA M PLES

O bjective EvidenceSITE / PR O JEC T-

SP EC IF IC G U ID A NC E

S P 1.1 : D eterm ine w hich sources w ill be used to fu lfill custom er needs . ( In form ational O nly)S ourc ing O ptions inc lude: (1) P urchasing o ff-the -she lf products or serv ices. (2) O bta in ing products or serv ices th rough a contractua l agreem ent. (3) O bta in ing products or serv ices from another part o f the business ente rprise (i.e ., another part o f the corporation, governm ent agency, e tc.) (4) O bta in ing products from the custom er or end user. (5) C om bin ing som e of the above (e .g ., contracting for a m od ifica tion to an o ff-the -she lf p roduct or having another part o f the business enterp rise co-develop products w ith an externa l supplier.)

A ) W P1: O u tsourc ing O ptionsB) W P2: L ist o f products to be acquired.C ) W P3: L ist o f p roducts for in terna l deve lopm ent.

IP DS 2.06A RE F TA SK O UTPU TS :2.02.01.08 U pdate M ake/B uy P lan4.05.01.05 M ake/Buy A nalysis4.05.01.08 Sourc ing stra tegy for P ro ject-un ique P artsSE -03.02 Assessm ent Developm ent ApproachSE -03.02.06 Assess M ake or B uy A lte rna tive

S CM 05 .04 T rade S tud ies05 .05 S upply B ase Developm ent10 .09 M ateria l P rogram P lan15 .01 P re lim M ake/Buy P lan15 .02 D eterm ine In itia l P roc Approach20 .01Define Reqs.(Tech M FG /F lowdown20 .02 ID C andidate Sources

S P 1.2 : Estab lish and m ain tain agreem ent req ts for the p roducts be ing acquired. (S BP are In fo rm ational O nly) SBP 1: E stab lish, for each item on the lis t o f products to be acquired, reqts to be fu lfilled by the supp lier. SB P2: Review and obta in ag reem ent w ith re levan t stakeholders on the reqts to be fu lfilled by the supp lier. SB P3: Docum ent proposed changes to req ts. SB P4: Review and obta in ag reem ent w ith re levan t stakeholders on proposed changes. SB P5: Revise reqts as changes are approved.

A) W P1: Perform ance param ete rs.B ) W P2: M ethods of verificatiion and va lida tion.C ) W P3: Reqts specs and a llocation m atrices.D ) W P4: Verification and va lidation specsE) Accep tance crite ria .F) IP DS 2.06A RE F TA SK O UTPU TS :2.05.01.02 M G M T C hange A ctiv ity4.05.01.09 R equest for PO G enera tion

S CM10.09 M ateria l P rogram P lan20 .01Define Reqs.(Tech M FG /F lowdown20 .06 In itia te R FI/RFQ30.01Receive TD P/M FG R eqs.30 .03 In itia te /R efine R FQ

S PE CIFIC G O AL SG 1: R equirem ents for S upplier Agreem ents are estab lished and m ainta ined. These reqts (w hich inc lude technica l, non-technica l and verification reqts) m ight com e from the fo llow ing: (1 ) Reqts a llocated to the acquis ition; (2) O rganizational po licy on supplier ag reem ents ; (3) S tandard ag reem ent provis ions; (4) P ro ject support reqts (e .g ., too ls and outs ide techn ica l support); (5) Tota l support needed for acquired p roducts. The developm ent o f supplier agreem ent reqts is an iterative process that occurs in para lle l w ith dete rm in ing the sourc ing options.

Gap AnalysisCompany Team

CMMI RoadmapPA (SSM) - Model SE/SW/IPPD/A

Build the Process for

Supply Chain . . .

The 21st Century Supply Chain Organization

PEOPLEPEOPLE

Salary/Salary/CompensationCompensation

Growth/Promotional Growth/Promotional OpportunitiesOpportunities

EmployeeEmployeeRecognitionRecognition

Pay forPay forPerformancePerformance

UniversityUniversityOutreach/InternshipsOutreach/Internships

PerformancePerformanceDevelopmentDevelopment

MentorMentorProgramProgram

DiversityDiversityRecruitmentRecruitment

StateState--of theof the--Art Art Tools/SystemsTools/Systems

Targeted Targeted Professional TrainingProfessional Training

TalentTalentUpgradeUpgrade

Balanced Balanced ScorecardScorecardIndividual thru Individual thru Business UnitBusiness Unit

Policies &Policies &ProceduresProcedures

BestBestPracticesPractices

Material Material Program Program

MgmtMgmtRa yt he o n

SubcontractBest

Practices

Learning CurveAnalysis Guide

August 2001

Co pyright © 20 01 Raytheo n Compan y. All righ ts reser ve d.

PROCESSPROCESS

® ® ®

SCM SCM Web PortalWeb Portal

REMSREMSREMSREMS&&&&

ee--ProcurementProcurementSingle System Single System

SolutionSolution

SAPSAPSAPSAP

SYSTEMSSYSTEMS

®

®

Adv. Planning Tool ®IP TelecomIP TelecomSupplierSupplier

Rating SystemRating System ®

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Becoming a Focused Organization

IncreaseShareholder’s

Value

Delight OurCustomers

InstitutionalizeEffectiveProcess

Motivated, Capable, Functionally Mature

Workforce

Grow TheBusiness

What Will Happen:

Personal/Personnel Objectives:

Balanced Scorecard:

What We Believe InCore/Enduring Values:

Vision:What We Want To Be

How We Are Going to Get There

The Dashboard Light Implementing and Focusing the Individual & Organization

What I / What We Need To Do

Mission:Why Do We Exist?

Strategy:

Culture of Discipline

DisciplinedPeople

DisciplinedThought

DisciplinedAction

+ =

No Hierarchy No Bureaucracy No ExcessiveControls

Why Process Improvement through CMMI

• Customers require strong subcontract management and processes and CMMI is their chosen assessment Model

• The framework of the Model improves SCM organizational infrastructure and tenets of project processes which increase predictability and reduce program risk

• Raytheon’s strategy utilizes the CMMI model– to access– to improve– to sustain… the supply chain organizational maturation for the purposes of

meeting and exceeding customer expectations

People …Building a Team Strategy

• Develop and Grow a Diverse Workforce

• Facilitate New Leadership

• Promote Cooperative Education Programs and Internships

• Mentor Professional Development Opportunities

• Provide Top Level Professional Training and Applied Learning

• Recognize Employee Achievements and Reward Them

The right people are the most important asset

Process …Developing a Strategic Tool Box

• Focus on Key Subcontract Processes

• Material Performance Tracking through Metrics

• Utilization of Web Resources to Institutionalize and Promulgate e-Learning of Process Learning

Process …Developing a Strategic Tool Box

• Focus on Key Subcontract Processes– Instituted via web based development

and training

– Fully Integrated and aligned with Integrated Product Development Systems (IPDS) and Raytheon Six Sigma Process (R6σσσσ)

– Key element of Material Program Management (MPM)and Integrated Product Team (IPT)

• Material Performance Tracking• Utilization of Web Resources to Institutionalize

and Promulgate e-Learning of Operations

R = Responsibility

S = Support

I = Information only

A = Authority / Accountability

Process …Developing a Strategic Tool Box

• Material Performance Tracking through Metrics

– Key lynchpin of supplier process• Best value management with discrete

quality and delivery• Supplier rating system

– Major feed to supplier financial systems through web-based• Fact find and cost analysis• Budget and target development• Estimated Cost at Completion (ECAC) reporting• Cash and sales management (milestone/progress payments)

• Focus on Key Subcontract Processes

• Utilization of Web Resources to Institutionalize and Promulgate e-Learning of Process Learning

Supplier Ratings

NCS SAS Reporting

Process …Developing a Strategic Tool Box

• Supplier selection and surveillance• Supplier rating system

• Standardized/common processes across the enterprise

• Interactive multidisciplinary program management resource• Full involvement of suppliers and program management/

engineering customers

• Structured balanced scorecard approach (buyer-planner, dept., division)• Key metric reporting: DPMO, P.O. transaction

placements, small-disadvantaged business, etc.

• Interactive compliance guidelines based on contractual requirements• Electronic tool kit

• Utilization of Web Resources to Institutionalize and Promulgate– Business processes

– Policy and procedure

– Subcontract status

– Operational Dashboard Reporting

– Compliance

• Focus on Key Subcontract Processes• Material Performance Tracking

NCS

NCS Supply Chain Management

NCS Subcontracts

NCS Subcontracts

NCS Subcontracts

NCS Subcontracts

NCS Subcontracts

NCS Supply Chain Dashboard / Cockpit

Institutionalization

Do We Use 10 3-inch 3-ring Binders on the Shelf Above Our Desk ?

OR …..

Subcontract

StatusReporting

SS

R

MatPerf

ToolBox

Process

ComplIance

MetrIcs

DIversIty

References

PolIcIes

Procedures

Change the Game

TO

Collaboration and CommunicationCollaboration and CommunicationHave Changed the Game!Have Changed the Game!

Communication of Key Communication of Key Standards/InformationStandards/Information

Material Performance

Reference & Tool Box Resources

MetricsDiversity

SubcontractStatus Reporting

ProcessControl

Compliance

WEB

Portal

Islands of InformationIslands of Information

Towson

MRL

Goleta

DallasFt.

Wayne

ColoradoSprings

Largo/St. Pete

McKinney

Canada

The Trojan Horse Project

The Trojan Horse Project

People

Diversity

University Outreach

Professional Development

Employee Recognition

Growth Opportunities

Indirect Self-Directed e-Learning

Process

Compliance

IPDS (Integrated Product Development)

Best Practices

Balanced Scorecard

Material Program Mgmt (MPM)

Six Sigma

Integrated Product Teams (IPT)

Systems

Single Procurement Solution

SAP/APEX

B2B

DataMart

Video IP Telecommunication

Web Portal

NCS SCM Web Portal Home Page

Access to MaterialMeasurement Info

Access to MaterialMeasurement Info Procurement and

Subcontract Information

Procurement and Subcontract Information IPDSIPDS SIX SigmaSIX Sigma

People and Training

People and Training

Systems InformationSystems

Information

Raytheon Daily StockInformation

Raytheon Daily StockInformation

Org Charts/Personnel

Lists

Org Charts/Personnel

Lists

What’s New !What’s New !

MPMMPM

V.P. Communications

Business Unit of the year

Raytheon Home Page

RTN Shared Services

Supplier Collaboration throughIP-Video Teleconferencing

• On demand, face-to-face collaboration between Raytheon and suppliers

• Allows for more frequent contact with strategic partners without the high cost, inconvenience and lost productivity of travel

• Adhoc meetings easily set up to discuss and solve critical issues

• Several sites can easily collaborate to maximize problem solving

• High quality video/audio coupled with real time document and application sharing

Supply Chain Web PortalPrincipal Benefits

• Facilitates the Deployment of IPDS CMMI Process

• Increased Productivity

• Centralized Site for SCM Activity

• Integrates with Other Systems and Provides a Single Sign-on Capability and Security

• Enables User Friendly Access by SCM and Customers Across the Enterprise

– Institutionalization – Fluoridation . . . Always there doing its job

– “Four Corners” Approach– Indirect, Self-Directed e-Learning

– Policy and Work Instruction– Metrics and Communications– Interactive Data Reporting and Sharing– Functional Standard

Summary

• High Level Commitment• Defined Well Written Process• Institutionalization

– “Fluoride in the Drinking Water . . .Always there, always working”

• Systems Must Measure Progress of the Process

CMMI . . . Always there, doing its job