lockheed martin aeronautics company sustainment partnering: a value added strategy bill anderson...

Lockheed Martin Aeronautics Company

Sustainment Partnering: A Value Added Strategy

Bill Anderson

Vice President, Customer Support


March 2, 2004


Partnering A Key Element of Lockheed Martin’s Sustainment Business Strategy

F-16 F/A-22

Approaching 6000 LM Aircraft in Service Worldwide

… Success and Customer Satisfaction Heavily Influenced by Definition Success and Customer Satisfaction Heavily Influenced by Definition and Implementation of Effective Product Sustainment Strategiesand Implementation of Effective Product Sustainment Strategies

C-130U-2 C-141 P-3

C-5 F-117

F-35

F-111 S-3

… Plus Strategic Alliance Aircraft

F-2 T-50

IDF C-27J

• Aircraft in all product life-cycle phasesAircraft in all product life-cycle phases

• Strategic partnerships and teammates on almost all programsStrategic partnerships and teammates on almost all programs

• Fine tuning sustainment strategies with our customers on F/A-22, F-35, and C-130JFine tuning sustainment strategies with our customers on F/A-22, F-35, and C-130J

• Opportunity to exploit cross-vehicle synergies, e.g., F/A-22 and F-35Opportunity to exploit cross-vehicle synergies, e.g., F/A-22 and F-35

Lockheed Martin Aeronautics Company 3

Product Sustainment Integration…The New Paradigm

Internal study conducted recently to assess emerging sustainment situation and direction…from an enterprise perspective

Customer expectations Competitive environment Program requirements Financial opportunities

Concluded that a consistent sustainment strategy applicable to multiple programs provides

Flexible, affordable support for the warfighter Optimized investments Integrated solutions across platforms Business value

The future of product sustainment is not a continuation of the past – new Performance Based Logistics (PBL) concept being demonstrated on leading edge programs like F-117, C-17 and B-2 – this is the new norm for product sustainment


DoD Mandating Its Program Managers to Implement Performance Based Logistics

“PMs shall develop and implement performance-based logistics strategies that optimize total system availability while minimizing cost and logistics footprint.””

- DoD Directive 5000.1 dated May 12, 2003

“PBL is the Department’s near-term strategy to increase weapon system readiness through integrated logistics chains and public/private partnerships.”

- 23 January 2004 Memo from Acting USD, AT&L Michael Wynne


Critical Elements for Successful PBL Implementation

Improve sustainment performance As measured by warfighter metrics, e.g., operational availability, mission

capability

Decrease total customer ownership cost Significant reduction compared with traditional approach expected

Accept responsibility for product sustainment integration Be empowered to make decisions to optimize performance and cost reduction

Reduce costs by eliminating/reducing sustainment transactions Establish and maintain network of value added partnerships with customer

organizations and industry

Receive financial rewards for risks associated with being the product sustainment integrator

Double digit return-on-sales objective – must be competitive with development and production margins


… … Specific Sustainment Applications Should Be Analyzed Specific Sustainment Applications Should Be Analyzed For Presence Of All Five Of The Critical ElementsFor Presence Of All Five Of The Critical Elements

DECREASEDDECREASEDTRANSACTIONSTRANSACTIONS

DECREASEDDECREASEDTOTAL COSTTOTAL COST

Critical Elements of Successful PBL Implementations

INCREASEDINCREASEDPERFORMANCEPERFORMANCE

INCREASEDINCREASEDRISKS/REWARDSRISKS/REWARDS

INCREASEDINCREASEDINTEGRATIONINTEGRATION


… … Specific Sustainment Applications Should Be Analyzed Specific Sustainment Applications Should Be Analyzed For Presence Of All Five Of The Critical ElementsFor Presence Of All Five Of The Critical Elements

DECREASEDDECREASEDTRANSACTIONSTRANSACTIONS

DECREASEDDECREASEDTOTAL COSTTOTAL COST

(2.1% NMCS vs (2.1% NMCS vs 5% std)5% std)

(>10% ROS)(>10% ROS)

(Warehouse reductions, (Warehouse reductions, reduced order times)reduced order times)

($195M savings & ($195M savings & avoidance to date)avoidance to date)

(LM designated(LM designatedSustainment Integrator)Sustainment Integrator)

F-117 TSPR ExamplesF-117 TSPR ExamplesTraditional vs PBLTraditional vs PBL

Critical Elements of Successful PBL Implementations

INCREASEDINCREASEDPERFORMANCEPERFORMANCE

INCREASEDINCREASEDRISKS/REWARDSRISKS/REWARDS

INCREASEDINCREASEDINTEGRATIONINTEGRATION


Prime Contractor

Supplier BaseSupplier Base

Proactive Leadership Of Proactive Leadership Of

• Sustaining EngineeringSustaining Engineering• Engineering Source Data & Engineering Source Data &

Tech OrdersTech Orders• Configuration ManagementConfiguration Management• Fleet Health ManagementFleet Health Management• Supply Chain ManagementSupply Chain Management

Sustainment Integration

USG DepotsUSG DepotsStrategicStrategicPartnersPartners

International International PartnersPartners

• Shared Risk/Rewards Shared Risk/Rewards for System Cost & for System Cost & PerformancePerformance

• Multi-Year (5 – 10+)Multi-Year (5 – 10+)• Minimum CLINs (4 – Minimum CLINs (4 –

10)10)• Short, Performance-Short, Performance-

Based SOW (vs Task-Based SOW (vs Task-Based)Based)

Contract from SPOContract from SPO

DirectFleet Mgmt

Interface to Users

Sustainment Integration Is…

Others . . .Others . . .


Prime Contractor

Supplier BaseSupplier Base

Proactive Leadership Of Proactive Leadership Of

• Sustaining EngineeringSustaining Engineering• Engineering Source Data & Engineering Source Data &

Tech OrdersTech Orders• Configuration ManagementConfiguration Management• Fleet Health ManagementFleet Health Management• Supply Chain ManagementSupply Chain Management

Sustainment Integration

USG DepotsUSG DepotsStrategicStrategicPartnersPartners

International International PartnersPartners

• Shared Risk/Rewards Shared Risk/Rewards for System Cost & for System Cost & PerformancePerformance

• Multi-Year (5 – 10+)Multi-Year (5 – 10+)• Minimum CLINs (4 – Minimum CLINs (4 –

10)10)• Short, Performance-Short, Performance-

Based SOW (vs Task-Based SOW (vs Task-Based)Based)

Contract from SPOContract from SPO

DirectFleet Mgmt

Interface to Users

Sustainment Integration Is…

Others . . .Others . . .

Strategic Strategic Partnership Partnership NetworkNetwork

Strategic Strategic Partnership Partnership NetworkNetwork


Partnerships & Sustainment Integration Strategy

Best-in-class solutions required to meet customers’ cost/value requirements

A single entity can not currently provide or sustain best-in-class performance in all Sustainment discipline areas

Carefully selected strategic partners provide:

Demonstrated levels of performance Willingness and commitment to provide funding to enhance their disciplines Senior management focus on the discipline

Strategic partners includes partnerships with customer organizations

Sustainment Focus Must Be On Meeting Warfighter Expectations At Sustainment Focus Must Be On Meeting Warfighter Expectations At Greatly Reduced Total Ownership Costs Through Performance Greatly Reduced Total Ownership Costs Through Performance

Based Logistics Contracts in Partnered Environments. Based Logistics Contracts in Partnered Environments.


Sustainment Partnerships Emerging at Different Organizational Levels

A range of relationships have been noted – from corporation to government department down to intra-program (contractor-to-customer program offices) agreements

Partnerships also emerging within corporations and between and among industry entities

All partnerships can be value added, but rhetoric does not automatically translate to sustainment results

Lessons learned from partnership experiences can and should be studied and reapplied across applications


Strategic Supplier AllianceStrategic Supplier Alliance

F-117 Total F-117 Total Sustainment Sustainment Performance Performance ResponsibilityResponsibility

C-130J Direct Sales AgreementC-130J Direct Sales Agreement


Internal Partnering Internal Partnering AgreementsAgreements

Aeronautics CompanyAeronautics CompanyAircraft & Logistics Centers

C-130J Long Term SupportC-130J Long Term Support

F/A-22 Weapon System Partnering Charter

00-ALC – LM Aero MOU00-ALC – LM Aero MOU

Aeronautics CompanyAeronautics Company

A Network of Partnering

Agreements

Sustainment Partnerships Take Many Forms

LM – Boeing – P&WLM – Boeing – P&W


Strategic Supplier Alliance


Participants: USAF (AFMC),Participants: USAF (AFMC),Army (AMC), DLA, & LMArmy (AMC), DLA, & LM

Duration: Not time limitedDuration: Not time limited

Objectives:Objectives:• Improve support to our nation’s warfighters throughImprove support to our nation’s warfighters through

Relationship of collaborative decision makingRelationship of collaborative decision making Leveraging member organization capabilitiesLeveraging member organization capabilities

• Support transformation initiatives including PSCM,Support transformation initiatives including PSCM,• Logistics modernization, & business system modernizationLogistics modernization, & business system modernization



Participants: F/A–22 SPO,Participants: F/A–22 SPO,Propulsion SPO, WR-ALC,Propulsion SPO, WR-ALC,OO-ALC, OC-ALC, Boeing,OO-ALC, OC-ALC, Boeing,P&W, & LMP&W, & LM


Objectives: Objectives: • Actively seek out opportunities for mutually beneficialActively seek out opportunities for mutually beneficial

cooperative public-private partnering initiativescooperative public-private partnering initiatives

• Provide a framework for implementing documentsProvide a framework for implementing documents



C-130J Long Term Support

Participants: WR-ALC, PEOParticipants: WR-ALC, PEO(A, T and M & S), C-130J SPO,(A, T and M & S), C-130J SPO,And LM AeroAnd LM Aero

Duration: Until October 2005Duration: Until October 2005

Objectives: Objectives: • Integrate efforts and capabilities toIntegrate efforts and capabilities to

Meet warfighter requirementsMeet warfighter requirements Support government transformation goalsSupport government transformation goals Achieve collective objectivesAchieve collective objectives

C-130J Long Term SupportC-130J Long Term Support


C-130J Direct Sales Agreement

Participants: WR-ALC & LM Participants: WR-ALC & LM (C-130J Program)(C-130J Program)


Objectives:Objectives:• Provide exceptional support to C-130J operational Provide exceptional support to C-130J operational

customerscustomers• Provide best value to the USAFProvide best value to the USAF• Comply with public lawComply with public law

C-130J Direct Sales C-130J Direct Sales AgreementAgreement


Summary

Partnering a critical element of emerging performance based logistics sustainment strategies

Existing and evolving partnerships may have different forms and formats

Sustainment partnerships being created to take advantage of best value capabilities of involved organizations…in order to provide affordable sustainment for our nation’s warfighters

lockheed martin aeronautics company sustainment partnering: a value added strategy bill anderson...

Documents

sustainment performance

product sustainment

future of product sustainment

emerging sustainment

strategic alliance aircraft

customer satisfaction

customer organizations

j aircraft