supply chain management 1 strategic perspectives in supply chain management – october 28, 2008...

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Supply ChainManagement

Strategic Perspectives in Supply Chain Management

– October 28, 2008

Craig Sando

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Supply Chain Management

Agenda:

• Moog’s Role in Space

• Key Supply Chain Challenges

• Changes in Approach & Strategy– Supply Chain Mission Success

– Virtual Factory

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Moog’s Support of NASA Space Programs

100% Mission Success

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Moog Technologies & Products - Precision Motion Control

Actuation

PropulsionControls

VibrationControls

Avionics

SoftRide Passive

Vibration Suppression

Reaction Mass Actuator Active Vibration Suppression

Thruster and Latch Valves

Hydrazine Propulsion Systems

Subsystems

Hydraulic TVC System &

Components

Electromechanical TVC System & Components

Solar Array Drive

Antenna Pointing

Electronic Control Units for Electromagnetic Actuators

Command Data Interface Unit for Ares I Upper Stage

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Supply ChainManagementMoog is Committed to the Long Term Support of NASA Space Programs

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Space Related Supply Chain Challenges

• Growing Product Offerings• Growing Dependence on External Suppliers• Growing Sub-contract Content• Growing Needs In Sub-tier Management

– Delivery Performance, Risk Management, Capacity management

– Process control & change control

• Growing Cost Challenges• Continuing Challenges in:

• Small quantities

• Education of critical nature of hardware and end application

• Qualified small businesses for critical hardware

• Maintain supply chain over life of program

• Specialty metals

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• Transition the organization– From Purchasing…to Procurement…to Supply Chain Management

• Business Process Integration– Becoming an integrated part of Operating Group value stream– Program team member

• Global Supply Chain Development– Develop new low cost Supply Chains– Strategy for moving centers of LCC sourcing

• Category/Commodity Management– Teams focused on major categories of spend– “Virtual Factory” approach

• Focus on Strategic Sourcing– Product Line Supply Chain Strategy– Alignment of business conditions, customer flow down– Re-qualification Strategy

• Excellence in Operational Purchasing– Execution - Meeting the needs of our factories (QDSC)– Supply Chain Mission Success

Supply Chain Strategy - Key Initiatives:

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• Transition the organization– From Purchasing…to Procurement…to Supply Chain Management

• Business Process Integration– Becoming an integrated part of Operating Group value stream– Program team member

• Global Supply Chain Development– Develop new low cost Supply Chains– Strategy for moving centers of LCC sourcing

• Category/Commodity Management– Teams focused on major categories of spend– “Virtual Factory” approach

• Focus on Strategic Sourcing– Product Line Supply Chain Strategy– Alignment of business conditions, customer flow down– Re-qualification Strategy

• Excellence in Operational Purchasing– Execution - Meeting the needs of our factories (QDSC)– Supply Chain Mission Success

Supply Chain Strategy - Key Initiatives:

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Supply Chain Mission Success

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Why The Increased Focus on Supplier Performance & Risk Management in the SC?

Business Drivers:

• Increasing Purchase Content

• Move to Systems Provider

• Increasing Major Sub-Contract Activity

• Increasing expectations for risk management in the

supply chain

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Supply Chain Mission Success – Managing Risk in the Supply Chain

Three key components:

1. Supplier Performance• Delivery and quality performance

• Raised expectations

• RCCA’s to meet these expectations

2. Risk Management• Identify the risks

• Plan for high risk, high impact events

• Eliminate, mitigate or have a response plan

3. Production Readiness• Confirming we are ready

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Supplier Segmentation - Mission Success - Engagement Criteria

Expendable Suppliers

CommoditySuppliers

Strategic

• Single or Sole Source• Technology Leader• High Switching Costs• High Capacity Utilization/Lead-times

• High NRE or program content• New suppliers• High Switching costs

• Require Quality Approval• Ability to meet functional specs

• Multiple Sources & Distribution• Safety Stock & VMI

Segmenting Suppliers for Prioritization and FocusSegmenting Suppliers for Prioritization and Focus

Key

Incr

easi

ng R

isk

Current Performance, Risk Management, Production Readiness

Risk Factors

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Supplier Mission Success Engagement Approach Depends on Type of Supplier:

Supplier Type Risk Factors Moog Engagement Supplier Engagement

Strategic

Partners

• Single or Sole Source• Technology Leader• High Switching Costs• High Capacity Utilization/Lead-

times

• Senior Mgt• Senior SC Mgt• Strategic Sourcing• Mission Success

• Senior Mgt Team• Mission Success

Key

Partners

• High NRE or program content• New suppliers• High Switching costs

• Senior SC Mgt• Strategic Sourcing• Mission Success

• Senior Mgt Team Member

• Operations Mgr• Quality Mgr

Commodity Suppliers

• Require Quality Approval• Ability to meet functional specs

• Buyer• SQA

• Senior Mgt Team Member

• Operations Mgr• Quality Mgr

Expendable Suppliers

• Multiple Sources & Distribution• Safety Stock & VMI

• Buyer• SQA

• Sales

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SC Mission Success – Supplier Performance - RCCA

• Suppliers are being encouraged to have a structured approach to the RCCA process and are assessed on their Corrective Action performance

• Corrective Action Metrics

G Problem Identified > Root Causes Identified > Effective Solutions > Verifiable Dates

Y Problem Identified > Root Causes Identified > Effective Solutions not clear and/or verifiable

R Root Causes not identified > No Effective Solutions

• We are focusing on event based problem solving methodologies to correct Delivery and Quality deficiencies

– Event based problem solving uses the cause and effect principle during analysis

It is more than Root Cause we are after, it is Effective Solutions

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SC Mission Success – Risk Management• Risk Management

– Starts during the design phase and continues into early production– A cooperative effort between Moog and our suppliers– Allows us to manage the sub-tier process in production by managing the risks

• Risk Categories:1. Contractual/Regulatory2. Program Management3. Purchased parts/assemblies4. Design5. Special Process

6. Materials7. Manufacturing8. Assembly & Test9. Shipping10. Installation

• The Metrics – Risk Management

Risk Identification not complete or high risk item identified and risk owner/risk mitigation plan or response plan is not in place or behind plan

R

Risk Identification complete, moderate to high risk items identified, risk owner and response plan in place

Y

Risk Identification complete, no moderate or high risk itemsG

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CategoryDev Qual Production

Comments

Contractual/Regulatory G G G Contractual requirements not in place. Low probability of schedule impact as contracts get put in place

Program ManagementR Y G New requirements putting risk on ITV/Qual schedule

DesignR R G

Design instability putting schedule at risk

Special Processes TBD TBD TBD Not fully assessed. XXXX to provide list of special processes and suppliers

Purchased Parts/Assemblies TBD TBD TBD Not fully assessed. XXXX to provide list of purchased parts, assemblies and suppliers

Materials TBD TBD TBD Not fully assessed. XXXX to provide list of materials and suppliers

ManufacturingG G R

New design driving new mfg processes. High probability of low production yield.

Assembly & TestG G R

Additional secondary operations may drive low production yield.

Shipping G G G No identified risks

Field Service G G GNo identified risks

SC Mission Success – Risk Management Example

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SC Mission Success – Production Readiness

• Production Readiness– Are processes in place and are they effective?– The Production Readiness process is designed to assure they are ready– Uses the Boeing Production Readiness tool as a guide

• Production Readiness Categories– Production Planning– Sub-tier Management– Manufacturing Tools and Processes

• The Metrics – Production Readiness

G Mature, effective processes in place delivering positive results

Y Processes in place, marginal results, needs attention

R Processes are not in place, no plan to improve or at risk of making plan

The challenge is recognizing processes that are not effective

– Facilities– Raw Material– People

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Supplier: XYZ

Category Requirement Status Rating Comments

1.0 Staffing -Manufacturing Engineering (Shop) 25 17 Y 55 Engineers on site 10/05 -Product Engineering (Assy. & Test) 8 5 Y 8 PE's on board by October via Internal promotions -Machinists 148 102 Y Recruitment underway to provide sufficient level to meet 2006 loading and beyond -Assy & Test Technicians 77 62 G 8 skilled and 7 jr machinists to be hired thru 7/05, 45 Aug-Sep. -Planners 6 6 G 4 increased to 6 for production control, training on schedule.

2.0 Manufacturing Equipment (Majors) - Milling Centers 10 7 G 7 here, 1 due by Aug, 1 more on order, 1 in cap plan. Devel hrdw capacity avail -Turning Centers 7 5 G 5 here, 1 due by Sep, 1 in cap plan. Devel hrdw capacity available -Screw Machines 5 3 Y 3 here,1 due Sep, 1 in cap plan. Devel hrdw capacity available

3.0 Assembly and Test Equipment -Test Stands & test fixtures 9 6 Y Final Designs / Specs awaited. Major items identified and capital authorized.

4.0 Facilities Domestic 50ksf 40ksf G Construction has started for a 20,000 sq.ft. addition, complete Dec 05 Offshore n/a n/a

5.0 Capacity Make - Manufacturing 137k 144k G Fab hours included in Capacity plan, including start up learning allowance - Assembly & Test 63k 68k G Build hours in Capacity plan. No OT in either capacity calc. 10% possible for surge Buy 90k 75k Y Supply base to be expanded to meet 2006 loading and beyond

6.0 "Go To Green" Status G C/A addresses Cause & Effect and provides an effective solution

7.0 Risk Management Status Y Risk response plan OK but significant impact if risk is not mitigated as expected

On planBehind Plan but will still be on timeAt risk

SC Mission Success – Production Readiness Example

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SC Mission Success Metrics - SummaryMetric Definitions

Current Performance

G Equal to or greater than 97%

Delivery Y 85% to 96.9%

R Less than 85%

G Equal to or greater than 99.9%

Quality Y 96.5% to 99.8%

R Less than 96.5%

G Problem Identified > Root Causes Identified > Effective Solutions > Verifiable Dates

Corrective Action Y Problem Identified > Root Causes Identified > Effective Solutions not clear and/or verifiable

R Root Causes not identified > No Effective Solutions

G Risk Identification complete, no moderate to high risk items

Risk Management Y Risk Identification complete, moderate to high risk items identified, risk owner and response plan in place

R Risk Identification not complete or high risk item identified and risk owner/risk mitigation plan or response plan is not in place or behind plan

Production Readiness

G Mature, effective processes in place delivering positive results

Y Processes in place, marginal results, needs attention

R Processes not in place, no plan to improve or at risk of making plan

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Supply Chain Mission Success

What Does It Take To Accomplish This?• Specialized Supply Chain Management Resources

• Focused Training

• Co-location With Program Teams

• Different Skill Set On the Team

• Increased Supplier Collaboration

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Virtual Factory

Develop Select Suppliers to Be Strategic Partners– Leverage our Customer Intimacy value proposition– Build long term relationships based on the Moog Culture– Sharing of Moog resources

PlanningPlanning

EngineeringSupport

EngineeringSupport LEAN & PVRLEAN & PVR

FactoryDesignFactoryDesign

SpecificCompetencySupport

SpecificCompetencySupport

TrueMoog / SupplierPartnerships

TrueMoog / SupplierPartnerships

Supplier IntimacySupplier Intimacy

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Virtual Factory - Objective

“Develop a new way of doing business with key suppliers”

Long-term relationship

Moog to support as “extension of our factory”

• Mfg Eng, Lean, Materials Mgmt, QA & QE

Create a cell dedicated to Moog parts in Supplier’s factory

Focus on each other’s core competency

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Strategic Perspectives in Supply Chain Management

Take Away’s

• The World Of Supply Chain Management Is

Changing To Meet NASA’s Future Requirements

• Supply Chain Management Is Key To Moog’s

Success In Supporting NASA

• Successful Management Of The Supply Chain

Requires Changing Roles And The Engagement Of

Multiple Functions

• It’s About Managing Change …

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The Probability of Success Improves …… When Seven Critical Elements Of Change

Are Aligned And Executed Against

= Successful Change

= Confusion

= Inertia

= Diffusion

= Frustration

= Fatigue

= Crawl

= Doubt

CompellingCase?

Clear Vision?

Well Defined Plan?

Adequate Resources?

Capabilities? Sufficient Motivation?

Effective Commun-ication?

Source unknown

supply chain management 1 strategic perspectives in supply chain management – october 28, 2008...

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