Strategic Perspectives in Supply Chain Management

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Strategic Perspectives in Supply Chain
Management October 28, 2008
Craig Sando
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Supply Chain Management

• Agenda
• Moogs Role in Space
• Key Supply Chain Challenges
• Changes in Approach Strategy
• Supply Chain Mission Success
• Virtual Factory

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Moogs Support of NASA Space Programs
100 Mission Success
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Moog Technologies Products - Precision Motion
Control

• Actuation

Electromechanical TVC System Components
Solar Array Drive
Hydraulic TVC System Components
Antenna Pointing
Propulsion Controls
Thruster and Latch Valves
Hydrazine Propulsion Systems
Subsystems
SoftRide Passive Vibration Suppression
Reaction Mass Actuator Active Vibration
Suppression
Vibration Controls
Electronic Control Units for Electromagnetic
Actuators
Command Data Interface Unit for Ares I Upper Stage
Avionics
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Moog 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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Supply Chain Strategy - Key Initiatives

• Transition the organization
• From Purchasingto Procurementto 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

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Supply Chain Strategy - Key Initiatives

• Transition the organization
• From Purchasingto Procurementto 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

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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
• Supplier Performance
• Delivery and quality performance
• Raised expectations
• RCCAs to meet these expectations
• Risk Management
• Identify the risks
• Plan for high risk, high impact events
• Eliminate, mitigate or have a response plan
• Production Readiness
• Confirming we are ready

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Supplier Segmentation - Mission Success -
Engagement Criteria

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

Risk Factors
Strategic

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

Key
Increasing Risk
Commodity Suppliers

• Require Quality Approval
• Ability to meet functional specs

• Multiple Sources Distribution
• Safety Stock VMI

Expendable Suppliers
Segmenting Suppliers for Prioritization and Focus
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Supplier Mission Success Engagement

• Approach Depends on Type of Supplier

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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

• 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

• Contractual/Regulatory
• Program Management
• Purchased parts/assemblies
• Design
• Special Process

• Materials
• Manufacturing
• Assembly Test
• Shipping
• Installation

• The Metrics Risk Management

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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

• Facilities
• Raw Material
• People

The challenge is recognizing processes that are
not effective
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SC Mission Success Production Readiness Example
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SC Mission Success Metrics - Summary
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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

Supplier 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
  Suppliers factory
• Focus on each others core competency

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Strategic Perspectives in Supply Chain Management

• Take Aways
• The World Of Supply Chain Management Is Changing
  To Meet NASAs Future Requirements
• Supply Chain Management Is Key To Moogs Success
  In Supporting NASA
• Successful Management Of The Supply Chain
  Requires Changing Roles And The Engagement Of
  Multiple Functions
• Its 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
Inertia
Confusion
Diffusion
Frustration
Fatigue
Crawl
Doubt
Source unknown