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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 ®
®
®
®
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