lockheed martin aeronautics company sustainment partnering: a value added strategy bill anderson...
TRANSCRIPT
Lockheed Martin Aeronautics Company
Sustainment Partnering: A Value Added Strategy
Bill Anderson
Vice President, Customer Support
Lockheed Martin Aeronautics Company
March 2, 2004
Lockheed Martin Aeronautics Company
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
Lockheed Martin Aeronautics Company 4
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
Lockheed Martin Aeronautics Company 5
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
Lockheed Martin Aeronautics Company 6
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
Lockheed Martin Aeronautics Company 7
… … 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
Lockheed Martin Aeronautics Company 8
… … 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
Lockheed Martin Aeronautics Company 9
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 . . .
Lockheed Martin Aeronautics Company 10
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
Lockheed Martin Aeronautics Company 11
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.
Lockheed Martin Aeronautics Company 12
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
Lockheed Martin Aeronautics Company 13
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
Strategic Supplier AllianceStrategic Supplier Alliance
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
Lockheed Martin Aeronautics Company 14
Strategic Supplier Alliance
Strategic Supplier AllianceStrategic 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
Lockheed Martin Aeronautics Company 15
F/A-22 Weapon System Partnering Charter
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
Duration: Not time limitedDuration: Not time limited
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
F/A-22 Weapon System Partnering Charter
Lockheed Martin Aeronautics Company 16
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
Lockheed Martin Aeronautics Company 17
C-130J Direct Sales Agreement
Participants: WR-ALC & LM Participants: WR-ALC & LM (C-130J Program)(C-130J Program)
Duration: Not time limitedDuration: Not time limited
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
Lockheed Martin Aeronautics Company 18
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