After a century of innovation, Lockheed Martin continues to help its customers solve challenges today. The company remains focused on finding breakthroughs in everything from clean energy and advanced materials to robotics and big data technologies.
“We feel it is our responsibility to shape and mold where the industry should be, and we take a leadership role within our industry to do that,” says Dan Pleshko, vice president of global supply chain.
A global security and aerospace company, Lockheed Martin is mostly engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The company is headquartered in Bethesda, Md.
As a leader in the industry, Lockheed Martin serves both domestic and international customers with products and services that have defense, civil, and commercial applications. Its main customers are agencies of the U.S. government. In 2012, 82 percent of the company’s net sales were from the U.S. government, 17 percent were from international customers and one percent was from U.S. commercial and other customers.
“Our customers define quality though mission assurance,” Pleshko says. “When products work every time the way they’re supposed to, we don’t have returns, we don’t have issues and the products get to the mission operators and have 100 percent mission success.”
Steps on the Path
Over the past few years, the Lockheed Martin global supply chain has been on a journey to make its current systems more capable and ensure that future systems are more affordable over the long term. The company’s global supply chain has more than 4,000 supply chain employees and includes 29,000 suppliers and $26 billion in spend. In fact, two-thirds of Lockheed Martin’s costs reside with its supply chain.
“Collectively with our suppliers, we’ve been working to identify where the value points are and how to optimize the overall supply chain,” Pleshko says. “Lockheed Martin has a relentless focus on affordability, quality and performance. Our ongoing focus on program execution, affordability and quality will help us to stay competitive, responsive and reliable for our customers.”
The company strives to have intimate knowledge of the overall supply chain and the value that it brings. Lockheed Martin understands the composite of its 29,000 global suppliers and how they are interconnected.
“It is a complex supply web,” Pleshko says. “We are driven by a mission to make strategic business decisions that shape and architect the multi-tier supply chain to produce value creation and mission success, through program execution, affordability, quality and securing the supply chain [PEAQS]. We continue to work with our customers to assure they get the best product for the right price, exactly when they need it.”
The PEAQS program is one of the key methods Lockheed Martin is using to drive performance excellence with its top suppliers through enterprise collaboration on shared objectives. The company has engaged its top-15 suppliers on its top 20 programs representing over 55 percent of its annual procurement base on PEAQS. The strategy includes conducting formal, structured engagements between Lockheed Martin and PEAQS supplier senior management to review current performance metrics and drivers and develop mitigation plans and measures for continuous improvement of performance.
“To date, we are exceeding our commitments to deliver affordability on our top programs through this strategy,” Pleshko says. “We continue to mature this process and expand it beyond our top-15 suppliers to our major commodity providers through coordinated category management teams at the enterprise level.”
Working as a Team
Lockheed Martin ensures a fully integrated approach to supply chain management through its category teams, which work with the business area program and design teams to assure what it is designing at the very beginning of each program can be supported throughout the full lifecycle. It is about optimizing inventory strategies and flow of materials to drive affordability.
“We identify where the value propositions are and design how to work the flow of materials to optimize affordability for our customers,” Pleshko says.
Lockheed Martin is on a path with its supply chain that is focused on continuing to provide more efficient, affordable solutions and still maintaining 100 percent quality. Among the many supply chain-related business challenges the company faces are very long lifecycles.
“We are not in a fast-moving consumer lifecycle,” Pleshko says. “We have to sustain product for, in many cases, decades and continue to support those products in the field all over the world. That’s very different than most other industries.”
The company is also expanding all over the world. In fact, it launched Lockheed Martin International earlier this year.
“Not only are we busy with our domestic presence and activity, we have an ever-expanding international footprint to achieve success on a global scale,” Pleshko says.
In addition, Lockheed Martin is adapting to the ways its customers are now thinking about how to address major issues like clean energy, clean water, sustainability and climate change.
“We are exploring the far reaches of the universe and expanding the boundaries of human knowledge in our quest for innovative solutions that make life better for people around the world,” Pleshko says.
Investing in the Future
To help ensure success, the company is investing in technology. Pleshko says 80 to 85 percent of supply chain costs get determined by which technologies and designs the company selects, making technology absolutely integral to success.
“You have to choose technologies and designs that are affordable and meet the requirements and expectations of the customer,” he says. “Innovation, which traditionally has been used inside the corporation for capability enhancement, is now being used for affordability enhancement.”
Lockheed Martin is also investing in relationships with suppliers and service providers, as well as in employees. It sees suppliers as critical to innovation and executing on PEAQS. Service providers are helping the company streamline operations and improve business processes. With employees, the company offers comprehensive training, whether virtual, classroom or on-the-job, and it has a supply chain leadership institute and an operations leadership development program.
Lockheed Martin understands that the global security environment has become more complex and the global financial outlook remains turbulent. The company says it is developing technologies that are more dependable, versatile and affordable, and it is shaping the future of emerging technology arenas. The company believes investing in those areas now can help customers stay one step ahead of a rapidly changing technology curve.
“We’re proud to bring decades of relevant experience and the innovative minds of our people to help solve the challenges of tomorrow, today,” Pleshko says. “Being a leader in this industry means never resting on our laurels. It also means embracing a philosophy of continuous improvement.”