An Integrated Approach Supplier ManagementAn Integrated Approach Supplier Management ... fAvoiding...

© UGS Corp. 2005. All rights reserved.

An Integrated Approach Supplier ManagementFocus on Technology Supplier Collaboration for Innovation in 21st Century ManufacturingRaj Khoshoo


Topics Digital transformationDigital transformation

Digital maturity for supplier relationshipDigital maturity for supplier relationship

Collaboration technology used in PLMCollaboration technology used in PLM

Integrated SRMIntegrated SRM

Contrasting SRM systems approachesContrasting SRM systems approaches

Integration of collaboration with SRMIntegration of collaboration with SRM


Digital Transformation

Digital transformation is the ability to understand what business trends and technologies are at hand that can be of great value to a corporation, and then to have a systemic and rapid way of adopting those trends, building them into a sustainable business model and making competitive use of them.

Three principles used to determine whether a capability is a good choice for digital transformation

The capability must be more attractive in digital form.Potential must exist to leverage the capability beyond existing company boundaries.The target business model must be strategically attractive.

(“The Digital Springboard” by Gillis Jonk and Bruce Klassen)


A sound indicator of the digital potential is to look at the entire spectrum of customer’ supplier management initiatives generalized over broad categories of sourced systems/parts

System & parts suppliers(bulk of

suppliers)

co-development partners

(small numberof suppliers)

Catalog &

indirect

Current practice

Bestpractice

Nextpractice

future

DigitalMaturity

SupplierRelationship

“hands off”

“earlyinvolvement”

“mutual dependency”

“strategic”


We see a mix of digital, services, consulting and custom software development initiatives in the industry

System & parts suppliers(bulk of

suppliers)



Catalog &

indirect

SupplierRelationship

“hands off”

“earlyinvolvement”

“mutual dependency”

“strategic”

DigitalCapability

Based Sourcing

Digital Rfx And Auctions

Specifications Thrown Over The

Wall

IP segmentation

digital integration

Co-designed systems

Digital Interoperability

Global SourcingNetworks

Trading Exchanges

& BPO

B2B Digitization

For Transaction Processing

Volume Consolidation

&Best Price

Specification, Change, Cost &

RiskManagement

Current practice

Bestpractice

Nextpractice

future

DigitalMaturity


PLM provides heavy lifting digital product and process development capability



IP segmentation

Digital integration

Co-designed systems

Digital Interoperability

Suppliers collaborate with their customers to provide information early in the design cycle to integrate the digital product definition

Suppliers collaborate with their customers to concurrently develop systems

Suppliers collaborate with their customers to concurrently develop specifications and IP


Digital Integration ILLUSTRATIVE


Digital Integration ILLUSTRATIVE

Service

Costing

GLOBAL INNOVATION NETWORK

Sourcing

Mfg

4 million PLM seats use JT around the world everyday


Co designed systems ILLUSTRATIVE


IP development ILLUSTRATIVE


Conventional Takeoff and Landing Variant (CTOL)

Short Takeoff Vertical Landing Variant (STOVL)

Carrier Variant (CV)

JSF: One Program - - Three VariantsMeeting Service Needs


Integrated Digital Environment

Integrated, Inactive, Associative, Web-based, Synchronized & Secure

Prod Str = Product Structure


Instant World-Wide Collaboration

Major Partners…


Instant World-Wide Collaboration


United StatesCanada United Kingdom Denmark

Australia

Netherlands

Norway

Martin Baker

Rolls-Royce

BAE SYSTEMS

Smith Industires

CytecFiberite

Honeywell/Normalair

Garrett LTD

Aermacchi

Alenia Aerea

Mecaer

Datamat

Maersk Data

Piaggio Aero

Italy

GKN Aerospace

Turkey

Fokker-Elmo

Fokker-Aerostructure

NGHoneywell

Rockwell Collins

General Electric

LM Aero – Ft Worth

Harris Corp

LM Aero

-

Litton Amecom

Moog

LM AeroPalmdale

-

Kaiser

NG ESSS

L3Communications

TRW Avionics

Parker Aerospace

Cytec

Fiberite

United Technologies

LMNTS

EDO

TRW Aeronautic

System

Wright

VSIMoog Hexcel

Hamilton SundstrandRolls Royce Allison

BAE SYSTEMS Controls

Eaton

Goodrich

Marion Composites

Smiths Industries

Smith Industries, M&T, Visioneering

Goodrich

Weber

LogiconInfo Sys

Logicon Adv Tech

McCook Metals

Wyman Gordon

LMNE & SS

NASA

Ames

Applied Research

NASA LangleyRMI

Research

Veridian

Boeing Company

Progressive

H.M. Dunn

HI /CAT

Alliant Tech

AdvanceTool & Die

LMALC

Info Sys

Litton

J.C. Carter

Goodrich Aerospace Hq

LMSI

United TechnologiesNASA Glenn

Alcoa

Pilkington

Sandia Labs

General Electric

Harris Corp

LMInformation Systems

LM Aero

-

Marietta

Litton

Amecom

BAE SYSTEMS

LM Missiles &Fire Control

NG ESSS

L3Communications

Cytec

Fiberite United Technologies

EDO

TRW Aeronautical System

Curtiss

BAE SYSTEMS Controls

Eaton

Marion Composites

Smiths IndustriesGoodrich

Wyman Gordon

AEDC

Applied Research

NASA Langley

RMI

Bihrle Applied

Research

Veridian

LMMannedSpaceSystem

Advance Tool & Die

LogiconInfo Sy

LMSI

United Technologies

NASA Glenn

Global Network of Suppliers…

Lockheed Martin Aeronautics Company

LockheedLockheed--led Global Military Coalitionled Global Military Coalition

UGS Teamcenter provides a capability that does these things:UGS Teamcenter provides a capability that does these things:•• The Master Digital ThreadThe Master Digital Thread…… from Concept through Sustainmentfrom Concept through Sustainment•• Collaboration & workflows worldCollaboration & workflows world--wide, enabling a Virtual Programwide, enabling a Virtual Program•• ITAR Capability to control exports/data securityITAR Capability to control exports/data security•• MultiMulti--CAD Product data & structure managed in a single systemCAD Product data & structure managed in a single system•• Config Mgmt performed throughout the Product Life CycleConfig Mgmt performed throughout the Product Life Cycle•• SignificantSignificant savings over traditional programssavings over traditional programs


PLM software provides flexibility in implementing global development business rules

Centralized, distributed, federated,…Secure supplier access to data segmented by “need to know”basisSupplier hubs can be placed in the DMZ depending on customers requirementDistributed architecture can be implemented to reflect design partitions of the productStandards can be local or global or both


Before Global Outsourcing

Design In House

Simple Supply Chain

Engineering

Design

BOM Change Request

ManufacturingSite B

ManufacturingSite A

Design


Global Outsourcing

Sourcing Team On Critical Path

Globally Distributed Supply Chain

Complex Collaborative Processes

BOM Change Request

Product Development

Design

Purchasing

SourcingData

Supplier A

Supplier B

ManufacturingSite B

ManufacturingSite A

RFQ

UpdatedCosts

DesignReview

RecyclingReq.

TrackIssues

Design

TimeCost ManagementProfit

Tier 2 Supplier CSupplier C


Keys To Effective Sourcing

Complete SRM Solution

Integrated with Product Development

Supplier Collaboration

BOM Change Request

Product Development

Design

Purchasing

SourcingData

Supplier A

Supplier B

Supplier C

ManufacturingSite B

ManufacturingSite A

RFxSpecs

UpdatedCosts

DesignReview

RecyclingReq.

TrackIssues


Typical Collaborative Global Supply Chain

1,200 buyers in 12+ countries

40,000 to 60,000 suppliers worldwide

BuyerBuyer

BuyerBuyer

BuyerBuyer

BuyerBuyer


Integrated SourcingThe Need

• Which parts on this CR have been sourced?

• How much will this change impact my program cost?

Product Development

Procurement

• Why does this part need to be re-sourced?

• Where is the design spec?• Please don’t ask me to re-key this info into an RFQ!


Integrated SourcingBringing Purchasing into Product Development Processes

Sup

plie

rsP

urch

asin

gP

rodu

ctD

evel

opm

ent

QuoteTask

Review /ModifyRFQ

MonitorEvent

PostEvent

ReceiveRFQ’s Evaluate

CreateCR

Create/ GenerateBid Pkg

Review &Respond to

RFQ

Review &Respond to

RFQ

Review &Respond to

RFQ

Quote TaskComplete

AcceptQuoteTask

Task Assignment with Bid Package

Award Recommendation


Integrated SourcingValue of Process Improvement

0 20 40 60 80 100

Integrated

CurrentInitiate Change Request

Change Impact Analysis

Develop Sourcing Strategy

RFQ Prep

Initiate RFQ

RFQ Collaboration

RFQ Response

Analyze Responses

Negotiate

Award Contract

Change ImpactAnalysis

+ RFQ Prep

+ RFQCollaboration = >50% of Cycle Time

•Reduced Time to Process Change Requests•Improved Cost Management


Integrated SourcingValue of OEM and Partner Collaboration

As the OEM drives higher content from the suppliers, the cost ofcollaboration and coordination rises while improving affordability as long as both are collaborating and iterating to an optimum specification complexity

• UGS has integrated the proven and scalable Teamcenter collaboration and Program management technology with the eSourcing Tools


Integrated SourcingValue of Improved Purchasing Productivity

Less time on repetitive manual tasks

More time for strategic supplier management

30%

Tactical Transactions

Strategic Supplier Mgt.

30%

0% 20% 40% 60% 80% 100%

Electronic

Manual

% Sourcing Pro's Time on Strategic Activities

Tactical TransactionsStrategic Supplier Mgt.


Contract Mgmt.

Req. to pay Finance

The UGS Integrated SRM suite

RFX and Surveys SpendNegotiate Supplier

Mgmt.SupplierQuality

Reports &Analytics

Program Management

Product & ProcessData

CAD

Program Mgmt.RequirementsChange Mgmt.

Process planningDesign Mgmt.

Release mgmt.Doc mgmt.

Commodity, Category and Industry best practices

(Doc mgmt., Routing, visualization, Office collaboration, conferencing, Alerts, Issue tracking, , reports and dashboards)

Alliances and

Category Solutions

CAE CAM

Sourcing Databasee.g. PLM item references, Tooling, Changes, events, spend, suppliers, awards,

customer extensions


Systems covering supplier management….extending PLM systems

PLMERP eProcurement

&Trading

exchanges

PLM systems successfully manage the co-design relationship today

Extending this capability by integrating strategic sourcing tools provides significant value:

Avoiding errors which are discovered later in the lifecycle by managing the entire lifecycle including day to day changes

Taking full advantage of the supplier innovation

Bringing the supplier selection, on-boarding early on the product development process by linking the specifications to the category/supplier structure

Enabling supplier quality / performance to be linked to supplier capability


Systems covering supplier management….extending ERP systems

Extending ERP and other indirect Sourcing systems to handle engineered systems/parts has the advantage of:

Integration with business data warehouse, R2P and contract management

In some cases of engineered goods, particularly in the domain of“order to re-order” business process, this approach may be suitable

PLMERP eProcurement

&Trading

exchanges


Systems covering supplier management…. Should SRM be an independent system in the middle?

Having another backbone system for Sourcing is not a long term viable proposition

The coverage of such systems today is limited, with little or no interfaces with PLM and ERP systems and will end up maintaining costly integrations

Specialty “open” applications will evolve in this space

which will need to be integrated into the backbone systems.

Specific capability based category solutions (e.g. Vykor) are a great example of this trend


Two distinct directions for digital sourcing

Transaction based systems Model based systems

Centralized monoliths Distributed architecture



Evolved from Finance, HR Evolved from product development

Flat BOM based Product structure based





The technical basis of collaboration is EDI

Collaboration and change management is integral







Understanding of People, BOM, payables and

receivables

Understanding of parts, systems and assemblies at a model level








receivables


Integration of contract management and R2P Integration of ME/EE/SW








receivables



Link supplier to its delivery? Link supplier capability and quality to specification








receivables




Expensive to customize, maintain and extend

Model based approach lends itself to easy on-site extensions








receivables




Expensive to customize, maintain and extend

Model based approach lends itself to easy on-site extensions


Summarizing the two approaches


Next generation Sourcing is based on 6 key technologies

Quality driven improvements

Analytics and lifecycle cost

PLM integration and change

management

ProgramManagement & collaboration

Supplier capability & risk

model

eSourcing Tools integration

+ OPEN ARCHITECTURE


Program Management & Collaboration

One window avi






management



model


+ OPEN ARCHITECTURE


Summary

Digital transformationUnderstanding what business trends and technologies are at hand that can be of great value to a corporation and then to have systemic and rapid way of accepting those trends, building then into a sustainable business model and making competitive use of them.

Digital maturity for supplier relationshipKey to understanding your business environment…and your understanding next step

Collaboration technology used in PLM – Instant World-wide CollaborationPLM software provides flexibility in implementing global collaboration...which is required!

Integrated SRMIntegrated SRM, with PLM, for maximum data re-use, process automation, sharing, and collaboration with your suppliers.

Contrasting SRM systems approachesThe integration from PLM offers critical advantages…takes full advantage of the supplier innovation, capability, and performance…integrated with the supplier database

Integration of collaboration with SRMThe full suit of integrated tools are required to receive maximum value.

To be continued….






management



model


+ OPEN ARCHITECTURE

Next Presentation


Analytics in Supplier Relationship ManagementFocus on Technology Analytics in Supplier Relationship Management Raj Khoshoo


Next generation Sourcing is based on 6 key technologies with analytics occupying a key role




management



model


+ OPEN ARCHITECTURE


Market AssessmentConcept Development

Product DesignRFX

Analytics, Negotiation, awardDesign Collaboration

Release to Mfg.

OEM xProgram y


Product DesignRFX


Release to Mfg.

OEM xProgram 1


Product DesignRFX


Release to Mfg.

OEM 1Program n


Product DesignRFX


Release to Mfg.

OEM 1Program 1

Supplier structure with capability is the basis of next generation sourcing






management



model


+ OPEN ARCHITECTURE


Enabling the next generation of savings….good data basis is needed for decision making……. data needs to be aggregated from multiple sources

A B C D E F G H I

Supplier Files

WebSitesData

Bases WebSites

PriorActivities

Employee Paper Files

A B C D E F G H IA B C D E F G H I

ManualData

Collection

Traditional Approach Technology-Based Approach

A B C D E F G H I

A B C D E F G H IA B C D E F G H I

Data Warehouse

Quality, SCARS, Warranty,..

ANALYTICS

Performance

Supplier structure, capability, capacity, spend, specifications,

events,..

SRM

BOM, Change History, forward and backward references, EBOM/MBOM comparison, associated models and drawing, requirement specs, sourced

parts

PDM

Inventory by revision level, lot size, target cost, target volumes,

production usage, MRO consumptions

ERP


The Case for Advanced Analytics - Optimization






management



model


+ OPEN ARCHITECTURE


Visual Analytics – Supplier Quality

Short avi of GF


Visual Analytics – Supplier Scorecard


Visual Analytics – Sourcing Dashboard


SummaryDigital transformationDigital transformation






Summary

“ the sourcing diamond” (AT Kearney)






management



model


+ OPEN ARCHITECTURE

An Integrated Approach Supplier ManagementAn Integrated Approach Supplier Management ... fAvoiding...

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