General Dynamics, a $31 billion manufacturer of aerospace, combat, IT and marine systems, didn’t have problems with its supply chain. But management thought the company could do better.
“When [General Dynamics Mission Systems President Chris Marzilli] asked me to take on supply chain [realignment], it wasn’t that it was doing a bad job,” said Scotty Miller, vice president of supply chain management for General Dynamics Mission Systems (GDMS). “It operated a lot like a service organization and it did a pretty good job at that. We’re looking for more out of our supply chain—and we’re looking to drive more value out of the organization.”
That’s a daunting task. Half of General Dynamics’ overall revenue flows through its supply chain. It has 5,000 suppliers worldwide. General Dynamics’ goal is an end-to-end supply chain solution encompassing all functional departments, including engineering, finance, human resources and manufacturing. “We’re all aligned along the same unity of vision,” Miller said, “and that is to drive value for our customers and our shareholders. We’re looking at [the supply chain] as a holistic organization.”
Miller directs procurement activities for all companies within the General Dynamics Information Systems and Technology business group. The company procures items ranging from microprocessors to fully integrated subsystems. It easily spends hundreds of millions of dollars on components, materials and subsystems.
The project had several factors working in its favor right away. It has complete management buy-in from the top down. General Dynamics is willing to take its time developing a long-term solution. The company also recognizes its core competency is not supply-chain evaluation. Research and consulting firm Gartner was brought in. “One of the first things we did was assess our level of maturity relative to top performers,” Miller said. The company also surveyed its own supply base. “Our ‘voice of the supplier’ effort was educational and it provided information on ways we could do thing better. Organizationally we did well but there are areas in which we can do better. We got some feedback on our cost of doing business compared with our competitors; how often we change our purchasing requirements; and how we ask for the same thing 10 different ways,” Miller said.
Two years into the four-year effort, the process is yielding results. Departments that aren’t directly involved with the supply chain see the value of the realignment. “Once the various lines of business see what we’re trying to achieve it’s really not that hard to get their support,” Miller said. The company made a point of tapping into a wide range of talent. “We wanted to make sure we brought in the best people, so it’s not just supply chain: it’s engineering, financial and manufacturing talent. A diversity of thinking will make us better,” Miller said.
Still, General Dynamics is a big organization with four major lines of business. Miller broke things down into manageable segments. “I’d say we are managing this like eight mini-projects, each working toward a better organization.”
To date, the company has:
- Reorganized procurement: Integrated the direct and indirect procurement teams to remove barriers and leverage staff; and restructured into commodity teams to better manage suppliers and leverage the spend within a commodity.
- Aligned the supply chain team to meet business goals: A supply chain finance team ensures savings and costs are well understood and communicated; a strategy and capture team targets new business; and the unified subcontract team works across the legacy AIS & C4S organizations.
- Focused projects to improve performance: This includes supplier segmentation and supplier relationship management; program monitor and control; common tools and data management; a preferred parts & supplier list; rotational assignments; updated job descriptions and expectations.
- Implemented a supply chain center of excellence: Assigned COE to implement strategic actions to improve the supply chain impact to the business and capability maturity, and to ensure: the integrated supply chain organization is collaborating across the business; total cost of ownership is evaluated; spend across General Dynamics’ Mission Systems is leveraged and working with the cross functional team to optimize value to the customer and the business.
General Dynamics has bumped up against a problem common to many established manufacturers—digitizing its supply chain. Collecting and analyzing data is the foundation of a seamless and effective digital supply chain. “To be honest, we are getting more up to speed on the applications of digital technology,” Miller said. “We have all the data and the information that we need. We don’t yet have the tools and analytics for predictive analysis that moves us toward corrective solutions. It is a high priority of mine to get in place data analytics and understand the value of data visibility to us and to our suppliers.”
Toward that end, Miller is assessing cloud-based supply chain platforms that are easy to use. Suppliers’ ability to integrate with GD’s system is essential. “IT [hardware] is always changing,” Miller said, “and we are always integrating tools [into the supply chain.] There’s nothing inexpensive about a supply chain realignment. However, there are several cloud-based solutions that are easily available that meet all our needs.”
The biggest challenge, Miller said, is keeping the various departments focused on the supply chain as they manage their own organizational responsibilities. “You have to keep everybody committed and always moving forward,” Miller said. “Everybody’s doing their day-to-day jobs.”
He also recommends patience. “Don’t do too much too fast,” Miller said. “You need a high level of commitment and you have to make sure your team stays focused on the end-game. If it doesn’t, the project will go off the rails.”
Miller will be presenting February 7 at the ECIA Regional Series in Phoenix at the Hilton Scottsdale Resort & Villas. Gerry Fay of Avnet Electronics Marketing is a featured speaker as is Tushar Nandwana of One Beacon Technology Insurance.
The Regional Series Events explore industry issues at the local level and feature experts on topics of interest. Registration information is available through the ECIA.