Sourcing Snapshot-Rockwell Collins P2P and Supplier Portal

Rockwell Collins is a growing company selling communications and avionics systems to both government and commercial customers with sales of over $4B. The company provides pilot controls to the flight deck of the new Boeing 787 Dreamliner.

In 2005, the material and supply operation at Rockwell Collins was already good enough to win Purchasing’s Medal of Professional Excellence. Not one to rest on his laurels, Roger Weiss, Vice President, Material and Supply, has taken steps to make the operation even more strategic, positioning it to play an even more important role in the company’s future growth. The role relies heavily on the success of its supply chain.

“We are truly dependent on our supply chain to make that happen, to continue to grow at the rate we’ve been growing,” says Weiss. “Programs driven by the government and commercial industry are forcing us to become more supply chain focused. We simply can’t do everything in-house.

Phil Krotz, Director of Lean Supply, says that all the key strategies the material and supply operation had in place when Rockwell Collins received Purchasing’s medal have served them well. The team’s efforts to lower inventory levels continue to be successful, he says. They’ve also reduced shortages by 30%, helping to ensure an ample supply of material to the company’s facilities across the U.S.

Automating procurement activities have helped offset business growth: Material and supply has not had to add resources in the past year. “We let our processes and systems do the tactical work,” he says.

In fact, the team now is concentrating its efforts on more strategic activities. For example, Kevin Meyers, Senior Director of Enterprise Sourcing, is working on the organization’s planning processes. “We believe that if we focus on our material planning processes up front that we will be able to reap further benefits in asset management and inventory, as well as have a more stable supply chain,” says Krotz. That involves more discipline and integration with the company’s marketing and sales organization.

Use of the material and supply team’s supplier portal, www.supplycollins.com, has increased from 25,000 visits per month a year ago to more than 40,000 today. More than 1,700 suppliers have signed on to use the portal, which encompasses more than 95% of the company’s direct spend.

The team has automated more than 75% of the company’s procure-to-pay process, resulting in another recognition: Rockwell Collins received the R. Gene Richter award for leadership and innovation in supply management in the technology category at the annual Institute for Supply Management conference in 2006.

The team also is more focused on containing costs and strategic sourcing. In an inflationary market with rising raw material and energy prices, they’ve been able to maintain and slightly decrease the company’s cost structure, Krotz says. They’ve taken a new approach to sourcing, now looking at, for example, an entire display system rather than a single component. “We establish teams to identify cost drivers within the system and work with our supply base to look at value engineering or other avenues that we could perform to lower our overall costs,” he says.

As Director of Lean Supply, one of Krotz’s responsibilities is supplier development. He’s taking the company’s lean initiatives a step further, by deploying Six Sigma techniques with suppliers. “With our lean tools, we’re creating flow and looking to reduce variability in those processes so there’s very little variation in, say, performance or size or parts as they are being produced.” This will help to further reduce costs.

The material and supply team has created a supplier dossier, or what Krotz calls a one-stop shop for supplier information. Developed for Rockwell Collins employees who work with suppliers, the dossier contains data gathered from www.supplycollins.com, the company’s SAP system and sup- plier information available through Dun & Bradstreet. Says Krotz, “The better informed you are when dealing with someone the better the result.”

They’re also developing a dashboard that displays performance metrics so that first thing on Monday morning Weiss can get a reading on the health of the business and determine what he and the team need to do to meet their commitments to the corporation. Now, quality and delivery metrics appear on the dashboard with inventory and purchase price variance mea- sures to be up and running shortly. The dashboard consists of three levels, with the first providing a summary of the four measures. Levels two and three provide a deeper dive into the data.

“The benefit is that now we are all looking at the same metrics, calculated in the same way, from the same data sources,” says Krotz. “In the past, we had to reconcile data and make sure that we pulled it in the same manner from each location. The dashboard is going to help us manage business-critical metrics on a more proactive basis.”

Source: Avery, S. (2006) “Rockwell Collins Builds on Success,” Purchasing, October 19.