Component acquisition and single-source vendor management strategy in a defense application

• Main Author: Hammer, Lory (Lory Yeamans)
• Other Authors: Henry Marcus and Jonathan Byrnes.
• Format: Others
• Language: English
• Published: Massachusetts Institute of Technology 2009
• Subjects: Sloan School of Management.; Mechanical Engineering.; Leaders for Manufacturing Program.
• Online Access: http://hdl.handle.net/1721.1/50092

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Dept. of Mechanical Engineering; in conjunction with the Leaders for Manufacturing Program at MIT, 2009. === Includes bibliographical references (p. 51-52). === Building an aircraft carrier is one of the most complex manufacturing undertakings in the world. Each component must be designed, tested and manufactured to not only Northrop Grumman Shipbuilding's (NGSB) exceptionally high standards, but also to the standards, requirements and approvals of both the Navy and the US Federal Government. As a result of these standards and requirements, lead times for construction materials can exceed two years, while a similar component, purchased for industrial use may have a lead time of 90 days. To add to the complexity, the scheduled delivery date for the carrier is fixed, and compressed so that engineering design and construction must take place concurrently. In essence, the ship is under construction years before the design is complete. As a result of concurrent engineering, a complex procurement process and a limited vendor base, some material is chronically late to the Required-in-Yard (RIY) date, causing deviations from the optimal construction schedule and impacting the cost of the ship. This thesis analyzes the current CVN 78 valve purchasing process to identify opportunities to leverage the product model and existing process infrastructure to improve material delivery to schedule and decrease construction costs for CVN 79. It is the goal of this research to improve the supply chain to support the preferred construction schedule, while reducing cost and risk associated with component acquisition. This thesis begins with an analysis of the current supply chain system within NGSB New Carrier Construction. === (cont.) It then explores the current state of vendor relations between NGSB and the supply base. The cost impact for delaying construction due to delinquent valves is identified and presented. Then specific vendor management strategies are examined. This thesis proposes a framework for improving on-time delivery of the component and lowering overall supply chain cost by (1) pursuing strategic alliances with valve vendors, (2) providing greater visibility of demand earlier in the engineering design cycle and (3) using this visibility to drive procurement timing to improve delivery to scheduled need date. The thesis presents a case study in vendor collaboration and provides recommendations. Finally, it discusses the impact of applying the framework to similar components within the New Carrier Construction Program and the potential application of the framework to NGSB's other active programs and shipbuilding locations. === by Lory Hammer. === S.M. === M.B.A.