Breakout Session 904 Dr. David N. Burt, Ph.D Program Director, SCMI, U. of San Diego

1. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

2. Development of a Professional Certification Program Across an Internal Supply Chain: A Case Study Breakout Session 904 Dr. David N. Burt, Ph.D Program Director, SCMI, U. of San Diego James Reeds, CPCM, CPM Project Director, SCMI, U of San Diego April 26, 2004 4:30 p.m. – 5:30 p.m. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

3. Mr. Robert B. Westerman, Senior Supply Chain Manager Raytheon Missile Systems, Tucson, Arizona Mr. William P. Forbes, Procurement Manager Raytheon Integrated Defense Systems, Andover, Massachusetts Ms. Sandra L. Holliday, Programs Operations Manager RaytheonSpace and Airborne Systems, El Segundo, California Ms. Ellen R. Lux, Texas e-Supply Chain Manager Raytheon Space and Airborne Systems, Plano, Texas Breakout Session 904Raytheon Presenters NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

4. Agenda • The MPM Certification Project • Team Charter Model & Mission Statement • The Case for Creating a MPM Certification Program • Benchmarking • The Goal: Progression to World Class • Benefits of Implementing a MPM Certification Program • Financial Benefits • Change Management • The MPM Certification Model • Lessons Learned, Risks, Feedback • Q & A NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

5. The Material Program Manager (MPM) Certification Project This Certification Project targeted a critical supply chain management role: The MPM What is a MPM? • A Bridge which links the Program IPT to SCM • Leads/Facilitates SCM Activities w/Program IPT • Ensures all SCM issues are resolved w/Prog IPT NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

6. Team Charter Model Used to Create Project Foundation NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

7. Mission Statement The MPM Certification Team will provide a formal standardized MPM Certification Program across the company supply chain so MPMs can deploy world class supply chain core competencies: • In Capturing new business • Executing existing commitments • Exceeding customer expectations NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

8. 30% Responding Felt MPMs Did Not Receive Sufficient MPM Training The Case for Creating A MPM Certification Program MPM/CustomerSurvey 43% Felt They Did Not Receive Sufficient MPM Training MPM Responses Customer Responses 87% MPM and 85% Customer Support For A MPM Certification Program Hypothesis: Investing in learning and growing of our Supply Chain talent will improve the bottom line NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

9. Benchmarking/Company Best Practices • Benchmarking Forums • Advanced Benchmarking Group • Global Benchmarking Council • High Tech Benchmarking Forum • Supply Chain Related Benchmarking/Best Practices • Boeing Supplier Management Proficiency Program Curriculum • John Deere Industrial Training Program • Raytheon Program Management Certification • Institute for Supply Management (formally, NAPM) • APICS - The Educational Society for Resource Management • Other Certification Programs • Teacher Certifications (TX, CA, MA, AZ) • Project Management Institute • FAA NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

10. Visualize The Goal: Progression to World Class World Class Proactive Mechanical Clerical NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

11. What Is The Value Proposition? • Upgrade skills & talent of the SCM experts closest to the customer • Improve robustness of material program strategies • Invest in the talent pool as a competitive discriminator • Untap the human potential & the opportunities are endless NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

12. Benefits of Implementing a MPM Certification Program • An MPM Certification Program Enables Competent & Skilled Resources • Certification Provides Greater Professional Credibility to the MPM Role and to SCM • Certification Distinguishes the Role of MPM in the SCM Community & Beyond • Material Program Managers are Valued, Core Members of Integrated Product Teams • Accomplished and Skilled MPMs Provide a Uniform Foundation of Customer Service • Establish Uniform Training Foundation Across Sites for the MPM Role • Facilitates the Development Path for the MPM • Certified MPMs will Result in Greater Confidence and Improved Credibility • Improve SCM Image with Internal and External Customers NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

13. Financial Benefits • A trained MPM will improve a program’s bottom line: • Reduce Material costs - Strategic Material Plan • Reduce working capital - Process Improvements • Cost avoidance – Experience, Networking & Knowledge Sharing • Level 1 savings - short term Material Strategy • Level 2 savings - 1 to 2 years Process Related • Level 3 savings - 2 - 4 years Job Satisfaction NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

14. Force Field Analysis Forces for Change Forces for Maintaining Status Quo One-Company Vision Unique Requirements Enterprise Savings Customer “Ownership” Customer Support Fear of Change Need for Skills Limited Time Better Retention Process Familiarity Overall Performance Sub-cultures Current Level of Performance Higher Level of Performance NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

15. MPM Certification ProjectChange Management Model April 26–28, 2004Renaissance Orlando Resort at Seaworld Orlando, FL NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World” NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World” 15

16. Change Management Steps • Identify the Problem – Two concerns: lack of training and lack of a standardized process. • Consult with Experts –Raytheon Learning Institute, the SCM Steering Committee, and USD. • Data Gathering and Preliminary Diagnosis–The preliminary diagnosis was originally conducted by Supply Chain senior managementthen later reviewed and confirmed by the team. Extensive benchmarking was performed to expand the scope of data and overall understanding of the concerns. • Joint Diagnosis– Feedback and surveys clearly supported a new training process. 43% of the MPM’s and 30% of the customers responded that MPM have received insufficient training. The joint diagnosis was made by the team representing MPM’s from the four major sites, the SCM Steering committee, and the SCM Leadership Council. • Joint Action Planning – Action planning required meeting stakeholders on a regular basis. Several different communication methods were deployed: telephone conferences, face-to-face monthly meetings with the team and SCM Steering Committee, and USD presentations in San Diego. • Action– The action was to create a MPM Certification Program. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

17. Institutionalizing the Change • Organization Characteristics • Congruence – MPM Certification is congruent with SCM desire to elevate the stature of SCM at Raytheon • Stability of Environment and Technology – Company restructuring and changes in SCM leadership. New program starts required new MPM resources and services. • Intervention Characteristics • Goal Specificity– The primary goal of the MPM Certification Project is 100% of MPMs trained and certified across Raytheon • Level of Change Target- Change is targeted at three levels, individual level (MPM), Business Unit level and Corporate level • Internal Support- Raytheon Learning Institute, The Supply Chain Management Institute and the SCM Steering Committee. • Sponsorship- Team has executive sponsorship in the support of VP of SCM SAS, and the Raytheon Corporate VP of SCM. Site Owners by business unit have been identified to take ownership of local deployment and play their part in curriculum maintenance. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

18. Based On Core Competencies – A program of Self-Paced Classes Pre- Requisites Phase I Provides the “Basics” Of The MPM Role – Turn Key 3 Day Program MPM Fundamentals “Subject Matter Experts” Provides Advanced “In-Depth” Skills – An Enterprisal 3 Day Program Phase II Intensive Enterprise Training “The Big Picture” Phase III Demonstrates Skills – Mentor Environment / Savings Benefit Execution & Demonstration Phase IV Certification Continued Learning Material Program Manager (MPM)Certification Model The Material Program Manager (MPM) Certification Project goal is to design and implement a certification program for all MPMs that will promote “One Company” standardized MPM training and common processes that will result in increased knowledge, skills and customer satisfaction through demonstration of applied learning. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

19. Areas Requiring Risk Management • Process will not be institutionalized • Leadership will not be aligned • Steering Team committee is ad hoc • Time and diverse geography of team • Mutation of MPM roles • Mutation and non-acceptance of Certification Program • Skill Level of Trainers NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

20. Lessons Learned - An Ongoing Process • People • Team Norms • Optimize Member Strengths • Use “Straw man” • Communicate! • Process • Goal Alignment • Tools to Organize • Incorporate Feedback • Logistics • Plan for Worst Case • “Devil in the Details” • Overcome Geography • Financial • Secure Funding Early • Budget Early NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

21. Questions ? Open Discussion NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”