LOCKHEED MARTIN'S aeronautics sector has implemented procurement changes, which are projected to reduce operating costs by $410 million by 1999. The company has consolidated procurement for its Fort Worth, Texas, and Marietta, Georgia, aircraft plants at the Aeronautics Material Management Center in Fort Worth.
The centre was established after a study concluded that consolidating material procurement could reduce inventory, cut material and labour costs, streamline and improve administration and enhance product and process quality, the company says. Consolidation has been combined with "...aggressive programmes to reduce costs and span times while improving quality," says Aeronautics Material Management Center vice-president Monty Dickinson.
Lockheed Martin is now in the process of reducing its supplier base and inventory. Efforts include supplier certification, streamlined contracting, alliances with subcontractors and standardisation of certain purchases. Strategic alliances and long-term partnerships are being developed with key suppliers, the company says.
Consolidation is expected to reduce inventory, while savings from supplier discounts for volume purchases are projected at 10-15% of material cost, and the streamlined organisation is expected to save 21-26% on procurement-related costs. Lockheed Martin is projecting recurring cost savings of around $188 million a year.
Source: Flight International
