Lockheed Martin Seeks Savings on Engineered Parts

Renews agreement with solution provider Vykor to reduce manufacturing costs for F/A-22 program


Renews agreement with solution provider Vykor to reduce manufacturing costs for F/A-22 program

Renton, WA — March 8, 2004 — Lockheed Martin has signed a "phase two" agreement with solution provider Vykor in a bid to continue generating savings in its engineered parts supply chain.

In related news, Vykor announced the latest release of its Velocity solution, designed to streamline sourcing initiatives for engineered parts.

Lockheed Martin's Aeronautics division engaged with Vykor as part of its cost reduction initiative for the F/A 22 program. The goals of this initiative include reducing manufacturing costs on F/A-22 metallic structure, increasing the health and productivity of the component supply base and gaining better visibility into the cost and schedule of mission critical parts.

With Vykor's software and services, Lockheed implemented the provider's Strategic Sourcing solution on the F/A 22 program to analyze structural parts at key suppliers. The first phase initiative targeted 30 parts at six suppliers. Many of the parts in phase one were being produced at a cost greater than the price of the contract. As a result, an objective was set — and achieved — to improve the viability of the supply base, as well as to reduce prices for Lockheed Martin.

Vykor's software and professional services team defined and digitized an optimal manufacturing strategy for each part using the provider's Global Production Format (GPF). The GPFs were published to Vykor Velocity, a hosted suite of Web-based application services that quantify the time and calculate the "should manufacture cost" to fabricate each part.

By iterating and optimizing on the supplier's capabilities, best-known manufacturing processes and the most efficient cutting tool technology, Vykor said it was able to reduce the manufacturing costs for these parts.

"We eliminated costs from these engineered parts, and in many cases, returned our suppliers to profitability," said Rich Briggs, director of F/A-22 affordability for Lockheed Martin.

Based upon the successful completion of phase one, Lockheed Martin and Vykor will continue rolling out phase two of the initiative across a larger number of parts and suppliers. Terms of the new deal were not disclosed.

While Vykor provides the technology and manufacturing services, the strategic partners in Lockheed's supply base are responsible to adopt the new technology and adapt the new approach to their specific manufacturing capabilities. Many of the suppliers in phase one joined the Vykor Affiliate Network to signal their commitment to Lockheed's initiatives.

"Working with Vykor has proven to be a great benefit for the Acromil Corporation," said Jon Konheim, president of the Acromil Corp. "Through Vykor's quantified productivity improvements we were able to improve our margins and provide savings to Lockheed Martin."

Meanwhile, Vykor also issued a new release of Velocity, its application services platform for managing the sourcing lifecycle of engineered parts. The provider said that its solution's new user interface sets the stage for the introduction of sourcing applications for original equipment manufacturer (OEM) customers as well as suppliers.

Through manufacturing process computations and dynamic costing models, Velocity generates a detailed cost breakdown of the factors and elements that drive the cost of a part, telling procurement executives and their suppliers how much a part should cost. This cost, referred to as the "should manufacture cost," is coupled with Vykor's Global Production Format (GPF) record to create higher levels of visibility for suppliers and OEM's alike.

Vykor said that with the latest Velocity release, suppliers — machine shops for complex engineered parts — can more easily interpret the design requirements and associated time and cost impacts. The overall benefit is to reduce the misunderstanding of specifications that arises during the sourcing process by clearly communicating an achievable manufacturing process. Today information gaps lead to additional risk to the supplier in the quoting process, and therefore result in higher bids back to the OEMs in order to compensate for incomplete information.

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