What the A&D Industry is learning from Automotive Different - - PDF document

What the A&D Industry is learning from Automotive Different ways of thinking Ryan Blanchette October 6th, 2016

Overview Different Ways of Thinking Topics

Topic Traditional Mindset Different Mindset

Talent Hire for Experience

• Ensure strong FAR/DFAR

knowledge Hire for Talent

• Develop Individuals
• Establish diverse thinking

Quality “Keep it under 6 digit PPM” What is our barrier to zero PPM? Cost Fair and Reasonable Prices Responding to “unreasonable” material cost targets

Presentation contains Supply Chain focused examples, but the themes are universal

Talent Mindsets Experience vs. Talent

Traditional Mindset Different Mindset

Experience Is Key: Hire individuals with defense industry procurement experience Talent is Key: Hire individuals with talent critical for their role Experience is Important: teach critical activities, provide development for team Balance company and industry insiders and

• utsiders

Company culture and fit are key Internal Supply Chain team members will be developed to be future Supply Chain leaders Individuals with key Supply Chain talents will be developed to be future Supply Chain leaders Compliance is key: Compliant bids are primary consideration; price needs to be justified Cost is key: Compliant bids are important but “30% savings is the target” Filling open roles is key – BTNs are better than nothing Hiring is the most important thing we do – and we set the bar high.

“OK, let's see what kind of hand I've been dealt”

• G. Hackman, Hoosiers

Current State: Homogenous and underperforming Critical Org. Structure areas

Key functional gaps

– E.g. Material costing, Commodity Mgmt.

Waste “Unbalanced Org. Structure”

– E.g. Senior Cost Analysts – Strategic vs. Tactical work

Future State: Diversity of thought, correct “bus riders”

Balance insiders and outsiders -

Company, Industry – 6-7 carry overs – 1-2 company outsiders – 1-2 industry outsiders

Waste “Funds Change”

– Functional gaps, salaries

Talent vs. Skills & Experience

Definition of Talent “a recurring pattern of thought, feeling, or behavior that can be productively applied” Characteristics of Talent

You can’t teach talent – you need to select for it Skill and Experience are situational: “faced with unanticipated scenario, they

lose much of their power.

Excellent performance requires fit between talent and role

Examples of Talent

Empathy – An ability to identify the feelings and perspectives of others Performance Orientation – A need to be objective and measure performance Gestalt – A need to see order and accuracy Arranger – Ability to orchestrate Developer – A need to invest in others and derive satisfaction in so doing Activator – An impatience to move others to action

Talent in one Organization

Buyer Talents:

Ethics (responsible for co. money) Performance Orientation (metrics) Strategic thinking (holistic spend) Competition (negotiation) Responsibility (self accountability)

Commodity Manager Talents:

Strategic thinking (Cmdty Strats) Interpersonal (Nego.) Arranger (Sourcing initiatives) Performance Orientation (metrics)

Sample Interview Questions:

• Tell me about a time when you challenged

someone’s authority, because you felt his/her action was not in the best interest

• f the company or customer
• Our team negotiates everyday. Tell me

about the last negotiation you had. Potential follow-up: Who won?

• As a CM, you will be responsible for

conducting sourcing initiatives requiring input from many different functions; tell me a time when you prioritized the elements

• f a complicated project
• Tell me about a time where you were held

accountable by your customer (external or internal) for something that was the responsibility of another person or group. What was your initial response, what did you do, and what was the end result?

Align your organization on key talents. Test questions out on your top performers

Culture and Fit Separate Interview Questions / Activity

What talents are important for all roles in your company?

Competitive vs. Collaborative, Self-Directed vs. Structured/Hierarchical Make sure questions relating to these talents are asked Open ended questions can be indication of talents / Cultures preferred

– What is the best environment in which you have ever worked? What made it so? – What aspects of work do you find most exciting? – What are you most proud of?

Meet the team and understand the role

Example: Manager role spends time with direct reports – understands “day in the life of

a Buyer”, key question for directs: “What kind of questions did candidate ask?”

Good, Bad and Ugly talk: Scare away “excellent failures”

Example: “World Class”, “Open layout”, “Victims don’t live long here”, “Constantly

pushing to get better – frustrating to some”, “Servant Leadership”

Here is what a bad day looks like…. … still interested?

Talented hires that “don’t fit” will set you back longer than “bad hires”

Balance your organization Strategic vs. Tactical

Eisenhower Matrix: Urgent will always trump important Are you organized to spend enough time on the Important but not Urgent work? Structure: Organization/ R&R

Commodity Manager vs. Buyer

Relationship Building Next Period Objectives Professional Achievement Goals Personal Growth Goals

Weekly/Periodic Cadences reflection

How much time did we spend on the

important?

Internal Talent Can I “hire” internally?

Key questions to ask when a position opens

Which jobs have similar talent requirements?

– Sales Representative & Buyer

Which key talents are found in other functions?

– Problem Solving (Planning): Quality, Finance, Manufacturing Eng. – Strategic Thinking (Buyer): Business Development, Program Management

Which junior members of your team have key managerial talents & how can you see

them demonstrate them? – Talents: Coaching, Development, Strategic Thinking – Potential ways to assess (put in annual objectives):

• Training they lead (Class, Supplier coaching, etc.)
• Contributions to strategic work (Commodity Strategy contributions)
• Who is the “go to” person who trains their peers?

Natural tendency is to look within Function and then Externally – don’t

• verlook the talent in the rest of your organization

Quality Mindset Experience vs. Talent

Traditional Mindset Different Mindset

Low Volume = Low volume rules Low volume “Rules” can lead to rejecting valuable (high volume) tools 100,000 PPM is “Pretty Good” <100 PPM is when we start talking Component Inspection Engineers Supplier Development Engineers Meet AS9100 requirements & respond to customer audits Engage in Advanced Product Quality Planning (APQP)

Change Paradigms – Changing mindsets through Large External Influences

AMDR F-35

Change Paradigms - Focusing energy “Everyone else is going too slow” “and getting in my way”

Transition Curves “A body in motion tends to stay in motion” - I. Newton Engage in “Dynamic Continuous Improvement” – APQP was one example Focus on “redirecting misguided energy” instead of initiating activities from “scratch” Influence Model

Advanced Product Quality: making the Important, Urgent “Just give me a plan…”

Result was zero PPM for critical parts on key Program

Product Control Matrix: making the Important, Urgent “Just give me a key specification…”

Result was baseline process capability and improvement for key specifications

• Rel. Date:

• Rev. Date:

• peration

• peration

Supplier APQP: Product Characteristic Matrix

APQP and PCM benefits to suppliers “What’s in it for me?”

Influences design, improves manufacturability

Reduces rework Lowers cost to supplier Provides opportunity to leverage suppliers strengths visa vi competitors

Drives Supplier Quality Improvement

Gauge R&R improvements Understanding of Process capability Foundation for continuous improvement

Creates “stickiness” with customer and makes relationship more strategic

Helping a customer get in front of themselves is priceless

Helps in journey to “World Class”

“We like our automotive customers because they ask us to do things no one else

does…” - Diversified Supplier to Aerospace, Industrial and Automotive industries

Invest the time; avoid internal barriers that can squash productive early engagement (legal, budgets, etc.)

Cost The FARs mindset

Traditional Mindset Different Mindset

Focus on “Fair and reasonable” Low Volume = Low Volume Rules Focus on “Unreasonable” 30%+ cost reductions “Low volume rules” can lead to rejecting valuable (high volume) tools Competitive Bid = 2 reasonable quotes Competitive cost = what the market requires Assessing all potential sources of supply Leveraging spend ITAR Limitations, “Buy American” clauses Export protection is required, but not all parts are “ITAR” Export licensing is hard Export Licensing can be streamlined Competitive Bids don’t need Cost or Pricing support Cost modeling can be condition of business award

Traditional thinking focuses on tactical sourcing compliance to FARs. Different thinking requires Strategic engagement

Different thinking - Strategic Sourcing How do you start?

• 1. Hire Correct Talent – are the right people on the “bus”?
• 2. Provide Experience – team needs to see “what good looks like”
• 3. Just give me…

a. Basic commodity information b. A plan to improve

“3 Step process” can be used for any strategic activities (non- Procurement) to help focus on the Important, but not Urgent

Basic Commodity Information

Commodity Overview/Spend/Segmentation Suppliers Capabilities/Performance Supplier Rationalization/Outreach Upcoming Sourcing Initiatives / Business Awards Long Term Agreements Commodity Economic Review Supplier Engagement/Challenges/Looking Forward

The Basic Commodity Information can be basic… Example of Commodity Segmentation

Tubes

Sleeves Links

Tubing Commodity Segmentation

Spacers

Plan to Improve

Activity When

Commodity Overview/Spend/Segmentation

• Segment products into new classifications (sub-commodities)
• Assign sub-commodities codes in ERP
• Stratify spend by sub commodity

Q1 Q2 Q2 Suppliers Capabilities/Performance

• Develop matrix of supplier secondary and special operation processes
• Integrate Supplier scorecards into Commodity Strategy review

Q3 Q1 Supplier Rationalization/Outreach

• Attend annual trade seminar
• Conduct Supplier initial process capabilities audits

Q4 Q2, Q3 Upcoming Sourcing Initiatives / Business Awards

• Conduct multi-program sourcing event
• Launch outsourcing feasibility study

Q3 Q1 Long Term Agreements

• Establish LTA for sub-commodity
• Establish LTA for key program

Q4 Q1 Commodity Economic Review

• Develop basic cost model

Q2

Cost Modeling Can be used in Defense competitive environment

Very underutilized tool in many Industries

Stampings

Cost Modeling benefits to suppliers “What’s in it for me?”

Assists in understanding true costs Assists benchmarking of “competitive rates” in geography Ensures all requirements are captured in bid (e.g. Xray, XRF testing…)

“Double check” Compliance to SOW / Drawings Ensures all costs are accounted

Assists with Strategic / Portfolio / Market positioning May assist with Negotiations Cost Modeling is only one Strategic Sourcing tool and can be effective in aligning Customer / Supplier

Summary What can I do tomorrow?

Talent

Brainstorm a list of talents for a key position that you have open Create or test out some interview questions you have on “3 Sigma” talent owners

Quality / Capacity

Highlight some barriers that are inhibiting 0 PPM performance. Establish a plan to

improve (either incrementally or transformationally)

Pick a high value program or commodity and create an “Just give me” one pager

Cost / Strategy

Determine roles / activities that are deficient in Strategic work Create strategic template to force urgency and measure performance

General

Think of one source of Influence (External / Internal). What energy needs to be

better focused? What tools are needed to do so? Create an action to implement.

Appendix

Influence Model

“The influence model” - four key things need to be in place for individuals to change their behaviors

Role-modeling “I see superiors, peers and subordinates behaving in the new way” Fostering understanding and conviction “I know what is expected of me – I agree with it, and it is meaningful” Developing talent and skills “I have the skills and competencies to behave in the new way” Reinforcing with formal mechanisms “The structures, pro- cesses and systems reinforce the change in behaviour I am being asked to make” “I will change my mindsets and behaviors, if…”

Change is tough …

… even when the stakes are high

• Medical researchers took a

group of heart patients who had coronary bypasses resulting from their lifestyle:

• Smoked too much
• Ate too much
• Drank too much
• Had too much stress
• And didn’t exercise
• The patients were told:

Change or Die

When faced with the ultimate “burning platform”, what percentage of heart patients changed their lifestyle?

10%

But change is possible

• f patients who underwent a

behavioral change program were able to change their lifestyles and avoid life-threatening heart problems

What did they do?

Created a positive vision of the future – for example seeing a grandchild graduate from school – not just a “burning platform” Put in place 2 meetings per week as a powerful reinforcement mechanism Created powerful, positive role models

• f people “like

them” who had successfully changed their lifestyles Instructed the patients in meditation, relaxation, yoga, and aerobic exercise

Role-modeling “I see superiors, peers and subordinates behaving in the new way” Fostering understanding and conviction “I know what is expected

• f me – I agree with it, and

it is meaningful” Developing talent and skills “I have the skills and competencies to behave in the new way” Reinforcing mechanisms “The structures, processes and systems reinforce the change”

• “I will change

my mindsets and behaviors, if…”

“The influence model” - four key things need to be in place for individuals to change their behaviors

Role-modeling “I see superiors, peers and subordinates behaving in the new way” Fostering understanding and conviction “I know what is expected of me – I agree with it, and it is meaningful” Developing talent and skills “I have the skills and competencies to behave in the new way” Reinforcing with formal mechanisms “The structures, pro- cesses and systems reinforce the change in behaviour I am being asked to make” “I will change my mindsets and behaviors, if…” Key levers:

▪

Leadership actions

▪

Opinion shapers

▪

Formal and informal interactions Key levers:

▪

Develop a compelling story

▪

Deliver the story strongly in all relevant levels Key levers:

▪

Organization structure

▪

Targets and metrics

▪

Management and business processes

▪

Rewards, recognition, and consequences

▪

Information systems Key levers:

▪

Talent management (hiring, replacing, and retaining)

▪

Learning