Hi everyone; this is Kevin. We’re recording today’s podcast on Friday afternoon, October 23rd. In my recent podcasts with Sean Davies, Jim Gildart and Wilmer Lambert a few weeks ago, we talked about the three key components to building submarines: getting the design right, getting the material available and getting the planning done. Today on the podcast—I’ve really been looking forward to today–I’m joined by Blair Decker, our Vice President and Chief Supply Officer, to talk about what his organization is doing to ensure our trades men and women have the material they need, and when they need it, to build submarines. I think you’re going to find that the work they’ve been doing is really impressive.
So Blair, let’s get started. You celebrated forty years with EB last year—congratulations. For those folks who may not know you very well, why don’t you tell us a little bit about your background?
Thanks Kevin, appreciate the opportunity. This is actually the first podcast I’ve ever done. Looking forward to filling folks in on my background and what the team does. As an organization, we’re all very proud of the role we play in supporting our operations team on a daily basis.
For me, today is actually the first day of my 42nd year at EB, and I wouldn’t trade it for a minute. It’s been a great experience and it’s been a great opportunity to serve our country building the greatest ships in the world.
I actually grew up a few miles from here in Old Saybrook. I went to Fairfield University and got a degree in economics. I was going to go to work in the NY stock exchange; my grandfather actually ran the trading floor on the stock exchange. But when I got out of school, he decided I needed to go someplace to learn how things are truly manufactured and made, so I decided where best to go but to Electric Boat. I joined the company in 1979, started as an Associate Buyer for the whopping sum of $10,200 a year. I’ve had the opportunity to rotate through many of the material management departments across Quonset. At Groton served for a period of time in the midway facility at the warehouse we used to have there, so basically had the opportunity to touch all of the locations in the company. I was blessed with the opportunity to become a supervisor in 1985 and then further had the opportunity to join the senior leadership team as a Vice President in 2014. I’ve always enjoyed the opportunity to build parts, but most of all I enjoy the opportunity to maintain relationships with our supply base partners.
Like you and your organization, I’m proud to work with you every single day. As part of our rollout of organizational goals on Homeport, you did a really great overview of the scope of your organization’s responsibility. Could you please share that with our audience?
The multiple organizations that I have; we are responsible to define, plan, procure and control tens of thousands of parts across multiple programs. Our supply base consists of 3,500 supplier partners. We execute all of the acquisition responsibilities for the goods and services to keep our 16,500-plus employees safely working every day. We also ensure that our workforce is supported through all of the capital overhead and facilities needs in Groton and Quonset Point. So if you come to work at Electric Boat, every day you deal with something that my team buys. Equally important is our efforts contribute greater than 1/3 of the revenue that our great company generates annually.
It’s an absolutely critical function in our business, and I’m really proud of the work that your team is doing. Let’s talk about the priorities for your organization. First, you have a goal to achieve 95% material availability for Department 904, the Quonset Point Pipe Shop, and we’re making some excellent progress. Let’s talk about why that matters.
I came up with an analogy when I was thinking about this conversation to compare a nuclear submarine to the human body, with its incredibly complex architecture consisting of a myriad of different pipes, valves and fittings that are critical to allow humans to survive in an environment resplendent with extreme risks and challenges to personal safety. These parts to me are like the circulatory system and the organs in the human body. We all know what happens to one of us when one of these key elements of our body fails; think about what could happen when a nuclear warship is at depth and one of these parts does not do its job. On-time material is super critical to D904, most everything they do involves connecting fittings to pipe, pipe to valves and valves to fittings. The operation is highly choreographed—one part missing and the operation stops. These assemblages of material are absolutely essential to allow the waterfront side of Quonset Point to successfully outfit decks, install components and complete the modules to feed the final assembly and test facilities in Groton and Newport News. Our goal is aggressive; we have dozens of suppliers that contribute miles of pipe, miles of tubes and tens of thousands of valves and fittings. One supplier who drops out of line causes significant risk to attaining our goal. The team is laser focused on making sure this doesn’t happen. We live to be able to drive success and capability in the Operations organization, and we’re going to achieve our goal.
That customer service orientation is something I’m keenly interested in as we move forward into 2021, and I think everyone listening is going to hear a lot more about that. So I really appreciate you reinforcing that discussion. I go back to my time serving in our Navy on Boomers; I never worried about the integrity of my ship and the work that we do. That requires incredible organizational support and great quality and a great relationship with our supply base to make sure that all comes together. Let’s talk about your team’s goal focused on reducing purchase requisitions that are late and beyond buyer lead time—What is that and why does it matter?
For background, the inventory planning function in supply chain is responsible for generating purchase requisitions. Our material requirements planning system begins with a bill of material that’s loaded into the system. The system understands and manages what we have in stock and also manages what we withdraw from stock to create opportunities for us to go ensure we have the right material at the right time in the right place. A purchase requisition is an electronic demand signal to the procurement side of the house to go buy some type of product. Each of these requisitions should be released to the buyer with adequate time for the buyer to quote with the supply base and issue the purchase order and for the supplier to fabricate and deliver the material in accordance with a prescribed date that supports the consumer’s need date.
Sometimes this does not happen, which results in urgent, inefficient use of the buyer’s time and expediting and sometimes higher cost with the supply base. The purpose of this objective is to reduce by 50% the number of requisitions that are late and beyond the buyer lead time. This is important because it will give the buyer a better opportunity to plan and execute their workload, adequate lead time for an already-stressed supply base to efficiently manufacture their products and ultimately and most importantly to get the material into our most valuable players’—our tradesmen and women’s— hands so they can do what they do best—build ships.
That’s a great description that really connects the front-end of the business from an engineering and design perspective all the way through to the consumers—that is, our trades organizations on the deckplate. You play a critical role between that front end of engineering and the consumption of that equipment on the deckplate.
A few weeks ago on the podcast I shared some metrics that demonstrate how you and your team are rallying in support of our shipbuilders. I can think of no better customer service orientation currently at EB than what you guys are doing. Last year at this time we were experiencing material shortages about 3.3% of the time in the Virginia program and about 11% in Columbia. This year we took a lot of effort to really reduce that. I’m proud and I know you are too, knowing that our shortage rate fell to about 2.6%–a 21% reduction. For Columbia we’ve actually cut that delinquency by about half; the shortage rate is now about 6%. I think we’d both agree that it’s still too high, but tremendous, tremendous progress by you and your team. What measures did you and your team take to drive that type of progress?
First off, hats off to my team. They’ve done an excellent job of breaking down the end-to-end value stream into what we call the diamond chart—there are multiple steps and multiple organizations across the company that play key roles in material identification to distribution to the trades. We now know, every week, where every shortage is in the value stream. This allows us to then attack with vigor the areas that will best help with productivity in D904.
Secondarily, we amped up our engagement with the supplier base. Following your guidance, we recognized that we, EB writ large, were 51% of the problem. We went after the pain points that we inflict on the supply base—technical supplements VIRs, VPARs, source inspection, price negotiations and terms and conditions were identified as areas to attack. We have numerous initiatives in play, all geared towards getting the administrative side, which I consider to be partially non-value added, of buying material out of the way and letting the supply base focus on manufacturing, not on paper.
Great work here, and the other key metric, and what I think our listeners should take away, is how many suppliers we have moved from a state of “not being ready” or very stressed in terms of their performance to “now ready for future work.” So today, about 90% of our suppliers are “ready for future demand,” which really serves us well going forward. Tell us a little bit about what that entails and how hard it is to get people to move from that not-ready state to ready-for-future-work state.
To put it in context, when you look at where we were in 2017 to where we’re going to be in the 2020’s and beyond, we’ll be required to procure and provide more than two and a half times the annual volume in the 20’s as we did in 2017. So as we were faced with this pending generational growth in material demand, we recognized we needed to ensure supply-base readiness. We knew we had suppliers who were ready now, we knew we had good current suppliers who had not yet planned for the future, and we knew we had suppliers who were struggling today. Our focus was and is on making the second and third group prepared for the future.
Through a supplier assessment process involving a prescribed scoring rubric, we were able to identify gaps in critical areas of supplier performance. Once these gaps were identified, we were able to develop plans of action and milestones to improve the suppliers’ performance as well as their ability to support us in the future. Although we have made significant progress, we still have significant work to do. We work this relentlessly. This is a daily objective and a daily drive in the organization; we must ensure we have an industrial base that can support our submarine shipbuilding of not only today, but the future as well. We look forward to being able to continue this contribution. We’ll have significant numbers of new suppliers that will come onboard, and this will be a regular diet for us going forward to ensure that we are ready to deal with the future.
Excellent Blair; I know we’ve had conservations about the scope of supply and where we are with material in the yard. It is really gratifying for me to see how your team has rallied. We’ve got a lot of people who have really poured a lot of intensity into getting material in the shipyard available to our team. Now we’re starting to see the improvements in that performance based on how that team is able to accept that material and move the ball forward. It’s been tremendous for me to watch that, and I think from my perspective the Breakfast Clubs that we do every couple of weeks really turn from being a difficult session to one where now I’m starting to see members of your team brag on their performance. I couldn’t be prouder of the work they’re doing. My challenge to you and your team is to please keep it up—we need more of it. I’m really proud to be here at work with you every day.
Blair— thanks for joining me. Thanks everyone for listening; we’ll talk soon.
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