# Presentation: 523479

## www.nasa.gov

** **
* *
**Michael Galluzzi **
- NASA ESMD
- and
**Ted Bujewski**
- AEROSPACE CORP.
- October 29, 2008
- NASA Headquarters
- 300 E Street SW
- Washington DC 20024-3210

- SUPPLY CHAIN MANAGEMENT
- ANALYSIS FOR SPACE EXPLORATION

- National Aeronautics and Space Administration

## NASA Industrial Base Transition

- 	NASA Human Space Flight (HSF) Industrial Base
- 1,200+ Active Tier 2 Suppliers
- NASA 2007 HSF Obligations were $7.8B
-  4% of the Aerospace Industry
-  20% of the Space Sector
- Future NASA HSF Manifest lower than e.g. SSP

- U.S. Aerospace Industry
- Total deliveries estimated to hit ~$199B
- Space sector sales will increase a modest 1.6 percent, or $605 million, to $39.2 billion over the next year

## NASA Exploration System Mission Directorate (ESMD) Supply Chain issues:

- NASA Exploration System Mission Directorate (ESMD) Supply Chain issues:
- Impact on Industrial Base (IB) from Human Space Flight time gap
- Ensuring supplier capabilities
- Current SCM capabilities are not adequate to support the Constellation ConOps / Manifest
- Spares are not an option
- A dynamic interplanetary and integrated supply chain is needed for Lunar
- Processes must be flexible and agile in order to                                        adjust to economic, legislative, and technological shifts
- Lack of government supply chain insight hinders ability                                           to manage program risk
- Government needs to ensure effective supply chain management
- An ESMD Supply Chain Management implementation is a solution:
- _Reduces Costs_ of late TRL non-recurring and recurring indirect operations & sustainment
- _Minimizes Risks_ to safety, cost, schedule and IB viability
- *(given current budget and activity projections assuming ~2.2% inflation matched by like budget increases)

## Why Supply Chain Management (SCM)?

_**Background**_
**	****What is Supply Chain Management?**
*The integration of materials and information amongst *
*Centers and Programs, suppliers, other govt. agencies, *
*and international partners to plan, execute, and operate space *
*programs with a common spare and repair  philosophy in *
*order to minimize system-wide life-cycle costs and risks*
*while satisfying program level requirements*
**	****How is SCM different from Logistics?**
- Embeds Technology Insertion in the Process
- Production Processes –vs- Material flow focus
- Integrated end-to-end
- Greater supply base situational awareness
- Focused on product life cycle management

_**Reduces Cost**__ _
- (SCM impacts 90% of a Program’s recurring cost)
**Manufacturing processes –vs- material flow focus**
**Reduces proliferation**
- Part number and procurement duplication
- Number of qualified suppliers needed
- Cost of holding Inventory
- Reduces unit and overhead cost with larger buys
**Integrated end-to-end, **
**Embeds Technology Insertion**
**JIT practices (Pay-as-you-go)**
**Focused on Product Lifecycle Management**
- Enables collaborative forecast demand planning
- Supports changing hardware TRL

_**Reduces Schedule Risks**_
- (Suppliers account for 75% of Space R&D)
**Greater supply base situational awareness**
**Identifies risk of capability loss**
- 5 year gap for ~1500 Shuttle active suppliers** **
**Manufacturing Processes –vs- Material flow focus**
**Maps supplier capabilities to future requirements**
**Integrated end-to-end **
**Embeds technology insertion**
**Allows for more flexible design characteristics**
**Improves manufacturing readiness levels**

_**Improves Reliability/Quality**_
- (Supplier health impacts reliability/quality)
**End-to-end integration, **
**Embeds Technology Insertion**
- 	Improves cross-program impact assessments
- 	Cross Program/Agency DMSMS mitigation
**Manufacturing Processes –vs- Material flow focus**
- 	Enables supplier stability/viability forecasting
**Greater supply base situational awareness**
- 	Increases ability to address counterfeit parts
- 	Increases ability to identify problem suppliers in 	a timely manner

## The Modern Evolution of Supply Chain Management

**1960**
-    Cost Management
-    MRP
**1980**
-    Integrated Logistics
-    MRPII
**1990**
-    SCM
-    WMS
-    MES
-    ERP
-    PDM – Outsourcing
-    Supplier integration
-    DMSMS
-    APS
-    SLEP
-    Six Sigma
-    PLM
-    Collaborative Planning
**2000**
-    Integrated SCM
-    e-SCM CRM
-    e-Procurement
-    e-Fulfillment
-    RT-SCM
-    SC CEM
-    SCM M&S
-    IMN “Supplier City”

- Inventory Control, PHS&T
- Total Cost Management
- Logistics Centralization
- Customer Service
- Operations Optimization
- Logistics Planning
- ILS with external functions
- Supply Chain strategic planning
- Strategic, Tactical & Ops Supply Chain Management
- Collaboration & Integration
- Strategic Alliances
- Adopting new Technologies
- e.g. extranets, Applying lean concepts
- Information sharing
- Business Intelligence
- Internet applications in SCM
- SCM integration, synchronization
- Supply Chain Optimization
- Real time
- “True” Integration
- Events management
- Stochastic optimization

- Low logistics management authority
- Decentralized logistics operations
- Higher logistics mgt. authority
- Enhanced logistics functional integrity
- Centralized logistics operations
- Computer applications
- Integrated logistics functions
- Supply chain planning
- Total Quality Management (TQM)
- Just-In-Time (JIT)
- Supply chain networking
- Benchmarking
- Reengineering
- Integration of SCM and TQM
- Internet applications
- Enterprise agility
- Extended and virtual enterprise
- Networked supply chain
- Internet applications and .coms
- Applying IT in all facets of business
- Economy of Scope
- Responsiveness
- Performance driven
- Knowledgeable workers

**The Modern Evolution of Supply Chain Management**

_**Legend**_
- PLM – Product Life Cycle Management
- SCM – Supply Chain Management
- ILS – Integrated Logistics Support
- PLM – Product Life cycle Management
- ERP – Enterprise Resource Planning

**Agile/Virtual**

**Lean**

**Mass Mfg**

**Management Focused on**

**Enterprises features**

- Many Suppliers
- Low level of trust
- Weak and long-term relationships
- Few Suppliers
- High level of trust
- Cooperative relationship
- Long-term relationships
- Selective suppliers
- Full level trust
- Shared risks/rewards relationship
- Short-term relationship

**Supply Chain**

- ‘92

- ‘94

- ‘96

- ‘98

- PDM – Product Data Management
- PHS&T – Packaging, Handling, Storage, Transportation
- DMSMS – Diminishing Manufacturing Sources
- PLM – Product Life cycle Management
- CRM – Customer Relationship Management

- APS – Advanced Planning and Scheduling
- MES – Manufacturing Execution System
- WMS – Warehouse Management System
- SC-CEM – Supply Chain Collaboration & Events Mgt.
- RT-SCM – Real Time Supply Chain Management

- ‘03

- ‘06

## The Value Proposition

- The vast majority of Space Shuttle operations costs are indirect recurring
**“****Non-recurring indirect costs associated with sustainment and space systems support cost reductions of upwards to 35% can be achieved by integrating the material and information flow” SAP**
- Example: As a result of poor low demand planning. “Average electronic obsolescence cost mitigation for minor and major engineering cost is $100K to $400K” **DMEA / ARINC**
**“****By improving asset management the Aerospace Industry can realize a reduction of up to 18% of recurring cost” SAP**
- “~35% of an Aerospace support contractors spare parts inventory are duplicate with a carrying cost ranging from $4,500 to $23,000 per line item” **Aberdeen Group**
**“****Without supplier / industrial base integration and information sharing, only 40% to 50% of shipments will be delivered on time” ****MIT Lean Aerospace Initiative Study**

**The Value Proposition**

## Are we locked into business as usual? How dynamic is the future state? 

**10%** is what we see...results...
- and all that “other processing stuff” where the time and money is...**90%** what we don’t see

- Accepting demand
- New technology an exception
- Deterministic optimization

***Present State**** *
*Linear, push manual practice *

- Supply

- Demand

***Future State***
*Circular, self-renewing process*

- Shaping demand
- Embedded technology insertion
- Probabilistic planning optimization

*10% Direct Visible*
*overlap of operations*

## ESMD SCM Initiatives

**Current Projects and Activities by NASA ESMD**
-  Assessment of Supply Chain Management software applications and processes
-  Product Lifecycle Management
-  Supplier Relationship Management
-  Product Data Management
-  Enterprise and Material Resource Planning
-  Operability Simulation and Modeling
-  Supplier Economic Indicator Model
-  Supplier Mapping to include assets, data and organizations
-  Integrated Manufacturing Network / “Space Commerce Network”
-  **Expected results**
-  Lower Lifecycle Costs
-  Collaborative Forecast Demand Planning
-  Process embedded Technology Insertion
-  Enhanced Long-term Operability
-  Coordinated obsolescence mitigation
-  Minimize proliferation of process and parts
-  Supplier liquidity
-  Lean and agile manufacturing
-  Process standardization and reduced process complexity
-  Reduced indirect touch labor and fixed cost

## The Future Supply Chain of Human Space Flight