Big Data, Smart Strategy
The supply chain techniques that create competitive advantage
In this interview, David Wilkins, vice president of contracts and supply chain for Raytheon, shares how data visualization, predictive analytics and Big Data can turn complexity into a competitive advantage:
What’s driving Raytheon’s focus on supply chain?
Our supply chain is under intense scrutiny, a level never before seen in the defense industry. Our customers need us to “do more with less” – that means providing the most advanced capability at the lowest possible price. When roughly 70 percent of a program’s cost comes from materials, we know we can reduce costs by sourcing smarter. To do this, we’re using data analytics, collaborative technology and an internal strategic sourcing framework called Enterprise Sourcing & Performance Excellence.
How is Raytheon using data analytics to improve its supply chain practices?
Raytheon’s supply chain environment is complex: We’re a company of four businesses, 8,000 programs and more than 10,000 suppliers. A few years ago, we realized we needed a platform that provided rapid, data-driven decision making across all of these factors. So we developed ‘Supplier Insight,’ which integrates structured and unstructured data from sources within and outside of the company. We’re able to track our suppliers’ financial stability and performance on a number of key factors. And, if there’s a wildfire, hurricane, or earthquake that may affect our suppliers’ ability to provide what we need, we know about it immediately and can make quick decisions that’ll reduce any impact to our customers.
How has data analytics helped you reduce costs within your supply chain?
We now have the ability to look across all of our programs and suppliers for ways to reduce costs. The data analytics Supplier Insight provides allows us to better negotiate costs by whittling down our suppliers and engaging in long-term contracts for multiple programs. Are we purchasing materials from Supplier A, B and C that we could get from Supplier A for a better price? Does Supplier C have a critical technology we need, eliminating our need to spend IR&D dollars? These are just a few examples of how data analytics have provided a tremendous benefit to reducing the cost of our programs.
What are some of the unique technologies Raytheon uses to collaborate with suppliers?
In 2014 we introduced the Immersive Design Center at our facility in Andover, Massachusetts. We’re using this 3-D, immersive environment to drive product excellence and accelerate time-to-market through co-development and co-production of products. The IDC provides 320 degrees of large-scale 3-D immersive data visualization and interaction. With it, there’s better alignment between our engineers, our suppliers and our customers. Users wear 3-D goggles and can then interact with virtual models of products projected into the room. Together, we can refine designs and detect potential problems without having to work and rework expensive prototypes. We also have a remote feature that allows us to connect with suppliers and customers around the world.
What’s the future of Big Data and supply chain?
We’re still at the beginning stages of big data-driven supply chain decision making. I think all of the things we can do today will be even better, faster and smoother tomorrow – there is still much to be squeezed out of current capabilities. Ultimately, I think that big data will simplify our supply chain so we work with a smaller group of suppliers on a more strategic basis. Which isn’t to say that small businesses will be negatively impacted, on the contrary, I believe that big data will allow us to more easily identify high-performing, innovative small businesses. In the future, we’ll expect our analytics platforms to constantly be data mining for new partners. This “suggestive” capability will improve performance and protect the bottom line.