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How They Did it: Supplier Relationship Management at Raytheon

Raytheon is on a mission to be the Customer of Choice and earn preferential treatment from its suppliers. To get there, the defense contractor is looking to a Supplier Advisory Council for advice, ideas, and innovation.

By ·

In early May of 2014, senior executives from Raytheon’s Integrated Defense Systems (IDS) business met with senior executives from 13 key Raytheon suppliers at a hotel near Boston’s Logan Airport. The suppliers came from all over, including one who traveled from as far away as Norway, to launch Raytheon’s first Supplier Advisory Council, or SAC. The meeting was the first step toward a pilot program designed to be a key building block in Raytheon’s emerging Supplier Relationship Management (SRM) strategy. The ultimate goal, according to Michael Shaughnessy, vice president of Integrated Supply Chain for Raytheon Integrated Defense Systems, is to earn and provide preferential treatment as the Customer Of Choice—the customer who receives the best terms, manufacturing capacity as needed, and gets first dibs on innovations that can win in the marketplace. “In order to reach that level of earned preferential treatment, we have to build stronger bonds and greater trust into supplier relationships,” says Shaughnessy.  Together, he adds, Raytheon and its suppliers can work collaboratively to develop winning technologies while taking costs out of the production and maintenance of products.

By all accounts, the first meeting started off slow. By the end of the day, however, there was a focus on next steps and a commitment to move forward. By the third meeting in September 2014, the suppliers were truly participatory. “We had momentum,” says Neil Perry, Raytheon Integrated Defense Systems’ director of supply chain operations.

The changes in Raytheon’s approach to supply management reflect the kinds of discussions that are going on at other industry leaders who are moving from transactional relationships based on cost and delivery times to more strategic relationships with their suppliers. This is the story of how Raytheon is implementing a Supplier Advisory Council in order to become the Customer Of Choice.

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By ·
Download Article PDF

In early May of 2014, senior executives from Raytheon’s Integrated Defense Systems (IDS) business met with senior executives from 13 key Raytheon suppliers at a hotel near Boston’s Logan Airport. The suppliers came from all over, including one who traveled from as far away as Norway, to launch Raytheon’s first Supplier Advisory Council, or SAC. The meeting was the first step toward a pilot program designed to be a key building block in Raytheon’s emerging Supplier Relationship Management (SRM) strategy. The ultimate goal, according to Michael Shaughnessy, vice president of Integrated Supply Chain for Raytheon Integrated Defense Systems, is to earn and provide preferential treatment as the Customer Of Choice—the customer who receives the best terms, manufacturing capacity as needed, and gets first dibs on innovations that can win in the marketplace. “In order to reach that level of earned preferential treatment, we have to build stronger bonds and greater trust into supplier relationships,” says Shaughnessy.  Together, he adds, Raytheon and its suppliers can work collaboratively to develop winning technologies while taking costs out of the production and maintenance of products.

By all accounts, the first meeting started off slow. By the end of the day, however, there was a focus on next steps and a commitment to move forward. By the third meeting in September 2014, the suppliers were truly participatory. “We had momentum,” says Neil Perry, Raytheon Integrated Defense Systems’ director of supply chain operations.

The changes in Raytheon’s approach to supply management reflect the kinds of discussions that are going on at other industry leaders who are moving from transactional relationships based on cost and delivery times to more strategic relationships with their suppliers. This is the story of how Raytheon is implementing a Supplier Advisory Council in order to become the Customer Of Choice.

SUBSCRIBERS: Click here to download PDF of the full article.

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