Lockheed Martin Missiles and Fire Control. ECIA Regional Event. November 9, Teresa Wardingley Director SEMAC

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1 Lockheed Martin Missiles and Fire Control ECIA Regional Event November 9, 2016 Teresa Wardingley Director SEMAC

2 Lockheed Martin Business Areas Products and Services Aeronautics Missiles and Fire Control Rotary and Mission Space 2

3 MFC Business Area Products and Services ~13,963 Employees Worldwide 18 Major Operating Locations 2015 Sales $6.8B Air & Missile Defense Tactical Missiles / Combat Maneuver Fire Control / SOF CLSS Energy LMUK Ampthill Advanced Programs / Special Programs Terminal Defense - THAAD - PAC-3 - MEADS Indirect Fire Protection Capability Integrated AMD Solutions Close Combat Precision Fires Long Range Strike Precision Guided Guided Projectiles Ground Vehicles Combat Maneuver Unmanned Ground Vehicles Rotary Wing Fixed Wing Special Operations Support Advanced Programs Platform Survivability Ground Sensors Maritime Sensors Advanced Energy Storage Intelligent Microgrid Solutions Nuclear and Solutions Commercial Energy Management Solutions Ocean Energy Vehicle Programs Special Projects Mission Support Exoskeleton Technologies Mining Automation Next Gen Sensor Technologies Advanced Missile Technology Advanced Unmanned Advanced Materials /Coatings Bio Energy Waste-to-Energy Market Special Initiatives 3

4 Defense Industry Characteristics Complex Customer Warfighter, Project Offices, Congress, Operating Commands, Oversight Agencies No Single Customer Can Make All Decisions Competitive Landscape Direct Competitors Partners Many Common Suppliers Regulatory Constraints Federal / Defense Acquisition Regulations International Trade / Export Regulations Customer Funding Process Extreme Uncertainty Orders Turn and Flexibility International Sales F-35 Lightning II PAC-3 Missile 4

5 Director, Southeast Material Acquisition Center Teresa S. Wardingley 2016 Forecasted Base $825M Over 64K parts procured YTD Across 5 Sites Spend: $175.1 M Line Items 17,495 Senior Manager Mechanical Commodities Matt Berinato Commodities Include Fasteners Chemicals Optics Sheet metal General machining Castings Ultra precision machining Spend : $141.7 M Line Items 18,297 Senior Manager Electrical Commodities Mark Tieman Commodities Include Capacitors Gyroscopes Electro-mechanical assemblies IC and microcircuits Electrical connectors Backplanes Spend $291.8 M Line Items 15,723 Senior Manager Dallas Direct Jim Arnold Commodities Include Wire Cable assemblies PWBs Castings Precision machining Lasers Senior Manager Operations Support Evelyn King Manager SEMAC Functional Operations Curtis Stearns Spend : $225.1 M Line Items 41,034 Commodities Include Construction Contract labor Information technology Special processes Capital equipment Leases and rentals Point of Use Expediting >15K PO LIs Corporate Agreement Coordination Legal Liaison Program Proposals Worked 2015; YTD Line Items sent to Suppliers for Quote 2015; YTD 5

6 LMMFC Global Supply Chain Challenges Over 1300 tier I and thousands of tier II to tier N suppliers > 69 Million parts delivered each year Affordability goals and constrained resources Wide range of supplier products & processes Contract unique product standards and requirements Low Rate / Low Volume to High Rate / High Volume Complex Terms and Conditions & Government flow downs Increasing international orders driving higher offset requirements (Poland, UAE, India) COPQ and COPD The Environment is Diverse and Dynamic 6

7 Counterfeit Control Counterfeit Parts are manufactured and circulated at an alarming rate - Aging systems drive obsolescence & diminishing sources - Cost, schedule pressures and minimum buys drive need DFARS The final rule DOES apply to subcontracts for the acquisition of commercial items--including COTS items (Released 5/2014) The Supply Chain Know Your Source - Original Manufacturers: OCM, OEM - Distributors: Authorized, Broker, Stocking Develop and implement Counterfeit Control Plan Consequences to Counterfeit Parts in Aircraft, Missiles or Spacecraft can be Devastating 7

8 Cybersecurity Implement security requirements specified by NIST and Technical (NIST) Special Publications no later than December 31, 2017, if storing, processing or generating Covered Defense Information - Complete NIST and Prime Contractor Questionnaires to determine current compliance posture Ensure the cyber DFARS clause (7012) and associated language is flowed to all suppliers/subcontractors Supplier/subcontractors will report non-compliance with the cyber DFARS clause directly to the DoD, providing a copy to LMC (or Prime Contractor) Supplier/subcontractor will report cyber incidents directly to DoD, providing a copy to LMC (or Prime) Safe Guarding is Everyone s Responsibility 8

9 Future of Supply Chain Partnering with supplier leadership to positively impact supplier culture Investing in supply chain short and long term sustainment and affordability Demonstrating partnership with our customers and suppliers by hosting and participating in collaborative initiatives Using analytics to drive organizational excellence Maximizing workforce potential through cultural optimization Sharing best work practices to improve operational performance Expecting 100% quality and delivery from ourselves and supply chain Goal: Increase Velocity of Knowledge to Increase Product/Service Quality 9

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