Innovative Logistics Solutions Presented at the National Press Club

Innovative Logistics Solutions at the National Press Club

At a media briefing at the National Press Club June 25, 2013 Chris Jones, president, Northrop Grumman Technical Services (second from left) shares his views on today's logistics market and how the company is delivering innovative logistics solutions to support its customers' global mission readiness. 

Featured Northrop Grumman participants in the Press Club event include (from left) Randy Belote, vice president, strategic communications; Jones; Tom Moore, director, systems engineering and logistics, Electronic Systems; Jim Zortman, sector vice president, global logistics and operational support, Aerospace Systems; and Steve Hogan, sector vice president, integrated logistics and modernization division, Technical Services. Below are their remarks along with video clips of each main speaker.



Innovative Logistics Solutions – Introduction

Randy Belote, Northrop Grumman Corporation
Randy Belote

Vice President, Strategic Communications,
Northrop Grumman Corporation


I'd like to thank you all for joining us here at the National Press Club this morning in another briefing of an ongoing program of briefings that Northrop Grumman offers here at the Press Club.

Northrop Grumman is focusing its National Press Club briefings to define its core areas of capabilities. We affectionately refer to them as our four pillars: cyber, which we briefed here at the end of May, C4ISR and unmanned systems, which we will be briefing in the coming months, and today, logistics.

Northrop Grumman delivers innovative logistics solutions, enabling affordability, effectiveness, and global mission readiness, from modernization and sustainment, to supply chain management, training, and simulation, high technology services, and automated test equipment. We offer the full spectrum to support or meet any mission requirement.

Northrop Grumman has logistics expertise across the organization. To ensure that we are bringing value to our customers, we approach logistics in a cross-company, integrated team concept. Today you'll hear from Northrop Grumman's logistics experts, as they discuss the marketplace and how mission execution, effectiveness, and innovation for affordability define the company's performance in this critical area. Today, 70 percent of the cost of a military system is in sustaining and modernizing that product over its entire lifecycle, while 30 percent of the cost is in its research, development and production.

Today's briefing is structured to provide you with some insight into Northrop Grumman's approach to innovative logistics, how we think about it, how we define it, and how we approach it. To exemplify and expound on our approach, today on our panel are four subject matter experts. To my immediate left, Chris Jones, the corporate Vice-President and President of Northrop Grumman's Technical Services Business Sector. Next to Chris is Tom Moore, Director, Systems Engineering and Logistics, Electronic Systems Sector. Jim Zortman follows, Sector Vice-President, Global Logistics and Operational Support, Aerospace Systems Sector. And last but certainly not least is Steve Hogan, Sector Vice-President and General Manager, Integrated Logistics and Modernization Division of our Technical Services Sector.

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Logistics Market Overview – Video

Christopher Jones
Corporate Vice President and President,
Northrop Grumman Technical Services


Thanks Randy. And thanks everybody for attending. And thanks for allowing us the opportunity to discuss what logistics sustainment and modernization means to Northrop Grumman. As a former Air Force maintenance officer, being in the Air Force for 20 years and having deployed overseas, I fully appreciate how important logistics sustainment and modernization is to our customers, allowing them to complete their missions.

As Randy mentioned, a full 70 percent of the lifecycle cost of a military weapons system, or a piece of military hardware or capability is post-production. It's in logistics, sustainment and modernization. So we feel that's a very good business for us. What we're focused on is that part of logistics where we can apply the decades of experience Northrop Grumman has in designing, developing, building, maintaining and upgrading military equipment.

So we feel we have the level of expertise and capability required to provide the solutions that our customers need. You know, given the global security environment, we feel there will be operations ongoing throughout the world. And, if you look at those military, both U.S. and our coalition partners, the equipment tends to be rather old. And, given the constrained economic environment, it's very difficult for these customers to buy new equipment. So we feel that sustaining, upgrading the modernization military equipment, you know, both that which is developed and built by Northrop Grumman, and that which is not built by Northrop Grumman but is in use with our customers, that's a very good market to be in.

And, as Randy mentioned, the company is focused on four pillars: unmanned systems, C4ISR, cyber and logistics. Logistics is an enabler for the other three pillars to be successful. Having robust sustainment and logistics environments for all of the capability we have in the other three pillars is critical. So, what you're going to hear today is a discussion of what logistics means to Northrop Grumman.

So we'll start with looking at the design and development of systems and how we think about logistics early in the lifecycle. And then talk about logistics and sustainment for our products after the product is fielded, and how we make sure that the product operates correctively and effectively. We'll talk about innovation for affordability and logistics, and then talk about sustainment and modernization, so how we upgrade this equipment and make sure it stays relevant.

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Logistics Effectiveness and Design – Video

Thomas Moore
Director, Systems Engineering & Logistics,
Northrop Grumman Electronic Systems


Thank you, Chris. We talked about the 70 percent cost. And we believe that you set the trajectory for affordability in a system at the beginning of the design phase. And, since we're committed to affordability throughout the lifecycle of our programs, we are using modular open system architecture principles, along with logistics analytics, to be able to design our systems to be affordable over the long run. There's a number of key principles that we follow as we go through our modular open system architecture designs: modular functional designs, how can we break apart the system, both for sustainment, as well as performance and cost. And I'll elaborate more on that a little later. Application software we use. Software is a big part of system costs. How can we reuse that and allow it to evolve as time goes on?

Another part that I'm going to talk about is collaboration and competition. We believe affordability is driven by competition. And working with our supply base, we're able to drive competition and affordable systems in the future. Interoperability, our systems have to continue to be interoperable. And, as I said, all these sum up to lifecycle affordability.

So, as we talk about modular system architectures, what we're really trying to drive towards is something called product line architectures, where we're sharing common components across our various products. This enables us not only to lower our costs in our development, but it also enables us and our customers to be able to share in common stories of sparing, common depot actions, and overall, commonality across platforms.

We also believe that, through these commonalities, the training becomes common across components. So, once we have a system that has similar components, we're able to share training across them. We also employ diagnostics and prognostics in our systems. So our systems understand what their mission-capable status is, as well as what spares and repairs are needed in order for them to meet that capable status. The key is to having the right spares at the right time.

One of the things I talked about earlier is the functional partitioning of our systems. It is very important to how you partition them, such that it doesn't set the cost in the future. So, and recently, we've been able to partition our systems to balance affordability, availability, and performance. By doing that, we're able to broaden the supply base for each of these components. As an example, we recently had a supplier conference where we brought in various suppliers to how they could provide components into our systems and share in our open architectures.

As we talk about open architectures in a hardware perspective, there's also open architecture from a software perspective. The software is a big part of today's systems. We use a component-based software architecture that allows not only further development, but allows third parties to develop applications that can fit into our systems, providing advanced capabilities, as well as being able to take advantage of the best capable software development.

We use what we refer to as a middleware, that isolates our computer programs from our processing hardware. And we do that because it enables an easier upgrade path as new processing hardware becomes available, being able to maintain the software and inject new capabilities. In addition, this middleware provides an application interface that our third party suppliers can provide software into, and again, be able to have a larger group of applications, as well as competition for software.

All these components, whether it's commonality hardware, commonality in software, open interfaces, are fundamental to driving competition and being able to drive down costs in our systems and the future logistics. So Jim is going to take this theme we've talked about in affordability, and continue that discussion at the system level.

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Logistics Affordability – Video

Jim Zortman
Vice President, Global Logistics and Operational Support,
Northrop Grumman Aerospace Systems


Well thanks, Tom. That's really a great discussion about a number of the things that are being done at the subsystem and the component level that absolutely form the foundation. My background, a lot like Chris's, I spent a lot of years as a user and then a provider of logistics as a military officer. And I've got some really good bad examples of what a bad design will do once something gets into the field.

And I can remember laying under a fighter, an aircraft carrier deck that was scheduled to launch in two or three hours. And a bunch of young sailors trying to put an 80 pound part in around something that never should have been put in the way there. And the part, if it was going to be changed, should have been a lot more reliable. And them going, “I wonder who the knucklehead was that did this.” And I always use that as a personal example of, I don't want to be that knucklehead that those young guys were talking about.

When we design these state-of-the-art systems that are going to go out into the field anywhere from 20 to 50 years, something that's cutting-edge today can very quickly become something that's a lot less than cutting-edge. And, by the time you get to the end of its projected service life, the ability to maintain it and keep it up to date, a lot of that was set during the initial design phases.

So, as a large system designer, producer, and ultimately sustainer of space systems, manned aircraft and unmanned aircraft, we've tried to take an approach that focuses on how do you start in the design phase to make those systems affordable. And we believe that it's through innovation and a technical approach that allows us to do it. And our aim is to bend that 70 percent curve, that 70 percent cost curve that Chris referred to, so that when that system is in the field for those decades that it's out there, we have the chance to really do something about it.

I kid my friends in manufacturing, if somebody designs a $20 million dollar wing and then turns it over to the production guys to build it for $10 million dollars, probably not going to be a good outcome of that. And it's probably very much the same in the support and logistics business. If, in the design phase, you don't get the right things in place, you can want to support it for a lot less money. But the opportunities to do it have probably passed you by.

So, I'm really going to talk about three areas that we've gone and we think have got some very innovative and industry-leading capabilities. The first one is, as part of design, is modeling and simulation. And then, 3-D visualization that allows us to see results. And it's about enabling decisions to be made during that design phase. And I'll talk a little bit more about that in detail.

The second thing is, how do you, once that thing is fielded, deal with diminishing manufacturing of material sources that, if it's going to be out there for 20 to 50 years, the inevitable change of technology, and the ability to forecast that coming down the road in partnership with the people who own and operate it. And then, the third thing is, in support anywhere, and that is, how do you get an IT architecture and a system that allows you to take all this great information that's developed during design and development, and use it and repurpose it through the many lifecycles that a product will go through? And that enables the partnership with suppliers and industry and then, ultimately, the customer and the government who's going to operate that.

So I'd like to be able to talk a little bit about each of those three things. And, at the end, have a good picture of how they allow us to be affordable. And that's based on technology and innovation.

So, modeling and simulation, we feel like, through some internal investment, we've developed some capabilities that don't exist anyplace else in the industry. And there's really two parts of it that we think we have to be good at doing. And one is, understanding the operational concept that the customer is going to operate the system and the field under, so that we can show different basing schemes and different ways of how it would be repaired, and how it would be supported, and show the operational outcome that that has, how much it's available, how much it's there to do what it's supposed to do.

And then, at the same time, be able to take that modeling and simulation and flip it on its head, and say, “Okay, if you do it that way, here is what the cost of that is.” And then be able to put those two together, again, during design and development, so that both internally and as customers, they are in a position to make choices where now we can go back in and we can affect that level of reliability, that scheme of repair, that concept that they're going to operate under.

So, you say, “Okay, well that sounds great. What is something that maybe has come out of that?” And I'll give you a couple of examples. We've used the 3-D visualization as an example for an aircraft that we were building for the Navy. And they decided to put it on a couple of different classes of ships. And the typical way to do fit checks on that is, is you actually have to have one, and you move it onto the ship. And then you move it around and see if it fits in all the various places. The fidelity of the system was such that we could take design engineering information, put it into the modeling and the 3-D visualization. And they were able to make the decision about whether it would fit or not based on the fidelity of it. And it saved them over a million dollars and, more importantly, a lot of time in the initial design, to say if we could go forward that way.

Another example is, in a long endurance system, that the metric of if it was effective or not was, its effective time on station. And we were able to model a number of basing options, and then repair options, and then placement of spares based on reliability, and actually cut the cost in acquisition of the spares that they had initially budgeted for by about 25 percent. So, these are real numbers that turn into real support cost later on in life. And it's part of that bend in that 70 percent curve.

Now, the second thing is, is when a system goes out there, it inevitably will age. And, just like all of us that own computers or televisions, that HDTV that was the best thing out of the box, two years from now your friends come in and look at it and go, “Wow. Where did you get that?” The same thing in very complicated, integrated systems.

And the ability to be able to look around the corner, and look into the future on things that are going to diminish in the amount of material sources and the manufacturing sources that are available to do that, is very important, and particularly important as suppliers-- and, more and more, multiple suppliers are involved in building these things-- they decide that they're moving onto the next big thing. Or, they have decided that they're just not going to do that particular thing anymore. The ability to see ahead on that, and either make buys while they're still in production, or identify alternate sources, is a problem that both industry and the government customer faces.

So again, we've, through internal investment, we've developed a tool we call foresight. And foresight is a way of taking design data, putting it in, and then being able to share it across, in prediction models, across the lifetime of that system, and be able to make decisions about, do you buy the stuff ahead of time? Do you go identify alternate sources? Or, in some cases, do you really have to go out and look at a modernization? Because there just isn't any way it's going to do that.

So, it's a copyrighted system that has got a level of fidelity that we are actually using it with the government customer today to run. And they use the results to make budget decisions. So we think that's a pretty strong endorsement of the fidelity and the use of it. And we continue to be part of the DMS, Diminishing Manufacturing Sources community that goes across all of industry.

So, as an example, in 2009, it won a pretty significant award out of the Defense Department for DMS. And Society of Automotive Engineers has recognized it also as a tool that has clickability [?] across a wide piece of industry. So, as an example, in our long endurance global op program, we were able to identify, just in a couple of areas, over $300,000 dollars a year of potential savings through taking these actions ahead of time. And that program, as a result of that and some other things, recently, in 2012, was awarded the James Roche, Dr. James Roche Maintenance Award for the entire Air Force. So again, a pretty strong endorsement that the things we're doing are making sense.

The last thing I'll talk about is, this is an era of big data. And big data is kind of a buzzword that's out there these days. We don't necessarily think about big data. But we think we've got a lot of data. And we've gone, and again, through some pretty significant internal investment, with an IT structure called Support Anywhere. And Support Anywhere is just that. How do you take the data, developed in the design phase, and then take it through the lifetime of the product, and repurpose it? So, it was great that it was designed so you could figure out if you could build it. And you use the same data on a shop floor to use, again, through 3-D visualization to build it, and then repurpose that data to use it when it's time to train, and when it's time to maintain.

So, a young maintainer out there, now, instead of having a book that a lot of pages that may not get updated, he's got a device in his hand. And he can get a 3-D visualization picture that allows him to see how the thing is put together. Same thing when it comes time to train. So, this is particularly important, we believe, in terms of how we product the data as it comes up. Cyber security, a huge, huge issue. And so, information assurance, and then the security and the availability of that data.

I'll give you an example of where we think this is really helping us out. We're looking at, in the recurring parts of our programs, about a 35 percent reduction over the last three years, just through the reduction in software redundancies. And then, in nonrecurring, we're seeing about a 20 to 40 percent reduction as we take this particular program and standup new programs, we're able to just replicate and do it over and over and over again, and make minor changes to it. And then, all of us that are in this business are able to share that.

NATO alliance ground system, we're using it, really a big piece there. And, when you're bringing 28 countries together to agree on something, that's never an easy thing to do. But we're seeing great results from it. So, I'd close by saying, this is, as Chris said, a technology-based approach that we're taking. And we're using that technology to design and affordability. And then, over the life of the product, be able to use that and repurpose that systems and that data to continue to deliver affordability.

Now, that's all great. But it doesn't mean anything unless it's in the field, operating the way it's supposed to, 24/7, 365. And Steve Hogan is going to talk about how we're doing that, including modernizing those systems as they come along. Steve.

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Logistics Execution - Video

Steve Hogan
Vice President and General Manager, Integrated Logistics and Modernization Division
Northrop Grumman Technical Services


Thanks Jim. Chris talked to you about our strategy as a logistics pillar. Dr. Moore talked to you about how we are looking at the front end of logistics, and we're designing capability into those products, so that we can maintain them throughout their life. And then, Jim talked to you a little bit about affordability.

And so, as I bring up the rear here, my background was acquisition. So I am that knucklehead that Jim referred to, who built that product, and then delivered it to our military, and then tried to have them maintain it. So, thanks Jim for pointing that out. [laughter] Actually, that was the first two-thirds of my career, so I had kind of forgotten about that.

But, now that I'm in a position to help, let's talk about execution. So our team in technical services really concentrates on 24/7 global mission readiness. So we help our customers either view the problem in a different way, innovate by inserting technology, for allowing these systems, these weapons systems to stay in the field much longer than they were ever really intended, as Jim was just referring to.

The three things that I want to talk about today are really, operational sustainment. We're going to talk about smart modernization, which is really that piece that Jim referred to where we look at the technology that we have developed, and we insert that technology so that it makes sense for our war fighters, and gives them mid-cycle upgrades with capability. As Jim mentioned, your TV goes out of – Well, we have some computers that were developed in the ‘60s, that, frankly, we can put a card in and do that smart modernization. So we'll talk a little bit about that.

And then, global deployed logistics and embedded training that goes with that, to allow our war fighters to have the capability and the technology in their hands. So, now that we have this new generation of smart kids, you know, they don't want to read a manual anymore. They want to be able to take an iPad out there with them, and flip through, and make sure that they understand the drawings and the techniques they're supposed to use all at the same time.

So, let's talk a little bit about sustainment. Sustainment – and I'll give you a couple of very specific examples. The Joint Surveillance Attack Radar System, or Joint STARS as it's commonly referred to, was a Beck Award winner. Which means it's the outstanding logistics sustainment program of the year. So our team works on those in a depot. We do depot level repair, bring the aircraft in, break it down, look at critical components, replace those critical components, and send it back to our fleet.

We concentrate on zero defects. So, I mean, there were lots of things – TQM, all of the strategies that were employed in the ‘80s and ‘90s. But the zero defect process that we've employed at Northrop Grumman has allowed us to deliver the last 34 of 35 aircraft defect-free. So, what does that really translate to? It translates to a product that gets in the hands of our users that they don't have to do anything with to go out and use that product right away. So huge amount of savings for a fleet of aircraft maintainers who then don't have to worry about whether it came out of the factory the right way. So, excellent work on that team.

KC-10 is another great example. On the KC-10 program, we were able to focus on what we called our Drive for 85. We were looking for above 85 percent availability. And we did that through a depot modernization process that is total lifecycle support. So we're able to look at high time components and replace those components. And one of the areas that we concentrated on was the engines.

So, when we put our proposal together, we teamed with a commercial provider of engines, which was not something the military was typically comfortable with, or had been done that way. They kind of focused on organic support most of the time, on a product like this. That commercial vendor was able to save us over a million dollars per engine on this rework process. And we have done over 185 engines in this process to date.

So you can imagine that the government is able to use those funds, and do smart modernizations, that we would always like them to be able to do but, frankly, they didn't have the budget to do. So, by allowing that commercial vendor to use commercial best practices, to give us those savings, we were able to roll that into the other things that we'd like to do to maintain and persevere in that particular air frame.

Switching gears a little bit, we also looked at ground vehicles. Northrop Grumman has a large footprint in California at Fort Irwin, and then the training center at Fort Polk, over 7,000 ground and wheel tracked vehicles that we maintain. And our job was to provide a 97 percent or greater availability rate to those users. And so, we broke down the process with them, looked at the maintenance practices, and have been able to achieve higher than their stated objectives. Which means they're paying less for more in a process where smart buying power and all the things that the team are doing, really focus on that dollar that they can spend in a different way.

Smart modernization, if you shift what we do well in the depot world and in the maintainability world, you think about how you can upgrade that product during the mid lifecycle. So, an example of that is the electronic attack pod, or EAPUP. We take two fielded systems, the ALQ131 pod and the ALQ184 pod, and we take out the critical technology components that we can reuse.

We combine that with some development that NGES, the electronic systems sector is doing, to put a new brain, for lack of a better word, on where we control the profiles and the algorithms for jamming an electronic world. And we combine that back together, and provide them a savings of-- a maintenance savings of over $750 million dollars over the course of the program. That's a very good, affordable way to take two systems that, frankly, on their own, probably were unsupportable, upgrade the critical pieces through smart modernization, and then use the innovation techniques that we've used off of other programs to insert that software and those hardware products that have already been designed and developed for other platforms. So, that was a very good – And we gave them about a two times increase in maintenance man hours. So they didn't have to fix that product. So that was a tremendous savings for our customer.

If you think about commercially on smart modernization, the Department of State and the Highway Patrol Commissions are always looking for new a way to go out and do their mission, whether it's border crossings, whether it's just doing casual observance of a city environment. So we developed a product called Air Claw. Air Claw is a commercially available aircraft that we then modified to put surveillance and reconnaissance systems I, at a very, very affordable price. In other words, we're not using the high end grade military kinds of equipment. We're using commercially available radars and information systems. And we've networked them through the kind of networking that you do, frankly, in a normal computing environment.

For this user, it's an elegant solution at a very affordable price. So we're allowing them to get into a technology that they would have never been able to afford had we given them the DoD solution that we certainly have developed and paid for. But again, they don't have the same requirements. So we've made sure that smart modernization makes sense for that particular user.

The last piece that I wanted to talk about is deployed logistics. So Jim talked about the field and weapons systems. Technical services, along with each of the other sectors, deploy forward. So we are often, with our customer, at the front edge of the battle space, you know, helping them maintain or produce readiness levels, to allow them to do their mission. Global Hawk is an interesting example. We were able to rapidly redeploy to support the 2011 tsunami in Japan. Not typically something you'd think about doing. But, because the readiness levels were at the height of where they needed to be, they were able to move that asset quickly, and maintain it in an environment that they weren't ever anticipating to maintain it in. So, not only a military application, but a commercial application as well.

Hunter is one of the earliest UAV programs, I think, that was developed-- you know, quoted as the program that will never die. And frankly, it keeps doing just what the services need. When the Army needed a forward-deployed ISR program, they developed a government-owned, contractor-operated scenario where we put our employees forward and located at the range which made sense to operate. And we, for that effort, we were achieving 99.9 percent availability rates, which, frankly, is unheard of with several aircraft doing 24/7 kind of operations. And we won the Army's Joseph Cribbins Award for that extraordinary effort of making a system availability be our primary contract factor.

If we think about internationally, we, Northrop Grumman, are also developing significant footprints in deployed logistics internationally. So the UK AWACS program, or airborne warning and control system that's based in Waddington, does – we do a whole life logistics support, much like we talk about CLS here in the United States. Whole life support is akin to that in the UK. And so, we are responsible for the depot level maintenance, the commercial seat checks, which is a way of ensuring that phase maintenance is done properly, and then the upgrade parts of those programs.

So, by giving that all to Northrop Grumman, teamed with a couple of industrial partners in the UK, BAE, one of our primary partners there, we are able to provide four aircraft mission-readiness capable, so that they can go off and do things like they did in Libya. They had fantastic performance out of this weapons system when called upon for that particular operation.

We're going through midlife upgrade right now. So all of the smart avionics activities that we're doing in AS and ES logically flow right into that process. So, that was – The UK team is very happy with us. In fact, we're going over to the air show here fourth of July weekend, because they don't have fourth of July. So we're going over there to support a lot of flying that this system is going to do.

The last example I have is, we also do things that you don't typically think about in the deployed logistics arena, like supporting our first responders. We've trained over 75,000 first responders for real life activities, for things that you don't know are going to happen, but they need to be ready for. Whether it's a wildfire in California, whether it's a potential bomb or nuclear event, we go through the whole process of training those teams. And so, we've made sure FEMA and DoD have available and ready trained people to meet those missions. And that's a big deal.

So, kind of my final thoughts on where we're going here. We're focusing on delivering integrated, affordable solutions, through leveraging the technologies that we are developing, either with our industry partners, or with our customers. We're also – We've got a strong industrial partner relationship that we've also developed. So, a lot of the people that are supporting us are also helping us maintain these kinds of readiness levels. And it's changed the culture in some of the activities they're doing. So, to make our suppliers ready is equally important to have Northrop Grumman people on the front lines ready.

And then, the last piece, the relationships with our DoD and the initiatives that we're doing. A lot of those initiatives are actually starting in the commercial industry, rolling through the Department of Defense, and then becoming initiatives that allow affordable solutions to be inserted into the programs. And we're very proud of those activities.

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Innovative Logistics Solutions – Conclusion

Christopher Jones
Christopher Jones

Corporate Vice President and President,
Northrop Grumman Technical Services


As you've heard from our presenters today, logistics is an important focus area for all of Northrop Grumman. We look at this in a lifecycle manner. We look at it starting with basic design and development, trying to design high amounts of reliability, maintainability, and readiness into our products. We remain focused as these products are developed, tested and produced, then as they're deployed. And, we apply the same level of expertise and technical excellence for sustainment, then eventual modernization.

We apply all of that to both our own products and those products not designed or developed by Northrop Grumman, where we think we can add value. And, given the large amount of equipment that exists in the world, given the environment that this equipment will be used in, and given the requirements of our customers, we feel this is going to be a good business for us today and for the future, to be able to leverage the technical expertise Northrop Grumman has, to provide logistics, sustainment and modernization solutions.

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