By Ann Roosevelt
Rockwell Collins [COL] Services strategic move to a sub-system service integrator from a traditional “fix the box” mode is proving successful, an executive said.
“Nothing happens at Rockwell Collins without a strategy,” Kent Statler, executive vice president, Rockwell Collins Services, told Defense Daily. “The final feed back of that is the growth we’ve seen in the business.”
Outside the traditional Maintenance, Repair and Overhaul (MRO) business, in the engineering services–obsolescence management–the public private partnerships, the logistics support, there is strong growth.
“We’ve seen probably in the realm of a 20 percent compounded annual growth rate in that over the last five years,” he said. “Our simulation and training business over the past three years has averaged about that same number, about 20 percent growth on an annual basis.”
In 2005, Statler took a fresh look at the service business as he took his current job.
From 1998, when services was pulled out as a standalone business from the government and commercial businesses, the focus had been how to increase market share and the repair of the boxes in the traditional Original Equipment Manufacturer (OEM) model of an MRO.
That led to a “fairly high market share” for Rockwell Collins, doing about 65 percent of the repair of its products, he said. About 35 percent is done within government entities, such as depots. On the commercial side, about 75 percent of the work is done internally, the rest almost exclusively by airline MROs.
“As we went in there and looked at the market, we saw some trends in the market that were truly winds of change,” he said. The key drivers included coming pressure to flatten the defense budget, the geopolitical environment, an acquisition cycle with delays, cancellations and overruns “plaguing” programs, and a requirement for new ways to do sustainment and support.
The resulting strategy sees the work moving from a box repair function to a sub-system service integrator role. The bottom line and the end-state metric: “to improve readiness of warfighter is just critical,” he said.
For Rockwell Collins, there are not a lot of new platforms in sight at DoD. There is an extension of life needed for current platforms, as the Defense Secretary has emphasized and a streamlined supply chain.
Today, it is not uncommon for it to take more than 100 days from when unit fails until it is available to go back on the platform, Statler said.
“What we’ve done within the traditional service side, we’ve taken that from 95 percent MRO to roughly about 60 percent MRO, 40 percent engineering services, and then on top of that we’ve brought in the simulation and training side,” Statler said.
“We’ve really tried to balance the business where we still rely on that core of MRO as an access to product…What it leads to is the need for how to streamline the supply chain to get the most efficiency and effectiveness in the supply chain, how to ensure you have a global supply chain to support those U.S. troops as they operate in a global environment, and secondly our global allies as they take on our equipment as well and thirdly is to be able to do it in a partner and alliance way with DoD.”
Working with DoD becomes a lesson learned, Statler said, because in the past Rockwell Collins saw the depots as a competitor. But what must be done is to help depots become successful.
“We come in with things such as public private partnerships where you actually partner with the depots,” he said. “We give them the latest and greatest technology, which is a key problem for them today, because they have a very aged technology…we bring in that training for them, but at the same time we bring the processes and also the supply chain that goes behind it that allows them to streamline their supply chain.”
For example, the Rockwell Collins ARC 210 Air Force and Navy communication radio that “is in almost every cockpit you could ever fly” has a full cross-service performance based logistics (PBL) program, whereby the company is paid on a flight hour basis for maintaining an availability of units off the shelf. Rockwell Collins takes over the logistics chain and takes responsibility to ensure a unit is available, dispatched to where the availability to the customer is guaranteed, normally in the 90 percent level. “Quite candidly we’ve been able to reach into the 99 to, in some cases, 99.5 percent availability for the warfighter.”
“One of the key lessons learned in a PBL is you’ve got to have the right performance metrics,” Statler said. “You have to have the things such focusing not on turnaround time, not on days in the supply chain–you have to focus on availability.
What the warfighter wants is when they need a unit, there’s one there, ready to use,” Statler said
What Rockwell Collins learned and has incorporated into all its PBLs is to work with the customer and define the key definitions of success.
The ARC 210 was at a roughly 60 percent availability for many years, he said. Now it’s running at about 98-99 percent availability, he added.
“If you look at the U.S. Coast Guard, it’s the poster child, he said. A 10-year contract was up for renewal and was renewed for another 10 years. “They clearly say that’s the model of how PBL is to be run, and they’ve put it across all Rockwell Collins units across all the Coast Guard fleet.”
Statler said the company believes such a move is in the works and that DoD is looking to industry to step up and perform these integrated services offering over the lifecycle of a program.
“The idea is that logistics and support need to be involved in every phase of the program,” he said. Programs focus on technical requirements in concept and development but tend to overlook the fact the system will be in the field for 20 years, 30 years or more.
“We see that the leading edge programs–and we think this is both a lesson learned and also the future–is that you will see logistics embed itself clear through the 10 phases of the life of a program,” Statler said. “It’s gaining momentum. The ability to really mandate that at the front end we believe will be through mandates or through directional funding into those line items.”
Rockwell Collins now has more than 400 people deployed as field service representatives, working on conceptual program stages to consider logistics and support from the initial work, and at the other end, on obsolescence management plans.
“Conceptually, clearly we see this because we see the market changing and the key market drivers that are there,” Statler said. “We see an underserved market.
For Rockwell Collins, “we’ve got about as much share as we’re going to get” in the MRO market, he said. “If you look at the expanded lifecycle of both concept development, logistics, clear through the obsolescence management things, it will literally put a three fold increase on the size of your addressable market.”
The strategy is not static, but reviewed and adjusted as needed.
“We’re very, very bullish on both the opportunity, but also the initial results we’ve been able to achieve in this area,” Statler said.