Todd Jacobson
NS&D Monitor
6/27/2014
Sandia National Laboratories is transferring a chunk of its production mission to the Kansas City Plant in a move officials say could save $3 million over the next five years. Chris Gentile, the president of Kansas City Plant contractor Honeywell Federal Manufacturing & Technologies, and Sandia National Laboratories Director Paul Hommert, signed an agreement this week to finalize the details of the transfer and kick off a one-year transition period. Under the agreement, the Kansas City Plant will assume responsibility for several product families previously managed by Sandia, including frequency devices, power assemblies, magnetics, and certain custom pulse discharge capacitors. Sandia will still retain design authority over the components, and will also continue managing four other external production product families: switch tubes, electronics packaging, power sources, and explosive devices.
Like Sandia, the Kansas City Plant will not manufacture the parts themselves, but it will take over management of an existing subcontractor base. The work is “relatively expensive and relatively high complexity,” Honeywell FM&T Senior Director of Program Management Rick Lavelock said, even though the approximately 50 additional parts the Kansas City Plant will manage represents only a 5 percent increase to the 1,000 parts it currently procures.
‘It Really Gets Back to the Core Competency of the Two Organizations’
The transfer will amount to about $90 million in work over the next decade, Lavelock said. “It really gets back to the core competency of the two organizations,” he said. “Sandia is exquisite with design and novel approaches to getting components to fit in packages and that’s their forte. Honeywell has a true strength in supply chain management prowess. Since all these products are actually produced by suppliers and managed internally it really made sense to get better alignment with our core competencies.”
Officials from Kansas City and Sandia said the transfer was a mutual decision between the contractors. “This is a self-started and collaborative initiative we have developed together and fully endorse,” Hommert said. “We believe it better aligns core strengths at each site and that it creates added value and efficiencies through the consolidation of resources and the leverage of existing supply chain management systems and infrastructure.” David Plummer, the director of engineering design and integration at Sandia, said the transfer “aligns the responsibility for the work with the government entity that was designed to do the work. The production families we transferred align with the technical competencies and the business model for Kansas City.”
Expertise Determined Transfer of Work
Lavelock said the decision on what missions to transfer, and what should remain at Sandia, was made with the expertise of each facility in mind. Some product families were transferred years ago from the Pinellas Plant in Florida and Kansas City never developed an expertise in certain areas. “The decision was based on the expertise that both organization still had and therefore the cost to transfer,” he said. “Neither organization thought it was cost effective to transfer everything.”
Lavelock said Honeywell is still refining the amount of cost savings that will be generated from the transfer, calling it a work in progress. “We think there will be more economies,” he said. “The good news is we already had fully functioning supplier quality programs, procurement organizations, inspection of incoming products and so forth. It only adds a small incremental cost to Kansas City so the savings enterprise-wide will be pretty significant that Sandia will be able to divest themselves of.”
