How We Manage

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Risk Management
We operate a vast global supply chain that brings with it both opportunities and risks. Minimizing risk across a wide range of businesses and locations is a difficult task. We need to consider factors including suppliers’ financial and operational stability, the multiple interconnected levels of our supply chain, country solvency, cyber security, legislative activity, geopolitical events and the prospect of natural disasters.

To manage these complexities and uncertainties, we implement companywide supply chain risk action plans, tools and mitigation processes, led by our Global Supply Chain Operations and Enterprise Risk Management departments. Key risk indicators and mitigation activities are evaluated quarterly and reported to the Board of Directors.

We use a risk management tool to evaluate the health of individual supplier companies, and our business areas deploy real-time incident management systems and processes to track and react to disruptions such as natural disasters, terrorist activities, labor strikes, criminal activity and fires. When evaluating risk levels, we prioritize suppliers based on criteria including how critical the products supplied are, whether the supplier is a sole source, the supplier’s record of quality and the state of our supplier relationship.

Environmental and Social Performance
We give guidance to suppliers on our sustainability expectations. Our ethics policy statement is included on each purchase order we issue. We also send an annual letter to our suppliers stating our core values of ethics and integrity upon which Lockheed Martin’s reputation is built. Our suppliers are required to meet environmental and human rights requirements in their dealings with us. We plan to expand our Greening the Supply Chain program to incorporate broader sustainability principles, with the goal of holding our suppliers to the same environmental and social standards as we hold ourselves.

Business Case

Business and society increasingly view sustainable supply chains as a key generator of business value, as well as an important element of overall corporate sustainability performance. Our customers and stakeholders are also voicing growing expectations for our supply chain and are seeking more supplier-related governance and performance information. Stakeholders want to know how we are managing our suppliers, what we expect of them, and how suppliers are performing against our expectations. It is therefore in our business interest to develop a sustainable supply chain.

In response, we will continue to work with our suppliers to manage both the sustainability risks and opportunities afforded by our global supply chain. We are working to incorporate broader sustainability principles into our supplier requirements.

Supplier Excellence Plans

Lockheed Martin takes on difficult challenges which often involve cutting edge technologies, and we and our suppliers often face unforeseen challenges and technical obstacles. For all our large programs, we require that major subcontractors complete a Comprehensive Risk Assessment (CRA) which covers ten common risk areas. Subcontractors then develop a supplier excellence plan of action to mitigate any risks uncovered by the assessment. This process helps us and our suppliers execute programs successfully and on time, and is vital to the sustainable business health of our company.


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