Like many companies, defense contractor Northrop Grumman Integrated Systems is in the middle of a supplier base reduction initiative. Over the last two years the number of suppliers for Integrated Systems has been reduced from 1,800 to 850, according to Tom Vice, senior vice president of materiel for Integrated Systems. The number will likely be reduced to 750 by the end of the year.

However, the number of electronics suppliers will probably stay the same. Reason: Buyers at Integrated Systems aren't purchasing semiconductors, passives, con- nectors and other components. Rather, they are buying finished electronics systems such as radar systems, avionics-controlled computers, flight computers, mass memory units and liquid crystal display systems, and there are few capable suppliers to begin with. Those systems are for the Hawkeye, E2C, Hornet and other warplanes the company makes for the Navy, Marines, Air Force and other armed services. Northrop Grumman Integrated Services purchases about $1 billion of electronics systems and nonelectronic materials per year.

"Our focus is with supplier base reduction standard parts, sealants and sheet metal, and not electronics," says Vice. "With electronics, the focus is not on supplier reduction, but on supplier collaboration." Supplier collaboration is important because of the limited number of sources for these high-tech leading-edge systems.

"For instance with radar systems there are only a few suppliers in the world who can provide these things. The job in that area is not reducing the number of suppliers but collaborating with the ones you have left," says Vice. For radar systems Integrated Systems uses its sister sector Northrop Grumman Electronic Systems, Raytheon and Lockheed Martin. "We team in one way or another with those entities to build our products," he says.

Vice says the electronics supply chain won't be reduced because those suppliers develop enabling technology for new systems that Integrated Systems needs. "That's different than say machine houses where there may be 40-50 to choose from," says Vice.

In fact, there are times when integrated systems will add an electronics supplier. "Say a company develops a state of the art technology in a particular area that is applicable to a program we are trying to develop. We may go after that company to get that technology into our platform," says Vice. "It may be a technology we have not used before."

An example might be displays. Integrated Systems has always used LCDs. "However, maybe a new application requires glass plasma displays. We would go after someone who has glass plasma technology," says Vice.

A subcontract buyer at Integrated Systems could be the person who is involved with bringing new technology in-house at Integrated Systems. Subcontract buyers have the responsibility to manage relationships with electronics suppliers.

"A subcontract buyer is a person who has the skills to handle complicated systems such as radar," says Vice. "They have the ability to write and execute contracts and to work closely with engineering to establish requirements and discuss them with suppliers." Requirements would include performance parameters of the systems, reliability, supportability, overall cost, development and lifecycle costs, and mean time between failures.