Operations Management - Northrup Grumman. Research Paper

THE OPERATIONS MANAGEMENT OF NORTHROP GRUMMAN
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THE OPERATIONS MANAGEMENT OF NORTHROP GRUMMAN
Abstract
Space flight and aviation require high maintenance, thorough monitoring, and responsible management. All of which comprise the different aspects, categories, and subsets of Northrop Grumman Corporation. Its internal aspects centralizes on its capabilities as a corporation while its external aspects defines its leadership efficiency furthering a breakdown on its global competitiveness in comparison to its rival companies. With the goal of assessing its performance as a leading defense and aeronautics corporation, this research paper serves to discuss and analyze Northrop Grumman through its operations management. The findings present the corporation’s key success aspects, driving force, and core competencies necessary for achieving its mission and vision through exemplary and progressive performance.
Introduction
A worldwide security corporation, Northrop Grumman Corporation provides an exceptional set of potentials and applied science covering under sea, cyberspace, and outer space; thereby, caters to both commercial clients and the government its groundbreaking solutions, products, and systems. In line with the corporation’s mission of ensuring the country’s freedom and security and with the design to attain the corporation’s anticipated necessities, Northrop Grumman created an efficient means of rendering the skill of airworthiness to individuals who seek to study and wish to be part of such subject area/s. In 2017, Northrop Grumman then collaborated with Embry-Riddle for the development of the country’s first independent airworthiness engineering graduate study program -- Certificate of Study in Airworthiness Engineering (CSAE). As such Northrop Grumman had acknowledged the program’s first batch of graduate students for, as Embry-Riddle’s CSAE Program Coordinator Professor Greiner quipped, partnering with universities pave the way for student empowerment in pursuit of aeronautical occupations.
In the United States of America, no formal study course in airworthiness existed prior to the establishment of the CSAE program. Clients placed an increase in the importance of airworthiness as an independent field of study as the demand for a more cutting-edge technology, updated knowledge, and extensively comprehensive skillfulness have become dire. The program then provides a centralized method for solving the industry’s concern in bringing engineers to such aforementioned ideals. Programmed to last 15 months per course study, the coursework of CSAE mixed in asynchronicity and synchronicity for the student to earn 12 graduate-level credits in addition to the CSAE certificate. Such credits are applicable when a student desires to take a master’s degree at any of the campuses of Embry-Riddle (Roddey, 2018).
The CSAE program of Northrop Grumman ranks only as one among its achievements in aeronautics. In order to determine the corporation’s strengths, weaknesses, opportunities and threats, a discussion on its tasks, systems, achievements, and factors affecting its management will assist in the assessment of its performance. This research papers aims to discuss the operations management behind the corporation’s and its programs’ success.
Northrop Grumman’s Operations
Formerly situated in Los Angeles, California, the current corporation’s principal central office in Fall Church, Virginia serves as an easier means for client accessibility. Two of its four business sectors’ headquarters are also located in the same state Herndon and Dulles. Its headquarters in U.K. is located in London, England (Thompson, 2011). The underlying Operations of Northrop Grumman serve as one of the internal factors to the development, success, and evaluation of its operations management.
Business Sectors
Aerospace Systems (Headquarters: Redondo Beach). With an estimate of 24,000 employees, the market value of this sector costs around 10 billion US dollars. It sector engages in designing, developing, integrating, and producing systems such as next-generation innovations (mircoelectronics), space systems, autonomous systems for strategic and tactical operations, and military aircraft. It caters to clients such as U.S. government agencies and the Department of Defense. The Autonomous Systems revolve around designing, developing, manufacturing and integrating Intelligence, Surveillance and Reconnaissance (ISR) programs. Multinational missions use the Alliance Ground Surveillance (AGS) under the North Atlantic Treaty Organization (NATO). Coastal areas and oceans use real-time ISR through the Triton system. As for big geographical regions, these require high resolution images using high-altitude system called the Global Hawk system. The Military Aircraft business focus on systems such as directed energy, tactical aircraft, long-range strike aircraft (B-21 Raider long-range strike bomber), and airborne C4ISR (Joint Surveillance Target Attack Radar System (JSTARS), E-2D Advanced Hawkeye) (Reuters 2018; Martinez, 2016).
Mission Systems (Headquarters: Linthicum, Maryland). Under the presidency of Mark Caylor, this sector has offices in more than twenty countries and fifty states housing approximately 30,000 employees. In 2011, this business was approximately 8.4 billion US dollars. It caters to all kinds of clients (commercial, civil, federal, international) and the Department of Defense as this provides multifunction systems and operational solutions such as Advanced Capabilities, Cyber and ISR, and Sensor and Processing (Reuters; Martinez).
Technology Services (Headquarters: Herndon, Virginia). This sector supports the systems and platforms in their respective whole developments as it offers Advanced Defense Services, Modernizations and Services, and Global Logistics.
Innovation System (Headquarters: Dulles, Virginia). Under the Presidency of Blake Larson, it functions over 18 states with 15,000 employees. This sector is tasked in designing,building, and delivering advanced aeronautical structures; ammunition, armament systems, and precision weapons; propulsion systems and launch mobiles. systems from avaition-related to defense to space (Reuters; Northrop Grumman Official Website, 2018).
Organization Structure
The corporation is known for having regional corporate liaisons and continental and international corporate lead executives. They supplement the principal people behind the operations of the corporation, who consists the 3 primary head entities: elected officers (Chief Executive Officer, President, and fifteen departamental Vice Presidents), corporate policy council, and a board of directors. Among the three entities, the role to deliberate every major opportunities, threats, issues, and problems considered as policy-leveled fall in the hands of the corporate policy council (Martinez; Executive Summary 2011, 2011).
Northrop Grumman’s Marketing and Finance
Aside from its operations, the internal factors also include Marketing and Finance. The U.S. Government has been the primary client title of Northrop Grumman’s list, followed by local and state governments, commercial agencies, and international organizations. With an estimate of 92 percent, the U.S. government holds a major percentage considered in the total revenues of 2016 (USD 6,397 million), 2017 (USD 6,634 million), and 2018 (USD 6,735 million) of Northrop Grumman (Table 1. Reuters, 2018). In comparison to its 2010 Annual Report, no more than 10% of its total revenue was accounted by any other sole service or product. As the world’s largest defense and aeronautical market, the progress of the industry relies mainly on how government departments spend, driven primarily by the U.S. defense budget, which is the largest of the global military funds. In the 2010 Annual Report, a total of USD 698,000,000,000 (million) accounted for the 43% in the overall world defense spending of USD 1,600,000,000,000 (billion) came from the U.S. Defense (Northrop Grumman Corporation’s Annual Report Form 10-k, 2010). In table 2, the overall sales in the industry has reached 7% this year, the growth rate in sales reflects the increase in two of its three main sectors (Aerospace Systems and Missions Systems) and additional sector (Innovations Systems). In 2010, only 1% allotted for the increase in Technology Services and the formerly Information Systems.
Table 1. Revenue and Earnings per Share (Reuters, 2018)
 

 

Revenue*

Earnings Per Share**

 2018 FY

March ‘18

6,735.00

4.213

 2017 FY

December '17

6,634.00

2.722


September '17

6,527.00

3.679


June '17

6,375.00

3.145


March '17

6,410.00

3.691

2016 FY

December '16

6,397.00

2.959


September '16

6,155.00

3.352


June '16

6,000.00

2.848


March '16

5,956.00

3.032

 
*Note: Units in Millions of U.S. Dollars
**Note: Units in U.S. Dollars
Table 2. Growth Rates (Reuters, 2018)
 

Company

Industry

Sector

Sales (MRQ) vs Qtr. 1 Yr. Ago

5.07

7.06

10.94

Sales (TTM) vs TTM 1 Yr. Ago

5.24

6.85

25.14

Sales - 5 Yr. Growth Rate

0.46

5.39

11.24

EPS (MRQ) vs Qtr. 1 Yr. Ago

14.15

343.04

-44,969.46

EPS (TTM) vs TTM 1 Yr. Ago

7.07

--

--

EPS - 5 Yr. Growth Rate

11.05

6.53

14.97

Capital Spending - 5 Yr. Growth Rate

22.90

2.95

10.49

Table 3. Financial Strengths (Reuters, 2018)
 

Company

Industry

Sector

Current Ratio (MRQ)

2.52

1.24

2.04

Quick Ratio (MRQ)

2.45

0.81

1.61

LT Debt to Equity (MRQ)

187.40

109.82

89.19

Total Debt to Equity (MRQ)

198.70

130.56

107.59

Interest Coverage (TTM)

11.05

34.29

30.07

Table 3 indicates that Northrop Grumman has greater financial strengths with private, commercial, local sectors compared to the overall industry of Aeronautical and Defense. However, the company itself stands out from both financially enabling its purpose to produce capital for its products and services.
Table 4. Efficiency (Reuters, 2018)
 

Company

Industry

Sector

Employee’s Revenue (TTM)

375,300

1,307,596

1,055,323,260

Employee’ Net Income (TTM)

34,486

61,336

57,850,051

Receivable Turnover (TTM)

5.72

3.68

7.67

Inventory Turnover (TTM)

29.62

4.66

76.55

Asset Turnover (TTM)

0.87

0.50

0.71

The financial weakness of Northrop Grumman manifests in the net income of its employees as shown in Table 4. It is not inadequate but there have been suggestions from its former employees as to how it must match their cost of living, particularly in United Kingdom. Part of Northrop Grumman contracts include an emphasis on how both the subcontractor’s and employee’s performance, and how available and costly the required raw materials are contribute to the company’s earnings and margins. Nonetheless, the corporation provides medical and pension expenditures for its employees relative to benefit plans for retirees (Northrop Grumman Corporation’s Annual Report Form 10-k, 2010).
Table 5. Management Effectiveness (Reuters, 2018)
 

Company

Industry

Sector

RoA (TTM)

8.02

4.26

5.42

RoA- 5 Yr. Avg.

7.87

5.35

4.71

RoI (TTM)

9.93

7.55

...