SPACE supports the European aviation industry and secures global competitiveness

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1 n o n p r o f i t O r g a n i s a t i o n SPACE supports the European aviation industry and secures global competitiveness Jochen Bucher Airbus Operations GmbH Supplier Development Cabin Norbert Schröder SPACE Germany March 2014

2 Our challenge: A strong growing market Example: Airbus order backlog Net orders 2013: Airbus : Boeing : Deliveries 2013: Airbus : 626 (plan 2014: approx. 650) Boeing : 648 (plan 2014: ) further growth of order backlog in 2013 : Airbus : Boeing : The coming ramp-up of production rates in the aviation industry requires a ramp-up of the complete supply chain If we cannot reduce the backlog we will loose market shares to our competitors! Airbus and Boeing feel already the competition of Bombardier s C-Series and Embraer s E195-E2 in the market of aircraft with up to150 seats!

3 Airbus Make-or-Buy strategy Strategic focus on Risk Sharing Partners (RSP) From Make Built-to-print To Buy Design-and-build Platform Assembly Airbus Airbus (System Integrator) Systems & Equipment Large scale integration Airbus TIER 1 Value added partss and assemblies Airbus Make-to-print partss and assemblies Raw materials High degree of vertical integration inside Airbus Local sourcing of B-t-P packages in an extended workbench approach Focus of Airbus on system integration and selected buy technologies Sourcing of major components from a network of D&B Risk Sharing Partners ( extended enterprise ) The evolution from an aircraft manufacturer to an architect and integrator requires suppliers as RSP with enhanced engineering capabilities Source: Airbus presentation on network meeting of Niedersachsen Aviation in November 2012

4 Supply chain s chances & challenges Supply chain will be re-structured and is faced with new challenges OEM TIER 1 / RSP Systems & Equipment Tier 1 Status is occupied by big international multi-systems suppliers TIER 2 Assemblies & Components TIER n Detail Parts & Raw Materials The downstream supply chain must develop the capability to design & manufacture multi-level products and services Transfer of responsabilities and accountabilities from Airbus to Tier 1, from Tier 1 to Tier 2 Increase of work package size & complexity Increase of US$ Sourcing, global sourcing and global competition

5 Supply chain s chances & challenges In the future the supply chain participates up to 80% in the value chain MAKE BUY 50% 50% 25% 75% 20% 80% Airbus 1990 Airbus today Airbus tomorrow Subcontracting volume Global 40% Global Western Europe 29% 71% Western Europe 60% Despite the increasingly global procurement strategy, the procurement volume increases for European Supply Chain Airbus today Airbus tomorrow

6 A supply chain growing in maturity

7 The - Concept in Europe The major actors in the aerospace industry support their supply chain In order to secure the production ramp-up in the aerospace industry the complete supply chain must be optimized It is not enough to concentrate only on the 1st Tier suppliers; the role of the 2nd & 3rd Tiersuppliers (mainly SMEs) has to be considered The SMEs must be prepared for the challenges of the coming production ramp-up and the requirements regarding delivery reliability, quality and costs ( on time on quality on cost ) The mission of SPACE is to conduct industrial improvement projects at supplier s sites by pooling the resources of major aerospace actors.

8 The - Concept in Europe SPACE non-profit Organisation Executive Members EADS, ATR, Eurocopter, Airbus, SAFRAN, Thales, Zodiac, Dassault, Diehl, Liebherr, Hamilton & Ratier Figeac, MOOG, Daher, Goodrich, RUAG, Aernnova Honorary Members BDLI, GIFAS, EAQG, IEF AERO, QUALIFAS, ADS SC 21, EACP Associated Members more than 80 SMEs Executive Members Branch Know How Improvement projects with associated members Expert - Pool Luftfahrtexperten Honorary Members Associated Members Improvement of Industrial Performance on time - on quality - on cost Expert knowledge Best Practices Competences/Experiences Tools, Processes Aviation Standards Benchmark Technologies

9 Two types of improvement processes Prime Contractors Individual projects Pool of Primes experts Projects External ressources funded by institutions Projects Collective projects F Suppliers

10 - Improvement Projects SPACE projects are strictly confidential; no information out of the projects will be provided to OEMs, Tier 1s or others! SPACE provides experienced experts (experienced in aviation and Lean / Six Sigma) in order to support suppliers in performing improvement projects Standardized tools and processes are used in improvement projects (e.g. Supply Chain Management Handbook of I.A.Q.G., Lean / Six Sigma principles, APICS Standards etc.) in order to gain the industrial performance With this we support the transition from handicrafts industry to production in series In order to identify improvement potential SPACE starts with a diagnostic based on IAQG Supply Chain Management Handbook (SCMH) During improvement projects the SPACE Toolbox will be applied FMEA 5 WHY S 8D Check sheet Histogram Scatter diagram Control chart Flow chart Cause & effect analysis Pareto analysis First pass yield Overall Equipment Efficiency Skill matrix Value Stream Mapping Line balancing Visual management Takt time Kanban Process Mapping Total Productive Maintenance Single Minute Exchange of Die Poka Yoke Line of balance Manufacturing Resource Planning (MRPII) Input Output Control

11 - Improvement Projects Typical improvements of SPACE projects

12 - project with Project Process optimization in drop-forge Reduction of complexity and waste Standardization of processes, tools and planning Improvement of KPIs lead time distance of product flow inventory in process As a result of the project the KPIs have been improved by approx. 30%! The project team has been awarded with the SPACE Award 2012

13 - project with

14 - project with

15 The - Concept in Europe The European initiative SPACE started 2007 in France After successful improvement projects with more than 80 SMEs SPACE and GIFAS started in January 2014 an Aerospace Program in order to support the French aerospace supply chain with more than 400 SMEs and 65 cluster heads over 3 years; this program is focused on industrial performance and relationship improvement through the whole French aerospace supply chain In 2012 SPACE started the deployment in Germany and 2013 in Spain In order to consider the national specialties it is important to give SPACE a national identity in all European countries

16 Example: - deployment in Germany In order to support the German aerospace supply chain SPACE and the German aerospace associations founded an initiative called Supply Chain Excellence Objectives of Supply Chain Excellence initiative: Initiation and performance of improvement projects in order to gain the industrial performance of the supply chain Network- and communication platform for OEMs., 1st, 2nd & 3rd Tier suppliers in order to support the transformation of the supply chain Identification of future challenges and impacts on the supply chain Acquisition of funding for improvement projects Ramp-up of national (Spanish/French/German) expert pool Development of national (Spanish/French/German) Trainings Support to introduce and develop harmonized tools and processes

17 The - Concept in Germany Members of the Supply Chain Excellence initiative German OEM focal points (SPACE Executive Members) Airbus - Aerostructure Procurement - Cabin Procurement - Systems&Equipment Proc. - Jigs & Tools Proc. - Detail Parts Proc. Eurocopter Premium Aerotec PFW EFW Liebherr Diehl Aerospace ZODIAC RUAG Supply Chain Excellence Network- and Communication platform SPACE Associated Members Otto Fuchs, 3D ICOM, DEVA, E.I.S. Aircraft, Franke Aquarotter, COTESA, Comtronic, Deharde, TITAL BDLI with it's regional associations and aviation clusters Alround ASIS AVIABELT bavairia BBAA BodenseeAIRea CCA / Hessen Aviation Hanse Aerospace LR BW LRT Hamburg Aviation Niedersachsen Aviation

18 The - Concept in Europe SPACE is your tool to improve OTD & Quality in your supply chain Our common target is the strengthening of the European aviation industry for a global competition SPACE invites you to co-operate, contribute and to benefit!

19 This document and all information contained herein is the sole property of SPACE. No intellectual property rights are granted by the delivery of this document or the disclosure of its content. This document shall not be reproduced or disclosed to a third party without the express written consent of SPACE. This document and its content shall not be used for any purpose other than that for which it is supplied. The statements made herein do not constitute an offer. They are based on the mentioned assumptions and are expressed in good faith. Where the supporting grounds for these statements are not shown, SPACE will be pleased to explain the basis thereof. Norbert Schröder SPACE Germany Tel Mob SPACE France Tel.: +33 (0) Fax: +33 (0)

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