The North West Aerospace Alliance Aerospace Supply Chain Excellence (ASCE)

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1 The North West Aerospace Alliance Aerospace Supply Chain Excellence (ASCE) The content of this material is the property of the North West Aerospace Alliance (NWAA) and should not be reproduced without the express permission of the NWAA 1

2 NWAA Organisation Key Indicators Founded 1994 as a not for profit company Full time staff 30, Associates, 5 Part time OEM programme support staff, 25 Turn over 2010/2011, 5millions Contracts under management circa 10 millions Active membership of 370

3 The NW Regional Aerospace Industry Turnover, 7 billion 50,000 direct employees Airframe & engine component orientated 6% of regional GDP Average GVA per employee, 74,000 Regional average GVA per employee, 15,000

4 Aerospace Supply Chain Excellence 4

5 Aerospace Supply Chain (ASCE) Development ASCE 1 is based on the development of individual companies within a cluster a supplier development programme ASCE 1 has defined the shape of the industry in the North West (the tiering structure) and has developed the foundations of common culture, language and processes. ASCE 2 recognises the need to create a close coupled, knowledge based cluster, integrating companies and support infrastructure - the supercluster

6 Aerospace Supply Chain Excellence 1 6

7 The North West Aerospace Alliance (NWAA) has created a supply chain improvement programme with the objective of creating a World class supply chain in the North West region. ASCE 1 The Programme is called Aerospace Supply Chain Excellence (ASCE) and is supported by BAE Systems, AIRBUS & Rolls-Royce (The Primes) The 4 year programme value is 4 Million total programme value of 8 million which includes revenue from Suppliers and partner in-kind contributions.

8 ASCE Structure ASCE Programme Steering Group (Strategic Direction) NWAA Manage NWAA Contract & Manage Mentoring Benchmarking Training & Coaching Review Journey to World Class Journey to World Class 45 Aerospace Supplier Companies

9 End-line Customers ASCE 1 Programme Regional Shape Final Assembly Line (FAL) UK Centres of Excellence Multi Tier Suppliers Work Package Suppliers Inward Investment Tier 1 Suppliers Inward Investment SPACE SPACE Tier 2 Suppliers SPACE SPACE Tier 3 Suppliers SPACE SPACE G PARKER ENGINEERING GRETONE LTD Tactical Off Load or Low Cost Source Suppliers

10 Benchmarking Learner to World Class The NWAA has developed a 5 Step model (Learner to World Class) for Supplier development. The model describes the characteristics and capabilities expected of companies for each step from Learner to Developer to Performer to Contender and finally to World Class for each of the 11 foundation processes.

11 Top Level Diagnostic

12 Detailed Foundation Process - Lean

13 All Companies Benchmarked NWAA Average Score for all 24 Companies Benchmarked

14 All Companies Benchmarked Average Tier 1 Average Tier 2 Average Tier 3 Average Multi Tier Suppliers Average all 24 Companies

15 Priority Action

16 Training & Coaching Training and Coaching is typically funded at 50%. The Mentor will ensure that an organisation uses the appropriate training at the right time in support of the improvement plan. The supplier will have the services of dedicated coaches who will work with the organisation to ensure that any training taken is then deployed appropriately within the business. Foundation Process Standard 1. Leadership Lean Learning Academy 2. Strategic Bus Planning Goal / Policy Deployment 3. Project/Risk Management APM 4. Lean Manufacturing Excellence 5. Supply Chain Management Make vs. Buy Supplier Assoc 6. Skills Development Skills Matrices PDP 9. Collaboration SCRIA 10. Facilities Management Various 11. Sales & Ops S&OP Trainer

17 Process Confirmation

18 Process Confirmation Results Original Benchmark Movement of priority areas Movement in other proceses Original Line-in-the-Sand

19 NWAA Learner to World Class Model 100% 100% Target Condition (end 2009) Average of 10 companies D = 96%, Q = 5-6 σ quality, delivery 6σ 5σ 4σ 99% 95% 80% Current State (after 2 nd Benchmark) 12 months into ASCE Average of 4 companies D = 90%, Q = 4-5 σ Original State Average of 26 companies D = 80.3%, Q = 4 σ 3σ 60% 2σ Learner Developer Performer Contender World Class

20 ASCE 1 Outputs Typical cluster based intervention return 7 for every 1 invested ASCE 1 return at mid programme: 50 to 75 for every 1 invested 276 Senior managers trained, 1700 man days of training

21 Aerospace Supply Chain Excellence 2 21

22 ASCE 2 Key Themes Skills The generation and ownership of the skills demand signal through an aerospace Skills Centre of Excellence Commodity Groupings Focussed technology sectors based on regional core capabilities which provide the demand signal for skills, innovation and shared services Shared Services The focussing of knowledge and experience in industry support centres of excellence to deliver radical performance advantage Innovation A strong partnership of industry, academia and business support organisations responding to strong, cluster led demand signals applied to the product life cycle Extended Enterprise (Collaboration) Building on the common culture of ASCE 1. ASCE 2 will establish the DNA for the first model of the extended enterprise in the aerospace industry

23 ASCE Progression Extended Enterprise Shared Services Commodity ASCE 2 Work Share Groups Supplier Shared benefits Associations Common strategy ASCE 1 Common language Shared objectives

24 SME s Supply Chain SME s University & Science Research Collaboration Shared Services Industry Image Innovation Programmes SKILLS Demand Autonomous Systems Commodity Virtual Eng Centre Process Treatments Commodity Carbon Composite Commodity Hard Metal Commodity Integrated Assembly Commodity Automation Robotics Tooling Commodity Advanced Metal Forming Commodity Strategies Design Houses ASCE 2 Super Cluster AMRC

25 ASCE 2 Status Value 11 Million ( 6.9 Million ERDF and RDA investment) Contract signed November 2009 Revenue / In kind contribution circa 5 Million Programme length 4 years ( )

26 4 STEP MODEL FOR SUCCESSFUL CHANGE PRESSURE TO CHANGE Pressure to + Clear Shared + Capacity to + Change Vision Change Actionable First Steps = THE LONG TERM (2020) MARKET FORECAST IS FOR SIGNIFICANT GROWTH, WHILST HEADCOUNT REMAINS UNCHANGED 26

27 Aerospace Supply Chain Excellence (ASCE) 2 Skills Academy 27

28 Skills Academy Key activities Development of Skills Capacity Model Workload Forecast From Primes Resource Forecast & Demographics from Suppliers Development of Regional Skills Strategy Co-ordination of Delivery of Regional Skills Strategy Development of Impact Plan for Image Co-ordination of Delivery of Impact Plan for Image

29 Basic skills matrix by product/man hours Demographic impact Technology shift Skills Model, Variables Matrix New programmes In-house re-skilling In house up-skilling effect

30 Aerospace Supply Chain Excellence (ASCE) 2 Commodity Groupings 30

31 North West Regional Competences Military aircraft systems integration Airframe components Hard metal machining Military & Civil aerospace composites Engine sub systems and components Systems engineering, UAV s & systems design

32 Supportive to make but non-essential Not Competitive but closely linked Control Small composite parts (access panels) Small sub-assemblies Pipes & tubes Specialised Treatments Regional Core Capabilities for the Future Electrical content Process Treatments Composites Multi Axis hard metal machining Digital assembly Make Autonomous systems Automation/ Robotics / Tooling Advanced metal machining Knowledge Capabilities Innovative R&D Focussed Obviously Noncompetitive High touch time manufacturing Outsource/ offset Buy Electronics GRP moulded parts 3 Axis Soft metal machining Simple formed parts 3 Point bending Plastics General tooling Flat & Form details Metal bonding Billet Preparation Stretch Forming Deep drawn forming Titanium forming 4 axis machining Electron beam welding Long bed machining Protect Relatively dependant capabilities Currently competitive Doubtful future deployment

33 Regional Skills Academy Commodity Groups Commodity Groups Composites Hard Metal Machining Integrated Assembly Extended Enterprise Commodity Groups Shared Services Autonomous Systems Advanced Metal Forming and Joining Automation, Robotics & Tooling Virtual engineering & systems design Process Treatment Innovation 33

34 Commodity Group Key Activities Set regional strategy Share best practice Identify opportunities for radically improved efficiency (shared services, collaborative enterprise) Create innovation challenge against global competition Agree innovation priorities requiring R & D resources Initiate skills & skills development demand to the skills academy Benchmark the regional competitiveness

35 Aerospace Supply Chain Excellence (ASCE) 2 Shared Services 35

36 Supplier Management Anticipated View & Service Provider Shared Services Team Supplier: Electricity KPI Quality Cost Delivery Etc... P P P Supplier: PPE Supplier: Personal Care Supplier: Stationery

37 Some of the Benefits Reducing direct purchasing costs Reducing indirect purchasing costs Better service from suppliers Access to specialist services such as Quality, Legal, Environmental etc Bulk purchases across the groups will create lower prices per unit Simplified purchasing process reduction in time spent purchasing, allowing focus on core activities Suppliers will be measured against a number of KPI s to ensure better service to customers Will be of particular benefit to companies without resource to employ full time experts

38 Future State Sharing Expert Personnel & Service Provider Shared Services Large company with expert personnel who may not always fully utilised NWAA coordinates the share of expert skills between organisation s Small company without the resources to employ a full time person with required skills

39 NWAA providing expert services to our customers Future State NWAA Expert Services

40 Aerospace Supply Chain Excellence (ASCE) 2 Rationale

41 Market Forecast World Class 41

42 Market Forecast - Uncompetitive 42

43 Aerospace Supply Chain Excellence 43

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