Requirements to be an Aerospace Supplier
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1 Requirements to be an Aerospace Supplier 5 th PE COI Annual Conference 11/04/ Rolls-Royce plc The information in this document is the property of Rolls-Royce plc and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of Rolls-Royce plc. This information is given in good faith based upon the latest information available to Rolls-Royce plc, no warranty or representation is given concerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc or any of its subsidiary or associated companies
2 Content Rolls-Royce overview Global Supply Chain - Challenges Operational Excellence prerequisite? Generic requirements for supply chains How to participate in the global opportunity? 2 Rolls-Royce proprietary information
3 Group profile 3
4 A consistent approach to business 4
5 2012 financial highlights 5
6 A global business 6
7 Investing for future growth 7
8 Civil aerospace 8
9 Defence aerospace 9
10 Research and development 10
11 Global workforce
12 Content Rolls-Royce overview Global Supply Chain - Challenges Operational Excellence prerequisite? Generic requirements for supply chains How to participate in the global opportunity? 12 Rolls-Royce proprietary information
13 Supply Chain challenge low volume & high mix 18,000 parts 13
14 Supply Chain challenge long lifecycle Development Maturity Decline Product Lifecycle Demonstrator Engine Development Programme Engine flight Programme Series and volume production Continuous improvement Aftermarket and spare parts 3 years 7 years 10 years 20 years 10 years 20 years 14
15 Supply Chain challenge global growth, developing capability UK EMEA Americas Asia 2015 activity 2010 activity 15
16 Supply Chain challenge high value add Manufacturing in high value add Regulated and approvals required High start up cost and high barriers to entry High cost for sub standard performance Significant consequences for non quality 16
17 Supply Chain challenge turning order books into profit Customer price pressure How do we build our margins and grow our businesses? Elementals, raw materials and utilities cost pressure 17
18 Supply Chain challenge to be class leading Typical component cost structure margin energy variable cost labour If workforce does not deliver class leading performance than it does not only affect the labour cost but the total 100%! depreciation material In high value add, competitive labour cost alone does not automatically provide a competitive supply chain independent on location partly dependent on location dependent on location 18
19 Content Rolls-Royce overview Global Supply Chain - Challenges Operational Excellence prerequisite? Generic requirements for supply chains How to participate in the global opportunity? 19 Rolls-Royce proprietary information
20 Operational Excellence our experience To increase the level of maturity in Operational Excellence is a significant change program Rolls-Royce started the Journey to Process Excellence years ago Today, we have the evidence that improved level of maturity in Operational Excellence leads to improved performance - QCDR 20 Rolls-Royce proprietary information
21 Operational Excellence prerequisite? Yesterday wow factor Today order winner! Tomorrow order qualifier? 21 Rolls-Royce proprietary information
22 Operational Excellence Operational Excellence level of maturity a SEA sample 5 Industry Maturity Assessment Manufacturing Complexity Aerospace Other Industry 22
23 Operational Excellence maturity score Operational Excellence prerequisite? To venture into Aerospace, class leading maturity level in Operational Excellence is essential! World Class Aerospace House Keeping Lean Principles Quality System Six Sigma SPC Continuous Improvement Performance Management Visual Management Fail Proof Processes Effective Change Control Material Handling Step 1 class leading Operational Excellence Step 2 enhanced capability Aerospace approvals Developing low Manufacturing Complexity high 23
24 Content Rolls-Royce overview Global Supply Chain - Challenges Operational Excellence prerequisite? Generic requirements for supply chains How to participate from the global opportunity? 24 Rolls-Royce proprietary information
25 Suppliers generic requirements Competitive cost structure, e.g. location in emerging markets Financial stable and strong suppliers Preferred trading currency - US Dollars Commitment to Long Term Agreement (LTA) Agreed cost modeling / transparency Lean manufacturing / continuous improvement capability World class delivery and zero defect quality 25
26 Challenges and lessons learnt Significant capability gap in developing countries l l l l l Education standards Advanced technologies Advanced materials Operational Excellence maturity Aerospace approvals High levels of investment for equipment Long start up phase, hence high cost of learner High validation effort for manufacturing processes Demanding approvals, e.g. NADCAP, SABRe Supply Chain management - vertical integration l l l Special processes Tooling and fixtures Raw materials barriers to entry 26
27 Content Rolls-Royce overview Global Supply Chain - Challenges Generic requirements for supply chains Operational Excellence prerequisite? How to participate in the global opportunity? 27 Rolls-Royce proprietary information
28 How to participate in the global opportunity? We aim for fewer but more strategic suppliers We encourage our existing suppliers to grow with us and to develop a global footprint We proactively develop technologies for tomorrow s engines entry points Bring new technology into Aerospace Partner, collaborate with existing suppliers to develop global footprint Sub tier for suppliers in region Significant investment into capability and capacity development 28
29 Christian Mutter Business Development Director Supply Chain Asia Pacific 3 Temasek Avenue #19-01 Centennial Tower Singapore DID: christian.mutter3@rolls-royce.com 29
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