Transforming and optimization of the supply chain to create value and secure growth and performance
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1 Transforming and optimization of the supply chain to create value and secure growth and performance Niedersachsen Aviation, Jahresnetzwerktreffen Hannover, 10th December 2015
2 Today s storyboard Short introduction to Premium AEROTEC (PAG) Trends that form and drive the future supply chain Our starting point Our strategic roadmap Management of transformation Building Procurement Excellence the vision that drives the transformation Wrap-up and outlook 2
3 Premium AEROTEC. A portrait. 3
4 The company. Premium AEROTEC belongs to the world's leading companies in the development and manufacture of structural components for the civil and military aircraft industry. 4
5 The company. Leading supplier of aircraft structures Revenues of app. 2.0 bn euros (2015) More than 9,000 employees About 1,200 engineers in research and development More than 400 apprentices Unique manufacturing processes Partnerships with the world's largest aircraft manufacturers 5
6 The company. Strong investments in research and development (R&D) Full subsidiary of Airbus Group Reliable employer with rewarding assignments Collaboration with universities and institutes Constant investments in education and further education 6
7 5 strong sites. 7
8 The programmes. Premium AEROTEC participates in all Airbus programmes, in the Boeing 787 and in large military programmes such as Eurofighter or A400M. 8
9 Civil programmes. Airbus A320 Airbus A330/A340 Airbus A380 Fuselage shells and sections Wing components Floor structure Fuselage shells and sections Wing components Floor structure Fuselage shells Wing components Floor structure 9
10 Civil programmes. Airbus A350 XWB Boeing 787 Fuselage shells and sections Wing components Floor structure Bulkhead Main landing gear suspensions Bulkhead Titanium components 10
11 Military programmes. Eurofighter Typhoon Centre fuselage section Assembly/partial equipment CFRP components system components Airbus A400M Rear fuselage section Shells for centre fuselage section Top cargo door System components 11
12 Aerospace supply chain management has to prepare for key trends and challenges. Trends that form and drive the future Aerospace supply chain Trends and challenges in Aerospace and its supply chain Globalisation Technology innovation (e.g. ALM, automation, digitalisation, Industry 4.0) Time-to-market further decreasing Vertical integration Continuous cost pressure Supply chain risks Increasing social and ecological responsibility Requirements for Aerospace procurement functions and their capabilities E2E capability of procurement and supply chain management forecasting/ planning, new products and changes, lead time mgmt. Technology and innovation scouting and management Manufacturing engineering capabilities Design and implementation of integrated supply networks at global scale 12
13 We have to transform our classical procurement approach and skills. Our starting point (PAG view) Strategic procurement Quite classical procurement approach: RFQs based on specifications, negotiations of prices and conditions. High number of suppliers. Only a few real strategic partners. Savings cases based on price savings. Strong price cutting focus. Limited TCO view; supply chain management may veto but is not a driver. Procurement operations Processing of orders often below contractual lead times. Catching up with late changes and short term demands. Chasing missing parts. Classical SAP MM use, increasingly complemented by AirSupply usage. Limited collaboration management with suppliers. Capabilities Classical purchasing skills. Limited international experience. Still more administrative and reactive procurement. Limited relationship and value management skills. Supply chain fire fighters but less improvement and innovation managers. Lack of industrial and manufacturing capabilities in supply chain teams. 13
14 Procurement Excellence will be the platform for next cycle. Our strategic roadmap (PAG view) two major cycles Stabilisation Phase (recent past/today) driven by turnaround, recovery, flexibility, capacity and short-term demands QSF-A >90% D1 < 70% R1 < 1600ppm (not always achieved) Optimization Phase (starting with/tomorrow) driven by sustainability, improvement needs QSF-B > 50% D1 > 90% R1 < 1000ppm Excellence Phase (moving to/2020 vision) driven by pro-active pursuit of opportunities and continuous improvement QSF-B > 90% D1 > 99% R1 < 100ppm BUY volume Procurement Excellence project QSF-B E2E / TOW/ MM / UNITY / Procurement Operations set-up and development Brasov Fill QSF-A 14
15 We built a new Procurement organisation with E2E responsibilities. PAG Procurement organisation with E2E responsibilities and capabilities 15
16 PAG followed a systematic process to select future strategic suppliers Strategic supplier selection for respective M2B and B2B clusters 16
17 In Detail Parts, PAG currently manages important transformation towards BTP suppliers (QSF-B). Change of PAG Detail Parts supplier landscape (QSF-A-to-B project) 17
18 PAG Procurement Excellence project works along four axes. PAG s four axes of Procurement Excellence Deliverables per workstream Best suppliers in Aerostructures market Highest performing supply chain. Digital transformation to 4.0 Highly qualified and motivated employees Selection and management of strategic partners with TCO and value creation targets. Advanced supplier life-cycle and risk management. Enhanced BCC sourcing capabilities (market opportunity management). Capabilities and processes for continuous improvement and innovation (DtV) on both sides. High performing suppliers with D1 > 99% and close-to-zero rejections (R1) and concessions; top IPCA scores and VMI > 80% of deliveries. Strategic suppliers with POA to ensure more supplier self-sufficiency in quality assurance. Comprehensive value chain and creation capabilities and focus. Integrated IT landscape (ERP, tools) with connected and digitalised supplier network. Sophisticated planning and forecasting capabilities; real-time supplier collaboration. Real-time performance (KPI), logistics and inventory management. Automation of standard processes (e.g. RFQ, ordering, claims). Definition of distinct competence profiles and development plans. Transformation of buyers to supplier managers, and of supply chain recovery managers to supply chain improvement and innovation agents. Market and technology trend scouting skills. Change management along entire E2E chain inside and outside of procurement teams. 18
19 Many thanks for your attention 19
20 Premium AEROTEC GmbH Haunstetter Str. 225 D Augsburg Tel Fax Your personal point of contact: Dr. Matthias Mette VP Procurement & Supply Chain Management 20
21 2015 by Premium AEROTEC GmbH All rights reserved. Confidential and proprietary document. This document and all information contained herein is the sole property of Premium AEROTEC GmbH. 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 Premium AEROTEC GmbH. 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, Premium AEROTEC GmbH will be pleased to explain the basis thereof. Dieses Dokument und alle darin enthaltenen Informationen sind das alleinige Eigentum der Premium AEROTEC GmbH. Die Zustellung dieses Dokumentes oder die Offenlegung seines Inhalts begründen keine Rechte am geistigen Eigentum. Dieses Dokument darf ohne die ausdrückliche schriftliche Genehmigung der Premium AEROTEC GmbH nicht vervielfältigt oder einem Dritten gegenüber enthüllt werden. Dieses Dokument und sein Inhalt dürfen nur zu bestimmungsgemäßen Zwecken verwendet werden. Die in diesem Dokument gemachten Aussagen stellen kein Angebot dar. Sie wurden auf der Grundlage der aufgeführten Annahmen und in gutem Glauben gemacht. Wenn die zugehörigen Begründungen für diese Aussagen nicht angegeben sind, ist die Premium AEROTEC GmbH gern bereit, deren Grundlage zu erläutern. Joachim Nägele Hannover, 10 December
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