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www.ipm-scm.com III/2013 AVIATION Content In focus: AVIATION FORUM Hamburg 2013 Global Aerospace Supply Chains: China Europe USA Conference information, profiles of speakers and experts List of partners, sponsors and exhibitors Total Cost of Global Sourcing in China Prof. Dr. Michael Eßig, Dr. Andreas H. Glas, Karl J. Grajczyk, Bundeswehr University Munich Enhancement of a Static Performance Optimization Tool Omar Abdul Rahman, Benjamin Kuch, Fraunhofer-Institute for Manufacturing Engineering and Automation IPA Quo vadis A&D Industry 2013? Pockets of Turbulence Eric Bernardini, Alain Guillot, Stefan Ohl, AlixPartners Global purchasing organization the next evolutionary phase Dr. Marcus Schüller, Dr. Lars Immerthal, KPMG AG Wirtschaftsprüfungsgesellschaft SPACE An initiative of aerospace prime contractors Dr.-Ing. Anfried Sauerborn, EADS, Christophe Cabaret, Norbert Schröder, SPACE TM AVIATION FORUM 2013

Many routes can be taken, but only one route is the quickest. The choice is yours. Whether by land, through water or in the air, intelligent supply chain management takes all matters of transport and procurement into consideration. Development within the aviation industry has brought about a great number of opportunities, as well as planning tasks. Our specialists can support and advise you regarding cross-border challenges anywhere in the world. Call us now. C M Y CM Your contact Dr. Gerhard Dauner Head of Industrial Manufacturing Europe, Middle East and Africa T +49 89 9282-1136 gdauner@kpmg.com www.kpmg.de/maerkteohnegrenzen MY CY CMY K 2013 KPMG AG Wirtschaftsprüfungsgesellschaft. All rights reserved.

Editorial TM AVIATION This issue of SUPPLY CHAIN MANAGEMENT TM focuses on the 3 rd AVIATION FORUM Hamburg 2013, the established academic communication and networking platform in the aerospace industry. The title of this international conference and exhibition is Global Aerospace Supply Chains: China Europe USA. Special topics are the Airbus production FALs in Tianjin Free Trade Zone (China) and Mobile, Alabama (USA). Furthermore, the following key issues will be discussed: Globalized Supply Chains: Risk or opportunity for aerospace?, MRO A global business in transition, Open Innovation: How to integrate suppliers in the innovation process and Managing Growth. Fundamental articles analyze the total cost of global sourcing in China and Europe and discuss the enhancement of a Static Performance Tool by a pre-analysis for adjusted capacity data. Practical topics present the global purchasing organization as the next evolutionary phase, focus on the economic situation of the A&D industry in 2013 and introduce SPACE TM, an initiative of European aerospace prime contracters to improve the industrial performance and competitiveness of aerospace supply chains. We wish you an interesting and informative reading! Prof. Dr. Johannes Walther CEO, Institute for Production Management Editor Dr. Klaus Richter EVP Airbus Procurement Co-Editor s u p p l y chain management I II/ 2013 3

Content Fundamental topics Total Cost of Global Sourcing in China Prof. Dr. Michael Eßig, Dr. Andreas H. Glas, Karl J. Grajczyk, Bundeswehr University Munich 7 Enhancement of a Static Performance Optimization Tool Omar Abdul Rahman, Benjamin Kuch, Fraunhofer-Institute for Manufacturing Engineering and Automation IPA 17 Practical topics Quo vadis A&D Industry 2013? Pockets of Turbulence Eric Bernardini, Alain Guillot, Stefan Ohl, AlixPartners 23 Global purchasing organization the next evolutionary phase Dr. Marcus Schüller, Dr. Lars Immerthal, KPMG AG Wirtschaftsprüfungsgesellschaft 29 SPACE An initiative of aerospace prime contractors Dr.-Ing. Anfried Sauerborn, EADS, Christophe Cabaret, Norbert Schröder, SPACE TM 33 AVIATION FORUM 2013 Global Aerospace Supply Chains: China Europe USA 37 Greeting 38 Partners and Sponsors 39 Exhibitors 40 Exhibition plan 42 Program: 4 th of December 2013 44 Program: 5 th of December 2013 47 Speakers and Experts Index 48 Speakers and Experts Profiles 50 Book review 122 Editorial 3 Register of authors 14 Event Calendar 79 116 List of advertisers 52 Total Cost of Global Sourcing in China Prof. Dr. Michael Eßig, Dr. Andreas H. Glas, Karl J. Grajczyk, Bundeswehr University Munich Global supply chains in the automotive industry use the Asian and particularly Chinese as efficiency levers on the supply side. The workbench of the world China is developing increasingly from a low-cost alternative to a more and more quality oriented source. In contrast to cost-efficient unit sourcing, procurement of complex modules and sub-systems from China increases the complexity of the buyer-supplier relationship and as a consequence the relevance of coordination costs. The analysis focuses on the total cost of global sourcing on a category level. The results of the survey enable comparing the total cost of sourcing of similar product categories in Europe and in China. Page 7 Enhancement of a Static Performance Optimization Tool Omar Abdul Rahman, Benjamin Kuch, Fraunhofer-Institute for Manufacturing Engineering and Automation IPA In order to preserve competitiveness in today s markets, companies have to carefully plan their factories performance and investments. As product complexity and the number of required variants are continuously increasing, size and complexity of the production network grow just as fast. Hence, a critical success factor concerns the distribution of the value-added among the existing production network. To meet those requirements Fraunhofer-Institute for Manufacturing Engineering and Automation (IPA) has developed a combined approach considering various optimization dimensions synchronously while allowing dynamic and scenario-based analyses. Page 17 Global purchasing organization the next evolutionary phase Dr. Marcus Schüller, Dr. Lars Immerthal, KPMG AG Wirtschaftsprüfungsgesellschaft Most international companies now have efficient purchasing organizations across China, Brazil, USA and Eastern Europe the purchasing and SCM departments have really received a huge efficiency boost over the last few years. However, when it comes to developing an integrated global organization, which has a high level of maturity and supports the long-term success of the company as a strategic growth driver, there is still significant potential that can be tapped in purchasing. The problems that most often occur are the lack of strategic processes and product group strategies with long-term cost optimization approaches being prevented. Page 29 SPACE An initiative of aerospace prime contractors Dr.-Ing. Anfried Sauerborn, EADS, Christophe Cabaret, Norbert Schröder, SPACE TM SPACE TM stands for Supply Chain Progress towards Aeronautical Community Excellence and is a nonprofit aerospace association founded in June 2007 by aeronautical primes to support the development of their Supply Chain. The association aims to provide and implement services to improve industrial performance and competitiveness of supply chains by increasing the efficiency of subcontractors and the relationship with their major aerospace manufacturers. The mission of SPACE is to conduct industrial improvement projects at supplier s sites by pooling the resources of major aerospace actors. Since 2011, SPACE gets engaged in regional and national government supported projects. Page 33 s u p p l y chain management I II/ 2013 5

For those who see their information vanish into thin air frequently, there is now Doxis4. Managing suppliers throughout the aerospace supply chain remains a major challenge for the industry. This is a documentintensive process, beginning with selection of suppliers and ending with accounts payable. It is a key target for cost reduction and improvement in operational efficiency. And public demand for safety and reliability drives the need for product quality to approach near perfection. Enter SER Software Solutions. Our integrated Enterprise Content Management Doxis4 can be particularly beneficial in four areas of the supply chain: contract lifecycle management, ERP transactions, accounts payable, and quality management. Doxis4 iecm-suite SER Solutions Deutschland GmbH Joseph-Schumpeter-Allee 19 D- 53227 Bonn www.ser.de info@ser.de

Global Sourcing Total Cost of Global Sourcing in China Prof. Dr. Michael Eßig, Dr. Andreas H. Glas, Karl J. Grajczyk, Bundeswehr University Munich Summary Global supply chains strongly focus on the Asian and particularly Chinese sales markets, but also use those regions as efficiency levers on the supply side. From that perspective, the workbench of the world China is developing increasingly from a low-cost alternative to a more and more quality oriented source. In contrast to cost-efficient unit sourcing, procurement of complex modules and sub-systems from China increases the complexity of the buyer-supplier relationship and as a consequence the relevance of coordination costs. This contribution addresses that point and aims at establishing a better understanding of the Chinese-German supplier relationships. The analysis focuses on the total cost of global sourcing on a category level. In a quantitative survey an expert sample of 60 European procurement managers was chosen, who have insights not only in product categories sourced in China but also in similar categories sourced in Europe. The results of the survey enable comparing the total cost of sourcing of similar product categories in Europe and in China. Empirical findings uncover the 10 most effective management initiatives to reduce the total cost of sourcing in China. The importance of Global Sourcing Costing Concentrating on core competencies is a strategy that companies have been pursuing for the reason of strengthening competitiveness. Suppliers in the manufacturing industry do not only provide direct materials like raw material and operational supplements but offer components, modules and systems incurring many value-adding stages. Whereas companies built up local supplier networks in the past, they recently tend to search for global sources, oftentimes located at the workbench of the world China. The most important drivers for China sourcing are besides strategic aspects like the entry into international markets or access to highly innovative products and technology [Schumacher et al. 2008, Trent/Monczka 2003] expected cost savings compared to local suppliers due to lower factor costs like wages or currency influences [Bremen et al. 2010]. However, even if production costs are lower, China sourcing can still be costly. At least the expected cost savings may not be as great as expected [Gilley/Rasheed, 2000]. In order to calculate the real costs, the consideration of all expenses involved is necessary [Bergman 2006, Ting 2004]. Recently, systematic cost measurement approaches have been proposed to investigate all sourcing costs through case study analysis [Platts/Song 2010]. On this basis, this study evaluates the total cost of sourcing in China, as well as comparing cost drivers and the effectiveness of global sourcing management initiatives on Chinese and European supply markets. For this purpose, this paper applies a quantitative Geographical distance between China and Europe increases transportation costs and complicates decisions that diminish the effectiveness of processes. survey methodology on the purchasing category level. Subsequently, the applied total cost of sourcing framework is described, followed by the presentation of the survey findings. Total Cost of Global Sourcing Framework Substantial geographical distance between China and Europe does not only increase transportation costs, but complicates decisions because of inventory cost tradeoffs, different cultures, languages, and practices, that diminish the effectiveness of business processes such as demand forecasting and material planning. Cost transparency in China sourcing is a challenging task, as the initial production price of a sourced product contrasts with numerous hidden costs for supplier relations, information, intercultural competencies, and supplier relationship management. All those difficulties inhibit the degree to which a global supply chain can represent a competitive advantage [Meixell/Gargeya 2005]. Already in the late 1990s several studies address potential negative profit implications of global sourcing in general [e.g. Arnold 1999, Smith 1999, Herbig/ O`Hara 1996]. Most studies focused on sourcing from China examine only single cost aspects, such as quality issues [e.g. Ting 2004, Eberhardt et al. 2004], corruption [Wilkinson et al. 2005], intercultural supplier relationship management [e.g. Salmi 2006, Millington et al. 2005], or guanxi [Nassimbeni/ Sartor 2006]. Especially the latter topic has gained widespread research interest. Guanxi constitutes a special type of personal business relationship that bonds exchange partners through reciprocal obligations and favors. Business in China is particularly challenging for Western companies s u p p l y chain management II I/ 2013 7

Global Sourcing because of the peculiarities of its conduct. Recent studies indicate that guanxi is still flourishing in existing business relationships in China [Chen et. al. 2011]. Guanxi and other hidden cost aspects have long been underestimated in practice, which calls for an integration of all expenses into a holistic total cost of global sourcing framework. In addition, a holistic view on the problem seems to be underdeveloped in research, even if Platts and Song [2010] presented a cost framework integrating a multitude of different expense aspects. The aforementioned total cost model is in line with the study s idea to apply a total cost of ownership perspective also for procurement decisions [Ellram 1995] and provides the basis for the conceptualization and operationalization of the underlying total cost of global sourcing framework (Fig.1). Although all applied constructs in the framework are based on literature, measuring the total cost of China sourcing is challenging, as even firms themselves struggle to calculate the financial effects of their sourcing operations [Cokins 2001]. The use of comparative contextual factors instead of comparative respondent groups allows a comparison of cost drivers and cost-savings management initiatives in global sourcing. The proposed total cost of global sourcing framework classifies cost drivers into four main groups: acquisition price related costs, logistics costs, coordination costs and sustainability costs. Every group contains several homogenous cost indicators which have been derived from literature and are presented in the findings section of this paper (Fig.6). Traditional cost drivers were supplemented by one additional cost driver group, representing expenses related to the dimension of social and ecological sustainability. Further, the total cost of global sourcing framework differentiates between several contextual factors, firstly distinguishing the industry context (e.g. manufacturing), second the country context (China or Europe), and thirdly the category context (units, components, or trade goods). This enables a cost comparison between the country contexts and provides insights into the effectiveness of Industry context Chinese supply market context Category context Cost driver groups Acquisi(on price related costs Logis(cs costs Coordina(on costs Sustainability costs Measures (Management ini(a(ves which aim at influencing sourcing costs) Total Cost of Global Sourcing Framework management initiatives which aim at improving sourcing performance. Research Methodology European supply market context Category context Cost driver groups Acquisi(on price related costs Logis(cs costs Coordina(on costs Sustainability costs Measures (Management ini(a(ves which aim at influencing sourcing costs) Total cost comparison: China- Sourcing vs. Europe- Sourcing (total sourcing cost & acquisiion cost savings comparison) Figure 1: Total cost of global sourcing framework of this work 2% 2% 2% 2% 2% 7% 5% Based on the previously conceptualized total cost of global sourcing framework, a questionnaire was developed to empirically identify and compare total sourcing costs between China and Europe. The survey took place in 2013 and utilized the purchasing category level as the main unit of analysis. Global sourcing experts were asked to provide insights into global sourcing activities and related costs, and to report measures (management initiatives) which positively influence sourcing success in China and Europe. All cost drivers and management initiatives used in the questionnaire were derived from the literature review applying established scales with a 3% 4% Manufacturing (incl. Automo9ve & Mechanical Engineering) Electricity, gas, steam and air condi9oning supply Wholesale and retail trade 71% Figure 2: Distribution of respondents by industry sector Transporta9on and storage Accommoda9on and food service ac9vi9es Financial and insurance ac9vi9es Professional, scien9fic and technical ac9vi9es Administra9ve and support service ac9vi9es Human health and social work ac9vi9es Arts, entertainment and recrea9on 8 s u p p l y chain management II I/ 2013

Global Sourcing strong measurement record. Pretests involving purchasing practitioners and academics were conducted to guarantee high levels of face validity of scales and quality of the research framework. The requirement of respondents to possess experience in sourcing goods from China and Europe simultaneously was prescribed to reduce bias as there is no established comparative group of respondents. However, this also reduced the overall available sample s quantity, as many procurement executives are only responsible for either global or local sourcing activities. A sample of 250 experts from procurement related functions who satisfy the aforementioned experience requirement was contacted and 60 responses were received. The majority of respondents (45%) were purchasing directors, followed by purchasing managers with a share of 20%. Chief purchasing officers, buyers and respondents with miscellaneous job titles (e.g. consultants, sourcing advisers) altogether hold a share of 35%. Assessing the distribution of respondents by industry sector illustrates that 71% of answers constitute expert responses from the manufacturing sector, including automotive and mechanical engineering companies (Fig.2). Sourcing from China is of very high importance for the questioned organizations as more Acquisi-on price related costs than 75% of companies in the sample report to procure more than 50% of their total purchasing spent in China. Global sourcing cost drivers: Comparison of China and Europe Logis-cs costs Coordina-on costs Sustainabilty costs Cost drivers and their importance in China and Europe Purchase price Taxes Cash refunds, bonuses or rebates Currency risks Transporta-on Insurance Customs Charges for port, terminal, handling Packaging Documenta-on Capital commitment of inventory and transport Loss or damage of inventory Insufficient supplier reliability Procurement market research Evalua-on of suppliers Communica-on expenditures - supplier selec-on Travel expenses for supplier selec-on Nego-a-on and rela-onship building IT- integra-on with the supplier Design adjustments of the product Communica-on with authori-es Commission for intermediaries Cost of an own representa-ve Quality management Reworking faulty products and discarding rejects Returns, exchanges and replacement Keeping up the supplier rela-onship Risk of loss of exper-se and know- how Renego-a-ons Performance measurement - supplier rela-onship Risk of loss of reputa-on Risk of delivery shorhalls Poli-cal / legal support (compliance) Risk management Audits of working condi-ons at suppliers Informa-on costs - regulatory changes Management of social aspects Evalua-on of environmental standards extremely 1 low 2 quite 3 quite 4 high 5 extremely 6 low low high high Europe Cost Driver Importance China Cost Driver Importance Figure 3: Cost drivers and their importance in China and Europe Global sourcing experts were asked to assess the importance of 38 individual global sourcing cost drivers on a six-point likert scale ranging from extremely low (1) to extremely high (6). They can be classified into four expense groups of the total cost of global souring framework. The findings indicate that not very surprising purchasing acquisition cost is of highest importance for sourcing decisions on both markets. This is in line with foregoing studies, which found that on average around 80% of all sourcing costs are related to that cost driver [Platts/Song 2010]. As expected, German procurmenent managers normally aim to reduce cost through China sourcing, while sources in Europe are expected to be more expensive. Therefore purchasing prices and cash refunds, bonuses, or rebates are of high relevance for both markets, but slightly more important for Europe. Contrary to these two cost drivers, all other cost aspects have a significantly higher importance for the Chinese supply market (Fig.3). In comparsion to Europe, the biggest differences in cost driver importance (defined by a difference of >1.0 scale s u p p l y chain management II I/ 2013 9

Global Sourcing points in the Europe-China comparison) can be identified for aspects which reflect specialties of global sourcing. Not unexptectedly, the relvance differs mostly in the following areas: customs (1.79), currency risks (1.72), risk of know-how loss (1.33), expenditure for own representatives (1.31), port or terminal handling fees (1.27), transport (1.09), risk of reputation loss (1.07), compliance costs (1.05), and capital commitment for inventory (1.01). Surprisingly, the next cost drivers with the biggest differences between China and Europe are all related to sustainability, e.g. management of social aspects (0.94), information costs regulatory changes (0.92), audits of working conditions (0.90), and management of environmental standards (0.87). Apparently, the relevance of those cost drivers depends on the supply market, while other cost drivers, e.g. quality management (0.85) differs not that much, mostly due to the fact that this aspect is also of high importance for European sources. In total, the expert sample of procurement managers evaluated the importance of most cost drivers much higher for the Chinese supply market. This is a striking result, as this supports the assumption, that the benefits of lower production costs in China (Asia) are at least partly equalized by higher transaction costs. This poses the question, if China sourcing is really worth its efforts. Is China sourcing really worth its efforts? much lower slightly lower slightly higher much higher What is your savings success of your chosen category that is sourced from China for the last three years - in comparison to Europe? The differences in cost drivers relevance again poses the question whether sourcing from China can be justified by its potential cost savings when taking into consideration total cost. To answer this question, global sourcing experts were asked to evaluate the overall cost savings success in China during the past three years in comparison to sourcing this category from European suppliers. More than 70% of respondents report higher cost savings success in sourcing goods from China. Differentiating between purchasing categories, indicates that the highest perceived savings success can be generated for finished and trade goods (Fig.4). Fifty percent of respondents indicate much or extremely higher savings in China compared to European sourcing. This contrasts to a share of only 29% for component supplies and 13% for units and parts. The share of experts reporting a lower savings success in China compared to sourcing goods from European suppliers was highest for units and parts (35%), followed by finished or trade goods (30%) and component supplies (21%). The overall assessment indicates clear total cost advantages for sourcing goods in China, which significantly differ by category groups. 0% 10% 20% 30% 40% 50% 60% Unit / part Component & supply Finished good / trade good Figure 4: Cost savings success on category level To gain a complete picture, experts were also asked to assess total sourcing costs for the same purchasing category for which they had previously reported cost savings. Overall, 62% of respondents estimate that sourcing from China leads to lower total sourcing costs compared to Europe. Still, a substantial share of 38% of respondents considers total sourcing cost from China higher than in Europe. Taking into account the type of category purchased (Fig.5), it becomes evident that 64% of component supplies sourced from China induce higher total cost compared to Europe. Although, 79% of respondents reported substantial savings in component supplies sourced from China, the results provide an indication that these positive effects might be negated by additional costs which cannot easily be accounted for in the purchasing price. Potentially, higher degrees of technological complexity of component supplies compared to finished goods and units/ parts induce higher total cost e.g. for identifying suitable suppliers and make to order manufacturers, assuring quality and safeguarding technological proprietary know-how [Tibben-Lembke 1998]. For the purchasing group units and parts, 82% of respondents regard sourcing in China more favorable to sourcing goods in Europe comparing total cost of sourcing over a time period of three years. Forty-three percent estimate total cost being more than 10% lower for procuring these items 10 s u p p l y chain management II I/ 2013

Global Sourcing >10% higher 0-10% higher 10-0% lower >10% lower What are the total sourcing costs for your chosen category sourced in China - in comparison to Europe? 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Unit / part Component & supply Finished good / trade good Figure 5: Total sourcing costs on category level in China. On the one hand, this might be due to the longterm experience and established China sourcing practices for routine items. On the other hand units and parts rather possess lower levels of technological complexity leading to a reduction in search costs and uncertainty [Ramanathan 2007]. For the finished and trade goods category an even share of respondents estimates total sourcing costs being higher, while the other half reports negative total sourcing cost effects for sourcing goods from China. At a first glance, the findings indicate that sourcing from China can induce significant cost savings in comparison to sourcing in Europe if only the acquisition price of goods is considered. However, these cost advantages significantly differ by category group and are easily negated by taking a total cost perspective. The total cost perspective especially includes the aforementioned hidden expenses outside of purchasing acquisition cost field. As a result, sourcing managers should conduct a thorough total cost analysis incorporating a broad range of cost drivers and potential scenarios prior to making a final sourcing decision. Reducing total cost in global sourcing: Which practices should be applied? The aforementioned findings suggest that sourcing managers are confronted with a broad array of differentiated cost drivers in global sourcing. Besides accounting for these factors while evaluating prospective sourcing alternatives, a multitude of measures is available which can proactively be applied to influence procurement success in global sourcing. Derived from an in-depth review of purchasing literature, a set of 31 measures and tactics was identified that can be applied to optimize global sourcing arrangements. Subsequently, global sourcing experts were asked to evaluate the influence of these activities on procurement success for sourcing goods from China and Europe. Results indicate that the effectiveness of measures severely differs between China and Europe (Fig.6). Evaluating the top 10 management initiatives shows that success of China sourcing is highly influenced by bridging the aforementioned cultural gap in supplier relations. While for China sourcing an investment in cross-cultural trainings, negotiation tactics and language courses for purchasing personnel stands at the top of the agenda, it represents an almost negligible role for European sourcing activities. This underlines previous research [e.g. Chen et. al. 2011] that mastering cultural peculiarities of Guanxi in business relationships is paramount to achieving sourcing success in China. With regard to the organizational setting, international purchasing offices are estimated to have a higher impact on purchasing success than cooperative purchasing and joint ventures in China sourcing. Surprisingly, although ecological and social sustainability costs represent highly relevant cost drivers for China sourcing, measures for training and developing suppliers with regard to these aspects are considered less important. In Europe sourcing, the focus is predominantly on measures for the development of established suppliers: Long-term contracts, collaborative capacity management and the integration of suppliers in joint R&D projects represent the most effective management initiatives. Sourcing from European suppliers is largely undertaken from the subsidiary s home location only randomly pursuing cooperative purchasing with business partners. These findings indicate fundamentally different levers for reducing total cost in sourcing between the two regions. Global sourcing initiatives for the Chinese market mostly aim at reducing uncertainty related cost drivers, while European measures target an enhancement of the cost/ value ratio of procured items by improving efficiency, quality and innovation. Similarities in the importance of measures between China and Europe sourcing exist with regard to classical demand-related optimization factors like supply item standardization, demand aggregation and internal purchasing process optimization. The findings also indicate that global sourcing managers should possess high proficiency in benchmarking and target costing approaches enabling profound assessments of geographic sourcing decisions that take into account a broad range of total cost. s u p p l y chain management II I/ 2013 11

Global Sourcing cess? cess? extremely extremely high high 6 What is the influence of the following measures on procurement success? With What regard is the influence to the of question if savings advantages the following measure What is the influence of the extremely following measures low quite on procurement quite high success? extremely What is the influence of the following extremely measure low extremely extremely low low quite quite high extremely low low high high low low 1 2 low 3 high 4 5 high 6 of China sourcing make it a 1 low 2 favorable sourcing destina- Cross- cultural training tion, the study Long- term produces contracts ambivalent management results: Although, with suppliers the Cross- cultural training Long- term contracts Interna=onal purchasing offices Capacity Interna=onal purchasing offices Capacity overall management assessment with shows suppliers that Nego=a=on tac=cs 62% of purchasing Nego=a=on experts tac=cs see Nego=a=on tac=cs Nego=a=on tac=cs Evalua=on of suppliers Integra=on clear total of suppliers cost in advantages development Evalua=on of suppliers Integra=on of suppliers in development for sourcing goods in China, Language training Benchmarking / Target Cos=ng Language training these Benchmarking cost advantages Target Cos=ng sig- Aggrega=ng demand nificantly differ Process by op=miza=on category Aggrega=ng demand Process op=miza=on Benchmarking / Target Cos=ng groups. While Evalua=on for finished of suppliers Benchmarking Target Cos=ng goods and Evalua=on units/parts of suppliers a Process op=miza=on majority of experts Aggrega=ng sees demand clear Process op=miza=on Aggrega=ng demand Capacity management with suppliers total Formaliza=on cost advantages of the procurement in China, European sources are re- Capacity management with suppliers Formaliza=on of the procurement Standardiza=on Standardiza=on Standardiza=on garded as a better Standardiza=on choice for Top 10 measures China sourcing components. This may Top alert 10 measures Europe Top 10 measures China sourcing management to thoroughly Top 10 measures Europe What is the influence of the following measures on procurement success? examine alternatives before What is the influence of the following extremely measures low quite on procurement quite high success? extremely engaging in risky low-wagecountry sourcing activities. low low high high extremely low low quite quite low high high extremely high 1 2 3 4 5 6 Moreover, a range of management initiatives is iden- Long- term contracts Long- term contracts tified which helps sourcing Capacity management with suppliers Capacity management with suppliers managers developing specific Nego=a=on tac=cs capabilities for respective global sourcing projects. Finally, it Nego=a=on tac=cs Integra=on of suppliers in development Integra=on of suppliers in development must be acknowledged that Benchmarking Target Cos=ng Benchmarking / Target Cos=ng due to the majority of survey Process op=miza=on respondents backgrounds being rooted in the manufactur- Process op=miza=on Evalua=on of suppliers Evalua=on of suppliers ing sector, the results have Aggrega=ng demand limited validity for other prominent industry sectors such Aggrega=ng demand Formaliza=on of the procurement Formaliza=on of the procurement as retail trade and chemicals. Standardiza=on Standardiza=on Future research might employ structural equation modelling Top 10 measures Europe sourcing Top 10 measures Europe sourcing techniques to statistically validate the path relationships in Figure 6: Top 10 management initiatives to influence sourcing costs in China the total cost of global sourcing and Europe framework. Conclusions This research paper analyzed total cost of global sourcing in a comparison between China and Europe. Being in line with previous studies [e.g. Horn et al. 2013], the results suggest that sourcing managers are required to go beyond the pure assessment of acquisition costs. It is striking that experts evaluate the influence of all major cost drivers for sourcing goods from China significantly higher than for sourcing the same purchase category from European suppliers. This underlines that China sourcing still represents a black box for most purchasers and the influence of hidden costs outside of the tangible purchasing price is not negligible. References n Arnold, U., Organization of global sourcing: ways towards and optimal degree of centralization, in: European Journal of Purchasing and Supply Management, Vol. 5 (3-4), (1999), pp. 167-74. n Bergman, I., Is China the promised land? (Risk management), in: IET Engineering Management, June/July, (2006) pp. 39-42. n Bremen, P., A Total Cost of Ownership Model for Global Sourcing, in: CUNNINGHAM, P. & CUNNINGHAM, M. (Eds.) Collaboration and the Knowledge Economy: Issues, Applications, Case Studies. Amsterdam, IOS Press, 2008. 12 s u p p l y chain management II I/ 2013

Global Sourcing n Bremen, P., Alard, R., Total Cost of ownership: Gesamtkostenanalyse bei der Beschaffung in China, in: Beschaffungsmanagement Revue de làcheteuer, 3, (2008), S. 12-15. n Bremen, P., Oehmen, J., Alard, R., Cost-transparent sourcing in China applying Total Cost of Ownership, Proceedings of the 2007 IEEE, 13th IEEE International Conference on Industrial Engineering and Engineering Management, (2007), Singapore. n Bremen, P., Oehmen, J., Alard, R., Schönsleben, P., Transaction Costs in Global Supply Chains of Manufacturing Companies, in: Journal of Systemics, Cybernetics and Informatics, 8 (1), (2010), S. 19-24. n Chen, Z., Huang, Y., Sternquist, B., Guanxi practice in Chinese buyer-supplier relationships: The buyer s perspective, in: Industrial Marketing Management, 40, (2011), 4, pp. 569-580. n Cokins, G., Activity-Based Cost Management: An Executive s Guide, John Wiley & Sons, Burr Ridge, Illinois, 2001. n Eberhardt, M., McLaren, J., Millington, A., Wilkinson, B., Multiple forces in component localization in China, in: European Management Journal, Vol. 22 No. 3, (2004), pp. 290-303. n Ellram, L.M., Total cost of ownership: an analysis approach for purchasing, in: International Journal of Physical Distribution & Logistics Management, 25(8), (1995), pp. 4 23. n Gilley, K.M., Rasheed, A., Making more by doing less: an analysis of outsourcing and its effects on firm performance, in: Journal of Management, 26 (4), (2000), pp. 763-790. n Herbig, P., O Hara, B., International procurement practices: a matter of relationships, in: Management Decision, 34 (4), (1996), pp. 41-5. n Horn, P., Schiele, H., Werner, W., The ugly twins : Failed low-wage-country sourcing projects and their expensive replacements, in: Journal of purchasing and supply management, 19(1), (2012), pp. 27 38. n Meixell, M.J., Gargeya, V.B., Global supply chain design: a literature review and critique, in: Transportation Research Part E, 41, (2005), pp. 531-550. n Millington, A., Eberhardt, M., Wilkinson, B., Gift giving, Guanxi and illicit payments in buyer-supplier relations in China: analysing the experience of UK companies, in: Journal of Business Ethics, Vol. 57 No. 3, (2005), pp. 255-68. n Nassimbeni, G., Sartor, M., International purchasing offices in China, in: Production Planning and Control, Vol. 17 No. 5, (2006), pp. 494-507. n Pratts, K.W., Song, N., Overseas sourcing decisions - the total cost of sourcing from china, in: Supply Chain Management: An International Journal, 15 (4), (2010), pp. 320 331. n Ramanathan, R., Supplier selection problem: integrating DEA with the approaches of total cost of ownership and AHP, in: Supply Chain Management: An International Journal, 12 (4), (2007), pp. 258-261. n Salmi, A., Organizing international supplier relations: an exploratory study of Western purchasing in China, in: Journal of Purchasing and Supply Management, Vol. 12 (4), (2006), pp. 197-208. n Schumacher, S., Contzen, M., Schiele, H., Zachau, T., The Three Factors of Purchasing: Strategic Positioning of Purchasing and Suppliers, Wiley VCH, Weinheim, 2008. n Smith, J.M., Item selection for global purchasing, in: European Journal of Purchasing and Supply Management, 5 (3), (1999) pp. 117-27. n Tibben-Lembke, R. S., The impact of reverse logistics on the total cost of ownership, in: Journal of Marketing Theory and Practice, 10 (4), (1998), pp. 51-60. n Ting, A., Outsourcing in China, in: Industrial Engineer, 36 (12), (2004), pp. 46-50. n Trent, R.J., Monczka, R.M., Understanding integrated global sourcing, in: International Journal of Physical Distribution & Logistics Management, 33, (2003), pp. 607 629. n Wilkinson, B., Eberhardt, M., McLaren, J., Millington, A., Human resource barriers to partnership sourcing in China, in: International Journal of Human Resource Management, 16 (10), (2005), pp. 1886-990. Zusammenfassung Global agierende Supply Chains der Automobilindustrie beziehen den Absatz- aber auch den Beschaffungsmarkt China stark in ihre Wertschöpfung mit ein. Die verlängerte Werkbank China entwickelt sich zunehmend von einem rein auf niedrige Preise ausgerichteten Markt hin zu einer verstärkt auch qualitätsorientierten Quelle für anspruchsvollere Produkte. Im Gegensatz zur rein kosteneffizienten Beschaffung von Bauteilen erhöht die Bedarfsdeckung von Modulen und Subsystemen aus China die Komplexität der interkulturellen Beschaffungsentscheidung und damit die Relevanz von Koordinationskosten. An dieser Stelle setzt der vorliegende Beitrag an und verfolgt das Ziel ein besseres Verständnis der Beziehungskosten in chinesisch-deutschen Lieferbeziehungen zu schaffen. Hierzu werden auf der Ebene der Warengruppe die Totalkosten der Beschaffung aus China mit Hilfe einer quantitativen Studie erhoben. Insgesamt wurde eine Expertengruppe von 60 Beschaffungsmanagern befragt, welche sowohl Beschaffungsvorgänge in China als auch in Europa beurteilen können. Die Ergebnisse der Studie erlauben den Vergleich der Totalkosten und zeigen zudem für jeden Markt die zehn wichtigsten kostenbeeinflussenden Maßnahmen auf. Authors PROF. DR. MICHAEL EßIG, born 1968, holds the Chair of Materials Management & Distribution at Bundeswehr University Munich, conducting research in Industrial-, Public- und Defence Supply Management. DR. ANDREAS H. GLAS, born 1977, is Project Manager and Researcher at the Chair of Materials Management & Distribution at Bundeswehr University Munich, conducting research in Performance-Based Contracting and Supply Management of Service or Defence Industries. KARL J. GRAJCZYK, born 1985, is Research Fellow at the Chair of Materials Management & Distribution at Bundeswehr University Munich, conducting research in Industrial-, Public- und Defence Supply Management. s u p p l y chain management II I/ 2013 13

Register of Authors Register of Authors Eric Bernardini AlixPartners Tel. +44 20 70987492 E-Mail: ebernardini@alixpartners.com Christophe Cabaret SPACE Tel. +335 61 310766 E-Mail: Christophe.cabaret@space-aero.org Prof. Dr. Michael Eßig Bundeswehr University Munich Tel. +49 89 60044221 E-Mail: michael.essig@unibw.de Dr. Andreas H. Glas Bundeswehr University Munich Tel. +49 89 60043790 E-Mail: andreas.glas@unibw.de Karl J. Grajczyk Bundeswehr University Munich Tel. +49 89 60044679 E-Mail: karl.grajczyk@unibw.de Alain Guillot AlixPartners Tel. +33 1 76747209 E-Mail: aguillot@alixpartners.com Benjamin Kuch Fraunhofer IPA Tel. +49 711 97000 E-Mail: omar.abdul-rahman@ipa.fraunhofer.de Dr. Stefan Ohl AlixPartners Tel. +49 89 20304053 E-Mail: sohl@alixpartners.com Omar Abdul Rahman Fraunhofer IPA Tel. +49 711 9701865 E-Mail: omar.abdul-rahman@ipa.fraunhofer.de Dr.-Ing. Anfried Sauerborn EADS Tel. +49 89 60734741 E-Mail: anfreid.sauerborn@eads.com Norbert Schröder SPACE Tel. +49 8066 8840842 E-Mail: norbert.schroeder@space-aero.org Dr. Marcus Schüller KPMG AG Wirtschaftsprüfungsgesellschaft Tel. +49 221 20731100 E-Mail: mschueller@kpmg.com Dr. Lars Immerthal KPMG AG Wirtschaftsprüfungsgesellschaft Tel. +49 211 4757000 E-Mail: limmerthal@kpmg.com TM AVIATION 14 s u p p l y chain management I II/ 2013

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Simultaneous English translation of all main presentations provided! 16. INDUSTRIE FORUM WOLFSBURG 2014 Automotive Globalization and Innovation Potentials Concepts Methods 25 th and 26 th of June 2014 Conference and Exhibition Hot Topics Future Markets of the Automotive Industry Innovation in the Supplier Networks EU Emission Goals 2020 as an Innovation Trigger Patron Dr. Francisco J. Garcia Sanz Member of the Board of Directors of the Volkswagen AG Competence Partner IPM GmbH Institut für Produktionsmanagement Donarweg 6 D-30657 Hannover Fon +49 511 47314790 Fax +49 511 47314791 kontakt@ ipm-scm.com Organized by www.ipm-scm.com/ifo

Production competitiveness Enhancement of a Static Performance Optimization Tool Omar Abdul Rahman, Benjamin Kuch, Fraunhofer-Institute for Manufacturing Engineering and Automation IPA Summary In order to preserve competitiveness in today s markets, companies have to carefully plan their factories performance and investments. As product complexity and the number of required variants are continuously increasing, size and complexity of the production network grow just as fast. Hence, a critical success factor concerns the distribution of the valueadded among the existing production network. To meet those requirements Fraunhofer-Institute for Manufacturing Engineering and Automation (IPA) has developed a combined approach considering various optimization dimensions synchronously while allowing dynamic and scenario-based analyses. Rahman et al. have presented an approach to provide this dynamic analysis with particular input parameters derived from a static optimization analysis considering multiple sites and value-added steps within a production network [Rahman et al. 2013]. This paper presents an approach for a pre-analysis, as an extension of the static optimization of Rahman et al. in order to improve this approach regarding the accuracy of the capacity data when multiple products are to be produced parallel within the network whereas only one focal product exists for the static optimization consideration. Introduction Over the last decades enterprises have been confronted with rapidly increasing challenges in almost all markets [Rahman et al. 2013]. This is on the one hand due to individualization of markets, an immense increase in different product variants and therefore a decreasing frequency of repeated manufacturing, on the other hand because of declining product life cycles and hence shorter time spans for innovative product development [Neumann et al. 2012, Behrendt 2009]. Furthermore companies will prospectively have to enter more markets and built production sites with their own capacities there in order to exploit market opportunities and hedge against business threats [Rahman et al. 2012]. However, these developments result in an increasing complexity of a company s production and value-added network which has to be strategically planned and operated. This gives great importance to the management of the value-added distribution among the production network of a company [Rahman et al. 2013]. To master this challenge successfully Fraunhofer-Institute for Manufacturing Engineering and Automation (IPA) developed a combined approach to synchronously utilize two reference methods and engineering tools, one of which is supporting companies to find an ideal distribution of the value-added [Rahman et al. forthcoming, Contantinescu et al. 2012]. With these engineering tools, a dynamic simulation model can be built, subsequently being computed and evaluated against predefined target values of several key performance indicators. Although this kind of planning and optimization system is taking into account variable parameters, different aspects of uncertainty and risk as well as sundry scales of the production system, the parameterization is still widely experience-based. Therefore Rahman et al. presented a concept for a static performance optimization within an These developments give great importance to the management of the value-added distribution among the production network of a company. existing production network which aims to identify the value-added distribution leading to maximum profit under given static input parameters like process cost for each site and value-added step [Rahman et al. 2013]. Another challenge that has to be dealt with regarding today s market requirements is caused by the highly volatile and turbulent markets, uncertainties in demand as well as in supply and the customers requirement of quick delivery and therefore short lead times. To meet all requirements companies have to respond quickly to changes in customer needs. Hence, supply chain flexibility and agility will be key success factors for companies to remain competitive [Contantinescu et al. 2012]. Supply chain flexibility means the ability to adapt the range of products and services, to deepen service levels, to hedge against market risks and exploit new opportunities, whereas the agility of a supply chain is based on its flexibility but emphasizes the velocity with which changes in market requirements can be responded to [Spath et al. 2008, Swafford et al. 2008]. To allow for non-monetary key performance indicators in the evaluation and planning of value-added networks, Rahman et al. also defined and implemented a straightforward workflow to quantify for instance flexibility levels of each production site to subsequently be considered by the data analysis and be evaluated against predefined budgets [Rahman et al. 2013]. The static optimization tool present- s u p p l y chain management I II/ 2013 17

Production competitiveness The static optimization tool helps to manage complexity caused by the rising number of sites and value-added steps that combine into the production network. Real business cases, however, often require the management of multiple products as well, driving production network complexity even further. As the approach delivered by Rahman et al. has one focal product there occurs a problem if the capacities of the production network should serve different products or variants at a time [Rahmann et al. 2013]. The current paper tries to improve the static optimization tool while adjusting the gathered capacity data with respect to a particular product. The basic tool provides a four step approach to conslidate the data, perform an optimization analysis, store the results and present selective data in a Power-Point slide deck. The four steps to progress in order to accomplish the approach are: n Input of Raw Data n Analysis n Evaluation of Scenarios n Presentation The tool consideres aggregated capacity data from each production site that may be dedicated to multiple products. For the approach targets one product at a time those site capacities should be adapted prior to the actual analysis. Figure 2 shows the chronological process of the tool and the contribution of the current paper to the approach. After the raw data has been inputted to the tool, the preanalysis can be performed in order to estimate an optimal production program considering multiple products. The goal of the pre-analysis is to estimate a capacity distribution among the entire product range. This seems to be necessary because site managers presumably are going to deliver capacity values that account for an overall considered by [Rahman et al. 2013], however, focuses on a single product while collecting general site data. Especially the site capacities could just as well serve or be reserved for other products to some extent. Therefore, this paper presents an enhancement of the static optimization tool by a pre-analysis module to be able to consider only fair capacity proportions for the selected product. Static Optimization Tool to Support the existing Approach: Prior art As described above, Fraunhofer-Institute for Manufacturing Engineering and Automation has developed a synchronous reference method and engineering tool for the strategic factory planning. Although it considers crucial key performance indicators in multiple scenario simulations and hereby addressing strategic factory planning with respect to performance, investment and optimal value-added distribution, the mathematical space and the number of parameters to be inputted is large. Hence a preceding static analysis and optimization is of essence to deliver values for the input parameters being located in a good or near-tooptimal area within the mathematical space. Relation between the Combined Approach and the Static Optimization Tool A static optimization tool was developed by Rahman et al. to serve the existing combined approach for the strategic factory planning with concrete values for the parameters to be inputted in the dynamic simulation model [Rahman et al. 2013]. As depicted in Figure 1 the relation between the static optimization tool and the combined approach is characterized by an output-input-connection. On the one hand the results of the static optimization serve as parameters for the dynamic simulation, on the other hand the results of the simulation can likewise be used to further adjust the static tool. Pre-Analysis Module as an enhancement of the Basic Optimization Tool Dynamic environmental conditions P 3 Engineering DB -Tool Output Data regarding the value added distribution: What added value at which site/location How much of this added value at which site/location Input Data vpronet Simulation Consideration of risks, uncertainity and trends Fraunhofer IPA Legend P 1 : Raw Data Analysis P 2 : Analysis P 3 : Evaluation P 4 : Presentation M: Module Figure 1: General relation between the Static Optimization Tool and vpronet [Rahman et al. 2013] 18 s u p p l y chain management I II/ 2013

Production competitiveness Tool for Sta*c Op*miza*on Input Raw Data Pre- Analysis Analysis Evaluate Scenarios Presenta*on Extension of the scope of the former Tool for Sta*c Op*miza*on Mul*ple Products can be considered with respect to their capacity consump*on Pre- Analysis establishes an op*mal alloca*on of global capaci*es regarding the value- added steps Figure 2: Method and Process of the Tool ation. Since various products might have to be produced on the same sites, there should be an estimation of what average portion of the capacity of a particular value-added step on the site should be allocated to a certain product. Having this information, the actual analysis can take place with adequate (product-individual) capacity data. Figure 3 depicts the basic structure of the calculation sheet to perform the pre-analysis that is based on MS-Excel`s Solver [FronlineSolvers 2013]. The solver engine estimates the optimal production program by maximizing the overall contribution margin, while remaining compliant with all constraints. Data to be inputted is product and value-added step related. This means that one data record accommodates information about a particular product (such as product-id and contribution margin per unit) and about the consumption rates of this product regarding each value-added step. For instance, product P1 could be consuming one entity of the value-added step V-AS1, which meant that, in order to finish P1, the value-added step V-AS1 must be performed once. Of course P1 could additionally require the production to perform several other value-added steps as well. The variables of the analysis are the n-tuple consisting of the planned production quantities of either products. It can be inferred that the solver engine performing the optimization analysis will be strategically changing the values of the planned production in order to maximize the total contribution margin. Therefore, each data record also includes the planned production that accounts for the amount of units of a particular product. If, during the analysis, a special planned production value is increased, this raises total contribution margin as well as the total consumption of all valueadded steps the particular product needs in order to be finished. Finally, the solver engine estimates the optimal production program by maximizing overall contribution margin while remaining compliant with all constraints that arise from the total consumption of either value-added steps and the existing technical or economical limits (maximum utilization of a certain value-added step). Because either product consumes a certain amount of each value-added step the calculated planned production of the products leads to a particular percentage of the total capacity for each value-added step that should be dedicated to a certain product in order to meet the results of the pre-analysis. Those percentages form a pre-analysis scenario that subsequently can be selected while performing the actual analysis. Total CM Total Capacity V- AS Total Consump5on V- AS V- A S Data Data 1- n V- AS= Value- Added Steps PP = Planned Produc5on CM= Contribu5on Margin Products Consump5on of V- AS per Product PP per Product * CM per Product 1- n Data Data Data Key: Framework Cells ready for Input Calculated Cells * Variables for Solver Fraunhofer IPA Figure 3: Structure of Pre-Analysis s u p p l y chain management I II/ 2013 19

Production competitiveness Doing so, the capacity of the value added modules on each site will be adjusted accordingly. Conclusion In order to support the approach for value-added ideal production network planing vpronet, developed by IPA, with input parameters, Rahman et al. developed a static optimization tool that analyses the value-added distribution through a non-linear programming problem that is fed with aggregated general capacity data [Rahmann et al. 2013]. Because the tool focuses on one product at a time and capacities of particular value-added steps might have to serve multiple products, there occurs the need of a pre-analysis that adjusts the collected data according to the selected and focal product. The current paper presents such an approach to enhance the existing static optimization tool by delivering the adjusted capacity data. References n Rahman, O., Schatz, A., Kuch, B., Wertschöpfungsverteilung in globalen Produktionsnetzwerken, in: ZWF Fachbeitrag, 108 (2013) 9, S. 656-659. n Neumann, M., Constantinescu, C., Westkämper, E., Method for Multi-Scale Modeling and Simulation of Assembly Systems, in: Procedia CIRP, Volume 7 (2013), pp 413-418. n Behrendt, A., Entwicklung eines Modells zur Fertigungssystemplanung in der spanenden Fertigung, Darmstadt 2009. n Rahman, O.A., Kluth, A., Schatz, A., Configuration and evaluation of production networks using a maturity model based approach, Cambridge 2012. n Rahman, O.A., Jaeger, J., Constantinescu, C., Synchronous Method and Engineering Tool for the Strategic Factory Planning, forthcoming. n Spath, D., Hirsch-Kreinsen, H., Kinkel, S. (Hrsg.), Organisatorische Wandlungsfähigkeit produzierender Unternehmen, Stuttgart 2008. n Swafford, P.M., Ghosh, S., Murthy, N., Achieving supply chain agility through IT integration and flexibility, in: International Journal of Production Economics 116 (2008) 2, pp. 288-297. n FrontlineSolvers 2013, in: www.solver.com, Stand: 08.11.2013. Zusammenfassung Um in heutigen Märkten wettbewerbsfähig zu bleiben, müssen Unternehmen die Leistungen und Investitionen ihrer Produktionsstandorte detailliert planen. Aufgrund der stetig steigenden Produktkomplexität sowie der Anzahl der erforderlichen Varianten steigen auch die Größe und Komplexität der Produktionsnetzwerke in ähnlicher Geschwindigkeit. Dies macht die ideale Verteilung der Wertschöpfung in globalen Produktionsnetzwerken zu einem entscheidenden Erfolgsfaktor. Um diesen Anforderungen gerecht zu werden, hat das Fraunhofer-Institut für Produktionstechnik und Automatisierung einen kombinierten Ansatz entwickelt, welcher mehrere Optimierungsdimensionen parallel betrachtet und dynamische Analysen mithilfe der Simulation zulässt. Rahman et al. haben einen Ansatz präsentiert, welcher diese dynamischen Analysen gezielt mit Inputparametern unterstützt, die durch eine statische Optimierungsanalyse auf der Basis eines Produktionsnetzwerkes mit mehreren Standorten und Wertschöpfungsstufen ermittelt werden [Rahman et al. 2013]. Das vorliegende Paper liefert einen Beitrag für eine Voranalyse, als Erweiterung der statischen Optimierungsanalyse von Rahman et al., um die Akkuratesse dieses Ansatzes bzgl. seiner Kapazitätsdaten zu erhöhen, wenn verschiedene Produkte parallel im Netzwerk gefertigt werden, wohingegen die statische Optimierungsanalyse lediglich ein fokales Produkt kennt. Authors OMAR ABDUL RAHMAN, born 1982, is working as a research fellow in the department of Order Management and Value Networks. His research mainly focuses on the field of supply chain management. BENJAMIN KUCH, born 1988, is a graduate student at the Fraunhofer IPA, Order Management and Value Networks department. www.ipm-scm.com/shop 20 s u p p l y chain management I II/ 2013

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Achieving High Performance in the Global Aerospace and Defense Industry Tackling the problems of today while preparing for growth tomorrow Today s multi-polar world, with its dynamic emerging markets, new and sometimes surprising competitors, and rising importance of services and customer-centricity, will make strategic investment, not retrenchment, the key to emerging from the downturn not simply as a survivor, but as a stronger company that can win in the long term. Accenture offers a number of tailored industry solutions that help global companies and their partners deliver high performance, including: Shifting to Services Accenture helps aerospace and defense companies reshape and reposition themselves successfully from a pure product focus to a service-orientated way of Title Placeholder working. Our capability assets help aerospace and defense companies win and support availability and performance based contracts. Aligns to a in Global Supply Chain Resilience Using analytics, simulations solutions and global field expertise, we can also help aerospace and accenture and May defense companies prepare and execute strategies to mitigate supply chain risk, while raising the responsiveness of their supply chain networks. Move Vertically Mergers and Acquisitions and Post Merger Integration Accenture has helped numerous clients in many sectors to achieve high performance by identifying and extracting the value from mergers and acquisitions and perpetuating it through effective post merger integration to maximise cost savings. Mission Software Accenture helps aerospace and defense companies design, develop and roll out robust and reusable software for mission-critical applications. Aerospace and Defense Security Accenture helps aerospace and defense companies manage their security risks and capitalise on new business opportunities, through the analysis, design and deployment of advanced information and cyber security solutions. Talent Management We combine Accenture s Human Capital Transformation approach with our aerospace and defense experience to help our clients overcome the challenges that stand in the way of rapidly and cost effectively building strong workforces. Using these tools, we work with our clients to increase workforce productivity, decrease workforce attrition, decrease time to competence, lower learning costs, and streamline human resource management. For more information visit www.accenture.com/a&d About Accenture Accenture is a global management consulting, technology services and outsourcing company, with approximately 275,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page is www.accenture.com. Copyright 2013 Accenture All rights reserved.

Quo vadis A&D Industry 2013? Pockets of Turbulence Eric Bernardini, Alain Guillot, Stefan Ohl, AlixPartners Outlook A&D Summary The global A&D industry is continuing its growth in the wake of the worldwide financial crisis, yet it remains an extremely dynamic marketplace, in which some sectors are booming and others are experiencing pockets of severe turbulence. Commercial aerospace companies represent perhaps the strongest segment of the industry: they are expected to deliver more than 1,300 jets worldwide this year a record for the industry and new orders continue to roll in (Fig. 1). In contrast to this growth, the defense sector is shrinking. Even though some of the developing-market countries are ramping up spending, the increases are not enough to make up for a sharp decline in spending by developed nations, primarily the US. Given this challenge, A&D companies need to become more efficient and wring costs out of their operations at all levels and across the entire value chain. In the defense sector particularly, companies must diversify into new, more-promising international markets, where the rules of engagement are also changing. The industry will likely remain highly competitive for the foreseeable future, yet there is strong growth potential in some markets, as well as greater profits for companies which are fast and flexible enough to identify and exploit those markets. Airlines: Growth returns, but profits still languish The airline sector reflects the current good-news/badnews state of the A&D industry. Steady traffic growth is leading to improved revenue, and the airlines have become much more disciplined on capacity than they were in the past. Still, airlines have struggled to translate these improvements to the bottom line, and strong profits remain elusive. Operators are being squeezed on both sides: high fuel prices have raised operating costs, and low-cost carriers and new global competitors have kept pressure on pricing. Even if fuel costs revert to historical averages at some point, the competitive factors are likely here to stay. The formerly strong European and US markets are in decline, and operators The current industry supply chain is not entirely ready for this dual challenge of delivering a greater volume of more-sophisticated aircraft. are either restructuring or merging. As growth in mature markets has flattened, the industry s center of gravity has shifted to more rapidly-growing markets in Asia and the Middle East. Defense: A challenging contraction and a shift to the East The defense sector is experiencing a similar shift from mature Western markets to faster-growing regions in Asia (Fig. 2/3). Asian countries outspent European NATO countries for the first time and will most likely continue to do so. As two of the largest developing-market spenders China and Russia are effectively off-limits for outside contractors, defense manufacturers are now fighting to cap- -3.5 ppt 14 % 13.5% 11.9% 12 % 9.7% 10.0% -7.5 ppt 10 % 8 % +4.3 ppt 6 % 5.5% 4 % 2.9% 2.5% 2 % 2005 2006 2007 2008 2009 2010 2011 Figure 1: 2005-2012 A&D Sales Growth evolution (%) 6.8% 2012 s u p p l y chain management I II/ 2013 23

Outlook A&D 800 711,4 668,8 700 600 551,4 560,0 568,6 500 400 527,5 526,6 540,8 300 200 100 0 2011 2012 2013 2014 2015 2016 2017 2018 Figure 2: Historic and Forecast US Defense Budget ($B, 2011 2018F) able. Similarly, companies that depend on annual appropriations such as ship repair and the supply of operational consumables like ammunition and protected vehicles are directly exposed to the impact of sequestration, which requires short-term cuts. Among European firms, the threats may be even more serious. As major programs like combat aircraft and shipbuilding ramp down, European contractors are now struggling to sustain innovation and industrial capacity. In the absence of a major new initiative to radically restructure European defense capacity, the industry is dangerously close to a point of no return. The situation is not yet do or die, but it is clearly do or decline. To succeed in this environment, defense companies must continue to reduce their costs, focus on international markets, re-balance their portfolios, and consolidate in Europe. Excess capacity in combat air, defense electronics, and shipbuilding is currently unsustainable, requiring a major effort with strong government leadership. The effects of the growing markets and rapidly evolving technologies will likely lead to instability for the A&D industry over the coming years. ture the addressable sub-segment of developing markets primarily India, Brazil, and Saudi Arabia (Fig. 4/5). This situation most likely will have varying effects depending on a manufacturer s offering and geographic focus. Companies that have fairly diversified portfolios minimize their exposure to cuts in specific programs, while OEMs with less diversified portfolios appear to be vulner- 1.800 1.600 1.400 1.200 1.000 800 600 400 200 0 1.697 669 158 91 63 60 59 54 49 48 37 36 12 362 Figure 3: 2012 Defense Expenditure by Country At Average Exchange Rates for the Period ($B) Commercial aerospace: Booming with new products The strongest sector within the A&D industry last year was commercial aerospace, which not only expanded but also accelerated its growth, particularly among OEMs. By 2017, the workload volume of OEMs main commercial programs is expected to have ramped up by 45% and will include a significant surge in major new programs, with further increases on the horizon. At the same time, both OEMs and suppliers are translating those gains into improved profitability. Supplier segments including propulsion, cabin interiors, and components and materials built on their positive momentum from earlier years. Overall, suppliers remain more profitable than OEMs by a gap of nearly five percentage points. That said, other indicators show that the gap in financial performance between OEMs and suppliers is starting to close (Fig. 6). For example, OEM revenue growth is now accelerating from 1.6% in 2011 to 6.7% in 2012 and supplier growth seems to be slowing down: from 10.2% in 2011 to 6.6% in 2012. Similarly, an analysis of cash return on capital invested (CROCI) shows that suppliers have trended downward since 2007, whereas OEMs have improved their CROCI performance. In part, this is because the backlog in orders has allowed OEMs to build up stronger cash positions. Moving forward, the commercial aerospace profit pool is expected to continue to grow at a rate of 5% per year, driven in part by both airframe and engine manufacturers new technologies intended to improve aircraft operating efficiency. Aircraft deliveries are expected to increase 2.3% a year for the next decade. As the profit pool gets 24 s u p p l y chain management I II/ 2013

Outlook A&D CAGR (%, (%, 2011 2016) larger, commercial aircraft OEMs will fight to increase their share, by developing new aircraft designs and ramping up production for both narrow-body and wide-body aircraft. Supply chain: Challenges on the horizon The coming increase in sales volume is a positive sign, but it will create significant challenges for A&D supply chains. As noted earlier, a 45% ramp-up in workload by 2017 is projected, with new programs like the A320neo, Boeing 737 MAX, and Bombardier C Series that will tax engineering and industrial service functions. These new programs also involve more-technologically complex designs aimed at increasing aircraft operating efficiency by 15 to 20%. Such advances include composite materials, fuel-efficient engines, and new systems, including avionics, fuel, braking, and electric systems. The current industry supply chain is not entirely ready for this dual challenge of delivering a greater volume of more-sophisticated aircraft. In fact, there is a real and growing risk of supply chain disruptions. Certain suppliers have only limited expertise and modest engineering capabilities for implementing and sustaining several programs, especially in the detailed-parts and aerostructures segments. Some CAGR (%, 2011 2016) 18.5 18.5 14.1 14.1 14.4 14.4 8.7 8.7 5.4 5.4 93,3 93,3 217,7 39,4 39,4 76,1 76,1-3.2-0.1-0.8 0.1-4.0 71,8 61,0 60,2 60,0 53,2 53,2 27,1 27,1 72,0 72,0 109,4 43,9 42,1 39,0 39,2 63,1 63,1 48,5 48,5 China India Brazil Russia Saudi Arabia 2011 2016 Figure 4: 2011 2016 Forecast Defense Spending and CAGR for China, India, Brazil, Russia, Saudi Arabia ($B) suppliers and OEMs have taken early steps to handle those limitations for example, by more directly involving and closely monitoring tier 1 aerostructure suppliers in new programs but those measures represent a new risk-sharing model for which neither side is yet mature enough to implement and monitor. As new-aircraft orders rise and industry focus continues to shift away from defense towards the commercial sector, the entire aerospace value chain faces four macro challenges: n Shortage of competency Currently there is limited expertise in supporting several new programs in parallel whilst production is ramping up so steeply. The processes for building these new aircraft are not established enough to facilitate rapid and effective training to expand the workforce, and there is limited experience available of managing these complex projects. n Capacity There is a long lead-time between the planning and the effective availability of new capacities for example, in forgings and the cash required to fund such upgrades has been in short supply during the recent downturn. n Raw-materials supply chain There are long lead-times on key raw materials, such as carbon fiber, and these materials are highly subject to shortages and price increases, added to which their suppliers usually hold only limited inventory of these expensive materials at any one time to manage their cash effectively. n Industrial maturity As with the workforce, the newness of the materials and processes used in new aircraft could lead to issues with quality and repeatability of manufacture, along with reliability issues per some of the materials provided. 12,5 10,2 UK France Germany Italy Spain Figure 5: 2011 2016 Forecast Defense Spending and CAGR for UK, France, Germany, Italy and Spain ($B) More and more, OEMs will have to lead operational improvement programs at their key suppliers, and tier 1 suppliers will have to develop similar measures further down the supply chain. As tier 1 responsibility shifts to include not only full-system but subsystem specs and integration, OEMs will have to work with those specs and that integration to ensure the OEMs have the sufficient competencies in place. In s u p p l y chain management I II/ 2013 25

Outlook A&D 25 % 20 % 15 % 10 % 5 % 0 % -5 % 8.1% 21.6% 2005 15.2% 13.1% 9.5% 9.6% 7.3% 2006 2007 2008 addition, OEMs will have to continue streamlining their supply chains through restructuring and integration efforts. Consolidation is especially needed in the detailed-partssupplier segments, and OEMs must actuate that process. MRO: Solid growth and a shuffling of competitors Worldwide, the maintenance, repair, and overhaul (MRO) market grew 11% in 2012. The civil air transport fleet, including regional jets and turboprops, is currently at about 26,000 aircraft, and that number will grow sharply in the coming decades: in 15 years, the in-service fleet is projected to be about twice as large as today s. That growth will lure new entrants to the MRO field and realign the competitive landscape, and there is already first evidence of the shuffling including an increased deal volume on mergers and acquisitions, airlines continuing to outsource their maintenance segments in greater volume, and more broadly aircraft OEMs extending their reach into the MRO business. In particular aircraft OEMs can build on their unique access to airlines and can challenge component manufacturer such as cabin equipment provider by implementing major new programs and platforms. Another trend affecting the MRO business is that next-generation aircraft and engines simply require less maintenance. As a result, profits are expected to remain elusive: only a few premium players can reach an EBIT margin of 10%. In sum, there is a clear growth opportunity in the MRO segment, but to win, operators will have to navigate a dynamic market. Key requirements will be access to capital, willingness to invest long term, and a footprint with operations close to the fleet of tomorrow, including strong coverage in Asia. Thriving in an unstable market 10.7% 6.2% 2009 OEMs -2.8% Figure 6: 2005-2012 A&D Sales Growth evolution (%) 3.0% 2.5% 2010 The effects of the growing markets in Asia and the Middle East, rapidly evolving technologies, and fiscal strains on mature markets in Europe and the US will likely lead to instability for the A&D industry over the coming years. Successful companies in the industry will focus on three key priorities: n Profitability is an ongoing Suppliers challenge, and companies must redouble their efforts to reduce costs. Those that can achieve 10.2% 6.7% 6.6% more-efficient operations and greater EBIT margins can give themselves the head room to 1.6% pursue future opportunities 2011 2012 and endure future downturns. n Companies should accelerate their diversification into new and faster-growth markets. This entails more than a mere geographic change with the inherent supply chain challenges and involves the tailoring of products and services for customer segments with varying priorities and requirements. n Innovation is a major theme across all segments. The ability to identify and anticipate demand for new products and services often driven by new technologies will be a clear differentiator in A&D companies. These are sizable challenges, yet they also point to clear opportunities. A&D operators that can get these three areas right can give themselves a clear, competitive edge in a volatile industry. Zusammenfassung Unterschiedliche Geschwindigkeiten und gegenläufige Entwicklungen scheinen sich in der weltweiten Luftfahrt- und Verteidigungsindustrie auch in der näheren Zukunft fortzusetzen. Einige Sektoren wie die kommerzielle Luftfahrt verzeichnen weiterhin einen starken Aufwärtstrend, während andere wie insbesondere die Verteidigungsindustrie in den meisten westlichen Ländern rückläufig sind. Es ist damit zu rechnen, dass eine kontinuierliche Zunahme des Luftverkehrsaufkommens die Gewinnaussichten der Branche generell steigert und der Konkurrenzkampf um diese Gewinnanteile härter wird. In diesem Zusammenhang muss die Luftfahrt- und Verteidigungsindustrie effizienter werden, um im aktuellen Branchenzyklus bestehen und weiter wachsen zu können. Dazu müssen insbesondere die großen Auftragsvolumina aus der kommerziellen Luftfahrt bewältigt und neue, wachstumsstarke Sicherheits- und Verteidigungsmärkte erschlossen werden. Der bevorstehende Volumenanstieg stellt insbesondere die Zulieferer vor signifikante Herausforderungen. Es besteht ein erhebliches Risiko, dass die Zulieferer nicht mit den steigenden Anforderungen an einen industrialisierten Produktionsprozess Schritt halten können, weshalb Produktionsengpässe mehr als wahrscheinlich sind. Authors ERIC BERNARDINI, born 1959, is a Managing Director in AlixPartners London Office. ALAIN GUILLOT, born 1960, is a Managing Director in AlixPartners Paris Office. STEFAN OHL, born 1968, is a Managing Director in AlixPartners Munich Office. 26 s u p p l y chain management I II/ 2013

Unfailingly innovative www.zodiacaerospace.com Zodiac Aerospace prepares for the future with innovative concepts integrating new technologies. Zodiac Aerospace is a world leader in aerospace equipment and systems on board of commercial, regional, and business jet aircraft as well as helicopters. With over 30,000 employees on five continents, it develops and implements the most advanced solutions for its customers through five business segments : Cabin & Structures, Galleys & Equipment, Seats, Aircraft Systems, and Aerosafety. The customer service is provided by the global network of Zodiac Services. Zodiac Aerospace develops new architectures and new embedded systems in the systems areas of the more electrical aircraft (project Genome), fuel and tank inerting systems (project Safuel), or fuel cell technology (project Hycarus). In the cabin Zodiac Aerospace developed the solution ISIS for the retrofit market of short haul aircraft which significantly increases passenger baggage space and allows adding two additional rows of seats. New seats, cabin lighting systems, modular galleys or the Seat Centric IFE solutions are further innovations which improve the comfort and the life on board of an aircraft.

Procurement excellence Global purchasing organization the next evolutionary phase Dr. Marcus Schüller, Dr. Lars Immerthal, KPMG AG Wirtschaftsprüfungsgesellschaft Summary Most international companies now have efficient purchasing organizations across China, Brazil, USA and Eastern Europe the purchasing and SCM departments have really received a huge efficiency boost over the last few years. However, when it comes to developing an integrated global organization, which has a high level of maturity and supports the long-term success of the company as a strategic growth driver, there is still significant potential that can be tapped in purchasing. Global footprint = global purchasing? There is still a lot of ground to be made up by purchasing as far as companies internationalization strategies are concerned: the problems that most often occur are the lack of strategic processes and product group strategies with long-term cost optimization approaches being prevented. Fragmented structures are the cause of communication that is often inadequate and complicated and they sometimes have serious consequences. This means for example that an integrated compliance management system cannot be developed and the management of cross-functional interfaces and teams and the implementation of tax-optimized purchasing pose tremendous difficulties. The same problem occurs when it comes to generating, distributing and using knowledge in the organization and sharing best practices. This is a situation that is all the more serious when you look at the fact that a growing number of companies are having to deal with high, short-term cost pressures, price fluctuations and complex geopolitical situations. All in all, this means that purchasing has a comparably low maturity in a large number of companies with a global market presence and is hardly in the position to operate as a strategic partner in the value chain. Given the challenges outlined, increasing the maturity in purchasing is a strategic task, which an increasing number of companies address by centralizing and integrating their global purchasing activities. However, is creating a global, centralized purchasing organization the solution? Is it actually possible to deliver really significant competitive advantages in the long term and ensure a transformation Execu(on Supply Control Synergies Sustainability Value Sourcing Evolu(on status - Coordinator Administrator Assistance Tac(cal sparring partner Coopera(on in goal sedng and demand management Expert with market- know- how Mediator in the supply chain Understanding of business model and demands Value chain partner Early Involvement Strategic partner in value chain Ra(ng 1 2 3 4 5 Figure 1: Maturity model for purchasing s u p p l y chain management I II/ 2013 29

Procurement excellence Maturity of an organiza.on Category Management n Defini&on & implementa&on of Category strategies n Medium maturity level Category strategies Global process framework Cost down program Global Category teams Nego.a.on program Risk management Supplier evalua.on Cost structure analysis Methods & Tools n Use of methods & tools (e.g. Cost structure analysis) n High maturity level Sustainability Competence Centers n Implementa&on of cross- func&onal competence centers (e.g. for risk mgmt) n Best in class maturity level Savings Low savings contribu.on High savings contribu.on Figure 2: Roadmap for transforming purchasing and advancement in purchasing over a sustained period of time with this type of structure? The answer to this question is determined by a company s specific structure and the market conditions it is facing. Experience gained from the last few years shows that a network organization, which on the one hand is centrally managed, but on the other hand has enough flexibility to localize global strategies and requirements, offers numerous benefits especially for the manufacturing industry in B2B markets: in particular, these advantages include a significant increase in global purchasing power combined with portfolio and pooling effects which primarily result from purchasing commodities. At the same time, a centrallymanaged global purchasing organization also ensures that synergies can be used as effectively as possible, knowledge can be shared efficiently and that processes can be standardized. However, globally centralized purchasing also presents companies with a number of different challenges such as the risk of bureaucratization as a result of the potential for conflict embedded in matrix structures, a lack of awareness and openness to local requirements and the great need for management input. Finally all these efforts will lead to better and measurable purchasing performance with impact on costs, service levels, quality and risk avoidance. Becoming a global purchasing organization A structured and planned approach is required as far as the above is concerned to transform a fragmented purchasing organization into a centrally-managed global entity. The path leading from operating in regional and functional isolation and often from merely maintaining a tactical set up to becoming a cross-functional organization cooperating on a global scale and an organization that will deliver strategic value often involves a number of different subject areas. Developing a shared vision is the first step in this type of transformation process and it is also the essential requirement for this process. It requires a lot of motivation and the ability to embrace change only an organization that is considered to be both a value driver and a strategic partner Three key factors are involved in creating an integrated global purchasing organization, which have to be addressed on a global and regional level. and that offers scope for developing creativity and entrepreneurship is likely to be widely accepted within a heterogeneous cultural landscape. Further critical factors are the common objective conception and how to put it into practice, as well as defining a global purchasing strategy and implementing cross-functional commodity strategies and management structures as a framework for the actual implementation procedure. Directly associated with this are the requests for an exact description of the roles and areas of responsibility within the organization as well as the necessary qualifications and further education measures. It is also essential to align the processes and harmonize the system landscape and to ensure a great deal of transparency in order to develop a global compliance and risk management system and to manage and improve the performance of the organization using key performance indicators (KPIs). 30 s u p p l y chain management I II/ 2013

www.ipm-scm.com III-IV/2008 AVIATION Procurement excellence Success factors for achieving the transformation There are three key factors involved in creating an integrated global purchasing organization, which have to be addressed on both a global and regional level. As far as the strategy is concerned, the head office has to establish Whether it is possible to achieve success with a global transformation plan is ultimately determined by the regional level. a common strategic alignment and ensure that all relevant internal and external partners are integrated into the process at an early stage. It must also put across a consistent interpretation of the established standards, for example in terms of platform and module strategies and provide regulations for prioritizing activities. In this case, regional teams face the task of implementing the global strategy locally and aligning processes with new forms of cooperation and partners. To support this an organizational structure has to be implemented which is qualified to reproduce the cultural variety of a global network, to promote a cooperation and exchange of knowledge among the divisions and to ensure a great level of transparency and responsibility. The regional teams are faced with the challenge of adapting global input to regionally accepted and approved models and refining global strategies using the knowledge relating to cultural characteristics and specific regional structures. And when all is said and done, a global transformation project must also have a precisely planned and implemented change management procedure. The cooperation between the head office and the regional branches of the purchasing organization is also vitally important here. The foundation for this cooperation is formed by a global communication plan, which accounts for all relevant interfaces and ensures the necessary cultural awareness in the change process. All levels of management at head office, in regional offices and cross-functional have to be integrated into the project. Whether it is possible to achieve success with this process over a sustained period of time is ultimately determined by what happens at a regional level: being open to changes and prepared to transfer a global program into local contexts is essential. The concept of a global purchasing organization, which is characterized by an extensive cooperation between different divisions and which is constantly attempting to develop and shape the future as a strategic partner of the company management, is therefore quickly becoming a profoundly cooperative project. Zusammenfassung Ob China, Brasilien oder Osteuropa: Viele Unternehmen haben heute auf der ganzen Welt oftmals leistungsfähige Einkaufsabteilungen etabliert. Doch sind sie auch Teil globaler Wertschöpfungsnetzwerke, die langfristig den Unternehmenserfolg unterstützen? Um dies zu gewährleisten, muss der Einkauf einen hohen Reifegrad aufweisen und hier bestehen noch erhebliche Potenziale. Authors DR. MARCUS SCHÜLLER, born 1967, is Partner at KPMG AG Wirtschaftsprüfungsgesellschaft. DR. LARS IMMERTHAL, born 1969, is Director at KPMG AG Wirtschaftsprüfungsgesellschaft. II/2008 www.ipm-scm.com II/2008 TM AVIATION Wir haben nicht nur die richtigen Werkzeuge,... Annual Subscription (3 issues) E 78, per year (national) (students E 25, ) E 88, per year (international) (students E 35, )... sondern auch die Lösung! Trial versions and past volumes online at: www.ipm-scm.com Über 25 Jahre Erfahrung in Methoden, Best Practices und Umsetzung für F&E Lean Production SCM Beratung, die sich rechnet www.roi-international.com scm_0802_umschl_aussen_1507.indd 1 15.07.2008 14:26:05 Uhr IPM GmbH Donarweg 6 30657 Hannover Tel. +49 511 47314790 mail@ipm-scm.com www.ipm-scm.com INHALT INHALT Sicherheit in globalen Supply Chains: Ableitungen aus der Prinzipal-Agent-Theorie Andreas Wieland, Technische Universität Berlin Szenario-Management in der Logistik Planungspraxis, Potenziale und Perspektiven Dr. Heiko A. von der Gracht, European Business School (EBS) PRTM Studie: Global Supply Chain Trends 2008 2010 Dr. Reinhard Geissbauer, Michael D heur, PRTM Management Consultants GmbH Monetäres Supply Chain Management: Beitrag des SCM zum Unternehmenswert Alwin Locker, Soltar The Supply Chain Experts, Markus Rothböck, delfortgroup AG Procurement Service Provi ding: Konzeption Branchen studie Praxisbeispiel Sherin Stepniak, Wolfgang Buchholz, Fachhochschule Münster The Evolution in Supply Chain Replenishment Models: New Opportunities to Create Value Oliver Eitelwein, CTcon Management Consulting, Prof. Dr. Thomas J. Goldsby, University of Kentucky (USA), Prof. Dr. Terrance L. Pohlen, University of North Texas (USA), Dr. Carl Marcus Wallenburg, WHU-Otto Beisheim School of Management Lean Management und RFID in der Automobilindustrie Dr. Walter Huber, Atos Origin GmbH Best Cost Country: Kosten optimale Wertschöpfungskette in der Automobilindustrie Markus Wiederstein, Lutz Fischer, PA Consulting Group Dynamic Vendor Managed Inventory Plattform für eine veränderte Business Kultur Prof. Dr.-Ing. Thorsten Brandes, TFH Wildau, Marc Tuma, Motorola GmbH, Stefan Wiesemann, T-Mobile Deutschland GmbH Risiko- und Kostenminimierung bei internationalen Beschaffungen Prof. Dr.-Ing. Robert Schmitt, Janko Kukolja, RWTH Aachen Prozessorientierte SCM-Optimierung am Beispiel des Message Hub Klaus Josef Schäfer, Clariant Corporation RFID-gestützte Logistik in der Pharmaindustrie Frank Brzoska, SAP Deutschland AG & Co. KG Die erfolgreiche Integration komplexer Supply Chains bei einem Firmenzusammenschluss Dr. Hans-Walter Höhl, Bayer Schering Pharma AG Handlungsempfehlungen zum Bestandsmanagement Dr. Götz-Andreas Kemmner, Abels & Kemmner GmbH scm_0803_umschl_außen_a3_3012.indd 1 30.12.2008 20:24:02 Uhr s u p p l y chain management I II/ 2013 31

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Supply Chain Optimization SPACE An initiative of aerospace prime contractors Dr.-Ing. Anfried Sauerborn, EADS, Christophe Cabaret, Norbert Schröder, SPACE TM Summary In June 2007 aeronautical primes founded the nonprofit aerospace association SPACE TM to support the development of their supply chains. The association aims to provide and implement services to improve industrial performance and competitiveness of supply chains by increasing the efficiency of subcontractors and the relationship with their major aerospace manufacturers. The mission of SPACE is to conduct industrial improvement projects at supplier s sites by pooling the resources of major aerospace actors like Airbus, Aernnova, Daher, Dassault Aviation, Diehl Aerospace, EADS, Eaton, Latecoere, Liebherr Aerospace, Moog, Rockwell Collins, Safran, Thales, UTAS Goodrich and Zodiac Aerospace and others. Since 2011, SPACE gets engaged in regional and national government supported projects [www.space-aero.org]. Strong need to improve the industrial capacity of the Aerospace Supply Chain The aerospace industry is characterized by n steady growth in the past, strong likelihood to continue in future (Figure 1), n relatively low quantities and significant product lifetime (typical 30 years), n highly specialized supply chain, regulated markets, n complex multi tiers supply chains, n Transition from manufacturing to series production, n large number of SMEs engaged. In order to streamline and improve the efforts of the Aerospace OEM regarding industrial development of their sub tiers, the Airbus systems supplier council has brought up the idea to commonly address the topic together with their important suppliers in 2006. In the meantime several pilot projects on common supplier development have been successfully carried out (Figure 2). Due to cartel regulations (several companies could exercise inadequate pressure to common sub-tiers) the creation of an independent organization was required. The foundation of SPACE was the answer to these constraints. What is SPACE and how does it operate? The mission of SPACE is to conduct industrial improvement projects at supplier s sites by pooling the resources of major aerospace actors. Figure 1: Ramp up of air traffic demand SPACE stands for Supply Chain Progress towards Aeronautical Community Excellence. SPACE a nonprofit organization gathers about 16 aerospace primes from the Systems and Aero structure business (Figure 3). They send delegates to the SPACE executive committee which is the operational decision making body of SPACE. Additionally the primes are obliged besides payment of annual fees to send experts to common projects. The SPACE association employs an operating manager and two further staff. The costs of operations for the association are covered by the membership fees. Which methods are used by SPACE projects? The resources for SPACE projects at suppliers are sent from the executive members. Each SPACE project s u p p l y chain management I II/ 2013 33

Supply Chain Optimization Figure 2: Typical SPACE project setup gathering experts from different OEMs starts with a diagnostics of the supply chain management maturity. This is mainly done by interviews and on site verifications at the supplier concerned. The method is based on the Supply Chain Management Handbook (SCMH) which has been developed by the International Aerospace Quality Group (IAQG). This comprehensive assessment determines 5 maturity levels in 10 categories (Figure 4). The results of the assessment are the basis for the improvement project only. The assessment does not result in a grade or quality certificate. This allows to avoid beauty contests and to focus on the real improvement needs. For the improvement itself, SPACE has gathered a toolbox comprising among others the following methods: n FMEA n 5 WHY S n 8D n Check sheet n Histogram n Scatter diagram n Control chart n Flow chart n Cause & effect analysis n Pareto analysis n First pass yield n Overall Equipment Efficiency n Skill matrix n Value Stream Mapping n Line balancing n Visual management n Takt time n Kanban n Process Mapping n Total Productive Maintenance n Single Minute Exchange of Die n Poka Yoke n Line of balance n Manufacturing Resource Planning (MRPII) n Input Output Control SPACE Achievements SPACE is focusing on improving on time delivery and reducing rejection rates. Around 150 Projects have been conducted so far, most of them in France. Each year, SPACE grants an award to the three best improvers. For example TECHCI, a member of the FINMASI Group, has received such an award. On time delivery has improved from 50% to 80% and rejection rate has been cut by half (Figure 6). Government funded projects in France Figure 3: SPACE members, including executive members (center) In 2010 SPACE started to widen its scope for French region wide projects involving OEMs and supplier in a given region. These projects were government supported and carried out by using the SPACE methodology and toolbox. In contrast to the above mentioned projects the experts are not sent by the executive members, but comprise SPACE labeled consultants. The resulting improvement plans cover activities at both parties: the OEMs and their suppliers. Aerolean k was such a project involving 57 SME and 11 OEM. A satisfaction survey among the participating SME and OEM resulted in more than 90% satisfaction. The operational performance of the participating companies improved significantly (on time delivery, rejection rate). This lead SPACE to develop such an initiative also in others regions (cf DINAMIC AERO managed with the 34 s u p p l y chain management I II/ 2013

Objectif Objectif Objectif Objectif Objectif Objectif Objectif Objectif Objectif Objectif Objectif Objectif Objectif Supply Chain Optimization Pays de Loire region with 36 SME and 5 OEM) and now even delete a project is under construction with Gifas (target 400 SME and 70 OEM) covering the whole French territory. Further development and outlook Until recently SPACE has been focusing on France. 2013 was the year of a successful deployment in Germany and Spain will follow in the near future. For Germany a dedicated German representative has been hired who successfully builds his network among the OEM, SME, the BDLI and the German regional Aerospace associations. First projects at supplier sites are currently going on. Zusammenfassung Figure 4: Assessment grid used for SPACE diagnosis Im Jahr 2007 haben die wichtigsten Auftraggeber der europäischen zivilen Luft- und Raumfahrt konstatiert, dass ihre Supply Chains zunehmend weniger in der Lage sind, die neuen Herausforderungen der industriellen Exzellenz zu erfüllen. Zur Förderung der Entwicklung dieser Branche haben sie entschieden, im Juni 2007 den Verband SPACE zu gründen [www.space-aero.org]. Die Aufgabe des Verbands ist die Durchführung konkreter industrieller Verbesserungsprojekte bei den Lieferanten durch eine gemeinsame Nutzung der Ressourcen der wichtigsten Auftraggeber in der Luft- und Raumfahrtbranche, u. a. Airbus, Daher, Diehl Aerospace, Dassault Aviation, EADS, Aernnova, Eaton, Latecoere, Liebherr Aerospace, Moog, Rockwell Collins, UTAS Goodrich, Safran, Thales and Zodiac Aerospace. Seither hat SPACE über 150 industrielle Verbesserungsprojekte unterstützt und mehr als 200 Experten an den Werkzeugen für eine effiziente industrielle Prozesskontrolle geschult. Seit 2011 führt SPACE regionale Verbesserungsprojekte mit öffentlicher Förderung in Frankreich durch. SPACE Kontakt für Deutschland: Norbert.Schroeder@space-aero.org. Authors ANFRIED SAUERBORN, born 1955, is in charge of the supplier management aspect of the EADS Group s Sourcing Strategy at their headquarters and represents EADS in the executive committee of SPACE. CHRISTOPHE CABARET, born 1960, is the Operating Manager of SPACE. NORBERT SCHRÖDER, born 1953, is Operating Manager of SPACE Germany. nombre de jours ouvrés de retard 100% 92 >5 90% 88 82 80% 79 78 +5 75 70% 63 +4 60% 57 56 Results end of 2011 OTD : 80% (was 50%) Returns : <3841 PPM (was 7800) 50% 47 49 51 +3 40% 30% 40 +2 350000 Indicateur PIC BACK ORDERS 2 (Ex BACKLOG) - CA en retard 20% +1 300000 10% 0% DEC-10 JAN-11 FEB-11 MAR-11 APR-11 MAY-11 JUN-11 JUL-11 AUG-11 SEP-11 OCT-11 NOV-11 DEC-11 ok 250000 200000 CA CA en retard 150000 Leadtime (in working days) 100000 Objectif < ou = à 120 50000 0 janv.-11 févr.-11 mars-11 avr.-11 mai-11 juin-11 juil.-11 août-11 sept.-11 oct.-11 nov.-11 déc.-11 Mois Figure 5: Indicator landscape of the TECHCI project s u p p l y chain management I II/ 2013 35

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Aviation Forum 2013 Hamburg Germany Global Aerospace Supply Chains China Europe USA 4 th and 5 th December 2013 Exhibition and Conference Congress Center Hamburg (CCH) Conference Hotel: Radisson Blu Hotel Special Topics Airbus production FAL: Tianjin Free Trade Zone (China) and Mobile, Alabama (USA) Patron Dr. Klaus Richter Executive Vice President Airbus Procurement Competence Partner Designed by www.ipm-scm.com/afo

Global Greeting Aerospace Supply Chains China Europe USA Aviation Forum 2013 Global Aerospace Supply Chains Hamburg Germany China Europe USA Av Greeting Dr.-Ing. Klaus Richter Greeting Dr.-Ing. Klaus Richter Ladies and Gentlemen, 2013 is another year of successful expansion for Airbus. Fuelled by rampant growth Ladies and Gentlemen, Airbus continues to develop its global footprint and supply chain. The construction C Final Assembly Line in the USA progresses well, aiming at a production start in 2015 2013 is another year of successful expansion for Airbus. Fuelled by rampant business growth success in has the always emerging been innovation. markets The launch of the Single Aisle NEO pr M Airbus continues to develop its global footprint and supply chain. The the construction two most recent project and for prominent our Single pillars Aisle of our strategy to continuously push the Y Final Assembly Line in the USA progresses well, aiming at a production start in 2015. A second key driver of Airbus CM business success has always been innovation. The launch of the Single The Aisle 3 rd NEO annual program AVIATION and FORUM the A350-1000 2013 will take are place on the 4 th and 5 th of Decemb topic is Global Aerospace Supply Chains: China Europe USA. Among others th MY the two most recent and prominent pillars of our strategy to continuously push the standards in civil aviation. discussed: Managing Growth, Globalized Supply Chains: Risk or opportunity for CY The 3 rd annual AVIATION FORUM 2013 will take place on the 4 th and business 5 th of December in transition, in Hamburg, Open Innovation: Germany. How The to integrate suppliers in the innovat CMY topic is Global Aerospace Supply Chains: China Europe USA. Among The first others conference the following day hosts key eight issues workshops will be with the opening of the accompany K discussed: Managing Growth, Globalized Supply Chains: Risk or opportunity afternoon as for well aerospace?, as a Panel Discussion. MRO An A global Airbus plant tour at Finkenwerder or a to business in transition, Open Innovation: How to integrate suppliers Logistics in the innovation Center the process. morning precedes the official opening of the conference. Fou will be held on the second day. All confirmed speakers and experts are listed on the The first conference day hosts eight workshops with the opening of the accompanying exhibition in the early afternoon as well as a Panel Discussion. An Airbus plant tour at Finkenwerder With FALs or in a China tour to and Kuehne the United + Nagel s States, it Airbus is our pleasure to welcome both Chines Logistics Center in the morning precedes the official opening of the conference. at the AVIATION Fourteen FORUM top this level year. presentations will be held on the second day. All confirmed speakers and experts are In listed 2012 on the the AVIATION following FORUM pages. offered more than 430 participants access to best pr aircraft industry and professional networking opportunities. Approximately 500 atte With FALs in China and the United States, it is our pleasure to welcome both Chinese and American delegations at the AVIATION FORUM this year. I wish all attendees a successful AVIATION FORUM 2013. In 2012 the AVIATION FORUM offered more than 430 participants access to best practice know how on the aircraft industry and professional networking opportunities. Approximately 500 attendees are expected in 2013. I wish all attendees a successful AVIATION FORUM 2013. Dr.-Ing. Klaus Richter Executive Vice President Airbus Procurement Dr.-Ing. Klaus Richter Executive Vice President Airbus Procurement Competence Partner Cooperations Partner Competence Partner Cooperations Partner www.ipm-scm.com/afo 38 s u p p l y chain management I II/ 2013 www.ipm-scm.com/afo

es es t Partners and Sponsors Partner Logistics Partner Globalization Partner SCM Partner Corporate Partner Air Travel Partner Location Partner Platin Sponsor Gold Sponsors Sponsors Conference Folder Sponsor Lunch Flag Sponsor Name Badge Sponsor Seat Exhibitor Rollup Sponsor s u p p l y chain management I II/ 2013 39

Exhibitors Exhibitors 40 s u p p l y chain management I II/ 2013

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Exhibition plan Aviation Forum 2013 Hamburg Germany Panel Discussion Keynotes & Track 1 Track 2 Buffet Bar 13 28 14 12 11 10 9 8 7 WS 7 WS 1-6 Buffet 6 5 4 3 2 1 Subject to change! 42 s u p p l y chain management I II/ 2013 www.ipm-scm.com/afo

Aviation Forum 2013 Exhibition plan Hamburg Germany 29 Registration Foyer 30 Bar Barista Buffet 18 19 24 25 26 15 16 17 Buffet Buffet 20 21 22 23 27 Subject to change! www.ipm-scm.com/afo s u p p l y chain management I II/ 2013 43

Program Wednesday, 4 th December 2013 Aviation Forum 2013 Hamburg Germany Wednesday, 4 th December 2013 07:00-08:30 08:30-12:00 Check-In Plant Tour 1 Plant Tour 2 Airbus Finkenwerder Factory Tour (A320 & A380) Airbus Logistics Material Center Hamburg operated by Kuehne + Nagel 12:15-13:00 Business Lunch and Visit of the Exhibition 13:00-13:30 Welcome address Prof. Dr. Johannes Walther, Institute for Production Management, CEO Sandy Stimpson, Mayor of Mobile, Alabama USA Bernhard Conrad, Lufthansa Technik AG, Senior Vice President, CTO/Hamburg Aviation, President of the Board 13:30-14:00 Development of Airbus in the US and perspectives for the supply chain Dave Williams, Airbus, VP Sourcing Office North America 14:00-14:45 Airbus in Tianjin Supply Chain Destination Tianjin: The Airbus Final Assembly Line in China!: Andreas Ockel, Airbus (Tianjin) Final Assembly Company LTD, General Manager Tianjin Where Aviation Business Comes to Thrive: David Zheng, Tianjin Airport Economic Area Administrative Committee, Director of Aviation Development Center Workshop 1: Logistics Management 14:45-18:15 The Critical Success Factor in the Aerospace Supply Chain? Moderator: Prof. Dr. Dr. h.c. Ulli Arnold, University of Stuttgart, Professorship for Business Administration, Investment Goods Marketing and Supply Chain Management Experts: Bernard Pain, Airbus, VP Travel & Supply Chain Procurement, EADS General Procurement; Oliver Schmidt, PSIPENTA Software Systems GmbH, Director Automotive & Aerospace; Dr. Carl Deppisch, Kuehne+Nagel Management AG, VP Operations Aerospace & Defence; Peter Buchfeld, Interturbine Aviation Logistics GmbH, Vice President Operations; Markus Quicken, SupplyOn AG, CEO Workshop 2: Globalized Supply Chains 14:45-18:15 Risks and Opportunities of Global Sourcing in Aeropace Moderator: Prof. Dr. Hans-Gerhard Seeba, Ostfalia University of Applied Sciences, Professorship for Business Administration Experts: Matthias Gramolla, Airbus, Head of EADS/Airbus Procurement Strategy and Services; Christian Leber, Accenture GmbH, Executive, Aerospace & Defense, Operations; Josef Gropper, Liebherr Aerospace & Transportation SAS, COO; Dr. Sylvia Trage, KPMG AG, Senior Manager; Ulrich Ludwigshausen, B/E Aerospace Systems, Global VP Supply Chain Life Support Systems GmbH; Dr. Stefan Ohl, AlixPartners GmbH, Managing Director Workshop 3: Maintenance, Repair, Overhaul (MRO) 14:45-18:15 How to integrate MRO in the Aerospace Supply Chain? Moderator: Dr.-Ing. Franz-Udo Brückner, IPM GmbH, Director Quality Experts: Philippe Mhun, Airbus, SVP Procurement Equipment, Systems & Support; Dick Allewelt, Germania Technik Brandenburg GmbH, Commercial Director; Kim Kroejby, Leki Aviation Oy, CEO; Marc-Philipp Graf von Bethusy-Huc, Marcotodo Wärmetechnik GmbH, CEO Subject to change! 44 s u p p l y chain management I II/ 2013 www.ipm-scm.com/afo

Aviation Forum Program 2013 Hamburg Germany Workshop 4: Mergers & Acquisitions 14:45-18:15 Successful Management of SME's Consolidation Moderator: Prof. Dr. Andreas Zaby, Berlin School of Economics and Law, Vice President Experts: Olivier Cauquil, Airbus, SVP Head of Material & Parts Procurement - Chairman of the EADS Material Board; Joachim Ley, RECARO Aircraft Seating GmbH & Co. KG, Vice President Supply Chain, Member of the Executive Team; Stephan Brunke, RBS RoeverBroennerSusat GmbH & Co. KG, Managing Director Workshop 5: Innovation Management 14:45-18:15 Open Innovation: How to integrate Suppliers in the Innovation Process? Moderator: Prof. Dr. Stephan M. Wagner, Swiss Federal Institute of Technology Zurich, Professorship for Logistics Management Experts: N.N., Airbus; Sven Behrendt, SER Solutions Deutschland GmbH, Branch Manager, Strategic Projects and Solutions; Dr. Jürgen Laakmann, Formel D Unternehmensgruppe, Managing Director; Andreas Kaden, Lufthansa Technical Training GmbH, CEO; Prof. Zhu Zhengjun, Aviation Industry Corporation of China, Deputy of General Manager; Stefan Kroll, MT Aerospace AG, SVP Aeronautics, Composites & Ceramics Workshop 6: Green Propulsion 14:45-18:15 Managing the Global Supplier Network of the Engine OEMs Moderator: Prof. Dr. Holger Schiele, University of Twente, Professorship for Technology Management Experts: Michael Chemouny, Airbus, Head of Supply Chain Quality; Alexander Dulebenets, Sukhoi Civil Aircraft Company, Deputy Procurement Director Workshop 7: Mass Production 14:45-18:15 Adapting Automotive best Practices in Aircraft Supply Chains Moderator: Prof. Dr. Michael Eßig, Universität der Bundeswehr München, Professorship for Supply Chain Management and Distribution Experts: Antoine Baux, Airbus, Head of Detail Parts Procurement; Jürgen Fried, Vice President Delivery Unit Donauwörth, Product Center Airframes; Joachim Hermes, Karl Berrang GmbH, Member of the Board Panel Discussion 14:45-18:15 Managing Growth Moderator: Prof. Dr. Matthias Tomenendal, IMB Institute of Management Berlin, Director Experts: Dave Williams, Airbus, VP Sourcing Office North America; Andreas Ockel, Airbus (Tianjin) Final Assembly Company LTD, General Manager; Olivier Zarrouati, Zodiac Aerospace, CEO; Jill Albertelli, Pratt & Whitney, Vice President Procurement; Jenette E. Ramos, Boeing Commercial Airplanes, Vice President Supply Chain Management 18:15-18:30 Transfer to dinner location Emporio Tower, Dammtorwall 15, 20355 Hamburg 18:30-19:15 Champagne Reception (sponsored by the State of Virginia) Dawne S. Hickton, RTI International Metals, Inc., Vice Chair, President and CEO 19:15 Dinner Speech Günter Butschek, Airbus, Chief Operating Officer 19:45 Gala Buffet Subject to change! www.ipm-scm.com/afo s u p p l y chain management I II/ 2013 45

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Thursday, 5 th December 2013 Aviation Forum 2013 Hamburg Germany Thursday, 5 th December 2013 07:00-08:30 Check-In 08:30-09:00 09:30-10:00 10:00-10:30 10:30-10:50 10:50-11:15 Opening Address Prof. Dr. Johannes Walther, Institute for Production Management, CEO Dr. Bernd Egert, Free and Hanseatic City of Hamburg, Ministry of Economics, Transport and Innovation, State Councillor Uwe Gröning, Hanse Aerospace e.v., President Mario Ohoven, German Association for Small and Medium-sized Businesses (BVMW), President Dietmar Schrick, German Aerospace Industries Association, Managing Director Expectations on our core partners for the next decade of joint business Dr. Klaus Richter, Airbus, Executive Vice President Procurement Transitioning Products in the Midst of a Large-Scale Ramp Up Jean-Paul Ebanga, CFM International, CEO and President Opening of the Exhibition Dr. Bruno Costes, Director Environment and Public Affairs - France, International Aerospace Environmental Group Coffee Break and Visit of the Exhibition 11:15-11:45 Track 1: Globalization Keeping The Local Aspect in Globalized Supply Chains Jeff Luckasavage, ThyssenKrupp Aerospace North America, President Track 2: Innovation From LEAN Production to LEAN Services Martti Wallin, Patria Aviation Oy, Senior Vice President 11:45-12:15 New Trends in Aerospace Industry and TAI AIM Aviation delivering customisation and Muharrem Dörtkaşli, Turkish Aerospace Industries, Inc. lead time reduction (TAI), President & CEO Mark Edwards, AIM Aviation Ltd., CEO 12:15-13:45 Business Lunch and Visit of the Exhibition 13:45-14:15 Global Logistics in the Aerospace Industry Managing Global Production Parts Flows Dominic Edmonds, Kuehne + Nagel Group, Senior Vice President Contract Logistics Western Europe Mastering worldwide supply chains Cross learning opportunities Eberhard Weiblen, Porsche Consulting GmbH, CEO 14:15-14:45 Innovations for efficient worldwide Air Cargo Container Management Alexander Plümacher, Jettainer GmbH, Managing Director & Wolfgang Bublitz, KPMG AG, Senior Manager GMOS The SR Technics Material availiability solution & light speed André Wall, SR Technics, President 14:45-15:15 15:15-15:45 15:45-16:15 16:15-16:45 16:45 Coffee Break and Visit of the Exhibition Diehl Aerosystems: a first tier supplier in the aerospace industry Rainer von Borstel, Diehl Aerosystems, Member of the Executive Board of Diehl Stiftung & Co.KG, President of Corporate Division Board Diehl Aerosystem SSJ100. New project. New prospects Roman Shport, Sukhoi Civil Aircraft Company, Deputy First VP for Production Global Commercial Aviation Forecast Ismail Benbrahim, Airbus Closing Address Prof. Dr. Johannes Walther, Institute for Production Management, CEO Subject to change! www.ipm-scm.com/afo s u p p l y chain management I II/ 2013 47

Speakers and Experts Index Speakers and Experts Index A Advani, Philippe Page 50 Airbus S.A.S. Albertelli, Jill Page 51 Pratt & Whitney Allewelt, Dick Page 54 Germania Technik Brandenburg GmbH Arnold, Ulli, Prof. Dr. Dr. h.c. Page 55 University of Stuttgart B Baux, Antoine Page 56 Airbus S.A.S. Behrendt, Sven Page 57 SER Solutions Deutschland GmbH Bethusy-Huc, Marc Philipp Page 58 Marcotodo Wärmetechnik GmbH Bijou, Paul-Franck Page 59 Airbus Prosky Brückner, Franz-Udo, Dr.-Ing. Page 62 IPM GmbH Bublitz, Wolfgang Page 63 KPMG AG Buchfeld, Peter Page 64 Interturbine Aviation Logistics GmbH Burrow, Brian Page 66 Carbon Cycle Investments C Cauquil, Olivier Page 67 Airbus S.A.S. Conrad, Bernhard Page 68 Hamburg Aviation D Deppisch, Carl, Dr. Page 69 Kuehne+Nagel Management AG Dörtkaşlı, Muharrem Page 70 Turkish Aerospace Industries, Inc. (TAI) Dulebenets, Alexander Page 72 Sukhoi Civil Aircraft Company E Ebanga, Jean-Paul Page 73 CFM international Edmonds, Dominic, Dr. Page 74 Kuehne+Nagel Ltd. Edwards, Markus Page 75 AIM Aviation Egert, Bernd Page 76 Free and Hanseatic City of Hamburg Eßig, Michael, Prof. Dr. Page 77 Bundeswehr University Munich F Funke, Jürgen Page 78 ThyssenKrupp Aerospace G Gröning, Uwe Page 80 HANSE-AEROSPACE e.v. Gropper, Josef Page 81 Liebherr-Aerospace Lindenberg GmbH H Hermes, Joachim Page 82 Karl Berrang GmbH Hickton, Dawne S. Page 84 RTI International Metals, Inc. Hörmann, Uwe Page 85 Flughafen Berlin-Brandenburg GmbH K Kaden, Andreas Page 86 Lufthansa Technical Training GmbH L Laakmann, Jürgen, Dr. Page 87 Formel D Leber, Christian Page 88 Accenture GmbH 48 s u p p l y chain management I II/ 2013

Speakers and Experts Index Ley, Joachim Page 89 RECARO Aircraft Seating GmbH & Co. KG O Ockel, Andreas Page 90 Airbus (Tianjin) Final Assembly Company LTD Ohl, Stefan, Dr. Page 91 AlixPartners GmbH Ohoven, Mario Page 92 Bundesverband mittelständische Wirtschaft (BVMW) P Pain, Bernard Page 93 Airbus S.A.S. Plümacher, Alexander Page 94 Jettainer GmbH Q Quicken, Markus Page 95 SupplyOn AG R Ramos, Jenette Page 96 Boeing Commercial Airplanes Rehmet, Michael, Dr. Page 97 Eurocopter Deutschland GmbH Richter, Klaus, Dr. Page 98 Airbus S.A.S. S Schiele, Holger, Prof. Dr. Page 100 University of Twente Schmidt, Oliver Page 101 PSIPENTA Software Systems GmbH Schrick, Dietmar Page 102 BDLI Seeba, Hans-Gerhard, Prof. Dr. Page 103 Ostfalia University of Applied Sciences Shport, Roman Page 72 Sukhoi Civil Aircraft Company Stimpson, Sandy Page 105 Mobile Alabama T Tomenendal, Matthias, Prof. Dr. Page 106 IMB Institute of Management Berlin Trage, Silvia, Dr. Page 108 KPMG AG V Vana, Jan Page 109 WheelTug plc von Borstel, Rainer Page 110 Diehl Stiftung & Co. KG W Wagner, Stephen M., Prof. Dr. Page 112 ETH Zürich Wall, Andre Page 113 SR Technics Wallin, Martti Page 114 Patria Aviation Oy Walther, Johannes, Prof. Dr. Page 115 IPM GmbH Wang, Yongsheng Page 117 AVIC Aircraft Co., Ltd Weiblen, Eberhard Page 118 Porsche Consulting GmbH Z Zaby, Andreas, Prof. Dr. Page 119 Hochschule für Wirtschaft und Recht Berlin Zarrouati, Olivier Page 120 Zodiac Aerospace Zheng, David Page 121 Tianjin Airport Economic Area Administrative Committee s u p p l y chain management I II/ 2013 49

Speakers and Experts Globalizing the Aerospace Supply Chain: The EADS & Airbus approach Philippe Advani, Vice President, Head of EADS Airbus Global Sourcing Network Introduction As Western economies are still affected by one of the worst economic crises ever, the commercial aerospace industry has been astonishingly spared by it. Driven by the sustained growth of Asian Economies and the timely development of well positioned programmes, the Airbus order book has never been so full. In order to sustain this growth as well as to consolidate an optimal economic proposition, EADS remains steady-on-course with the ambitious globalization road-map it has set over the past years. Globalisation Drivers The Western Aerospace industry has been tightly knitted around its North American and European hubs. Till recently, very limited sourcing volumes were spread across the world, driven mainly by Market Access considerations. However, Value for Cost has emerged progressively as a leading driver for the globalisation of the aerospace industry. Access to Rare Resources (materials, engineering) and Minimization of risks such as currency fluctuations, geopolitical, factor cost inflation, loss of Intellectual Property and supply chain are additional globalisation drivers. Global Sourcing targets EADS has incorporated Global Sourcing targets in its top most strategic Road-map Vision 2020 with the intention to source, whether directly or indirectly, 40% of its spend, from beyond Western Europe by the end of the present decade. The EADS & Airbus approach In the case of Aerospace, one of the primary challenges is the maturity of the Supply Chain. The hurdle of technological complexity is compounded by stringent certification requirements. A second major hurdle is the size of the industry. Although it enjoys an aura of advanced technology and strategic value, its total turnover is a fraction of that of the Automotive Industry. A third issue relates to consistency with other aspects of procurement policy such as the overall consolidation of the supply chain. Expert PHILIPPE ADVANI, Vice- President, EADS & Airbus Global Sourcing Network, has held the positions of Managing Director EADS India and General Representative (China) for Alcatel SEL A.G. Philippe Advani graduated from Ecole Supérieure d Electricité in Paris with a degree in Engineering and completed an MBA at INSEAD. He holds a degree in Chinese language and civilization. EADS France 37, boulevard de Montmorency 75016 Paris, France www.eads.com EADS & Airbus have put in place a set of strategic responses and organisational enablers to address these challenges. This includes both the mobilization of its current supply base as well as adapting its processes and organization. A dedicated organisation named Global Sourcing Network orchestrates and supports the preparation, focus and implementation of its globalisation road-map. Country Sourcing offices located in countries such as India, China and the USA cover the end-to-end procurement process in support of the central procurement organisations. The group is confident that, by focusing its efforts and setting up the right organisational support, it will improve its overall business proposition through Global Sourcing. The Company EADS is a global leader in aerospace, defence and related services. In 2010, the Group comprising Airbus, Astrium, Cassidian and Eurocopter generated revenues of 45.8 billion and employed a workforce of nearly 122,000. 50 s u p p l y chain management I II/ 2013

Speakers and Experts Delivering Our Next Generation of Products Jill M. Albertelli, Vice President, Procurement, Global Supply Chain, Pratt & Whitney Pratt & Whitney, a United Technologies Corp. company (NYSE:UTX), is a world leader in the design, manufacture and service of aircraft engines, auxiliary and ground power units, and small turbojet propulsion products. Pratt & Whitney (P&W) develops game-changing technologies for the future, such as the PurePower PW1000G engine, with patented Geared Turbofan technology. This engine is real, is flying, and is certified. A combination of the gear system and an all-new advanced core deliver double-digit improvements in fuel efficiency, environmental emissions and noise. P&W has more than 4,700 engine orders that include announced and unannounced firm orders, plus options. Current efforts at P&W involve ensuring the company has capacity in place to meet the needs of its global customer base and delivers on an increased engine schedule. P&W has recently announced expansion/transformation projects at our Middletown, Connecticut, West Palm Beach, Florida and Singapore facilities to increase capacity as we prepare and ramp up production. Capacity is not just a consideration within P&W, but also at our suppliers around the globe. The company has implemented several new processes that include our suppliers. These improved processes have been put in place to ensure success on meeting the increased demand based on customer requirements. Delivery and Quality Assurance Reviews We ve been visiting our suppliers and conducting delivery and quality assurance reviews. As part of these reviews we interrogate capacity, inventory strategies, quality systems and ensure the supplier understands the P&W demand profile. One of the outputs from the review process is a scorecard, which highlights gaps and opportunities for P&W and the supplier to work together to drive improvements. Delivery & Quality Assurance Clinics Outstanding supplier performance is required for P&W to achieve its business objectives. Therefore, it is essential that suppliers have the right tools to rapidly identify, diagnose, and eliminate causes of both delivery and quality shortcomings. P&W is working with key suppliers to implement Delivery & Quality Assurance Clinics to ensure they have a robust process for understanding, eliminating and preventing chronic quality and delivery issues. Speaker JILL M. ALBERTELLI provides procurement leadership for Pratt & Whitney s Global Supply Chain organization. She and her team are responsible for the on-time delivery and purchase of all raw materials, parts and components for Pratt & Whitney s Module Centers & Operations to meet on-time delivery and cost targets. Jill M. Albertelli Pratt & Whitney 400 Main Street, M/S 101-24 06108 East Hartford, USA http://www.pw.utc.com/home Production Readiness Reviews We are also focused on production readiness. P&W is working with suppliers to determine capacity requirements and monitor the supply base industrialization. As part of our production readiness efforts, a no single point of failure strategy is being utilized to support risk mitigation and program success. Delivery Command Center P&W has developed a Command Center approach to ensure we have compliance to meeting customer delivery and quality requirements. The Command Center will enable P&W to proactively prioritize and manage delivery risk, properly focus resources and sustainably improve the delivery system at the part, supplier, commodity and program level. s u p p l y chain management I II/ 2013 51

List of advertisers List of advertisers Accenture Tel. +1 312 8425012 www.accenture.com Airbus S.A.S. Tel. +33 561 933333 www.airbus.com Karl Berrang GmbH Tel.: +49 621 87860 www.berrang.de CFM International Tel.: +971 4 447 5357 www.cfmaeroengines.com Global Aerospace Summit Tel. +49 89 290360 www.aerospacesummit.com W. L. Gore & Associates GmbH Tel. +49 8063 8010 www.gore.com H&D International Group Tel. +49 5361 308560 www.hud.de Hutchinson Aerospace GmbH Tel. +49 40 319746928 www.hutchinson-aerospace.com Interturbine Aviation Logistics GmbH Tel. +49 4191 809300 www.interturbine.com IPM GmbH Tel. +49 511 47314790 www.ipm-scm.com Karl Berrang GmbH Tel. +49 621 87860 www.berrang.com Kühne + Nagel (AG & Co.) KG Tel. +49 40 303330 www.kn-portal.com PSIPENTA Software Systems GmbH Tel. +49 800 3774968 www.psipenta.de SER Solutions Deutschland GmbH Tel. +49 228 908960 www.ser.de Siemens AG Tel. +49 1805 444713 www.siemens.com State of Alabama Tel. +1 334 2420400 www.madeinalabama.com State of Florida Tel. +1 888 8593469 www.floridasgreatnorthwest.com State of Georgia Tel. +1 404 9624000 www.georgia.org SupplyOn AG Tel. +49 811 999970 www.supplyon.com TAI-Turkish Aerospace Industries, Inc. Tel. +90 312 8111800 www.tai.com.tr ThyssenKrupp Aerospace Tel. +49 201 844537172 www.thyssenkruppaerospace.com Virginia Economic Development Partnership Tel. +32 26477433 www.yesvirginia.org WheelTug plc Tel: +1 410 4190082 www.wheeltug.gi ZODIAC AEROSPACE Tel: +33 161342323 www.zodiacaerospace.com KPMG AG Wirtschaftsprüfungsgesellschaft Tel. +49 30 20680 www.kpmg.com Matrium GmbH Tel. +49 721 570090 www.matrium.de oneworld Managememnt Company Tel +1 212 716 0713 www.oneworld.com AVIATION TM 52 s u p p l y chain management I II/ 2013

SupplyChain Management - Goldsponsor Aviation Forum 2013 - FINAL.pdf 1 31.10.2013 16:14:07 WWW.MATRIUM.de C M Y CM MY The service behind LogisticsProcurezement Logistics Procurement Customs CY CMY K E20001-F620-P610-X-7600 Take off with increased productivity SINUMERIK CNC the innovative platform for aerospace part manufacturing siemens.com / sinumerik Answers for industry.

Speakers and Experts Supporting a growing airline Dick Allewelt, Commercial Director, Germania Technik Brandenburg GmbH Germania Technik Brandenburg (GTB) is an EASA Part- 145 organization which is 100% owned by Germania Fluggesellschaft. GTB has accumulated over 30 years of experience and employs around 100 people. GTB offers Line and Base Maintenance services for the Boeing 737 and Airbus A320 FAM (CFM). GTB will actively go on the market as of this year to offer and acquire third party maintenance and CAMO and engineering services. Key selling points of GTB are 30 years of experience and their lean structure allows for great flexibitly and competitive pricing. The base of GTB is located at Berlin Schönefeld Airport and is a state of the art Hangar with two bays for narrow body aircraft. Base Maintenance activities GTB offers are: Expert DICK ALLEWELT was appointed Commercial Director at Germania Technik Brandeburg GmbH (GTB) in October 2013. The technical purchasing department and the warehouse are departmens for which he is responsible. He started his career in 2009 at Airberlin and joined Germania Technik in 2010 where he was assistant to the general manager in his last position. n Engine/APU Change n Landing Gear Change n Cabine Modifications n Special Mod Programms n C-Checks (saisonal, ad-hoc) n Interlease Storage For all of the above, GTB is well capable of offering supply chain solutions and order, replenish and store the necessary material. Furthermore, GTB is specialized in offering line maintenance. GTB has line stations in Germany including but not limited to Berlin, Düsseldorf, Bremen. Line maintenance services offered in these stations are: n Daily/Weekly Checks n A-Checks n Component Replacement n AOG Support n Trouble Shooting GTB offers Part M and engineering solutions for small to medium sized airlines with the ultimate goal to keep CAMO resources of those airlines as lean as possible. Such services are: n Engineering Services n Maintenance Planning n Purchasing & Repair Administration n Material Storage & Handling Services n Engine Asset Management n Lease Management Dick Allewelt Germania Technik Brandenburg GmbH 12529 Schönefeld Germany www.flygermania.de With the imminent threat of increasing fuel prices and the demanding market, airlines always have a profound intersest in optimizing their operations. A lean warehouse and a well functioning purchasing department add value to the operation of an airline. Since these services are subcontracted services offer by GTB, GTB is always looking for improvement in these areas. Germania indicated this summer that it will increase her fleet form 18 aircraft to 23 aircraft starting the summer season 2014. It has taken delivery of a new aircraft, the A321. This means that GTB had to adapt its organization to cope and will add a Continous Improvement department to its organization to address different issues. Germania has a Pool solution for its rotables, the account management is subcontracted to GTB. In order to lower capital, GTB is looking for a partner to have its consumable in consignment. A tender for a consigment contract will start at the second half of 2014. 54 s u p p l y chain management I II/ 2013

Speakers and Experts Logistics Management: The Critical Success Factor in the Aerospace Supply Chain Prof. Dr. Dr. h. c. Ulli Arnold, Universiy Professor (chair), University of Stuttgart Moderator PROF. DR. DR. H.C. ULLI ARNOLD is professor at the University of Stuttgart, Grantholder of EU Tempus project AMEV and Head of the Research Team Purchasing and Supply Management. He is guest professor and lecturer at several foreign universities, co-editor of different scientific journals and member of various supervisory and advisory boards. Prof. Dr. Dr. h. c. Ulli Arnold University of Stuttgart Keplerstr. 17 70174 Stuttgart Germany www.bwi.uni-stuttgart.de Many industries have understood that the design of supply chain became a critical factor for further competitiveness. Several factors forced that change and provoked deeper insight and management attention for supply management issues and logistics. In general more division of labor within the value creating process often connected with higher degree of international supplier relationships has become an important factor. Following the idea to use external supplier as a specific resource with superior quality and higher scale effects compared with the OEM (final manufacturer/assembler) outsourcing strategies emerged as a reasonable answer for continuous cost pressures and new technological challenges. Do what you can do best outsource the rest became a popular management saying even in Aerospace Industries. It is clear that external division of labor is necessarily connected with more interfaces in the manufacturing process. Logistics operations must have been installed in order to connect physically suppliers with OEMs. In case of international supplier relationships complexity of external spanning logistical activities increased significantly and sometimes touched management ability to steer and control. This paradigm of increasing outsourcing activities became questionable several years ago. Here we have to remind of Boeing`s experiences with the development of the Dreamliner aircraft. Financial Times reported 4/22/08: Boeing was the first to take a radical approach to its outsourcing, even flying large parts of its new aircraft from Asia to Seattle. Airbus looked enviously on as its inflexible production system struggled to cope with the tumbling US dollar. Management in the Aerospace Industry recognized that outsourcing could not been understood as a panacea for solving general business problems. There is another critical factor which should be treated more carefully: the efficiency of internal logistical activities. It is not only the problems of high capital lockup elicited by stocks of real assets. It is the operational availability of production goods in time within the manufacturing process. This must be guaranteed in order to avoid disruptions in the workflow causing irritation by customers and affect OEM reputation. This is a technical challenge and a question of an appropriate organizational model as well. The first aspect deals primarily with transportation and warehousing facilities, with optimization of information flow (e.g. using of RFID). The second aspect is related with an efficient structure of workflow and an optimal design for deployment of manufacturing facilities. Eventually firms must develop relevant and resilient KPI for planning, steering and measuring logistical activities. Empirical research findings prove that many firms have not yet applied an effective cost and result oriented controlling system for logistics. s u p p l y chain management I II/ 2013 55

Speakers and Experts Adapting Automotive best Practices in Aircraft Supply Chain Antoine Baux, Material Procurement, Vice President, Head of Standard Parts, Airbus SAS The automotive industry has been investing since many years in its supply chain to face a very competitive environment (more than ten major car manufacturers are competing worldwide). With its growing production volumes, aeronautics is also looking more and more at its supply base and how to improve its procurement activities to decrease cost, improve quality and ensure on time deliveries while minimizing stocks. To speed up procurement transformation, aeronautics has been looking for gaining experience from the automotive industry, adapting some best practices to its own needs. Indeed there are more similarities between automotive and aeronautics than differences. Even if volumes are much higher in automotive, suppliers have, in both industries, similar impact as near 80% of aircraft and car cost structure are procured items. Moreover, the arrival of new aeronautical OEM (Russian, Chinese) and the larger focus of the OEM on the civil market are both increasing the competition and pushing OEM to focus more and more on competitiveness. Procurement is therefore more and more playing a central role in aeronautics as it is already the case in automotive. Procurement processes are one example where the automotive industry can bring benefits to aeronautics. The automotive industry has structured the competition between the suppliers: upstream supplier evaluation to define preferred supplier panel per commodity, implementation of fair, opened and tough competition (including use of e- auction), development of internal Multi Functional Team to build commodity strategy and ensure one voice to supplier, supplier development program to support suppliers improvement plans, risk management tools etc. Most of these processes have already been adopted by the aeronautical industry. As already implemented in the automotive industry, end to end supply chain processes and LEAN approach are being developed in aeronautics and are a mean to deliver increasing performance to end customers, in a more and more complex environment. Some differences remain and explain why some adaptations are necessary. Life duration of an aircraft is much longer than a car (respectively >20 years vs 5 to 7 years). As a consequence, sourcing leverage in automotive is much Expert ANTOINE BAUX was appointed Material Procurement Standard Part Vice President at Airbus in November 2013. After graduating from engineering school (EMN and ENSPM), he began his career in Renault in 1993 in Engineering and moved to Procurement (Renault Nissan Purchasing Organization) in 2004. He joined Eurocopter in 2007 as Senior Manager in Avionics Procurement. Antoine Baux AIRBUS SAS 1, Rond-Point Maurice Bellonte 31700 Blagnac France www.airbus.com higher whereas aeronautics has to secure its supply chain by signing long term agreements. Sourcing leverage and contract management are therefore two key drivers of the relation between OEM and suppliers in aeronautics. Some other differences consist in higher constrains existing in aeronautics: certification, export control regulation, industrial compensations etc. As a conclusion, there are specificities between automotive and aeronautics, but in general, procurement and supply chain management are based on the same principle. The advantage of the aeronautical industry is to come after the automotive industry and to have the opportunity to benefit from prior experience. Aeronautics can also benefit the automotive industry for example by establishing long term strategies to correctly address the long life cycle of an aircraft. 56 s u p p l y chain management I II/ 2013

Speakers and Experts Managing the supply chain with iecm Sven Behrendt, Branch Manager, Strategic Projects and Solutions, SER Solutions Deutschland GmbH Aerospace companies operate in a complex, competitive marketplace. Managing suppliers throughout the aerospace supply chain remains a major challenge for the industry. This is a document-intensive process, beginning with selection of suppliers and ending with accounts payable. It is a key target for cost reduction and improvement in operational efficiency. And public demand for safety and reliability drives the need for product quality to approach near perfection. Enter SER Software Solutions. Our integrated Enterprise Content Management (iecm) can be particularly beneficial in four areas of the supply chain: contract lifecycle management, ERP transactions, accounts payable, and quality management. Expert SVEN BEHRENDT is in his function of Branch Manager Hamburg responsible for the project implentation in the northern part of Germany. Furthermore he is Managing Director of SER egovernment und SER UK Ltd. During his career he has passed through various stations within the SER and in many strategic customers projects with an emphasis on project management. Being number one, SER is Germany s largest ECM software vendor in terms of total revenue, gross earnings, operating profit, and head count. These ratings are based on the most current balance sheets published at any one time, as well as on ECM market potential analysis. More than 1,300 customer references throughout Europe (including half of the DAX 30 companies) and over 1,000,000 users underline our top position on the ECM market. SER s DOXiS4 is an all-in-one universal ECM platform that comprises the performance features of a Service Oriented Architecture (SOA) as well as specific functions for integrated Enterprise Content Management. Sven Behrendt SER Solutions Deutschland GmbH Hans.Henny-Jahnn Weg 53 22085 Hamburg Germany www.ser.de Contract lifecycle management: DOXiS4 contracts management is the first integrated standard solution for the comprehensive management, processing, archiving and monitoring of contracts based on the DOXiS4 iecm Suite. The specific DOXiS4 features in the area of records management and workflow management form the basis for a highly efficient, closely integrated solution for end-to-end electronic management of contracts. ERP transactions: DOXiS4 SAP Edition puts the framework in place for integrated Enterprise Content Management for SAP, mysap and SAP NetWeaver. Its modular structure and consistent use of standardised interfaces make it possible to implement a large number of use cases efficiently within the SAP environment through the addition of DOXiS4 iecm features. Accounts payable: DOXiS4 InvoiceMaster SAP Control is an invoice verification solution developed and optimized specifically for SAP users. The DOXiS4 InvoiceMaster SAP Control Monitor is the central administration point for viewing and monitoring the whole of the invoice management process in SAP. The Monitor takes on the role of an invoice receipt ledger and can also be used both as a payment deadline monitor and as a cash discount early warning system. Quality management: SER s solution package for the documentation of quality processes covers the whole lifecycle of quality-centric documents, from their creation and editing to their approval and release. Add-on packages are available for both, audit management and action control. Based on DOXiS4 all the necessary functions of a complete quality management solution are provided, including document management, revision-proof archiving and business process management. s u p p l y chain management I II/ 2013 57

Speakers and Experts Speeding up curing processes of Composites and adhesives with TeQua Cure Dipl. Wi.-Ing. Marc-Philipp Graf von Bethusy-Huc, CEO, Wärmetechnik GmbH Rapid technical advances in mass production of composites are opening the way to bulk material manufacturers. However, despite the most modern production processes industrial output is often less than perfect. After the detection of a low quality CFRP structure (e.g. defects on large components in the aerospace industry) a decision must be made whether to scrap the part at high costs or to partially rework it adhering to strict safety conditions. To ensure one hundred percent functionality, along with precise mechanical processing, the subsequent heat treatment of reworked laminate is of critical importance. Since it is often impractical as well as uneconomical to cure components in the autoclave, local curing is usually achieved by the use of heat blankets and heat lamps. But in many applications their temperature distribution is not precise enough, especially if manufacturers work with geometrically complex components. For this need Marcotodo GmbH has developed a flexible heating technology based on the TeQua Cure proven in the aerospace industry. TeQua Cure is an air circulating temper process which offers considerable gains in quality and efficiency compared with ordinary none-autoclave heating tools. Out of its Portfolio Marcotodo supplies universally applicable, high-precision single and multiple heat zone control devices for controlling and monitoring all process parameters like time, vacuum, temperature and humidity also as individual housing equipment with modular hot air fans. Hot spots, heat shadows and exothermic problems are leveled out by the turbulent warm air; external influences (drafts) are excluded by the precise fitting repair housing. Standard processes such as the partial thickening of layers or patch repairs can be carried out significantly faster and more reliably with a homogenous temperature profile up to 200 C. The TeQua controller performs the curing with precise and reproducible temperature (± 2 C) at the component. Faster heating rates at a uniform temperature distribution over the entire cure cycle are possible with the powerful air circulation. The reworking e.g. at stringers on the A350/A320 series has already been optimized and turnaround rates have been improved by using the modular TeQua -Warm Air Box System.In addition to the heat curing of wet laminate/prepreg in manufacturing, rework and field repair TeQua Cure can also be used Expert MARC-PHILIPP GRAF von BETHUSY-HUC, Founder & CEO of Marcotodo GmbH, has been working for more than 10 years in Composite industries. Beside he runs with TripleS Consulting GmbH a technologie driven consulting company with national and international projects. From 2014 on Graf Bethusy-Huc is a freelancing tutor at the mtec Technologie Academy. Dipl. Wi.-Ing. Marc-Philipp Graf von Bethusy-Huc Wärmetechnik GmbH Rissener Str. 106 22880 Wedel Germany marcotodo.de cfk-reparatur.de to speed up adhesive joint and assembly processes. The use of moist warm air has been proved to shorten drying times for auxiliary material by up to 70%. This compensates time-critical turnarounds for example in rotor blade lamination or when applying sealants and shim on A320-23 aircraft wings, significantly increasing the productivity. Whether portable warm air box system with modifiable frames for concave/convex contours or adaptive warm air ducts with vacuum holders and integrated humidification for drying adhesive bonding:tequa Cure technology is adaptable to every need for forced curing with homogeneous temperatures to achieve optimal material quality out-of-autoclave. 58 s u p p l y chain management I II/ 2013

Speakers and Experts Airbus ProSky: Unlocking the Skies through ATM Performance Improvement Paul-Franck Bijou, Chief Executive Officer, Airbus ProSky Air traffic is expected to double by 2033. If we look into the past, air traffic has already grown by over 50% in the last decade which puts tremendous strain on airports and airspace. If nothing is done to alleviate the capacity issues, air traffic gridlock will have significant economic and environmental impacts globally. That s where Airbus Prosky comes in delivering end to end ATM performance through Air Traffic Flow Management (ATFM) Solutions, Airport Solutions, and Airspace Services. Airbus ProSky, the Air Traffic Management (ATM) subsidiary of Airbus, is dedicated to improving the performance of global ATM. Comprised of recognized subject matter experts and offering intelligent ATM solutions, Airbus ProSky works with stakeholders to maximize efficiency, capacity and environmental sustainability. Airbus ProSky is committed to working side-by-side with Air Navigation Service Providers (ANSP), aircraft operators and airport authorities to build a truly collaborative system with greater capacity, better performance and environmental sustainability for all stakeholders Airbus ProSky provides innovative ATM solutions: n Air Traffic Flow Management (ATFM): ATFM has demonstrated dramatic efficiency gains for the world s leading ANSPs, airlines and airports. Balancing airport and airspace capacity and demand with ATFM provides a wide range of benefits such as reducing airborne holding, fuel burn and emissions; improving gate-to-gate predictability; improving situational awareness for all stakeholders; and ensuring equitable use of resources. n Performance-Based Navigation (PBN): The air transport industry is facing challenges with airspace capacity optimization and environmental sustainability. Better and safer access to challenging airports, lower operating costs, and smoother Air Traffic Control (ATC) integration are needed.. n Exact Landing Interference Simulation Environment (ELISE): ELISE is a software solution based on advanced technologies that model all objects in close proximity to airports in order to analyze the impact to Instrument Landing System (ILS) antenna signals. ELISE can accurately predict and analyze disturbances caused by objects allowing for improved airport safety. n Airport-Collaborative Decision Making (Airport-CDM): Airport-CDM improves the overall efficiency, predict- Expert PAUL-FRANCK BIJOU is CEO of Airbus ProSky. Prior to joining Airbus ProSky, he was a member of the Airbus Business Aviation Aircraft Sales Business Unit & was also the COO of Dassault Falcon Service. As an Operations Engineer graduate from French National School of Civil Aviation (ENAC), he spent the first part of his career in flight operations & economy of flight transport. Paul-Franck Bijou Airbus ProSky 1, Rond-Point Maurice Bellonte 31700 Blagnac France www.airbusprosky.com ability and punctuality of airport operations and improves overall network efficiency by improving ATFM departure compliance. n Tower Surface Management System: Airbus ProSky offers a highly advanced system for airports that provides automated guidance and control capabilities to maximize airport capacity, enhance safety and improve situational awareness for pilots while reducing costs and overall environmental impact. n Airspace Services: Airbus ProSky offers advanced airspace analysis for ANSPs and aircraft operators. These services include capacity analyses, airspace design/redesign, operational procedural design, operational and technology roadmap planning, and a holistic analysis of ATM operational efficiencies. s u p p l y chain management I II/ 2013 59

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Speakers and Experts How to integrate MRO in the Aerospace Supply Chain? Dr.-Ing. Franz-Udo Brückner, Moderator, IPM GmbH Maintenance, repairs and upkeep are crucial factors in the aviation industry which ensure the conservation of value and flawless functioning of the aircraft as an investment. In order to keep up air traffic without disruptions and delays these MRO goods have to be available at all time and at short notice, globally. Therefore an expansion of the MRO procurement strategy to all the diversified supply chains of an aircraft OEM including all of its n-tier suppliers is crucial if one wants to achieve cost-optimization in supplying these MRO goods. In order to make the procurement of these MRO goods efficient and effective, the specialties of this procurement market have to be integrated into the overall procurement strategy at the stage of chosing a supplier and its location factors and have to be taken into account in the entire supply network of the aircraft OEM. Not only for the procurement of the MRO goods themselves but also for the many existing MRO service providers and MRO suppliers the focus on and integration into the countless supply chains of the aviation industry is of vital importance - one can assume that this integration is one of the strategies which will secure or at least improve the survival chances of MRO suppliers in the future, especially in the context of the increasing market demarcation of OEMs. Currently, MROs are suffering from reduction of market shares. This is due to many OEMs demanding the use of original parts and thus excluding MRO goods from being used a trend that is clearly visible during the current new acquisition of aircraft. Through an increased integration of MROs into the OEM supply chains the purchase of goods and sevices directly produced by the MROs can be better established in the procurement markets. This also has a positive effect on the direly needed approvals for procurement and usage by the OEMs, especially during the current renewals of the aircraft fleets and may thus contribute to a consolidation of MRO market shares. In their internal organizational structures MROs must adjust to the fluctuating demand of the MRO business in order to make goods and services available exactly where they are needed always with the aim of being an attractive full-service-partner for the OEM which, on the basis of a mutually attractive cost structure, is always ready to efficiently and quickly reduce the grounding time of aircraft and ensuring the high security standards of the aviation industry through the planned utilization of MRO or through handling unscheduled short-notice customer demands. Moderator DR. FRANZ-UDO BRÜCKNER has after studying Metallurgy at University Clausthal-Zellerfeld since 1996 worked as Director Quality in different companies, mainly focused on the Automotive Industry. He was resonsible for the process oriented implementation of quality, environment and energy management systems with a strong focus on implementing lean strategy and MRO systems in mass production. Dr.-Ing. Franz-Udo Brückner IPM GmbH Institut für Produktionsmanagement Donarweg 6 30657 Hannover Germany Institute for Production Management The Institute for Production Management (IPM) designs and implements a wide range of customized formats for qualification and competencies development. Subject areas are procurement, logistics as well as innovation and global supply chain management. Quarterly, IPM publishes the journal SUPPLY CHAIN MANAGEMENT TM (Vol. 13). IPM organizes the AVIATION FORUM Hamburg with Airbus, the INDUSTRIE FORUM Wolfsburg with Volkswagen and the RAILWAY FORUM Berlin with Deutsche Bahn AG and publishes the journal SUPPLY CHAIN MANAGEMENT TM. Save-the-date December 09 th and 10 th 2014 62 s u p p l y chain management I II/ 2013

Speakers and Experts How digitalization changes the airline industry a show case Wolfgang Bublitz, Senior Manager, KPMG AG Increasing competition on attractive routes, rising fuel cost and regulatory fees result in the need for airlines to continue their search for cost reduction potential. While traditional cost optimization measures will always remain necessary, new opportunities for efficiency gains become increasingly relevant. It is the technological progress that provides new levers for realizing efficiency gains. In business-to-consumer processes those new opportunities are consistently gaining ground and have already produced new solutions with game changing quality. The business-to-business environment, however, at times appears to lag behind in the skill to implement innovations that leverage the significant potential brought by digitalization, social media and worldwide connectivity access. Now, innovations brought by digitalization show increasing potential for companies in the aviation industry to integrate along the value chain and generate efficiencies. Two key criteria need to be addressed in order for the innovation to be successful: First, excellence in technology and IT is necessary in order to ensure stable performance from day one of operation in an industry where success depends on smooth operations and efficient hand-over from one party to the next. And, secondly, developing a business model that clearly addresses the needs of all involved parties: clients, end customers, IT providers as well as third parties such as regulatory institutions. Long-term customer client partnership Jettainer and KPMG have successfully translated the aviation industry s demand for user-friendly, efficiencyincreasing solutions into an innovative use case: As part of a project, JettApp, an integrated app for ground handling was developed to be used via tablet pc. JettApp structures paper-based ground handling processes and increases speed and efficiency of numerous activities. A viable business model with clear profit and customer focus was defined in order to address requirements of cargo carriers, ground handlers and Jettainer. About Jettainer Jettainer is the leading international service partner for outsourced ULD management. This compromises the purchase and pooling of ULDs, their maintenance, an IT solution for all stations involved, and the entire daily operational management. Speaker WOLFGANG BUBLITZ, KPMG Advisory, works with his clients in the aviation industry to implement innovation projects and to optimize international Sales organizations. Following graduation with a business degree from Emory University in Atlanta, he began his professional career in 2001 with TellSell Consulting, a boutique management consultancy in Frankfurt. Wolfgang Bublitz KPMG AG THE SQUAIRE 60549 Frankfurt am Main Germany www.kpmg.com Our aviation industry is flying fast and, within our network, there are 3,500 daily flights in a dense global network spanning 350 airports worldwide. We keep the flow of containers and pallets running and deliver outperforming results and performance and cost, daily from 7 different operational locations, and stay at the heartbeat of our partner s businesses. About KPMG KPMG is one of the leading auditing and advisory firms and assists clients with high specialist knowledge about the aviation industry and with a wide set of experiences from numerous projects completed in that sector. As an integrated management consultancy, KPMG offers tailored solutions concerning development of new business models, sales effectiveness, supply chain management and outsourcing strategies. s u p p l y chain management I II/ 2013 63

Speakers and Experts Aircraft Maintenance Support The everlasting challenge Peter Buchfeld, Vice President Operations, Interturbine Aviation Logistics GmbH The Global Market Forecast predicts a continuous growth in aviation. The future demand for passenger and cargo aircraft and the need to replace ageing fleets require an agile supply chain. This agility is needed as traditional material is more and more exchanged by composites. Fixed material exchange schemes have been replaced by on-condition maintenance. Additionally, maintenance organisations push the physical storage of material upstream in the supply chain and demand high availability at the same time. This is only possible when the players in the supply chain synchronize their activities with the requests set by customers. Only those suppliers will endure that will be able to cope with requirements such as REACh to enable suitable worldwide material supply. Such regulations will further develop and it will be even more demanding and cost intensive to keep pace. The MRO business requirements are guided by reduction of supplier base while achieving a wide range of material to be supplied at the same time. The Interturbine answer to this critical success factor is the One Stop Source Concept. The material portfolio has been expanded over time. It now comprises 500.000 part numbers of raw material, consumables, composites, mechanical and electrical standard hardware and selected breakdown parts. This concept enables customers to place one single order with Interturbine which covers the complete material portfolio offered by 3.000 OEMs. This is helpful especially during larger heavy maintenance events where the predictability of material usage and the repetitivity of the same part numbers are low and the uncertainty is high. The current off-shelf availability of 84% and the number of worldwide warehouses contribute to a short and smooth supply chain that is manned 24/7 around the globe. To round up this concept Interturbine does not only serve maintenance material but also offers its transport, expertise in export and customs control and even the production of customized items in any quantity on customers request. Interturbine Aviation Logistics GmbH is one of the industry s main suppliers of aircraft maintenance materials and serves 7.000 aviation and non-aviation customers worldwide. With its sister companies Interturbine Logistics Expert PETER BUCHFELD is Vice President Operations at Interturbine Aviation Logistics GmbH. With more than 20 years of worldwide material supply chain experience at Airbus he joined Interturbine in 2009 and since then oversees all elements pertaining to Interturbine material supply processes and customer related operations in headquarters and with outstations on all continents. Peter Buchfeld Interturbine Aviation Logistics GmbH Kisdorfer Weg 36-38 24568 Kaltenkirchen Germany www.interturbine.com Solutions and Interturbine Technologies it forms the Interturbine Group of Companies. Founded in 1990 Interturbine has since then expanded its worldwide presence through natural growth and targeted acquisitions to follow customers requirements for on-site and on-time material support. In 2012, Interturbine was acquired by B/E Aerospace, the world s leading manufacturer of aircraft cabin interior products and the world s leading provider of aerospace fasteners, consumables and logistics services. The Interturbine headquarter is located in Kaltenkirchen near Hamburg. Combined with B/E Aerospace, Interturbine offers a global focus and presence in all major geographic markets with over 60 offices/facilities worldwide. 64 s u p p l y chain management I II/ 2013

Designed by Berlin 201 4 RAILWAY SUPPLY CHAINS Globalization Innovation Quality 17 th and 18 th March 2014 Conference and Exhibition Estrel Convention Center Conference Hotel: Estrel Berlin Patron Jörg Manegold, Chief Procurement Officer, Deutsche Bahn AG Competence Partner Selected Partners and Sponsors More online: www.ipm-scm.com/rfo_en

Speakers and Experts Addressing the Challenges of Demand for Aviation Biofuel Brian Burrow, Chief Business Development Officer, Carbon Cycle Investments The topic of creating alternative fuels for use in commercial and military aviation has grown from a mere conversation piece into a rapidly progressing reality. Carbon Cycle Investments is among the world leaders in presenting innovative solutions which are both environmentally and economically feasible. The rapid progress made thus far in the world of alternative aviation fuels has not come without the presence of certain challenges. Viewing these challenges as opportunities, designing solutions, and working through them has given Carbon Cycle Investments a unique perspective into the universal challenges faced today by all organizations in this industry. New Opportunities and Challenges Most companies operating in the world of alternative fuels share similar chicken and egg challenges in terms of available markets, distribution channels, and industry definitions and standards. While the concept of incorporating alternative fuels is steadily moving more mainstream, it is still a relatively new topic and faces some level of unawareness and even some criticism. Other challenges relate to available feedstocks and the technology used to transform those various materials to a fuel which meets industry standards in any significant volume. In addition to the typical business-related challenges, the reality that much of the recent progress in alternative fuels has been politically-driven through mandates relating to renewable fuel standards, low carbon fuel standards, blenders credits, and tax incentives can add another layer of skepticism when it comes to traditional financing methods. The Company Carbon Cycle Investments exists to change the world by rebalancing the carbon cycle for the benefit of future generations. We do this by introducing common sense, sound business practices, and proven technology to stimulate social, economic, and environmental stability in communities around the world. We do this while cleaning the air, while producing bio-based fuel and lubricants, and while creating value from waste. Partners and Solutions Rather than shrinking away from the previously stated challenges, Carbon Cycle Investments has assembled a Expert BRIAN BURROW designed college aerospace training programs after graduating from Eastern Washington University in finance and economy. He worked as a strategy consultant and economist for aerospace companies throughout the United States and now serves as Chief Business Development Officer of CCI and oversees their global business development and strategic relationship activities. Brian Burrow Carbon Cycle Investments 221 W. Main 99201 Spokane WA USA www.carboncycleinvestments.com team of like-minded individuals and companies with the fortitude and the capability of bringing to market viable solutions which will benefit the world and its inhabitants. These team members include some of the brightest minds in chemical, electrical, and mechanical engineering, as well as software design, entrepreneurship, and philanthropy. From top to bottom, we have total commitment to our company mission and desire to create something that will transcend all of us. We have built strong public-private partnerships with local colleges and universities to help train workers and foster creativity and innovation. We have built strong partnerships with our customers and our suppliers to help solidify and stabilize each others operations. We even build great working relationships with our competitors and serve together on boards and committees to help drive forward the industry and open up markets. 66 s u p p l y chain management I II/ 2013

Speakers and Experts Successful Management of SME s Consolidation Olivier Cauquil, SVP, Material & Parts Procurement, Airbus S.A.S. Drivers of supply chain consolidation The industrial approach of the major Aircraft manufacturers has significantly evolved over the past 20 years. Many factors have driven them to increase out-sourcing. The Airbus cost structure has actually evolved from a 50-50% make and buy balance in the early 90 s to close to 80% of procured items in the aircraft content today. The management of resources has been the first driver. The huge increase in the demand and hence in the aircraft production volume has led Airbus to rethink the relationship with its supply base. Lower volumes could cope with tactical (build-to-print) subcontracting. Delivering over 500 aircraft yearly can only be envisaged with integrated components procurement. In parallel the Airbus product range has been significantly broadened. Handling several developments in parallel has only been possible by transferring some engineering tasks to suppliers (design and build). Going further, Airbus has divested part of its Aero-structure activity, thus creating big design and build partners, integrated into airframe design loops and configuration management processes within an Extended Enterprise model. Besides workforce and skills, the financial resources are also a major hurdle in launching a new airplane. The set-up of an aircraft programme business case relies on the participation of suppliers acting as risk-sharing partners. The quest for a sustainable position on the market has driven the set-up of a more collaborative way of working with a narrowed set of suppliers. Reducing the time-to-market and opening the door to suppliers design innovation opportunities is key to maintaining competitiveness. Common R&D projects, earlier selection for broader work packages are the main drivers of this new approach. Finally, the vertical integration of procured goods has been a significant contributor to production lead time reduction. The evolution of all these relationships has resulted in supply chain consolidation. This consequently raises a legitimate question for many suppliers: how to maintain and develop their business in this fast evolving environment? There is no single and universal answer. We will, however, provide some ideas and comments that may help find the way forward. Expert OLIVIER CAUQUIL is responsible for Material and Parts Procurement at Airbus. As such, he deals with metallic and composite materials, along with standard and detail parts for all Airbus programmes. He manages teams located in the 4 main Airbus countries. His main challenge is to structurally adapt the supply chain to properly cope with the upcoming production ramp-ups. Olivier Cauquil AIRBUS SAS 1, Rond-Point Maurice Bellonte 31707 Blagnac France www.airbus.com How to envisage the consolidation? n Becoming or remaining a Tier 1 supplier is not a must, nor is the size of the company in itself. The cornerstone of the strategy definition is to identify where the supplier is contributing unique added value and how an association with other player(s) can create competitive advantage. Working as a supplier to a well established prime can often be a better option (faster, less capital investment, opening to market with other OEMs). n Due to the long cycles and the capital-intensive nature of the aircraft industry, a healthy balance sheet is of utmost importance to ensure a safe growth. n Invest in innovation: technology, industrial processes, logistics, global sourcing. n Pay close attention to the efficiency of your supply chain. Revisit your make or buy policy. s u p p l y chain management I II/ 2013 67

Speakers and Experts HAMBURG AVIATION achieving more together Bernhard Conrad, Chairman of Executive Board, Hamburg Aviation Challenges for the international aviation supply chain All over the world, continual growth in passenger volume on the one hand and increasing fuel prices on the other are stimulating demand for aircraft with low energy use and low operating costs. Aircraft manufacturers that build such aircraft are guaranteed sales success. And the global fleet growth also means that we can expect increased demand for MRO services. Considering that the operations of every manufacturer and every MRO provider are closely intermeshed with system partners and their suppliers, an increase in production capacity has substantial consequences for the entire supply chain. Suppliers have to be able to offer innovative, globally competitive products and services, and at the same time they must be in a position to cater for production lines all over the world with the highest quality and performance just in time. Such challenges as these are a catalyst for major adjustment processes throughout the entire process chain, from engineering and production all the way to logistics and financing. In Europe, the supplier landscape is still dominated by small to medium-sized enterprises. The proprietors of these companies recognize that they have to make a special effort to survive and succeed in this process of change. We do well to make sure we do not lose the innovative strength and flexibility of these suppliers, for they cannot just get together and move to a different location. The only successful approach here is a joint approach, where we find suitable solutions and offer our support through intensive dialog. Achieving more together in a network Hamburg Aviation has established such a network, with the goal of achieving more together, especially through our guiding principle of generating innovation in partnership, closing competency gaps and opening up new markets. As we do so, it is vital that we also optimize based on understanding the processes and demands of international supply chains. Ten years of joint work in the cluster have taught us that we can achieve a great deal together when we truly work together, pooling our strength with a common goal. Together the OEMs, the suppliers, the universities, training facilities, research institutions and the political administration. Speaker BERNHARD CONRAD was awarded his Masters degree in aerospace engineering in 1981. With effect from January 2007 he was appointed Chief Technology Officer, Head of Design Organization and Innovation Engineering at Lufthansa Technik AG. As of June 2011 he was elected as President of the Executive Board of HAMBURG AVI- ATION which is the aviation cluster of the Hamburg metropolitan region. Bernhard Conrad Hamburg Aviation Habichtstr. 41 22305 Hamburg Germany www.hamburg-aviation.com About HAMBURG AVIATION Hamburg Aviation is a cluster which networks in an association the various players in the aviation industry, research, education, training, and political administration in the Hamburg Metropolitan Region. Hamburg Aviation has been recognized by the Federal Ministry of Education and Research as a Leading-Edge Cluster. With its strategy of generating innovation in partnership and promoting the development of specialist personnel, the cluster pursues the goal of making aviation of the future more economical, more ecological, more reliable, more flexible and more comfortable. And well beyond state and national borders: Hamburg Aviation is a member of EACP, the European Aerospace Cluster Partnership, and coordinates the group s activities. 68 s u p p l y chain management I II/ 2013

Speakers and Experts Global Production Logistics Solutions Dr. Carl G. Deppisch, Vice President Operations Aerospace & Defence, Kuehne + Nagel Management AG Sourcing in low cost countries and doing assembly in or close to major markets is an increasing trend in the aerospace industry. Airframe manufacturers are extending their production networks in order to either manufacture or procure parts and sub assemblies in low cost countries on the one hand or on the other hand - to carry out the final assembly work directly in the selected target market itself or at least within its region or in neighboring countries. This trend is calling for an enhanced global supply chain organizational set-up. In order to both ensure flawless production supply as well as to avoid excess inventory, the supply chain capabilities have to be organized and put in place accordingly to make global flows in the extended network possible. Of utmost essence in this context is end-to-end visibility throughout the entire chain covering all processes and interfaces so that all parts movements can be monitored and controlled and inventory deployment can be steered. It has to be understood that not only the internal flow of major components and assembly kits needs to be ensured but also the supply chain from major suppliers to the new factories. Kuehne + Nagel has responded to these industry requirements with the development and implementation of tailor-made solutions. They are geared to these specific needs and based on practical experience and know-how acquired in businesses for industries such as Automotive and Aerospace. These solutions consist of: n Consolidation platforms to bundle parts flows from suppliers and component manufacturers n Disposable and reusable packaging capabilities n Air and ocean freight capabilities based on a dense worldwide network n Deconsolidation center at the point of arrival n Bonded warehouse solutions for added value services such as kitting capabilities n Lineside delivery in pull flow mode n 24/7/365 end-to-end visibility and real time inventory, order and shipment visibility n Integration of Tier 1 suppliers via a Vendor Village inbound consolidation platform n Specialised and tailor-made transport and logistics solutions for major components and large cargo units. An example of this approach is the development and recent introduction of the KN EngineChain solution which focuses particularly on the needs of aircraft engine producers and engine maintenance companies Expert DR. CARL G. DEPPISCH joined the supply chain practice of the consulting firm Accenture after completing his PhD at the University of Cologne. In 2006 he joined Kuehne + Nagel being responsible for solution development and implementation. He developed the Lead Logistics solution for Airbus and managed the operations before taking his global role as VP Operations Aerospace & Defence. Dr. Carl G. Deppisch Kuehne + Nagel Management AG Dorfstrasse 50 CH-8834 Schindellegi www.kn-portal.com n Integrated end-to-end management of these flows through a supply chain cockpit Kuehne + Nagel is specialised in providing integrated supply chain solutions to the Aerospace industry, developing and implementing customised products in fields such as maintenance, repair, overhaul, ground handling and in-flight services. As a strategic partner of Airbus, the company is responsible for the management of production logistics warehouses and line side delivery in all European locations and China. With some 63,000 employees, Kuehne + Nagel operates own locations in over 100 countries, having strong market positions in the seafreight, airfreight, contract logistics and overland businesses. s u p p l y chain management I II/ 2013 69

Speakers and Experts New Trends in Aerospace Industry and TAI Muharrem Dörtkaşlı, President & CEO, Turkish Aerospace Industries, Inc. (TAI) Turkish Aerospace Industries, Inc. (TAI), ranking among the top hundred global players in the aerospace and defense arena, is Turkey s center of technology in design, development, modernization, manufacturing, integration and life cycle support of integrated aerospace systems, from fixed and rotary wing air platforms to unmanned aerial vehicle (UAV) systems, and space systems. TAI has established a respected and bespoken presence in the global market as a reliable design to build partner, known for its technologies and commitment to ultimate customer satisfaction with strategic investments made in recent years. TAI has built its worldwide success on the foundation of the technological excellence of its products and solutions, highest quality and punctuality in delivery, cost effectiveness which led the way to become a globally competitive, an important partner in design and production for OEMs and 1st Tier Supplier in most of the international aerospace programs. If change is an inevitable fact in the world, following the new and growing trends is essential for existence. Success can only be achieved with awareness, correct positioning and timing. There is a strong bond among the success of the OEMs and their supply chain. In achieving success, there are major responsibilities such as on time delivery and quality. TAI has been working with Airbus for 10 years; therefore TAI is very familiar with the Airbus business culture. TAI s strategic goals in the aerospace business, like participation in joint development programs as Global/Risk Sharing Partner, getting higher level responsibility by Vertical Integration of major OEM Supply Chain (design and/or production), developing capabilities on advanced technologies, outsourcing fabrication/detail level & low value added tasks and continuous improvement in all processes, clearly expresses TAI s dedication to the aerospace industry. We are currently contemplating an IPO. We aim to be a reliable, first-tier supplier to OEMs like Airbus, and we would expect to invest a portion of the proceeds from an IPO in these OEMs upcoming projects. Speaker MUHARREM DÖRTKAŞLI, was entrusted as the President & CEO of the company in October 2005, while a Board Member of TAI. Since then, he continues his duty as President & CEO of TAI. Dörtkaşlı, is also Member of the Board of Defense Industry Manufacturers Organization, Vice Chairman of Turkish-US Business Council of DEIK and Head of Defense-Security Commission. Muharrem Dörtkaşlı Turkish Aerospace Industries, Inc. (TAI) Fethiye Mah. Havacılık Blv. No:17 Kazan 06980 Ankara Turkey www.tai.com.tr TAI, with its current standing, design capability and high quality production, has a strong international competitive power. However, there are challenges in the international market. Any company having the highest quality and punctuality with competitive pricing should be evaluated and should have the chance for selection. We are aware of the challenges and with the passion of our employees, continuous improvement approach and the way we do our business, we believe we can overcome the challenges. This is where you can register for our conferences, purchase conference materials and apply for copies of the Magazine SUPPLY CHAIN MANAGEMENT TM! www.ipm-scm.com/shop 70 s u p p l y chain management I II/ 2013

Software for Perfection in Aerospace Mobile Processes MRO Order Management Spare Parts Management Sequencing Warehouse Management Adaptive Planning Project Management Skill Management Data Collection PSIPENTA Software Systems GmbH Dircksenstrasse 42-44 D 10178 Berlin +49 800 3774968 sales@psipenta.de www.psipenta.com www.erp-demo.com WWW.INTERTURBINE.COM Worldwide Material Support For all CES Material, Consumables, Expendables, Chemicals and Composites Consolidating > 550,000 part numbers / specifications from more than 3,300 sources Innovative supply solutions from regional warehouses Composites Extrusion / Raw Material Seat Track Cover Sealants/ Gaskets Electrical Parts Standard Hardware Wire and Cable Bulbs Lamps Consumable Material (Chemicals) Non-Textile Floor Covering Semi-finished Material Silicone and Foam Sheets Appointed for total fleet support by: AGUSTAWESTLAND AIRBUS ATR DORNIER EMBRAER EUROCOPTER PILATUS SUPERJET INTERTURBINE THE ONE STOP SOURCE Germany +49 4191 809 300 France +33 5 34 40 0670 UK +44 1480 377 111 Czech Rep. +420 234 280 160 Hungary +36 29 620 231 Turkey +90 212 60367 13 Russia +7 495 989 2327 USA / TX +1 817 633 8377 USA / FL +1 786 337 8144 Canada +1 450 632 0647 U.A.E. +971 4 7030 418 P.R. China +86 10 8047 5445 Japan +81 3 6868 3169 Singapore + 65 654 69858 India +91 80 4060 0811 Australia +61 7 3292 5200 South Africa +27 11 826 1167

Speakers and Experts SSJ100. New project. New prospects Alexander Dulebenets, Deputy Procurement Director, Sukhoi Civil Aircraft Company Roman Shport, Deputy First VP for Production, Sukhoi Civil Aircraft Company JSC Sukhoi Civil Aircraft (SCA) focuses on the competitive product projection on the world market. The main project of the company is the creation and production of a family of regional planes, the Sukhoi Superjet 100 (SSJ). The SSJ100 is the first airliner in which engine and airframe have been designed together to optimize performance. The SSJ100 a fusion of Russia s famed aviation design and production skills with the latest systems from leading aerospace suppliers around the world offers standards of economy, performance, environmental efficiency and passenger comfort never before seen in a 100-seat airliner. In strong competition with other airfrmers all over the world this project gives hope for the whole Russian civil aviation industry. The procurement team of SCAC is doing its best to coform to best practices of procurement standards in the world. Since it is a new project, SSJ100 still has small troubles in the production and supply chain, which is a common situation in the beginning of courageous projects all over the world. But from year to year Sukhoi Civil Aircraft shows significant increases of its production output ratio and for the future the management of the company sets forth ambitious aims that constitute a new challenge for every person in the company and of course new requirements from procurement itself. That is why it is of the highest importance to understand the worldwide trends in supply chain management and procuement organization inside and outside of the airframe industry. Experts ALEXANDER DULEBENETS was appointed for the position of Deputy Procurement Director of SCAC in 2013. Before Alexander was in charge of major partners and suppliers of SCAC in the field of procurement. Having graduated with a university degree in Economics in 2006, Alexander got his second higher education in Logistics in 2011 and a MBA degree in 2012. ROMAN SHPORT is the Deputy First Vice President for Produciton. Roman graduated from Pacific Lutheran University in 2004 with a MBA degree specialized in Technology and Innovation Management and received a PhD in Technical Science and defend his dissertation in 2009 with the subject of research in improving the process of aircraft plane building. Past Issues Download: www.ipm-scm.com AVIATION TM Sukhoi Civil Aircraft Company Polikarpova str.23 B 125284 Moscow, Russia scac.ru 72 s u p p l y chain management I II/ 2013

Speakers and Experts CFM: Transitioning Products in the Midst of a Large-Scale Ramp Up Jean-Paul Ebanga, President & CEO, CFM international During the past three decades, aviation has experienced steady growth in terms of annual aircraft and engine deliveries, even through the peaks and valleys of a series of industry cycles. However, in the years to come, the introduction of a new generation of engines coupled with a forecasted requirement for more than 40,000 engines over the next 20 years for the single-aisle segment alone, we are facing one of the most daunting challenges ever. Coping with this challenge requires extensive preparation and a near-perfect execution. Speaker JEAN-PAUL EBANGA was named President and Chief Executive Officer of CFM International (CFM) in February 2011. His previous assignments have included leadership positions in electronics, systems and aircraft engines. Mr. Ebanga is a graduate of the ENSEM Graduate School of Engineering in France. CFM has a well-oiled, highly sophisticated global supply chain that has delivered more than 1,000 engines nearly every year since the year 2000. The organization currently produces more than 1,500 engines annually, and that number is expected to reach 1,700 by the year 2020. Despite its unprecedented experience, or maybe because of it, CFM has already been working diligently for the past four years to ensure this supply chain is ready for the introduction of the LEAP engine in 2016. Not only are CFM and its parent companies, GE & Snecma, fully engaged, but so are all of the suppliers for the advanced new product line. In his presentation, Jean-Paul Ebanga will speak about how CFM is preparing to meet these challenges, as well as the journey from the launch of the LEAP engine to its eventual transition into commercial service and the unprecedented demand the industry will experience over the next 20 years. About CFM CFM is the world s largest commercial aircraft engine supplier, and the company has delivered more than 25,000 engines to more than 530 operators around the globe. The CFM56 fleet has logged nearly 650 million flight hours since the first CFM56 engine entered commercial service in 1982. These engines have gained a reputation as the most reliable engines in the air. Jean-Paul Ebanga CFM international 6440, Aviation Way, MD Y5 45069 West Chester USA www.cfmaeroengines.com The CFM56 product family is produced by CFM International, a 50/50 joint company between Snecma (Safran) and GE. It is the engine of choice for both the Airbus A320 and Boeing 737 aircraft families and has been selected to power nearly 70 percent of all aircraft in service or on order. The advanced LEAP engine is CFM s newest product family and is currently in development for the Airbus 320neo, the Boeing 737 MAX and the COMAC C919, all of which will be introducted in commercial operation in the 2016/2017 timeframe. To date, CFM has received firm orders for more than 5,300 LEAP engines and the product is still more than three years away from its initial entry into commercial service. s u p p l y chain management I II/ 2013 73

Speakers and Experts Global Aerospace Supply Chains China Europe USA Dominic Edmonds, SVP Contract Logistics Western Europe, Kuehne + Nagel Ltd. The demand for end-to-end supply chain solutions in the aerospace industry is growing faster and faster. Both collaboration as well as integration is increasing while at the same time, the supplier base, outsourced component manufacturing and the production network of airframe manufacturers are becoming more and more international. These developments clearly call for enhanced supply chain and logistics capabilities. There are two supply chains or building blocks which distinguish themselves from each other on the one hand but have to be combined on the other hand. The first one concerns the supply chain all the way from the supplier, via all interfaces, to the production line. In order to reduce missing parts and / or production-disruptions to an absolute minimum and at the same time to optimize inventories, it is essential to design and implement zero failure end-to-end global supply chains. Equally essential is a fully integrated logistics flow of major components and assembly kit ship-sets from the component factories to the assembly line. This goal can only be achieved by establishing a global seamless internal logistics chain which connects component assembly factories with the new final assembly lines in key markets on other continents such as the North- and South America or Asia A key solution developed by Kuehne + Nagel in relation to the first case are the so-called vendor villages which are shared facilities for multiple strategic suppliers. The vendor villages are located close to the final assembly lines and are combined with upstream scheduling, transport consolidation, management and tracking. The vendor villages n enable the airframe manufacturer to pick-up parts directly from the vendor village and thus not only maximizing flexibility but also minimizing inventory n allow the supplier to remain in full control of the supply chain, to optimize inbound transport through shipment-consolidation and to keep inventory close to the customer s production site (ensuring maximum on time availability and reliability). In relation to the second case, Kuehne + Nagel has developed an integrated supply chain concept. It consists of n a consolidation hub to bundle shipments from component assembly sites in one region allowing the building Speaker DOMINIC EDMONDS is looking back on over 20 years of experience in the logistics sector and has been appointed Senior Vice President Contract Logistics Western Europe at Kuehne + Nagel in 2013. He has the responsibility of operations in 19 countries. Dominic Edmonds holds a Post Graduate Degree in Industrial and Operations Management of Coventry University, UK. Dominic Edmonds Kuehne + Nagel Ltd. Sunrise Parkway Linford Wood MK14 6BW Milton Keynes United Kingdom www.kuehne-nagel.com of optimized ship sets and ensuring maximized capacity utilization, n managed transport to the final assembly line abroad, optimizing transport modes and ensuring timely arrival n a production warehouse near the final assembly line to receive ship sets and to reconfigure the parts in line side delivery media. This integrated supply chain solution is managed using integrated end-to-end tracking and visibility tools which are based on innovative state-of-the-art technology (such as GPRS tracking). Kuehne + Nagel is a specialist in developing, implementing and providing integrated supply chain solutions to the Aerospace industry. The company is a strategic partner of Airbus responsible for the management of production logistics warehouses and line side delivery in Europe and China. 74 s u p p l y chain management I II/ 2013

Speakers and Experts From imagination to reality: the shape of interiors to come Mark Edwards, CEO, AIM Aviation Differentiation Airlines want differentiation. The flying experience is different with each airline and the cabin interior must reflect and inspire the character of the airline. While design is fundamental to differentiation, it is just the beginning of the journey. Unique and creative design must then be engineered and manufactured. It is this process as a whole, for which AIM Aviation is best known. Innovative materials Innovative design requires innovative materials. Specifying granite and glass for use in a building is one matter but in aerospace it is very different. AIM Aviation s engineers are renowned for being able to make such materials not only possible in terms of weight but also in terms of safety standards. Moreover, AIM Aviation s craftsmen and women are capable of making these designs work in practice, and cost effectively, as both robust and aesthetically beautiful items in the demanding world of aviation. Design to delivery Taking aircraft interiors from design to delivery gives AIM Aviation the advantage of understanding and guiding the entire route to completion. Each skill and stage has a direct influence on the next. AIM Aviation s expertise reaches all the way from the design and engineering, through composite assemblies, to the production of stowages and galleys, to the crafting of premium monuments, bars and lounges. The ability to take each item from design to delivery also provides the airlines with value for money. AIM Aviation is well known for its stunning bars, mood lighting and special monuments for premium class cabins. However, as much care and attention to detail goes into our full range of interiors including galleys, stowages, wardrobes and dog boxes. The same highly skilled engineers and craftsmen work on the high-end premium as on the standard range of cabin interiors. The same precision and expertise is applied throughout. Challenges The aircraft industry is particularly challenging as each different aesthetic needs to be visually appealing and meet Speaker MARK EDWARDS became CEO at AIM Aviation in June 2010. Mark has extensive experience of managing businesses in the industrial sector across Europe, USA and the Far East. He is a chartered accountant and a graduate in Economics from Bristol University in England. Mark Edwards AIM Aviation Jecco House Boscombe Grove Road BH1 4PD Bournemouth United Kingdom www.aim-aviation.com demanding airworthiness certification requirements whilst achieving the delivery lead times required by the airlines and aircraft manufacturers. To achieve the exacting levels of inspirational design, meticulous engineering and beautiful crafting, AIM Aviation invests heavily in its people and facilities. 2013 will see the provision of extensive new facilities to further enhance AIM Aviation s capabilities and offering. AIM Aviation has extended its overseas operations into new countries, making the company truly global. Several internal promotions have also been made to further progress the company in size and structure, utilising the extensive knowledge and experience of the existing team. With no limit to the imagination of designers, now the engineering and manufacture of cabin interiors is able to match this vision of the future. s u p p l y chain management I II/ 2013 75

Speakers and Experts Hamburg The place for aviation Dr. Bernd Egert, Secretary of State Councillor, Free and Hanseatic City of Hamburg Thinking in new dimensions Hamburg offers competences covering all facets of aircraft construction, aircraft maintenance and airport operations. Together with the three major companies LufthansaTechnik and Hamburg Airport more than 300 small and medium-sized firms together with the technological and scientific institutions make contributions to the knowhow. That makes Hamburg a leading location for civil aviation world-wide. The construction of the Airbus A380 gives Hamburg as a place for aviation a share in an internationally outstanding project: the development, construction and operation of this wide-bodied aircraft are hitherto the greatest challenges faced by the aircraft industry, suppliers and aircraft operators. Another outstanding aspect for Hamburg as a place for aviation is the sole responsibility for the development and construction of the A380 cabin. The construction of the A380 also has a positive effect on the metropolitan region of Hamburg. The Airbus plants in Stade as centre of competence for CFRP and in Buxtehude for in-flight entertainment play a major role in the programme. Hamburg The place for aviation. Speaker DR. BERND EGERT was appointed State Councillor at the Ministry for Economics, Transport and Innovation (concerned with the economy and innovation) on the 24th of March 2011. Before that Dr. Egert was at the Ministry of Economics and Labour Affairs of the Free and Hanseatic City of Hamburg, head of the Office for the Economy, Port and Technology, comprising departments for: the port, logistics, aviation/industry, technology+innovation/commerce, services, craft trades. Dr. Bernd Egert has obtained the academic degree Diplom-Physiker. At a glance n An aviation tradition of more than 100 years with today more than 40,000 employees, n three core companies: Airbus, Lufthansa Technik, Hamburg Airport, n supply chain with 300 aviation suppliers (SMEs) with distinct diversification, n a continuously growing scientific landscape with five universities focussing on basic research and practical applications in aviation technology (University of Applied Sciences HAW Hamburg, Hamburg University of Technology TUHH, University of Hamburg, Helmut Schmidt University, University of Applied Sciences FH Wedel), n two research centres (Technology Centre Hamburg Finkenwerder THF, Centre for Applied Aircraft Research ZAL) as well as two institutes of the German Aerospace Centre DLR, n qualification centre for professions in aviation technology; dual training at State Technical School for Production Engineering and Aircraft Technology (G15); private basic Dr. Bernd Egert State Secretary Free and Hanseatic City of Hamburg Alter Steinweg 4 D-20459 Hamburg web www.bwvi.hamburg.de and advanced training; technical tertiary education; corporate learning location co-operation at the Hamburg Centre of Aviation Training HCAT, n Leading-Edge Cluster of the Federal Republic of Germany with focussed research pro-jects in the strategy for a new kind of aviation : more economic, more ecologic, more comfortable, more reliable, and more flexible, n powerful and communicative network of industry partners, public authorities, associations, universities, chambers, employers and workers organisations, n networking of German regional aerospace organisations and international aerospace organisations in the EACP European Aerospace Cluster Partnership. 76 s u p p l y chain management I II/ 2013

Speakers and Experts Aircraft Supply Chains: Is there an input from Automotive Best Practices? Prof. Dr. Michael Eßig, Chair of Materials Management & Distribution, Bundeswehr University Munich The automotive industry is well known for a lot of best practices in terms of supplier base management, global sourcing, manufacturing operations and supply strategies. Especially the European automotive industry improved its competitiveness with the help of their strong supply base. For example, automotive OEMs integrate their suppliers into r&d activities and use suppliers as a source of innovation. As a result, they are highly interested in getting first access to suppliers innovation trying to get preferred customer status. Additionally, they try to buy integrated systems instead of single parts to reduce the number of interfaces ( modular sourcing ). Together with single sourcing and just-in-time, they are able to reduce transaction cost and capital lockup significantly. Automotive supply chains are highly fragmented and include exotic members, e.g. the cattleman in South Africa who delivers the leather for the interior. Both automotive and aircraft OEMs face the problem of complexity and unstable customer demands. As a result, supply chain agility is one of the major targets in both industries. The question ist, whether the concepts mentioned above can or should be adopted in aircraft operations. On the other hand, there are major differences between aircrafts and cars for example, the structure of their downstream supply chain. Aircrafts do have only a businessto-business line, cars mainly private clients. As a result, aircraft buyers often require professional and integrated services, very often availability based. Aircraft OEMs must be able to encounter the risks related e.g. with performance based contracts and integrate suppliers in their risk management system (e.g. Rolls-Roye engines Power by the Hour -concept). Bundeswehr Universty Munich The Bundeswehr Universty Munich was founded in 1973 with the aim of providing officers and officer candidates with a university education that would also prepare them for civilian careers. After all, most regular soldiers leave the Bundeswehr after 13 years. Since its founding, the number of students has been rising steadily: today there are around 3,700 registered students, including 360 women, 50 civilians, and 150 international students and officers. Moderator PROF. DR. MICHAEL ESSIG holds the Chair of Materials Management & Distribution at Bundeswehr University Munich, and is Scientific Director of the Research Center for Law and Management of Public Procurement. He is Director of the Transfer Center for Defence Supply Chain Managementand Director of competence network Performance Based Logistics of Bundeswehr University Munich. Prof. Dr. Michael Eßig Bundeswehr University Munich Werner-Heisenberg-Weg 39 85577 Neubiberg www.unibw.de/materialwirtschaft In contrast to other universities, the standard period of study at the Universität der Bundeswehr München is only 3 years for a bachelor s degree and one additional year for the master s degree. Our diplomas are nevertheless fully recognized by the state and are considered to be on equal standing with those awarded by other German universities. The Bundeswehr Universty Munich is made up of the University and a College of Applied Sciences and offers a total of 13 programs of study in seven departments of the University and three departments of the College. Our excellent scientific facilities allow high-level research that is competitive on an international scale. s u p p l y chain management I II/ 2013 77

Speakers and Experts Keeping The Local Aspect in Globalized Supply Chains Jürgen Funke, President, ThyssenKrupp Aerospace Production of aircraft has become a global enterprise which provides suppliers with a paradox: How to support industry standardization, harmonization and commonality while at the same time capturing local and regional unique advantages in diversity and structure. Price, delivery and quality continue to be the most important requirements of aerospace material buyers. The development of new aircraft and the competitive pressure to provide lowest cost and the highest quality in the shortest timescales, mean that these requirements have to be achieved in an increasingly complex environment. The introduction of each new aircraft drives the need for a wider range of materials and specifications. The economics of metals manufacturing are affected by the weight of the production batch of each individual item. Obtaining the lowest price per kg/lb requires the buyer to buy large quantities of individual items at a lead time that fits the material producer s schedule. Lean manufacturing has led aircraft manufacturers to produce smaller batch quantities of components on a just-in-time basis and to operate in a zero inventory environment. This conflicts with the material buyer s need for large quantities in order to obtain the lowest possible price. The question asked by all is how to manage this conflict and obtain security and consistency of supply in such a volatile environment whilst minimizing both price and total cost. ThyssenKrupp Aerospace (TKA) offers an answer for Small and Medium Enterprises (SME) as well as major OEMs. By operating from a multitude of service centers TKA can aggregate demand across a single supply chain whilst providing a responsive local service to meet the needs of individual subcontractors. There are many companies, customers and partners around the world that are equally important in the supply chain and all have individual needs and requirements. Different customers have different manufacturing strategies and need different services to optimize production costs. To best meet these needs, the big picture is important, but not all. To think and be global in our world, without forgetting the local aspect of it, opens opportunities for sustainable, value-adding solutions for manufacturers and suppliers of all sizes. In such a setup, we are ready to respond to any need on a localized basis or as part of a global arrangement to everybody s benefit. Speaker JÜRGEN FUNKE was born in 1961. He joined Thyssen- Krupp in Essen, Germany in late 1980 following his graduation in Business Administration in 1979. In 1996, he moved to Thyssen- Krupp North America. After 6 years as CFO in Michigan, he took over the aerospace activities in Seattle, WA in 2002 as President. Since 2011, he leads the global business of ThyssenKrupp Aerospace. Jürgen Funke President ThyssenKrupp Aerospace Am Thyssenhaus 1 45128 Essen Germany www.thyssenkruppaerospace.com The company ThyssenKrupp Aerospace supplies material and supply chain management services to the world s leading aerospace companies and their supply chains. The multinational company operates from 41 locations in 16 countries throughout the Americas, Europe, Asia Pacific and North Africa. Located in all global regions of aerospace manufacturing, 1600 employees can aggregate demand across a single supply chain on behalf of the world s leading OEMs. At the same time, the ThyssenKrupp Aerospace network provides local service to meet the needs of aerospace subcontractors anywhere in the world. 78 s u p p l y chain management I II/ 2013

Event Calendar Event Calendar January to April 2014 MRO LATIN AMERICA 2014 21. to 22. January, Rio de Janeiro Aviation Week Tel. +44 20 71766233 www.aviationweek.com MRO MIDDLE EAST 2013 04. to 06. February, 2014, Dubai Aviation Week Tel. +212 904 3225 www.aviationweek.com Loyalty 2014 17. to 19. February, Amsterdam Reed Exhibitions Tel. +44 (0) 20 8652 3233 http://www.flightglobalevents.com/ Cool Chain Logistics 2014 27. to 29 January, 2014, Luxembourg-Kirchberg IQPC GmbH Tel. +44 (0) 20-7368-9300 www.coolchaineurope.com LogiMAT 2014 25. to 27. February, 2014, Stuttgart EUROEXPO Tel. +49 (0)89 32391-253 www.logimat-messe.de AEROSPACE & DEFENSE Supplier Summit Seattle 11. to 13. March, 2014, Seattle advanced business events Tel. +1 206-256-6145 www.bciaerospace.com TOC Container Supply Chain Asia 12. to 14. March, Singapore PennWell Tel. +44 (0) 20 7017 0 www.tocevents-asia.com Aircraft Interiors Expo 08. to 10. April, 2014, Hamburg Reed Exhibitions, Hamburg Messe Tel. +44 208 2712174 www.aircraftinteriorsexpo.com LEAP year We re writing to confirm a date we made with our customers in 2008. The first LEAP engine began testing September 4, 2013. Right on schedule. Just like our last 21 engines. Adjust your calendars, we ve made this a LEAP year. Go to cfmaeroengines.com CFM International is a 50/50 joint company between Snecma (Safran) and GE. MORE TO BELIEVE IN s u p p l y chain management I II/ 2013 79 Superior performance Lower cost of ownership Greater reliability

Speakers and Experts Consolidation of SME in the Aerospace Field Uwe Gröning, CEO, Hanse-Aerospace e.v. New Weckruf from the EADS After several past wake up calls we recognized, in the Sept. 26 th 2013 edition of the Handelsblatt, where Tom Enders was quoted saying that the SME do not sufficiently contribute to the yield targets of EADS.. Following a study that has been published by h&z in cooperation with the BDLI (German Aerospace Industries Association), most of the 2nd tier and 3rd-tier suppliers are not able to compete globally. Only 10 % of the suppliers are currently able to meet the future customer and market criteria. 39 % of the suppliers are supposed to be able to develop sufficiently in order to be competitive. Most of the small and medium sized suppliers are doing business with Airbus at the moment, but 51 % of those will not have a future in aerospace. Moderator UWE GRÖNING is CEO of Innovint Aircraft Interior, a leading company for customized cabin interiors (www. innovint.de), President of Hanse-Aerospace e.v, President of the Association for the Promotion of Applied Aeronautical Research e.v., member of the supervisory board of Center of Applied Aeronautical Research (ZAL) and member of the board of Hamburg Aviation. Facts about Consolidation of SME The dramatic change of the aerospace supply chain is well known since 2005. (Ref. Suppl.Chain Mgmt. III/2011) The new A350 program presents to SME s approximately 240 1st-tier-suppliers. All 2nd- and n-tier-base-suppliers have to become Supply-Chain-Partners to the 240 preferred suppliers and will no longer deliver directly to Airbus. All future supply chains will be re-shaped accordingly. All suppliers are struggeling with Dollar-Risk-Sharing ($ Contracts), Ramp Up costs for new production sites and increased R&D efforts. The restructuring of the engineering suppliers has already been completed with 20 1st-tier engineering companies (E2S) having been selected. In addition, the restructuring of HR suppliers (Human Resources) has also been completed. The First OSM (On Site Management) is the agency for HR requirements and all other companies are required to work with them. The restructuring of production companies, (i.e. parts, modules, sub-assemblies and assemblies) which are forced to perform as an EASA production organization, is still under evolution. The main problem is that the first tier companies want to pass through the OEM-General Terms to the next tier-level, which is often not acceptable for various reasons. What Can be Done? 1. We have to prevent that approx. 26000 skilled personnel in northern Germany become unemployed (see above). Uwe Gröning Hanse-Aerospace e.v. Holzmühlenstraße 84 22041 Hamburg Germany www.hanse-aerospace.net 2. SME s have to improve their skills 3. SME s have to enter into new markets, e.g. airlines, MRO, other OEM, all other business. 4. SME s have to be backed by the governmental bodies. 5. SME s have to use SCAN, the new tool for cooperation. (cost: 2$/day) 6. SME s have to become recognized world wide About Hanse-Aerospace e. V. HANSE-AEROSPACE e. V. is Germany s largest association of small and medium sized aviation and space companies. The more than 160 members include suppliers from all areas of the aviation and many areas of the aerospace industry. Apart from manufacturing, maintenance, and development companies, there are also numerous service providers (especially engineering, personnel and documentation services), institutes for further education, academies and universities. 80 s u p p l y chain management I II/ 2013

Speakers and Experts Global Supply Chain at Liebherr-Aerospace and Transportation Josef Gropper, COO, Liebherr-Aerospace Lindenberg GmbH Introduction In the past few years, the global aerospace industry has witnessed an impressive growth, and according to current industry outlooks the increase in production is likely to continue. In its current global market forecast Airbus foresees the need for some 27,300 passenger airliners with seating capaciwties of 100 seats and above, along with nearly 900 new factory-built freighter aircraft for 2012-2031. The forecast also anticipates the world s overall passenger aircraft inventory will double during this period. As one of the major suppliers to the aerospace industry, Liebherr was able to achieve an impressive commercial success over the last years: Liebherr is present on a significant array of programs that are currently in production, which lays a sound foundation for the future development of the company. Almost all the new major commercial aircraft programs have been developed with Liebherr on board. The anticipated growth rate of the industry will pose an enormous challenge to the supply chain of Liebherr-Aerospace. As the company s aim has always been to open production plants in strategically important markets Liebherr-Aerospace today not only runs OEM centers of excellence in its traditional European locations (Germany and France) but it also has a network of industrial facilities in the USA, Brazil, Russia and China at its disposal. Some years ago the company took the decision to source globally for a number of reasons, amongst them cost reduction and natural hedging by dollar contracts. Liebherr-Aerospace s globalization target until 2015 is to base 50% of the overall purchasing volume on dollar contracts. In his speech, Josef Gropper will present Liebherr-Aerospace s approach towards a global supply chain. He will describe the company s activities, the production network and the corresponding supply chain, as well as the reasons for globalization. Josef Gropper will also provide examples for intelligent sourcing solutions and possibilities of standardizing collaborative processes in the supplier base. The company Liebherr is a family-owned group of companies founded in 1949. Liebherr today is made up of more than 130 companies worldwide, employs over 35,000 people and in 2011 Speaker JOSEF GROPPER is MD of Liebherr, Lindenberg and since 2008 COO of Liebherr Aerospace & Transportation SAS, Toulouse the divisional controlling company. He is responsible for all production, procurement and asset investments. Following graduation from the University in Ulm in production technology he joined Liebherr in 1978. He has more than 30 years experience in the field of production. Josef Gropper Liebherr-Aerospace Lindenberg GmbH Pfänderstraße 50-52 88161 Lindenberg www.liebherr.com reached a turnover of approximately 8.3 Billion. The Group has a multi-faceted product range. In 2011, the Aerospace and Transportation Systems division accounted for 11% of the Group s total revenues. The division employs more than 4,000 people. Liebherr- Aerospace also operates a joint venture in China. Liebherr is a leading supplier of systems for the aviation industry and has more than five decades of experience in this field. The range of aviation equipment produced by Liebherr for the civil and military sectors includes flight control and actuation systems, landing gear and air management systems. These systems are deployed in wide-bodied aircraft, single aisle and regional aircraft, business jets, combat aircraft, military transporters, military training aircraft, civil helicopters and combat helicopters. s u p p l y chain management I II/ 2013 81

Speakers and Experts C-Class Parts become A-class Joachim Hermes, Member of the Board, Karl Berrang GmbH The procurement of fasteners and fastener related hardware, like nuts and bolts, is usually underestimated. Parts are called C-class-parts, even if they are A-class, taking quality expectations and availability into consideration. How would you feel, driving a car with a broken wheel nut? Or what will happen, if there is a shortage of the wheel nuts in the assembly line? Berrang Short Profile The Berrang Group is a family business specialized in providing mechanical fastening technology for over 60 years. Working closely with their customers, more than 450 employees develop and provide technically and logistically impressive solutions. With a broad network of branches in Germany, USA, France, Poland, and China, they are able to establish direct contact and offer efficient support to their customers straightforward and with minimal waiting times thanks to their fast and flexible approach. They combine technical competence and high-performance logistics with a comprehensive approach to quality management and reliable service. Their customers are thus able to build on a business relationship that is characterized by continuity and dependability. Expert JOACHIM HERMES, born 1968, joined the Berrang Group in 1999. Prior to that, he took responsibility in different positions within the fastener industry. Joachim Hermes is member of the board of the Berrang Group and responsible for marketing and sales, engineering and logistics. Joachim Hermes Karl Berrang GmbH Helmertstrasse 1 68219 Mannheim www.berrang.de Quality What does quality actually mean? According to ISO, quality is the degree to which a set of inherent characteristics fulfills requirements. The dictionary also defines quality as something that can be measured in physical terms. However, Berrang does not consider either definition to be sufficient as they do not take into account some essential factors. It is not only for the product itself where quality management comes into play. Above and beyond the product, it is also necessary to consider the employee who designs the process or carries out the service. Berrang strives to achieve the maximum benefit for the customers in regard to both the product and the related processes. Berrang s quality orientation governs all activities, from the design and development of processes and procedures to the implementation of projects and intensive quality control. Their customers can expect nothing less than total quality, which is ensured by the employees in all aspects of their day-to-day work. These essentially simple principles were first formulated by Karl Berrang when the company was established more than 60 years ago. Service Berrang s work is governed by an unerring focus on the particular requirements of each of their customers. Working together with their clients, they develop customized solutions for every aspect of a project. Whether the customers manufacture commercial vehicles or passenger cars, lithographic systems or aircraft seats, a large number of hidden champions rely on Berrang s global expertise in procurement and experience in supply chain management. Their in-depth knowledge of various manufacturing processes is also called upon time and time again. They are able to identify the optimal production process for each customer s application, be it for a prototype, short run or large-scale production. With all these efforts Berrang makes C-class-parts reliable and always available. 82 s u p p l y chain management I II/ 2013

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Speakers and Experts The Transformation of the Global Supply Chain Dawne S. Hickton, Vice Chair, President and Chief Executive Officer, RTI International Metals, Inc. The commercial aerospace industry is in the midst of a historically unprecedented period of growth. This expansion is being driven principally by population growth and economic progress in the world s developing countries, particularly those in Asia. Other factors include the need to replace aging airliners, the push for improved fuel economy and compliance with increasingly stringent environmental regulation. It has been estimated that more than 30,000 new passenger planes will be needed to meet demand over the next 20 years. More than 10,000 of those planes are on order now - the most ever and an inventory of more than eight years of production at current rates. Airbus, itself, has a backlog of over 5,000 aircraft as of October 2013. Speaker DAWNE HICKTON has been President and CEO of RTI International Metals, Inc. since 2007 and has over 25 years of diversified metals experience, including 15 years in the titanium industry. Prior to RTI, she was employed by United States Steel Corporation. Mrs. Hickton is a graduate of the University of Rochester and received a Juris Doctor from the University of Pittsburgh. As the OEMs prepare their factories for this increased production, the suppliers must also prepare. Can the current supply chain meet future demand that vastly transcends anything it has been asked to fulfill? How are suppliers preparing for the powerful ramp in production that these forecasts envision? What steps are being taken by the supply chain and is it enough? What are risks to the OEMs and companies in the supply chain in the need to develop new products, processes, management strategies and customer relationships in this dynamically changing environment? These are just some of the key questions that Dawne Hickton, Vice Chair, President and CEO of RTI International Metals, Inc. will address in her discussion of how the global aerospace supply chain has changed and is continuing to change as the industry moves to meet the challenges ahead. Historically comprised of small, independent companies as well as large multi-market conglomerates, the supply chain has been transforming to global, integrated suppliers focused on aerospace. RTI International Metals, Inc. is an example of this trend. In her discussion, Mrs. Hickton will highlight how her company has grown over the past decade from a small supplier of titanium mill product in the state of Ohio during the first 50 years of its corporate life, into a vertically integrated global supplier of engineered titanium products and other metals and associated services to the commercial aerospace industry with manufacturing plants in two continents, covering four countries and seven states, Dawne S. Hickton RTI International Metals, Inc. Westpointe Corporate Center One 1550 Coraopolis Heights Rd., 5th floor 15108-2973 Coraopolis, PA USA rtiintl.com including one of the newest locations in Virginia. It is an experience that parallels that of other aerospace industry suppliers. About RTI International Metals, Inc. RTI is a global supplier of advanced titanium products and services in the commercial aerospace, defense, propulsion, medical device and energy markets. Today, RTI has 21 manufacturing locations in North America and Europe and is widely recognized as a leading integrated supplier of technologically sophisticated titanium products. Its two business segments are the Titanium Segment and the Engineered Products and Services Segment. RTI is the North American titanium supplier for Airbus. Headquartered in Pittsburgh, Pennsylvania, RTI employs over 2,300 people worldwide. 84 s u p p l y chain management I II/ 2013

Speakers and Experts Potential for Growth and Investment Opportunities Uwe Hörmann, Head of Strategy and Corporate Planning, Flughafen Berlin Brandenburg GmbH Berlin-Brandenburg Germany s capitol region is in the middle of the Trans-European traffic network. The region connects the developing markets in Eastern Europe and Asia with Western Europe s hot spots. With the opening of the new Berlin Brandenburg Airport Willy Brandt (BER) Germany s capitol region will transform its existing airports into a truly German hub in the heart of Europe. You can save up to two hours travelling on flights to and from Asian cities compared to other European cities like Madrid, London, Paris etc. There are many significant reasons to consider Berlin Brandenburg and its airport region when evaluating and deciding on your next investment location. The new airport stands for business and investment prospects. Some developers have been very swift to recognize the potential of this location and the first pilot projects have already been started and completed. They form an opening for this prime commercial location, which has started to flourish before the new airport has opened and will pick up even more speed once BER starts operating. The region is linked to the Trans-European highway system between Rotterdam and Warsaw as well as Scandinavia and Southern Europe. Along these routes several industrial sites, production facilities, research and development centers including those of well-known international aviation industry players have been set up in recent years in the region of Berlin-Brandenburg. Berlin- Brandenburg is after Hamburg/Bremen and Munich the top 3 aviation industry region in Germany. With respect to the market segment jet engines Berlin-Brandenburg is even a top 3 location in the European Union. Key success factors for the strong growth in the past decade are the 22,000 well-trained employees and the close collaboration between science and research and development facilities as well as production and service companies. Within a one-hour-drive range around the BER air-port you find seven universities, 21 colleges for applied science and more than 100 international renowned research facilities. Leading jet engine manufacturers MTU and Rolls-Royce Deutschland have build close ties with innovative local suppliers that offer unique and special skills in the area of Maintenance Repair Overhaul (MRO) and Testing. Among those you find AneCom Aero Test, GEVA, FTI Group and MTOC as well as MTU, Lufthansa Technik, Air Berlin Technik, Lufthansa Bombardier Aviation Services and KRAUSS Aviation Technologies GmbH. Speaker UWE HOERMANN started in 2011 at the Berlin Airports as a CFO Finance, Controlling, Treasury. He successfully managed the financial crisis of the Berlin Airports after the delay of the opening in 2012 and arranged the financial recovery of BER project with a volume of EUR 1.2 bill. Since May 2013 he is responsible for the turnaround program (SPRINT to BER) which focuses on a fast and reliable opening of the new airport facilities. Previously he worked eight years for Mercedes Benz Financial Services and had various international assignments in Europe and the Americas region. Uwe Hörmann Flughafen Berlin Brandenburg GmbH Berlin Airports 12521 Berlin www.berlin-airport.de Additionally comprehensive training services are available from Lufthansa Flight Training, Trainico and TFC Käufer. Berlin Airports is the biggest seller of high-quality sites directly at and around the new airport in Berlin and in Brandenburg. The portfolio comprises ten development sites, next to the airport terminal, close by the government airport, in the business park and in the neighborhood of the maintenance and business aviation areas. Currently the market price of real estate close to the new airport infrastructure is still highly attractive. s u p p l y chain management I II/ 2013 85

Speakers and Experts Building and enhancing competencies in the supply chain Andreas Kaden, Chief Executive Officer, Lufthansa Technical Training Open innovation is the use of purposive inflow and outflow of knowledge to accelerate internal innovation, and at the same time to expand the markets for external use of innovation. We assume that companies can and should use external and internal ideas in their effort to advance their technology. An innovation will not be successful on the market if it does not meet customer demand. But demand can also be created by the existence of innovative products. In a supply chain the voice of the customer can fade as you dig deeper in the tiered levels of supply if customer requirements are not properly translated into specifications. It is therefore vital that market demand and innovative ideas are continuously leveraged and facilitated. Over the last two decades this stratagy has also been applied in aviation training and has gone through at least three significant strategic changes. The first strategic wave was the focus on coloured presentations. Coming from black and white schematics, colour helped the student in understanding the system philosophy. The next wave was based on digital technology advances to allow interactive web based training. The most recent innovations combined the foresaid with various kinds of simulations, leading to today s significant blended learning solutions. The driving force towards innovation has always been the achievement of gaining an added value for our customers. Furthermore, the demand of a changing generation of trainees, their diversified values and their different ways in how to process information had to be considered. Two significant innovations have been implemented. First, digital natives prefer to receive information as quickly as possible from multiple sources. They are used to multitasking and they can easily get bored if the learning media do not support their way of learning. The innovation process was focused on an ipad solution. A new technological setup was created. A kiosk app was launched with the possibility of gaining access to training material on-line and off-line. It is a matter of fact that the nature of technical documentation is a very particular one, not always very exciting to read. Spherical views of cockpits and virtual aircraft, make learning more vivid as visual stimuli are given. Editorial functions have been outsourced Expert ANDREAS KADEN joined Lufthansa German Airlines in 1984 after graduating Aerospace Engineering at Berlin Technical University and another assignment. He worked in engineering, aircraft asset management and DLH Technical Operations. He set up Lufthansa Bombardier Aviation Services in Berlin prior to taking the assignment to lead Lufthansa Technical Training in 2011. Andreas Kaden Lufthansa Technical Training Weg beim Jaeger 193 22335 Hamburg www.ltt.aero and users have received push notifications on new content, event notifications and more. The second recent innovation is in skill development. The Hamburg Centre of Aviation Training (HCAT) is run jointly between Airbus, Lufthansa Technical Training, the Hamburg University of Applied Sciences and the Hamburg Vocational College System. The HCAT provides a source of qualifying professionals and of coordinating the interests of relevant stakeholders in the aerospace supply chain with regard to their measures of personnel development. Here, they together can find the best fit of market needs and innovative ideas. Furthermore, they can foster the transfer of knowledge between themselves and the older and the younger generation in building up the aviation industry of the future. 86 s u p p l y chain management I II/ 2013

Speakers and Experts Service Provider in Global Supply Chain Management Dr. Jürgen Laakmann, Managing Partner, Formel D In order to comprehend the challenges of global supply chains and develop possible strategies, a general understanding of the supply chain is useful. A holistic application of the Global Supply Chain Model (GSCM) includes production and distribution networks as well as supply chains. The primary goal is to minimise costs of the cumulative supply and production units as well as the distribution network, taking into account market needs and restrictions such as local content requirements while of course complying to quality and timetable guidelines. Management of the supply chain has different goals depending on the product life cycle phase. Expert DR. JÜRGEN LAAKMANN (Managing Partner) is part of a four-member management team, and runs business operations for the Formel D Group. In May 2013, as part of a succession plan and reorganisation process, he was involved in a management buyout of the Group. The supply chain s quality management therefore differs between pre-production and production support. Formel D supports the product life cycle early on by identifying suitable suppliers close to the global production locations. It specialises in building market expertise in China, Russia, India, Mexico and Brazil. In the search for parts suppliers, it offers professional advice. Our customers have particular needs: Aspects such as delivery, quality and price stability must be permanently guaranteed by the supplier. Specific levels of optimisation are required depending on the stage of development the supplier has reached. In other words, discipline, consistency and sustainability are needed. For this purpose, Formel D assists in supplier qualification by offering local expertise in production, training and quality at 65 branches in 22 countries. This support is essential for the sustainability of each branch. Formel D has ramp-up teams consisting of engineers, technicians and mechanics to provide support for product launches. Furthermore, special teams provide worldwide support for issues such as eliminating paint damage and dents. After launches, it is important to supervise the supply chain and react in a quick and appropriate manner when performances are poor. Formel D provides worldwide support for the automotive industry and other sectors with quality and technology specialists at critical points along the supply chain. This is how a supercapacitor supplier in England gets its capacity problems eliminated, how warranty claims get reduced by 95% for robot displays, how rotor blades for wind turbines get shipped on time and how printed circuit board production for the infotainment modules of a German system supplier get stabilised in China all at the same time. The availability of appropriate expertise at any given time is the decisive factor. Formel D can meet this challenge by accessing its network of expert Dr. Jürgen Laakmann Formel D Hunsrückstrasse 1 53842 Troisdorf Germany www.formeld.com locations in 22 countries which are able to support each other if needed. Through its production and quality assurance services, Formel D has established itself as a premium service provider which offers quick, qualified and appropriate support to supply chain partners during the various phases of the product life cycle. ADVERTISEMENTS Issue I/2014 Closing Date 14.02.2014 RAILWAY s u p p l y chain management I II/ 2013 87

Speakers and Experts Globalized Supply Chains in the Aerospace & Defense Industry Christian Leber, Executive, Aerospace & Defense, Operations, Accenture GmbH Globalization is driving the market for Aerospace & Defense (A&D) products bringing new opportunities for selling and partnering. Simultaneously, doing business in this multipolar world alongside with arising new competitors from the emerging markets brings risk and challenges to the well-established companies. To sustain high performance in the future, companies must possess speed, flexibility and precision, characteristics that Accenture sums up as agility. Greater integration between suppliers, partners and customers is a clear direction of travel for the industry. A recent Accenture research (A&D Extended Enterprise, Accenture, 2013) shows that A&D businesses grasp the necessity of working in an Extended Enterprise in order to leverage the opportunities and address the challenges. Accenture views the Extended Enterprise as a comprehensive network of firms (customers, suppliers and other third parties) including all means of collaboration (people, process and technology). Expert CHRISTIAN LEBER is an executive within Accenture s Aerospace & Defense Industry Practice and is responsibile for the Operations related activities within this segment. Leveraging his aerospace background and his 10 years of experience in Operations consulting, he spent the majority of his career in large scale transformation projects at A&D OEMs and suppliers across Europe. This is particularly true for the globalized Supply Chains as the traditional pyramid-shaped organization of Original Equipment Manufacturers (OEM)/suppliers is replaced by a more horizontal structure where suppliers act as business partners. The increased complexity caused by OEMs developing into integrators, tier-one suppliers moving up the value chain taking more responsibilities (design and even integration) and new players emerging globally calls for this new type of market structure. Christian Leber Accenture GmbH Anni-Albers-Straße 11 80807 München Germany www.accenture.com A&D companies must fundamentally rethink the structure and purpose of their supply chains and move towards a transparent and integrated partnership imposing strict requirements on quality and timely delivery on the one hand but supporting the development of their business partners on the other hand. Transparency and common agreements on standards, processes, performance targets and a robust risk management is crucial to jointly succeed in this complex environment characterized by unpredictable, pervasive and rapid change. Additionally, new managerial and analytic capabilities are required to anticipate and react to such changes. Multiple interfaces both exter- nally and internally as well as big amounts of data need to be mastered. Naturally, getting the Supply Chain right is not the only remedy for all challenges facing the A&D industry but it is a crucial component to sustain long-term profitability. A poor design of the Supply Chain can result in quality issues, lower productivity, increased lead-times and high cost with significant adverse effects on operations, finance and the overall market position of a company. 88 s u p p l y chain management I II/ 2013

Speakers and Experts Operations excellence through shopfloor management Joachim Ley, Vice President Supply Chain, Member of the Executive Team, RECARO Aircraft Seating GmbH & Co.KG There are very few industries that are continuously growing like the aviation industry. This means lots of opportunities on the one hand but also lots of challenges on the other hand for all involved parties. Particularly in Europe, the aviation supplier industry is still characterized by highly specialized small and medium sized companies which have long-term relationships with the OEMs, often even as tier one suppliers. This will most likely change over the next years, a process that already started some years ago. With the rate increases at the two major OEMs that we have already seen, and the ones just ahead of us, industrial capability is key for the industry. Moreover it has become an entry barrier for new suppliers. Recaro Aircraft Seating started developing these capabilities several years ago, having today a proven track record across the global network. Operations excellence is the foundation for all sites. It has successfully been implemented in established sites like the headquarters as well as in start-ups and in a smaller company that has been acquired and integrated in the meantime. In Recaro s sense, operations excellence goes well beyond operations, it is rather a philosophy or an excellence culture along the entire value chain. However, the lean transformation started in operations with the common lean tool set, as it does in most organizations. After the first results, the Recaro quickly recognized the full potential of having a lean culture rather than only a lean tool set. The cultural change then started with shopfloor management. It can be characterized by the way problems are analyzed and solved on the one hand and continuous human resource development on the other hand. One of the major principles applied is go and see instead of meet and mail. This specifically brings management closer to the shopfloor. People from different departments quickly get a common understanding whenever a problem occurs, thus being able to define the correct measures right away rather than sending Emails back and forth. At the same time, this is a coaching situation. If done correctly, managers continuously train their subordinates in problem solving which then enables them to train their teams accordingly. By permanently following daily, weekly or monthly routines, lean thinking eventually becomes part of the corporate culture, being shared amongst all employees. With the experience from the first pilots in operations in the German plant, the idea has spread horizontally to operations in the global network in a first step and vertically Expert JOACHIM LEY was appointed Vice President Supply Chain and Member of the Executive Team at RECARO Aircraft Seating in 2012. He is overseeing all supply chain related departments, in particular purchasing and operations across all sites. From 2007 until March 2012 he successfully completed a lean transformation as Director Operations in the company s headquarters in Germany. Joachim Ley RECARO Aircraft Seating GmbH & Co.KG Daimlerstraße 21 74523 Schwäbisch Hall Germany www.recaro-as.com in a second step deeper into the value chain in departments like engineering. Regardless of the regional culture or the different departments within the same site, challenges, experiences and results have always been almost the same. With slight adaptations taking the above mentioned circumstances into account, Recaro has created a strong foundation for future success in the rapidly growing business environment. Save-the-date June 25 th and 26 th 2014 s u p p l y chain management I II/ 2013 89

Speakers and Experts Supply Chain Destination Tianjin: The Airbus Final Assembly Line in China! Andreas Ockel, General Manager, Airbus (Tianjin) Final Assembly Co. LTD The Airbus Final Assembly Line (FAL) in Tianjin is the supply chain destination for flying material for the A320 Family aircraft assembled in China. The FAL China is set up as the Airbus (Tianjin) Final Assembly Company LTD, a joint venture company between Airbus (51%) and a Chinese Consortium (49%) comprising Tianjin Port Free Trade Zone (TJFTZ) and China Aviation Industry Corporation (AVIC). With a container vessel leaving Hamburg every week FAL China receives a complete set of aircraft sections, wings, horizontal and vertical stabilizers and a good dozen of containers with aircraft equipment through Tianjin s seaport. Suppliers of passenger seats ship directly to FAL China and, just in time for the final phase of the aircraft s assembly, an air freight of aero engines and nacelles arrives at the Tianjin airport. The proximity of both a major seaport and an international airport, together with the location of FAL China inside a comprehensive bonded area provided by the Tianjin Port Free Trade Zone, have been the key factors in selecting the site back in 2006. Ramping up production by 25% this year, up to the planned maximum rate of four aircraft per month, the stability of the supply chain into FAL China becomes ever more crucial for delivering on our committed targets. The proven concept of a central logistics hub at Airbus in Hamburg has provided the basis on which FAL China has delivered more than 150 aircraft to 13 Chinese customers on time and on quality since its inauguration in September 2008. As FAL China celebrates its 5th anniversary this year, I would like take the opportunity of this successful milestone and the upcoming Aviation Forum 2013 in Hamburg to encourage our suppliers and partners to consider the next step in developing the supply chain. Triggered by the increasing demand in aviation in China, opportunities for localizing production should not be missed! Typically the supply of customization equipment, especially for cabin, is on the critical path of the final assembly line. With the support of the Tianjin Port Free Trade Zone, which largely contributed to the success of FAL China, the first cabin interiors supplier has recently opened its manufacturing facility in the Tianjin Airport Economic Area and successfully started direct delivery of passenger seats on time and on quality into FAL China. Speaker ANDREAS OCKEL is responsible for the Final Assembly of A320 Family Aircraft in China. Previously, until May 2013 he was accountable for the Cabin Supply Chain that directly feeds all Airbus Final Assembly Lines. Andreas Ockel, Dipl.-Ing. Dipl.-Wi.- Ing. and former military pilot in NATO, joined Airbus in 2009 from BMW Group, where he was VP Procurement in China in his last role. Andreas Ockel Airbus (Tianjin) Final Assembly Company LTD No. 2 West 9 Road, Tianjin Airport Economic Area 300308 Tianjin China www.airbus.com Overall the Tianjin Airport Economic Area today already counts some 25 registered aviation industry enterprise s engaged in engineering, manufacturing, maintenance and logistics with customers ranging from fixed wing aircraft and helicopter manufacturers to airport infrastructure and airlines. The success of the aviation industry companies who have localized their business here in Tianjin is giving testimony to the fact that following Airbus industrial footprint into China bears the potential of a win-win-win for our supply chain partners, for Airbus and for Tianjin! Leaving it on that note, I warm-heartedly recommend an exchange with the Chinese delegation that will join me from Tianjin for the Aviation Forum 2013 in Hamburg! 90 s u p p l y chain management I II/ 2013

Speakers and Experts Quo vadis A&D Industry? Pockets of Turbulence Dr. Stefan Ohl, Managing Director, AlixPartners GmbH The global A&D industry is continuing its growth, yet it remains an extremely dynamic marketplace, in which some sectors are booming and others are experiencing pockets of severe turbulence. Commercial aerospace companies represent perhaps the strongest segment of the industry. In contrast to this growth among airlines and commercial aircraft OEMs, the defense sector is shrinking. Given this challenge, A&D companies need to become more efficient and wring costs out of their operations at all levels and across the entire value chain. n Airlines Growth returns, but profits still languish: Steady traffic growth is leading to improved revenue, and the airlines have become much more disciplined on capacity than they were in the past. The formerly strong European and US markets are in decline, and the industry s center of gravity has shifted to more rapidly-growing markets in Asia and Middle East. n Defense A challenging contraction and a shift to the East: The defense sector is experiencing a similar shift from mature Western markets to faster-growing regions. Asian countries outspent European NATO countries for the first time. As two of the largest developing-market spenders China and Russia are effectively off-limits for outside contractors, defense players are now fighting to capture the addressable sub-segment of developing markets primarily India, Brazil, Saudi Arabia. n Commercial aerospace Booming with new products: The strongest sector within the A&D industry last year was commercial aerospace, which not only expanded but also accelerated its growth. Current projections call for that growth to continue, due largely to a huge backlog of orders. By 2017, the workload volume of OEMs main commercial programs is expected to have ramped up by 45% and will include a significant surge in major new programs. n Supply chain Challenges on the horizon: The coming increase in sales volume is a positive sign, but it will create significant challenges for A&D supply chains. New programs also involve more-technologically complex designs aimed at increasing aircraft operating efficiency. The current industry supply chain is not entirely ready for this dual challenge of delivering a greater volume of more-sophisticated aircraft. In fact, there is a real and growing risk of supply chain disruptions. Thriving in an unstable market The compounding effects of the growing markets in Asia and Middle East, rapidly evolving technologies, and Expert STEFAN OHL is a Managing Director in AlixPartners Munich Office. With 20 years of business experience, he has deep expertise in all areas of operations improvement and co-leads AlixPartners European PMI and Aerospace & Defense Practices. He holds a Master in Economic Engineering from the University of Karlsruhe and earned his Ph.D. on Forecasting in the Automotive Industry. Dr. Stefan Ohl AlixPartners GmbH Mauerkircherstraße 1a 81679 München Germany http://alixpartners.de fiscal strains on mature markets in Europe and the US will likely lead to instability for the A&D industry over the coming years. Successful companies will focus on three key priorities: n Profitability is an ongoing challenge, and companies must redouble their efforts to reduce costs n Companies should accelerate their diversification into new and faster-growth markets. n Innovation continues to be a major theme across all segments. These are sizable challenges, yet they also point to clear opportunities. A&D operators that can get these three areas right can give themselves a clear, competitive edge in a volatile industry. s u p p l y chain management I II/ 2013 91

Speakers and Experts The SME ready to conquer the sky Mario Ohoven, President, Bundesverband mittelständische Wirtschaft (BVMW) When people think about small and medium sized enterprises in the commercial aircraft business many may assume: The sky is the limit. This however is a false perception. In reality SME play a major role in the aerospace industry. A good example is the city of Hamburg which is one of the largest aerospace clusters in Europe. More than 350 small and medium sized enterprises support companies like Airbus and Lufthansa in their everyday business. These SME are generally highly specialized and offer unique products. Only with the support of the SME the aviation industry will manage to keep up with the rapid growth in the developing markets. At Airbus 70 percent of the production is sourced externally. More than 80 percent of the suppliers in the aviation sector are SME with less than 50 million revenue yearly. The whole industry has currently a workforce of more than 100,000 employees in Germany. The total amount of people working indirectly for the sector is significantly larger. Even if SME are not able to produce large commercial aircrafts by their own, they still play a major role in the production process. Speaker ARIO OHOVEN is president of the association of SMEs in Germany (BVMW) and of the European parent organization (CEA-PME) in Brussels. Coming from an investment banking background, his influence on tax-optimized investmentstrategies was crucial. His conglomerate has made sure of their position as a market leader in asset-management for now more than 25 years. Supply Chain Management plays a key role to ensure trust and reliability. On time delivery and a sustained performance are crucial to guarantee a smooth workflow. The past has shown that an interruption in the production process from the supplier side can lead to fatal delays on the aircraft manufacturer side. Airplanes are one of the most complex industrial products and contain several million components. Small and medium sized enterprises, however, are excellent risk sharing partners. Their private ownership structure pushes them to think long-term and to deliver only the best quality. Not the shareholder value but a sustainable long-term development of the company is important. German SME are famous for their superior products and seek to improve constantly. Quality is the key, not just because of the high safety standards in the industry. Furthermore, regular stress-tests are a great way to improve the reliability of the supply chain and to avoid bottlenecks. The future in the Aviation industry seems to be bright. The Asian markets are the new engine of the industry. Asian airlines will increase the global demand for larger and more eco-efficient aircraft. However, the majority of modern aircraft are still produced in the western industries. Outsourcing parts of the production to locations all Mario Ohoven Bundesverband mittelständische Wirtschaft (BVMW) Leipziger Platz 15 10117 Berlin Germany www.bvmw.de over the world has not always been effective and should be monitored further. Despite the rapid growing demand, the industry cannot allow to prolong investments. This accounts for SME and larger players as well. The switch to carbon fiber composites is a great challenge that will change rapidly the business. In the past mistakes have been made. The communication between the industry partners should be improved to avoid delays. In the future stronger customer relations and involvement is necessary to achieve a better vertical integration. The German Mittelstand is ready to conquer the sky. 92 s u p p l y chain management I II/ 2013

Speakers and Experts General Procurement at EADS Bernard Pain, Vice- President EADS General Procurement, Head of Travel and Supply Chain, Airbus SAS EADS General Procurement (EGP) is accountable for ontime on-cost on-quality delivery for the Supply Chain and Spares Logistics in EADS. The scope of activities of the commodity Supply Chain and Spares services is threefold: n Transport Services: General cargo goods by air, river, road and sea; n Manufacturing & Spares Logistics services: inbound, storage, internal distribution, plant internal transport, dispatch, outbound; n Oversized transport services: surface transport by sea, river, road and air charter. In 2009, Airbus did re-organize the manufacturing supply chain management around a central governance model with three Multi Functional Teams (MFT) and a central budget across Europe. Today the governance model is supporting a global reach including Final Assembly Lines (FAL) China and the future FAL USA. Airbus Military centralized the manufacturing supply chain management in 2010, sharing the same service provider as Airbus. The other EADS divsions are moving step by step to a more harmonized and central governance structure and the creation of Airbus Defence and Space in 2014 will represent a further opportunity to consolidate the supply chain management of Airbus Military, Astrium and Cassidian. The Spares logistics activities in EADS are being streamlined to provide customized support as well as added value services to our customers around the world with spares centers in Europe, Asia, and the USA. Within the scope of Future EADS, the EADS transformation programme launched in 2009, the EGP Supply Chain and Spares logistics commodity invited the EADS transport and logistics community to gather together to a Supply Chain Network (SCN) event with the aim to set-up the EADS standard for Supply Chain. n Define and share best practices across divisions; n Foster common initiatives; n Create best value for EADS Divisions EGP is inviting once a year the transport and logistics community within EADS to a Suply Chain Network (SCN) event. This year more than forty transport and logisitics experts from the different divisions met in Manching to share experiences and best practices, benchmark, brainstrom, network and exchange on new market trends. Expert BERNARD PAIN was appointed VP EADS General Procurement in 2009 and is in charge of Travel and Supply Chain Procurement. Following graduation from the Sorbonne University of Paris in Arts and Law, Bernard started his professional career with Lufthansa where he graduated in Airlines Management (Luftverkehrskaufmann). Bernard Pain AIRBUS SAS 1, Rond-Point Maurice Bellonte 31707 Blagnac France www.airbus.com During the two-day event we discussed the future procurement strategy for Supply Chain and Spares Logistics. Attention was put on the evolution of the market and the opportunities it brings to the divisional requirements for transport and logistics services. As a next step common initiatives will focus on simplifying interfaces, harmonizing processes and defining cost saving opportunities. A common supplier base between the divisions and an alignment of the processes will bring EADS in the position to manage the increasing complexity in the supply chain area. The roll-out of the lead transport provider concept (implemented at Airbus since 2009) in Eurocopter, Airbus Military and Cassidian is ongoing. The consolidation of all transport needs within the EADS Group by using one supplier is a major step to increase transparency and visibility of the supply chain, plants as well as customer. s u p p l y chain management I II/ 2013 93

Speakers and Experts How digitalization changes the airline industry a show case Alexander Plümacher, Managing Director, Jettainer GmbH Increasing competition on attractive routes, rising fuel costs and regulatory fees result in the need for airlines to continue their search for cost reduction potential. While traditional cost optimization measures will always remain necessary, new opportunities for efficiency gains become increasingly relevant. It is the technological progress that provides new levers for realizing efficiency gains. In business-to-consumer processes those new opportunities are consistently gaining ground and have already produced new solutions with game changing quality. The business-to-business environment, however, at times appears to lag behind in the skill to implement innovations that leverage the significant potential brought by digitalization, social media and worldwide connectivity access. Now, innovations brought by digitalization show increasing potential for companies in the aviation industry to integrate along the value chain and generate efficiencies. Two key criteria need to be addressed in order for the innovation to be successful: First, excellence in technology and IT is necessary in order to ensure stable performance from day one of operation in an industry where success depends on smooth operations and efficient hand-over from one party to the next. And, secondly, developing a business model that clearly addresses the needs of all involved parties: clients, end customers, IT providers as well as third parties such as regulatory institutions. Long-term customer client partnership Jettainer and KPMG have successfully translated the aviation industry s demand for user-friendly, efficiencyincreasing solutions into an innovative use case: As part of a project, JettApp, an integrated app for ground handling was developed to be used via tablet PC. JettApp structures paper-based ground handling processes and increases speed and efficiency of numerous activities. A viable business model with clear profit and customer focus was defined in order to address requirements of cargo carriers, ground handlers and Jettainer. About Jettainer Jettainer is the leading international service partner for outsourced ULD management. This compromises the purchase and pooling of ULDs, their maintenance, an IT solution for all stations involved, and the entire daily operational management. Speaker ALEXANDER PLÜMACHER was appointed Managing Director at Lufthansa for the subsidiary company Jettainer GmbH in 2008. Following graduation from the University of Trier, University of Manchester and Grande Ecole de Commerce (IECS) Strasbourg in Business Administration, Alexander Plümacher started his professional career with Bertelsmann in 1998. Alexander Plümacher Jettainer GmbH Am Prime Parc 17 65479 Raunheim Germany www.jettainer.com Our aviation industry is flying fast and within our network there are 3,500 daily flights in a dense global network spanning 350 airports worldwide. We keep the flow of containers and pallets running and deliver outperforming results and performance and cost, daily from 7 different operational locations, and stay at the heartbeat of our partners businesses. About KPMG KPMG is one of the leading auditing and advisory firms and assists clients with high specialist knowledge about the aviation industry and with a wide set of experiences from numerous projects completed in that sector. As an integrated management consultancy, KPMG offers tailored solutions concerning development of new business models, sales effectiveness, supply chain management and outsourcing strategies. 94 s u p p l y chain management I II/ 2013

Speakers and Experts Airsupply: platform for Airbus the A&D industry Markus Quicken, CEO, SupplyOn AG Strongly collaborative and intensive cooperation with suppliers and high quality requirements are the hallmarks of the aerospace industry. To be successful it requires not only continuous process improvement but also the seamless integration of external partners and suppliers into business processes. SupplyOn, the leading platform for cross-company collaboration in the manufacturing industry, worked closely with Airbus to develop such a platform for the aerospace industy, called AirSupply. This platform is available to the entire European A&D industry in order to optimize collaborative ordering and supply chain management processes. The suppliers to Airbus will also be using AirSupply to enhance collaboration with their own suppliers. This endto-end data flow over several levels of the supply chain will bring greater stability to SCM processes by permitting early identification and elimination of any bottlenecks. Expert MARKUS QUICKEN is Chief Executive Officer of SupplyOn and responsible for Sales and Customer Services as well as Finance & Controlling. Before joining SupplyOn in 2000 he was employed at the Mannesmann Group. He is a certified engineer and studied electrical engineering, specialising in communication engineering, at the RWTH (Rhine Westphalia Technical College) in Aachen. Functionalities of AirSupply AirSupply provides optimum support for the collaborative SCM processes between customers and suppliers typically found in the aerospace industry. Individually configurable notification and filter functions make for efficient, exception-based methods of working. The solution supports foresighted capacity planning, interactive fine tuning of delivery quantities and delivery dates, order and delivery status tracking, as well as the consumption-controlled logistics concept Vendor Managed Inventory. Significance of AirSupply The development of AirSupply is rooted in an initiative to standardize processes and data formats within the European aerospace industry. To this end, Airbus, Dassault Aviation, EADS, Safran and Thales have founded the company BoostAeroSpace. The aim of this joint venture is, among other things, to communicate with suppliers across several levels via a central aerospace SCM platform. AirSupply is not only being used at Airbus but also at Eurocopter, Astrium and ATR, as well as at the EADS subsidiaries Premium Aerotec and Aerolia. Other companies in the aerospace industry, such as Aircelle, which belongs to the Safran Group, and Liebherr Aerospace also use the AirSupply solution. Markus Quicken SupplyOn AG Ludwigstr. 49, 85399 Hallbergmoos Germany www.supplyon.com About SupplyOn SupplyOn is the leading platform for cross-company collaboration in the manufacturing industry and enables transparent, reliable and cost-efficient handling of business processes with partners and suppliers. SupplyOn s industry solutions are significantly more efficient compared to internally or externally operated individual solutions. SupplyOn is a global benchmark for the electronic planning and handling of cross-company business processes. More than 10,000 companies from 70 countries use SupplyOn s global company network, including renowned industrial companies such as Airbus, Astrium, BMW Group, BorgWarner, Bosch, Continental, DEUTZ, Eurocopter, ITT, Kautex Textron, Liebherr, Safran, Schaeffler, Schindler, Thales, Yazaki and ZF. The company generated sales revenues of 31 million in 2012. s u p p l y chain management I II/ 2013 95

Speakers and Experts Leveraging Boeing s global supply chain to build competitive advantage Jenette Ramos, Vice President, Supply Chain Management, Boeing Commercial Airplanes Boeing Commercial Airplanes relies on more than 1,500 tier one suppliers in nearly 40 countries around the world to build its expanding line of highly efficient commercial aircraft. In the past three years Boeing has increased its production rates by 40 percent to meet growing market demands. Over the next two years those rates will increase another 20 percent. To manage this unprecedented escalation in manufacturing, Boeing closely collaborates with suppliers to ensure they have the resources in place to support expanded production. Building a Boeing jetliner takes many parts from roughly 400,000 in a 737 to about 6 million in a 747 that are provided by Boeing and its supplier partners around the world. Approximately 2.3 million parts come together in the company s newest 787 Dreamliner. Bringing parts into the production system for a commercial jetliner, from simple but critical items such as fasteners, to the complex engines that power the airplanes skyward, is no easy task. Boeing uses a robust, disciplined and proven process to ensure parts and services meet all specifications for quality and performance and reach the company s factories on time. The result is a growing, high performing global supply chain that has successfully supported Boeing s production increases while at the same time reducing parts shortages to all-time lows. The Boeing philosophy of supply chain management is to assemble world class companies who, through their resources and innovation, bring value to Boeing and its airline customers. Boeing works closely with its supplier partners to provide resources in the areas of aggregated purchasing, production improvements through Lean and other tools, and sub tier management to create an environment of continuous improvement in its supply chain. To address customer requirements for greater affordability, Boeing is now engaging its suppliers in a program to reduce inherent supply chain costs through improved airplane design, production methods and leveraged purchasing. Partnering for Success is designed to improve affordability to the mutual benefit of Boeing and its suppliers, as well as airline customers. The Boeing supply chain is well positioned to take advantage of the robust demand for commercial aircraft over the next 20 years. Expert JENETTE RAMOS is vice president, Supply Chain Management, for Boeing Commercial Airplanes. In this role Ramos leads Supplier Management commodity groups in their work with supplier partners. Jenette is a graduate of the Harvard Business School Advanced Management Program, has a master s degree in business from Seattle Pacific University and a bachelor of science degree from Washington State University. Jenette Ramos Boeing Commercial Airplanes Everett, WA USA www.boeing.com About Boeing Boeing has been the premier manufacturer of commercial jetliners for more than 40 years. With the merger of Boeing and McDonnell Douglas in 1997, Boeing s leadership in commercial jets, joined with the lineage of Douglas airplanes, gives the combined company a 70-year heritage of leadership in commercial aviation. Today, the main commercial products are the 737, 747, 767, 777 families of airplanes, the 787-8 Dreamliner and the Boeing Business Jet. New product development efforts are focused on the Boeing 777X, the 737 MAX, the 787-9 and 787-10 Dreamliner. The company has nearly 12,000 commercial jetliners in service worldwide, which is roughly 75 percent of the world fleet. 96 s u p p l y chain management I II/ 2013

Speakers and Experts Airplane Doors Supply Chain in Asia, Europe and Latin America Dr.-Ing. Michael Rehmet, Vice President Airplane Door Systems, Eurocopter Deutschland GmbH While globalization of the supply chain from an OEM point of view is necessary for market development by creation of local content, for a tier 1 supplier the motivations are different. With increasing competitive pressure, resource need to cover the ramp-up and available financing to cover NRC, an optimized share of work content in different locations is necessary to secure deliveries and minimize total cost of acquisition. For mature, relatively simple products in the high volume programs, production or parts of the production need to be placed in best cost countries by todays suppliers, in order to stay competitive. Otherwise it is commercially attractive for the OEM to source directly. This is done either by contracting an external supplier or by building up own facilities in suitable locations. For the more complex products, lean production concepts for assembly in Europe are necessary, eventually combined with externalized parts and sub-assembly production. New products, especially those involving new technologies, are developed and industrialized in Europe. If more classical technologies are requested, global risk share partners can be considered. At Eurocopter the industrial strategy within the Business Center Airplane Doors Systems considers all these options. Airplane Doors are very complex aerostructure parts. The structural part, consisting of outer-skin and load-carrying underlying structure, is in principle similar to fuselage structures, with smaller dimensions. Integrated in high density are complex mechanisms to lift, latch and lock the door, to secure the emergency opening and to release the emergency evacuation slides, mounted on the door or in the fuselage Comparing product volume, product cost and labor share in it, doors are often seen as ideal products to grow local content outside Europe by transferring build to print work packages or involve risk sharing partners in the development for new products. Complete assemblies of simpler, high volume products are sourced in Eastern Europe and China. Moreover a Eurocopter owned facility is opened in Mexico to fully utilize cost advantages while having better control on delivery and quality performance as well as on employee capabilities. Expert DR.-ING. MICHAEL A. REHMET is leading the Buiness Center Airplane Doors Systems in Eurocopter since 2009. He is responsible for offering, developing, producing and supporting passenger access doors and cargo doors for commercial Airbus aircraft and for the Mitsubishi Regional Jet. This includes Management of a global supply chain in Europe, Asia and Latin America. Dr.-Ing. Michael Rehmet Eurocopter Deutschland GmbH 86607 Donauwörth Germany www.eurocopter.com Highly industrialized companies in Korea and Japan are design and build risk share partners. For the more complex products, tacted production lines being able to deal with all variants of one family of aircraft have been implemented in Europe and automation is used. These lines are following LEAN principles (continuous improvement, visual team management, optimized material flows, workload balancing ) with an optimized combination of internal and external sources for single parts supply. By this mix of solutions, the product portfolio could be kept and extended. The efforts and the investments in supply chain quality and performance management and supplier development must not be underestimated, especially the purchaser needs to be well aware of the extra efforts for education and supplier development at new risk sharing partners and global suppliers. s u p p l y chain management I II/ 2013 97

Speakers and Experts Expectations on our core partners for the next decade of joint business Dr.-Ing. Klaus Richter, Executive Vice President Airbus Procurement 2013 will be yet another successful year for Airbus. The company will deliver over 600 aircraft and continues to build up an impressive order book today worth over 760 billion US$ thanks to a new, innovative product portfolio including the A320 NEO and the A350 XWB. At the same time, international competition in the aircraft market is rising. For Airbus, this implies the need to align with its supply chain on the important challenges for the next successful decade of joint business. In the short-term, the A350 XWB will now have to be mature enough during the ramp-up phase and evolution towards series production. In parallel, the emphasis will be on containing recurring cost (RC) to avoid critical cost overruns at the start of the programme. With regards to the A320 NEO, following a record order intake of over 2,400 aircraft since its launch, the programme is now sold out until 2020. Production ramp-up to full rate will be done in only 30 months, i.e. the transition from the CEO, the current version, to the new model NEO will require an industrial stability of the overall system and reactivitiy/flexibility for the affected supply chain, notably for engine, pylon and related systems. On a mid-term horizon, Airbus product portfolio will now be stable for a certain time. In this context, two key aspects are part of the strategic supply chain challenges for the next decade: Firstly, cost competitiveness will remain a fundamental aspect reflected through inititatives such as the mentioned A350 RC convergence project, material & parts end-to-end added value/vertical integration, aerostructure double sourcing and cabin strategy. Secondly, constant and incremental innovation linked to the existing portfolio will be needed including activities with the supply chain, for example in areas such as avionics & systems, air traffic management, cabin, connectivity or aerodynamics. Airbus has started intensive discussions on innovation topics with its key partners and is assessing new ways of collaboration to bring these innovations to the market together with its suppliers. Twenty years ago, Airbus suppliers delivered one ship set a week; today they deliver three per day. In the future, Airbus will need technically and financially strong partners, having both the critical mass and the ability to share risks & opportunities for new and continuous developments. They Speaker DR.-ING. KLAUS RICHTER was appointed EVP Procurement at Airbus in 2007 and is in charge of all procurement across the entire Airbus organization. Following graduation from the Technical University of Munich in mechanical engineering and two years of re-search in the USA, Klaus Richter began his professional career with McKinsey in 1993 until he joined the BMW Group. Dr.-Ing. Klaus Richter Airbus S.A.S. 1 rond-point Maurice Bellonte 31707 Blagnac Cedex France www.airbus.com will need to remain competitive in the context of real industrial series business and in times of increasing cost pressure and need for innovation. About Airbus Airbus is a leading aircraft manufacturer with about 60,000 employees and a worldwide presence. The product line covers a full spectrum of aircraft families from a 100- seat single aisle to the double deck A380. In 2012, Airbus achieved a turnover of 39 billion Euros, and it has captured since its creation more than 13,500 orders from over 360 customers around the world. Headquartered in Toulouse, Airbus is owned by EADS. 98 s u p p l y chain management I II/ 2013

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Speakers and Experts Propulsion: Managing the Global Supplier Network of the Engine OEMs Prof. Dr. Holger Schiele, Chair of Technology Management - Innovation of Operations, University of Twente Challenges in a global supply network Since the 1990 s many industries saw a tendency to outsource activities previously done with domestic suppliers to an international network. However, the initial euphoria has given way to a much more differentiated picture. Many such agreements fail, without any apparent clue as to why this happened. Usually, a whole plethora of issues contribute, such as a lack of competence by the supplier, changing demands by the customer or incomplete contracts. One often overlooked issue, though, seems to be the willingness of the supplier to treat that particular customer as their preferred customer and award the necessary attention. Being a preferred customer or not explains part of the difficulties arising in global sourcing arrangements. At the same time, understanding the chance to become a preferred customer of key suppliers may be a key to successful supply chain configuration. Research has indicated that it is more difficult to be a preferred customer from an international supplier as compared to a domestic supplier. Moderator PROF. DR. HABIL. HOLGER SCHIELE is Diplom-Ökonom (Master of Economics and Business Administration). Before joining academia, he worked for ten years in industry with Preussag AG, PWC and h&z business consulting. Currently he holds the chair of Technology Management - Innovation in Purchasing, Production and Logistics at the University of Twente in Enschede (NL). Being a preferred customer of suppliers A firm has preferred customer status with a supplier when the supplier ensures preferential resource allocation to satisfy the buyer. What is meant by preferential resource allocation? For instance, the supplier dedicates its best personnel to join new product development or customizes its products in accordance with the preferred customer s wishes. The supplier may also offer innovations to this firm first or even enter into an exclusive agreement. The supplier may also ensure privileged treatment when constraints in production capacity result in bottlenecks (effectively on the expense of the less preferred, regular customers). From a preferred customer perspective successfully managing an international supplier network will depend on answers to the following questions: Are we as buyer sufficiently attractive for the suppliers to get their prime attention? Who are the other customers our (potential) partner is serving? Can we ensure to be treated better than them, in order to achieve a competitive advantage in case of them being our competitors? If these questions are answered negatively, domestic suppliers or even in-house solutions may have to be seriously considered. Prof. Dr. Holger Schiele University of Twente Hallenweg 17 7522 NH Enschede The Netherlands www.utwente.nl/mb/ba/staff/schiele/ The University of Twente The University of Twente is located in Enschede, next to the German border. It is one of the three technical universities of the Netherlands, combining technical and managerial approaches in a unique way. One of the university s expertise centers, to which the Chair of Technology Management belongs, is UTIPS The University of Twente Initiative for Purchasing Studies. UTIPS brings together scholars from three departments working on supply management issues, such as supply chain configuration and global sourcing. It has been recognized as one of five centers of excellence by the IPSERA association. 100 s u p p l y chain management I II/ 2013

Speakers and Experts On the Threshold of Series Production Oliver Schmidt, Director Automotive & Aerospace, PSIPENTA Software Systems GmbH Aerospace manufacturers, suppliers or providers of technical solutions have to identify, consider and respond to a great range of economic and security challenges. Thus, increasing the efficiency of production and logistics processes as well as maintenance procedures has become a major factor for success. As a specialist for Software for Perfection in Production PSIPENTA recognized that in supply chain management or service processes there tends to be a huge potential for optimization by a modern software system. Making reliable manufacturing more efficient PSIpenta Enterprise Resource Planning (ERP) suite is designed for optimizing manufacturing processes of companies who supply products to the aerospace industry. The solution goes beyond traditional ERP-Systems, providing software modules such as project management, order management, adaptive planning and others. PSIpenta Planning, Execution & Control (PEC) refers to a solution-oriented approach based on standardized software modules. It enables the optimization of value-adding processes and increases logistic planning in existing system landscapes with a commercial focus. All modules can be comprehensively integrated into an existing software landscape via the PSIintegration standard interface. Powered by SAP, NetWeaver certification ensures compatibility with SAP. EURO-COMPOSITES Group, a specialist for the production of complex composites, Groth Luftfahrt- und Systemtechnik GmbH, manufacturer of galley and lavatory equipment, or E.I.S. Aircraft GmbH, specialist for cabin components, are examples of successful customer cooperations in this field of business. They optimize their production processes by the use of PSIpenta ERP. Speeding up MRO processes The PSIpenta suite supports the planning and control of maintenance and servicing processes. The scope of PSIpenta suite covers the whole MRO process ranging from slot planning, space parts logistics, skill management and hangar planning to mobile processes. The software monitors service cycles and coordinates the maintenance of machines, complex systems and other technical equipment. By using the software, the aviation industry can optimize maintenance intervals, reduce turn- Expert OLIVER K. SCHMIDT has been appointed Director Automotive & Aerospace in 2012 in order to develop the automotive and aerospace market. Coming from the aerospace business, he is an experienced IT expert for this sector today. He worked as Director Business Development at PSIPENTA, Manager for Master Scheduling at BMW Rolls-Royce Aero Engines and Supply Chain officer at Krone AG. Oliver K. Schmidt PSIPENTA Software Systems GmbH Dircksenstraße 42-44 10178 Berlin, Germany www.psipenta.de around time and increase the reliability of own operational processes or those of their clients. One of our prominent MRO-client is the SR Technics Group. Planning software optimizes the entire maintenance planning and implementation in the hangars at their Zurich and Malta sites. PSIPENTA at a glance PSIPENTA is the only software company that offers the complete solution portfolio of an ERP and Manufacturing Execution System. The solutions are focused on the aerospace industry, mechanical and plant engineering as well as the automotive industry. In 1997 PSIPENTA Software Systems GmbH emerged as the wholly owned subsidiary of PSI AG, which was established in 1969. PSI AG also offers high-performance control systems for energy and infrastructure management. In total, PSI AG employs over 1,500 people who generate an annual turnover of approx. 150 million. s u p p l y chain management I II/ 2013 101

Speakers and Experts Challenges ahead of the national supply chain Dietmar Schrick, Managing Director, BDLI/ German Aerospace Industries Association The BDLI with more than 210 member companies represents the interests of an industrial sector which is one of the drivers of national economic growth. Our industry creates and safeguards highly-skilled jobs in Germany, combines almost all strategic key technologies and achieved a turnover of 28.4 billion with a directly employed labor force of more than 100,000 in 2012. Full order book Although the order book of German Aerospace companies is still dominated by the OEMs like Airbus, Eurocopter and Cassidian, quite a number of German suppliers have contractual links with system companies from abroad. Most of them intend to extend their customer base as one of the prerequisites exists: a good competitive market position. And due to a quickly-growing global demand, the civil aircraft industry is envisaging an excellent long-term perspective. With more than 5000 aircraft in the order book of Airbus, the production for the next 7 to 8 years is safe assuming that no severe market crisis will occur. This goes along with a range of challenges. Challenges ahead These splendid market perspectives go along with some challenges that the supplier industry is facing. The ramp-up of production rates in nearly all of the civil series programmes, further pressure on consolidation, globalization, constant cost pressure, the lack of qualified employees in some areas of Germany, the euro-dollar ratio, to name only a few of them. And the Airbus New Systems Policy (NSP) is still an ongoing topic, resulting in a reshaping of responsibilities, contractual links, higher and modular expertise into a cascaded global supply chain. Risk reduction, fair risk and revenue partnership models and tailored contracting are key issues for all involved parties. German suppliers involved in military programmes experience a different kind of scenario. Flat budgets, reduced number of military aircraft fleets and the lack of new development programmes might lead to a downswing of activities, reduction of employees and a creeping process of losing competencies. Fortunately the German customer has decided to start a dialog with the industry to develop a joint strategy for the military aircraft activities. Speaker DIETMAR SCHRICK is Managing Director of German Aerospace Industries Association (BDLI). Before changing to BDLI, he was Member of the Executive Board of EADS Military Air Systems, Director of Manching Plant and of Dornier Flugzeugwerft. He had several leading positions in Business Development, Marketing and Foreign Relations within MBB, DASA and EADS. Dietmar Schrick holds a degree in Engineering and a degree in Business Administration. Dietmar Schrick Bundesverband der Deutschen Luft- und Raumfahrt industrie e.v. (BDLI)/ German Aerospace Industries Association ATRIUM Friedrichstraße 60 10117 Berlin Germany www.bdli.de Innovation, consolidation The BDLI is actively involved in these processes on different levels, for example through representation of the supplier industry in its board, by means of eye-level platforms for OEMs and suppliers within the BDLI, through dedicated working groups for engineering service suppliers and through specific research on the national supplier segment. Furthermore the BDLI has successfully started a campaign at all the 16,000 grammar schools in Germany. They have the possibility to conduct technical experiments in order to experience aerospace at kids-level. Of course the result of that campaign will be seen within a decade when these young kids might enter their professional life hopefully in the Aerospace Industry! 102 s u p p l y chain management I II/ 2013

Speakers and Experts Air Traffic Management: A systems approach Prof. Dr. Hans-Gerhard Seeba, Professor for Automotive Management, Ostfalia University of Applied Sciences Basics According to EUROCONTROL flying is the result of both technological and human skills. Air traffic management (ATM) is about the processes, procedures and resources which are vital to ensure that aircrafts are safely guided through the skies and on the ground. Therefore ATM encompasses all systems that assist aircraft to depart from an airport, transit airspace, and arrive at a destination airport. Complementary Subsystems are: n Air Space Management (ASM), i.e. all activities to provide the best and shortest routes for the increasing number of flights by using all available flight space. To achieve this goal, the individual requirements of civil commercial air traffic, civil non-commercial air traffic and military air traffic have to be met. n Air traffic flow and capacity management (ATFCM), i.e. the activities to match the flights with the available capacity as only a certain number of flights can be safely handled at any one time. n Air traffic services (ATS), i.e. activities relating to the operation of flights including air traffic control (ATC), flight information service (FIS) and alerting service (ALRS). In Europe, air traffic control is carried out by the air traffic control centers (ACCs) located in each country, which guide aircraft in and out of airports. Moderator PROF. DR. HANS-GERHARD SEEBA is Professor of Automotive Management at Ost falia University of Applied Sciences at Campus Wolfsburg. In addition he is Chairman of the International Car Distribution Programme (ICDP) and is a Lecturer at the AutoUni of Volkswagen which provides training programs for senior managers in the component factories and sales departments. Prof. Dr. Hans-Gerhard Seeba Ostfalia University of Applied Sciences Siegfried-Ehlers-Straße 1 38440 Wolfsburg Germany www.ostfalia.de/w Challenges for air traffic management Air traffic continues to grow, reaching almost 5 billion passengers per year worldwide. In Europe alone over 40,000 flights per day are predicted for 2020. More customers with higher expectations are therefore placing tremendous pressure on the aviation industry. Additionally, rising fuel prices and environmental restrictions are dominant factors when ordering new and technologically advanced aircrafts by the airline companies. But reducing flight costs, for example the cost of kerosene, is not only a matter of fuel efficiency for new aircrafts but also a task for air traffic management. Keeping aircrafts on the ground and/or in holding patterns can jeopardize the economic efficiency of the respective flight. Whilst the security of passengers remains paramount, air traffic management becomes an integral part of the travel value chain. Limiting factors which air transportation systems need to overcome For many years the most limiting factors for the architecture and efficient management of airspace systems have been apparent, i.e. inefficient airspace utilization, increased air traffic control (ATC) workload as well as the obsolete and country specific fragmented technology. Functional airspace blocks (FABs) are being created, marking another step towards building a single sky for a region. The EU s Single European Sky (SES) legislative package defines FABs as airspace blocks based on operational requirements and are established regardless of State boundaries. Also hybrid control systems in which aircrafts choose their own optimal routes, altitudes and velocities within a given framework of harmonized global control systems are solutions to optimize and to renew air traffic management. s u p p l y chain management I II/ 2013 103

be global. be one. oneworld is proud to be the official airline alliance of The Aviation Forum 2013. The oneworld network covers almost 900 destinations in 150 countries, so we can get you anywhere you need to be. Learn more at oneworld.com an alliance of the world's leading airlines working as one. airberlin American Airlines British Airways Cathay Pacific Finnair Iberia Japan Airlines LAN Malaysia Airlines Qantas Qatar Airways Royal Jordanian S7 Airlines oneworld benefits are available only to passengers on scheduled flights that are both marketed and operated by a oneworld member airline (marketed means that there must be a oneworld member airline s flight number on your ticket). For information on oneworld, visit www.oneworld.com. Air Berlin, American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Malaysia Airlines, Qantas, Qatar Airways, Royal Jordanian, S7 Airlines, and oneworld are trademarks of their respective companies.

Speakers and Experts Mobile a top destination for Foreign Direct Investment Sandy Stimpson, Mayor, City of Mobile, Alabama Sandy Stimpson is a lifelong resident of Mobile, Ala., who was elected Mayor in August 2013. Mayor Stimpson spent his entire working career with Gulf Lumber Company and its successor, Scotch & Gulf Lumber LLC, resigning as Executive Vice President before taking office as mayor on Nov. 4. Stimpson s business and civic endeavors are numerous and varied, including his membership on the boards of the Alabama Alliance of Business and Industry, the Business Council of Alabama and the Mobile Area Chamber of Commerce, in addition to charitable, educational and civic organizations. Stimpson s experience at Scotch & Gulf Lumber gives him a first-hand knowledge of the challenges it takes to build a successful business, including the hiring of personnel, managing a budget and dealing with environmental, tax and regulatory issues. Speaker SANDY STIMPSON was born in Mobile, Alabama in April 1952. Graduated University Military School 1970. Graduated from the University of Alabama in 1975; B.S. degree in Civil Engineering. Graduate of Leadership Alabama, 1992. Employed by Gulf Lumber Company 1975-2009; Scotch & Gulf Lumber LLC 2009 to present Executive Vice President Mayor, City of Mobile, Alabama 2013 takes office in Nov. As mayor, Stimpson is focused on establishing Mobile as the safest, most business and family-friendly city in America by 2020. Mayor Stimpson is a leader in the city s economic development efforts and has helped to establish Mobile as a top destination for Foreign Direct Investment eight of the city s 10 largest employers are global businesses. Sandy Stimpson City of Mobile, Alabama P.O. Box, Mobile AL 36633-1827 www.cityofmobile.org This is where you can register for our conferences, purchase conference materials and apply for copies of the Magazine SUPPLY CHAIN MANAGEMENT TM! www.ipm-scm.com/shop s u p p l y chain management I II/ 2013 105

Speakers and Experts Managing Growth A Continuous Challenge Prof. Dr. Matthias Tomenendal, Director, IMB Institute of Management Berlin Generic Growth Drivers Corporate growth is typically driven by a combination of exogenous and endogenous factors. The actual combination is individual to each company, which means that there is no common recipe for success. This is especially true in the long run. Recent reviews of academic literature have revealed a wide array of circumstances which enable or hamper growth for certain types of companies. Generically speaking though, growth is supported by an effective market strategy and the establishment of an organizational growth identity. The External Environment: Serving an Attractive Market According to the market-based view of strategic management the markets served determine a company s success and growth prospects. Therefore corporate managers should segment the market intelligently and target attractive, high-growth segments. Dimensions for segmentation can be, among others, products and services, value-added steps, regions, customer groups or technologies. Penetrating existing market segments, developing new product segments or customer groups and diversifying are typical growth strategies. Competitive advantage is achieved by detecting attractive market segments earlier than the competition or by serving these segments better. Speaker PROF. DR. MATTHIAS TOMENENDAL is Professor of Management and Consulting at the Berlin School of Economics and Law and the Director of the IMB Institute of Management Berlin. He holds business degrees from the Universities of Bielefeld, Georgia (USA) and Saarland and has worked as a strategy consultant for the Boston Consulting Group. Prof. Dr. Matthias Tomenendal IMB Institute of Management Berlin Badensche Straße 50-51 10825 Berlin Germany www.mba-berlin.de The Internal Challenge: Fostering a Growth Identity According to the resource-based view of strategic management corporate success is determined by the quality of internal company resources. Competitive advantage is achieved by deploying superior resources. Gaining and maintaining superior resources is the key challenge for corporate managers. It is widely acknowledged that resources need to be rare as well as difficult to imitate and to substitute in order to qualify for strategic resources. It seems that immaterial resources can be very valuable in this respect. A unique organizational identity which is defined as company characteristics that company members believe to be central, distinctive and enduring can be such a valuable immaterial resource. A coherent identity across an organization, e.g. based on a common vision and customer-focused values can foster growth. Many high-growth companies have very distinct growth identities. Maintaining the iden- tity while tremendously growing is challenging. So-called transformational leaders, who are moral exemplars of working towards the benefit of the team and the organization, can meet this challenge and support the continuous development of a growth identity. The Berlin School of Economics and Law (BSEL) The BSEL is among Germany s leading universities of applied sciences specialized in private and public management. Almost 10,000 students are being taught in 50 study programmes leading to Bachelor, M.A., M.Sc., L.L.M. or MBA degrees. The IMB Institute of Management runs the school s programmes in continued international management education. The institute s MBA programme has recently been awarded accreditation by the internationally renowned Association of MBAs (AMBA). 106 s u p p l y chain management I II/ 2013

Success Factor Qualification Your employees know-how determines your company s success. The capability of learning is a core competence for industrial and service oriented companies. IPM GmbH supports its customers to develop a strategic training and learning culture and to implement appropriate knowledge management structures for long term success. Topics of qualification are Innovation, Globalization, Supply, Logistics and Supply Chain Management. Definition of Requirements Concept Development Implementation Supervision Institute for Production Management IPM GmbH Donarweg 6 D-30657 Hannover Fon +49 511 47314790 Fax +49 511 47314791 mail@ipm-scm.com www.ipm-scm.com

Speakers and Experts Enlargement of existing supply chains with Best Value Country Sourcing Dr.-Ing. Sylvia Trage, Senior Manager, KPMG AG Faced with rising production volumes aircraft producers have to manage their globalized supply chains very carefully in order to anticipate and to avoid supply chain risks. It is necessary to ensure that suppliers worldwide deliver reliable quality on time and at optimized costs. Successful supply relationships based on partnerships need a suitable organization which is capable of developing suppliers. Committees and decision processes for controlling the supplier management have to be set-up and should be tested with selected pilot suppliers. Pressure on existing production capacities often results in building up additional suppliers in different regions that have suitable technological and financial capabilities. Such global sourcing activities underwent a paradigm shift over the last 20 years away from so-called low cost country sourcing (LCCS) to best value country sourcing (BVCS). The focus of LCCS continued to be on a short-term strategy to select suppliers solely on the basis of cost advantages and to predominantly exploit the labour cost advantages of various countries; whereby the principle of total cost of ownership, the comprehensive consideration of all costs incurred, has gained ground over the last years. Today s BVCS utilizes a long-term approach which analyzes costs and productivity along the supply chain, quality and logistics aspects, local content requirements, compensation transactions or natural hedging in order to achieve sustainable increases in value. A clearly structured process is necessary for the effective application of the value driver BVCS. Initially, a detailed analysis of the purchasing volume, individual groups of goods and cross-functional requirements must exist. The central question here is which volumes and which products are even suitable for global sourcing. It is recommended to select appropriate pilot studies. Then the actual tendering process can begin with the identification of suppliers, questioning of technical competencies, requests for representative parts and supplier evaluations. Potential suppliers must be systematically integrated and built up in the course of a quality assurance process. This frequently includes technical support of the supplier at their location. In-depth knowledge of country-specific mentalities and patience, endurance and investment is required. Thus, Expert DR.-ING. SYLVIA TRAGE is senior manager at KPMG in the Strategy & Operations consulting business with focus on optimization of globalized supply chains and Industrial Footprint. After graduation from the Technical University of Darmstadt she began her professional career with Roland Berger Strategy Consultants and Siemens before specializing in SCM consulting services in 2000. Dr.-Ing. Sylvia Trage KPMG AG Ganghoferstrasse 29 80339 Munich Germany www.kpmg.com the decline of documents such as surveys, confidentiality agreements or proposals can be very sparse. Proposals often require multiple loops of communication. The specifications of many parts are not designed for emerging markets. Materials such as some types of steel or aluminum alloys are not available in many BVCS countries. Compliance with low tolerance is sometimes problematic due to the existing machinery. Modern manufacturing techniques with appropriate know-how of tools and setting parameters to achieve suitable tooling settings are frequently lacking. But, when these features are heeded, savings can be realized in double-digit percents, which, for example, can amount to 20 to 30 percent in product groups. 108 s u p p l y chain management I II/ 2013

Speakers and Experts Risk and Growth Management involving Aircrafts Jan Vana, Director, WheelTug plc Current commercial aviation practice utilizes a tug for aircraft gate pushback, while forward taxi is powered by the aircraft s engines. The electric WheelTug unit drives the aircraft without using the engines. The patented and proprietary WheelTug system uses high-performance electric motors installed in nose gear wheels of an aircraft, providing full mobility while on the ground without the use of the aircraft s jet engines or external tugs for both pushback and taxi operations. WheelTug enables aircraft to be electrically driven from the terminal gate to the takeoff runway, and upon landing to the gate. In addition to lower ground operation fuel consumption, other benefits of the WheelTug aircraft drive systems include: removal of the time and safety costs of the use of ground tugs, substantially reduced CO 2, NO x and other emissions, increased safety and flexibility of operations, faster turnaround times, reduced engine wear and repair costs, and decreased noise pollution. Expert JAN VÁŇA, a former jet pilot, Deputy Minister of Defense and member of the Czech Airlines Board of Directors, joined WheelTug plc. in 2009 as the Director of Business Development. His responsibilities include relationship development with airlines/aircraft operators, airports, ANSPs, MROs; the training of personnel, WheelTug sales and marketing, and European operations. WheelTug DRIVING AEROSPACE Besides multiple benefits for airlines WheelTug provides efficiency benefits for airports including increasing capacity especially at curfew controlled airports as engine start can occur near to the runway instead of at the gate which will result in more flights per day. Combining the benefits of the WheelTug Twist with the reduction in brake heating that results from not having to use the brakes on taxi-in to counter engine thrust, turnaround time can be reduced by as much as 17 minutes. While the WheelTug Twist allows the plane to rotate 90 degrees at the gate so that an aircraft can be parked sideways instead of nose in, and this allows for faster embarking/disembarking through two aircraft doors instead of just one. Then, at pushback, the aircraft can rotate a further 90 degrees to exit the gate by moving forward, effectively replacing pushback with drive out and keeping full control of the plane in the pilot s hands. WheelTug estimates the total savings at over US$1.1 million per aircraft per year. WheelTug Systems will be offered to the airlines entirely on a lease, or power-by-the-hour basis, so that the systems can be installed and operated on aircraft without any capital expenditure on the part of the airline whatsoever. As a retrofit system, WheelTug can be either installed or removed in two shifts. Ing. Jan Vana WheelTug plc Watergardens 5 Suite 16 000 00 Gibraltar Gibraltar www.wheeltug.com WheelTug plc successfully installed and tested the first in-wheel WheelTug in Prague in June 2012. The WheelTug s risk-sharing partners currently include Parker Aerospace for wheels; Resource Engineering Projects for software; Dynetic Systems for wheel motors; Co-Operative Industries for wire harness; Gables Engineering Inc. for cockpit interface; ICE Corporation for system controller; Endeavor Analysis for structural and system analysis; Newport Aeronautical Development for certification management; and ETA Global for kitting/ logistics. Videos describing the full benefits of WheelTug can be seen at www.media.wheeltug.com and include video of demos, tests, simulations, presentations, lectures, and interviews. s u p p l y chain management I II/ 2013 109

Speakers and Experts A First Tier Supplier in the Aerospace Industry Rainer von Borstel, Member of the Executive Board of Diehl Stiftung & Co. KG, President of Corporate Division Board Diehl Aerosystems Diehl Aerosystems is a first tier supplier for avionic solutions as well as a major partner for cabin integration in the aerospace industry worldwide, with customers including major aircraft manufacturers such as Airbus, Boeing, Bombardier, Eurocopter and Embraer, as well as manufacturers of military programs such as Tornado, Eurofighter and A400M. Diehl Aerosystems is one of five Corporate Divisions of the Diehl Group a family-owned German company with business activities in various industries, which employs more than 14,400 people all over the world. Within the Group, Diehl Aerosystems coordinates the activities of commercial and military aircraft. The division consists of four units Diehl Aerospace, Diehl Aircabin, Diehl Comfort Modules and Diehl Service Modules altogether with more than 4,000 employees and an annual turnover of more than 820 million Euros. The integrated product portfolio of Diehl Aerosystems consists of various avionic systems and cabin interiors elements. As part of avionic solutions for aircraft, Diehl Aerospace offers display systems graphics generation elements, flight and high lift control units, integrated modular avionics, doors and slides management systems and cabin lighting systems. Diehl Aerospace is a joint venture with Thales. Diehl Aircabin develops and assembles cabin interiors, such as the entire floor-to-floor lining which also includes luggage bins, crew rest compartments, monuments and air ducting. The company s areas of expertise range from the design, construction, manufacturing and qualification of cabin elements right through to the integration of system components. Diehl Aircabin is also involved in the manufacture of exclusive cabin equipment and furniture for VIP and corporate jets. Diehl Comfort Modules develops, designs, produces and overhauls high-quality cabin interior components for commercial aircraft. Lavatory systems, wash rooms and showers make up the core competence of the company. Diehl Service Modules is a specialist for designing, certifying, producing and delivering galleys, stowages, partitions and small monuments for both, linefit and retrofit installation. With its product range covered by the four units, Diehl Aerosystems has all major cabin interiors capabilities inhouse, which - in combination with avionics and cabin electronics generates a huge potential for technical integration Speaker RAINER VON BORSTEL is Member of the Executive Board of Diehl Stiftung and also President of Division Board Diehl Aerosystems since 2010. Before that he was Head of the Aerospace Division at industrial services supplier EDAG GmbH. He spent most of his previous professional career at aircraft manufacturer Airbus, where he held a number of increasingly senior positions. Rainer von Borstel Diehl Aerosystems Am Flugplatz 88471 Laupheim Germany www.diehl-aerosystems.de of products, i.e. weight and cost savings. Furthermore, scalable solutions from individual cabin products and systems to complete integrated cabin packages are available. Major challenges as a consequence of Diehl Aerosystems` development over the past 5 years are: a) stabilize supply chain in order to protect the ramp up of the aircraft manufacturers, b) encourage its own suppliers to consolidate as a measure to protect a stable supply chain, c) integrate its own business units to optimize processes and results. Diehl Aerosystems has proven to act as a consolidator in the market, however, has taken over additional risks thereby. Thus, 2nd and 3rd tier suppliers need to follow this consolidation. 110 s u p p l y chain management I II/ 2013

Save over $1,100,000 per year per aircraft (with no capital expenditure) Saves fuel and reduces emissions Reduces turnaround time and FOD Two shift retrofit installation Leased systems Removeable 731 delivery positions reserved as of 21 October 2013 Contact us for more information www.wheeltug.gi exec@wheeltug.gi +44 (0)20 7993 4293 +1 (410) 419-0082

Speakers and Experts Open Innovation: How to Integrate Suppliers in the Innovation Process? Univ.-Prof. Dr. Stephan M. Wagner, Chair of Logistics Management, ETH Zurich Innovation and Suppliers on Top of the Agenda Recent surveys revealed that innovating wisely is a key lever to gain competitive advantage in the aviation industry. PWC found that 64% of the senior executives stressed the importance of innovation as a source of competitive advantage while at the same time it can no longer come at any price (A&D Insights 2012). Roland Berger Strategy Consultants identified the management of the supply chain as a top priority in companies agendas (European A&D Top Management Issues Radar 2012). Combining these two priorities suggests that suppliers can play a critical role in enhancing product innovation in the aviation industry. In fact, aircraft manufacturers increasingly rely upon dedicated suppliers to design and develop components and subsystems which are integrated into the aircraft. This requires firms to further open up their innovation processes and liaise with suppliers during the innovation and new product development process. Critical Issues When Innovating With Suppliers Integrating suppliers in the innovation process is challenging and warrants to pay attention to numerous critical issues. Only a few are discussed here: First, firms need to have processes in place to support the identification and development of (mostly small-scale) suppliers who work on promising technologies and innovations. Such innovation scouting is necessary to identify technologies for future aircraft programs early and for being able to work with suppliers starting in the fuzzy front end phase of the innovation process. Second, aircraft manufacturers need creative ways to finance innovation, for example, by implementing riskand-revenue sharing contracts with suppliers. It is vital that the involved parties find tailored contracting arrangements that result in a fair sharing of risks and rewards, and do not overburden the suppliers. Third, being able to tap supplier innovation requires long-term orientation and collaborative buyer-supplier relationships. Our research shows that suppliers are more willing to offer innovative ideas if they can safeguard their Moderator PROF. DR. STEPHAN M. WAGNER is Full Professor, holds the Kuehne Foundationsponsored Chair of Logistics Management, and is Director of the Executive MBA in Supply Chain Management at the ETH Zurich. His supply chain, purchasing and logistics research focuses on topics related to strategy, networks, relationships, behavioral issues, risk, innovation, and entrepreneurship. Univ.-Prof. Dr. Stephan M. Wagner ETH Zurich Weinbergstrasse 56/58 8092 Zurich Switzerland www.scm.ethz.ch; www.mba-scm.org innovations through long-term contracts, ongoing relationships and cooperative behavior of the buying firm. Finally, aircraft programs where innovation and design are highly outsourced rely heavily on the ability to manage the complex network of interlocked technologies from different suppliers. That is, the more suppliers are involved in the innovation process, the more competencies are needed to run the projects and manage the relationships. Aircraft manufacturers need to get on the learning curve and improve their capabilities with respect to inter-organizational project management. Innovating wisely with suppliers is not limited to aircraft manufacturers, but will in the future have to be implemented at 1 st - and 2 nd -tier suppliers as well. Jet engine manufacturers like Rolls-Royce or MTU have already built up close ties with innovative suppliers that offer unique and special skills, and other suppliers in the industry will have to follow. 112 s u p p l y chain management I II/ 2013

Speakers and Experts SR Technics material availability solution at the speed of light André Wall, President, SR Technics Two of the key topics for airlines today are the delivery of an excellent customer experience and the realization of increased efficiency gains with all partners across the air transport value chain: from OEMs to MRO providers. Flights leaving on time and passengers arriving safely, without any delays, are where MRO providers can add value. With over 50% of technical delays due to component malfunction, the importance of component reliability is clear. In this respect SR Technics is best-in-class. In Airbus World s technical dispatch reliability figures for April 2013; all five of the top airlines, including easyjet (99.6%) and SWISS (99.5%) are SR Technics customers. Airlines are also increasingly placing a focus on components as assets. The facts show why. Components are slow-moving assets, requiring heavy capital investment (on average USDm 1.5m per aircraft), resulting in spare inventory accounting for around 10-20% of a mid-sized airline s overall assets. This creates financial risks as components bring a fixed cost of ownership burden, which is heavily exposed to fluctuating global market terms. Indeed, recent developments in the surplus market has seen average component values fall by around 30% on some platforms. In response, more and more airlines are turning to third parties to help them not only manage costs and risk, but also cash position with regards to component supply and availability management. Being able to offer guaranteed availability, outstanding technical reliability, as well as financial solutions can really become a game changer in today s market. In order minimize financial and operational risks and leverage the return on invested capital (ROIC) within the aviation industry, efficient global asset availability management is the key. SR Technics Global Material Operations Solutions (GMOS) aims to achieve this, enabling airlines to outsource the integrated component requirements from MRO through to financing. The improvement potential is high. Operating costs can be reduced by exploiting scale effects, and the overall cost structure can be streamlined by converting fixed into variable costs. At the same time, pooling allows reduction of capital expenditure, freeing up cash for investment into core operations. Speaker ANDRÉ WALL is President of SR Technics, which he joined in May 2009 as COO. Prior to this he served for two years as COO at Jet Aviation, Zurich. Before that he was CEO and President of MTU Maintenance in Berlin-Brandenburg, General Manager of Procurement and Production at Toyota and worked for eight years for Rolls-Royce Aero Engines, holding numerous management functions. André Wall SR Technics Flughofstrasse 8058 Zurich Airport Switzerland www.srtechnics.com SR Technics next step will be to look beyond existing business models and to provide complete aircraft and engine asset availability packages to airlines. This approach will reduce airlines financial commitment even further and enable them to fully focus on their core business: providing an excellent passenger experience in the air. The company SR Technics is a leading global technical solutions provider for airlines, with over 80 years experience. The company has almost 1,000 aircraft under an integrated component services agreement. It has nine logistics centers and 55 managed component consignment stocks, with around 40,000 components; and completes 35,000 in-house repairs annually. s u p p l y chain management I II/ 2013 113

Speakers and Experts From LEAN Production to LEAN Services Martti Wallin, Senior Vice President, Patria Aviation Oy Aerospace manufacturing has, during the last decade, witnessed a strong industry wide commitment to the various methods and tools associated with LEAN and other production systems originally developed within other serial manufacturing industries, automotive in particular. Even if the units produced in aerospace are usually fewer in quantities than serial manufacturing in general, the extreme technical complexity of aircraft and high unit cost mandate a systematic approach for continuous improvement of cost efficiency and competitiveness. The track record has shown that benchmarking other industries has been worthwhile and methods as well as tools have been successfully adapted to the aerospace manufacturing environment. The key for success is indeed in adapting rather than copying. The recipe for success is rarely in a particular template or metric it s in the mindset of the people in the organization: the specific way how continuous change is present in our daily work. Feasibility for MRO Services The cost pressure for new aircraft manufacture is equally applicable to the Maintenance, Repair and Overhaul Services, in some ways even more so. Hours spent at workshop are immediately taking the asset away from the revenue generating work and it is easy to consider this part of the aircraft Life Cycle as a waste that, by definition, should be eliminated. A significant amount of man hours and spare parts continue to be needed for Life Cycle Support services and the cost competitiveness thereof calls for a comparable approach to continuous improvement than what is currently the norm in manufacturing. One key difference between serial manufacturing and MRO services is the predictability and repeatability of the sequence of tasks at hand. Statement of Work for a repair activity has many steps that will be executed in a predetermined order, but the repairs and spare parts needed will eventually only be known once the work is started. While this makes planning more difficult, it only emphasizes the need to have proper tools and practices in place. Therefore, the focus needs to be on the parts of the process which add value as well as crtitically reviewing the non-value adding parts of the process. Once again the proven tools of serial manufacturing can provide a valuable benchmark, but case specific adaptation is needed. Expert MARTTI WALLIN was nominated the SVP of Patria Aviation in 2013 to implement lessons learned as an Airbus Supplier to Military Aviation MRO Business. Since getting his MSc of Aeronautical Engineering he has held several sales and management positions in aerospace and defence, lastly as the Managing Director of Patria Aerostructures Oy. Martti Wallin Patria Aviation Oy Linnavuorentie 2 37240 Linnavuori, Finland www.patria.fi The company Patria is a Finnish Aerospace and Defense company involved in manufacturing of armored vehicles, life cycle support for land, naval and airborne military assets, systems development and integration services as well as Design -Build supply of composite structures to Airbus. We are currently taking the continuous improvement methodology from civil aerospace manufacturing and applying the lessons learned to MRO services with the objective to improve value generated to the customer and to reduce cost at the same time. MEDIA KITS Download unter www.ipm-scm.com AVIATION 114 s u p p l y chain management I II/ 2013

Speakers and Experts AVIATION FORUM 2013: The communication platform in the aerospace industry Prof. Dr. Johannes Walther, CEO, Institute of Production Management (IPM) AVIATION FORUM Hamburg In 2013 the AVIATION FORUM takes place for the third time. It serves as a neutral academic platform for the communication between Airbus, its suppliers and other industry experts to continuously improve cost efficiency as well as quality and strengthening the relationship between players at the cutting edge of global supply chain knowledge. This forum facilitates knowledge exchange on an academic level with regard to the global topics of Supply Chain Management, especially concerning innovative procurement tools and methods. In this context IPM advances specific formats such as keynotes, presentations, workshops, panel discussions and organizes an accompanying exhibition based on the main issues of the conference. Dr. Klaus Richter, Executive Vice President Airbus Procurement, is patron of the AVIATION FORUM. Airbus S.A.S is the competence partner. Dr. Richter is also co-editor of the journal SUPPLY CHAIN MANAGEMENT TM AVIATION, which is published annually on the occasion of the AVIA- TION FORUM. Journal articles address the main subjects of the congress and showcase best practice examples from the aviation industry. Moreover, congress information and profiles of the conference speakers and experts are released, the latter including essential statements to the related topics as well as corporate information and contact data. With approximately 460 participants per day in 2013 the AVIATION FORUM is on its way to becoming the leading academic aerospace conference in Europe. On the first day of the congress (04.12.2013) attendees have the opportunity to visit the Airbus Finkenwerder Factory (A320 & A380) or the Airbus Logistics Material Center Hamburg. Aviation industry issues are covered in six interactive workshops, such as logistics management, global sourcing, MRO, SME s consolidation as well as open innovation, automotive best practices, globalization and innovation. Central issues of managing growth will be debated in a panel discussion. At the gala dinner Mr. Günther Butschek, Chief Operating Officer of Airbus will be the dinner speaker. On the second conference day (05.12.2013) thirteen presentations will focus on globalization and innovation as the main challenges of today s aerospace supply chains. In the accompanying exhibition suppliers, states and associations of the aviation Initiator PROF. DR. JOHANNES WALTHER is CEO of the Institute of Production Management (IPM), Professor of Production Management at the Ostfalia University of Applied Sciences and Member of the Advisory Board of the Institute of Procurement at the AutoUni of Volkswagen Group. IPM GmbH Institut für Produktionsmanagement Donarweg 6 30657 Hannover Germany www.ipm-scm.com industry will present their wide array of services. The congress is promoted by supporters from different European countries as well as from delegations and representatives from China and the USA. Institute for Production Management The Institute for Production Management (IPM) designs and implements a wide range of customized formats for qualification and competencies development. Subject areas are procurement, logistics as well as innovation and global supply chain management. Quarterly, IPM publishes the journal SUPPLY CHAIN MANAGEMENT TM (Vol. 13). IPM organizes the AVIATION FORUM Hamburg with Airbus, the INDUSTRIE FORUM Wolfsburg with Volkswagen and the RAILWAY FORUM Berlin with Deutsche Bahn AG and publishes the journal SUPPLY CHAIN MANAGEMENT TM. s u p p l y chain management I II/ 2013 115

Impressum Impressum Supply Chain Management TM ISSN 1618-1956 Herausgeber Prof. Dr. Johannes Walther Verlag IPM GmbH Donarweg 6, 30657 Hannover Tel. +49 511 47314790 Fax +49 511 47314791 E-Mail kontakt@ipm-scm.com Internet www.ipm-scm.com Redaktionsleitung Ines Hagemann E-Mail i.h@ipm-scm.com Daniel Wäldchen E-Mail d.w@ipm-scm.com Redaktion und Vertrieb Dr. Hajo Drees E-Mail h.d@ipm-scm.com Redaktion und Fotografie Marc Reitemeier E-Mail m.r@ipm-scm.com Wissenschaftlicher Beirat Prof. Dr. Dr. h. c. Ulli Arnold Universität Stuttgart Prof. Dr. Ronald Bogaschewsky Universität Würzburg Prof. Dr. Michael Eßig Universität der Bundeswehr Dr. Francisco J. Garcia Sanz Volkswagen AG Prof. Dr. Bernd Hellingrath Universität Münster Prof. Dr. Lutz Kaufmann WHU Otto Beisheim School of Management Prof. Dr. Paul Schönsleben ETH Zürich Dr. Thomas Uhlig Trelleborg Sealing Solutions Prof. Dr. Andreas Waldraff UBF.B GmbH Thomas Zernechel Volkswagen AG Erscheinungsweise 3-4x jährlich Erscheint 2013 im 13. Jahrgang Jahresabonnement EUR 78,00 (Inland) EUR 88,00 (europäisches Ausland) Studentenabonnement EUR 25,00 (Inland) EUR 35,00 (europäisches Ausland) inkl. MwSt. und Versandkosten Bankverbindung Postbank Hannover BLZ 250 100 30 Konto-Nr. 903 850 302 Druck KLARtext Direct Communications GmbH Gertrud-Greising-Weg 18, 30177 Hannover Gestaltung Gaby Reglitz Titelbild Copyright: Airbus S.A.S. Gerichtsstand und Erfüllungsort Hannover Manuskripte werden von der Redaktion gerne entge - gen genommen. Sie unterliegen vor Veröffentlichung der re daktionellen Bearbeitung. Für unverlangt eingesandte Manuskripte und Fotos wird keine Haftung übernommen. Korrekturabzüge können nicht zur Verfügung gestellt werden. Die Fachzeitschrift Supply Chain Management TM sowie alle in ihr enthaltenen Beiträge sind urheberrechtlich geschützt. Jede Verwertung, die nicht ausdrücklich vom Urheberrecht zugelassen ist, bedarf der vorherigen schriftlichen Genehmigung des Verlages. Dies gilt insbesondere für Vervielfältigungen, Bearbeitungen, Übersetzungen, Mikroverfilmungen sowie die Einspeicherung und Verarbeitung in elektronischen Systemen. TM AVIATION 116 s u p p l y chain management I II/ 2013

Speakers and Experts Learn for better supply chain management of AVIC Aircraft Yongsheng Wang, Vice President, AVIC Aircraft Co., Ltd About AVIC Aircraft AVIC Aircraft Co., Ltd is one of the core business sectors of the Aviation Industry Corp. of China. Its business mainly covers the research and development, production, marketing and sales, maintenance and services for all kinds of large and medium-sized military and commercial aircraft, landing gear and wheel and braking system. It also supplies the aerostructure, interior and nacelle of transporters in the global market for customers both at home and abroad, such as Boeing, Airbus, Bombardier, ATR and COMIC, etc. SCM: Vital for AVIC Aircraft SCM is vital for the business success for AVIC Aircraft, whether as an aircraft producer or components/system provider. There is large room for improvement, and it needs continuous reform. AVIC has set up a task force aiming at mapping out plans for improving the supply chain management, which includes the organization, human resources, procurement methods, logistics, production, delivery, service and IT platform. We hope to reduce the cost, improve the efficiency, and ensure the quality and on-time delivery through excellent supply chain management. And we will improve our competitiveness to provide better products and services for our customers. The capability to allocate the global resources is very important for the aviation industries. As the aviation industry is a global one, the supply chain management of aviation products needs an international vision, and we should optimize the resources of procurement, R&D, production, logistics etc, to meet the demands and characteristics from different customers around the world. AVIC Aircraft also attaches great importance to improve this capability, and increases its global presence through acquisition and investment accordingly. By the integration of the global resources and internal reform of AVIC Aircraft, we can have a better understanding of the customers and market, to provide the best product, services, and the whole solution. AVIC Aircraft SCM needs partners. The supply chain management of AVIC Aircraft is involved with customers, and suppliers of materials, components and systems. AVIC Aircraft is a part of the world s aviation industry. The Aviation Forum Hamburg provides Moderator WANG YONGSHENG is Vice President of AVIC Aircraft Co., Ltd since 2008, and in charge of the international cooperation, subcontract production, operation for the company. He is also a board member of Airbus Tianjin Assembly Line. From 2011 to April 2013 he concurrently served as Vice Chairman of SBM, FACC AG, Austria. He got a MBA degree from HEC Paris in 2008. Yongsheng Wang AVIC Aircraft Co., Ltd Building 19, Compound A5, Shuguangxili, Chaoyang District 100028 Beijing China www.avic.com a good platform and the Supply Chain Conference gives us a good opportunity to explore how to improve, to know the trends, to understand the demands from customers and suppliers, and seek opportunities to work together and improve the supply chain management. We hope all of us can benefit from the better management and innovation. We have guests worldwide for this conference, which would be very helpful for us to allocate the global resources and increase our global presence. It also provides a platform for us to understand the mutual demands and advantages, and to find the opportunity to work together for a closer relation, and finally, to achieve common development. AVIC Aircraft is willing to develop a partnership with you all, to discuss and deepen the cooperation both home and abroad. s u p p l y chain management I II/ 2013 117

Speakers and Experts Mastering worldwide supply chains Cross learning opportunities Eberhard Weiblen, CEO, Porsche Consulting GmbH Speaker EBERHARD WEIBLEN is the Chief Executive Officer of the Porsche Consulting GmbH. The wholly-owned subsidiary of Porsche AG is one of the leading management consulting companies for operational excellence in Germany. It provides consulting services for around 200 international clients from a wide range of industries, including aerospace. Eberhard Weiblen Porsche Consulting GmbH Porschestraße 1 74321 Bietigheim-Bissingen Germany www.porsche-consulting.com The aviation industry is impressive on the one hand by virtue of its products and technology. On the other hand we, as management consultants are also impressed by the aviation system as such: For example, to judge by accident figures and aircraft reliability commercial aviation is one of the most robust systems there is. The highest safety standards, clear internationally valid regulations for operations, superbly trained professionals in all key positions, and a special culture for dealing with errors. These factors make air travel the safest means of travel worldwide. We are convinced that other sectors can learn from the aviation industry. In fact the aviation industry is viewed throughout the world as an engine for growth. But aviation has to master many challenges as well: For example, aircraft manufacturers, suppliers and logistics providers have to deal with an enormous level of complexity. The A380, for instance, has around four million components which all have to be available at the right place in the production facilities at the right time. Further,competition will become more intense by mid-decade and the whole supply chain will have to react more flexibly. Operational excellence is key. We consider operational excellence as the willingness and ability of an organization and its employees to consistently deliver superior performance. The experience of the automotive sector could be of particular relevance to this. Our parent company Porsche has been working hard for many years to improve its processes and products. After the crisis in the early nineties three key factors were essential to achieve operational excellence: the perfect qualification of every individual, the 100 percent synchronization of all partners and the pursuing of a common vision and target. These principles are obvious in the Porsche plant in Leipzig, where the Porsche Panamera, Cayenne and in near future the Macan are assembled in a flexible model mix, and inventory is held for less than a day. Today, Porsche is one of the most profitable car manufacturers in the world. Increasing profitability is also a main challenge for aviation. We are convinced that performance levels in the entire industry could be raised siginificantly if all partners worked more closely together. Our vision of a new chain is based on the idea that trans-company value streams can be optimized by having all the relevant players share their aims, integrate their processes and improve openness and trust. We regard the optimization of production processes and the whole supply-chain as having the largest potential for improvement. This has recently been proven in a Porsche Consulting survey involving around 100 participants from OEM, suppliers and logistics providers in aviation. Key Messages: 1. It s important for companies to look farther afield: Aviation and automotive industries can learn from each other how to improve their processes and products. 2. Operational excellence is key for profitable growth. 3. The new chain in aviation increases the efficiency of the overall system. 118 s u p p l y chain management I II/ 2013

Speakers and Experts Mergers & Acquisitions: Successful Management of SME s Consolidation Prof. Dr. Andreas Zaby, Vice President, Hochschule für Wirtschaft und Recht Berlin Drivers of Mergers & Acquisitions The rationale for pursuing mergers & acquisitions (M&A) can be found in their potential to generate synergies. Such synergies can usually be divided into two large groups. These are either revenue-generating synergies or cost-reducing synergies. By acquiring an existing company, a buyer may attempt to utilize exisiting distribution channels to sell its own products in addition to the target company s products, thus generating additional revenues. Acquisitions may also serve to reduce cost through elimination of redundant activities or through economies of scale. Research suggests that costreducing synergies have a higher likelihood of being realized. M&A transactions frequently fail to deliver expected results. This problem has often been attributed to managerial underestimations of the difficulties of post-merger integration phases. M&A transactions are considered to be relatively risky due to the high up-front capital commitment and substantial information asymmetry. Therefore, it is important for management teams to ensure that the expected synergies are not given away in the form of takeover-premiums. Example: acquisitions of SMEs in the pharmaceutical industry The pharmaceutical industry has gone through significant consolidation by means of M&A transactions. Some of the world s largest mega-mergers have taken place among the global drug makers. But pharmaceutical companies are also well-known for their continuous stream of smaller acquisitions. In acquiring SME-type biopharmaceutical companies large pharamceutical firms are pursuing a distinct goal, i.e., capability-seeking. It has frequently been observed that smaller biopharmaceutical firms, often based on their close personal and institutional ties to academic research, have been highly innovative in developing new technology platforms and new biological methods as well as in identifying new target molecules or drug candidates. In times when the productivity of research and development of large firms has declined, access to outside sources of innovation has become a key challenge to incumbants. Therefore, the capacity of large firms to screen the universe of SMEs for potentially capability-enhancing innovation is an important factor. In Moderator PROF. DR. ANDREAS ZABY worked as a strategy consultant for Bain & Company in Munich and Zurich. He then became the Chief Financial Officer of a biopharmaceutical company with operations in Germany and the USA. He teaches International Management and Innovation & Technology Management at the Berlin School of Economics and Law where he is also the vice president. Prof. Dr. Andreas Zaby Hochschule für Wirtschaft und Recht Berlin Badensche Str. 52 10825 Berlin Germany www.hwr-berlin.de addition, acquirors need to build the skill to rapidly move through due diligence and deal implementation to secure access to the new technologies. It is equally important to ensure that the innovatory capacity of the target company is not stifled during integration. Many pharmaceutical companies install mechansims that ensure technology transfer into the parent company while maintaining the entrepreneurial spirit of the new subsidiary by lose forms of integration. Transferring the experience The aviation industry is also characterized by high levels of innovation among smaller players. Typical synergy expectations are certain to remain important M&A motives. However, acquisitions of SMEs with the goal of accessing technology and innovatory capacity are likely to be strong drivers for takeovers as well. s u p p l y chain management I II/ 2013 119

Speakers and Experts Challenges and Global Sourcing Olivier Zarrouati, CEO, Zodiac Aerospace Zodiac Aerospace: Figures Zodiac Aerospace is a world leader in the field of aerospace equipments and systems, able to provide turnkey integrated systems and with an expertise recognized by all the main aircraft manufacturers. Owing to this unique position, Zodiac Aerospace is onboard all the new aircraft programs. The increase of Zodiac Aerospace s FY2012/2013 sales revenues, up 13.2% on a reported basis and up 7.4% on a same scope and exchange rate, highlights, in a still favorable economical environment, the robustness of the Group s strategy. New operating environment & challenges Zodiac Aerospace has built, by internal and external growth, world-leadership positions on many niche markets, being able to supply its customers with larger and more integrated work packages. This higher volume of business creates the need for aircraft manufacturers to establish long term relationship between them and their best in class suppliers. Therefore Zodiac Aerospace has worked both on the operational and on its financial aspects. The latter is the ability to be a reliable risk-sharing partner for the long term. It triggers the need to remain profitable, even in a weak dollar environment, and to generate a proper return on investments and on capital employed. The former goes through an optimization of the internal processes and of the supply chain, considering and benchmarking all possible options. Global Sourcing Expert OLIVIER ZARROUATI was appointed CEO of Zodiac Aerospace in 2007. Following graduation from Ecole Polytechnique and from the Ecole Nationale Supérieure de l Aéronautique et de l Espace, Olivier Zarrouati started his carreer with the French Space agency (CNES) before joining Matra Marconi Space. He joined the Zodiac Group in 1998 and was successively Head of Development, CEO of the AeroSafety segment, and CEO of the Group s aerospace businesses. ZODIAC AEROSPACE 61, rue Pierre Curie 78370 Plaisir France www.zodiacaerospace.com Zodiac Aerospace anticipated the consolidation of the industry by being a major actor of this move. From an operating standpoint, the Group also early took the decision to develop production capabilities in cost competitive countries. This is not only a way to protect the Group s profitability from exchange rate variations, but also an opportunity to procure internally, to the benefit of all the Group s business units, and in accordance with the best standards in terms of quality and delays. This has set new criteria to revisit the make or buy decisions. Owing to higher volumes, the development of cost competitive countries operations was pursued, generating additional opportunities to improve the production processes towards more industrialization. Even if, in many ways, the automotive industry is different from aerospace, at least it can be learned a lot from the industrialization of processes and the Lean organization. Zodiac Aerospace has been heavily involved and is still investing in this process. The company Zodiac Aerospace is a world leader in aerospace equipment and systems for commercial, regional and business aircraft, as well as helicopters and space applications. Zodiac Aerospace employs 30,000 people worldwide, and generated revenue of 3.9 billion in 2012/2013 through its five business segments: Zodiac Aerosafety, Zodiac Aircraft Systems and three segments associated with aircraft interiors: Zodiac Cabin & Structures, Zodiac Galleys & Equipment and Zodiac Seats. 120 s u p p l y chain management I II/ 2013

Speakers and Experts Tianjin Where Aviation Business Comes to Thrive David Zheng, Director of Aviation Development Center, Tianjin Airport Economic Area Administrative Committee The Administrative Committee of the Tianjin Port Free Trade Zone and Tianjin Airport Economic Area is an arm of the Tianjin Municipal Government. As such, it has provincial-level administrative status and executive power over planning & construction, land & real estate, labor, personnel, and public utilities, as well as the authority to approve investment projects within the two administrative areas under its jurisdiction. Its responsibilities include both administering the Tianjin Port Free Trade Zone and Tianjin Airport Economic Area, and providing efficient and diversified services for overseas and domestic companies, in an effort to further develop Tianjin s reputation as a world class center for aviation and aerospace. We provide investment services including: n Supplying the latest information on Tianjin s business and investment environment, including comprehensive economic sector profiles, business incorporation advice, contacts for different aspects of business including human resources and information on the availability and cost of land, factories, offices and housing. Speaker DAVID ZHENG was appointed as Director of Tianjin Port Free Trade Zone & Tianjin Airport Economic Area Aviation Industry Development Center following a 17 year career in economic development. Experienced in providing government services in PRC, he successfully helped investment projects of Airbus, Zodiac, Sonaca, IBM, 3M, Caterpillar, Metso and other multinational companies. n Delivering government information on state incentive programs and other support services for businesses, as well as on taxation, import/export regulations, government projects and employment legislation. n Identifying and matching potential investors with business partners in Tianjin. n Arranging meetings, site visits and calls on government departments as well as trade and industrial support organizations. David Zheng Tianjin Airport Economic Area Administrative Committee Room 421 Investment Service Center No. 166 West Third Avenue 300308 Tianjin China www.tjftz.gov.cn n Assisting investors in dealing with government departments on matters such as fire and environmental protection requirements and business incorporation. n Helping investors settle in Tianjin, including employment & residence permits, housing, healthcare, and schooling. Save-the-date n Providing dedicated account managers for each enquiring business. n Helping to organize business-trips, including visa applications and hotel reservations. March 17 th and 18 th 2014 s u p p l y chain management I II/ 2013 121

Book review Weidinger, C., Fischler, F., Schmidpeter, R. (Editors) Sustainable Entrepreneurship Business Success through Sustainability Springer-Verlag, ISBN 978-3-642-38753-1 Heidelberg u. a. 2014, 314 Seiten, 83,50 Perhaps the relationship between business and society can be viewed differently through the idea of Sustainable Entrepreneurship. Leading intellectuals from business, academia, politics and civil society give their thoughts on the new paradigm of sustainability. Outlining the prevailing thought on sustainability, innovation and entrepreneurship will be 35 of the leading experts. When combined, these concepts create the foundation for developing and examining a new business paradigm capable of supporting economic, social and ecological principles simultaneously. The implementation of sustainable entrepreneurship requires not only the right perspective but also state-of-the-art instruments and inside knowledge. This book provides these and supplements them through examples of application and in-depth statements by the authors. The collection of diverse contributions presents a point from which to begin changing our way of doing business. This book is for those pioneering the development of new business strategies, the new leaders of sustainability, for anyone curious to join the thought-provoking journey to an equally sustainable and business-oriented world. The book is structured in five parts that give insights into the underlying concepts of sustainability and entrepreneurship as well as present implementation mechanisms and statements from recognized leaders in business, politics and civil society. The first part gives a broad overview of the theoretical thinking behind how sustainability can be successfully integrated into society. The various viewpoints on Sustainable Entrepreneurship such as the social, sustainable, ethical, innovative and international aspects are introduced. With that it becomes evident that Europe is at the forefront of the subject of sustainability. Europe has a long history of successful organizational models in which it has attempted to join the ecological and social factors into its economic model. If sustainability is to reach a global scale, there need to be intelligent solutions for transforming a non-sustainable society into sustainable one. The second part of the publication discusses various viewpoints on how business models can integrate sustainability. Different concepts and their evolution will be shown as well as how a new Sustainable Entrepreneurship paradigm emerges into the business world. The topics of Sustainable Entrepreneurship and special innovation are currently very important to business, governments and NGO s across the globe. Social innovation becomes integrated with the regular innovation processes within corporations. In order to establish an innovation for long-term success it is critical to build on pillars like true leadership, open innovation, entrepreneurial spirit and change agents. The third section of the book deals with the various approaches for implementing Sustainable Entrepreneurship. It specifically answers the questions about how to embed Sustainable Entrepreneurship, harbor Sustainable Innovation, and create corporate capability management, how to turn the bottom line green and how to address sustainability issues. The author provides evidence that stronger business cases of sustainability project and strategies lead to better alignment within the organization. Hence understanding the economic relevance of social and environmental impacts is a must, leading to distinct drivers and making tailored types of strategic innovation necessary to embed sustainability strategies successfully. The fourth part shows in which ways the innovative thinking of Sustainable Entrepreneurship has already been applied and gives additional observations from leading scholars in the business, political, academia and civil society realms. The different inputs show that sustainability affects all parts of society and the development of a mutual approach is essential. Partnering together to solve society s critical issues is the essence. The key to promoting social and sustainable innovation will be entrepreneurship. The final part of the publication aims to wrap up the various views, concepts and examples in this book, as well as provide additional thoughts and give an outlook into the future of sustainable entrepreneurship. The foundations of a new management concept and how it will change the future of how business is done will be described. The solution to the most pressing ecological, economic and social obstacles can be spearheaded by Sustainable Entrepreneurship. The benefits of this book reach from students and researchers in business administration focused on Sustainable Entrepreneurship, to professionals in the industry interested in refreshing or broadening their knowledge of the field. Dr. Peter Bräuer, Stuttgart 122 s u p p l y chain management I II/ 2013

Save-the-Date Aviation Forum 2014 Hamburg Germany Global Aerospace Supply Chains Strategies Concepts Solutions 9 th and 10 th December 2014 Exhibition and Conference Congress Center Hamburg (CCH) Conference Hotel: Radisson Blu Hotel Top Topics Integrating global and local supply chains! Supply management: Cornerstone of global aircraft supply chains? Patron Dr. Klaus Richter Executive Vice President Airbus Procurement Competence Partner Designed by www.ipm-scm.com/afo

Airbus, its logo and the product names are registered trademarks. Mit der A380 gehört der Himmel Ihnen. Die A380 ist für Airline-Wachstum ausgelegt. Sie befördert 30 Prozent mehr Passagiere und steigert den Direktund Anschlussverkehr in Ihrem Streckennetz. So können Sie stärker wachsen, Ihr Streckennetz ausbauen und von wachsendem Umsteigeverkehr profi tieren. Das bedeutet höhere Marktanteile, höhere Auslastung und höhere Erträge. Own the sky