Company Confidential 1

Developing Aerospace Suppliers in Mexico

Kalim Saiyed

October 22, 2009

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Agenda

• Purpose

• Desired Outcome

• Understanding customer expectations and Supplier Performance Report

• Roadmap to development

• Obstacles to success

• Summary

• Questions and Answers

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Purpose

• The purpose of this presentation is to provide an understanding of:

– Customer expectations

– Supplier performance report

– Roadmap to Supplier Development

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Desired Outcome

• To take away an understanding of how to challenge and leverage the supplier performance report

• To grasp the supplier development process that meets customer expectations

• Learn a few tips to remove cultural barrier

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Today’s Customers’ Business Challenges

• Ensure sustainable and profitable growth

• Better manage Customer relations

• Further enhance value streams

• Stay ahead of market conditions

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Tomorrow’s Opportunities

• Today’s challenges provide strategic opportunities to strengthen tomorrow’s competitive position.

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Customer Expectations

Think Strategic – begin the journey today

1. Do you really know what your Customers want?2. If you do what are you doing about it?3. If you don’t can you afford to wait any longer?

Customers want

• Quality• On-Time Delivery• Cost• You to be profitable

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Supplier Performance Report

• Management system to help suppliers analyze, control and improve their performance.

• A method to measure monthly and year-to-Date historical performance and improvement.

• Customers provide a monthly supplier performance report that includes;

• Quality, On-Time Delivery and Cost performance along with Service, certification rating

• Communicate with your customers and challenge the data

• Now you have a good base line for improvements

Data based improvements will sustain the gain

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Why Develop Suppliers?• Up to 70% of the content is purchased from the

supplier base

• Performance is not where it needs to be for key suppliers

• Procurement function is becoming more strategic (make vs. buy, large strategic partners, innovation etc.)

• Developing relationships with strategic suppliers is key for the whole value stream

• The necessary capabilities are not in place

• Suppliers need to be healthy, strong and competitive in order to remain competitive

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What is Supplier Development?

It is an organized effort to transfer knowledge using a focused team approach to obtain sustainable results for the benefits of both - suppliers and customers

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• One or two Supplier development associates and one or two supplier associates dedicated full-time to the project

• Other resources as needed

• At the supplier facility

Supplier Development – Who and Where

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The project is conducted over a three to six month period after an on-site Assessment is completed

Supplier Development – When?

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Roadmap to Development

Management Commitment

Identify Champion and Team Members

Train the TeamPerform Facility

Assessment

Develop Action Plan

Prioritize the Projects

Identify Improvement Methodology and Metrics

Develop Project Plan

Execute the Project

Measure the Performance

Celebrate the Success

Move on to next Project

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Supplier Development – How? Basic Methodology

– Kickoff meeting

– Improvement area selection

– Situation analysis» Data gathering

» Baseline data

» Data analysis

– Develop a contract and establish goals

– Develop improvement ideas

– Develop implementation

– Implementation and “CA” of PDCA

– Collect and evaluate “after” data

– Establish Control Plan and select next area

– Management review attended by senior management

– Lessons Learned

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Obstacles to success Supplier must have strong relationship with

the customer

Lack of mutual trust

Unqualified team lead

Lack of management commitment

Insufficient training

Zeal to get results quickly

Use Short cut or bypass the process

Ambiguous goals

Lack of follow up

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• Basis for Selection of Supply Chain Partners For The Future

• Data driven process

Mutually beneficial for growth

Improve Product Quality, OTD, Cost and lead time

Facilitate & Improve Communication at all Levels

Promote Continuous Improvement

Gather Feedback & Lessons Learned

Eliminate cultural barriers by suing common tools

Summary

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Thank You

Questions and Answers