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LEAN TRANSFORMATION STRATEGY MIRAMAR WORLDWIDE REPAIR (MRO)ACE GOLD SITE

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UTC PROPRIETARY INFORMATION 2

SuppliersInputs ProcessOutputsCustomersAftermarket

UTAS Miramar Worldwide Repair

INTRODUCTION

3CONTENTArea of FocusExecutive SummaryLean PhilosophyActual Indicators8 Success FactorsApproachLessons LearnedTransformation Plan

UTC PROPRIETARY INFORMATION 4FOCUS OF TRANSFORMATION

CURRENT STATE

737-NGEPIDG was selected for Lean Transformation project per product family matrix and PQ analysis. Focus on flow and material delivery.ELECTRIC POWER (EP) SHOP

UTC PROPRIETARY INFORMATION 5AREA OF TRANSFORMATION

Administration Area

AccessoriesMachine ShopShipping/ReceivingShared Services

FacilitiesNDTTestingAvionicsAirbus &BoeingGenerator, Regional & MilitaryRotor Shop

ELECTRIC POWERSite Analysis:Location: Miramar, Broward County, FloridaTotal Area: 85,000 sq. ft.Total employees: 163Salary: 27Hourly: 136Total ACE Associates 121ACE Practitioners > 50% 4Current ACE Level: ACE GOLD Area of focus will be Electric Power

Core business

Over 80% similar processes

PQ Analysis Data

6CONTENTArea of FocusExecutive SummaryLean PhilosophyActual Indicators8 Success FactorsApproachLessons LearnedTransformation Plan

UTC PROPRIETARY INFORMATION 7UTAS Miramar Worldwide Repair

Pierre GouletGeneral Manager

Osvaldo VelazquezBusiness Unit Leader Avionics/IDG/Rotor/Incoming Michael WyckoffFacilities ManagerGeorge Bowman Deputy GM/ACE Manager Kathryn CarlsonContracts & WarrantyRCA Manager

Rogelio ChongBusiness Unit Leader Electric Power & CSDTerry GreeneQuality Assurance ManagerVincent JermanyBusiness Unit LeaderAccessoriesEdgar LopezBusiness Unit Leader Machine ShopPatricia McLaughlinFinance ManagerYadira MonjeEH&SAlicia PamiesHR ManagerRaymond PoynerEngineering & Project Manager

Peter ThomasGEN/MIL/REG Manager

Darlene LorenzoSupply Chain ManagerMANAGEMENT STRUCTURE

UTC PROPRIETARY INFORMATION 8MANAGEMENT SUMMARY Project is on track Performed 3 out of 4 VSMs year to date. Avionics VSM scheduled for 12/11-12/13/2012.

Cell design training complete.

Pilot cell for lean transformation will be Electric Power to be worked jointly with Dijon and Singapore

Metrics impacted will be: CSL % (currently at 97%) TAT (currently at 9 days) Lead Time Labor Times Inventory Turn

ACE/Quality Council meets monthly to discuss project status and milestones

Opportunities exists for Supply Chain in order to meet delivery, packaging, and presentation of parts to support our overhaul & repair lines.

Contracts administration team needs to ensure a seamlessly flow of information to guarantee 100% On time delivery

MIRAMARDIJONSINGAPORE

9CONTENTArea of FocusExecutive SummaryLean PhilosophyActual Indicators8 Success FactorsApproachLessons LearnedTransformation Plan

UTC PROPRIETARY INFORMATION 10IMPROVEMENTS IN LEANCURRENT STATE VSM

EP

623457Current Lead Time3.5 Days

Current Process Time5.04 Days

Current Total Time 8.54 Days

ELECTRIC POWERCurrent State revealed issues in both information and material flow such as contract & quoting, communication, standard work, inventory, and over-processing. Identifying Waste in the Current State1 Transportation 2 Inventory 4 Waiting 5 Overproduction 6 Overprocessing 7 Defects

UTC PROPRIETARY INFORMATION 11IMPROVEMENTS IN LEANFUTURE STATE VSM

EPELECTRIC POWERThe lean principles were used to create flow and eliminate waste. Areas of opportunity included kitting for parts, standard work for SFR, and parts coding. Lean Guidelines in the Future State1 Takt Time 2 Finished Goods Strategy 3 Continuous Flow 5 FIFO 6 Pull System 6- Schedule only one point

Future Lead Time0.5 Days

Future Process Time5 Days

Takt Time55Mins

331572222247UTC PROPRIETARY INFORMATION 12IMPROVEMENTS IN LEANCURRENT STATE VSM

FSFUEL SHOPCurrent State revealed issues in both information and material flow such as contract & quoting, communication, standard work, inventory, and over-processing. Identifying Waste in the Current State1 Transportation 2 Inventory 3 Motion 4 Waiting 5 Overproduction 6 Overprocessing 7 Defects

Current Lead Time10 Days

Current Process Time1.5 Days

UTC PROPRIETARY INFORMATION 13IMPROVEMENTS IN LEANFUTURE STATE VSM

FSFUEL SHOP13Lean Guidelines in the Future State1 Takt Time 2 Finished Goods Strategy 3 Continuous Flow 5 FIFO 6 Pull System 6- Schedule only one point 7- Interval 8- Pitch

234544687Future Lead Time6.25 Days

Future Process Time1.5 Days

Takt Time113 Min

The lean principles were used to create flow and eliminate waste. Areas of opportunity included kanban for parts shortage control, FIFO, pitch, and process combination.

14IMPROVEMENTS IN LEAN

IDEAL STATE

EPELECTRIC POWER CONCEPT

Single Flow Line for IDGsHospitals built into line

15CONTENTArea of FocusExecutive SummaryLean PhilosophyActual Indicators8 Success FactorsApproachLessons LearnedTransformation Plan

UTC PROPRIETARY INFORMATION 16ACTUAL INDICATORS

Business MetricsQualifying 2006Bronze 2007Bronze 2008Silver2009Silver2010GOLD2011 GOLD2012 Improvement from Qualifying Year(As of 2012)Revenue ($)$74.7M$79.9M$86.7M$79.0M$82.9M$87.6M$90.0 M20%EBIT ($)$32.6M$41.2M$48.8M$45.5M$45.9M$47.5M$55.0 M58%Customer Survey5.505.205.756.206.036.306.40Above Gold LevelEmployee SatisfactionN/A55%55%76%76%79%89%44% IncreaseWorkmanship Escapes94613221152098% ReductionSignificant EscapesN/A001100Significant ImprovementInventory Turn (Days)N/A5.515.624.816.276.526.7518% Turn ImprovementCSL (%)77.0%80.0%85.0%88.4%93.2%97.0%97.3%26% ImprovementTurn Around Time (Days)2120171514.510.09.511 days Reduction

17CONTENTArea of FocusExecutive SummaryLean PhilosophyActual Indicators8 Success FactorsApproachLessons LearnedTransformation Plan

18UTC PROPRIETARY INFORMATION EIGHT SUCCESS FACTORS FOR LEAN OPS.

Lean Operations Target Linkage: Control TowerLean Operations Transformation Road MapLean Operations ACE 12.0 Criteria

Lean Operations Process Vision

Lean Operations Toolset

Lean Operations Roles & PeopleLean Operations Competency DevelopmentLean Operations Commitment & Communication

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19UTC PROPRIETARY INFORMATION EIGHT SUCCESS FACTORS

1PROCESS VISION

Site GM, staff and executives share process vision for Lean implementation in MRO. Emphasis on developing a truly lean value stream.

20UTC PROPRIETARY INFORMATION

EIGHT SUCCESS FACTORSTARGET LINKAGE

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Project KPIs include increased Customer Satisfaction Level to meet 100% on time delivery to be aligned with control tower and corporate compass.

Step 3: Cell Design21UTC PROPRIETARY INFORMATION EIGHT SUCCESS FACTORSTRANSFORMATION ROAD MAP

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Step 1: Establishing Pull at the Pacemaker

Pacemaker is scheduled/set at only one point

Event ProfilePre-WorkTarget Progress ReportEstablish Flow via FIFO and/or Pull. Follow up on Kaizen Action Items. Standardize all FIFO lanes.

Step 2: Set-up Kitting Zone

22UTC PROPRIETARY INFORMATION EIGHT SUCCESS FACTORS TOOLSET

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The 13 ACE tools:5SVSMProcess Cert.Std. Work3PTPMSet-up ReductionMFAQCPCRRCAMistake ProofingPassportPolicy Deployment

The ACE Portal is a training interface for the 13 ACE tools. Site ACE Manager uses the ACE tools to develop and train personnel.

23EIGHT SUCCESS FACTORS Roles and Responsibilities

6ACE PilotsACE ManagerSite ManagerRepair Americas DirectorVPSenseiJuan AraujoSteve BorchertDev RudraPierre GouletGeorge BowmanEbner Sanchez & Dayron Morales Provides Corporate Strategy & business goals for Worldwide Repair Worldwide Lean Transformation Manager for site organization Develops action plan for repair sites in North AmericaOversees sites initiatives for lean transformation. Verifies metrics. Develop & execute action plan to meet ACE targets. Create kaizen teams to bring projects & action items to closure.

1. FORM & TRAIN TEAMS2. ANALYZE & INVESTIGATE3. EXECUTE ACTION PLAN

STARTFINISHP1P2P3

24MIRAMAR ACE MANAGEMENT STRUCTURERaymond Poyner Site Pro-Cert ChampionYadira MonjeSite EH&S ChampionTerry GreeneSite QCPC ChampionKathryn CarlsonCustomer MFA ChampionGeorge BowmanDeputy GM/Site ACEManagerMichael WyckoffSite TPMChampionPierre GouletSite General Manager

Roles and Responsibilities

6Electronics*AvionicsElectric Power*MilitaryRegionalGeneratorAirbusBoeingAccessories*PneumaticsHydraulicsFuelActuationRCAMachine ShopShared Services* Indicates a Value Stream

UTC PROPRIETARY INFORMATION 25EIGHT SUCCESS FACTORS Competency Development

7UTAS Miramar Employees : 165Salary : 35Hourly : 130Data as of 11/7/2012Number of ACE AssociatesPractitioner Level Completion %

UTC PROPRIETARY INFORMATION 26EIGHT SUCCESS FACTORS Communication & Commitment

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Establish a communication plan for all team members (with target dates)

Create cross functional teams

Get buy in from management and employees

Develop a Kaizen Newspaper to identify action items

Create a Project Plan to track, update, and brief both salaried and hourly employees for any changes

Develop a timeline to track project completions

Projects List

2013

Q1Q2Q3Q4

Lighthouse ProjectTraining & EducationPilot CellDry RunsMonitor & ImplementationPhase

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27CONTENTArea of FocusExecutive SummaryLean PhilosophyActual Indicators8 Success FactorsApproachLessons LearnedTransformation Plan

FIVE PHASESPre-WorkPreparation & AnalysisPre-Work Activities PQ Analysis Product Family Matrix Current State Map Future State Map Site Pre-Analysis Selection of Lighthouse

Phase 1Training ACE VSM Line Back Logistics Leading Lean Cell Design Kanban for Internal Cell Supply Chain & Logistics

ACE Events

Phase 2Phase 3ACE 12.0 CriteriaPilot EventsDesign & Implement Lighthouse Electric Power Cell Design Electric Power Kanban System Design & Implementation Parts Delivery Design & Implementation

Phase 4Implementation

ConceptACE LEAN 12.0 Criteria Apply the lean concepts while concentrating on the following: Plan for every part Optimized Part packaging Visual Pitch Model Cell Design Continuous Flow and/or FIFO Kanban

Phase 5Shop Floor LayoutCreate Kaizen team to deploy the first lean cell design. Focus effort on part family matrix and monitor progress with turn back collection.Start Roll-Out

FIVE PHASES

2014

2014Q4December 31,2014Verification & Implementation

Monitor and verify turnbacks generated by pilot cell Open & Close out projects to resolve turnbacks Best practices implementation Develop strategy to deploy pilot cell throughout the site for 2014

Monitor & Implementation

Lighthouse Communication & ControlQ1March 31, 2014Lighthouse project initiation- Management Communication Set milestones Biweekly meetings to verify milestones Breakdown of unit subassemblies plan

Education &TrainingQ2June 30, 2014All personnel trained and aligned with the lighthouse project.

3P Cell DesignStandard Work Cell Design Kanban Lineback Logistics Leading Lean Apply lessons learned from Dijon and Singapore

Pilot Cell Design

Q3September 30, 2014Lighthouse Dry-runs

Pilot cell design Parts kitting presentation Kanban Parts distribution to pilot cell Completed 3D simulation for pilot cell

Competency Development30UTAS Miramar Employees = 165Salary = 35Hourly = 130ACE AssociateACE Practitioner

31UTC PROPRIETARY INFORMATION

L o c a l A C E O f f i c e

MIRAMAR, FL. U S AACE GOLD SITEL o c a l A C E O f f i c e

M I r a m a r, F l. U S AACE GOLD SITECONTENTL o c a l A C E O f f i c e

M I r a m a r, F l. U S AACE GOLD SITE