Meggitt Aerospace Challenge 20151208

Global Aerospace ChallengesA Meggitt Perspective

December 2015

Ian Bouquet-Taylor, Global Supplier Development Manager

Meggitt overview

December 2015

Smart engineering is second nature to us.

Global Aerospace Challenges

September 2015 | © Meggitt PLC Proprietary.

Meggitt PLC is an international engineering group − Aerospace, defence and energy

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Meggitt overview

Extreme environment experts− High technology products and systems on

Annual sales of £1.554B in 2014

Global footprint

Aerospace | 48%Defence | 34%Energy | 11%Other | 7%

OE | 41%Aftermarket | 59%

63,000 aircraftc.11,employees across Europe, the Americas and Asia



Leading technology positionsMeggitt divisions

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Aircraft Braking Systems Control Systems

Thermal management Fluid and pneumatic controlElectromagnetic controlSafety systems

Polymers & Composites

SealsFuel bladdersFuel systemsIce protection

SensingSystems

Condition- monitoring systemsHigh performance sensorsPower managementFlight displays

Equipment Group

Threat simulation trainingCombat supportSpeciality components

Wheels BrakesBrake controlLanding gear controlNose wheel steeringLanding systems monitoring



Global presence

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c.11,000employees worldwide

Asia and RoWEmployees: 1,000Australia, Brazil, China, India, Singapore, UAE and Vietnam

Mainland EuropeEmployees: 1,500Denmark, France, Germany, Spain and Switzerland

UKEmployees: 3,000

North AmericaEmployees: 5,500USA, Canada and Mexico

September 2015 | © Meggitt PLC Proprietary6

The Aerospace Market Trends and Challenges



The Challenge

During the next 20 years the Global Aerospace Market is going to grow

As primes we have to be sure we can commit to our customers that we can meet their expectations

So how much growth are we expecting?

What will it mean for us as suppliers?

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September 2015 | © Meggitt PLC Proprietary

Airline market growth prediction

Source – Airbus Global Market Forecast 2012-2032


Airline market growth predictionSource – Airbus Global Market Forecast 2012-2032


Airline market growth predictionMiddle classes to near 5 billion before 2034




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Airline markets resilient to outside influences

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Not just AirbusAll the major players are predicting the same

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September 2015 | © Meggitt PLC Proprietary16

What does that mean for us and the supply chain?

Our customers are demanding better performanceAnd so is the consumer

− Boeing 787 launch issues filled the news− Speed of bad news gets faster – A380− As consumers we expect performance better than we provide now

− 5000ppm just isn’t good enoughAs One business, Meggitt needs to focus it’s SD Activity

− To make the best of our resource− To work with suppliers to build an efficient value stream

The next few years are about − Building one approach, that is used across Meggitt− Bringing suppliers along with us, we learn from each other− Jointly benefitting from improved performance


What would we expect as customers?

99% will not cut it in today’s world! Our customers demand better!

99% a target for delivery and quality – the reality

3.8 Sigma (99% Good)

50 newborn babies dropped at birth by doctors per day

6 Sigma (99.99966% Good)

6 newborn babies dropped per year

Toxic drinking water for 15 minutes per day

Unsafe water for 1 minute per 7 months

5,000 incorrect surgical operations per week

1.7 incorrect surgical operations per week

204,000 wrong drug prescriptions per year

68 wrong prescriptions per year

2 crash landings at Heathrow per day

2 crash landings at Heathrow per 10 years


Aerospace

In the aerospace market we fly on planes quite often

A 777 has 4 million parts – if we achieved world class (6δ) levels of quality around 14 of these would be defective!

I just hope it’s the catch for the tray table!

As it is it’s a lot closer to 3.5 δ – 140,000 parts on a 777

Now that is a sobering thought!


And we need this – because in our market ….. there is no Plan B!

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September 2015| © Meggitt PLC Proprietary.20

MeggittSupply chain overview


Supplier Quality today

DPPM = circa 5000Meggitt customers require 250Main supplier non-conformance types:

− Raw material− Dimensional− Aesthetics− Incorrect Part marking− Transport and packaging− Missing or incomplete documentation− Delivery of wrong part


So what’s all this mean?

It means we have to look at everything we do to avoid waste in the marketplace

In our processes

In the time we spend adding value

And work to higher standards than we did before

Without adding cost

September 2015| © Meggitt PLC Proprietary.

Meggitt Simple expectations

Right first time, on time, every time.Quality

− low ppm to all customers continually− capable repeatable processes− fast, robust resolution of concerns− Quality built in – not inspected in later

Delivery− on time in full− good understanding of capacity and any constraints

Know where you are going− have a good business plan that encompasses technology development− cascade goals and targets down, make sure they are understood− use KPIs to manage your business

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MeggittSimple expectations, shared responsibility

Standard work methods− processes controlled by documentation – not “black book” knowledge

A business wide drive for continuous improvement− led from the top, with results driving the next improvement− make it visible – everyone sees, everyone owns, everyone improves

Operational excellence needs to be a givenMeggitt is investing considerable resources to improve performance. Are you?AS9100 and NADCAP for controlled processes are a base requirement

We need suppliers who can take growth in their strideInvestment in facilities and processesCommitment to improveAppropriate risk sharing

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So what do we look for in a supplier?What sets our future partners apart?

A current or planned global footprint or the ability to work collaboratively with global partnersA strong forward looking investment strategy to support growth and future technology needsAble to support with technology input at early stages of design and development, having a robust product introduction processA business aware of its limitations in both capacity and skills with plans to address these, ensuring RFTOTET

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So what do we look for in a supplier?What sets our future partners apart?

A culture of quality in all processes and aspects of the business – it isn’t added its part of daily life,Standard processes removing error, lean is normal not apartA linked system that drives the business goals to the lowest levels and manages them using relevant metricsA desire to become a true partner, managing and improving relationships across all faces of our businessThe ability to say no, and when challenged back it up with dataWhen issues occur, clear resolution in a structured way that means it doesn’t happen again

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What is Meggitt doing with its supply chain?


Meggitt and its supply chainSize and structure

Meggitt has approximately 6000 direct suppliers globallyAnnual spend on these is $700m

Suppliers range from 2 people in a small workshop to huge multi-nationals and everything in between

Reducing the impact of failure of these suppliers is paramount

We need to focus on the what we can do and the what we cannot

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Meggitt and its supply chainFocussing our mind

We cannot influence and change all suppliersWe can however do three things to lessen the risk

− Standardise Supplier Quality Requirements − Which increases the levels of excellence our suppliers have to achieve

− Consolidate spend and reduce supplier tail− In progress but not moving overly quickly

− Focus on improvements in our key suppliers

In our new supplier surveillance process we have defined key suppliers as − Suppliers who when listed in spend order form 90% of a sites spend− Plus others of a lower spend with critical process inputs (single source IP etc)

As an estimate globally this is 1400 suppliers

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Supply Chain Excellence FrameworkIncreasing the performance of our supply chain


Run Account reviews agree future state radar & prioritise improvements

Business awards linked to performance

MPS for Suppliers InfographicSupply Chain Excellence Framework

Meg

gitt

Site

Gro

upH

eadc

ount

MPS Phase Red Yellow Green Bronze Silver

Assess 90% spend+ significant others. Audit ‘Reds’

Use WASP outputs + identified site strategy to define ‘development suppliers’

WASP Training Process compliance

Run Account Review trainingDevelop “Mentor Modules” (aligned to ESP/STAR/SC21) 1. In supplier by Meggitt or 2. In Meggitt or 3. In supplier by external

Run Supplier Launch Event with site.

Build local improvement Clusters

Supplier form “Clusters” & become self- determining.

Centre led Regional basedSupplier excellence leaders (6?)

Implement CI/Supplier Development job role in “Green sites” – Centre owned, locally directed

Risk TrainingProcess compliance

Supp

lier

Support WASP Close NCR’sWork OFI’s

Improvement plan “ISPP” (CSIP)

Q& D focus

Join

tlySupplier “Partners” are selectively integrated into Meggitt’s tech. roadmaps and strategic planning

Monitor progress against CSIP at account review

Join up key processes eg. Kan-ban, PFEP, SIOP, product inspection

Agree and support the “ISPP” (CSIP)

Clusters share ideas and their benefits with Meggitt – consolidation,, exceed Q&D targets etc.Integrated Value chain – VAVE, etc.


Summary

The opportunity in aerospace and other markets is exceptional

Aerospace is demandingQuality is not just about dimensions, but also aesthetics, packaging and paperworkDelivery on-time in full is not a dream it’s an expectationHigher levels of business excellence, accreditation and efficiency are the only way to make tomorrow betterLong term relationships and contracts will allow us to manage costs

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Over 150 years of engineering in Meggitt’s DNA


Meggitt PLCAtlantic House Aviation Park West Bournemouth International AirportChristchurch Dorset BH23 6EW UK

Tel: +44 (0)1202 597597 www.meggitt.comRegistered in England and Wales (number 432989).

Cover: High pressure air travelling through the geometry of cast or machined bleed air valves is extremely noisy—as experienced by those who live near airports. In future, air could flow more quietly through a radically new organic structure made possible through additive layer manufacturing, exemplifying the bold use of innovative processes in Meggitt’s technology strategy

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Meggitt Aerospace Challenge 20151208