Collaboration in the Aerospace Supply Chain - Towards the Extended Enterprise Bangor University Wednesday 28th March 2012 John Whalley Aerospace Wales Forum Ltd. www.aerospacewalesforum.com

Aerospace technology is expensive Pound for Pound by weight a motorcar has the same value as hamburger Pound for Pound by weight an aero-engine has the same value as silver

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Aerospace Wales Forum Established 2002 150 member companies Representative body for aerospace & defence National partner in Wales of the UK’s trade association ADS (Aeronautics, Space, Defence & Security) Closely linked with other UK regional bodies Close partnership with Welsh Government Facilitates marketing, international partnering and company development www.aerospacewalesforum.com

The Industry – Size & Scope £5 billion pa sales ($8US billion) Over 160 companies 25,000 directly employed Presence of leading companies: EADS Cassidian, BAE Systems, General Electric, General Dynamics, Raytheon, Hawker Beechcraft & Airbus

SC21 – a UK aerospace supply chain initiative SC21 – launched at the Farnborough International 2006 Brought together a number of streams of development: Aerospace innovation and growth team (AeIGT) SCRIA Lean Aerospace Initiative (LAI) DTI initiatives SBAC Quality Committee Company (industry) supplier development programmes Regional Associations and Groups

Why SC21? Customers demanding more affordable and innovative solutions UK supply chains need to be more competitive Primes/OEMs want fewer direct suppliers UK industry recognition that transformation/rationalisation is required Defence Industrial Strategy (DIS)

Why SC21? Improvement and competitiveness is dependant upon companies working together to: Increase efficiency Remove repetition and duplication Plan and communicate better Earlier in the life-cycle Longer term – through life

21st century supply chains led by who committed to Airbus Agusta Westland BAE Systems Bombardier Aerospace Cobham Darchem Freeman & Proctor GKN Goodrich Lockheed Martin Marshall Aerospace Naysmith Group Rolled Alloys Rolls-Royce Selex Smiths Thales Ultra Electronics Fundamental business transformation Accelerated Change and Continuous Improvement. Through life management Demonstrating SC21 commitments Leadership role 21st Century Supply Chains recognises that it is no longer sufficient for the aerospace industry to be competitive and innovative at the individual company level. An industry task force has agreed an action plan with the aim of driving competitiveness to the core of the supply chain. SC21 seeks to embed the most efficient techniques in the supply chain through the spread of lean manufacturing, common industry wide metrics and through better business to business relationships. SC21 is an industry agreement developed by 14 international aerospace companies and supported by 4 supply chain members (those highlighted in orange). An action plan for SC21 will be published on Wednesday 19th July

The commitment Three key action streams to drive transformation and improvement Better supply chain relationships Share selection rules based upon through lifecycle costs / affordability Supply chain collaboration, sharing best practice and driving innovation Use SCRIA code of practice and toolsets to companies and suppliers Better supply chain development and performance Remove duplication of supply development programmes – achieve 80% commonality Develop common metrics (KPIs) – target 80% common Reduce auditing through recognition of supply chain accreditation Recognise and accept accreditation to AS/EN9100 Support special processes approval to Nadcap

What is SC21? - SC21 scope 3. relationships: need for better end-to-end communication and collaborative planning 1. accreditation: need to remove repetition, and unnecessary duplication 2. development and performance: need increased efficiency and remove waste initially SC21 will implement 3 action streams to drive early transformation and improvement 4. innovation 5. through life capability management To reduce auditing through recognition of supply chain Accreditation Recognise and accept accreditation to AS/EN9100 management system audit Support special processes approval to Nadcap To take a consistent approach to supply chain Development and Performance measurement Remove duplication of supply development programmes – achieve 80% commonality Develop common metrics (KPIs) – target 80% common To improve supply chain Relationships Share selection rules based upon through lifecycle costs / affordability / capability Supply chain collaboration, sharing best practice and driving innovation Use SCRIA code of practice and toolsets with companies and suppliers

Collaboration in Defence – Alliancing – BS11000 MARS – Military Afloat Reach & Sustainability

North West Aerospace Alliance ASCE Programme Extended Enterprise ASCE 2 Shared Services Work Share Commodity Groups Shared benefits ASCE 1 Supplier Associations Common strategy ASCE Shared objectives Common language Common processes Common culture 15

Robotics, Automation & Tooling Complex Machining CG Process Treatments CG Composites CG Commodity Groups Robotics, Automation & Tooling CG Design & Engineering CG SME Machining CG Autonomous Systems Commodity Group launched in July 2011 and runs parallel with GAMMA

NWAA Extended Enterprise – Current State Risk sharing Design to deliver Financially robust Multi-materials Single point responsibility Manage the supply chain Required Capabilities Clients Turnkey Solution Providers Supply Chain 25 -30 year Contract No current North West Candidate Contract Evolve with project life North West Supply Chain disadvantaged With no current NW RSP the Supply Chain could be starved of future work – if we don’t respond! 17 17

(Commodity Groups) Extended Enterprise NWAAExtended Enterprise- Future State NWAA Extended Enterprise Model Commodity Groups and Commodity Group companies interact, collaborate and bid collectively 1 2 Process Treatment Composites Comp[ex Machining Robotics, Automation Tooling Design & Engineering SME Complex Machining Autonomous Systems 4 3 2 1 (Commodity Groups) Extended Enterprise 3 2 1 1 1 2 2 Work Package Bids Extended Enterprise future state - suppliers from a cross sector of Commodity Groups bid collaboratively to provide through life (design and build) capability

Initial Lead Partner Alliance - Structure looks something like this … … End Client A Lead Partner Contractual Link NWAA as ‘honest broker’ selection open book build up (& auditing on expenditure) dispute resolution development Horizontal & Vertical Collaboration Sub - . Partner . 1 Sub - Partner 2 Sub - Partner 3 Vertical Collaboration Horizontal Collaboration ?

The Future? Aerospace Growth Partnership Continued growth in population and trade Growing environmental and resource pressures “Limits to Growth” Growing opportunities and competition New solutions A global business built on global teams

Aero 2075 – Flying into a bright future?

Thank you for listening Any questions? www.aerospacewalesforum.com