Introduction to the IAQG SCMH “Supply Chain Management Handbook” IAQG General Assembly Melbourne, Australia 18 April 2007 Cherif Khelil Safran Dale Gordon MPC Susan Armtrong UTC Bernard Lauras Airbus

Agenda General presentation of “Supply Chain Management Handbook” objectives and concept Presentation of SCMH projects that are well advanced

IAQG Strategy Foundations - Definitions IAQG Strategy is to develop and promote implementation of Common Standards, Shared Auditing and Continual Improvement methods and tools: Assuring Customer Satisfaction through On-Time, On-Quality Delivery of products and services, through the lifecycle Delivering exactly what the customer ordered, exactly when we agreed to deliver it

Existing IAQG Standards today Requirements to harmonise the Quality Management System 9100 – Aerospace Quality Management System (Design and Manufacturing) 9110 – Maintenance and Repair Stations 9120 – Stockists & Distributors Requirements to raise Product Integrity 9102 - First Article Inspection 9103 - Variation Management of Key Characteristics 9131 - Non-conformance Management 9134 - Global Supplier Risk Management Etc…

IAQG Objectives have recently evolved Up to now, IAQG produced standards describing requirements We need now to help suppliers to develop: By helping them understanding our requirements By providing guidance and best practices on how to fulfil requirements and achieve objectives and expectations Up to Now: Focusing on the WHAT And Now: Focusing on the HOW

New focus on “How” in particular through “SCMH” What does SCMH mean ? Supply Chain Management Handbook What is the SCMH ? A collection of guidelines, trainings, etc… What are the Objectives of the the SCMH ? Complementing existing standards In some cases, need for new standards or standard improvement could be identified How is the SCMH organised ? Several Projects, addressing a specific process or activity Provides links to 9100 series standards

New focus on “How” in particular through “SCMH” The Supply Chain Management Handbook further explains the requirements in 9100: Example 9100 states “The organization shall select suppliers which meet organization requirements”, but does not say how to assure or demonstrate that they meet these requirements” The AAQG committed to developing this overarching standard at their meeting in March 05. The document, Supplier Management 101, since renamed the Supplier Management Handbook, will contain both standards and ARP’s. “Supplier Selection and Capability Assessment” is a guideline on how to assess supplier capability and select them

+ Supply Chain Management Handbook Creation Concept AS/EN/JISQ 9100 Is Clarification of the standard needed to improve performance? In which phase of a programme is it applicable: Supplier Selection, Product development & industrialisation, On Going (series) Production, or Change Control activity ? Are there relevant existing industry standards or activities? AS/EN/JISQ 9100 Requirements Published Mat'ls Work in Progress Best Practices None Impact on Quality and Delivery performances? Industry Enthusiasm? Regulatory & Stakeholders Expectations? Easy Implementation? + A roadmap of how we’ll develop the handbook and some timing SCMH Development Priority Setting

SCMH : A framework for organizing and integrating our work New or revised IAQG standards 91xx 9131 9103 9102 9100 Requirements 9100 clarification (in next revision) Supply Chain Mgmnt Handbook Projects Preference is to develop guidance material, not new requirements IAQG guidelines on how to meet requirements

SCMH: A Facilitation Tool Customer Prime Supplier Subtier 1 Subtier 2 Subtier 11 Subtier 12 Subtier SCMH facilitates the flow of expectations and solutions to all levels of the Supply Chain

Supply Chain Management Handbook 10 Projects identified, 4 with significant progress, 1 on hold, 2 with volunteers Supply Chain Management Handbook Supplier Selection and Capability Assessment Requirements and Flow Down Process Control Work Transfer Significant progress New Product Introduction On hold Product Verification and acceptance Programme Management On going approval and maintenance No writing leader Controlling Non Conforming Product Supply Chain Management & performance Measures Volunteers identified

“Supply Chain Management Handbook” Supplier Selection and Capability Assessment IAQG Leader: Cherif Khelil – Safran

Supplier Selection & Capability Assessment Objective To build a common model to assess the Maturity of a Supply Chain to achieve sustainable On Time & On Quality delivery objectives

10 processes + 1 transversal one Titles consistent with 9100 when possible * * Red titles coming from 9100, black titles when clarification needed or no requirements 1. Sales & Operation Planning 2. Contract requirement flow down (Customer related Process) 3. Design and development 4. Suppliers sourcing selection & qualification (Purchasing process) 5. Plant, material, skills & capacity planning & scheduling (Planning of product realisation) 6. Order Management (Internal & external logistic management) 7. Manufacturing (Production and service provision) 8. Supplier operational management (Purchasing process) 9. Control of non conforming product and corrective action (Product Quality and Delays) 10. Customer Support (Control of service operations) 11. Business Management and Customer Satisfaction Monitoring

Supplier Development if deemed necessary Supplier Maturity Assessment per Supply Chain Process Example Four levels of maturity (Maturity model CMMI like) Undefined : No Process, Method, Tools/ No Process, Method, Tools/ and Appropriate Behaviours Defined Applied Optimising: Implemented and optimised, continuous improvement Four domains assessed: People & Organisation Processes Tools & Data Performances Metrics Non Conformity Non Conformity 1 1 2 2 3 3 4 4 Undefined Undefined Defined Defined Applied Applied Optimizing Optimizing Management Management People & Organization People & Organization No clear Accountability No clear Accountability Expert firefighters Expert firefighters Clear accountability Clear accountability Multifunctional team Multifunctional team No Problem solving No Problem solving Areas of potential Supplier Development if deemed necessary Cross functions Cross functions Highly Skilled Highly Skilled skills skills Highly skilled Highly skilled Process Process Reactive needs Reactive needs Ad hoc firefighting Ad hoc firefighting Root cause process in Root cause process in Mature process for root Mature process for root Customer Stimulus Customer Stimulus actions actions place place cause & preventive cause & preventive Process playbooks Process playbooks actions actions Limited preventive actions Limited preventive actions Expectation Supplier performance Tools & Data Tools & Data Manual : Fax e Manual : Fax e - - mail mail Multiple Data base Multiple Data base Integrated database, clear Integrated database, clear Internal & external Internal & external workflows, internal workflows, internal collaboration. collaboration. Spreadsheet Spreadsheet collaboration collaboration Real time intelligent Real time intelligent workflows workflows Performance Performance No measurement of No measurement of Measuring performance Measuring performance Performance drives action Performance drives action 3+ regular review of 3+ regular review of Performance Performance plans plans metrics effectiveness metrics effectiveness Metrics Metrics

Matrices exist for all processes Risk based analysis and supplier selection decision Matrices exist for all processes Supplier Assessment Results Decision to select or not based on risk analysis like 9134 “Supply Chain Risk Management guideline” (Special action plan if not capable but need to select) Each Company may apply weighting to each process as appropriate to their Product, Customer, Risks, etc…

“Supply Chain Management Handbook” Requirements and Flowdown IAQG Leader Larry Weng - Boeing Report by Dale Gordon - MPC

Requirements and Flowdown Objective To publish best practices and guidelines on how to ensure requirements are well identified, flowed down to suppliers and agreed upon between customer and suppliers.

Requirements and Flowdown

Requirements and Flowdown - Table of Contents Sec 9100 Table of Contents Sec 9100 Table of Contents 2.1 7.4.2 Purchasing Information 2.2 7.4.2a Requirements for Approval 2.3 7.4.2b Requirements for personnel 2.4 7.4.2c Requirements for a quality management system 2.5 7.4.2d Requirements for technical data 2.6 7.4.2e Requirements for acceptance 2.7 7.4.2f Requirements for test specimens 2.8 7.4.2g Requirements for nonconforming product 2.9 7.4.2h Requirements for changes 2.10 7.4.2i Requirements for right of access 2.11 7.4.2j Requirements for flow down to sub-tiers 2.12 7.4.1 Purchasing Process 2.13 7.4.1a Register of approved suppliers 2.14 7.4.1b Supplier performance review 2.15 7.4.1c Supplier corrective action 2.16 7.4.1d Use of customer-approved special process sources 2.17 7.4.1e Authority for disapproval of sources 2.18 7.2.1 Requirements Related to the Product 2.19 7.2.1a Requirements for delivery and post-delivery activities 2.20 7.2.1b Requirements not stated by the customer 2.21 7.2.1c Regulatory or statutory requirements 2.22 7.2.1d Requirements determined by the Organization 2.23 7.2.2 Review of Requirements Related to the Product 2.24 7.2.2a Requirements for Product 2.25 7.2.2b Contract or order requirements 2.26 7.2.2c Ability to meet defined requirements 2.27 7.2.2d Evaluation of risk 2.28 Records of review 2.29 Undocumented requirements 2.30 Requirement changes 2.31 7.2.3 Customer Communication 2.32 7.2.3a Communication of product information 2.33 7.2.3b Handling of customer order enquiries 2.34 7.2.3c Customer Feedback All subchapters of chapter 2 have been broken down to 9100 requirements

Requirements and Flowdown Content Structure Generic Expectation Specific Expectations How to demonstrate compliance Best Practices

Requirements and Flowdown Content Structure Specific to the product type 34 Templates have been populated Specific to the Buyer and Seller

“Supply Chain Management Handbook” Process Control Education Package about 9103 (Variation Management of Key Characteristics) IAQG Leader: Bernard Lauras - Airbus

9103 - Variation Management of Key Characteristics - Education package Objective Promote benefits of IAQG Standard 9103 (Variation Management of Key Characteristics) and gain broader acceptance Increase skills for all people involved in 9103 deployment Reason The application of 9103 will help resolve the main contributors to quality non-conformance in aerospace, but is not sufficiently and adequately deployed (lack of buy in, lack of skills)

9103 - Variation Management of Key Characteristics - Education package 9103 education package technical content completed Key Characteristics are the main ones guaranteeing full Customer satisfaction, that means ensuring all his needs are effectively & permanently met

“Supply Chain Management Handbook” Process Control Root Cause Analysis and Problem Solving IAQG Leader: Bernard Lauras - Airbus

Root Cause Analysis and Problem Solving Objective Propose methodology to improve the way escapes and problems are managed (including communication between all actors - engineering, MRB, supplier, customer, etc...) to reduce their impacts, contain them as far upstream as possible and prevent recurrence.

Root Cause Analysis and Problem Solving Reason Our suppliers (and even sometimes our organisation) do not deliver correct Root Cause Analysis and Problem Solving results This is because: We have not set criteria about what makes an acceptable corrective action plan We continue to accept bad answers (even if say we will not, reality of life makes us accepting ) People (internal and external) do not have the Root Cause Analysis culture, do not know any process or do not have the proper skill-sets Cultural change required to overcome the situation

Proposed “9 Steps” harmonised Process Objectives of the 9 steps defined Communication is a key aspect All methods basically do the same thing, although with different focus, for example DMAIC has a stronger data focus, whilst 8D has a stronger people focus (and also has the unique ‘contain’ step).

“Supply Chain Management Handbook” Work Transfer Management (AAQG) IAQG Leader Susan Armstrong - UTC

Work Transfer Management Objective To provide guidelines for the exercising of effective risk and management control when changing the source of supply of a component, a component package or an assembly across a company or its external supply chain.

Work Transfer Management Supplier A Supplier B Going to talk about whats probably the most visible part of the IAQGs work- its initiatives, particularly the documents it produces You may be aware of the Standards that the IAQG produces but the IAQG also produces Guidelines Many of the initiiatives to produce these documents start off as global activities, others start within one of the IAQG sectors and then move to become world wide documents. Reasons: Unsuccessful work transfer is a major problem for the industry We have not standardised process to do it

Work transfer Management Document issued describing Main phases required in the decision making process to ensure all risks are identified and mitigated Main activities to be conducted and action owners Decision gates, including project closure and lessons learned

Phase 1 Proposal & Feasibility Phase 4 Execution of Plan Work Transfer Management Phases & Gates: Gate 1 Gate 2 Gate 3 Gate 4 Phase 1 Proposal & Feasibility Phase 2 Develop Business Case Phase 3 Detail Planning Phase 4 Execution of Plan Phase 5 Project Closure Proposal & Feasibility Gate Review Team Launch and develop charter Source Selection Risk Assessment Business Case Gate Review Detail Planning Knowledge Transfer pre-move Gate Review Project Management Technical Review Requirements Production Readiness Review FAI / LAI Knowledge transfer Gate Review Identify Continuous Improvement opportunity Capture Lessons Learned Recognize team performance Post implementation review Templates WT Project Proposal Form Gate Check List Project Charter Risk Assessment Business Case Gate Check List Project Plan Transfer checklist Gate Check List Production Readiness Review Check List AS9102 FAI/LAI Gate Check List Closure Form

Conclusions All SCMH produced material is available through any IAQG member Please review data and give feedback to SCMH focals: cherif.khelil@safran.fr lawrence.a.weng@boeing.com gordon.d.barnes@boeing.com susan.armstrong@utc.com bernard.lauras@airbus.com

Contacts Product Realisation Processes Supply Chain Process Capability AAQG: Susan Armstrong - UTC APAQG: Kouichi Watanabe - IHI EAQG: Bernard Lauras - Airbus Supply Chain Process Capability AAQG: Larry Weng - Boeing EAQG: Cherif Khelil - Safran