WINNING BUSINESS IN TODAYS AEROSPACE SUPPLY CHAIN WHAT SMALL - PDF document

The Aerospace & Defense Forum San Fernando Valley Chapter March 20, 2018 WINNING BUSINESS IN TODAY’S AEROSPACE SUPPLY CHAIN WHAT SMALL COMPANIES NEED TO KNOW March 20, 2018 Jim Simpkins Confidential and Proprietary Confidential and Proprietary WINNING – WHAT DOES IT MEAN TO YOU? • Beating the Competition • Enhancing Shareholder Value • Exceeding Customer’s Expectations 1

The Aerospace & Defense Forum San Fernando Valley Chapter March 20, 2018 OUTLINE • Introduction – Jim Simpkins • Section 1 – Knowing your Customer’s Customer • Section 2 – How do the Tier 1’s React • Section 3 –Tier II’s –The Meat in the Sandwich • Section 4 –Tier II / III – Where Should the Focus Be • Section 5 – Conclusion Confidential and Proprietary Confidential and Proprietary KNOWING YOUR CUSTOMER’S CUSTOMER Section 1 2

The Aerospace & Defense Forum San Fernando Valley Chapter March 20, 2018 Confidential and Proprietary Confidential and Proprietary TIER 0 –WHAT DO THE AIRLINES NEED? They want/need a predictable economic model 1. Labor – Union contracts have been renegotiated 2. Maintenance – Tier II’s are making better returns that Tier I’s 3. Price / Lease Costs – Bankruptcy / Interest rates are low 4. Fuel – Price of a barrel of oil is low, BUT…………….. 3

The Aerospace & Defense Forum San Fernando Valley Chapter March 20, 2018 Confidential and Proprietary LARGE JET STRATEGY Confidential and Proprietary HOW DO THE TIER1’S REACT Section 2 4

The Aerospace & Defense Forum San Fernando Valley Chapter March 20, 2018 Confidential and Proprietary HOW TIER I’S REACT • They want to be seen as helping the Airlines, but not at the expense of their bottom line. (Both Airlines and Tier 1’s feel that too much of the profit is going to Tier II’s and Tier III’s) So they are looking to help you --- � Partnering for Success • PFS 1.0 focused on price. • PFS 2.0 focuses on terms and conditions (new revenus streams) • Product Support Agreements • Liquidated Damages for being late delivery • Quality Escapes / Penalties • Flow downs (especially on the Military side) • Boeing wants to stretch accounts payables (then get a discount to pay in XX • days) Suppliers get credit for investing in technology (Quality and Delivery ??) • Confidential and Proprietary TIER II’S – “ THE MEAT IN THE SANDWICH ” Section 3 5

The Aerospace & Defense Forum San Fernando Valley Chapter March 20, 2018 Confidential and Proprietary WHAT TIER II’S NEED TO PROVIDE TIER I’S Quality – 100% Quality with zero defects + • AS9100 Rev. C – is a given • Implement in-process quality check points • Consider PPAP - • Don’t rely on Receiving Inspection and ATP’s • Delivery – 100% OTD + • VMI – Carry Finished Goods • Kan/Ban – Pay for what they pull • T erms – • Tier II’s want PMA to control the aftermarket • Tiers I’s want greater participation in the aftermarket • Price – A competitive price • Lean – • Lean is more than Charts – it should always be about Parts (Process) • It should not be initiative heavy – Focus on the “Precious Few” • Confidential and Proprietary TIER II / III – WHERE SHOULD THE FOCUS BE? Section 4 6

The Aerospace & Defense Forum San Fernando Valley Chapter March 20, 2018 Confidential and Proprietary SERVICES WRAPPED AROUND PRODUCTS Quality – Don’t give your customer’s an excuse to second source your products • Delivery – Say what you can do and do what you say, be 100% • Consider Kan-Ban and VMI program(s) to leverage new business • Lean – participate in Lean, but keep it Lean (its about parts not charts) • Invest in Technology (that will improve Fuel Efficiency / Reduce Weight ) • Be a Customer Focused Supplier that provide “Services Wrapped Around Products” • Participate in programs like Exostar • Allow no cost delivery changes (ie no expedite fees) • Are responsive to quotations, phone calls, complaints • Be diligent in reviewing your T’s and C’s • Post Customer Scorecards and show that you have a Voice of the Customer Process” that actions the RED • signals Be the Supplier that can do the above and Price will become less of an issue. • Confidential and Proprietary END OF PRESENTATION Thank Y ou 7