Introduction to the IAQG SCMH “Supply Chain Management Handbook”

1. Introduction to theIAQG 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

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

3. IAQG StrategyFoundations - 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

4. 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…

5. 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

6. 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

7. New focus on “How” in particular through “SCMH” “Supplier Selection and Capability Assessment” is a guideline on how to assess supplier capability and select them • 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”

8. Impact on Quality and Delivery performances? Industry Enthusiasm? Regulatory & Stakeholders Expectations? Easy Implementation? SCMH Development Priority Setting • Published Mat'ls • Work in Progress • Best Practices • None + Supply Chain Management Handbook Creation Concept 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

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

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

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

12. “Supply Chain Management Handbook”Supplier Selection and Capability AssessmentIAQG Leader: Cherif Khelil – Safran

13. 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

14. 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

15. Areas of potential 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 1 1 2 2 3 3 4 4 Non Conformity Non Conformity Undefined Undefined Defined Defined Applied Applied Optimizing Optimizing Management Management No clear Accountability No clear Accountability Expert firefighters Expert firefighters Clear accountability Clear accountability Multifunctional team Multifunctional team People & Organization People & Organization No Problem solving No Problem solving Cross functions Cross functions Highly Skilled Highly Skilled skills skills Highly skilled Highly skilled 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 Process Process actions actions place place cause & preventive cause & preventive Customer Stimulus Customer Stimulus actions actions Process playbooks Process playbooks Limited preventive actions Limited preventive actions Manual : Fax e Manual : Fax e - - mail mail Multiple Data base Multiple Data base Integrated database, clear Integrateddatabase, clear Internal & external Internal & external Expectation Supplier performance Tools & Data Tools & Data workflows, internal workflows, internal collaboration. collaboration. Spreadsheet Spreadsheet collaboration collaboration Real time intelligent Real time intelligent workflows workflows 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 Performance Performance plans plans metrics effectiveness metrics effectiveness Metrics Metrics

16. 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…

17. “Supply Chain Management Handbook”Requirements and FlowdownIAQG Leader Larry Weng - BoeingReport by Dale Gordon - MPC

18. 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.

19. Requirements and Flowdown

20. Requirements and Flowdown - Table of Contents All subchapters of chapter 2 have been broken down to 9100 requirements

21. Requirements and Flowdown Content Structure 9100 Requirement Generic Expectation Specific Expectations How to demonstrate compliance Best Practices

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

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

24. 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)

25. 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

26. “Supply Chain Management Handbook”Process ControlRoot Cause Analysis and Problem SolvingIAQG Leader: Bernard Lauras - Airbus

27. 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.

28. Root Cause Analysisand 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

29. Proposed “9 Steps” harmonised Process Objectives of the 9 steps defined Communication is a key aspect

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

31. 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.

32. Work Transfer Management Supplier A Supplier B Reasons: Unsuccessful work transfer is a major problem for the industry We have not standardised process to do it

33. 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

34. Work Transfer ManagementPhases & 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

35. 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

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