“Supply Chain Management Handbook” SCMH Overview and Survey Presenter: Darryl Hue – Boeing July 30, 2009

1. “Supply Chain Management Handbook”SCMHOverview and SurveyPresenter: Darryl Hue – BoeingJuly 30, 2009

2. Supply Chain Management Handbook(SCMH) • Purpose: • Overview of SCMH • Objective and Scope • Project Team and infrastructure • SCMH Chapter and work in progress • How to access (Demo) • Survey • SCMH Assessment model

3. SCMH Objective and Scope • Objective: • Provides “How to” guidance material to help improve the “On-Time and On-Quality” performance of products and services throughout the Aviation, Space and Defence industry. • Scope: Guidance Material to include: • Deployment support to implement requirements contained in the IAQG (91xx) developed series of Quality Management Systems standards. • Material to support performance improvement of Supply Chain Processes. • The SCMH • Is structured in line with a Supply Chain process model covering the entire product lifecycle from development through in-service operations • Is provided for use by companies at all levels in the value chain. . • Will be completed progressively and include regularly updated to incorporate feedback and “lessons learned” from its application. • The contents have been developed by the member companies of the IAQG.

4. Focus on “How” through SCMH 91xx 9131 9103 9102 Includes SCMH Guidance material, tools, trainings New or revised IAQG published documents (Standards, guideline) 9100 Requirements Inputs for future revision of 9100 Supply Chain Mgmt. Handbook Links to Providing guidance material and best practices on how to meet requirements and achieve objectives

5. LT Core Members: S. Armstrong – UTC (AAQG) C. Buck - Safran (AAQG) L. Weng- Boeing (AAQG) B. Lauras – Airbus (EAQG) S. Komori – FHI (APAQG) Future Topics Not assigned Project Management Structure/Resources Work Instruction SCMH Leadership Team Support Resources: D. Hue (Boeing) – Proj Mgr R. Pardons (IAQG) – Tech mgr M. Iwadare – APAQG Support Contractors - Technical Writers Member Company Volunteers Preventive Action People Capability (PCAP 001) Notification of Change Technical Project Mgr Project Manager Priorities Master Schedule Counterfeit Part Prevention CI for Small Business New Product Introduction Special Requirements CI for Small Suppliers Requirements & Flowdown 9115 Guidance Material Other Topics Lean Assess. Tools Risk Management FOD Work Transfer Active Project Writing Teams Other Topics Assessment Checklists Configuration Management SQM Basics • Central project templates • Std. plan and processes • Documented expectations FAI Project Management Infrastructure Available Sections Key Characteristics Requirements and flow down • Active Work storage • Standard Processes • Standard templates IAQG Work Space RCA & Problem Solving Non-Conformance Work Transfer Source Selection In Revision In work Not assigned Completed

6. Plus Member (and non-member) Company Participation

7. SCMH Chapters and Work in Progress Requirements and flow Supplier Selection and Special Requirements down templates Capability Assessment Critical items New Product Introduction - Quality Root Cause Analysis & 9103 education package Supplier Quality Mgt Lean Assessment Problem Solving (Key characteristics) Basics Tool Work Transfer Risk Management Configuration Management New Exists Supply Chain Management Handbook Supply Chain Management Handbook 1. Sales, Master 1. Sales, Master 2. Contract 2. Contract 3. Design and 3. Design and 4. Suppliers 4. Suppliers 5. Plant, material, 5. Plant, material, Scheduling & Scheduling & Requirements and Requirements and development development sourcing selection sourcing selection skills, capacity skills, capacity Sequencing Sequencing Flow Down Flow Down & approval & approval planning & planning & scheduling scheduling Requirements and flow Requirements and flow Supplier Selection and Supplier Selection and Special Requirements Special Requirements down templates down templates Capability Assessment Capability Assessment Critical items Critical items Product Performance Product Performance Product Performance Product Performance Detailed Assessment Detailed Assessment Detailed Assessment Detailed Assessment Checklists Checklists Checklists Checklists 9115Software Guidance 6. Order 6. Order 7. Manufacturing 7. Manufacturing 8. Supplier 8. Supplier 9. Control of non 9. Control of non 10. Customer 10. Customer Management and Management and and inspection and inspection operational operational conformities, conformities, Support (Control Support (Control logistic (Internal & logistic (Internal & management and management and corrective and corrective and of service of service external) external) product validation product validation preventive actions preventive actions operations) operations) Root Cause Analysis & Root Cause Analysis & 9103 education package 9103 education package Supplier Quality Mgt Supplier Quality Mgt Lean Assessment Lean Assessment Problem Solving Problem Solving (Key characteristics) (Key characteristics) Basics Basics Tool Tool 9102 Education package 9102 Education package 9102 Education package 9102 Education package Control of non conformities Control of non conformities Control of non conformities Control of non conformities (First Article Inspection) (First Article Inspection) (First Article Inspection) (First Article Inspection) Foreign Object Foreign Object Foreign Object Foreign Object Debris (FOD) Debris (FOD) Debris (FOD) Debris (FOD) 11. Business Management and Customer Satisfaction Monitoring 11. Business Management and Customer Satisfaction Monitoring Work Transfer Work Transfer CI for Small Business CI for Small Business CI for Small Business CI for Small Business Risk Management Risk Management Configuration Management Configuration Management Appendices: New Priority 1 Exists Exists In Work In Work In Work In Work 9100 Rev C 9100 Rev C 9100 Rev C 9100 Rev C People Capability (PCAP 001) Deployment Support Deployment Support Deployment Support Deployment Support

8. Available material Being updated to AS9100 Rev C Being updated to AS9100 Rev C Being updated to incorpate additional input

9. Material In Work Priority 1

10. Are all of the requirements of the standard addressed in the handbook? What is the schedule to complete the handbook or will it be in a continual state of change/improvement? When will the AS9100 Rev C changes be incorporated into the handbook? The handbook has training material, procedures and a matrix with guidance. Where did all of this material come from and how is it intended to be used? What are the restrictions on the use of the material? Is it copyrighted? There are guidance materials identified as “Best Practices” listed in the handbook. Will the auditors hold companies to this level of performance? Will companies hold their suppliers to these “Best Practices”? Don’t “Best Practices” vary dependent on the size and complexity of the company? Has it been determined that the “Best Practices” included in the handbook will work in any company? Some parts of the SCMH have a matrix that gives examples of what the different users can expect from a particular type of company. Are there any instructions on how and when to use the matrix? Will training on the use of the SCMH be available through IAQG? Some Frequently Asked Questions

11. SCMH Access - Demo http://www.iaqg.sae.org/iaqg/

12. SCMH Survey SCMH Survey – • Information page • Your Statement of work • Types suppliers you work with • 11 survey areas – aligns with SCMH chapters • Utilize Assessment Maturity Models • Rate your supply base as a whole • Provide a range • Provide a medium • Identify specific “areas of concern” - Possible future topics for the SCMH

13. SCMH Survey – Information Page

14. Supplier Assessment Model (SCMH Section 4.1) Scope: • To assess a supplier’s capability to a set of main domains impacting supply chain performance Purpose of the Model: • Use as a guide to assess the maturity of a supplier to achieve and sustain customer expectations, especially for “On Time” and “On Quality” delivery It is suitable for: • Different product types • Different company sizes • Total or partial application

15. Items for Improvement Action Plan between supplier and customer Expectation Supplier performance Supplier Assessment Model (SCMH Section 4.1) Five levels of maturity A separate matrix for each process with : 1: Undefined and not capable 2: Defined and applied, but not 100% efficient or not applied everywhere in the company 3: Defined, applied and effective 4: Predictable 5: Optimised • Four domains : • Process • People & Organisation • Tools & Data • Performances Metrics

16. Assessment matrices in joined Excel file 11 sheets, one per business domain Title and Definition of the Business Domain Content for each level (from 1 to 5) and each parameter (Process, People and Organisation, etc…)

17. Rating Example

18. Exemple of results synthesis (10. Customer support not assessed in this exemple) Expected capability level Assessement results

19. Exemple of results summary: Processes with Strengths Exemple of results summary: Processes with Strengths and weaknesses • 11. Business Processes Performance Management and Customer Satisfaction Monitoring • Strength 1 • Strength 2 • Strength 3 • Sales, Master Scheduling and Sequencing • Weakness 1 • Weakness 2 • Weakness 3 • 2 – Contract requirement flow down • Strength 1 • Strength 2 • Strength 3 • 8 – Supplier operational management and product validation • Weakness 1 • Weakness 2 • Weakness 3 • 4 – Supply sourcing selection and approval • Weakness 1 • Weakness 2 • Weakness 3 • 9 – Control of non confomities, corrective & preventive actions • Strength 1 • Strength 2 • Strength 3 • 3 – Design and development • Strength 1 • Strength 2 • Strength 3 • 6 – Order management and logistics • Weakness 1 • Weakness 2 • Weakness 3 • 5 – Planning of product realisation • Weakness 1 • Weakness 2 • Weakness 3 • 7 – Manufacturing and inspection • Strength 1 • Strength 2 • Strength 3

20. Example of results by area

21. Help needed – Your expertise is needed! • Fill out the survey and return to me by end of Workshop • Or mail to: The Boeing Company P. O. Box 3707 mailstop 08-50 Seattle, WA 98124-2207 Attention: Darryl E. Hue • Or scan and email to: “darryl.e.hue@boeing.com” • Remember – Important to identify those critical Supply Chain “Areas of Concern” • Receive input by COB Friday, August 7, 2009 • Names are optional but if you would like to get a copy of the results, please provide email address via separate email

22. Questions? Questions? For any further question or comment, please contact: darryl.e.hue@boeing.com

23. SCMH Back-Up Material Back Up Material

24. Chapter Titles and contents • 1 - Sales, Master scheduling and Sequencing: Balancing and forecasting Medium-Long term customer demand with operational & financial capabilities by optimizing sequence of operations, schedule and resources. • 2 - Contract requirements flow down: Managing Review and flow down of contract requirements from the customers, through all functions internally & to suppliers. • 3 - Design and development: New product introduction activities impacting supply chain performances including product and process essential characteristics management, changes and obsolescence management. • 4 - Supplier sourcing selection & approval: Make or buy process and mapping of the supply chain responsibilities, including partners, suppliers…, Sourcing, Negotiating, & Contracting in line with Make or Buy strategy and Approving suppliers.

25. ChapterTitles and contents (continued) • 5 - Planning of product realisation (Plant, material, skills, capacity planning and scheduling): Plan & optimize the use of resources and means to meet operations planning at plant level. • 6 - Order Management & Logistic (internal & external): Issuing orders, resolving unplanned events & following up till completion including receipt. Collaborative Management of material, services & information to & from the supplier; Optimizing material flow, stock and inventory through the supply chain., up to final customer delivery. Customer property included. • 7 - Manufacturing & inspection (Production & service provision): Manufacturing and product integration processes, including inspection. • 8 - Supplier operational management and product validation (Purchasing process): Operational monitoring and surveillance of suppliers to ensure purchased products and services meet customer requirements (includes initial product validation). Working with suppliers to continually raise their performance levels (Supplier Development activities when required).

26. Chapter Titles and contents (continued) • 9 - Control of non conformities, corrective & preventive actions : Non conformance management and root cause analysis process for all business domains. Raising, notifying, deciding and acting to manage and prevent non conformities (product, processes, documentation, delays, etc...). • 10 - Customer Support: Supporting the customer to ensure end user satisfaction during "in service" phase (Maintenance & Repair, Spares, Training and Documentation, Operating Data feedback and analysis). This includes when applicable, supporting the customer during the product integration activities, up to delivery to the end user (Entry Into Service). TRANSVERSAL PROCESS: • 11- Business Processes Performance Management and Customer Satisfaction Monitoring: Survey, Consolidation and continual improvement of Supply Chain performance (Internal/External), risk and change management, overall decision process to meet customer satisfaction and business objectives throughout Life cycle

27. Supplier Selection and Capability Assessment Model Definition and content of the 5 levels : • 1: Undefined and not capable (No Process, Methods, Tools and/or inappropriate behaviours) • 2: Defined and applied : but not 100% effective or not applied everywhere in the company (capable for low risk products and services) • 3: Defined, applied and effective: repeated satisfactory performance capable • 4: Predictable : performance of proactive improvements towards planned targets, but not systematically on all processes / areas / products • 5: Optimised : best in class, continual improvement fully deployed, involving all stake holders as part of company culture