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

The Aerospace & Defense Forum San Fernando Valley Chapter March 20, 2018 1

WINNING BUSINESS IN TODAY’S AEROSPACE SUPPLY CHAIN

WHAT SMALL COMPANIES NEED TO KNOW

March 20, 2018 Jim Simpkins

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WINNING –

WHAT DOES IT MEAN TO YOU?

• Beating the Competition
• Enhancing Shareholder Value
• Exceeding Customer’s Expectations

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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

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KNOWING YOUR CUSTOMER’S CUSTOMER

Section 1

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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……………..

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The Aerospace & Defense Forum San Fernando Valley Chapter March 20, 2018 4

LARGE JET STRATEGY

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HOW DO THE TIER1’S REACT

Section 2

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HOW TIER I’S REACT

• They want to be seen as helping the Airlines, but not at the expense
• f 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 ??)

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TIER II’S – “THE MEAT IN THE SANDWICH”

Section 3

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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”

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TIER II / III –

WHERE SHOULD THE FOCUS BE?

Section 4

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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.

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END OF PRESENTATION

Thank Y

• u

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