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Supply Chain Providers-What Is YourDifferentiationSeptember 2010
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Market
BusinessMix
CustomerBase
Sector
GKN Aerospace 2010
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GKN Aerospace Sector Split
Special ProductsPropulsion SystemsIntegrated Aerostructures
Focussed business sector groups
Coordinated Customer approaches
Common Technology plan
Based on 2009 Revenues
65% 25% 10%
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$400M UK Based
A400M Spars
AWIATOR II
EFFICOMP
Integrated Wing
VITAL
NGCW
ELF1
Acoustic
ELF2
NGCW
Automation
Microwave Curing
SAMULET
ALCAS
Investing In Technology,Collaboration,
and Partnerships
Civil Focus
$2.5Bn Global First Tier
Civil Military Balance
Build To Print Aerostructures Risk Sharing Design and Build PartnerAerostructure, Engines and Canopies
GKN Growing a Global Aerospace First Tier
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Drivers For Opportunity and Growth
Source - International Air Transport Association
79 % = Single Aisle
More Electric Aircraft Concept
Conventional Aircraft Power Sources
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A Global Environment With A Competitive Appetite
Snecma Morocco EngineServices
Matis Aerospace (J/V RoyalAir Maroc, Boeing andLabinal : manufacture ofelectrical cables)
Boeing established apartnership with AeroVodochody
Sikorsky is to outsource partof manufacturing activities inCzech Republic
Latecoere Group acquired LetovLetecka Yroba (LLY) will investEUR12.2 m investment over 5 years tomodernise productionEADS cooperating with LLY as well
Pratt & Whitney investment in
WSK Rzeszow (manufacturingengine parts) and has its ownsubsidiary Kalisz for production
Malaysia
Government objectiveto become globalsupplier for aerospaceby 2015
Initial focus on MROservices, compositesand avionics
Significant FDI fromwestern aerospaceindustry
Mechanical parts
Indonesia Strong government
support toreestablishIndonesian
Aerospace (formerlyIPTN) Partnerships with
CASA andEurocopter
Developing MROcapabilities
Mechanical partsMexicoLocations for manufacture andlow value-add engineeringservices established by: GKN Aerospace Goodrich Gulfstream Honeywell Labinal Parker Hannifin PCC Rockwell Collins
Engine repair and overhaulJV with Malaysia Airlinesand AirAsia
MRO facility for APUs
JV facility establishedfor componentmanufacture
Low cost countries with growing aerospace industries [examples]
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2010 Budget Spend (M)
M1 - Machining from supplier
Material
30%
C5 - Composites
10%
F5 - Forgings
6%
A7 - Aluminium5%
A2 - Aircraft Subassemblies
4%
F1 - Fabrications (inc. Rims)
4%
T1 - Titanium
4%
F3 - Fasteners
3%
Indirect
20%
Other
7%
G3 - Glass & Glazing
2%F6 - Forming - Metal
2%
S7 - Subcontract
3%
The Importance Of Suppliers to GKN Aerospace
Budgeted Spend in Excess of 800M Per Year
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The Journey to Intelligent Procurement
Phase 1
Global contracts
Preferred suppliers
Supplier BOM alignment
Supplier rationalisation
Future
Full partner engagement
Risk sharing D&B
Lead supplier cascades
Value stream integration
Historically
Leveraged pricing
Medium term contracts
Competitive selection
Earlier engagement
Phase 2
Partner relationships
Long term agreements
Lean development
Lean deployment
CommodityManagement
SupplierConsolidation
PartnerEnvironment
20132013
Integrated Supply
TacticalSupply
Tier 2 FullyOptimised
SupplyChain
Intelligent Procurement
20112011
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GKN Aerospace Supply Chain Development Launched AtFarnborough 2010
Extended Value Stream Maps
Diagnostic Tools
C.I. Plans
Recognition
RelationshipManagement
C.I. TechniquesTraining
CommodityManagement
CurrentCurrent Phase 1Phase 1
SupplierConsolidation
Partner Environment
Phase 3Phase 3
Integrated Supply
Phase 2Phase 2
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So What Are Our Supply Chain PartnershipExpectations
To work with strategic partners who :
Share our strategic vision
Invest alongside us
Become an extension of our Enterprise
Have common technology / capability plans
Work together to reduce cost
Share the benefits
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Summary
GKN Aerospace strategic focus has been to create a global First Tierprovider
GKN Aerospace has established a position as a technology andengineering innovator through investment and risk sharing
The future outlook is strong but the pressures will be greater
Customers continue to expect greater value and service.Consolidation continues to drive the need for single points of deliver
GKN is striving to reduce the transactions it has to undertake with itscustomers and supplier
The challenge we all face is innovation and differentiation
What can you do that meets these criteria
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