We live in a volatile world Vice President & COO [email protected].

FES

We live in a volatile world

Vice President & [email protected]

CHUCK GRAY

FES

Aircraft Production 1999-2018Rough Times After The First Civil/Military Upturn In 25 Years

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '180

40

80

120

160(Market Value in 2009 $ Bns)

Fighters Bizjets Rotorcraft

Mil i taryTransports/Trainers/Other Jetl iners/Regional AC

FES0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

DoD Operating & Support Costs vs. Investment

% o

f D

oD

BA

(In

clu

des

OC

O)

1950 – 2010Average: 36%

Tension between O&S and investment will reach historic proportionsTension between O&S and investment will reach historic proportions

Lowest investment share since the Korean War

O&S (MILPERS plus O&M)

Investment (RDT&E plus Procurement)

FES

BALANCING QUALITY, SAFETY, RISK AND COST IN Volatile SPACE AND DEFENSE MARKETS

FES

Program risks associated with an

“up & down” business scenario

FES

Hurry up, you are behind schedule

• DESIGN PROGRAMS• Shortcut requirements analysis: DESIGN RE-SPINS• Compromise reliability / maintainability / availability analysis:

REDUCED SUPPORTABILITY• Reduce scope & content of Systems / Hardware / Software Peer

Reviews: MORE RE-SPINS• Shortest lead time becomes principal parts selection criteria:

INCREASED OBSOLESCENCE & COUNTERFEIT PARTS RISKS• Hardware – Software trade-off studies scope reduced: PRODUCT DESIGN

COMPROMISED• Reduced emphasis on Design for Manufacturing & Test: PRODUCTION/TEST REWORK

• PRODUCTION PROGRAMS• Shortcut work instruction preparation time: INCREASED “DO OVERS”• Compromise production training: INCREASED SCRAP & REWORK• Reduce rigor of first article / first build reviews: JEOPARDIZE PRODUCT

INTEGRITY/SCRAP/REWORK• Focus on delivery VS first time quality: MISSION FAILURE, INCREASED CUSTOMER

REJECTIONS

ACROSS THE BOARD RISK TO SYNERGY

“CORNERS”

FES

SLOW DOWN --- THE PROGRAM IS SLIPPING

• Design a ROLEX VS the TIMEX that the customer ordered: costs, lead times, producibility impacted

• Utilize science experiments to solve a problem requiring simple analysis

• Retain people on the program where ROI is low• Introduce production changes that actually reduce producibility

& testability

ANOTHER DAY ON

THE PROGRAM IS

ANOTHER DAY OF

COST!

FES

Subcontractors caught in the middle

• Subcontract reduction/terminations/extension• Delayed customer awards = Compressed

Subcontractor Cycle Time

• Extended material/parts lead times• Increased parts materials/cost: Building to

ORDER VS Building to STOCK

“SUBCONTRACTOR”

FES

QUALITYSAFETY

DELIVERY

COST

CULTURE, ROBUST PROCESSES,

LEADERSHIP

FES

A Native American,Woman-Owned Small Business

29 YEARS OF CUSTOMER-FOCUSED EXCELLENCE

IN ELECTRONICS ENGINEERING DESIGN AND MANUFACTURING

High Reliability Manufacturing

Stillwater

86,500 Sq FT Facility

A SMALL BUSINESS PERSPECTIVE

Brenda Rolls

President & CEO

FES

UAS Programs

Engineering Design & production focus

Maritime Programs

Aircraft ProgramsSpace and Missile

Programs

SB-4229A(V)/SP

Radar Switchboards

SB-4229

FES

Product Assurance Network

Corporate Quality Goals

GUIDELINES REQUIREMENTS TOOLS APPLICATIONS PERFORMANCE ASSESSMENT/

FEEDBACK

Departmental Goals

Customer Specifications

MIL-SPECS

Contractual Requirements

Process Specifications

ISO Documents

Process Training

SPC

CAB

MRB

TQM's

Prog Review

BA Reviews

Vendor Rating

Semi-annual Mgt Review

Pivot Table

Program Mgt System

Contract Mgt System

Supplier Mgt

Internal Process Audits and Validation

Pareto Charts

Process Improvement

Process Analysis

Q-Codes

Bench-marking

Audits

Metrics

Customer Feedback• FES-QP-1

• FES Quality Plan

8.1-2

8.5-2-1

8.3-2

8.1-5

5.6-1

5.6-1

7.4-1

5.6-1

7.4-1

8.2-1

5.6-7

7.1-1

7.2-1

• FES-QSP-

8.5-2-1

8.2-1

5.6-1

• FES-QSM-1 • FES Quality

Manual

• FES-QSP -7.2-2

• FES-QSM-1 • FES Quality

Manual

• FES-QSP-7.2-1

7.1-1

7.2-2

7.1-1

7.4-3

8.5-1

• FES-QSP- 8.5-2-1

8.5-2-1

FES

CORE PROCESSES

• Design

• Material Acquisition

• Manufacturing

• Product Support

FES

Processes without leadership

commitment & cultural buy-in are

a house of cards ready to Fall

FES

Developing a corporate culture of commitment & process optimization

• Leadership INTEGRITY and Organizational / Employee ETHICS & COMMITMENT Beyond Reproach

• Foster TRANSPARENT COMMUNICATIONS & Mutual Respect Throughout the Company

• Welcome New Ideas

• Specific Goals and ACCOUNTABILITY Established

• Resources Allocated to Achieve Quality Goals in Company Operating Plan

• Timely and Accurate PERFORMANCE FEEDBACK

• Fruits of Success “fairly” Shared with Contributors • LESSONS Learned are Captured & RE-DEPLOYED

FES

Key Quality Metrics• LINE of BALANCE

• CUSTOMER SATISFACTION

• ON-TIME DELIVERIES

• QUALITY ACCEPTANCE

• WARRANTY RETURNS

• NONCONFORMANCE

• CUSTOMER COMPLAINTS

• SUPPLIER CORRECTIVE ACTIONS

• SCRAP

• REWORK

• SUPPLIER PERFORMANCE

• RISK

FES

Customer Satisfaction

.810 + .988 --- .002 = 89.90 %

2 Proposals Won = 86Proposals Lost = 20Total Proposals = 106Wins ÷ Total Proposals Submitted = Proposal Win Rate Proposal Win Rate:

81.0 %FES Computed Delivery Rate:

98.8 %Warranty Returns = 4Units Shipped = 2035Warranty Returns ÷ Units

Shipped : 4/2035 X 100 = .2% x 100

(Proposal Win Rate + FES Delivery Rate)

/2

Warranty Return Rate

= SCORE

FES

Supplier RatingsFrontier's Supplier Quality Rating System is based on a 9 point system. It is divided into three categories,

which will be the basis for a supplier remaining on the Approved Suppliers List.

GOLD LEVEL 9 points Supplier Partner - Exceptional supplier performance, exceeding expectations.

SILVER LEVEL 8-6 points Preferred Supplier - Very good supplier performance, meeting or exceeding expectations.

BRONZE LEVEL 5-3 points Qualified Supplier - Satisfactory supplier performance, meeting expectations.

YELLOW LEVEL 2 points Marginal Supplier - Marginal Supplier performance, supplier is not meeting expectations.

RED LEVEL 1 - 0 point Unsatisfactory Supplier - Unsatisfactory supplier performance, clearly fails to meet expectations. Supplier is placed on Probation and has 60 days to implement corrective action. Unacceptable performance requires mandatory performance review.

FES

DoD Nunn-Perry Awards

Northrop Grumman World

Class Team Awards

Boeing Supplier of Year Awards

MILI 45208

MILI 45208

MILQ 9858MILQ 9858

Lean Journey Begins

Lean Journey Begins

ISO 9001-1994

ISO 9001-1994

ISO 9001-2000

ISO 9001-2000

USN BMPAudit

USN BMPAudit

AS9100AS

9100

NGST GoldNGST Gold

Supply Chain Mgt System

Supply Chain Mgt System

ERPERP

1989 1994 1999 2000 2001 2005 2006 2008 2009

A journey of continuous improvement

FES

challenge• Forced re-design of the F-18 E/F Engine Fuel Display

due to LCD supplier Bankruptcy o Hardware / Software

• No break in productiono Required 75% reduction in re-design time

• Focus on 1st Time Quality to Reduce Production Cost

FES

Reduce Order to First Delivery Cycle Time

PO Award

FES Critical Path

Sub Critical Path

FES & Sub Critical Path

Initial State

PO Award to

Sub

8 wks

All material received

FES

25 wks

All Sub material received

30 wks

Sub 1st Delivery

56 wks

FES 1st Delivery

76 wks

18 wks

4 wks

CurrentState

41 wks

48 wks

20 wks

Supply Chain LEAN Deployment

FES

Result

Achievements:

DESIGN Time Cut -75%

MTBF Improved +33%

PRICE Reduced -48%

F/A-18E/F Engine Fuel Display Redesign

EngineFuel

Display

Multi-Purpose Color Display

Customer Recognition:

Boeing’s Avionics Supplier of the Year

2001

New Up-FrontControl/Display

F

FES

Assembly

PCB

FES

Roadblocks to watch for

Inadequate

Training

Too Much Too Early

No Link to Company

Objectives

No Incentive

Dirty fingernail

gang looses clout

Diverging goals and objectives

Poor

Communication

Leadership Buy-In

Backsliding

FES

A Closing Thought

If the rate of change outside your business

exceeds the rate of change inside your business,

the end is in sight.

-Jack Welch

Profitability

PRICE

Pre Lean Post Lean

Cost Cost

Profit

Profit