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

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

SCMH Objective and Scope 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.

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

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

IAQG Member Company Participation Non-Members Participation Plus Member (and non-member) Company Participation IAQG Member Company Participation Airbus Gulfstream ATK Liebherr Avio Lockheed Martin Bell Messier Dowty Boeing MHI Boeing Canada MTU Bombardier Parker Dassault Safran Dassault Aviation Spirit AeroSystems EADS Sukhoi Embraer, Brazil Thales ESA UTC Eurocopter Volvo Aero Fuji Heavy industries, LTD Vought GE Aviation Zodiac Goodrich   Non-Members Participation JPL-NASA NQA-USA Progress Casting SEA Spirit Aero Triumph UL DQS Inc. Verify Inc

SCMH Chapters and Work in Progress 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 New New Product Introduction - Quality Lean Assessment Tool Supplier Quality Mgt Basics Risk Management Special Requirements Critical items Configuration Management Exists Work Transfer 9103 education package (Key characteristics) Root Cause Analysis & Problem Solving Supplier Selection and Capability Assessment Requirements and flow down templates Requirements and flow Requirements and flow Special Requirements Special Requirements Supplier Selection and Supplier Selection and down templates down templates Critical items Critical items Capability Assessment Capability Assessment 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) 9103 education package 9103 education package Supplier Quality Mgt Supplier Quality Mgt Root Cause Analysis & Root Cause Analysis & Lean Assessment Lean Assessment (Key characteristics) (Key characteristics) Basics Basics Problem Solving Problem Solving 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: Exists Exists In Work In Work In Work In Work New Priority 1 9100 Rev C 9100 Rev C 9100 Rev C 9100 Rev C People Capability Deployment Support Deployment Support Deployment Support Deployment Support (PCAP 001)

Available material Being updated to AS9100 Rev C Chapter Section SCMH Content Chapter 2 – Contract requirement flow down 2.1 Requirements and flow down templates Chapter 4 – Suppliers sourcing selection & approval (Purchasing process) 4.1 Supplier Selection and Capability Assessment Chapter 7 – Manufacturing and inspection (Production and service provision) 7.1 9103 education package (Key characteristics) 7.2 9102 Education package (FAI) Chapter 9 – Control of non conformities, corrective and preventive actions (On Time - On Quality) 9.1 Root Cause Analysis & Problem Solving 9.2 Control of Non-Conformities Chapter 11 – Business Processes Performance Management and Customer Satisfaction Monitoring 11.1 Work Transfer Appendix A.1 9100 Rev C Deployment Support A.2 People Capability (PCAP 001) Being updated to AS9100 Rev C Being updated to AS9100 Rev C Being updated to incorpate additional input

Material In Work Priority 1 Chapter SCMH Content Section Chapter 3 – Design and development 3.1 Special Requirements/Critical items 3.2 New Product Introduction - Quality Chapter 6 - Order Management and logistic (Internal/external) 6.1 Lean Assessment Tool Chapter 8 - Supplier operational management and product validation (Purchasing process) 8.1 Supplier Quality Mgt Basics Chapter 11 – Business Processes Performance Management and Customer Satisfaction Monitoring 11.3 Risk Management 11.4 Configuration Management Priority 1 Chapter 3 – Design and development 3.3 9115 Guidance Material (Software) Chapter 4 – Suppliers sourcing selection & approval (Purchasing process) 4.2 Product Performance Detailed Assessment Checklists (PPDA) Chapter 7 – Manufacturing and inspection (Production and service provision) 7.3 Foreign Object Debris (FOD)

Some Frequently Asked Questions 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?

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

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

SCMH Survey – Information Page

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

Action Plan between supplier and customer 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 Items for Improvement Action Plan between supplier and customer Expectation Supplier performance

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

Rating Example First - identify what you think the range that your suppliers would rate in Second – Identify medium where the highest number of your suppliers will rate Third – Tell us what specific areas of concern/topic that if guidance material was available in the SCMH, it would help your suppliers perform better! Provide your expertise as what “Specific Areas of Concern” need to be addressed as “Possible Topics” to add to the SCMH

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

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 19

Example of results by area 20

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

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

SCMH Back-Up Material Back Up Material

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.

Chapter Titles 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).

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

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