Company Confidential 1 Developing Aerospace Suppliers in Mexico Kalim Saiyed October 22, 2009

2 Agenda Purpose Desired Outcome Understanding customer expectations and Supplier Performance Report Roadmap to development Obstacles to success Summary Questions and Answers

3 Purpose The purpose of this presentation is to provide an understanding of: –Customer expectations –Supplier performance report –Roadmap to Supplier Development

4 Desired Outcome To take away an understanding of how to challenge and leverage the supplier performance report To grasp the supplier development process that meets customer expectations Learn a few tips to remove cultural barrier

5 Today’s Customers’ Business Challenges Ensure sustainable and profitable growth Better manage Customer relations Further enhance value streams Stay ahead of market conditions

6 Tomorrow’s Opportunities Today’s challenges provide strategic opportunities to strengthen tomorrow’s competitive position.

7 Customer Expectations Think Strategic – begin the journey today 1.Do you really know what your Customers want? 2.If you do what are you doing about it? 3.If you don’t can you afford to wait any longer? Customers want Quality On-Time Delivery Cost You to be profitable

8 Supplier Performance Report Management system to help suppliers analyze, control and improve their performance. A method to measure monthly and year-to-Date historical performance and improvement. Customers provide a monthly supplier performance report that includes; Quality, On-Time Delivery and Cost performance along with Service, certification rating Communicate with your customers and challenge the data Now you have a good base line for improvements Data based improvements will sustain the gain

9 Why Develop Suppliers? Up to 70% of the content is purchased from the supplier base Performance is not where it needs to be for key suppliers Procurement function is becoming more strategic (make vs. buy, large strategic partners, innovation etc.) Developing relationships with strategic suppliers is key for the whole value stream The necessary capabilities are not in place Suppliers need to be healthy, strong and competitive in order to remain competitive

10 What is Supplier Development? It is an organized effort to transfer knowledge using a focused team approach to obtain sustainable results for the benefits of both - suppliers and customers

11 One or two Supplier development associates and one or two supplier associates dedicated full-time to the project Other resources as needed At the supplier facility Supplier Development – Who and Where

12 The project is conducted over a three to six month period after an on-site Assessment is completed Supplier Development – When?

13 Roadmap to Development Management Commitment Identify Champion and Team Members Train the Team Perform Facility Assessment Develop Action Plan Prioritize the Projects Identify Improvement Methodology and Metrics Develop Project Plan Execute the Project Measure the Performance Celebrate the Success Move on to next Project

14 Supplier Development – How?  Basic Methodology –Kickoff meeting –Improvement area selection –Situation analysis »Data gathering »Baseline data »Data analysis –Develop a contract and establish goals –Develop improvement ideas –Develop implementation –Implementation and “CA” of PDCA –Collect and evaluate “after” data –Establish Control Plan and select next area –Management review attended by senior management –Lessons Learned

15 Obstacles to success  Supplier must have strong relationship with the customer  Lack of mutual trust  Unqualified team lead  Lack of management commitment  Insufficient training  Zeal to get results quickly  Use Short cut or bypass the process  Ambiguous goals  Lack of follow up

16 Basis for Selection of Supply Chain Partners For The Future Data driven process  Mutually beneficial for growth  Improve Product Quality, OTD, Cost and lead time  Facilitate & Improve Communication at all Levels  Promote Continuous Improvement  Gather Feedback & Lessons Learned  Eliminate cultural barriers by suing common tools Summary

17 Thank You Questions and Answers