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Operational Excellence -(Re)Structure for growth and stakeholder value

Anders DavasEaton Aerospace

Aerospace & Defence Forum - Orange County Chapter

September 6, 2012

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IntroductionAnders Davas

• Work Experience• Division Manager Eaton Aerospace• VP & GM Telair International (A Teleflex Company)

• Strategic Development Teleflex• Operations Director Ensas

• Education• The Wharton School• University of Cambridge• Chalmers – University of technology

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IntroductionEaton Aerospace - Fuel & Inerting Systems

Key Platforms• Boeing 787• Airbus A380• Sikorsky CH-53K• KC-46A

Key Platforms• Boeing 787• Airbus A380• Sikorsky CH-53K• KC-46A

Pedigree• First electric boost-pump manufacturer• First composite-wing integrated system• Complete ground-to-engine capability• Pumps for all power sources

Pedigree• First electric boost-pump manufacturer• First composite-wing integrated system• Complete ground-to-engine capability• Pumps for all power sources

Future Platform Innovations• Composite conveyance & equipment for

low-cost, light-weight composite wings • Integrating in-tank sensing with inerting

control for reduced bleed consumption

Future Platform Innovations• Composite conveyance & equipment for

low-cost, light-weight composite wings • Integrating in-tank sensing with inerting

control for reduced bleed consumption

• Northrop X-47• Eurofighter• Learjet 85• KC-390

Refueling Nozzle

Engine Feed Tube

Flexible Coupling

Engine Feed Pump and Canister

Technologically Advanced Thermally Efficient Fuel Pump

Transfer & Scavenge Jet Pumps

Motor Operated Shut-off Valves

Motor Control Unit

Air Separation Module

Pedestal Mounted Ball Valve

Pressure Transducer

Digital Fuel Gauging

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IntroductionAgenda

• Introduction• 4-Focus Model

• Strategy• Processes• People• Systems

• Pilot Implementation

• Q & A

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IntroductionOperational Excellence Model – Proven results

EBITDA Margins

2009

40% 2010

43%+ 2011

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IntroductionTurn Operational Excellence into a competitive advantage

Value

Cost

Company move to the left• Increasing Labour Cost• Decreasing Labour force

Frontier move to right • Competition moving to

emerging markets• Availability of new labour• Competition is becoming

better or cheaperImprove performance/valueDelivery, Quality, & Cost

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Introduction4-focus approach to operational excellence

1.

Strategy

2. Processes

3.

People

4.

Systems

• Value Adding• Standardized• Continuous Improvements

• Strategic Planning• Strategic Deployment

• Goal Setting

• Accountability & Commitment• Engagement & Development• Competence & Confidence

• Automate• ERP Efficiency• Poke-Yoke• Visual Mgmt

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Strategy Strategy

Processes

People

Systems

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StrategyKey dimensions of a strategic plan

Strategic Plan

-Growth

Business Unit & Group Overview

Market AnalysisSWOT Analysis

(situation analysis)

Technology Road Map

Product Developments

Competitive Analysis

Investment Opportunities

Product Strategy

Value Proposition

Mfg. Strategy

Internal

External

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StrategyValue analysis to identify core manufacturing activities

Core Non-Core

Hig

h U

tili

zati

on

L

ow

Uti

liza

tio

n

Maintain/ Optimize

OutsourceBCC

Right-size / Consolidation

OutsourceExperts

Product/Process

Pro

du

ct/P

roce

ss

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VSM, Product Grouping & Capacity Planning

5S, Visual Management &Tiered Meetings

Kan-Ban Parts withdrawal

Super Market Line feed Milk-Run

StrategyMaximize performance through best manufacturing practice

Move beyond 5S+ to unlock potential in organization.

Flow cells

Material Pull

Smoothed production

Paced ops

Flexible & leveled production

Variation Reduction & Six SigmaSix Sigma processes

Visual Factory

Balanced & Standard Operations

Flexible Cells & Error Proofing

Standard Work instructions

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Strategy Deployment – Create alignment, accountability and commitment.

Strategic deployment matrix and scorecard- Organizes thinking and links action to strategy- Aligns functions for goal setting- Identifies/Establishes break-through actions- Provides tools for continuous improvement- Communicates goals and performance

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StrategySet stretch metrics and identify breakthrough initiatives

HOWFAR

All itemsare listed

in priority orderstarting from

the center

HOW

WHAT

HOW MUCH

WHO

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StrategyThe whole picture of your company on one sheet of paper

HOWFAR

WHAT

HOW

HOWMUCH

Use dots to show relationship of

Improvement Priorities to Annual Objectives

Use dots to show relationship of Targets and Resources to the Improvement Priority

NOTE: Only Solid dots on a resource deploy to the

next levelUse dots to show relationship of Annual

objectives to 3 year strategic plan

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StrategyExample of SD-Matrix

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StrategyImprovement priorities cascaded to the point of impact

Second Level – Plant/Business

Top Level – Company/Group

Third Level Sub Plant/Dept

The level where root causes are addressed! Action Plans can be initiated out of any matrix level.

Action Plan

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StrategyEach target is copied to the SD score card

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StrategyAction plans drive the rate of improvement

ACTION PLAN

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Processes Strategy

Processes

People

Systems

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ProcessLean Management Philosophy

Process Focus

- PDCA -Leader

Standard Work

Visual Controls

StandardAccountability

Processes

A Foundation for Operations Excellence

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ProcessGood Leaders Execute & Improve

Plan

Do

Check

Act

A-Work

A-work – Value Creation Process – Delivery & Quality+

B-work – Improvement Process – Faster, Better & Cheaper=

Focused team with a continuous improvement culture

Business Operating System• Balanced Scorecard• Standard Work• Visual Management• GEMBA• Accountability• HPWT

B-WorkBusiness Operating System• VSM• GEMBA• Root Cause Analysis • Process – FMEA• Lean Six Sigma LSSS• HPWT• Lean Councils

Planning• Strategic Planning• Strategic Deployment• Profit Planning

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ProcessTiered meeting accountability and execution process – A-Work

Tier 1

Tier 2

Tier 3

Agenda / Focus

• Cell Lead• Team members

• Mfg Manager• Value Stream Leader• Support Mgr

• Values Stream Leader• Cell leaders• Support group

Attendees

Escalation

Escalation

• Labour Plan• Daily rotation• Cell issues/solutions (Forward looking))

• Daily performance data (yesterdays) - Safety- Quality- Delivery - Cost

• Overdue items and actions

• Labour Plan• Daily rotation• Plant Issues• Improvement actions

Develop efficient Tier Meetings:- Short and crisp - Stand-Up- Visual - Close to workplace- Structured and standardized agenda

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ProcessExample - Tiered Meetings in action….

Accountability BoardA-Work Metrics Board

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ProcessStandard leaders work to ensure leaders react to signals

Standard and aligned schedule

Process confirmation

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2009 2010 2011 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

Actual 77% 79% 73% 69% 72% 69% 71% 78% 78% 80% 0% 0% 0% 0% 0%

Plan 86% 86% 85% 74% 76% 77% 78% 79% 80% 81% 82% 83% 84% 86% 87%

On Time Delivery % Owner : Anders Davas

PERFORMANCE TREND

Key Metric Data

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% Actual

Plan

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000YTD Month

JanFebMarAprMayJunJul

AugSepOctNovDec

Ref Owner Open Due1 PM Apr-12 May-12

2 RD/WD Apr-12 on-going

3 ED May-12 Aug-12

4 LB/DB Jul-12 on-going

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Ref Owner Open Due1 M Mula Feb-12 Feb-12

2

3

4

5

Reflect Airbus progress

Continued performance issues in TF & SM. MCOE on site, review of porogress underway. 3 Tier meeting refreshed in TF. Euclid recovery in Feb >90% following Maini resourceImproved OTD at all plants except Euclid where FMS machine failure, furnace relining and continuing BCC supplier issues have held performance flat at 85%.Major impact from Euclid due to FAA issue.

Continued revovery in SM, TF Airbus driving improvements but hampered by strangers/legacy performance

MCOE CI process in Sdouth Molton , bi-w eekly review s

Commentary

Action Items

Recovery in South Molton, slow imporvement at TF, EU flat driven by shaft cell thourgh put issues

Promise dates availabilityActions agreed with DVP Operations Status (provide details of progress or state "Closed")

EU improvement hampered by continuing shaft yield issues

Divison Actions Status (provide details of progress or state "Closed") Results/Impact

EU - Foucs on w ork order release in OE, saft recovery actions Thorugh-put focus, Six sigma expert in place to drive yield issues OE OTD focus

Results/ImpactLine by line Arrears analysis

Analyses in place, line item avtion plans and due dates in the systems

TF - MCOE CI porcess read across to all value streams in TF

Bi-w eekly review s in place. MCOE team allocated

Customer Green team - taskforce being rolled out to accelerate improvement

Review manufacturing capacity constraints w ith Plants

Trade and IC improvement

1. Actual vs. PlanAssess the impact

2. Pareto analysisPrioritize the impact

3. CommentaryIdentify Root Cause

4. Improvement action planDrive Short term containmentImplement Long term prevention

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3

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ProcessData driven improvement process – Balanced Scorecards – B - work

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People Strategy

Processes

People

Systems

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PeopleTransition away from a traditional manufacturing organization

Plant Manager

ManufacturingQuality EngineeringSupply Chain Manufacturing Engineering

Human Resources

Continuous Improvements

Department Manager 1

DepartmentManager 2

DepartmentManager 3

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Quality

M.E

Supply Chain

Planning

EHS

C.I

Quality

M.E

Supply Chain

Planning

EHS

C.I

PeopleTo a value stream centric organization with high performing teams

Quality

M.E

Supply Chain

Planning

EHS

C.I

Plant Manager

Value Stream Manager

Value Stream Manager

Value Stream Manager

Cross functional teamsLocated close to workspace

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PeopleRedefine the Role of the Front Line Leader

Supervisor

Selected based on technical capability / process knowledge

Front Line Leader

• Directive (“Do as I say”)• An Expediter • Disciplinarian • Enforcer• Top-down

• Supportive / Coaching• Intrinsically motivated • Future vision orientation• Life-long learner

Selected based on leadership Competencies

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PeopleAttract the right leaders

Leaders need to…• Provide the vision and strategy• Lead by example – be a positive role model• Actively engage and recognize employees• Enable success of your employees (resources, barriers)• Empower the employees – drive decision making down

through organization

Empowerment

Leadership to create the environment

Values and ethics

A balanced Leadership Team

Engagement

Leadership to drive and stimulate change

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System Strategy

Processes

People

Systems

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SystemCreate flow cells and an environment to support flow.

High productivity assembly cell

Kan-Ban driven Super MarketPoke-Yoke

Pace board A-Work

Line Fed material at Point of Use System

Bar-Coding

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Moving Forward

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Moving ForwardPilot Line

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Moving ForwardSystematic approach to achieve excellence