Rolls-Royce - Singapore Institute of Manufacturing Technology

Requirements to be an AerospaceSupplier5 th PE COI Annual Conference11/04/2013© 2013 Rolls-Royce plcThe information in this document is the property of Rolls-Royce plc and may not be copied or communicated to a third party, or used for anypurpose other than that for which it is supplied without the express written consent of Rolls-Royce plc.This information is given in good faith based upon the latest information available to Rolls-Royce plc, no warranty or representation is givenconcerning such information, which must not be taken as establishing any contractual or other commitment binding upon Rolls-Royce plc orany of its subsidiary or associated companies.13014

Content• Rolls-Royce overview• Global Supply Chain - Challenges• Operational Excellence – prerequisite?• Generic requirements for supply chains• How to participate in the globalopportunity?2Rolls-Royce proprietary information

Group profile3

A consistent approachto business4

2012 financial highlights5

A global business6

Investing for futuregrowth7

Civil aerospace8

Defence aerospace9

Research anddevelopment10

Global workforce 201211

Content• Rolls-Royce overview• Global Supply Chain - Challenges• Operational Excellence – prerequisite?• Generic requirements for supply chains• How to participate in the globalopportunity?12Rolls-Royce proprietary information

Supply Chain challenge – low volume &high mix18,000parts13

Supply Chain challenge – long lifecycleDevelopment Maturity DeclineProduct Lifecycle• Demonstrator• Engine DevelopmentProgramme• Engine flightProgramme• Series and volume production• Continuous improvement• Aftermarket and spare parts3 years – 7 years 10 years – 20 years 10 years – 20 years14

Supply Chain challenge – global growth,developing capabilityUKEMEAAmericasAsia2015 activity2010 activity15

Supply Chain challenge – high value addManufacturing in high value add• Regulated and approvals required• High start up cost and high barriers to entry• High cost for “sub standard performance”• Significant consequences for “non quality”16

Supply Chain challenge – turning orderbooks into profitCustomerpricepressureHow do we build ourmargins and growour businesses?Elementals,raw materialsand utilitiescost pressure17

Supply Chain challenge – to be classleadingTypical componentcost structuremarginenergyvariable costlabour• If workforce does not deliverclass leading performance than itdoes not only affect the labourcost but the total 100%!depreciationmaterial• In high value add, competitivelabour cost alone does notautomatically provide acompetitive supply chainindependent on locationpartly dependent on locationdependent on location18

Content• Rolls-Royce overview• Global Supply Chain - Challenges• Operational Excellence – prerequisite?• Generic requirements for supply chains• How to participate in the globalopportunity?19Rolls-Royce proprietary information

Operational Excellence – our experience• To increase the level of maturityin Operational Excellence is asignificant change program• Rolls-Royce started the“Journey to ProcessExcellence” years ago• Today, we have the evidencethat improved level of maturityin Operational Excellence leadsto improved performance -QCDR20Rolls-Royce proprietary information

Operational Excellence – prerequisite?Yesterdaywow factor…Todayorder winner!Tomorroworder qualifier?21Rolls-Royce proprietary information

Operational ExcellenceOperational Excellence – level ofmaturity a SEA sample5Industry Maturity Assessment43210 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5Manufacturing ComplexityAerospaceOther Industry22

Operational Excellencematurity scoreOperational Excellence – prerequisite?To venture into Aerospace, class leading maturitylevel in Operational Excellence is essential!World ClassAerospace• House Keeping• Lean Principles• Quality System• Six Sigma• SPC• Continuous Improvement• Performance Management• Visual Management• Fail Proof Processes• Effective Change Control• Material HandlingStep 1classleadingOperationalExcellenceStep 2enhanced capabilityAerospace approvalsDevelopinglowManufacturing Complexityhigh23

Content• Rolls-Royce overview• Global Supply Chain - Challenges• Operational Excellence – prerequisite?• Generic requirements for supply chains• How to participate from the globalopportunity?24Rolls-Royce proprietary information

Suppliers – generic requirements• Competitive cost structure, e.g. location in emerging markets•Financial stable and strong suppliers• Preferred trading currency - US Dollars• Commitment to Long Term Agreement (LTA)• Agreed cost modeling / transparency• Lean manufacturing / continuous improvement capability• World class delivery and zero defect quality25

Challenges and lessons learnt• Significant capability gap in developing countrieslllllEducation standardsAdvanced technologiesAdvanced materialsOperational Excellence maturityAerospace approvals• High levels of investment for equipment• Long start up phase, hence high cost of learner• High validation effort for manufacturing processes• Demanding approvals, e.g. NADCAP, SABRe• Supply Chain management - vertical integrationlllSpecial processesTooling and fixturesRaw materialsbarriersto entry26

Content• Rolls-Royce overview• Global Supply Chain - Challenges• Generic requirements for supply chains• Operational Excellence – prerequisite?• How to participate in the globalopportunity?27Rolls-Royce proprietary information

How to participate in the globalopportunity?• We aim for fewer but more strategic suppliers• We encourage our existing suppliers to grow with us and todevelop a global footprint• We proactively develop technologies for “tomorrow’s” enginesentry points• Bring new technology into Aerospace• Partner, collaborate with existing suppliers to develop global footprint• Sub tier for suppliers in region• Significant investment into capability and capacity development28

Christian MutterBusiness Development Director – Supply Chain – Asia Pacific3 Temasek Avenue#19-01 Centennial TowerSingapore 039190DID: +65 65017608Email : christian.mutter3@rolls-royce.com29