Zodiac Aircraft Systems Supply-Chain...

ZODIAC AIRCRAFT SYSTEMS

Zodiac Aircraft Systems

ZODIAC AIRCRAFT SYSTEMSZODIAC AIRCRAFT SYSTEMS1

Supply-Chain Strategy

G.Blandet, VP Purchasing Zodiac Aircraft Systems

Here’s the bottom lineHere’s the bottom line

Here’s the bottom line :

85 % of Zodiac Aircraft Systems’ cost base is in its supply chain.


Key Figures of our Supply Chain (Direct Spend FY15 - July)Key Figures of our Supply Chain (Direct Spend FY15 - July)


Main Purchases Commodities (Direct Spend FY15 - July)Main Purchases Commodities (Direct Spend FY15 - July)


Zodiac Aircraft Systems Purchasing OrganizationZodiac Aircraft Systems Purchasing Organization

CENTER LED GOVERNANCE Zodiac Aircraft Systems Purchasing Committee

CENTER LED GOVERNANCE Zodiac Aircraft Systems Purchasing Committee

Commodity

strategies and

visibility of

our policy

with Suppliers

Commodity

strategies and

visibility of

our policy

with Suppliers

Flexibility of

execution

by our

operations

Flexibility of

execution

by our

operations

Collaboration

and value

creation with

Suppliers

Collaboration

and value

creation with

Suppliers

Management

of Suppliers

Performances

Management

of Suppliers

Performances


� Our organization is established to support the strategy

and optimize our supplier performances

� Supported by a clearly defined governance and key enablers

Gilles Debray

ZODIAC AIRCRAFT SYSTEMS

Zodiac Data SystemsZodiac Water &

Waste Systems

Zodiac Water &

Waste Aero Systems

Gil Lenhard

Zodiac Cabin & Cockpit

Systems

Zodiac Electrical

Systems

Zodiac Fuel&Control

Systems

Zodiac On Board

& Testing

Eric Carcanague

Zodiac Fluid

Management

Zodiac Hydraulics

Cédric Pichery

Supplier Contract

Lucie Le-Gloanec

Zodiac Fuel & Inerting

Systems

Mathieu Jutigny

Zodiac Oxygen

Systems EU

MC IIlunga

Zodiac Actuation

Systems

Valery Dreano

ZODIAC AIRCRAFT SYSTEMS PURCHASING

Gregory Blandet

Supplier Performance

Miryam Ennamir

Supply Chain Project

Sheyla Prado

Segment Missions

Leadbuyers

SPM Experts

Commodity Leaders

Pur

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Zodiac Cabin Controls

Oliver Schoëps

Zodiac Lighting

Solutions

Serena Wiliams

Zodiac Oxygen

Systems US

MB Harper

Gil Lenhard

ZIPS

Eli LiebermannZAA

John Stuart

Eric Carcanague

Zodiac Space

& Stations

Eric Carcanague

Zodiac Communication

& Monitoring

Eric Carcanague

PPP

Jean-Marc Lemaître

Zodiac Sensing &

System Management

Eric Mongenie

Zodiac Fluid

Equipment

Nicolas Pouget

Cédric Pichery

Zodiac Aero Duct

Systems

Stephane Meteyer

ENVIRO Systems

Daniel Wyatt

Zodiac Electrical Power

Systems

Valery Dreano

Zodiac Cockpit &

Lighting Systems

Mathieu Richart

Mathieu JutignyMC IIlungaValery Dreano

Zodiac Train Systems

Hans Wörmcke

Pur

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Pur

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Org

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US Committee Members

EU Committee Members

Aircraft manufacturers have changed their way ofbusiness selection

• Worldwide competition• Commitments about costs reduction programs• Criteria based on current industrial performances• Risk-sharing , Self-financing (NRC)

Zodiac Aerospace Customers RequirementsZodiac Aerospace Customers Requirements


• Innovation, technology differentiation• Offset participation• Time to Market effort…

Promises and business reputation are not enoughVOC makes the decision


EMBRAER BOEING AIRBUS BOMBARDIER

Cost Reduction ContinuousPartner for Success

RC ConvergenceScope+ SOFE

OTD > 95% >98% > 99.5% > 99%

<2000 ppm < 50 defects on


Quality < 500 ppm<2000 ppm

50 ppm B787< 3000 ppm

< 50 defects on one rolling year

Requirements are increasing

Often targets are higher than those given by Zodiac Aerospaceto its suppliers AT THIS PRESENT TIME

� Aircraft manufacturer industrial organization have changed

• S&OP Management is key

• Manufacturing lead time reduction

• Equipments must to be delivered to FAL

(Final Assembly Line) “just in time”

• No more incoming inspection



• No more incoming inspection

• No buffer stocks

• Information flow standardization and forecasting ( Air Supply )

Any Quality or Delay issues are consideredas « crisis » by Customers

� Customers request immediate reactivity

when quality or delay problem occurs.

• Bombardier: Task force



• Airbus: QSR process

More and more involvement of our Customersin solving quality issues : pressure at all levels

� Analysis made by our

customers showed that main

quality or delay issues

detected on FAL were due to



Tier-2 suppliers

11

Strong pressure from Customers to Tiers-1 to improve

their supply chain performances.

They charge us with penalties due to delinquent suppliers

What happens now… IntrusionWhat happens now… Intrusion

� Our customers are now requiring

detailed information about suppliers

responsible for poor performances (OTD,

NC, VLD…) and cost drivers also.


At this present time, Zodiac Aircraft Systems policy is to NOT communicate

to Customers detailed information regarding our suppliers.

� To maintain the business position, Zodiac

Aerospace must prove to its customers that the

supply-chain process in place gives targeted

results.

� Customer satisfaction is our main goal, must be

guaranteed

Business position with suppliers regarding our VOCBusiness position with suppliers regarding our VOC


guaranteed

� Suppliers selection is key to support the

business

Suppliers reaching targets and commitments are be more and more awarded

Others are placed in the Desourcing process at the Segment Level,

applicable for all BUs

Suppliers collaboration with Zodiac Aircraft SystemsSuppliers collaboration with Zodiac Aircraft Systems

Purchasing policy of Zodiac Aircraft Systems

Sustainable and balanced relationship with suppliers. To be selected, they must meet strict requirements in terms of ethics, performance, know-how and technological innovations. At the same time, ZAS supports them as part of an ongoing drive for improvement and growth.


Suppliers are an integral part of resources and capacities. ZAS measures the supplier's motivation to support the development of its strategic activities, from a technological, quality, logistics and business point of view.

Suppliers selection for competitiveness in terms of cost, operational excellence and future contribution to our business.

Suppliers Management and Purchasing PolicySuppliers Management and Purchasing Policy

�Suppliers Strategic Segmentation based on compliance with performance objectives (VOC).

� Disengagement of non-performing suppliers

� Business Development and Long Term Agreements with the most efficient suppliers

5 levers for action


� Introduction of new efficient suppliers, who are able to meet the requirements of our markets (VOC).

� Business ethics : based on honesty, integrity, fairness and protection. The code is signed by all Group employees

� Global management of suppliers at Zodiac Aircraft Systems level

� Part of our “Operational Excellence” project started in 2012

Formula of Supplier Performance is simpleFormula of Supplier Performance is simple

Be on Time Deliver QualityReduce Costs Keep best relationship in good


and bad days

Business Protection and risk mitigation

Value creation and

business growth consolidation

Performances in the supply chainPerformances in the supply chain

� Zodiac Aircraft Systems is engaged about meeting suppliers, explaining why we are squeezing the supply chain.

� Suppliers just can’t say “Hey, sorry we have nothing to offer but we will get back to see you soon”. That’s not the way it works.


� Very good progress about industrial performances, and cost reduction because of our best suppliers are working with us on a partnering for success basis.

Now, suppliers should take the opportunities

and join us in this path.

About our Supplier Reduction ProgramAbout our Supplier Reduction Program

�Reduction of Desourced Suppliers is key for our performances

• Contamination of our global performances

• Waste of time, cost and resources

• Not connected to our strategy

• Outside our Operational Excellence mindset

�Between 2013-2014 : 639 suppliers have been Desourced


�Between 2013-2014 : 639 suppliers have been Desourced

�FY2015 : 654 Suppliers are classified to be Desourced

46% completed in July 2015

Desourcing means more business, growth and opportunities

for our Preferred Suppliers and newcomers

Business EthicsBusiness Ethics

�Compliance with law is expected, but

ethics goes beyond mere compliance.

�The Ethics Code focuses specifically on

business ethics and the exemplary behavior

of employees throughout the Group, in terms


of employees throughout the Group, in terms

of transparency and loyalty.

Violations of ethics code are elevated to the corporate level for both ZA

and supplier employees and may result in termination of business.

http://www.zodiacaerospace.com/en/ethics-code

ConclusionConclusion

� Our operational performance automatically includes our Suppliers’ performance

Our only choice is to improve – or to leave the door open to our competitors and to your competitors

� Aerospace market context is very favorable – but also very demanding


� It is in your interest to quickly improve your performances to fully capitalize your current business with us.

Be a KEY PLAYER in our Supply-Chain,

And not one of the dominos !

Zodiac Aircraft Systems Supply-Chain...

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