Concrete and measurable improvements impacting sophisticated processes.
Product development
Design to Cost (DtC)
Context and Objectives
Major aero-structure manufacturer is requested drastic price increase from one supplier
Supplier claims his viability is at risk if initial un-realistic contract price is maintained
10-weeks project with the objectives to:
- Build a transparent and undisputable cost baseline with the supplier
- Challenge cost and their origin, and establish a factual input to the negotiation
- Propose cost reduction opportunities, including re-design to cost ideas
Results
Rigorous and detailed cost baseline validated, with ~5% savings compared to initial claim from supplier
Supplier commitment to implement continuous improvement actions bringing ~20% savings
Additional items identified (material costs optimization, re-design actions) bringing ~10% additional savings potential
Design office performance dashboard.
Context and Objectives
A major aircraft manufacturer wanted to implement operational indicators within its design office
- 10 Centers of Competence,
- 40 domains
- 7 programs
STEP Consulting supported the definition of a fully harmonized system
- Harmonized dashboard
- Regular management meeting
Results
Implementation of monthly Business Operational Reviews (BOR) at the top level of engineering management
- Cascaded down to 40 (domain) organization units
- With standardized performance management dashboard (especially TCQ by Program)
- Full set of processes and tools to ensure tracking of cost reduction opportunities
Implementation of drivers & unit costs approach on serial activities
Development drivers tested on system activity
Materials direct cost reduction for a cable manufacturer.
Context and Objectives
A cable manufacturer is facing a persistent negative operational margin in a factory.
Materials costs represent 75% of direct costs
A comprehensive diagnosis is performed in 10 weeks on the following axis
- Over quality : specification vs just necessary, material over-consumption
- Process : line speed, productivity, change over times, scrap
- Support functions : Production planning, Maintenance, Management
Results
4 major cost reduction levers are identified, with associated action plan to secure xxM€ annual savings:
- Over quality : review of some specifications, while controlling non-quality risks;
- Scrapping: reduction of scrap levels by redefinition of the standards and strict scrap follow up by visual management
- Control : implementation of operational KPIs (line speeds, change over time, material overconsumption)
- Finance: new controlling procedures to align financial and operational monitoring
Implementation of Model Based System Engineering (MBSE)
Context and Objectives
A major aircraft manufacturer decides to deploy the MBSE approach in collaboration with his system suppliers. The principle relies on usage of models to improve consistency of design data and better exchange it. Objective is to increase design office efficiency and product optimization (perfo / cost of ownership). Systems technology evolution triggers several relevant pilot cases for the project.
The challenge of our customer is to move from vision to results, while facing the high complexity of aircraft systems
- 3000 engineers and 200 system suppliers with a high diversity of disciplines
- Hundreds of thousands of interfaces and requirements, 100 millions of embedded software lines
- A highly constrained environment (performance, redundancy, spatial limitations, cost, weight, …)
STEP Consulting supports the team in place, during the 2 first years, to define ~300 deliverables and drumbeat their progress around 4 pillars
- A base model allowing to describe aircraft systems architecture and facilitate repercussion analysis when architecture options are envisaged (trades)
- A detailed modelling guide (adapted tools and languages, conditions for models’ interoperability, traceability, collaborative rules based on interfaces, multi system co-simulation, intellectual property management …)
- A pre-integration “software” platform allowing to alleviate physical tests
- An IS integration masterplan centered on a collaborative design platform (PLM), and on principles of concurrent engineering, with purpose to
- have one unique system architecture reference, updated and shared on real time basis
- guarantee integrity of design data (previously scarce in databases, local files and textual documents)
- accelerate design convergence and maturity through all phases of product development
Results
10% savings (avoided reworks and waiting times) simulated on system development costs of a derivative
A prototype dashboard allowing to evaluate impact of architecture options on product value
A sharp and agile project management considering budget constraints and changing priorities
Suppliers, Software editors and research institutions are part of the project
R&T program optimization & re-organization
Context and Objectives
The engineering department of an aerospace leader wanted to improve the organization of its Research and Technology program with the objective to
- Improve project management and capability to deliver mature technologies in time and cost.
- Reinforce technical management of the R&T portfolio to make sure the research effort is consistently driven towards future programs needs
- Foster innovation beyond “pure technology” developments
- Reduce costs, while delivering the same value to the business
STEP consulting assisted the senior VP, head of Research & Technology to define, conduct and implement a comprehensive change project.
Results
New organization implemented
- Nomination of a R&T Chief Engineer with full technical authority
- Creation of dedicated business engineers to manage significant increase of external funding
Portfolio rationalization from ~600 projects to ~100 technology products refocused on strategic axis
A dedicated R&T plateau concept defined and sized
About 10% cost reduction on program management
New dedicated innovation team
Purchasing
Partnerships to reduce costs of detailed parts
Context and Objectives
In a context of growing competition, a major aerospace actor wanted to
- reduce cost baseline of A350 parts
- optimize volumes through bundling of BoMs by technology.
- define a sourcing model to support industrial set up based on suppliers portfolio rationalization and low cost plants development.
Scope covers: ~8.000 references, 40 suppliers, 46 Techno-Codes (mechanical machining, sheet metal, sections, assembly), 3 material types (Aluminium, Alu-Lithium, Titanium).
Results
16% of immediate savings trough negotiation with current supplier base.
Definition of Industrial policy (MAKE/BUY).
Manage several RFP until supplier awards
50% of savings negotiated trough RFP, material optimization and MAKE LCC plant set-up.
Definition of transfer of work plan and simulation of RC projection.
Support for RFP on a new aircraft program.
Context and Objectives
A new aircraft program is entering in its detailed design phase, with 5 new a/c to be produced.
1/3 of RC are linked to detailed parts
Main objectives are:
- Define purchasing target at PN level
- Launch RFPs per clusters
- Ensure industrialization capacity according to the final assembly requirements
- Ensure costs convergence to the target
Results
Securing of a mature, frozen Bill of Material
Definition of parametric costing model per families (Frames, Panel, Machining parts, Sheet Metal parts bending and forming, …)
Extraction of technical cost drivers to run the parametric models and definition of cost targets (recurrent and non recurrent) at PN level
Analysis of supplier’s offers and breakdown per cost nature:
- recurrent : Material, Labor, Surface treatment, …
- non recurrent : programming, preparation, Tools,…
Allocation of parts to the suppliers according to their industrialization and capacity to secure supply chain
Achievement of cost targets
Diagnosis of the purchasing department of a defense actor
Context and Objectives
Procurement organization and way of working were not robust enough
- Heterogeneous purchasing practices across BUs and within buyers team
- High level of subcontracting : 50% of operations without a clear MoB strategy adapted to core business
- Scattered and growing network of suppliers with no performance management approach
It was required to
- Implement a robust purchasing process and associated tools
- Identify savings on equipments and services purchase
Results
In depth purchasing diagnosis, based on historic data analysis, interviews, workshops
New purchasing segmentation in line with core activities, allowing performance management and suppliers base optimization
Optimized interfaces and process between business units and buyers
Clarified roles and responsibilities along a commonly agreed purchase to pay process
19 levers and best practices described and tested on key spend families
5% to 7% of savings identified on addressable spend, relying on a 13 selected levers
Purchasing
Partnerships to reduce costs of detailed parts
Context and Objectives
In a context of growing competition, a major aerospace actor wanted to
- reduce cost baseline of A350 parts
- optimize volumes through bundling of BoMs by technology.
- define a sourcing model to support industrial set up based on suppliers portfolio rationalization and low cost plants development.
Scope covers: ~8.000 references, 40 suppliers, 46 Techno-Codes (mechanical machining, sheet metal, sections, assembly), 3 material types (Aluminium, Alu-Lithium, Titanium).
Results
16% of immediate savings trough negotiation with current supplier base.
Definition of Industrial policy (MAKE/BUY).
Manage several RFP until supplier awards
50% of savings negotiated trough RFP, material optimization and MAKE LCC plant set-up.
Definition of transfer of work plan and simulation of RC projection.
Support for RFP on a new aircraft program.
Context and Objectives
A new aircraft program is entering in its detailed design phase, with 5 new a/c to be produced.
1/3 of RC are linked to detailed parts
Main objectives are:
- Define purchasing target at PN level
- Launch RFPs per clusters
- Ensure industrialization capacity according to the final assembly requirements
- Ensure costs convergence to the target
Results
Securing of a mature, frozen Bill of Material
Definition of parametric costing model per families (Frames, Panel, Machining parts, Sheet Metal parts bending and forming, …)
Extraction of technical cost drivers to run the parametric models and definition of cost targets (recurrent and non recurrent) at PN level
Analysis of supplier’s offers and breakdown per cost nature:
- recurrent : Material, Labor, Surface treatment, …
- non recurrent : programming, preparation, Tools,…
Allocation of parts to the suppliers according to their industrialization and capacity to secure supply chain
Achievement of cost targets
Diagnosis of the purchasing department of a defense actor
Context and Objectives
Procurement organization and way of working were not robust enough
- Heterogeneous purchasing practices across BUs and within buyers team
- High level of subcontracting : 50% of operations without a clear MoB strategy adapted to core business
- Scattered and growing network of suppliers with no performance management approach
It was required to
- Implement a robust purchasing process and associated tools
- Identify savings on equipments and services purchase
Results
In depth purchasing diagnosis, based on historic data analysis, interviews, workshops
New purchasing segmentation in line with core activities, allowing performance management and suppliers base optimization
Optimized interfaces and process between business units and buyers
Clarified roles and responsibilities along a commonly agreed purchase to pay process
19 levers and best practices described and tested on key spend families
5% to 7% of savings identified on addressable spend, relying on a 13 selected levers
Supply chain and production
Manufacturing lead-time reduction for an actor in the cable industry
Context and Objectives
Facing the rise of low cost competition, a cable manufacturer has decided to use cost and lead time reduction as a competitive advantage to boost its sales in the Trains & Subways market
Objectives are to reduce direct costs by 20% on and cut by 2 the lead-time of complex products
Within 2 months STEP Consulting prepared an action plan and started its implementation:
- Deployment of Kanban
- Adjustment of product specifications
- Standardization of raw material references
- Speed-up of the production rate
- Optimization of Production planning
- Reduction of Set up time
Results
Cost and lead time reduction achieved and measured within 6 months:
- 25% of cost reduction (waste reduction, direct labor cost productivity, direct purchase reduction, …)
- 50 to 60% of lead time reduction on a specific product range by identification of kanban of semi finished goods
- Development of supply chain performance tools, used by operational teams (gantt, analysis of lead time and waiting time per machine and technical family, …)
Stock reduction for an industrial aerospace actor
Context and Objectives
In order to face a difficult market context and prevent cash problems, a leader of the aerospace industry wished to reduce its working capital.
STEP Consulting was requested to identify the range of spares stock reduction.
On basis of stock consumption history and technical data, a segmentation of references was achieved.
A sampling allowed to identify and test 36 improvement levers on a precise set of parts before extending them progressively to the complete corresponding segments
The analysis phase was pursued during 2 months. The improvement levers can be grouped in 5 families
- Short term actions : Systematic cleaning of obsolete parts
- Improvement of forecasting process and review of replenishments modes and parameters
- Improvement of the speculation process (short term forecasts on basis of maintenance needs)
- Securing of supply chain lead-times
- Implementation of a measurement system to control results (indicators, reporting …)
Results
20% of reduction was identified on a total stock value of 500 €M
35 improvement levers documented and validated
10% reduction achieved (validated by finance) in 1 year while maintaining delivery performance above targets
Reduction of unit outages times in nuclear power plants
Context and Objectives
A major nuclear energy producer faces a growing unavailability of its production Units during outages for maintenance
“Capacity vs. Load” management is identified as a major lever to reduce waiting times during units outages, but it is not under control
STEP Consulting assisted several nuclear power plants with local management in:
- building tools and methods to better prepare for capacity vs. load of x00 stakeholders from many sub-contractors
- implementing a follow-up of load evolutions during the execution phase
- supplying process and tools to find mitigation actions in case of planning issue
Results
“Capacity vs. Load” process, methods and tools implemented during maintenance outages in several nuclear power plants, generated a reduction of waiting times by -25% vs. previous maintenance outage
Sustainable process, tools and methods for future maintenance outages
Services and maintenance
Spares Order desk optimization for a Military actor
Context and Objectives
Time to answer requests of military customers was 50% below targets
It was necessary to improve the performance of the spares order desk, in order to reach
- 95% of answers to AOG (Aircraft on Ground) with a solution within 4 hours.
- 95% of answers to quotation within 4 days.
- 90% of rush or routine orders booked in the next 24 hours.
Results
Order desk performance restored to 95%
Visual dashboard implemented to track the performance
New organization set-up with 2 shifts
Weekly meeting implemented to solve issue with interfaces organization: pricing, procurement, demand & planning, engineering
KPI dashboard published every month
Improvement of an aircraft maintenance center
Context and Objectives
In a context of market share and profitability erosion due to highly competitive low cost actors, an aircraft maintenance center wants to improve its processes (aircraft maintenance hangars as well as equipment repair shops)
- Reduction of costs and lead-times
- Enhancement of ability to project the activity on customer’s sites and to adapt offer.
Results
18% costs reduction agreed
30% lead-time reduction, 95% on-time-delivery
All processes redesigned : from offer and pricing policies, supply-chain, to production and ground-&-flights tests,
New means and tools for forecasting, planning and follow-up of the activity
External communication
Repair pricing optimization for an equipment manufacturer
Context and Objectives
An equipment manufacturer is established through acquisition and merger of numerous entities
The market share and profitability on repair market was eroding
No centralized pricing policy, no worldwide catalogue , no update since 10 years, regional constraints unknown,
Objective was to
- increase revenues through a better market knowledge, adapted price level and set-up of a centralized catalog to manage prices
- avoid cannibalisation between repair business and spares business
Results
In 6 weeks, diagnosis performed and shared with 9 repair centers on 6 product lines.
X00 k€ savings generated through pilot cases on few references
Methodology for pricing defined: market size, market share estimation, re-costing and re-pricing policy
One-year project framed to address 4000 PN
- Market analysis per product lines,
- Pricing policy definition
- Process & Tools implementation
Services and maintenance
Spares Order desk optimization for a Military actor
Context and Objectives
Time to answer requests of military customers was 50% below targets
It was necessary to improve the performance of the spares order desk, in order to reach
- 95% of answers to AOG (Aircraft on Ground) with a solution within 4 hours.
- 95% of answers to quotation within 4 days.
- 90% of rush or routine orders booked in the next 24 hours.
Results
Order desk performance restored to 95%
Visual dashboard implemented to track the performance
New organization set-up with 2 shifts
Weekly meeting implemented to solve issue with interfaces organization: pricing, procurement, demand & planning, engineering
KPI dashboard published every month
Improvement of an aircraft maintenance center
Context and Objectives
In a context of market share and profitability erosion due to highly competitive low cost actors, an aircraft maintenance center wants to improve its processes (aircraft maintenance hangars as well as equipment repair shops)
- Reduction of costs and lead-times
- Enhancement of ability to project the activity on customer’s sites and to adapt offer.
Results
18% costs reduction agreed
30% lead-time reduction, 95% OTD
All processes redesigned : from Offer and pricing policies, supply-chain, to production and ground-&-flights tests,
New Means and tools for forecasting, planning and follow-up of the activity
External communication
Repair pricing optimization for an equipment manufacturer
Context and Objectives
An equipment manufacturer is established through acquisition and merger of numerous entities
The market share and profitability on repair market was eroding
No centralized pricing policy, no worldwide catalogue , no update since 10 years, regional constraints unknown,
Objective was to
- increase revenues through a better market knowledge, adapted price level and set-up of a centralized catalog to manage prices
- avoid cannibalisation between repair business and spares business
Results
In 6 weeks, diagnosis performed and shared with 9 repair centers on 6 product lines.
X00 k€ savings generated through pilot cases on few references
Methodology for pricing defined: market size, market share estimation, re-costing and re-pricing policy
One-year project framed to address 4000 PN
- Market analysis per product lines,
- Pricing policy definition
- Process & Tools implementation
Finance and controlling
Cash-out forecast for an aerospace industrial actor
Context and Objectives
The Finance department of a major company requested to analyze and understand an unscheduled increase of cash-out
- +19% cash-out increase
- while revenue increased only by 3%
After a complete diagnosis of the situation, it has been requested to develop a solution for end-of year cash-out prediction at the lowest granularity level
Results
Phase 1 enabled to clarify Cash out evolution principles and confirm OP
Phase 2 allowed to
- develop a model to predict cash out by end of year
- define process methods & tools to review cash-out on a monthly basis
- propose a proof of concept
Phase 3 allowed to industrialize the model and to develop a tool providing monthly cash-out situation and end of year projection
Cost Control of a major investment program
Context and Objectives
A major actor of energy production in Europe launches a major program to upgrade its installation (several billion euros)
A full referential of cost control methods & tools need to be implemented with purpose of putting program spent under control
This referential need to be deployed though 4 pilot cases, and generalized though the overall program
Results
Full set of referential defined
- Definition of a Work Breakdown Structure (WBS) and a Cost Breakdown Structure (CBS)
- Implementation of CBS within SAP
- Definition of tools for budget forecast with technical & economical assumptions monitoring
- Risk identification and monitoring
- Implementation of an “earned value management” tool for engineering
Definition of the corresponding training plan
Harmonization of financial rules for all subsidiaries of an international group
Context and Objectives
A helicopter manufacturer wants to harmonize financial rules across its subsidiaries
The topics are framed
- P&L structure by business line
- cost of sales, sustaining, SG&A, and intermediate corresponding margins
- hourly rates and chargebacks, material levy, R&D amortization, risk provisions
- pricing rules, transfer prices
- costs by nature and by organization
- WIP and stock, working capital, FCF
Results
A directive covering the priority topics is issued and deployed through training sessions organized for the 15 most impacted subsidiaries
The directive is used to build the 5 years OP
Some changes not adapted to specific local structures/context are treated in specific sessions allowing to manage some necessary exceptions
New risk sharing model for an aerospace actor
Context and Objectives
The performance of the upgrade division of an aircraft manufacturer doesn’t allow him to be competitive on product modifications
- long lead-times compared to
customers needs - negative EBIT
It was needed to improve competitiveness and secure growth objective by implementing a global sub-contracting approach
- from offer phase to modification & kits deliveries
- implementation of a “Risk sharing model” with the partner: no fees if no bid
Results
Make or Buy strategy defined
Business model defined with detailed process; Roles & Responsibilities defined
26 suppliers consulted, 5 short-listed
New dedicated organization set-up
Business case validated after RFP phase generating:
- -35% lead-time
- +70% turnover increase
- EBIT target restored
- Increased acceptance rate
