QM Using KPIs IAQG Gastvortrag E-Behle 16 Okt 2009 Engl 3

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Quality Management using

Key Performance Indicatorsat MTU Aero Engines

Egon Behle,

CEO, MTU Aero Engines

IAQG General Assembly, 16 October 2009



16 October 2009 IAQG General Assembly MTU Aero Engines Egon Behle 2

• Risk- and revenue-sharing partner inprograms of all major OEMs

• Focus on low-pressure turbines andhigh-pressure compressors

• Approx. 30% of the active engine fleet

flies with MTU components on board

OEM business

Commercial engine business Military engine business Commercial MRO

1.146 m€ (42%) 497 m€ (18%) 1.113 m€ (40%) Revenues*

MTU and its business model

• Capability to develop and manufacturecomplete propulsion systems

• R&D is frequently financed by thecustomer

• MTU has significant stakes in the major

European military programs

• Largest independent provider ofcommercial engine MRO(Maintenance, Repair and Overhaul)services

• Stakes in engines with high growth rates(V2500, CFM56, CF34)

• Strong presence in Asia

*) FY2008

MRO business

GP7000 EJ200

2,724.3 m€ ∑ Revenues*

331 m€ EBIT *

7537 Headcount *




The major market players in theengine business Overview of the engine industry

Engine

component

suppliers

Engine

sub-system

(module)

providers

OEMs

• Players specialize in specific engine modules

and technologies

• Oligopolistic market structures

• High market entry barriers:

• High technological expertise required

• Substantial up-front investments

required (R&D, royalty payments)

• Long-term agreements

• In part captive spare parts market

• Acceptance and certification requirements

and approval by authorities

I n c r e a s i n g

P a

r t n e r s h i p

The players in the engine market




0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

11000

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

0

500

1000

1500

2000

2500

3000

3500Passenger traffic forecast

Passenger traffic 1980-2008

Aircraft deliveries

Aircraft firm orders

W

o

d

e

o

m

e

s

(

)

N

m

v

a

e

r

c

a

(

r

n

s

e

g

e

s

)

Forecast (4.7% p.a. growth)History

Source: MTU/ASM September 2009, Airclaims‘ CASE

Remark: Western-manufactured jet powered commercial transport aircraft are considered (Airliners, Freighters & RJs; turboprops, business jets, military and general aviation excluded)

The market cycles (status September 2009)




Strategic pillars

Strategic target fields

To shape our future, the MTU strategy is targeting profitable growth

in all business segments

Customers /

Partners Products Branding Shareholders Employees Locations

First-class

technology

Successful

programs

Growth via

acquisitions

Competitive

cost

structure

Competence

enhancement

in marketniches

Strategic basementQuality, Reliability, Speed, Productivity and Intercultural Expertise

~ 6 Bn.€ Sales 2018EBIT > 12%

Strategic target


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Quality, a management task

Mindset of organization

MTU Board follows up KPIs

Focus on selected KPIs

Monitor development of trends

Quality audits and initiatives

Quality needs to be produced by every individual at any time.



CIP as an ongoing process throughout

the complete organization

Improve price/ performance ratio

Dedicated projects to improve KPIs examples:

• strong improvement of TAT and OTD in MTU’s MRO locations

• to become benchmark

• to win new contracts on the basis of best quality

Quality, a selling argument



MTU's Integrated Management System (IMS)

• Safety is a prime concern in aviation.

• The smallest of mistakes may have catastrophic

consequences. Therefore MTU insists on the finest quality of

its products and services.

Quality and safety are the first priority in whatever we do.

MTU's Integrated Management System (IMS)

QualityEnvironmental

protection

Occupational

health & safety

A world-class, efficient Integrated Management System (quality, occupational health

& safety, environmental protection) that ensures that principles, objectives and

standards are put in place at all of the company's locations.



Production quality Process quality Development quality

The key quality data / indicators have been continuously improved

1995 2005

Customer

complaints(components)

Scrap costs

Rework costs

First pass yield

(components/engines)

DPM

RPM

Supplier performance

Statisticalprocess control

(SPC)

Compliance withdevelopment milestones

Passed reviews(design / production readiness)

First pass yield(Design)

Number of component mods

Process maturity levels

EFQM result

Spec compliance



MTU's system allows the key performance indicator information tobe viewed from different perspectives

A complete and consistent database for the generationof key indicators for different perspectives

Organization ProcessProduct / program

GP 7000GP 7000

• Management perspective

• Center perspective

• Team perspective

• Engine

• Module

• Detail part

• Business processes

• Main processes

• Part processes



Highest priority on customer needs

Strong focus on on-time and on-quality delivery

Implementation of best-practice processes in production and quality management

Intense oversight and training of our suppliers

Continuous improvements through people, processes and tools

Highly qualified and trained personnel

Participation in national and international initiatives and working groups to developinternationally accepted standards

Cost optimization and quality do not have to contradict each other Aviation safety is the first priority in whatever we do!



"Good is not good enough where better is expected."(Thomas Fuller – English historian)

Thank you very much for your attention!




weiteres Material




The relevant key performance

indicators are consistently

reported2

We use key performance indicators (KPIs) to continuouslyimprove our operational performance

The company's objectives are

broken down into theoperational units' objectives

In the event of deviations,

corrective actions and failureanalyses are initiated without

delay

1

Company

Center

Team

Employee

3

Our Continuous Improvement

Program (CIP) supports

sustained process optimization4

5The organization's

productive efficiency is

improved, the

objectives are adjusted




External consultants help with the optimization of selected KPIs

Result: TAT reduction

by 26% achieved(average out of

54 components) -26%

Example: Project for the

reduction of turnaround time(TAT) in parts manufacturing

QM Using KPIs IAQG Gastvortrag E-Behle 16 Okt 2009 Engl 3

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