Strategic Planning

In what direction is the company headed?

How fast can we go?

Faster?

To be a World Class Organization!

Vision

Industry AnalysisCompany AnalysisDepartmental Targets (Near

/Long Term)

Supervisor Goals, Roles Business Plans Measures & Dashboards

INDUSTRY FORCES AND MPC STATUS

DepartmentsSupplier Power

Threat of Substitutes

Degree of Rivalry

(competitors)

Customer Power

Barriers to Entry

(new companies)

Dept. 01, SuperFinish

                         

Dept. 02, Formed Parts

                           

Dept. 03, Grinding         

                  

Assessed each of the Five (5) Forces, for each department•Bargaining Power of Suppliers: Standing & position of suppliers for major supplies

•Threat of Substitutes (Materials or Processes): Identify substitutes & their strength

•Intensity of Competitive Rivalry: Assess competitors for each department

•Bargaining Power of Customer: Standing, position & power of customers against the company

•Barriers to Entry/Threat of new Competitors: How easy/difficult for others to enter industry?

INDUSTRY FORCES AND MPC STATUS

Supplier Power Threat of SubstitutesDegree of Rivalry

(competitors)Buyer (MPC

Customer) PowerBarriers to Entry (new

companies)

Dept. 02, Formed Parts

Medium Power (compound bars) High Threat High Threat Medium Power High Threat

Environmental laws eliminated second source of compound bars.

Robotics are available world wide for polishing formed parts.

Multiple competitors world wide.

Pricing & delivery will be drivers for this part segment.

Relatively inexpensive automation available.

Limited Substitutes available, not a large market for suppliers.

A complete integrated/robotic system can be purchased for under $500K.

Multiple small and low cost polishers concentrated in Wichita (OEM regional base).

Forming companies (our customers) losing accounts on price.

Automation has been in use for at least 10 years.

Low volume use for MPC. Automation for forming of parts with in-house Robotics being implemented in China and Europe (Unverified Reports).

Several formed parts customers have in-house polishing capacity.

price war implies forming has evolved into commodity.

Automation can meet quality specs.

    New Entrants (unconfirmed) from China & Europe.

Price pressure for MPC customers translates into price reduction requests.

Compound & Buff suppliers familiar with automation & can assist new entrants.

    2 largest customers are in So. Cal. MPC in Irvine is attractive vendor.

MPC can not sustain dept. profit with ongoing price reductions.

 

• One department had high threats in 4 of 5 sections• This is where we spent more time, assessing the department

We listed the 5 forces

We applied them to each department

Is it possible to produce a 1 page executive summary?

RESULTS: Dept. 01: large risk by having 1 major supplier, Kaizen opportunities

Dept. 02: Many threats, Review planned capital investment into Automated Robotics

Dept. 03: No threats, opportunities to go after market share?

COMPANY ANALYSIS and RISK STATUS

Financial Operations Technology Markets Competitive

Dept. 01, SuperFinish

Dept. 02, Formed Parts

Dept. 03, Grinding

Assessed each of the Five (5) Forces, for each department•Financial: YOY Performance, strengths, weaknesses, P&L by Department.

•Operations: Labor, Material, Required Skill Level, Value Stream Map.

•Technology: Current status, new technology available, repair/Maintenance costs, tech. improvements as cost reduction strategy–assess per department

•Markets: What is happening in the marketplace? What are major forces? What are customers doing, primes doing, how is capital behaving? Traditional vs. Emerging markets

•Competition: How easy/difficult is it for others to enter the industry? Are small companies growing? Are large companies acquiring?

COMPANY ANALYSIS and RISK STATUSDepartments Financial Operations Technology Markets Competitive

Dept. 01, SuperFin

ish

Medium Risk Low Risk Low Threat Medium Threat Medium Threat

Sales volume increasing by 10-25%. Tied to 737 production rate.

Volume increasing by 10%, Volume may increase another 10-15% by 2012.

No known issues Aleris has history of erratic production leading to limited accounts with Spirit (no growth)

One major competitor (Alcoa).

3 year outlook is positive with upward sales trajectory; 3 yr. contract extension talks with Aleris upcoming.

Need to re-visit production plan and relayout product flow to accommodate up to 25% production increase.

  Aleris has history of zero quality improvement leading to limited accounts with Spirit (no growth)

Major competitor continuously working to increase market share.

Customer asking for price decrease; Pricing (maintaining & appropriate yearly increases) is the key issue.

Will need to revisit org. chart with possible re-assignment of supervisors.

    If Aleris falters, competitor ready to take over account.

Dept. 02, Formed Parts

High Risk Low Risk High Threat High Threat High ThreatSales volume decreasing. Volume reducing, possible less floor space and

manpower required. Unconfirmed automation in Europe & China; European customers moving orders overseas

Market has expansion potential as airplane makers begin bringing new and new generation airplanes to market.

Many competitors

MPC customers losing accounts on price. Customers want to continue with low lead times even with low volume.

Automation technology exists with relatively low cost and ease of implementation

Overall Market may not grow (new planes offset obsolete planes), but market share will shift among fabricators

Cluster of small competitors, competitively located near OEMS on Wichita

Customers want to keep/gain accounts on price and ask for MPC polishing price reduction.

Reduced volume may require updated production plan and product flow.

  Fabricated formed parts have evolved into commodity forcing price wars

Larger competitors in Europe/China

Volume is the key issue in this department.     Price war impacting MPC as customers (AHF, Versaform) lose accounts to pricing

Some fabricators in Europe/China

        Shift in accounts, country of fabrication and market share among fabricators (MPC customers)

Dept. 03, Grinding

High Risk Medium Risk Low Threat Low Threat Low ThreatAttractive gross margin with labor and material; much lower margins when overhead (insurance, rent, taxes) are added.

2 additional grinders being installed. New grinders cost approx.. $1.5 million, may serve as deterrent for small entrants.

Unattractive industry for entrants. Market stable with cyclical demand.

Labor cost over is over 30% (will tally exact percent at end of FY10 September).

current grinder needs to be overhauled and upgraded.

Process for grinding unchanged; New, state of the art technology at reasonable pricing not available.

Smaller grinding companies have been folding during current recession.

Strong competitive advantage with Precision Grinding and finish capability.

Labor cost increasing yearly due to large overtime hours.

Need for new production plan and capacity management with additional grinders.

  Precision grinders few in US; Explore option to gain customers by keeping small/select inventory of alloy for quick turnaround for East Coast Customers.

Need to undo "2 man per machine" concept to lower labor costs.

    Customer base expanding throughout US.

 

Need to grow gross margin and net income for the department.

       

RESULTS: Dept. 01: Strong Department, leverage strength into market place

Dept. 02: Many threats across the board, Review business case for maintaining department

Dept. 03: Reduce cost, streamline processes, kaizen events, restructure production methods

RESULTS: Dept. 01: Large risk by having 1 major supplier, target locating 2 additional suppliersKaizen opportunities – develop new measures to increase efficiency/reduce cost – track and post Strong Department - leverage strength into market place for Misc. Flat Sheet Polish

Dept. 02: Many threats across the boardPostpone Capital investment into Automated RoboticsReview business case for maintaining department, reduce Sq. Ft. Blueprint

Dept. 03: No threatsGo after market share with increase capacity and reduce lead-time (48 hour tunaround program)Reduce cost by reducing overtimeStreamline processes to implement SMEDConduct Kaizen events to eliminate non-value add activitiesRe-structure production methods to eliminate manpower (from 2 operators per machine to 3 operators running 2 machines)

Develop Targets

Near Term

Long Term

12 months (fy11) 12 - 24 months (fy12) 24+ months (fy13)

95% on time deliver 98% on time delivery 100% on time delivery

Customer complaints at less than 10% of orders for applicable orders (sigma measure?)

Customer complaints at less than 5% of orders for applicable orders (sigma measure?)

Customer complaints at less than 1% of orders for applicable orders (sigma measure TBD)

50% of 2 year Profit target goal 75% of 2 year Profit target goal Hit 2 year profit target goal

50% of 2 year Cost target goal 75% of 2 year Cost target goal Hit 2 year Cost Target Goal

6 kaizen events per year 8 kaizen events per year 12 Kaizen events per year

50% safety incident improvement from previous year Less than 2 safety incidents Zero safety incidents

Achieve 50% of sales growth target Achieve 75% of sales growth target Achieve 2 year Sales growth targets

Expand customer base by 25%? 30% 40% ? TBD.Expand customer base by 25%? 30% 40% ? TBD.

Expand customer base by 25%? 30% 40% ? TBD.

Achieve 50% of 2 year sales/employee targetAchieve 75% of 2 year sales/employee target Achieve 2 year sales/employee target

Reduce Changeover times by 25% Reduce Changeover times by 50% Reduce Changeover times by 75%

Shortest Lead-Time

Lowest Cost

Highest Quality

“What gets measured, gets done”

The highest Quality (Measured by Customer)

The shortest Lead-Time (Measured in Hours)

The lowest Cost (Measured in Profit)

Production rate increase by over 30% over next 2 years

Fast & furious segment, must stay organized & focused; Part turnaround in 6-10 hours

Highest Quality

Lowest Cost

Shortest Lead-Time

We will use measurable, industry recognized metrics to guide progress:

World Class Quality ISO 9001 and AS9100

World Class Continuous Improvement Program

Lean Manufacturing Kaizen

Company leaders must be motivating, guiding and inspiring their employees to be high achievers.

Two Ongoing Priorities1. The Creation of a High Performance Environment.2. The ongoing Development of High Performance

Employees.

ISO 9001 and AS9100 Certification

“The pursuit of world class management procedures and business practices”

“The pursuit of the Highest Quality, Lowest cost and Shortest Lead-Time”

Partnership and Collaboration

A World Class Organization!