customer keynote - seaonlineinformation of woodward, inc., the disclosure of which may be in...

Accelerating Supply Chain Performance

Customer Keynote

170

SEA 2012 All Rights Reserved

Halil Kinaci Director, Global Supply Chain

Woodward

This presentation is intended only for the individual or entity to which it is addressed and may contain information that is the Confidential and/or Proprietary Information of Woodward, Inc., the disclosure of which may be in violation of applicable law. If you are not the intended recipient, or an employee or agent responsible for delivery to the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this message is strictly prohibited and you are requested to notify us immediately by telephone.

Woodward, Inc.

Halil Kinaci

Director, Global Supply Chain

July 26, 2012

172 Proprietary Information

Woodward Markets

Sales $869 million – FY11 Sales $843 million – FY11


Woodward Global Presence


Woodward – Control Solutions

• Woodward delivers

Sound customer approach

Systems that deliver lower total cost of operation

Collaborative approach with customer teams

Technology and business model alignment

Consistent long-term investment and track record

• Our controls and systems are designed and manufactured for

Energy efficiency

Lower emissions

High performance

Harsh environments

Power to weight ratio

Consistent, safe operation for extended periods

• Energy control and optimization strategy

175


Woodward - Growth Drivers

• Global Infrastructure

Transportation of goods, people

Power generation, control

• Emission Reductions

• Energy Efficiency

• Renewable Energy

• Systems Strategy

Increasing share and total content

• Geographic Expansion

Global presence for customers

Infrastructure markets with long-term growth

176



Aerospace

Aerospace Growth Strategies

• System/Product Strategies

Systems framework, across Woodward, develop/ leverage platforms

Long-term technology focus

Evolution from components to systems supplier

• Customer Strategies

‘Business partner’ relationships, early technology alignment

Target key platforms, maximize content

Organic development and acquisitions grew product breadth

• Consistent R&D Investment



Aerospace – Sales Outlook

• Growth Drivers Share gains on new platforms

New entrants

Increased aftermarket penetration

Expanded motion control offerings

Increased synergies

• Further acceleration beyond 2016 with narrowbody and other gains

~10% CAGR (Compound

Annual Growth Rate)

Growth Driver – Fleet Development

Copyright, Boeing


737 MAX

787

Growth Driver - New Platforms: Lower Fuel Burn/Emissions

Growth Driver - New Entrants

Superjet 100

C919

ARJ21

MRJ

Growth Driver - Military

• DoD budget pressure, but key programs will move forward

• Continuing conflicts drive warfighter support needs

F-35 KC-46A

JDAM

RWS

F/A-18 KC-390

Growth Driver - Aftermarket

• Growing fleet, utilization (hours flown) and upgrades drive aftermarket sales

• Woodward share of installed base is growing

Exposure to successful platforms such as Airbus A320 and Boeing 777

Woodward increased content


Control Systems – Motion & Propolsuion



Technology – New Product Introductions

• Systems capabilities investments

• Customer technology alignment

Near Term - refinement

Mid Term – new product maturation

Long Term - enabling technologies

• World-class cycle times

Air Valve Main Fuel

Pump

Combustion Test Facility Zeeland, MI System Test Facility

Rockford, IL

Platform Cockpit Controls

Electronics/ E-LRU

Flight Control Actuation System

Aerospace Growth Drivers Summary

New Platforms

+ New Entrants

+ Aftermarket Opportunities

+ Expanded Woodward Content

= Strong Woodward Growth



Global Supply Chain

Strategic Supply Base Transformation - Selection and Development

Supply Chain Future Outlook

• Perfect execution in the supply chain

• Strong product development – Value Focused

• Zero tolerance for errors

• Cycle reduction and speed in execution

• Continuous improvement mindset and execution

• Global cost management – total landed cost

• High ethical standards

• Commitment to regulatory and government requirements

• Risk and reward sharing

• Fair and reasonable

• Trusting and transparent

Matt Taylor VP, Global Supply Chain

Ute John Supply Chain Director

Halil Kinaci Supply Chain Director

Joe Patterson Supply Chain Director

Simon Chen Asia Sourcing Director

Ute John Euro Sourcing Director Craig Culver

Global Commodity Mgr

Regional Commodity Extension

Global Supply Chain Organization

Electronics and Enclosures Machined Components Supplier Engineered Components & PLC

Indirect Materials

Global/Centralized Model with Regional Management

PLC Sourcing Vision

Engineering &

Development Teams

PLC Sourcing

Commodities

Global Supply Chain Segments

Purchasing

Technology

•New Technology discovery •SOW communication / compliance matrix •Should cost analysis •Supplier innovation discovery •Program risk identification and resolution

PM/Buyers

•Hardware Purchase (Proto, Production) •ESI Coordination •Single point contact w/development teams •Specific program implementation (DTC/PLC Deliverables, LTA additions)

What We Expect From You

• Strong support and contribution developing new programs – early integration

• Zero-defect products and systems to our request date – effective root cause analysis

• Achieve cost targets and provide year-over-year improvements

• Continuous improvement mindset and execution

• High ethical standards

• Commitment to follow applicable regulatory and government requirements

Woodward will partner with suppliers

who share our vision and objectives

Supply Base Strategic Planning

Supply Base Strategic Planning is facilitated by a characterization of the supply base

Foundational • All grow criteria, AND • Significant / long term

investment in Woodward business , AND

• Maintains a spend level of over $10M per year.

Grow • Historical operational

performance supporting QDRC targets, AND

• Business philosophy, culture and strategy that aligns and supports Woodward, AND

• Ability to align and support Woodward growth goals, AND

• Ability and willingness to support Woodward strategic initiatives (BTO-Lean, Six Sigma, E-Commerce, PPAP, etc.), AND

• Track record of engaging in and supporting year-over-year cost reductions efforts, AND

• Support and integration into Woodward PLC process, AND

• Long-term financial stability, AND

• Interact with Woodward under long term agreements to provide security of supply and cost forecasting., AND

• Maintain effective ethics compliance program

Maintain • Historical operational

performance supporting organization’s QDRC targets, AND

• Provider of unique material driven by engineering requirements, OR

• Fits within SBLO strategy, OR • Customer directed, OR • Risk of transition outweighs

benefit of maintaining.

Consolidate

• Balance of supply base – candidates for rationalization.

Maintain • Historical operational

performance supporting organization’s QDRC targets, AND

• Provider of unique material driven by engineering requirements, OR

• Fits within SBLO strategy, OR • Customer directed, OR • Risk of transition outweighs

benefit of maintaining.

Grow

Maintain

Foundational

Consolidate

Focus for new programs and opportunities

Characteristics You Need

• Best in class operational performance - QDRC

• Support NPI – prototypes, early involvement, PLC / DFSS integration

• Ability to integrate

• Risk sharing – inventory programs to support BTO, year-over-year cost reductions

• Global support to maximize spend opportunity

• Excellent communication and customer support skills

• Long-term viability as partner with good financial performance

• Strong desire to engage Woodward as a key customer and partner

195 Proprietary Information (195)

• Shared Vision & Core Values • Successful Assessment • Commercial Alignment

• Customer Satisfaction • Business Capability • Comprehensive Flow-Down

Candidate Identification

Self-assessment & WPQR 9100 compliance matrix

SDE/GSM Review overall and element

thresholds

On-site Audit

verify self-

assessment

Gap Analysis and

Development

Planning

Commodity Mgmt Review &

Recommendation

Final Review and

Approval

Globally standardized processes, documentation and accountability

Production Part Approval Process (PPAP)

Item Validation and Approval via Production Part Approval Process (PPAP)

PPAP Need • New Development item • Engineering change

• Process change • Corrective action

PPAP requirements flow down to suppliers per

WPQR-9102

Supplier production,

PPAP creation, & submission

Woodward PPAP

content review

Woodward production &

validation

Product shipment to

customer

Customer testing

& validation

Pursuit of Perfection

Responsiveness – All areas of communication

/response to our needs


Questions

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