TEAMSAI2012OCTOBER 2012 Improving MRO PerformanceThrough Process Excellence Presented by: David A. Marcontell President & COO, TeamSAI, Inc. What does an MRO do? The MRO business cycle Market capabilities Acquire contracts Receive products Perform Overhaul/Repair Receive payment and deliver Repeat The actual work of the process is wholly encompassed in the Perform element Performance determines Quality Delivery Cost Acquire Receive Perform Payment & Delivery Market October 2012 2 TEAMSAI2012

Traditionally, when performance is an issue We tend to do more of what were already doing Add staff, overtime, shifts Hold more status meetings Pressure staff for results Traditional results Increased cost Schedule impacts Increased defects We know what were doing But HOW are we doing it??? October 2012 3 TEAMSAI2012An Alternative Approach Evaluating the details of HOW we accomplish what we do can present significant insights to our process, and illuminate opportunities for improvement Harnessing these opportunities releases substantial benefits to the operation TeamSAIs approach combines Lean Principles with the Theory of Constraints as a methodology for identifying the greatest opportunity for improvement The key elements of our methodology include: Performance measurement Training Rapid Improvement Events Creation of a Leadership System Equipping the organization to carry on the effort as a continuous improvement strategy October 2012 4 TEAMSAI2012Common results Identification of the real obstacles to performance Policies, procedures, processes, methods, equipment, travel Greater understanding of the real work of the organization Reduced waste, improved productivity Rapid performance improvements of 20-50% or more Unprecedented gains are common Alignment of organizations to common, corporate objectives Streamlined operations Improved morale and interdepartmental relations The organization becomes a more desirable place to work October 2012 5 TEAMSAI2012Background A large air transport operation recognized a problem in its line maintenance operations Delays, Deferrals, and MELs were rising Out of Service aircraft numbers were increasing Detailed assessment revealed Priority given to releasing the aircraft, not accomplishing planned maintenance Excessively long travel distances from work assignment to aircraft (2.5 miles!) Little standardization Conflicting priorities High variation in work assignments, frequent re-assignments Little effective pre-planning or materials staging Last minute shuffling of work packages Many communications systems but difficult and poor information transfer In short, Line Maintenance had lost focus on actually accomplishing maintenance Case Study Line Maintenance October 2012 6 TEAMSAI2012Transformation Process Involved line mechanics andleadership from all levels and organizations Combined training coupled with rapid improvement events Systematically moved through a series of events focused on identified constraints to Line Maintenance success Some short and sweet Some long and involved Each event resulted in visible, tangible improvements to the operational efficiency of the department Each event improved the morale of those involved and strengthened their resolve to continue the efforts With each event, the number of trained and involved employees grew Case Study Line Maintenance October 2012 7 TEAMSAI2012Transformation Results Significant results show the power of tapping into the workforce experts to improve the operation 35% reduction in aircraft down time for engine change 60% improvement in wheel/brake change 80% reduction in chronic cargo area damage $600K annual reduction with improvements in return to stock process 69% improvement in technician search time for equipment 30-60% reduction in Engineering Authorization cycle time to support specific Line Maintenance issues Improving turn-around-times and dispatch reliability means it is not necessary to create additional spare aircraft as the fleet grows They can purchase one less aircraft as a result with a Net Present Value of almost $39 million They can also plan one less lease with a Net Present Value of just over $12 million Less tangible but a powerful contributor More energized work force More efficient support structure October 2012 Case Study Line Maintenance 8 TEAMSAI2012Background A commercial aircraft MRO was faced with numerous issues Inventory was growing, with significant expenditure on consumables and expendables AOG activity was high Despite inventory growth, hangar on-time performance was poor on high value C and D checks Belief was that inventory did not have a significant impact on hangar efficiency Initial mission Reduce spend and inventory growth Stretch goal Evaluate potential improvementswith a C Check pilot demonstration Shipside stores Pre-draw materials Consumables Inventory control measures Timely part request process C-Check cycle time Case Study Hangar Supply Chain On Time Performance0%20%40%60%80%100%A A+ B C DCheck TypePercent of Checks on TimeOctober 2012 9 TEAMSAI2012Transformation Process October 2012 10 TEAMSAI2012Current StateProcess Analysis Future StateProcess Definition Transition Planning A value stream mapcorrelated supply chain activity to the C Check milestone schedule Three key root problems were identified What to change? What does the change look like? How to create the change? Each root issue required individual analysis to identify effective resolution Analysis developed in concert with all process owners and users to obtain buy-in

Categorized and prioritized plans with schedules were developed to track accomplishment of the changes required Case Study Hangar Supply Chain Essential questions to achieve any significant and sustainable improvement

Pilot Project Details Pre-draw and consumables October 2012 11 TEAMSAI2012 Written procedures Result: Engine oil change that didn't require travel and time for needed supplies Case Study Hangar Supply Chain Transformation Results Pilot C-check planned for 10 days wascompleted in only 8 days using fewerman-hours than normal Observations and feedback: Pre-draw accuracy 100% Availability of consumables greatly improved Operations requested additional consumableand expendable items be available for future checks using new shipside stores method Changes to inventory tracking allowed forward staging of inventory WITHOUT charge Charges to inventory occurring upon consumption, triggering replenishment The access provided by the pilot approach to pre-draw and other materials was estimated by operations to eliminate 4 hours of wait time per a/c zone per day Suggestions for modifications and expansion of the pilot concepts to other check types began arriving daily October 2012 12 TEAMSAI2012In the course of five weeks and with a little help a struggling organization transformed itself!Case Study Hangar Supply Chain Background In this operation, the Inlet Fan module was the pacing constraint for the entire shop Initial Turn Around Time (TAT) required for module overhaul was longer than allowed for the engine Build line chronically short Inlet Fan modules direct impact to throughput Ten or more modules in WIP, parallel processing, high variation Materials nightmare of concurrent demand and uncertain priorities Robbing Peter to pay Paul October 2012 13 TEAMSAI2012Case Study Engine Module Overhaul Transformation Process Designed and Implemented Pulse Flow Line Pulse line designed by employee blitz team Standard work defined for each work position Build to TAKT target WIP control mechanisms defined WIP caps developed based on TAKT and Flow Developed Visual Status to help shop control production flow Co-located support staff to improve response to issues October 2012 14 IS Case Study Engine Module Overhaul Rapid Improvement Event WAS TEAMSAI2012Transformation Results Fixed work scope defined for each station Eliminated ambiguity of daily work scope Visual status indicated by position, details on area status boards for all to see Improved material flow and control Parts and materials unique to each station work scope kitted and delivered to a specific location Reduced material demand from 10 parallel WIP locations to 1 at the serial work position, dramatically reducing stores and transportation work requirements Dramatically improved area performance Priorities are clear Support is immediate Materials are available when and where needed Production challenges are greatly reduced; remaining challenges greatly clarified October 2012 15 TEAMSAI2012Since the area reconfiguration and process improvements, Inlet Fan modules have consistently been completed ahead of thebuild lines ability to use them.Summary and Conclusions The transformation process appears straight forward Know where you are Know where you want to go Plan and prepare to move Transform to the New condition Transformation itself, however, is never simple Our approach is designed to infuse transformation process knowledge Focus on the needs of the organization Listen!! Collaborative involvement from start to finish Organization must be willing to participate!! High level of workforce engagement Top down and bottom up Consciousness of and respect for the work place culture Differences exist for a reason Teach, train, facilitate, & mentor through transformation Dont fish, but teach how to fish Lead client staff to development of their own solutions Promote ownership A man convinced against his will is of the same opinion still.~Benjamin Franklin Teaching an organization transformation skills will provide ongoing returns from the initial effort October 2012 16 TEAMSAI2012THANK YOU! October 2012TEAMSAI2012 17 David A. Marcontell President & COO TeamSAI, Inc. 404-762-7257 Ext. 105 dmarcontell@teamsai.com