TEAMSAI©2014 CONFIDENTIAL & PROPRIETARY

Change Management Crystal City, Virginia

March 21, 2014

Yesterday, I introduced you briefly to TeamSAI

TeamSAI Consulting is a recognized leader in implementation of major change efforts with our MRO clients

Our work is often based on – Accelerated change methodologies – sense of urgency – Collaboration and involvement of client leadership, staff

and workforce – Clear improvement mandates and communication – Targeted metrics and improvement goals that are

broadly shared with the client work teams – Sustainable change supported by continuous

improvement methodologies

Importantly, the TeamSAI Principals all have a solid track record of successful change management in industry

– We developed and refined our successful consulting approach based on proven experiences

Before getting into some practical discussion for this audience, let me review a few examples of success

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Market Strategy Operations Maintenance, Repair & Overhaul Supply Chain Safety & Certification

Consulting & Advisory Services TEAMSAI CONSULTING SERVICES

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Nearly half our engagements involve a significant change effort

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Market Strategy

Operations

Maintenance, Repair & Overhaul

Supply Chain

Certification & Safety

Lean implementation and improved kitting solutions for production improvement

Facilitated transition from Military to Commercial engine MRO production

Proof-of-concept web enabled model for hazardous materials handling & identification

Multi-million dollar reduction in inventory through improved warehouse effectiveness

Internal supply chain assessment and improvements to benefit productivity

Aftermarket and Post-Delivery Customer Support Strategies

Acquisition due diligence and strategic support

North American growth strategy including acquisitions

Comprehensive market analysis to support engine MRO growth plan

Helicopter MRO market assessment and strategy for growth

Hangar productivity and capacity improvements via LEAN

Improvements in Line Maintenance planning effectiveness

Lean application to thrust reverser over-haul lines to reduce turn-around times

Step improvement in turn-around time through process improvement

Certification and training for first Asian Airbus certified VIP Completion Center

New fleet integration and certification

Start-up and certification of Lynx Aviation

Accelerated ETOPS Certification

Medivac operations SMS evaluation and recommendations

ETOPS certification support, interior engineering & certification

Lean transformation support to Air Ops division to enhance operation excellence

Post-merger on-time performance improvement from 4th quartile DOT to 1st

Major cost improvement initiative to align with industry norms

New Aircraft Evaluation and selection

Comprehensive operations improvement initiatives for improved margins

What’s are the common threads relative to motivating change?

The MRO business environment is changing faster than ever – The good life of 2007 is gone forever and the business is changing rapidly

The North American commercial fleet is undergoing a significant renewal – Demand may be more erratic as airlines quickly adjust capacity for disruptive conditions – High retirements of older aircraft

OEM participation in the aftermarket is definitely growing

Independent MRO’s are faced with a squeeze play – Fleet renewal – Changing input from airlines – OEM competition – Intensified cost and performance pressures

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The aftermarket business challenge requires dynamic strategies and constant adjustment

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Major change efforts are never easy

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So,

what are the Critical Success Factors (CSF)

of successful change efforts?

#1 CSF – Having a compelling business reason for change

Compelling is the key word … the vision must resonate at all levels – Board of Directors – Leadership and staff – Workforce – Customers

Urgency is also very important … it creates a “burning platform” – Most people will participate if they understand the need…therefore communicating

effectively is key

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If the mandate is not clear for all stakeholders, risk of sub-optimizing the change effort is high

#2 CSF – Strong, committed leadership

The leadership model has to be about "leading change", including – Sending a clear and consistent message to customers and employees – Taking on accountability for results – Learning to manage in a new environment that will not always be intuitive – Communicating why change is necessary – Becoming an example and pace setter for the process – Removing barriers that impede the process

Organizational Development expertise may be required to accelerate the efforts

Recognize that all may not be able to adapt – Be prepared to take action if necessary … ignoring the issue significantly increases the risk

of failure

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While top leadership commitment is an imperative, lack of unity among all leaders can be a major obstacle

#3 CSF – Have a well planned and organized methodology

Extensively plan for the important elements of the effort – How to drive effective and lasting continuous improvement in the organization – How to establish a sense of urgency around the effort – How to unify the Leadership Team in setting the example and the pace for the

organization – How to gain buy-in and traction across the organization to build momentum – How to communicate what you are doing internally and externally

Use a proven methodology based on identified needs … and commit the required resources

– Process change – Lean – Theory of Constraints – Six Sigma – Or a unique combination of available tools!

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“Just go do it” is not a winning strategy

#4 CSF – Involve the workforce and/or staff

Those involved directly in the processes being changed know best how to improve it

There is a lot of wisdom in the old Chinese proverb – Tell me – and I will forget – Show me – and I will remember – Involve me – and I will understand (commitment)

If you are dealing with a unionized work environment, get the union leadership involved and committed to support (before you start!)

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Driving change designed by others without involving the workforce is a recipe for failure

#5 CSF – Develop clear metrics and accountability

What gets measured, gets done!

Clear metrics at every level of the organization is important – It is easy to have too many meaningless metrics – pick the right ones – It is easy to incent the wrong behavior with poorly goals – balance the approach

Clear goals that drive long term continuous improvement are essential – "Raising the bar" as improvements move the needle is important

Clear accountability for results is often best leveraged with regular review sessions

– Start with weekly reviews to develop momentum

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Own the process and the outcome for greater commitment and accountability

Let’s Summarize

Successful, sustainable, large scale change efforts are challenging for sure

The top factors common to success must be solidly in place

If you are thinking that there surely are more success factors, there certainly are – These are the some of the most essential early on

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#1. Compelling Vision

#2. Committed Leadership

#3. Planned Methodology

#4 . Employee Involvement

#5. Clear Accountability

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Getting started and creating the framework is often difficult

There may be a clear vision and solid leadership commitment, but developing the roadmap can often be a challenge

– Within the organization, there may not be the talent and skills to map things out – Within the organization, there is often subtle executive resistance

– Admitting there is room for improvement in "my" organization is a threat – Self interests can often get in the way of an objective plan – Corporate culture or inertia can often be one of the greatest challenges to overcome

If the vision for change results in improved market position, better customer relations and retention, or improved financial results, every day of delay can be creating a competitive disadvantage

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One question for this discussion today is how best to successfully get started in your company

In closing, engaging outside experts to help is sometimes important … TeamSAI often assists in designing an effort

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Project Steps Purpose Benefits to Client

Identify Client Issues

▪ It is imperative that we understand the objectives from the clients perspective

▪ Generally issues are centered around productivity and throughput although root causes are difficult to define

▪ Knowledge that the consulting focus is clearly aimed at the core issues impeding performance

Recommendations

▪ Based on the findings, we define the most pragmatic route to new levels of performance with defined performance measures

▪ Improvement initiatives are defined in a prioritized ranking to create a literal road map for implementation

▪ Confidence in having a clear roadmap for implementation and freedom to make the choice of internal vs consultant led implementation

▪ Confidence that you will actually get a quality product within your desired timeframe vs. a “rolling invoice” to address unfinished items

Rapid Assessment

▪ Our approach of generating minimal disruption with maximum results in clearest perspectives on the core issues

▪ The cost of discovery is relatively low assuring the investment is channeled to actual improvements in results

▪ Using our proprietary Rapid Assessment Tools, TeamSAI has perfected a comprehensive process to probe all aspects of an operation to identify root causes

▪ We get to the heart of the matter within one to three weeks to understand the nature and scale of the opportunity

Improvement Implementation

▪ TeamSAI has an effective Rapid Implementation methodology with a track record of sustained results

▪ We instill continuous improvement methodologies to ensure that the client can continue to reap results after the engagement

▪ Flexibility in approaching improvements

▪ Greater certainty of sustained improvements

▪ Comfort in having clear off-ramp decision points for consultant involvement

End of advertisement !!

Questions?

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THANK YOU!

Corporate Headquarters 1003 Virginia Avenue Suite 300 Atlanta, GA 30354 USA +404-762-7257 Contact: David A. Marcontell President & COO

dmarcontell@teamsai.com

TEAMSAI©2014 March 2014

Case study: BBJ Interiors & Aux Fuel System Installation Efficiency

The client company had recently been spun off as a result of the sale of a larger component of the business; the owners looked to improve performance on current lines of business to increase profitability and enable expansion into additional lines

The size of the company was such that precision regarding investment dollars was extremely critical – prioritization of opportunities was tantamount

The organization was fragmented and the culture was sensitive as the employees had experienced numerous ups and downs – careful consideration of operational changes was required

TeamSAI was engaged by the board to conduct an assessment with specific focus on improving the profitability of interiors & fuel tank installation

The approach to the assessment included reviews of project bid procedures, hangar operations, staffing, project management and planning, change order processing, and organizational design

Financial considerations were linked to each component of the assessment to ensure recommendations were prioritized appropriately relative to the leaderships desire to focus on profitability

TeamSAI was retained to implement a number of significant objectives including hangar planning, organizational redesign, and continuous improvement program implementation

An independent MRO with significant BBJ offerings looked to improve custom interior and auxiliary fuel tank installation turn times in order to increase hangar capacity and improve profitability

The assessment uncovered the fact that the fragmented organizational structure was creating a number of inefficiencies

Planning and scheduling processes were found to be inadequate relative to managing the large scale nature of the installations and status reporting was inaccurate and ineffective

Other inefficiencies, including hangar floor work processes, materials supply delays, and work team management were also addressed in the assessment

Ultimately, having been retained to support a number of the assessment recommendations, TeamSAI redesigned the planning and project management processes and implemented a continuous improvement program to enable the company to proceed with other recommendations on their own

The assessment concluded with the presentation of findings and a detailed roadmap for implementation

TeamSAI conducted an organizational redesign plan to ensure staffing was consistent with production requirements (note that this effort was not related to numbers, rather, it was concerned with having people in the right positions to support the operation)

A comprehensive continuous improvement program was designed and implemented at the facility which included training, work team management, opportunity prioritization, and CI event execution

TeamSAI developed and implemented new project planning and scheduling tools for hangar project (interiors) and trained staff on the use of these tools

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Situation Results and findings

TeamSAI’s role Deliverables

Case study: Maintenance Planning & Operations Assessment

A new management team required a thorough assessment of the maintenance planning operation to help define deficiencies which were driving excessive numbers of aircraft out of service

The company was required to meet minimum contractual readiness requirements in order to achieve revenue thresholds and was struggling with planning and coordinating maintenance activities in the field

TeamSAI was initially engaged to conduct a two week assessment of maintenance planning processes at the airlines operations headquarters

Following the assessment, TeamSAI was retained to implement changes to planning, redesign maintenance programs, and restructure supply chain logistics functions at the airline

A niche airline supporting government logistics and operating in remote regions required assistance to improve their maintenance planning capability and the development of processes to meet maintenance support needs in the field

The assessment found the client company was laden with legacy military procedures which had not been adapted to meet the needs of their new commercial business model

Planning cycles were repeated numerous times before maintenance was executed and requirements were often missed as a result of the confusion

The coordination of maintenance plans, parts, and support documents was poor and often resulted in excessive downtime

The assessment portion of the engagement concluded with a presentation of findings and recommendations

TeamSAI, having been retained to lead the execution of specific deliverables related to maintenance planning and programs functions, completed these initiatives on time and on budget thereby enabling the airline to improve its mission readiness capability by 30%

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Situation Results and findings

TeamSAI’s role Deliverables

Case study: Airframe MRO Turn-Around-Time Improvement

Heavy maintenance turnaround times were consistently exceeding plan with increasing dissatisfaction from its customers

The longer turn times were also creating other issues externally and internally Down stream customer slots were being

compromised and constantly pushed back Internally, mechanic overtime was being driven up Hangar capacity was being unnecessarily

burdened Total facility throughput was being constrained As a result, financial results were not being

optimized

TeamSAI was engaged to first diagnose the root

issues and to assist the client in establishing a successful proof of concept improvement effort to demonstrate the potential for the facility

The first phase of the effort was a detailed assessment of the heavy maintenance cycle including pre-planning efforts, pre-induction preparedness, production control and management, responsiveness and handling of unexpected issues, material and tooling availability, mechanic productivity, and related internal support from engineering, shops, etc.

Following the assessment, TeamSAI guided implementation of the improvement efforts with a core team in the client organization

A large independent airframe MRO was struggling to complete airframe heavy checks on time and budget affecting customer relations and hangar capacity

The assessment results identified a number of opportunities relating to a best in class comparison

TeamSAI provided recommendation with a rapid implementation methodology which was necessary to demonstrate the proof of concept

Implementation was conducted in two stages First, the supporting functional issues were addressed

including pre-planning methodologies, parts and tooling staging, shop turnaround issues

With the pre-induction issues corrected, the actual production cycle improvements were implemented

The first aircraft produced under the new process represented a 30% improvement on historical performance

The assessment phase of the engagement concluded with a presentation of findings and recommendations

The implementation phase involved regular briefings to top management but was really judged by the change in energy in the workplace and by the structural and process changes being made to support the operation in line with best in class operations

Finally, a roadmap was developed for the client to continue with the implementation across the other hangar bays

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Situation Results and findings

TeamSAI’s role Deliverables

Case study: Line Mx Capacity Assessment & Modeling

Limited hangar space and long segment lengths created an urgent need to execute maintenance in very short intervals to ensure aircraft availability

The company had previously executed a lean initiative in the hangar and line maintenance areas at Heathrow but was still struggling relative to maintenance planning and scheduling

Collective bargaining units were unconvinced that schedule adjustments were necessary to achieve optimal performance

TeamSAI was initially engaged to conduct an assessment of maintenance planning and execution processes at the airlines hangar operation at Heathrow

Specific emphasis was placed on deviations from the plan, the re-planning cycle, and hangar efficiency

Following the assessment, TeamSAI was engaged to build a mathematical capacity management model for the LHR line maintenance operation which was used to develop staffing schedules

UK based international airline sought to leverage Mx scheduling to improve efficiency and decrease aircraft down time

The assessment found the client company was staffed adequately, but improperly scheduled (i.e. insufficient staffing at the right times)

Root causes for the rescheduling issues were examined and it was determined many were the result of a lack of coordination and planning standards

TeamSAI was subsequently engaged to quantify and model line maintenance capacity based upon variations of staffing and schedules for upcoming negotiations

The assessment portion of the engagement concluded with a presentation of findings and recommendations

TeamSAI produced a comprehensive mathematical capacity management model for the Heathrow hangar and used this model to develop and implement changes in the planning process

Situation Results and findings

TeamSAI’s role Deliverables

March 2014