Quality Management using

Key Performance Indicators

at MTU Aero Engines
Egon Behle,
CEO, MTU Aero Engines
IAQG General Assembly, 16 October 2009

MTU and its business model

OEM business
Commercial engine business

MRO business

Military engine business

Risk- and revenue-sharing partner in

programs of all major OEMs

Capability to develop and manufacture

complete propulsion systems

Focus on low-pressure turbines and

high-pressure compressors

R&D is frequently financed by the

customer

Approx. 30% of the active engine fleet

flies with MTU components on board

MTU has significant stakes in the major

European military programs

GP7000

IAQG General Assembly

Largest independent provider of

commercial engine MRO
(Maintenance, Repair and Overhaul)

services

Stakes in engines with high growth rates

(V2500, CFM56, CF34)

Strong presence in Asia

EJ200

1.146 m (42%)

16 October 2009

Commercial MRO

497 m (18%)

MTU Aero Engines

*) FY2008

1.113 m (40%)

Revenues*

2,724.3 m

Revenues*

331 m

EBIT *

7537

Headcount *

Egon Behle

The players in the engine market

The major market players in the
engine business

Engine
sub-system
(module)
providers

Players specialize in specific engine modules

and technologies

Increasing Partnership

OEMs

Overview of the engine industry

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

Engine
component
suppliers

16 October 2009

IAQG General Assembly

MTU Aero Engines

Egon Behle

The market cycles (status September 2009)

History

3500

Passenger traffic forecast

Passenger traffic 1980-2008

10000

3000

Aircraft deliveries
Aircraft firm orders

9000

World revenue passenger Kilometers (bn)

8000

2500

7000
2000

6000
5000

1500

4000
1000

3000

Number of civil transport jet aircraft

(Airliners, Freighters & RJs)

11000

Forecast (4.7% p.a. growth)

2000
500
1000
0

0
1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

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)
16 October 2009

IAQG General Assembly

MTU Aero Engines

Egon Behle

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

in all business segments
~ 6 Bn. Sales 2018
EBIT > 12%
Strategic target

Customers /
Partners

Products

Branding

Shareholders

Employees

Locations

Strategic target fields

First-class
technology

Successful
programs

Competence
enhancement
in market
niches

Growth via
acquisitions

Competitive
cost
structure

Strategic pillars

Quality, Reliability, Speed, Productivity and Intercultural Expertise

Strategic basement

16 October 2009

IAQG General Assembly

MTU Aero Engines

Egon Behle

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.

16 October 2009

IAQG General Assembly

MTU Aero Engines

Egon Behle

Quality, a selling argument

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 MTUs MRO locations
to become benchmark
to win new contracts on the basis of best quality

16 October 2009

IAQG General Assembly

MTU Aero Engines

Egon Behle

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)

Quality

Occupational
health & safety

Environmental
protection

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.
16 October 2009

IAQG General Assembly

MTU Aero Engines

Egon Behle

The key quality data / indicators have been continuously improved

Customer
complaints

Spec compliance

(components)

Statistical
process control
(SPC)

Process maturity levels

Scrap costs
EFQM result

First pass yield

Rework costs
Passed reviews
DPM
RPM

Production quality

(Design)

(design / production readiness)

Supplier performance
Compliance with
development milestones

Process quality

1995
16 October 2009

First pass yield

(components/engines)

Number of component mods

Development quality
2005

IAQG General Assembly

MTU Aero Engines

Egon Behle

MTU's system allows the key performance indicator information to

be viewed from different perspectives
Product / program

Organization

Process

GP 7000

Management perspective

Engine

Business processes

Center perspective

Module

Main processes

Team perspective

Detail part

Part processes

A complete and consistent database for the generation

of key indicators for different perspectives
16 October 2009

IAQG General Assembly

MTU Aero Engines

Egon Behle

10

Cost optimization and quality do not have to contradict each other

Aviation safety is the first priority in whatever we do!
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 develop
internationally accepted standards

16 October 2009

IAQG General Assembly

MTU Aero Engines

Egon Behle

11

Thank you very much for your attention!

"Good is not good enough where better is expected."

(Thomas Fuller English historian)

16 October 2009

IAQG General Assembly

MTU Aero Engines

Egon Behle

12

weiteres Material

16 October 2009

IAQG General Assembly

MTU Aero Engines

Egon Behle

13

We use key performance indicators (KPIs) to continuously

improve our operational performance
The company's objectives are
1
broken down into the
operational units' objectives
Company
Center

Our Continuous Improvement

Program (CIP) supports
4
sustained process optimization
The organization's
5 productive efficiency is
improved, the
objectives are adjusted

Team
Employee

16 October 2009

The relevant key performance

indicators are consistently
reported

IAQG General Assembly

MTU Aero Engines

Egon Behle

In the event of deviations,

3 corrective actions and failure
analyses are initiated without
delay

14

External consultants help with the optimization of selected KPIs

Example: Project for the
reduction of turnaround time
(TAT) in parts manufacturing

Result: TAT reduction

by 26% achieved
(average out of
54 components)

16 October 2009

-26%
IAQG General Assembly

MTU Aero Engines

Egon Behle

15