How Bombardier Is ImprovingFinally got around to finishing up reading the annual report. I've been reading these things for many years, and have to say I'm more impressed with this year's report than any previous annual report from Bombardier.
I know most people don't have the time to slog through these things each year, but I'd like to suggest you try to make time if you really want to understand this company.
For example, around page 84-to-95 of the report you'll see a list of all the measures Bombardier has undertaken for self-improvement. It's a long and I think, really constructive list.
For those of you who won't read this 208-page report here's an abbreviated extract ( I had some trouble copying this from the annual report since it is so long, but hopefully captured enough of it to interest you in reading more. There's a link to the report below):
https://www.bombardier.com/files/en/supporting_docs/image_and_media/flash/bw_flash_url_map_0000020-PDF.pdf
"We have also been paving the way to sustainable growth by improving our operational efficiency, focusing on key performance metrics
(such as on-time aircraft deliveries and fleet dispatch reliability), on inventory management and on productivity improvements at all our
sites across the world. We continued our efforts to deliver the highest level of quality and made strides in our AES deployment. Finally,
we signed two major labour agreements and remain committed to promoting employee engagement as we recognize that our people
are a key component of our success.
Our Enterprise Strategy is the foundation of Our Way Forward and it is structured around seven priorities that provide alignment and
therefore strength in achieving our goals. Our seven strategic priorities are as follows:
BA’s Enterprise Strategy Statement: Strengthen our long-term leadership in our industry segments through revenue growth
and sustainable best-in-class financial performance, with the most loyal customer base by 2020. We will achieve this by leveraging
our comprehensive portfolio of high-performance business jets, efficient commercial jets and turboprops, and quality innovative
aircraft services.in partnership
Seven strategic priorities to strengthen our long-term industry leadership
We strive to achieve world-class status not just within our industry but as a global company. We are guided by our Enterprise
Strategy Statement.
BOMBARDIER INC. 2009-10 Annual Report 85
MDGoal Be #1 in quality and customer satisfaction by exceeding our customer expectations and delivering on our brand promises through a culture of flawless execution. We aim to achieve world-class standards of customer engagement.
Leading initiatives
¦ We are creating a customer-centric culture through the deployment of the AES Gold phase of the program,
integrating common lean tools, techniques and processes, as well as other transformation initiatives, which
will engage our employees to achieve world-class best practices in all our activities.
¦ We are focusing on improving the performance of our aircraft by standardizing our operational and internal
quality processes and systems, to improve our on-time aircraft deliveries and fleet dispatch reliability.
¦ We are continuously improving the performance of our sales, contracting, delivery and in-service support
processes through specific targeted initiatives, to improve key performance metrics on customer satisfaction.
¦ In fiscal year 2011, we will expand our international service and support network to enhance our service
offering and be closer to our customers:
¦ we are planning to add a regional support office in Mumbai, India;
¦ we will further increase our customer support presence (customer support account managers and fieldservice
representatives) in strategic regions; and
¦ we are planning to install a Global Express aircraft simulator in Dubai, U.A.E.
Fiscal year 2010
highlights
¦ To date, 98% of our work teams qualified for Silver certification in our AES.
¦ For the third consecutive year, third-party surveys reported greater customer satisfaction with our service and
support in both business and commercial aircraft.
¦ We invested in international services infrastructure:
¦ we added a commercial aircraft service centre in Macon, U.S. offering heavy maintenance
on all Bombardier CRJ aircraft;
¦ we inaugurated a new service centre at Schiphol airport in Amsterdam, Netherlands, enabling our
customers to benefit from Bombardier’s technical and maintenance expertise for Learjet, Challenger
and Global aircraft in Europe;
¦ we deployed a Mobile Response Party (MRP) in Europe, increased parts availability for the European
parts depot and launched PartsExpress Europe to strengthen Aircraft on Ground (AOG) support for our
business aircraft customers in Europe;
¦ we opened two new authorized service facilities in Luton, England and in Indianapolis, Indiana, U.S.,
and opened a new Recognized Service Facility (RSF) in Beek, Netherlands;
¦ we implemented a customer survey and quality audit process in all authorized service facilities;
¦ we added a Global Express aircraft simulator in Dallas, U.S.; and
¦ we improved parts availability for commercial aircraft customers in the Middle East through an existing
parts depot at Dubai International Airport.
¦ We expanded our Customer Care organization initiatives to include the launch of a customer listening program
involving senior executives, to enhance our customer relationships.
¦ We harmonized delivery processes across all platforms and developed an enhanced customer
delivery survey.
¦ We launched the iflybombardier.com, a new online commercial aircraft customer portal, to strengthen
customer communication.
Be #1 in customer satisfaction through flawless execution
We are fully committed to support our customers by providing a consistently reliable customer experience, the foundation of which is
our internal quality processes and systems. We are focusing the entire organization on customer engagement by embedding customer
satisfaction metrics in our Management and Employee Incentive Plan, and by concentrating on enhanced execution in order to always
deliver on our promises to our customers.
86 BOMBARDIER INC. 2009-10 Annual Report
Raise our game in global talent management
Our people are a key driver of our success. To achieve customer engagement, employees need to be fully engaged. Recent
recruitment undertaken and our management of the economic downturn continue to underscore the need for effective talent planning
and management. Our focus is on intensifying our efforts to become a world-class employer, and on investing in the development
of a skilled, engaged and proud talent pool around the globe.
UNBEATABLE TALENT
Goal Provide a safe and rewarding environment that attracts and retains a talented team and where employees
are engaged in delivering exceptional results to our customers and our key stakeholders.
Leading initiatives
¦ We are strengthening the motivation and engagement of our employees by developing and introducing
a consistent global employment value proposition (“EVP”) to clarify the value we bring to current and
prospective employees and accelerate the hiring process.
¦ We are promoting employee engagement year over year through the deployment of our AES.
¦ We are launching our Employee Incentive Plan for all non-unionized employees across all BA sites outside Canada. This program rewards the collective efforts of our employees in achieving company objectives.
¦ We are enhancing the diversity of our management team by focusing on increasing the number of women in management positions to reach 25% by fiscal year 2012.
¦ We are accelerating the development of our leaders through our Talent Acceleration Pool (“TAP”) program
and the implementation of our new Emerging Leader program.
¦ We are deploying our leadership development curriculum program at all levels of the organization.
¦ We are aligning our selection, talent management, employee engagement and recognition processes to support the implementation of our AES.
Fiscal year 2010 highlights
¦ We conducted employee focus groups to provide input into our EVP.
¦ We further increased the number of employees under our TAP program by 29% to 139 employees. We also
increased our focus on monitoring and managing talent movement across the organization to accelerate the
development of our leaders.
¦ We created an executive level steering committee as part of our governance system to support the implementation of our diversity initiative. In fiscal year 2010, we determined that our primary focus would be to increase the number of women in management positions.
¦ Our leadership development curriculum program was enhanced to provide learning opportunities at all levels of the organization; however, not all programs were launched in fiscal year 2010.
¦ As part of our AES, we introduced the new Employee Incentive Plan for all salaried employees in Canada.
&A – AerospAce
Goal Proactively manage strategic and operational risks, seeking an appropriate reward for the risk level taken
and ensuring that effective mitigation strategies are put in place.
Leading initiatives
¦ We are constantly monitoring our key markets and using scenario analysis to stress-test our revenues
and cash flows projections to ensure the right sizing of the organization, maintain minimum inventories
and maximize earnings’ potential.
¦ We are proactively monitoring the exposure on our order backlog, future profitability and free cash flow
that could result from higher deferrals of deliveries and order cancellation rates, lower order intake, lower
availability of customer financing, deterioration in the financial health of our key suppliers and a sustained
increase in pre-owned aircraft jet inventories.
¦ We are optimizing cash flows through the effective management of operations and net utilized assets, mainly
inventories, receivables, advances from customers and capital expenditures.
¦ We are harmonizing and standardizing program management and product development activities through a rigorous governance process at each stage of the value chain. Further, we are implementing a technical audit process for new development programs consisting of audits and analyses of our key technical risks by internal and/or external experts, after which our dedicated technical oversight team follows up on our
mitigation actions for these technical risks.
¦ With Corporate Audit Services and Risk Assessment (CASRA), we are strengthening our identification and monitoring of our major risks through a dedicated process whereby our top 10 risks and their mitigation plans are reviewed periodically in a governance body.
Fiscal year 2010 highlights
¦ We adjusted our production schedules and re-sized the organization to better reflect the current economic reality. ¦ We formalized the use of scenario analysis as part of the strategic planning process.
¦ We established comprehensive governance at the senior management level to monitor progress on the development of our strategic aircraft programs.
¦ We developed risk-sharing approaches with key partners on strategic programs.
¦ We reduced the volatility of future costs through long-term price protection agreements with major production suppliers.
¦ We launched the Achieving Excellence System (AES), which aims at standardizing key business processes and provide effective planning, analytical and problem solving tools to all employees.
¦ We deployed extensive performance and risk management activities to improve availability and quality of supply, namely by performing more than 100 supplier financial assessments.
Actively manage risks
The magnitude of the recent financial crisis as well as its significant repercussions on the world economy and on many of our key customers and suppliers have highlighted more than ever the need to have a broad and comprehensive risk management approach.
While risk management has always been at the forefront of the corporation’s focus, we have embarked on a more systematic and far reaching risk management approach in order to both mitigate unwanted risks and identify potentially untapped opportunities.
88 BOMBARDIER INC. 2009-10 Annual Report
Establish local roots in all key markets
Our key markets are evolving, with a larger portion of our orders and deliveries originating from outside our traditional markets of North America and Europe. The rise of emerging economies such as China, India and Latin America offer numerous opportunities, including new markets for our products and services and access to well-trained talent pools. At the same time, increasingly capable and wellfunded competitors in these emerging markets pose challenges, requiring us to be ever more innovative and cost-effective. Expanding local roots in these markets will strengthen our global scale and leadership.
DEEP LOCAL ROOTS
Goal To build centres of gravity in key markets by adapting our organizational structure to grow deeper local roots, by leveraging synergies within these markets across Bombardier and by enhancing our local brand and reputation.
Leading initiatives
¦ We are establishing clear priorities for international expansion based on customer needs, revenue opportunities and the need to increase our competitiveness.
¦ We are working closely with local partners (governments, educational establishments, suppliers, customers and our employees) to further develop the local aerospace industry, build expertise, develop technology and attract investment.
¦ We are establishing an organizational model, which can be used to quickly establish a local presence and will
facilitate communication and alignment across all the organization.
Fiscal year 2010 highlights
¦ We invested in our international services infrastructure, in particular in Europe, where we expanded both owned and authorized service centre capacity, as well as increasing parts availability, strengthening Aircraft on Ground (AOG) support and increasing training capacity. This was supplemented with increased service centre capacity in the U.S., improved commercial aircraft parts availability in the Middle East and an additional regional support office in India.
¦ In Mexico, we started construction of production facilities for the Learjet 85 aircraft. In connection with this
program, we trained 68 Mexican employees throughout calendar 2009 on the new composite technology
required. In 2010/2011, we will create a new engineering organization, based at our facility in Querétaro, which
will support existing products, but also participate in product development initiatives and, particularly, build
and develop local engineering talent.
¦ In China, working with our partners Shenyang Aircraft Corporation (SAC) and Shenyang Aircraft CorporationChina (SACC), we transferred knowledge on lean manufacturing concepts, thus integrating our supplier in ourjourney to world-class manufacturing.
¦ In India, through our Bombardier India Centre, over 270 engineers are contributing daily to our existing andnew development programs. Beyond our centre, we also started to do research in collaboration with Indian universities. This collaboration is in line with our strategy to tap into the global talent pool and to raise the bar on creating innovative products.
¦ We have become a Tier 1 member of the aerospace research program in Singapore’s Science and Engineering Research Council that profits from public funding to drive innovation in the aerospace industry.
¦ Participation in over 20 airshows and tradeshows in calendar 2009, bringing our products closer to our customer and supporting the aerospace industry.
¦ Benchmarked organizational models of other global companies to identify best practices, to use as a basis for recommendations on future developments in our own organization.
¦ Established specific country councils with a cross section of senior management, with the objective of improving communication on specific business unit country initiatives, as well as aligning with our priorities.
BOMBARDIER INC. 2009-10 Annual Report 89
MD&A – AerospAce
Enhance our corporate social responsibility
In today’s business environment, we see the continuous improvement of our products’ environmental performance as a competitive
advantage and as an opportunity to strengthen our customers’ engagement. Ensuring that our own manufacturing and service
operations are sustainable is just as crucial. Through our AES, we are engaging our employees in continuous improvement initiatives
and diligently embedding sustainable development principles in day-to-day activities. We also remain committed to play a constructive
role within the communities where we operate.
GREATER CORPORATE SOCIAL RESPONSIBILITY
Goals ¦ Build socially responsible products and play a leadership role in the aviation industry’s environmental efforts.
¦ Minimize our operations’ environmental footprint, eliminate restricted substances and adopt high
sustainability standards for our buildings and operations to achieve carbon neutrality and deliver a “zero
waste” performance.
¦ Continuously improve employee engagement and promote an injury-free culture.
¦ Ensure the efficiency and viability of our suppliers, enhance the sustainability of our procurement
processes, and promote ethics, human rights and internationally sanctioned labour standards across
our global supply chain.
¦ Act as a responsible citizen through focused initiatives regarding donations, sponsorships and
community involvement.
Leading
initiatives
¦ We are continuing the deployment of our Design for Environment capabilities on the CSeries family of aircraft
and Learjet 85 aircraft programs and will produce Environmental Product Declarations (EPDs) for our
new aircraft.
¦ We are sharing best practices between BA and BT by developing standard procedures for HSE and are
incorporating these into existing operating systems (HSE excellence system).
¦ We are supporting our customers in establishing their compliance plan for new environmental regulations
such as the European Union Emission Trading Scheme.
¦ We are developing a strategy and objectives to manage our carbon footprint and we continuously assess
our environmental liabilities. We are committed to reduce our energy consumption by an additional 10%
between fiscal year 2010 and fiscal year 2015, and to promote the adoption of a carbon-neutrality mindset
throughout our activities, with annual targets meeting at least the levels defined in relevant national and
international agreements.
¦ We are developing a Green Building Policy with third parties such as Leadership in Energy and Environmental
Design (LEED) for all new facilities.
Fiscal year 2010
highlights
¦ We supported and promoted the industry commitment to reduce commercial aviation emissions through
our involvement in the Air Transport Action Group (ATAG), the IATA and the International Coordinating Council
of Aerospace Industries Associations (ICCAIA).
¦ We spearheaded the creation of a business aviation position statement focused on greenhouse gas
emission reductions under the umbrella of GAMA, the International Business Aviation Council (IBAC) and its
member associations.
¦ Based on the latest figures available, for fiscal year 2009 compared to fiscal year 2004, we reduced our
water consumption by 36.3%, achieved a 13.6% reduction in energy consumption, a 1.1% reduction in CO2
emissions and generated 13.1% less waste.
¦ We achieved an accident frequency ratio of 0.98 accident per 200,000 hours worked, compared to 1.32
in fiscal year 2009, and reduced our accident severity ratio to 32 workdays lost per 200,000 hours worked,
compared to 39 in fiscal year 2009, both ratios including hours worked for restricted duty.
¦ We continued our Occupational Health and Safety Assessment Series (OHSAS) 18001 certification activities
and reached 83% of our manufacturing and service sites with over 150 employees certified as at January 31,
2010, compared to 53% as at January 31, 2009. We put in place a plan to reach our target of 100%
certification in the first half of fiscal year 2011.
¦ Since fiscal year 2009, 83 of our suppliers have committed to adhere to our Supplier Code of Conduct.
Of these, 50 are aircraft equipment vendors representing 80% of our total bill of material cost.
¦ We became a long-term supporter of the Sierra Gorda World Biosphere Reserve in Querétaro, Mexico,
with three environmental and economic development projects that will directly benefit the reserve’s
23,000 residents.
¦ We received the 20/20 Vision Award from Business in the Community, Northern Ireland, in recognition
of our significant social impact in Northern Ireland during the past 20 years.
90 BOMBARDIER INC. 2009-10 Annual Report
Develop innovative, environmentally conscious products that meet customer needs globally
Development of innovative, environmentally conscious products that meet customer needs globally is a cornerstone of our product
strategy. Through fuel-efficient aircraft, lower noise and emissions and through new technologies such as composite materials wings
and fuselages, fly-by-wire and electrical systems, new aircraft configurations and an innovative aftermarket service offering, we are
aiming at setting industry standards in delivering value to our customers.
PRODUCT INNOVATION
Goals ¦ Develop products that deliver on customer needs and expectations and that encompass latest technologies.
¦ Design fuel-efficient aircraft that respect the highest environmental standards, as put forth in our Corporate
Social Responsibility (CSR) strategic priority.
¦ Provide innovative service solutions that respond to customer aftermarket and fleet management needs.
Leading
initiatives
¦ We continue to review and increase our product technology roadmap through our Aircraft Portfolio
Strategy Board.
¦ We continue to develop our core expertise to sustain, improve and create new innovative products in areas
such as advanced composites, new metallic materials, aircraft systems, emerging technologies and future
aircraft configurations.
¦ We will continue to expand our collaboration with universities and research institutions across the world.
As such, we want to continue initiatives just started with regard to our R&D Network participation in Singapore
and leading several research consortiums such as the Consortium for Research and Innovation in Aerospace
in Québec (CRIAQ).
¦ We are strengthening our product development system to leverage lean principles and ensure continuous
improvement of the critical aspects of the system that drive efficient, customer focused product development.
The system’s emphasis is on knowledge creation and to re-use this knowledge across products to ensure
higher levels of quality and optimization.
¦ For our new aircraft programs in development, we are extending our lifecycle solutions to address the
complete aftermarket experience, including parts, maintenance services, and pilot training.
Fiscal year 2010
highlights
¦ We successfully built the first demonstrator for a composite wing using Resin Transfer Infusion through our
involvement in a U.K. national research program aimed at developing new composite wing technologies.
¦ We built the first demonstrator of a forward fuselage in composite materials using Automated Fibre Placement
through a collaborative project with several partner organizations and consortia. Initial structural tests of the
composite fuselage section have shown the potential for further weight reductions as well as the improvement
of passenger comfort due to better adjustment of cabin pressure.
¦ We developed several key performance indicators to track our progress in significantly reducing our aircraft
emissions and replacing certain materials by more environmentally friendly alternatives.
¦ We co-chaired the Canadian Aviation Environmental Technology Roadmap (CAETRM). This initiative identified
technologies that must be developed to improve the environmental footprint of aerospace in Canada.
As a consequence, we became a founding member of the Green Aviation Research and Development
Network, a business-led centre of excellence funded by the federal government and dedicated to research
in aviation environment such as noise and emission reductions.
¦ We improved our industry-leading carbon offset program by offering a per-flight-hour payment scheme, which
leverages our Smart Services administrative platform.
BOMBARDIER INC. 2009-10 Annual Report 91
MD&A – AerospAce
Evolve into a lean enterprise with strong global supply chain partnerships
We are evolving into a world-class organization that adheres to lean principles and has a culture of continuous improvement. We strive to
optimize our manufacturing network, leverage our emerging country presence and build strong mutual relationships with our suppliers
to drive quality, reliability and overall world-class performance.
LEAN ENTERPRISE
Goals ¦ Develop a world-class manufacturing organization that adheres to lean principles and has a culture
of continuous improvement.
¦ Improve our asset utilization.
¦ Improve supplier performance on quality, delivery and reliability to reach world-class standards.
Leading
initiatives
¦ We will continue to focus on efficiency improvement and deployment of lean principles across the
organization, through the deployment of AES and building on momentum created within the organization
since the introduction of this continuous improvement program.
¦ We will continue to further develop our manufacturing base in emerging countries, specifically through new
programs under development.
¦ We will develop functional excellence across the organization by establishing functional forums to drive
standard policies and practices.
¦ We will continue to secure competitive total lifecycle value propositions from our supply base on new
and existing programs, including long-term cost protection and joint lean improvement initiatives.
¦ We will further deploy our simplified contractual framework and code of conduct with key suppliers.
¦ We will further enhance our supplier management activities, such as a structured cross-functional and
collaborative problem solving approach, and expand our vendor inspection program with suppliers to improve
quality and reliability.
Fiscal year 2010
highlights
¦ Due to the overall economic situation, we put on hold new transfers of work packages from Saint-Laurent,
Toronto and Belfast to Querétaro. We however completed transfers already underway.
¦ Through AES, we established a common set of key performance metrics that is consolidated into a balanced
scorecard to ensure the organization is consistently aligned and linked to the overall strategy and goals.
¦ We created logistics and quality councils to complement the already existing operations and engineering
committees. To drive results, we are leveraging this network to standardize and reinforce our efforts to
improve current operations and cultivate enhanced execution. As a result, we significantly improved several
key operational drivers, such as the number of purchased and manufactured parts late to master schedule,
non conformity reports raised and travelled work between sites.
¦ We established a new contract framework covering all future business with top suppliers, which together
accounts for 33% of the annual aircraft related procurement spend in fiscal year 2010.
¦ We introduced a supplier scorecard allowing us to more effectively measure supplier performance and
provide improved guidance for supplier management activities.
¦ We deployed an improved vendor inspection program with 140 suppliers and drove standard material
management measurements and processes across our sites.
¦ We continued our ISO 14001 certification activities and reached our goal of 100% at our manufacturing
and service sites with over 150 employees certified as at January 31, 2010, compared to 80% as at
January 31, 2009.
92 BOMBARDIER INC. 2009-10 Annual Report
We are confident in our proven ability to overcome turbulent
economic times by turning obstacles into opportunity.
We continue to reinforce our foundations and to grow
sustainably. We are leveraging our diversified portfolio of jetand
turbo-propelled aircraft to address the various needs of
geographically diversified commercial and business aviation
customers both today and into the future, building on a strong
commitment to innovation, based on more than 300 years of
combined aerospace experience and heritage, brought about
by a combination of Canadair, Short Brothers, de Havilland and
Learjet and the 25 new aircraft programs brought to market
since 1989.
Our capability to deliver results is based on the attributes
described in the Bombardier Way:
¦ we have a common vision and seven clear strategic
priorities which create alignment and drive behaviour
in the organization;
¦ we are focused on enhancing execution through the
continuous improvement of key business processes and
on implementing lean principles through our AES;
¦ we have strong relationships with our key stakeholders,
including customers, unions, suppliers, local governments
and regulatory agencies, which enable us to improve our
operations and products and foster mutually beneficial
continuous improvement in our relationships;
¦ we are focused on customer engagement and as such have
strengthened our customer relationships;
¦ we are in markets with solid long-term demand growth;
¦ we have a broad, leading-edge product offering;
¦ we are committed to invest in our product
development programs;
¦ we have a large talent pool of well-trained and engaged
employees; and
¦ we have an experienced management team, committed
to the long-term success of the organization.