Policy

Organisation

The Chief Quality Officer (“CQO”) is in charge of stimulating, coaching and supporting the BUs to implement continual improvements in operational level OTOQD performance and to maintain and improve customer confidence in EADS. In particular, he chairs an EADS Quality Council with senior level representatives from each BU to agree actions and priorities and to drive OTOQD deployment in all BUs and animates supports and drives a network of BU operational level experts to ensure that the Quality and Operational Excellence Programme (“QOEP”) is tuned directly to the needs, priorities and maturity of each BU. He also Represents EADS in relevant Quality, Standards and Regulatory bodies at both National and International level commensurate with the status of EADS as a global aerospace and defence company.

Performance and Best Practices

In the second half of 2004, a major initiative was launched to deliver enhanced customer confidence and satisfaction through driving operational improvements in those industrial processes which contribute to achieving OTOQD of products and services to end customers. In 2005, this “Quality and Operational Excellence Programme’ (QOEP) was deployed through EADS BUs.

This Programme acts on five key areas for improvement:

Customer Confidence

A common methodology was defined in early 2005, with a view to deploying it consistently throughout the Group. This Customer review process (“CRp”) methodology is based on a structured series of interviews targeting the key decision makers at EADS’ strategic customers. These interviews are performed by the BUs’ top management.

The goal is to measure the level of customer confidence, which is more important than satisfaction in determining its loyalty. EADS aims to measure (and to improve continuously) the relationships between the Group and each of its customers. Improvement plans result from these interviews, and the interviewer is responsible for reporting the progress of these plans to the interviewee.

In 2005, five reviews were completed (MTA, DS Spain, Eurocopter, Seca, and Socata), three reviews being in action planning phase (MTA, DS Spain and Eurocopter). Six BUs entered the Design and Review phase, mainly for Defence customers.

More complex CRps for Defence customers were also prepared in 2005: they are conducted at national level rather than at BU level, governments’ procurement activities being by nature cross BUs. The Spanish review was performed in 2005; the French review was launched in 2005 and will last until mid−2006. The German and British reviews will be launched in 2006.

Supply Chain Processes

More than 70% of EADS products are sourced from outside suppliers. If a supplier fails to deliver On Time and On Quality, so does EADS. Managing the Supply Chain through the traditional contractual relationship is no longer sufficient. Upstream visibility is needed into the internal processes of each supplier to enable a timely reaction to their deficiencies (as well as to EADS’ own deficiencies which could impair a supplier’s performance). In 2005, EADS deployed Supply Chain Diagnostics (two to three weeks assessments) in several BUs, in order to assess what they already identified as their weakest points in supply chain management, and derive “90 Day Action Plans”.

In 2005, ten Diagnostics were conducted in seven BUs: Defence Electronics, Military Air Systems, Astrium, Defence and Communication Systems, LFK, Seca and MTA.

These assessments resulted in action plans at three BUs (one in Defence Electronics and Seca, two at MTA). Implementation started in 2005 (improvement plans are under preparation in the other BUs).

DRIVER and EADS Black Belt

Until 2005, EADS “only” expected that each manager would improve the operational performance of his / her team; EADS now equips managers with an “Improvement Methodology and Toolkit”. This is the purpose of the “DRIVER’ methodology defined in 2005, along with the complete training syllabus (more than 50 training modules and 30 tools). DRIVER is specific to EADS. The corresponding training can be delivered in the format of “EADS Green Belt” (one week) or “EADS Black Belt” (four weeks). To be recognised as Qualified Improvers, EADS Black Belts must complete, on top of their training, an improvement project that can cover for six months and deliver measured benefits in terms of On Time On Quality Performance, costs savings or both.

In 2005, 97 EADS Black Belts were trained at seven sessions held within MTA, Eurocopter, Defence Electronics, Airbus, Seca, LFK and Socata. Six employees were qualified, by completing the improvement project and sixteen were EADS Green Belt trained.

Quality Gates

All EADS processes are made of steps: from bidding to delivery of demonstrators for a development process; from machining to final assembly for a manufacturing process. Each step completion must be carefully checked before passing the “product” down to the next step. Otherwise problems may be transferred to a place where they will be more difficult and costly to solve. Based on this simple observation, a methodology was already in place in some BUs, calling for an internal written contract between the two parties (upstream and downstream) at a “Gate” between two important steps of a development or a production process.

The quality gate system was further extended in 2005.While Airbus had already started the implementation of quality gate before 2005, Eurocopter implemented its quality gate in 2005.

High-Level Metrics

In order to measure the results of the improvement actions at BU level in terms of Customer Confidence and OTOQ Delivery, a set of high level metrics has been defined in 2005 and begun to be implemented.

The three generic metrics are:

The use of these Metrics is under the custody of the BU heads.

In 2005, normalised HLM have been defined in five BUs (MTA, Defence Electronics, Astrium, Eurocopter and Military Air Systems) and are operational in two of them (MTA and Defence Electronics).