Improving performance. Patrice Caine

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Archibald Johns
5 years ago
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1 Improving performance Patrice Caine

to a Performance Programmecovering Growth, Competitiveness and Talents Articulate the short-term objectives and a long-term

2 2 / Why Ambition Boost? To take over from Probasis Continue and strengthen the competitiveness actions To extend the scope Go from a cost-saving plan to a Performance Programmecovering Growth, Competitiveness and Talents Articulate the short-term objectives and a long-term vision 2 ultimate goals To implement a new approach Take into account the diversity of activities and situations within the Group Raise full awareness and increase engagement Enhanced cooperation, expanded scope, collective commitment

3 3 / Ambition Boost principles Growth Competitiveness People Emerging markets International industrial footprint Larger contracts Services Customer-driven competitive innovation 3 Engineering and R&D competitiveness Leadership and diversity Customer value and customer mindset Teamwork, incentives Excellence in project delivery Competitiveness in sourcing Efficiency of structure Full alignment with budget All plans initiated in the field One single programme to drive collective performance

4 4 / Focus on 4 full competitiveness topics bn Excellence in delivery Competitiveness in sourcing Engineering and R&D comp Efficiency of Structure Sales 2013 (1) 12.7 Purchasing Engineering Support Functions (2) Infrastructures (3) Cost of sales (9.7) x x x x x Indirect costs (2.0) o/w R&D expenses o/w M&S expenses o/w G&A expenses (0.6) (0.9) (0.5) x x x x x Restructuring costs (0.1) EBIT 1.0 Costs allocation Costs high stake topics to drive profitability improvement (1) Proforma IFRS 10/11 (2) GnalMgt, Finance, HR, Legal & Contracts, Com, Marketing & Sales (3) IS / IT, Real Estate

5 5 / Excellence in project delivery Thales: a project-driven Group 6,000 on-going projects 3,600 bids&projects managers Strong governance: Clear rules of escalation with commitment thresholds Standardized process for building and submission of bids Project efficiency index Project execution requires continuous primary focus Majority of difficulties are rooted back to the bid phase Control of bids and projects under high scrutiny by senior management

6 6 / Excellence in project delivery Reinforce successful actions and launch new ones Project variances Current actions reinforced Monitor and reduce negative variances New actions launched Foster and improve positive variances Improve the reliability of costs estimates Skills Project Management Office Tiger teams Increase skills in project management (20% of PM IPMA- certified) Implementation for significant projects «Project» Tigers teams Increase PM certification by 200/year Extension to all projects Reinforcement of Project managers accountability Multi-disciplinaryTiger teams Wider scope of intervention Strengthen bids & projects monitoring, tailored to new challenges: from a reactive to a proactive mode

7 7 / Competitiveness in sourcing Purchasing: an improvement lever (50% of Thales s costs) Mutualisation for purchasing power Extend mutualisation where it makes sense: additional purchasing families and extended geographical scope % of mutualisation % to 40% of mutualisation Standardisation for function efficiency Deployment of a Group Purchasing tool to capture needs and monitor purchasing performance Rationalisation of purchasing segments by end 2014 Common management of critical suppliers Internationalisation for growth in emerging markets Improvement of countries purchasing maturity Implementation of the internationalisation purchasing strategy in customer target countries Strengthen offsets management Continuous source of competitiveness

8 8 / Competitiveness in sourcing General Expenses Non specific Industrial purchasing* Specific Industrial purchasing Systems / Projects 1.4bn 2.8bn 1.5bn Mutualisation N/A Standardisation Internationalisation Case by case Current Target A common approach adapted to each type of purchase * Electronics, mechanics

9 / Engineering competitiveness Engineering: a major asset for Thales 22,500 engineers Engineering is 10,000 System 7,500 Software Translating markets needs and customer specifications into reliable

9 9 / Engineering competitiveness Engineering: a major asset for Thales 22,500 engineers Engineering is 10,000 System 7,500 Software Translating markets needs and customer specifications into reliable and sustainable solutions 5,000 Hardware aiming at being deployed, operated, maintained efficiently 3 benefits from engineering performance plan: Reduce costs for determined products Reduce Time-to-market At constant cost, propose additional features Increase market share of existing products Capture new markets with new products Objective: improve competitiveness of new projects by 30% within 5 years, and by 5-10% on current projects

10 10 / Engineering competitiveness Project-driven engineering Product & Project Engineering Model Document Driven Engineering Based on the long listsof customer requirements Model and Simulation Driven Engineering Robust Architecture of complex systems Product Policy implementation Lean in engineering Niches of high competences Already existing in Thales Sharing of best practices Development driven by value for customer Agile development for Software packages Engineering Environment Initial target: one standard workbench for all engineers Workbenches segmentation according to business needs Improvement of infrastructure for roll-out (cloud and network) An ambitious journey for a deep and sustainable transformation

11 / Efficiency of structure Support Functions and Infrastructures 9,100 people 2 objectives: Optimise our cost basis Spend the right cost for the right need Empowerment of function heads to:

11 11 / Efficiency of structure Support Functions and Infrastructures 9,100 people 2 objectives: Optimise our cost basis Spend the right cost for the right need Empowerment of function heads to: Benchmark internally and externally function costs and headcounts Get better value for money: better leverage support functions to sustain risk-mitigated growth and improve profitable execution Extend mutualisation to support businesses Grow top-line while restraining evolution of our structure costs

12 / Efficiency of structure: Real Estate and Information Systems Real Estate: Surface rationalization in our

2013 Genevilliers 4,000 2014 Vélizy 2,000 2014 hengelo 1,600 2014 Stuttgart 2,000 2016 Bordeaux 2,300 2016

Optimise operational efficiency Optimise sites in accordance with industrial footprint plansin emerging

12 12 / Efficiency of structure: Real Estate and Information Systems Real Estate: Surface rationalization in our historical countries Information Systems: Streamline number of ERPs to support rationalisation & mutualisation 2013 Genevilliers 4, Vélizy 2, hengelo 1, Stuttgart 2, Bordeaux 2, Toulouse 600 Reduce run costs while keeping a high level of security o Adapt sites to our business needs o Optimise operational efficiency Optimise sites in accordance with industrial footprint plansin emerging markets Deliver efficient Engineering working environment Grow top-line while restraining evolution of our structure costs

13 13 / Ambition Boost principles and framework Growth Competitiveness People Emerging markets Larger contracts Services International industrial footprint Customer-driven competitive innovation Engineering and R&D competitiveness Leadership and diversity Customer value and customer mindset Teamwork, incentives Excellence in project delivery Competitiveness in sourcing Efficiency of structure

14 14 / Competitiveness improvement requires people engagement New incentives scheme: More differentiation Fully aligned with profitable growthstrategy (Order Intake, EBIT, cash flow, EPS) Monitoring collective performance: Accountable leaders All teams empowered to deliver performance Foster team spirit and cooperation Ambition Boost as a management tool Performance plans at all levels Review progress and drive improvement on a regular basis One set of leading Key Performance HR initiatives fully embedded in Ambition Boost, supporting buy-in by employees and alignment with shareholders interest

15 15 / Ambition Boost principles and framework Growth Competitiveness People Emerging markets Larger contracts Services International industrial footprint Customer-driven competitive innovation Engineering and R&D competitiveness Leadership and diversity Customer value and customer mindset Teamwork, incentives Excellence in project delivery Competitiveness in sourcing Efficiency of structure

16 / Competitiveness to support sustainable, profitable growth Capture new markets with new products Engineering and R&D competitiveness Invest to innovate and enlarge our offer Engineering and R&D

16 16 / Competitiveness to support sustainable, profitable growth Capture new markets with new products Engineering and R&D competitiveness Invest to innovate and enlarge our offer Engineering and R&D competitiveness Develop emerging markets Competitiveness in sourcing - Internationalisation Secure execution& increase customer satisfaction Excellence in delivery Increase market share of existing products Engineering and R&D competitiveness Efficiency of structure Increase bid competitiveness Competitiveness in sourcing Mutualisation Efficiency of structure Competitiveness actions plans act as levers for growth

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