Adient Plc · NYSE:ADNT
Adient — Investor Day (November 2017)
81 slides from Adient's investor day presentation, Nov 28, 2017
Slide 1: Adient Supplier Expectation Day
Adient Supplier Expectation Day November 28, 2017 Improving the experience of a world in motion 1 Adient – Improving the experience of a world in motion
Slide 2: Agenda
Adient Supplier Expectation Day Agenda 7:30 – 8:00 a.m. Breakfast and networking 8:00 – 8:05 a.m. Adient one-year anniversary video 8:05 – 8:15 a.m. Welcome – Joergen Ernst, VP of Procurement 8:15 – 8:35 a.m. State of the business – Bruce McDonald, Chairman and CEO 8:35 – 9:00 a.m. Future of Adient
Slide 3: State of the Business
Bruce McDonald Chairman and CEO State of the Business Improving the experience of a world in motion
Slide 4: Our Mission
Our Mission We will be the world-class automotive seating supplier through leadership in cost, quality, launch execution, and customer satisfaction. We will leverage our capabilities to drive growth, both within and beyond the automotive industry. Improving the experience of a world in motion.
Slide 5: Five Year Marker progress
Five Year Marker progress INTEGRITY OPERATIONAL GLOBAL GROWTH PEOPLE AND LEADERSHIP We have a passion for winning EXCELLENCE We embrace the globalization of Our people are our greatest asset, but at all times will act with We will be the cost leader in our the automotive industry and there is nothin
Slide 6: Our values
Our values Behavior statement We always act ethically, with integrity, and in a Do it the right way socially responsible manner. … with everyone Play to win We meet our commitments, no excuses. we interact with: We deliver best-in-class performance in all that Get it right the first time > Colleague
Slide 7: We delivered: product development and innovation
We delivered: product development and innovation
Slide 8: We delivered: operational excellence
We delivered: operational excellence Adient Manufacturing System MANUFACTURING PRINCIPLES CONTINUOUS IMPROVEMENT 161 45,584 $317.1M plants principles applied across our plants savings—17% better than target GLOBAL WARRANTY COSTS achieved Maturity Level 3 $6M better than March forecast in FY17; also
Slide 9: Our investment thesis
Our investment thesis Here’s what we said before the spin … Here’s what we delivered in our first year … > Increase cash flow Increased cash flow > Grow margins in the midterm by 200bps Grew margins in the midterm by 200bps > Pay down debt Paid down debt > Return growth Returned growth $90,00 $8
Slide 10: Shareholder value
Shareholder value We will: > Grow our market share > Expand our margins > Diversify our revenue > Generate strong free cash flow
Slide 11: FY2017 Q4 key product launches
FY2017 Q4 key product launches Strengthening our leading position across customers, segments and regions… Buick Enclave Nissan Pathfinder & Infiniti QX60 BMW X3 Porsche Cayenne United States United States Mexico Romania / Poland VW T-Roc Ford Ecosport Land Rover Discovery Sport Kia Sorento Portugal
Slide 12: FY2017 full year financial highlights
FY2017 full year financial highlights Consolidated revenue Adjusted1 EBIT Adjusted1 EPS diluted $1,244 $16,213 $16,790 million $1,156 $9.35 million million million $8.51 Year-over- Year-over- Year-over- year growth year growth year growth - 3% + 8% +10% FY17 FY17 FY16 FY16 FY16 FY17 FY16Q4 FY17Q4 FY
Slide 13: FY2017 Q4 unconsolidated revenue
FY2017 Q4 unconsolidated revenue Seating Interiors $2,206 $2,166 $2,068 million $1,956 million million million Year-over- Year-over- year growth year growth + 13% + 5% + 5% Excl. low- margin cockpit sales FY17Q3 FY16 FY17 FY16Q3 FY17 2 FY16 FY16Q3 Q4 Q4 Q4 Q4
Slide 14: Cash and capital structure
Cash and capital structure September 30, September 30, 2017 20161 Cash $709 million $550 million Total debt $3,478 million $3,521 million Net debt $2,769 million $2,971 million Net leverage 1.73x 1.97x 1 Pro forma cash balance based on preliminary funding of Adient‘s opening cash balance on October
Slide 15: Current operating environment
Current operating environment Positive tailwinds Near-term headwinds Challenges with Seat Structures & Increased seating content per vehicle Mechanisms launches Stable global vehicle production Increased growth investments Growth in unconsolidated joint ventures Elevated commodity prices Futuris int
Slide 16: The Future of Operations at Adient
Byron Foster Executive Vice President The Future of Operations at Adient Improving the experience of a world in motion
Slide 17: Adient's operational challenges
Adient‘s operational challenges Global footprint with plants at different levels of operational excellence Highly vertically integrated business Need for continuous improvement to maintain leadership position Need to improve launch performance Operate in a very competitive industry 17
Slide 18: Adient Five Year Marker
Adient Five Year Marker INTEGRITY OPERATIONAL GLOBAL GROWTH PEOPLE AND LEADERSHIP We have a passion for winning EXCELLENCE We embrace the globalization of Our people are our greatest asset, but at all times will act with We will be the cost leader in our the automotive industry and there is nothing
Slide 19: Adient Manufacturing System (AMS)
Adient Manufacturing System (AMS) One Adient Way of manufacturing to attain world-class performance. We are engaging employees, driving operational excellence and growing our business. 19
Slide 20: Focused around nine principles
Focused around nine principles Principles Foundation Customer focus, organize around pull, zero tolerance for waste, stable operating environment Maturity Model Tracking Progress Provides a blueprint for improvement actions. > Tablet-based app > 5 levels of Maturity > 56 objectives > Used by each pr
Slide 21: AMS five levels of maturity
AMS five levels of maturity Breakthrough advancement is being Level 5 Distinguished acheived through total engagement of the shop floor. The practices of manufacturing excellence are Level 4 Excellent embedded in the mindsets and behaviors as second nature. Target is for all plants Meets the practic
Slide 22: Driving consistency throughout our global network
Driving consistency throughout our global network 70 Plants Thereof 37 Eastern Europe 64 Plants 44 Plants Thereof 14 Mexico 26 Plants Thereof 8 in Japan /Korea 22
Slide 23: Progress in FY17 – Level 3 achievement
Progress in FY17 – Level 3 achievement 180 159 160 > 159 L3 plants achieved Level 3 in FY17 164 166 166 150 165 159 > 6 plants forecasted into FY18 140 133 150 133 120 115 100 89 88 80 89 60 50 38 40 38 27 16 20 13 8 10 17 7 7 13 1 2 16 1 1 5 0 1 2 3 13 3 22 51 44 17 9 6 1 0 Sep-16 Oct-16 Nov-16 Dec
Slide 24: Adient begins the journey to Industry 4.0
Adient begins the journey to Industry 4.0 24
Slide 25: Adient: Industry 4.0 actions
Adient: Industry 4.0 actions > Adient has more than 30 projects underway around the world > Technologies in use: ‒ Collaborative robots ‒ RFID ‒ Advanced-vision systems ‒ Electronic performance systems ‒ Electronic layered-process audits ‒ Factory simulations > Three data analytic projects to discov
Slide 26: Sunderland selected as tough environment to prove I4.0 value
Sunderland selected as tough environment to prove I4.0 value • JIT (less machine intensity) Copyright © 2017 by The Boston Consulting Group, Inc. All rights reserved. • 2 shifts • Low volume / complexity • High performing plant (OEE, quality, turnover, etc.) 26
Slide 27: Four objectives for I4.0 model plant effort
Four objectives for I4.0 model plant effort Deliver 5%+ conversion cost savings and capitalize on non-financial benefits of I4.0 (quality, flexibility, safety/ergo, etc.) Learn about I4.0 use cases including which areas have the most impact and what key implementation challenges exist Copyright © 20
Slide 28: Launch performance
Launch performance > We use four KPIs to measure launch success for each program / product: • Safety – Zero recordable incidents for launching product / process • Quality – Achieve customer scorecard PPM (defects / million) requirements • Delivery – Zero disruptions to the customer’s manufacturing p
Slide 29: Achieving a successful launch
Achieving a successful launch Roadblocks: Necessary steps: > Lack of understanding of customer timing > Staff on time / Start on time > Insufficient resources early in the program > Align early with Adient’s program timing > Late sub-supplier sourcing > Effectively manage sub-tier suppliers > Late t
Slide 30: What can you do to support us in FY18?
What can you do to support us in FY18? > Dedicate necessary resources at the time a program is awarded > Meet deadlines – tooling and equipment kick-off are key > Actively manage your sub-tier suppliers > Deliver quality parts or services on time > Communicate with us often > Escalate issues early S
Slide 31: Innovation & Product Development
Dr. Detlef Juerss, Vice President Global Engineering & CTO Innovation & Product Development Improving the experience of a world in motion 31 Adient – Improving the experience of a world in motion
Slide 32: Global Product Development Network
Adient’s global Product Development Network provides a strong foundation to achieve Engineering Excellence Global capabilities to deliver excellence in product design – in quality and to customer specifications anywhere around the globe – while understanding regional market requirements. >5,300 20 2
Slide 33: Adient Engineering network – 5,300 Engineers
Adient Engineering network – 5,300 Engineers Global capabilities to deliver excellence in product design – in quality and to customer specifications anywhere around the globe – while understanding regional market requirements. 33 Adient – Improving the experience of a world in motion
Slide 34: Product Design focus
In our traditional products markets, customers expect us to deliver on light-weight, low-cost & high-comfort solutions in the short-term Three market drivers define Seating Engineering product design priorities today: 1. SUV segment 2. Functionality & content 3. Weight reduction content growth in ma
Slide 35: Changes in the industry ask for new seating design solutions
… while changes in the industry ask for new seating design solutions Global Industry Trends Implications on seating Changes in vehicle architecture & power ˃ >Safety Safety management ˃ Electrification > Light-weight >– Electrification Slim & lightweight > Low block height >– Slim Connectivity & lig
Slide 36: Future market shifting from seating to in-vehicle experiences
Our future market is shifting from seating to in-vehicle experiences; Convergence coming ... Auto, aircraft, bus, rail; PMV Autonomous and Electric Bus and Train Vehicle New mobility eco-system The “Command Center” = Comfort and Convenience Safety and Wellness Electronics and Connectivity Biometrics
Slide 37: Visioneering Innovation
Supplier involvement is an important element of Adient’s Innovation Pipeline Process Start Up Visioneering Innovation Open Suppliers Peer Partner Academia Vision Seat Compnt X OA CD IM SIX DI AI concept Studio Zero Traditional Csmr/Mkt Insight Commercialization Industrialization Input OK-to-sell Ide
Slide 38: Expectations from our Supply Base
Expectations from our Supply Base In FY18, it is all about launch execution ... > This world-class supply base is a key enabler for flawless global launch execution and continuous improvement to meet our global customers’ targets. > We count on your commitment, your expertise and your continued enga
Slide 39: Preparing to harness the future of mobility
... and preparing to harness the future of mobility > Going forward, our future market is shifting from seating to in-vehicle experience … and will demand for new technology and integration in > Lightweight > Safety > Comfort > Convenience > Connectivity > Our engineers are already designing the sol
Slide 40: Procurement & Supply Chain Strategy
Kelly Bysouth, VP Global Procurement and Supply Chain Procurement & Supply Chain Strategy Improving the experience of a world in motion 40 Adient – Improving the experience of a world in motion
Slide 41: Year in review
Year in review Hits Misses • Cost Savings • Supplier PPM • Logistics Optimization • Supplier PPSC’s • Supply Base Rationalization • Launch Execution • Diverse Purchases • Early Supplier Engagement • Supply Chain Operating Model • Sourcing On Time • Ariba Implementation 41 Adient – Improving the expe
Slide 42: Our functional mission supports our corporate objectives
Our functional mission supports our corporate objectives We will achieve operational excellence in Procurement and Supply Chain Management by developing and implementing strategies that deliver superior performance in the areas of total cost, quality and delivery. Our team will operate as a global,
Slide 43: Strategic plan
Strategic plan Mission: Achieve Operational Excellence in Procurement and Supply Chain Management Objectives Core Enabling Strategic Optimized Supply Chain Process People Sourcing Cost Maturity • Aligned Commodity • Sustainable Savings • Demand Driven • Operating • Skills Strategies • Economics Mana
Slide 44: Strategic sourcing
Strategic sourcing Sourcing decisions are based on: Preferred Suppliers defined by the strategy Current quality performance Commodity Strategy Current risk assessment score Available capacity Total landed cost Preferred Supply Base Result is a focused supply base that delivers world class
Slide 45: Optimized cost
Optimized cost • Drive sustainable year over year savings Sustainable • MBBP/CI Savings • Post Launch Audits • E-Auction • Manage impact of raw material economics • Global commodity management leverages scale Total Cost of Economics • Market and input cost intelligence Ownership Management • Improve
Slide 46: Supply chain maturity
Supply chain maturity • A more mature Supply Chain delivers improved business results • EBIT enhancement • Optimized working capital • Improved customer satisfaction • Assessing our maturity based on the Gartner 5-stage model • Initial assessment to be completed in FY18 • NA Regional Assessment = 2.
Slide 47: Terms Standardization and Early Payment Program
Terms Standardization and Early Payment Program Term Standardization Early Payment Program Background 1 > New standardized terms rolled out in > Early payment feature will be added for free for our suppliers October 2017 using the Taulia platform Direct 77 Coming December* 2017 though our technology
Slide 48: Integrated Demand & Supply Planning (IDSP)
Integrated Demand & Supply Planning (IDSP) 48 Adient – Improving the experience of a world in motion
Slide 49: Advanced Procurement
Advanced Procurement Phase 0 Innovation Process Supplier Innovation Criteria Designation for Phase 0 Innovation Process Idea Idea Lightweight Design In Vehicle Electronics Go / Go / Go / Go / Go / No Go No Go No Go No Go No Go and Connectivity Commodity Manager Design – For Function and Safety Innov
Slide 50: Advanced Procurement
Advanced Procurement Phase 1 Advanced Process Supplier Innovation Criteria Designation for Phase 1 Advanced SDT process Idea Idea Design for Performance Go / Go / Go / No Go No Go No Go Commodity Manager Design to cost SMTE / SUPPLIERS Advanced Opportunity Concept Identified Program Assessment Devel
Slide 51: Design for Total Cost Ownership (DfTCO)
Design for Total Cost Ownership (DfTCO) 51 Adient – Improving the experience of a world in motion
Slide 52: Key takeaways
Key takeaways > We will achieve operational excellence in Procurement & Supply Chain through a focus on Strategic Sourcing, Optimized Cost and Supply Chain Maturity. Our People and Process will enable us. > We require a renewed focus on quality and launch execution from our supply base to ensure we
Slide 53: Quality & Program Management
Jim Pastor, Global VP Quality & Program Management Improving the experience of a world in motion 53 Adient – Improving the experience of a world in motion
Slide 54: Supplier Expectation Day Agenda
Supplier Expectation Day Agenda > FY17 Performance & FY18 Targets > Upcoming Process and System Improvements > FY18 Supplier Focus 54 Adient – Improving the experience of a world in motion
Slide 55: FY18 process and system improvements
FY18 process and system improvements IT Systems > Enable supplier input into IRIS > Supplier PPAP Portal > Supplier Scorecard Access via the portal Process > Top Focus Process – Delivery / Quality Issues > Customer Satisfaction SMRR > Initial Supplier PPAP Evaluation > Supplier Scorecard Metrics (5
Slide 56: FY18 supplier focus
FY18 supplier focus > Proactive communication on product safety issues (PPSCs) > Upload your latest certifications and update your company contact information in Talia > Know your capacity constraints and know your production schedules. Communicate any upcoming delivery issues. > Actively manage you
Slide 57: 2017 Adient Supplier Awards
2017 Adient Supplier Awards 57 Adient – Improving the experience of a world in motion
Slide 58: Supplier awards overview
Supplier awards overview This year there are 53 suppliers receiving awards Number of suppliers receiving awards: > 1: Platinum > 5: Gold > 21: Silver > 26: Bronze > 5: Leadership awards Five of these top performers are also receiving Leadership awards! 58 Adient – Improving the experience of a world
Slide 59: Bronze Award
Bronze Award Supplier Awards & Expectations Day November 28, 2017 Improving the experience of a world in motion
Slide 60: Bronze Award Winners
Bronze Award Winners 60 Adient – Improving the experience of a world in motion
Slide 61: Silver Award
Silver Award Supplier Awards & Expectations Day November 28, 2017 Improving the experience of a world in motion
Slide 62: Silver Award Winners
Silver Award Winners 62 Adient – Improving the experience of a world in motion
Slide 63: Gold Award
Gold Award Supplier Awards & Expectations Day November 28, 2017 Improving the experience of a world in motion
Slide 64: Gold Award – AWL Techniek B.V.
Gold Award – AWL Techniek B.V. Company Overview Located in Harderwijk HQ (NL), Napajedla (CZ), Wuxi (CN), Spartanburg (USA) and Queretaro (MX) Established in 1993 Sales: USD 145 Mio 550 employees Machine builder and system integrator of Arc Welding, Resistant Welding, Laser Welding, Gluing
Slide 65: Gold Award – EDS Manufacturing, Inc.
Gold Award – EDS Manufacturing, Inc. Company Overview Headquartered in Nogales, Arizona Established in 1990 Sales: $100 Million EDS Manufacturing 3000 employees Wire Harnesses, Battery Cables 65 Adient – Improving the experience of a world in motion
Slide 66: Gold Award – Iteco Spol S.R.O.
Gold Award – Iteco Spol S.R.O. Company Overview Located in Zilina, Slovakia Established in 1992 Sales: $8 Million 50 employees Fabric knitting and lamination 66 Adient – Improving the experience of a world in motion
Slide 67: Gold Award – Leoni Bordnetz-Systeme GMBH
Gold Award – Leoni Bordnetz-Systeme GMBH Company Overview Headquartered in Nuremberg, Germany Established in 1917 Sales: 4.4 bn € (2016) 84.000 employees Wires, optical fibers, cables, cable systems and solutions, wiring systems as well as related services for the automotive sector and fur
Slide 68: Gold Award – MultiTech Industries Inc.
Gold Award – MultiTech Industries Inc. Company Overview Headquartered in Carol Stream IL. Established in 1993 Sales: $100+ Million 500+ employees Cold Headed Fasteners, Machined Components, Springs, Stampings, Wire Product, and Welded Assemblies. 68 Adient – Improving the experience of a w
Slide 69: Platinum Award
Platinum Award Supplier Awards & Expectations Day November 28, 2017 Improving the experience of a world in motion
Slide 70: Platinum Award – Kenwal Steel Corp.
Platinum Award – Kenwal Steel Corp. Company Overview Headquartered in Dearborn, Michigan Founded in 1947 Sales: $800+ Million 350 employees Steel Slitting, Pickling, A2LA Accredited Lab with capability to do mechanical and chemical analysis 70 Adient – Improving the experience of a world i
Slide 71: Leadership Award Innovation
Leadership Award Innovation Supplier Awards & Expectations Day November 28, 2017 Improving the experience of a world in motion
Slide 72: Leadership Award – Innovation – Paul Craemer GmbH
Leadership Award – Innovation – Paul Craemer GmbH Company First tailor welded side member • Optimum reduced weight design > Headquartered in Herzebrock-Clarholz, Germany • Fully automatic transfer process, fed by coil. > Established in 1912 HCT980X 0.8mm / 439gr > Sales: 250 M€ (2016) > 900 employee
Slide 73: Leadership Award Operational Excellence
Leadership Award Operational Excellence Supplier Awards & Expectations Day November 28, 2017 Improving the experience of a world in motion
Slide 74: Operational Excellence – Fujikura
Operational Excellence – Fujikura Company Overview Headquartered in Tokyo, Japan Established in 1885 Sales: $5.73 Billion USD 57,000+ employees Automotive, Electronics, Power & Telecommunication products 74 Adient – Improving the experience of a world in motion
Slide 75: Leadership Award Global Growth
Leadership Award Global Growth Supplier Awards & Expectations Day November 28, 2017 Improving the experience of a world in motion
Slide 76: Global Growth – Sumitomo Wiring Systems
Global Growth – Sumitomo Wiring Systems Company Overview Headquarters : Tokyo, Japan Established : 1917 Sales : US$9.9+ Billion (Harness Business) Employees : 256,000+ Global Footprints : 33 countries, 103 footprints Products : Wiring harnesses, components and cables for automobiles and
Slide 77: Leadership Award Global Growth
Leadership Award Global Growth Supplier Awards & Expectations Day November 28, 2017 Improving the experience of a world in motion
Slide 78: Global Growth – AWL Techniek B.V.
Global Growth – AWL Techniek B.V. Company Overview Located in Harderwijk HQ (NL), Napajedla (CZ), Wuxi (CN), Spartanburg (USA) and Queretaro (MX) Established in 1993 Sales: USD 145 Mio 550 employees Machine builder and system integrator of Arc Welding, Resistant Welding, Laser Welding, Glu
Slide 79: Leadership Award Supplier Diversity
Leadership Award Supplier Diversity Supplier Awards & Expectations Day November 28, 2017 Improving the experience of a world in motion
Slide 80: Supplier Diversity Excellence
Supplier Diversity Excellence Maximum points 5% goal “Through persistence and executive-level support, supplier diversity lead of Adient sales spent with diverse suppliers EDS achieved its diversity spend goal in 2017 while maintaining or improving Minority Supplier service, support, and cost Develo
Slide 81: See you next year!
See you next year! 81 Adient – Improving the experience of a world in motion