Developing a portfolio of autonomous but collaborative business units, within a well-defined control framework, whilst promoting best practice sharing and developing complementary capabilities is the foundation of Senior’s business model.
The Group’s strong level of free cash flow generation allows it to target a select number of complementary strategic acquisitions in growth markets to expand its capabilities, accelerate growth and enhance its asset portfolio.
Portfolio enhancement through focused acquisitions and disposal of non-core assets, with decisions in both cases being subject to strict financial criteria, the operations’ long-term outlook and the Group’s anticipated funding position. The Group has a good track record of acquiring and successfully integrating new businesses, and also of rationalising and enhancing the overall asset portfolio through disposals, utilising a framework that has been developed as part of the strategic planning process. The key enabler of this programme is the significant balance sheet capacity that has been generated in recent years through strong free cash flow generation.
DEVELOPING AN INTEGRATED GLOBAL FOOTPRINT
Senior continues to develop an integrated global commercial and operational footprint to enable it to supply key programmes to its OEM (Original Equipment Manufacturer) customers cost-effectively and to meet growing domestic demand in emerging markets.
In 2014, the Group continued to invest in expanding a number of existing facilities within its portfolio. For example at SSP an additional 59,000 sq ft building is under construction to support growth, principally for the A320neo. In Thailand we are expanding capacity threefold adding processing capability at a total cost of £6m over the next three years.
Working with customers to provide market-leading solutions in the Group’s chosen principal markets is the primary objective of customer alignment.
OPTIMISING VALUE AND EXCEEDING EXPECTATIONS
The Group seeks to deliver competitive products utilising its engineering expertise to optimise customer value and exceed their expectations whilst continuing to meet its performance objectives. This is achieved through advanced process engineering and excellent operational execution, leading to market differentiation and continued growth in organic revenue, operating margins and cash flow delivery.
Targeted investment in new product development, technologies and geographic regions, for markets having higher than average growth potential, to further enhance organic growth opportunities.
Many of the Group’s products are developed to help customers to achieve their objectives for improved operating costs, particularly fuel efficiency in aircraft platforms and land vehicle engine applications, and to meet increasingly stringent global emission regulations. The Group’s level of investment in these growth areas and on expanding its geographic footprint, which now includes Thailand and China, continues to increase.
Senior’s long-standing emphasis on operational excellence is based on the principles of Lean, striving at all times for continuous improvement and the elimination of non-value-added activities and processes.
The Group has achieved great progress in this area in recent years, driving value creation through the implementation of its operational excellence initiatives based around Lean principles and sustained superior performance in the eyes of its customers. This is the principal reason that, at 13.9% in 2013, the Group’s adjusted operating margin is at record levels, having more than doubled since 2006.
Each operation is challenged to deliver operational improvements as part of the annual planning cycle, using Kaizen events and other Lean practices to reduce costs, improve product flow and velocity and optimise use of resources. Planned introduction of Kanban systems in Mexico will strengthen our position with a key customer there.
Engineering teams at multiple locations are identifying technical improvements in CNC machine programs and cutter technologies to speed throughput benefiting capacity load and lead times. Value stream mapping activities are frequently undertaken to reduce set-up time, manufacturing lead times and inventory levels. A good example of this is at SSP, where the team is in the process of transforming the production process to a one-piece flow from the current batch and queue process for an estimated 80% of the items produced.
Governance procedures are designed to allow each operation to embrace and manage key operational excellence effectively, and to comply with all legal and regulatory requirements, without imposing an unnecessary administrative burden. They also aim to ensure that employee’s act at all times safely, with integrity and in an ethical manner.
Developing the capabilities and competencies of Senior’s employees to meet tomorrow’s customer requirements is critical to the future success of the Group.
EMPOWERED LOCAL MANAGEMENT
The Group benefits from having empowered, entrepreneurial and highly engaged local management. As much authority and responsibility as possible, within a well-defined control framework, is devolved to the senior management team at each of our operations. This culture of empowerment and autonomous collaboration, along with the strong reputation of the Group, helps attract and retain experienced senior executives from within the industry.
Senior’s values of operating with integrity and in a respectful and ethical manner, along with entrepreneurial spirit, guide our people in the judgements, actions and decisions they make each day. This is underpinned by our “tell it as it is” philosophy.
DEVELOPING OUR PEOPLE
The Group’s employees are one of its most valuable assets, with the financial and operational progress made during 2014, and earlier years, largely due to their hard work and dedication. The delivery of our strategy depends on the right people, skills and capabilities being in place. Each of Senior’s businesses is responsible for continuously developing its people and the skills and training needs of employees are typically reviewed through a performance review and development process. Senior continues to increase its investment in developing people at all levels of the organisation, and in addition to local training and development, Senior has expanded the Group Development Programme and health and safety training. Employee development, together with a renewed emphasis on the recruitment and succession planning processes, will remain an important focus for the Group in the future.
GROUP DEVELOPMENT PROGRAMME
The quality of Senior’s people is a core competency of the Group and how it recruits, trains and motivates its staff is pivotal. Since 2009, Senior has operated a Group Development Programme aimed at developing mid- to senior-level managers so that they acquire the broader skills essential to operate at higher management levels. The training provides an intensive learning and development forum for current high-potential senior managers. During 2014, we introduced three new courses: Programme Management, Fast Track Advanced Management Programme and Driving Innovation.