Performance Management…With The Earth In Mind

CPM Implementation Plan

Competitiveness Improvement Team
 Develops Vision of Resource Optimization
 Drives and Forces Improvement
 Empowers the Organization
 Leverages TPM in Marketplace
Objectives
 Improves Competitiveness (IAR, Profit)
 Optimize the Utilization of Resources
(Productivity, IPY and Cash Tied Up)
 Improve Responsiveness to the Customer
Methodology Measurements
 TPM/AIM  DPT Measurement Charts
 Transition Process Team Activities  Transition Process Barometer
 Obstacle Identification
Input  Root Cause Analysis Output
 Obstacle Removal
 WIP TIP Management
Baseline Performance  Learning Cycles Resource Optimization Performance
Tools Required Skills Required
 Process Maps  TPM Mindset/Understanding
 Pareto Charts  Problem Solving Abilities
 TIP Management Techniques  Use of Learning Cycles
 Root Cause Analysis (Fishbone)
 Dynamic Process Time Measurements
 Initial Pass Yield
 Disciplined Strategic Process
 Process Management Road Map

1. Identify each critical path processes

2. Establish the scope of each process
3. Identify and bring together the key players
4. Validate scope and determine process boundaries
5. Map the relationship of the processes
6. Establish baseline performance
7. Determine value-added and non-value-added process steps and
activities
8. Remove non-value-added steps and create a resource optimization map
9. Determine measurements
• Design the measurement system
• Establish initial resource optimization goal
• Identify the obstacles
• Develop Cause and Effect diagram to find root cause obstacles
• Rank-order root cause obstacles
• Assign and schedule obstacle removal actions
• Track progress through measurement systems
 CPM Change Process Overview

Process Map Obstacle Selection Specific Action Plans

Process/Activity Road Map
Process Name

Process Who
Scope

Process
OBSTACLE REMOVAL
Req’ts Outputs Customers Req’ts
Inputs Defines
PRIORITIES WORKSHEET 24
CVD PRE CISION 5000 INSTALL AT ION PROCESS T IME
(Shi p thru Si gnoff Dates, Systems Onl y)
24

Process Map Obstac le:

22

20
22

20

P ROCE S S T IM E (i n m o n th s)
18 18

I 10 16 16

M High 14

12
14

12

P 9 10 10

Problem Statement : 8 8

A Average installation process time has increased to 6

BAS EL IN E
6

8 six time of our best practice goal. 4 4

C 2
P LAN

B EST PR ACT ICE

2

T 7
0
NOV DE C JAN
96'
FE B MAR AP R MAY JUN JUL AUG S EP OCT NOV DE C JAN
97'
FE B MAR
0

Perform. Who Who Program Goal : DYNAMIC PROCE SS T IME

M E AN COMP LE T ED INST ALL AT IONS
SHORT ES T COMP L ET E D INS TAL LAT ION
L ONGES T COMP L ET E D INS TAL LAT ION
Stds. Defines Req’ts ResourcesProvides Req’ts O 6 Reduce average process time installations to three
B AS E LINE
PL AN
B E ST PRACTICE
DP T F ORE CAST

F Easy Difficult month by year end 1997. MO NTH

IN PR O CE SS INST A LL AT IO N S
N OV
188
DE C
182
JAN 9 6'
193
FE B
181
MA R
169
AP R
185
MAY
152
JUN
148
JU L
155
A UG
126
SE P
101
OC T
108
N OV
98
DE C
96
JAN 9 7' FE B MA R

PT CO MP LE TE D INST A LL AT IO N S
B A SELI N E
31
6. 1
27
6. 1
27
6. 1
26
6. 1
30
6. 1
47
6. 1
17
6. 1
25
6. 1
33
6. 1
31
6. 1
16
6. 1
18
6. 1
11
6. 1
8
6. 1 6. 1 6. 1 6. 1

5 B EST P RA CTI C E
P LAN
2. 0
6. 1
2. 0
5. 9
2. 0
5. 7
2. 0
5. 5
2. 0
5. 3
2. 0
5. 1
2. 0
4. 9
2. 0
4. 7
2. 0
4. 5
2. 0
4. 3
2. 0
4. 1
2. 0
3. 9
2. 0
3. 7
2. 0
3. 5
2. 0
3. 3
2. 0
3. 1
2. 0
2. 9

O Owner DY NA MIC P RO C ESS T IM E

LO N GE ST C OM PLE TE D INS TA LL AT ION
M EA N CO MP LE TE D INST A LL AT IO N S
6. 1
8. 1
5. 4
6. 9
12. 7
4. 9
6. 9
10. 7
4. 6
7. 2
14. 8
5. 5
5. 8
14. 2
4. 6
3. 8
14. 6
4. 7
9. 9
16. 0
4. 3
6. 0
15. 6
6. 8
4. 6
16. 7
5. 4
4. 5
14. 8
5. 1
7. 1
14. 3
5. 8
5. 8
19. 6
6. 9
9. 4
21. 3
6. 3
12. 1
9. 4
6. 3

IPY B 4 : SH OR TE ST C OM PLE TE D INS TA LL AT ION

FO R ECA STE D WI P
PL AN NE D SH IP MENT S
1. 8 1. 5 1. 4 2. 1 1. 3 1. 1 0. 0 2. 3 0. 0 2. 1 1. 7 3. 0 0. 9 4. 8
98
13
100
14
105
11
D PT FO REC AS T 12. 1 10. 3 10. 5 11. 0

S
COST T 3
A Key Action Items By Whom Completion Date
Who I nput Outpu ts Who I nputs Outpu ts 2
I nform ati on P rovid es Req’ ts Req’ ts S ubP rocesses Defines Req’ ts Req’ ts C Low Identify all products in WIP $ status Mgr../Supervisors 3/11/97
L Signoff all installs > 150 days Mgr./Supervisors Q2 END
1 Signoff all installations > 120 days Mgr./Supervisors Q3 END
E 1 2 3 4 5 6 7 8 9 10
Signoff all installations > 90 days Mgr./Supervisors Q3 END
DIFFICULTY OF REMOV AL

Fishbone Diagrams Obstacle Ranking Sustaining Metrics

OBSTACLE RANKING WORKSHEET
Long Dock-to-Stock Cycle Time Example 35
%

B
$K
8 00 0

o Sa les
x Hea d co un t
He ad c ou n t
1 80 0

30

8 M’s PROCES S: 7 00 0 1 60 0

Workaround Workaround Man

25

Processes/Re source s Processes/Re source s WHO OBSTACLE REMOVAL E

6 00 0 1 40 0
Money
Method
OBSTACLE DESCRIPTION REMOVES IMPACT DIFFICULTY 20

Process/Activity
MRB Machine
15
M A M J J A S O N D J F M AM J
5 00 0 1 20 0

Indices
M J J A S O N D J F M A M J
A IAR% SALES AND HEADCOUNT
Wait Material
Re-inspect Motivation M o nth s
B 3

Request 2nd Copy Management

48

Search For C
E
42
B

from Vendor Measurement 2 36

ECO B
Request 30

Request D
Deviation 1
24

Deviation Search for P.O.

18
E
at Purchasing Effect 0
12

6
E

Long Cycle Time F M J J A S O N D J F M A M J M J J A S O N D J F M A M J

PRODUCTIVITY* PRODUCT DEVELOPMENT PT

in Dock to
Part Not Stock G Da y s
1 90
$M
7 1 00
% %

to Spec 1 70 B 6
90 1 00
E

Paperwork H 1 50
E
80
80
5 70

ECO Late Lost I 1 30 4

60

50
E
60

1 10 3 40
Vendor Not 30
40

P.O. Not J 90 E 2 B
20 B
on AVL 70 1
B 20

in System 10

K 50
M J J A S O N D J F M A M J
0
M J J A S O N D J F M A M J
0

M J J A S O N D J F M A M J
0
M J J A S O N D J F M A M J

Waiting ORDER MANAGEMENT PT NET INCOME ORDER MANAGEMENT IPY CUSTOMER SERVICE
Sys tem L (Annualized) ON-TIME DELIVERY
Deviation
Parts Rej. Down Order Impact: 1 = Low, 10 = High Difficulty: 1 = Easy, 10 = Difficult
*SA LES - MATERIAL + PROFIT
TOTAL PEOPLE COSTS
at Incoming Causes Batching Stopped
Receiving 17
 Obstacles Are Inter-related
Culture
Obstacles
2
1

Business Workaround
4 Process 3 Processes
Obstacles 2

2
1
Subject
Matter

1. Culture constrains business process performance that in turn constrains

subject matter performance.
2. Not removing culture and subject matter obstacles will create workaround
processes.
3. Obstacles/workaround processes often overlap and are sometimes mutually
reinforcing.
4. Business Process constraints negatively impact energy conservation
Typical Experience Of Process Time Reduction

Baseline

A High Leverage Business Process

P
or Culture Obstacle is Removed
R
O
C
E
S
S

T
I An Improvement Stall Surfaces
M Problems to be Solved
Resource Optimization
E (Realizable Performance)

TIME

6
 CPM…The Transition Process
Global
Competitiveness

Continuous
Improvement
& System
Enablement

Realizable Resource Optimization

Performance
with Current Embracement
Resources

Implementation
Categorization
Analysis

Training
Baseline Motivation TIME
Process Improvement Phase Continuous Improvement
& System Enablement
 The Transition Process

MOTIVATION
To help critical decision makers and implementers understand that
Total Process Management is the driver and result of making
business competitive.

 Exposure to Total Process Management Concepts.

 Formation of multi-functional teams.
 Regular meetings of teams and top management.
 Meeting attendance.
 Degree of commitment to Total Process Management program
 How your carbon footprint is affected
 The Transition Process

TRAINING
Develop a Total Process Management mindset throughout the organization
and to provide the skills/knowledge to meet and maintain Resource
Optimization.

 Employees receive in-depth training in Total Process Management

 Plan to reach Resource Optimization.
 Degree of Total Process Management mindset.
 Demonstrated use of Total Process Management skill and tools.
 The Transition Process

CATEGORIZATION
Determine Baseline, Resource Optimization, and Obstacles to
meeting Resource Optimization, as well as quantifying the
impact of reaching Resource Optimization.

 “Baseline” established and measurements defined.

 “Baseline" process map completed.
 "Resource Optimization" process map completed.
 Major obstacles identified.
 Impact of Resource Optimization quantified.
 “Resource Optimization” established.
 The Transition Process

IMPLEMENTATION
Achieve Resource Optimization and ongoing obstacle
removal.

 Regular measurements of dynamic process time and

initial pass yield
 Progress to Resource Optimization in process time
 Progress to Resource Optimization in initial pass yield.
 Progress in obstacle removal.
 Existence of feedback loops
 The Transition Process

EMBRACEMENT
Creation of a culture in the organization which depends on Total
Process Management Methodology to remain competitive and
continuously improve performance.

 Hierarchical measurements in place.

 Focus on business process, not functions.
 Continued results.
 Organizational Relationships

Multi-Functional Teams Structure

Client Senior Management Implementation Team

Total Process Management

Competitiveness Improvement
Team (CIT)

Multi-Functional Teams
(Composed of)

Design Project Product Procurement Human Program

Eng. Eng. Assurance Resources Management
Order Material
Planning Manufacturing Customer Service/
Entry
Forecasting MIS Product Support

MFT’s create Obstacle Removal Teams (ORT’s) as necessary

to remove specific obstacles.
 Timetable to Achieve Improvements

Rapid Implementation Architecture

Establish
TPM Define Install Achieve
Improvement Embracement
Workshop Processes Measures Objectives Objectives

1 WEEK 6 WEEKS 1 WEEK 4-10 MONTHS 2 MONTHS

TOTAL TIME = 8 - 14 MONTHS

 …What Works

Organizational Team Structure

• Top-down commitment - must have CEO’s support at
each level.
• Top-level active involvement.
• Change through current operational management
structure.
• Involvement of outside objective team players with
hands-on experience.
• Well-trained internal implementers working with outside
assistance.
• Frequent top management/outside change agent
obstacle removal meetings.
• Simplifying and revising measurements to minimum set
that drives competitiveness.
• Communication, Communication, Communication.
 …What Doesn’t Work

 Self medication (typically stalls at 25% to 30% of

potential).
 Lack of top management involvement.
 Assigning responsibility to internal staff as
leaders of Total Process Management cultural
change.
 Continuing with today’s measurements.
 Program of the Year.
 Edicts of performance change.
 Partial cultural changes.
Real-Life Solution Examples
 Effective Collaborative Product Development

Size of Opportunity: Solution Impact:

• Capture larger market share in industry
with short product life cycles and declining
product margins
• Accelerate new product time-to-market
• Reduce product development cost
• Increase customer satisfaction
• Improve pre-production yield
• Reduced ECO’s
• Increased product gross margin by 7%
• Accelerated product time-to-market by 15
days (x%)
• Increased first pass yield by 2%
•Increased accuracy and timeliness of
information for engineering and quick
decision making

1 4

Problem Area: Enablers:

• How do I effectively and
efficiently collaborate with
customers, suppliers, and
partners in the product
development process?
2 3
Integrated knowledge and team design
collaboration across global team
• Integration of back office systems
• Yield mgmt., yield failure and test failure analysis
• Trend tracking and product alerts to engineering
• Personalized user tools and information
• Streamline qualification and handoff to
manufacturing
• Automated data flows, full cycle accountability
 Eliminating Excess & Obsolete Inventory

Size of Opportunity: Solution Impact:

• Eliminate excess and obsolete inventory
write-off cost
• Reduce inventory holding costs
• Increase sales by carrying “saleable” items
• Increased cash reserves by reducing
inventory requirements
1 demands
• Reduced total inventory by 20-30%
• Reduced inventory financing and
carrying costs > 25%
• Reduced Order-to-Cash time > 30%
• Shorter-time-to-ROI of targeted projects
• Clear ownership of enterprise-wide
metrics
•Match inventory levels with production
4

Problem Area: Enablers:

•Comprehensive, real-time global view
• How do I eliminate excess and
• Inventory-based suggestive selling
obsolete inventory?
process
• Alerts, decision analysis, and reporting
• Bill of Materials data aggregation
• Obsolesce management
• Continuous KPI and account monitoring

2 3
 Effective Contract Manufacturing Management
Size of Opportunity:
• Reduce product procurement cost
• Increase inventory turns resulting from JIT
replenishment from Contract Manufacturer
• Increase sales resulting from increased
visibility to CM fulfillment capabilities
• Reduce handling, shipping and transaction
costs resulting from increased accuracy of
communication
1 • Improve OTD by 20%
Problem Area:
• How do I effectively and
efficiently manage my contract
manufacturers?
2 3
Solution Impact:
• Reduced cost of goods sold by 10%
• Increased inventory visibility by 40%
• Reduced inventory days 4 days / year
• Increased supplier performance levels
• Increased ability to scale for biz growth
• Reduced handling, shipping, and
transaction costs by 30%
4
Enablers:
• Metric definition
• Accountable buyers/planners/facilities
• Clean data
• Lower min/max settings
• Good reporting tools
• Formalized training program
•Continuous KPI and Account Monitoring
 Global & Timely Performance Monitoring
(Inventory & Fulfillment)
Size of Opportunity: Solution Impact:
• Revenue increase resulting from
• $100Ms reduction in parts inventory
improved customer service levels
• $10Ms reduction in Inventory Carrying
• Reduce holding and write-off costs
Costs
resulting from increased component
• Reduced component and raw material
Inventory turns while balancing
inventory
continuity of supply
•Reduce liability for over-purchased
1 components at suppliers and partners
4

Problem Area: Enablers:

• How do I perform global and • Performance metrics tracking on buyer
timely performance monitoring • Standardize purchasing methodology
within and outside the • Provide buyers with automated on-hand
enterprise? inventory volume & value numbers by
part
• Mandate Inventory allowance by volume
and value so buyers can manage excess
2 3
Effectively Manage Order Capture Through Fulfillment
Size of Opportunity:
• Increase customer retention and total sales
• Increase responsiveness to customer and
market opportunities requiring new capabilities
• Reduce order processing administrative costs
• Reduce inventory holding costs
• Improve customer experience to result in
increased customer loyalty producing
increased revenue per customer
1 commitment
Problem Area:
• How do I effectively manage
orders from Order through
Account Receivables?
2 3
Solution Impact:
• Decreased inventory levels by 5%
• Increased supplier number of supplier
relationships and ease of doing business
• > 20% reduction in sales cycle time
• > 10% reduction in costs of servicing
sales
• > 25% reduction in order to cash cycle
time
• Increased OTD to > 98% to original
4
Enablers:
• Sales reports and forecasting
• Online promotional management
• Integration to supplier and partner
internal systems
• Quick quoting and self-service
ordering
• Product data sheets and product
search
• Real-time stock status and order
status
 Accurate & Timely Demand Planning

Size of Opportunity: Solution Impact:

• Increase sales by ensuring that the right • Improved deal and product sales
product is available at the right time and forecasting accuracy from 25% to 5%
at the right place error rate
• Reduce inventory costs by accurately • Reduction in inventory of 5%
predicting demand • Improved sales closing rates
• Reduce risk of lost deals because of
product unavailability
•Transition from BTS to BTO or CTO
1 4

Problem Area: Enablers:

Centralized and common global demand
• How do I improve my demand planning and sales forecasting structure
planning process? • Automated forecasting process that collects
sales info. in a timely manner
• Implemented global standardized policies and
practices
• Centralized repository for data and sales
resources including account planning
• Mass Customization
2 3
 Bills of Material Integrity

Size of Opportunity: Solution Impact:

• Reduce scrap parts inventory • Improved BOM accuracy by 35%
• Reduce administrative costs associated
• Reduced BOM processing by 15
with BOM maintenance
days
• Reduce procurement costs resulting from
increased ability to pool orders by resolving • Integrated 36 different BOM lists into
part number duplications one global unified BOM list
• Reduce part inventory based on increased
ability to use equivalent parts
1 4

Problem Area: Enablers:

• How do I improve the integrity
of my Bills of Materials?
• Unified BOM / Parts list
• Unified Supplier list
• Common Information Model
• Integration between various systems
holding BOM information
• Link ECO’s to BOM’s effectivity changes and
dates

2 3
 Vendor Managed Inventory

Size of Opportunity: Solution Impact:

• Increase sales and customer
satisfaction through improved OTD • Reduced total inventory by 20-30%
•Eliminate $Millions in excess and • Reduced inventory financing and
obsolete inventory by increased carrying costs > 25%
collaboration and management of top • Reduced order fulfillment time > 30%
customer(s) inventory
• Reduce order to cash cycle time by
1 reducing inventory requirements
4

Problem Area: Enablers:

• How do I manage the • Comprehensive, real-time global view
inventory of my customers? • Customer demand data aggregation
and forecasting
• Alerts, decision analysis, and
reporting
• Bill of Materials data aggregation
• Obsolesce management
• Continuous KPI and account
2 monitoring 3
 Quality Tracking & Pro-active Remediation

Size of Opportunity: Solution Impact:

• Reduce high Cost of Quality by reducing
root cause defects
• Capture timely quality related information
• Detect and correct field failures earlier
(current lag time is 6 mos.) to reduce
warranty exposure
• Incorporate field and manufacturing
experience into design and procurement
1 4
• Increased supplier recoverable costs
by 50%
• Reduced warranty costs by $10M
• Reduced scrap costs by $10Ms
• Reduced standby engineering costs
by $10Ms
• Reduced field failure rate (FFR) by 8%

Problem Area: Enablers:

• How do I track my enterprise-
wide quality data and react
quickly to quality problems?
2 systems
• Consistent purchasing, design and mfg.
feedback loop
• Tighter control of parts inventory
• Own a product throughout lifecycle incl. end
of warranty
• Defect tracking
• Analyze Cost of Poor Material data gathering
root causes
• Minimized number of company wide metrics
• Integration of disparate data in existing
3
 Timely BTO/ETO Product
Size of Opportunity:
• Capture larger market share with
accelerated BTO/ETO capabilities
• Reduce product development cost
• Increase customer satisfaction
• Reduce inventory by building to
customer specifications (BTS vs.
1 BTO/ETO)
Problem Area:
• How do I build my product to
customer’s specifications
(BTO/ETO) in a timely fashion?
2 3
Solution Impact:
• Reduced inventory, scrap, rework
and administrative costs
• Increased working capital utilization
4
Enablers:
• Comprehensive, real-time global view
• Alerts, decision analysis, and reporting
• Mass customized components
• Continuous KPI and account monitoring
• Real-time communications with suppliers
• Automated data flows, full cycle
accountability
• Product configurator linked to BOM, ECO,
production capacities, and margin analysis
Our “Green” Credentials
Performance Management…With The Earth In Mind

Eco-Technology in “Real-Time”