CNH Saskatoon Plant

Management Strategies For A Successful Lean Transformation

November 2012

Speaker – John Weist

- Born and raised in Southern SK - Industrial Systems Engineering Degree - 4 years as Manufacturing Engineer - 4 years as WCM Manager - 1 year as ME / WCM Manager

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INTRODUCTION

2010 2011 2012

Annual Savings $5.7 M $5.6 M $5.9 M

% Trans. Cost 10.3% 9.0% 9.2%

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WHY AM I SPEAKING WITH YOU TODAY?

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2008 2009 2010 2011 2012

saskatoon

Plant #11

Plant #6

Plant #4

Plant #9

Plant #3

Plant #2

Plant #8

Plant #1

Plant #7

Plant #5

• Plant Information • Product Line • World Class Manufacturing (WCM) • Management Strategies 1.) Senior Management Involvement 2.) Importance of KPI 3.) Goal Alignment 4.) Involve Everyone 5.) Time and Budget Investment 6.) Rigorously Audit 7.) Reward and Recognize • Plant Results

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AGENDA

Plant Information

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PLANT 632,000 SQUARE FT

58,700 SQUARE M

LAND 156 ACRES

63 HECTARE

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SASKATOON FACILITY

• The previous company, Flexi-Coil Ltd., was established in 1952.

• During the 1990s Flexi-Coil became Canada's largest farm manufacturer.

• Air Seeding and Tillage industry leader in North America and Australia. (air carts, drills and coil packer)

• New Holland purchased 35% of Flexi-Coil in 1997

• 1999 Merger of New Holland and CaseIH

• The remaining shares of Flexi-Coil were acquired in January

of 2000

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FLEXI-COIL COMPANY HISTORY

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FULLY INTEGRATED FACILITY

FAB WELD

PAINT ASSEMBLY

East Powder Paint Line

Planter, Header Assembly Lines

Planter and Header Weld

Stalls Fabrication Equipment

Receiving / Warehouse

West Powder Paint Line

Air Seeder line

Tillage and Air Seeder Weld

Stalls

Tillage Crating and Component

Assembly 9

M66 Assembly

PLANT LAYOUT

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HEADCOUNT

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USA 70.6%

Canada 21.9%

China 2.6%

S America 0.6%

Australia/NZ 2.0%

Africa 0.5%

CIS 1.8%

PLANT SUMMARY – CUSTOMER DISTRIBUTION

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Product Line

Air Carts (4 models, 3 brands)

Hoe/Disk Drills (4 models, 3 brands)

Planters (17 models, 1 brand)

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PRODUCTS

Grain Heads (2 models, 1 brand)

Corn Heads (2 models, 2 brands)

Pickup Heads (2 models, 2 brands)

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PRODUCTS

This configuration requires ~175 hours of labor to setup

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SOME ASSEMBLY REQUIRED!!

2010- 2012 NEW PRODUCT LAUNCHES

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Pickup Header January 2011

16R30/18R20 Corn Header April 2010

580 Bu Air Cart November 2010

1260 Planter February 2010

M66 December 2012

Pull-Type Sprayer Dec 2011

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World Class Manufacturing

- Corporate continuous improvement program focused on 3 objectives; 1.) employee involvement 2.) improving plant standards 3.) reducing wastes and losses - 10 technical pillars and 10 managerial pillars - focuses on the concept of “zero” and the sharing of best practices - 168 Plants involved in 16 different countries - Fundamentally changed how the Plant is managed - WCM is not a project, it is how we do business

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WHAT IS WCM

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Management Strategies

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THE RESOURCE STRUGGLE

Everyone has full time jobs where we work through the day to day

things that allow us to get paid

We as Managers want more time for our employees to

do continuous improvement type

activities

Resources

Reviews completed and

planned action items for the week

Reviews road blocks and takes actions as required

A lack of activity cannot be hidden on the floor (we learned this the hard way)

Senior Management including Plant Manager conduct Gemba project reviews twice per week

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IT STARTS WITH SENIOR MANAGEMENT (TOP DOWN)

- Set KPI’s / Lagging metrics (3-5 most critical metrics) Plant level followed by department specific - Set KAI’s / Leading metrics (30-50 supporting measures) Plant level followed by department specific **** Caution, several companies try to focus on everything, 10-20 KPI’s are too many **** **** KAI’s need to predict KPI success and must be able to be influenced by the group****

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UNDERSTAND AND SET KEY PERFORMANCE INDICATORS

- Set SMART metrics 1.) specific 2.) measurable 3.) attainable 4.) realistic 5.) timely - Set aggressive metrics 1.) 8% transformation cost savings per year 2.) zero breakdowns 3.) 90% reduction in cleaning times

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UNDERSTAND AND SET KEY PERFORMANCE INDICATORS

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VISUALLY DISPLAY YOUR KPI’S / KAI’S (PLANT LEVEL)

• Create a Scorecard • Simple • Highly visible to all employees • Have the right metrics • Must be easy for everyone to know whether they are

winning or losing

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VISUALLY DISPLAY YOUR KPI’S / KAI’S (PLANT LEVEL)

• Each pillar updates their specific KPIs every week

• Displayed in Center of Excellence • Quick visual for Senior Management to see overall

progress and question KPI’s which are not being met

May. 18 May. 25 Jun. 1 Jun. 8 Jun. 15 Jun. 22 Jun. 29 Jul. 60 3 0 0 1 1 1 0

999 417 417 417 417 548 517 548207.5 289 289 289 289 202 151 15180.1% 80.1% 80.1% 80.1% 80.1% 77.2% 77.2% 77.2%

May. 18 May. 25 Jun. 1 Jun. 8 Jun. 15 Jun. 22 Jun. 29 Jul. 6367 367 367 367 367 398 398 398

90.00% 91.60% 91.60% 91.60% 91.60% 91.30% 91.40% 92.80%16 16 16 16 16 16 16 16

12% vs 88% 11% vs 89% 11% vs 89% 11% vs 89% 11% vs 89% 11% vs 89% 11% vs 89% 11% vs 89%

KPI's Target# of breakdowns after step 3 in the model area 0MTBF - 1000MTTR - 200OEE by Step 5 - 85

B/C of each step 1 >1B/C of each step 2 >3B/C of each step 3 >1

KAI's Target# of SMPs in model areas 240% EWOs closed (counter measures implemented) 100%# of MP Info in model areas 24Breakdown Maintenance Hours vs Non Breakdown hrs in Maint. 30% vs. 70%

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VISUALLY DISPLAY YOUR KPI’S / KAI’S (DEPARTMENT SPECIFIC)

• Standardized supervisor communication

boards (hourly staff)

• Process Monitor Boards for department specific metrics (salaried staff)

Kaizen Tracking Board

Activity Boards

Front Entrance Safety

KPI Display Boards

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VISUALLY DISPLAY YOUR KPI’S / KAI’S

Objectives managed through central Performance Management System

(EHRMS System)

Plant

Functional Area

Salaried Employee

Hourly Employee

Plant Manager’s Goals provide the foundation for all other objectives. For 2012 they are: -Cost (Productivity & Spending) -Safety -Quality -Delivery & Inventory -WCM

Area Manager’s Goals are derived from the Plant Manager’s goals. For 2012 they are: -Cost (Productivity & Spending) -Safety -Quality -HR -WCM

Production Supervisor’s Goals are derived from the Area Manager’s Goals and linked with their employee’s Goals: -Spending -Productivity -Safety -Quality -HR -WCM

Hourly Employee’s Goals are derived from the Success Share Targets set across all plants: -Spending -Productivity -Safety -Quality -WCM

Example of Goal Alignment from Plant Manager to the Hourly Employees:

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KPI / GOAL ALIGNMENT

- Our WCM Pillar Leaders are Managers, no questions asked, other Plants are not this way - All salaried staff are mandated to participate on a Pillar, its part of our “letter of offer” now

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INVOLVE EVERYONE

• All pillars meet weekly (Using a kaizen journal)

WCM Weekly Meeting Times Monday Tuesday Wednesday Thursday Friday

7:00 Management Meeting Management Meeting Management Meeting Management Meeting Management Meeting

8:00

GEMBA Walk (8:00 – 9:00) Pillar Leads, Plant Manager, Ops

Manager

PM (7:30-8:30)

Room F

9:00 Focused Improvement Corporate (9:00-10:00) Logistics 9:00-10:00 Floor

10:00

Autonomous Activity

11:00 Room F (10:30-11:30) WO (11:00-12:00) Corporate

WCM Information Session 11:30-12:30 MTC 12:00 WCM new-hire presentation

EPM Room B 12:30-1:30 1:00 EEM Room B 1:00-2:00 FI (1:00-2:00) PM (1:00-2:00)

Room B Room F

2:00 Quality Control Room A (2:30-3:30)

CD East Plant People EEM (2:00-3:00)

Pillar Lead Meeting Corporate (2:00-3:00) Environment Development Room B

3:00 Floor project reviews Room B (10:00-11:00) Room F CD Fabrication Safety Room F 3:00-4:00

(2:00-4:00) CD Pillar

4:00 Floor project reviews Floor project reviews Floor project reviews

5:00

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INVOLVE EVERYONE (MAKE IT A PRIORITY)

Introduction of WCM into daily production meetings (2 Pillars present each day) - Tying WCM into everyday management - Support from production for roadblocks, brainstorming and countermeasures

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INVOLVE EVERYONE (MAKE IT A PRIORITY)

PD – WCM Audit Toledo

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Quality Gate Central Team Conference - Racine EEM / CD – Wichita

AM – Goodfield PD – Fargo / Wichita

PM – North America Pillar Leads

PD – Chrysler Academy

TIME AND BUDGET INVESTMENT (LAST 5 MONTHS)

CDFI

AMWOPMQC

EEM/EPM PD

BENCHMARKING

FIAT - Mirafiori

Pillar Teams

FIAT - Cassino, Sevel

CNH - Fargo

CNH – Grand Island

Iveco - Brescia

CNH - Fargo

FIAT - MirafioriFIAT - Cassino, Sevel

FIAT - MirafioriFIAT - Cassino, Sevel

CNH – San MauroCNH - Zedelgem CNH - Jesi

Vizient

Iveco - Suzzara

Iveco - Brescia

Iveco - Brescia

Iveco - Suzzara

Iveco - Suzzara

CNH – Grand Island

Senior Management Benchmarking SEVEL Cassino Suzzara Brescia Mirafiori Auto Mirafiori FPT AM, PM, Minimum Material Handling, Q-Gates, Bulky Items, Golden Zone, Kitting

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TIME AND BUDGET INVESTMENT (SENIOR MANAGEMENT)

WCM Starts

Mar. 2008

Yamashina Audit

Oct. 2010 37 Points

Yamashina Audit

April 2009 14 Points

• Audit Process Split between shop floor projects and management presentations 10 technical pillars scored 0 – 5 10 managerial pillars scored 0 – 5 Total score is out of 100

2008 2009 2010 2011 2012

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WCM AUDIT PROCESS AND RESULTS

Materazzo Audit

Aug. 2010 35 Points

Mr. Emo Audit

May 2011 41 Points

Mr. Risi Audit

May 2012 48 Points

Bronze Audit

Oct 2012

Mr. Pino Audit

Dec 2011 44 Points

Senior Management rewards 4 employees per week with small

monetary reward for top kaizens

Employees presented their Kaizens and

Suggestions to the Senior Management and

attendees

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REWARD AND RECOGNITION

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Plant Results

Employee Suggestion Program

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RESULTS

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2009 2010 2011 Projected 2012

Actual

Target

YTD Target: 9.0/person YTD Actual: 9.0/person

6,579 Suggestions YTD

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RESULTS (WCM INVOLVEMENT)

0%

20%

40%

60%

80%

100%

2009 2010 2011 2012 2013

Actual Target

ESP Kaizen Pillar Team Project Team

2011 1 1 1 1

ESP Kaizen Pillar Team Project Team

2012 3 3 1 1

ESP Kaizen Pillar Team Project Team

2013 6 4 1 1

KPI - Lost Time Injury Frequency

KPI – First Aid Injury Frequency

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RESULTS (SAFETY)

96% Decrease in

LTI Frequency since 2008

75% Decrease in First Aid Frequency since 2008

0 0.3 0.6 0.9 1.2 1.5 1.8 2.1

2008 2009 2010 2011 2012 YTD

Freq

uenc

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LTIFI

LTI Target

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RESULTS

Plant Shipping – Customer Service Delivery

VARIABLE COST PER HOUR

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46.00

48.00

50.00

52.00

54.00

56.00

58.00

2008 2009 2010 2011 2012

Variable CPH

COMPARISON TO OTHER PLANTS

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2008 2009 2010 2011 2012

saskatoon

Plant #11

Plant #6

Plant #4

Plant #9

Plant #3

Plant #2

Plant #8

Plant #1

Plant #7

Plant #5

BRONZE LEVEL Certification last week

1st Plant in CNH NA 3rd Plant CNH WW

Considerable improvements to Plant KPI’s (Safety, Quality, Productivity, Shipping) Continue to empower employees (ESP, Employee Observation Form, Quick Kaizen, Plant Wide Data Collection) Staying competitive globally requires constant growth and improvement

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WHY WCM IS IMPORTANT TO SASKATOON

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QUESTIONS