1 2 3 Ps u Purpose: –Introduction to Six Sigma methodology and roll out of I&CIM vision to all employees of Europe u Process –Presentation & exercises.

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Slide 2 1 Slide 3 2 3 Ps u Purpose: Introduction to Six Sigma methodology and roll out of I&CIM vision to all employees of Europe u Process Presentation & exercises u Product Common understanding of Six Sigma Slide 4 3 Voice of Stake Holders Slide 5 4 I&CIM Mission,Europe Aggressively Change the Way We Do Business with Sustained Improvements Slide 6 5 What is Quality Quality is a state in which Value Entitlement is realized for the customer and provider in every aspect of the business relationship In the world of six sigma entitlement means that companies have a rightful level of expectation to produce quality products at the highest possible profits; for customers entitlement means that they have a rightful level of expectations to buy high-quality products at lowest possible cost. Slide 7 6 The Absolutes of Excellence u Focus: Your Customer u Performance Goal: Do it Right the First Time u Method: Innovation & Continuous Improvement u Control: Customer Feedback u People Caring u Style: Teamwork u Reward: Recognition and Security Slide 8 7 Business Performance Slide 9 8 How do we work Various Internal Process Customer Requirement + u Quality u Delivery u Price u New Launches Performance at Customer PPM= 30-40 Price = As per Customer 99 % SOP On time Loss Internal Performance FTQ = 10,000 -30,000 Cost = Red Supplier = We dont Know Design FTQ= 200,0000- 3000000 We lose More As We Grow More Slide 10 9 Where we lose money Traditional Quality Costs Hidden Quality Costs Lost sales Six Sigma reveals hidden capacities and capabilities Lost Opportunity Late delivery Engineering change orders Long cycle times Expediting costs Excess inventory (intangible) (Difficult to measure) Lost Customer Loyalty More Setups Customer Sat Field Modifications Customer Productivity Loss Lengthy Installs Employee Morale, Productivity, Turnover T&L Overtime 15-20% of Revenue Scrap Rework Inspection Warranty Rejects (tangible) (Easily Identified) 1.5 % of Revenue Slide 11 10 How much we lose 40% 35% 30% 25% 20% 15% 10% 5% 3.4233 6210 66,807 308,537 691,462 Cost of Failure (% Sales) Defects per Million 6 5 4 3 2 1 Sigma If X is a 3 Company, Cost of Failure is Estimated to Be at Least 15% of Sales A $0.8 Billion Cost Reduction Opportunity in Europe! Slide 12 11 How do we Improve today Random Upstream Down Stream Higher Lower Down StreamLower Hierarchy Present Focus Big $ Improvement in Down Stream Process & Lower in Hierarchy gets PULLED by the Upstream process & Higher in Hierarchy Savings are recorded but does not HIT the Profit & Loss A/C Improvement are incremental & unsustainable in Nature & we Need BREAKTHROUGH & sustainable Upstream Down Stream Higher Lower Slide 13 12 Change Slide 14 13 What to Change We all agree there is a Need to change the way we work But we need to Bring Speed in the change Change the thinking from Cost to profit Dont look at the cost of the person watering the plants, But look at the impact of the process on the results. $ There are many Upstream Process apples still waiting to get picked $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $$ $ Slide 15 14 What is the changed methodology Innovation & Continuous Improvement Methodology (I&CIM) is a Xs common global philosophy of doing business by implementing a rigorous, structured & Data driven Continuous Improvement Methodology which Focus on the Customer by driving perfection in the Business processes through Understanding & Eliminating All Sources of Variation. Business Process Variation is a termite in our growth Slide 16 15 Success & Results Slide 17 16 Major Projects in Europe u Claim Management process for Model Year & Engineering Changes u Connection Systems Capacity improvement u In-sourcing of components u Tapping Utilization u Cutting Machine Productivity u Costing Accuracy u Trucking efficiency u Cost of Value Streams u Design Process optimization u NC Cost in Mechatronics u Over dues A/C Receivables u Europe Wide FTQ reduction ProjectsEstimated Savings u $30-50Mi. u $2-3Mi. u $3-4Mi. u $1Mi. u $1-2Mi. u $3-4Mi. u $4-5Mi. Slide 18 17 X Global Performance 1.13% We are Here 2002 Achieved Plan Slide 19 18 What is Six Sigma Slide 20 19 The Many Facets of Six Sigma Tools Metrics Leadership Process Focus and commitment to quality must be driven by top leadership Leadership must be fully engaged and accountable for success Focus is on statistical process capability and process variation analysis Products must be designed to be manufactured within process capability Process capability must be quantified Goal is defect free products and processes Focus is on process capability (rolled throughput yield) rather than end of line yield All decisions must be data driven Six Sigma provides classical problem solving tools enhanced with a fundamental knowledge of statistics and variation Slide 21 20 Target Average I Shot the Boat!! Supplier Customer Dissatisfaction Boat is still there ?? Customer Organisations focus on internal performance Business Performance Slide 22 21 Target Variation of the Upstream to downstream processes creates variation to Customer output Customer Experience Slide 23 Target Customer Specification Target Customer Specification 1 2 3 A 3 process because 3 standard deviations fit between target and spec 3 0.27% Defects Before What Is Six Sigma After 6 No Defects! Reducing Variability Is The Key To Six Sigma Slide 24 23 Why Six Sigma 6 sigma Increases probability of shipment of defect free products No of Parts in the product Product Quality Level Quality as a Function of Part Count For Average Part Quality Level PPMs Slide 25 24 Purchased Material Lot Reject Rate IRS - Tax Advice (phone-in) (140,000 PPM) 7 Sigma Scale of Measure 1,000,000 100,000 10,000 1,000 100 10 1 PPM Restaurant Bills Doctor Prescription Writing Payroll Processing Order Writeup Journal Vouchers Wire Transfers Airline Baggage Handling Domestic Airline Flight Fatality Rate (0.43 PPM) (with 1.5 shift) Best-in-Class Average Company 345621 Why Today 3 6 Adds Reliability and Competitive advantage Slide 26 The Standard Deviation 1 T USL p(d) Upper Specification Limit (USL) Target Specification (T) Lower Specification Limit (LSL) Mean of the distribution ( ) Standard Deviation of the distribution ( ) 3 1 Sigma - 68% 2 Sigma - 95% 3 Sigma - 99.73 % (X X) 2 n = Slide 27 6/1/2014Corporate Initiatives Group - Europe26 What Variation Means to Business Higher Production Cycle Time Reduction Lower PriceInventory Reduction LHHLHLHL u Using mean-based thinking, we improve average performance, and we break out the champagne... u But our customer only feels the variance and cancels the next order! u Shifting of the mean require heavy capital investment and does not significantly reduce the waste u Variation is enemy, just kill it. Slide 28 Stability Factor Plant Capacity = 1100 / Year Q1 Q3 Q1 Q3 Stability Factor = Q1/ Q3 SF 0.9, Technology Issue Capacity Gain Plant Capacity = 2000 / Year IMPACT Mfg Cycle Inventory Turns Promises Kept Investment Efficiency Labor Productivity Delivered Quality (PPM) Stability factor can unfold hidden factories A Six Sigma Best Practice For Generating Free Capacity... Q1 = Quartile 1 (25%) Q3 = Quartile 3 (75%) Slide 29 28 The Focus of Six Sigma Y Dependent Output Effect Symptom Monitor X 1... X N Independent Input-Process Cause Problem Control f (X) Y Would you control shooter or target to get the Gold Medal at Sydney Slide 30 29 The Inspection Exercise Task: Count the number of times the 6th letter f the alphabet appears in the following text. The Necessity of Training Farm Hands for First Class Farms in the Fatherly Handling of Farm Live Stock is Foremost in the Eyes of Farm Owners. Since the Forefathers of the Farm Owners Trained the Farm Hands for First Class Farms in the Fatherly Handling of Farm Live Stock, the Farm Owners Feel they should carry on with the Family Tradition of Training Farm Hands of First Class Farmers in the Fatherly Handling of Farm Live Stock Because they Believe it is the Basis of Good Fundamental Farm Management. Slide 31 30 The Impact of Added Inspection 1,000,000 ppm 3.4 ppm 6 ppm If the likelihood of detecting the defect is 70% and we have 10 consecutive inspectors with this level of capability, we would expect about 6 escaping defects out of every 1,000,000 defects produced. You can save your self by producing quality not by Inspection Slide 32 31 Six Sigma As A Goal PPM Process Capability 2345623456 308,537 66,807 6,210 233 3.4 Defects Per Million Opportunities Distribution Shifted 1.5 Slide 33 FTQ performance of manufacturing quality What are the over dues as % of the total Receivables What is the shipping window of the suppliers What is the % of pending payables What is the % compliance to the production plan What is the % compliance of the project completion date Process Performance 5000-10000 PPM Slide 34 33 Implementation Slide 35 34 6 Sigma Methods Manufacturing, CS, PCL Engineering Sales Purchasing IS&S HR Finance... Can Be Applied To Every Business Function Where in X.. Slide 36 35 Philosophy Behind Implementation We dont know what we dont know We cant do what we dont know We wont know until we measure We dont measure what we dont value We dont value what we dont measure Six Sigma is a process of asking questions that lead to tangible, quantifiable answers that ultimately produce profitable results Slide 37 36 Six Sigma Road Map Customer RequirementsBusiness Requirements Organisation BusinessProcess Weak Business Process Cant Meet Customer Requirements 1 765432 8 Identify Customer Requirements Identify Business Requirements Identify Broken Processes Allocate resources and execute six sigma project Permanent repair the process Monitor the business performance as seen by customer Broken Process Slide 38 37 Six Sigma Road Map Train Green Belts Grow MBBs Mentor, Coaching & Closure of Projects Keep Clear Focus Celebrate -Reward & Recognition Train Black Belts Support with Organisation Structure Get Master Black Belts Decide the Business Strategy Train Green Belts Right Structure can only make it successful Slide 39 38 Change Process Convincing Self Convincing Others DMAIC/DFSS Process Break Through Improvement 1 2 3 4 Point 1 & 2 contribute 70-80% of the success Slide 40 39 Organisation Slide 41 40 Black Belt / Green Belt Coach/ MBB Project Target Y Financial Reviewer Organisation Six Sigma Structure Define clear roles of the people Slide 42 41 Who Are These People? u Green Belt: 5 days of training Focused on DMAIC Knowledge of PCSs Part time team member u Black Belt: 15 plus days of training Normally, highly knowledgeable on a particular process. Respected by peers Full time position, managing 3-6 DMAICs and PCSs A rising star Slide 43 42 Who Are These People? (continued) u Master Black Belt: Quality Professional ~8 weeks of training including electives The mentor to the BB The facilitator of the entire process Supports specific areas of the company Can support 6-8 BBs, 12-20 DMAICs Responsible for validating the linkages of the PCSs for his/her area Does not report to any process owner u Sponsor: The process owner Supports the BBs in his/her area Removes barriers for DMAIC teams Responsible for the teams success Accountable for SS in his/her area u Champion: Responsible for multiple processes Boss to a number of Sponsors Provides the linkage to the business at the highest level A member of Jim Spencers staff Slide 44 43 Who Are These People? (continued) u The Business Leader Jim Spencer Ultimately, responsible for the quality of a particular business function u The Quality Leader Mentor of the Business Leader with regards to Six Sigma Champion- Site Manager Project Name: Reduce FTQ Sponsor- Plant Manager MBB- Deployment Champion- BB- GB- Slide 45 44 Project Selection Slide 46 45 COST $$$$ Scrap Tickets Labor for Replacement FTQ or RRPPM Defect Start-Up (Start-Over) Source Scrap Tickets Unplanned Downtime Labor for Replacement Quality Problem Failure Mode Project Selection Slide 47 46 Project Selection Functional Baskets Gets filled by the Precipitated Cost of the Business Process Sales 7.3% Engg 8.8% PCLMfg 21.4 % CsIT 1.6% HR Pur 53.1 % Slide 48 47 Project Selection Slide 49 48 Project Selection Slide 50 49 Project Selection BB Project Slide 51 50 Certification Process Slide 52 51 Certification Map Black Belt Pass all tollgate review sessions No Improve Tools and Application to Project Yes Technical Certification A A Project Completed and Final Report Submitted and Approved by Sponsor No Complete Project and Submit Final Report Yes Six Sigma Black Belt and I & CIM Certification 1week training per month 4 - 6 months avg. Six Sigma BB Training Project Application Six Sigma Slide 53 52 Certification Map Green Belt 10 weeks (1 day on / 9 days off) 3 months avg. Six Sigma GB Training Project Application Six Sigma Pass all tollgate review sessions No Improve Tools and Application to Project Yes Technical Certification A A Project Completed and Final Report Submitted and Approved by Sponsor No Complete Project and Submit Final Report Yes Six Sigma Green Belt and I & CIM Certification Slide 54 53 DMAIC Problem Solving Methodology: An Overview AnalyzeMeasureImproveControl Team Chartering Process Mapping The Business Case Preliminary Problem Statement Project Scope Deliverables Roles Definition of Quality Types of Customers Translate Customer Needs Into Specific Requirements Methods of Collecting Customer Requirements Voice of the Customer Analysis Process Definitions Connecting the Customer to Your Process Business Process Mapping Mapping Guidelines Benefits and Applications of Process Mapping Customer Focus Define Slide 55 54 DMAIC Problem Solving Methodology: An Overview (cont.) DefineAnalyzeImproveControl MeasurementVariation Data Collection Why Measure? Input/Output/ Process Measures Effective and Efficiency Measures Understand Variation is the Enemy Common Cause/ Special Cause Why, When, and Where? Guidelines of Data Collection Understand Qualitative and Quantitative Data How to Collect Data Develop Data Collection Plan Measure Slide 56 55 DMAIC Problem Solving Methodology: An Overview (cont.) Define Measure AnalyzeImproveControl Process Analysis And Focus Root Cause Analysis Quantify Opportunity Read, Interpret, and Construct Visual Displays of Data Process Data Collection (On- Going) Moments of Truth Analysis Value-Added Analysis Focus on Vital Few Problems Charter Revision Cause & Effect Analysis Verifying Root Causes are Real Focus on Vital Few Problems Determine Opportunity Display/Packa ge Opportunity Data Analysis Slide 57 56 DMAIC Problem Solving Methodology: An Overview (cont.) DefineMeasure Analyze Improve Control Generate Solutions Select Solutions Implementation Planning Solution Parameters (Solution Statement & Solution Criteria List of Possible Solutions Validated Solution Cost/Benefit Analysis Business Proposal for Improvement Should Be Process Map Piloting Project Planning Change Management Strategy Slide 58 57 DMAIC Problem Solving Methodology: An Overview (cont.) DefineMeasureAnalyzeImproveControl DocumentationInstitutionalize Standards Control Charts Measurement Plan Developing Procedures Procedure Sheet Template Systems and Structures Problem-Solving Structure Continuous Improvement Attitude Monitor the Process Slide 59 58 200? Slide 60 59 Results and Plan Slide 61 60 Documents Slide 62 61 Contract Sheet Slide 63 62 Saving Sheet