Ingersoll Rand New Product Development Stakeholder ......Confidential & Proprietary information of Ingersoll Rand. Do not print, save or distribute this slide or discuss its contents

Confidential & Proprietary information of Ingersoll Rand. Do not print, save or distribute this slide or discuss its contents without prior executive approval.

Ingersoll Rand New Product Development Stakeholder Management and Communications

July 22, 2010


Safety Tip

• Don’t let your kids throw crackers to the fish when sailing off the coast of South Africa!


Ingersoll Rand Corporate Profile

Net Revenues~$13.2 Billion

EmployeesApproximately 60,000

Locations47 plants in United States28 plants in Europe18 plants in Asia10 plants in Latin America1 plant in Canada.

U.S. Executive HeadquartersPiscataway, New Jersey, and Davidson, North Carolina

Date of FormationThe Ingersoll-Sergeant Drill Company and the Rand Drill Company merged in 1905 to form Ingersoll Rand.

Presenter

Presentation Notes

Countries�Ingersoll Rand provides its products and services directly or through distributors to customers in more than 200 countries. U.S. Executive Headquarters�Piscataway, New Jersey, and Davidson, North Carolina Place of Incorporation�Dublin, Ireland


Climate Solutions

Industrial Technologies

Residential Solutions

Security Technologies

** IR acquired Trane Inc. in 2008

Presenter

Presentation Notes

Industrial Technologies Our Industrial Technologies sector provides products, services and solutions that enhance our customers' energy efficiency, productivity and operations. Our diverse and innovative Ingersoll Rand® products range from complete compressed air systems, tools and pumps to material and fluid handling systems and environmentally friendly microturbines. We also enhance productivity through solutions created by Club Car®, the global leader in golf and utility vehicles for businesses and individuals. Climate Solutions Our Climate Solutions sector delivers energy-efficient HVACR solutions for customers globally. Its world class brands include Hussmann®, a manufacturer of refrigeration and food merchandising solutions, Thermo King®, the leader in transport temperature control and Trane®, provider of energy efficient heating, ventilating and air conditioning systems, building and contracting services, parts support and advanced controls for homes and commercial buildings. Residential Solutions, a business comprised of well-known brands like Schlage® and Trane®, delivers safety, comfort and efficiency to homeowners throughout North America. Our quality products, services and solutions include mechanical and electronic locks, heating and air conditioning systems, indoor air quality solutions, advanced controls, portable security systems and remote home management. Security Technologies�Security Technologies is a leading global provider of products and services that make environments safe, secure and productive. The sector’s market-leading products include electronic and biometric access control systems, locks and locksets, door closers, floor closers, exit devices, steel doors and frames, portable security devices, decorative hardware, cabinet hardware and time, attendance and personnel scheduling systems from well-known brands like Schlage®.


Product Sampling

Truck Refrigeration

Trailer Refrigeration

Mini Splits

Building Controls

Climate Changer

Chillers

Packaged Rooftop

http://climate-sharepoint.ingerrand.com/mktg/truckprodmgmt/tru/USA Images/Pictures/Truck_T1000_Corner.jpg

http://www.bacnet.org/


i2 Horizontal Application 95% (due to being primarily a residential product)

Air O

ut

Air In

Precedent Downflow Application 80%

Precedent Horizontal Application 20%


Facility• Plant built in 1996, expanded in 2000• Total 353,000 sq ft. (32,800 square meters)

– Factory 320,000 (29,700 square meters)– Office & Lab 33,000 (3,100 square meters)

• Two Assembly Lines:– Original “L” shaped Bay Line– 2nd Gulf Line began production for E cabinet in September 2009

• Total employees: ~580 (two shifts)– Office ~77– Factory ~500– Average Age: 40 yrs.– Average Seniority: 4 yrs.

• Union Free

Bay LineNew Gulf Line

Pre i2 ramp up

Will be approximately 700 total after i2 ramp up


Precedent: Manufacturing Profile• Supply Chain Management

– 112 Suppliers– 7,600 Direct Purchased Parts

Steel 34,000,000 lbs.Aluminum 5,100,000 lbs.Copper 4,300,000 lbs.

– $143 million DM Spend in 2010• Production Details

– Configured BOM’s & High VolumeTAKT: 2.4 minutesTPCT: 6.5 hrs

– 100,000+ Unique Model Numbers Built to DateMillions of Possible Combinations

– Factory Cycle Time 3 days (ATC), 5 days (configured)– Ship Cycle 1 day for ATC in Stock, 10 days for Configured

Product– Ship up to 30 Trucks per day, 80% Flatbed / 20% Enclosed Van– *i2 Production NOT INCLUDED in any of these metrics

Focus on Mixed Model Assembly & Rapid Delivery

(2009 usage)

Presenter

Presentation Notes

Take Away: Precedent replaced Voyager 1, and Precedent is a CONFIGURED BOM product, a key strategic difference between the Voyager. 1 product and Precedent’s primary competitor, Carrier. Carrier is a hard billed product that they distribute through stocking locations all over the America's. Precedent is a configured product that is available in some sizes out of stock, but is primarily available through rapid manufacturing cycles from Lynn Haven. Lynn Haven’s core competency is as a high volume, mixed model assembly facility. Our ability to rapidly deliver a configured model provides a strategic difference between how Precedent goes to market and how Carrier goes to market. A key contributor to our expanded share growth. Testimonial to DVS from William Sekkel, (John Conover's counterpart) our Latin American Region (LAR) sales VP, has stated that one of Precedent’s key market differentiators is our ability to rapidly deliver a configured product.


NPD Process


Sound Familiar?


Integrated NPD Process

Opportunity Capture

Gate0

Project Scoping

Gate1

Planning(Commitment)

Gate2

Development

Gate3

Launch Preparation

Gate4

Launch

Gate5

T0 T1

M1

T2

M2

T3

M3

T4

M4

T5

M5

Not shown:• Business Case Review• Design Review• Reliability Review• DFMA Review• Legal Review

Presenter

Presentation Notes

Phase – describes activities required to successfully execute a project. Each phase contains specific activities appropriate for each point in the project lifecycle. Gate – a decision point used to review the activities of the previous phase in determining if the project should proceed to the next phase of the project lifecycle. Key metrics are reviewed at each gate including: Updated risk assessment Updated project financials The NPD Phase Gate Framework is identical to the Core Phase Gate Framework At each Gate Review, a decision to proceed or not to proceed is made. If the decision is made to not proceed, the team may be instructed to: Perform more work in the Phase and come back when issues are resolved Stop working on this project and redeploy to another (change in priority) Kill the project Put the project on hold Other: Project planning, execution, monitoring an controlling, and closing all take part in each of the gates. Joe does rolling wave planning Gate 0 Decision Is the opportunity attractive and aligned well enough with company strategy to justify assigning resources to further investigate? GATE 0 APPROVAL Approve Project for addition to the MGPP Gate 1 Decisions This phase is kicked off with approved PIR with resources assigned Is it clear that the business needs this project? Are the market requirements well enough understood to propose a solution? Does the proposed solution provide a compelling value proposition & address the customer/market needs? Does the business case, relative to other opportunities, justify assigning resources to a project team? Are risks understood & manageable making the project feasible? GATE 1 APPROVAL Approve Additional Resources & Extended Concept Team Gate 2 Decisions Does the project team have the resources to succeed? Does the business case, concept & project plan justify the investment for full development & testing? Should this project be executed relative to other opportunities and when? Does the project plan, schedule, & concept satisfy the business case objectives? Or address all significant risks? Does the concept provide compelling customer value & satisfy all known customer requirements? Functions are committing to execution including funding and resources for the program to succeed GATE 2 APPROVAL Approve Additional Resources & Full Development /Launch Team to Gate 4 Gate 3 Decisions Are all functional elements of the business plan updated? Are functional areas ready to announce the product (acceptable risk)? Has the solution been validated against customer expectations? Have all significant technical issues/risks either been resolved or are corrective action plans in place? Have financials, costs, sales and reliability estimates been validated; is the business plan still attractive? GATE 3 APPROVAL Permission to announce the product (with committed ship date) Gate 4 Decisions Are all functional elements of the business plan complete? Are functional areas ready to support the launch? Can the offering be repeatedly produced using the processes defined in the plan? Has the solution been validated against customer expectations? Have all significant issues/risks either been resolved or are corrective action plans in place? Have financials, costs, sales and reliability estimates been validated; is the business plan still attractive? GATE 4 APPROVAL Permission to Launch (Ship Product) Gate 5 Decisions Did the project meet business and market expectations? Have expected financial returns & objectives been realized? What lessons can be learned from this project? Project close-out GATE 5 APPROVAL Transition of Resources to Next Project & Retrospective


Program Types

• New Product Development– Large, Medium, Small

• Systems• Technology Integration• Sourced Products

– Branded Sourced (2 types)– Buy-Resale

All use the framework, but tailored for the application.

Presenter

Presentation Notes

New Product Development: 80-90% of the work/value Core of the group PMO focuses on the Large and sometimes medium size programs…very subjective. Time and resources: 1 year – 6 years with ~50 FTE End result is a product, literature, distribution in place Value could be up to $250M in revenue We do not do large programs very often, so each time it is with a new team and much of the lessons are lost. Systems: New not completed one yet. Product is a business plan and commercialization plan Time and resources: ~3-6 months with 4 FTE. Value could be up to $32M+ in revenue Technology Integration: Not completed one yet. Advanced engineering; takes new technology (new to our industry) and develops a body of knowledge for input into the NPD programs. Time and resources: 6 mo – 2 years with 3-6 FTEs No immediate value Deliverable is documentation and knowledge management. Sourced Products: Branded Trane Sourced Product - Level 1: This is a sourced product from a supplier but the product carries a Trane label, Trane supplies all pre-sale and post-sale support, holds the warranty, etc. This type of product is loaded completely into the Trane systems such as TOPSS (selection program), Lynx (pricing and ordering system), CATS (service parts system), Falcon (warranty system), and all other related system. Products are sold on a commission basis just like all other Trane products. No one should see any difference between a fully branded Trane Source Product and a product that is produced in a Trane plant. This product should have a full set of Trane literature to go along with the product. Timing & Resources: It takes about 9 to 12 months with ~ 6 FTE’s to complete a program Gross Margins: Highest Margin Potential Branded Trane Sourced Product - Level 2: (Hybrid) These products fall between Buy-Resell & Level 1. It varies a depending on the supplier and their capabilities. But as a general rule, this type of product has a Trane label on the unit, has Trane literature but is treated more like a buy-resale product. The sales offices deals directly with the supplier to work out pre-sale support, orders the product from the supplier, pays the supplier, etc. The warranty work is done by the supplier who also supplies the service parts. As mentioned, all the above is negotiable with the supplier and varies slightly from supplier to supplier. Timing & Resources: It takes about 3 to 4 months with ~ 2 FTE’s to completed a program Gross Margins:Medium Margin Potential ( varies greatly by how the deal is structured ) Buy-Resale: Can be either a local sales office agreement or a national Trane agreement. This is where Trane buys a product for a supplier and then re-sales the product. The other company’s name remains on the product. All support, warranty, service, etc. is supplied by that company. Trane has no financial responsibility for warranty. Supply agreement is the output. Timing & Resources: Very limited resources & time Gross Margins:Lowest Margin Potential


Resource Owners

Typical Stakeholder Structure

Product Managem

ent

Engineering

Operations

Supply Chain

Service

Afterm

arket Parts

Finance

Distribution

Quality

Safety

PM, you are here!

Presenter

Presentation Notes

Many silos are created. The value of program management is to acquire the team, drive consensus, unity, consistency, and communication. Each of these silos develop their own process to follow. The issue is that everything is intertwined and it is not as simple as the process would state There are layers of these silos in the team. Communication within the team is critical. Stakeholder Management is not possible without communication. Team around the world which complicated. Logistics. Travel is important. Face to face is important. Management happens within the project team and outside of the program team. Each of the team members at one point in the program at least will be a stakeholder because they will be a customer. As a matter of fact this is preferred because you want to build ownership. These stakeholders are not pure in the sense of the word. They usually can not make program decisions or redirect the course, but they do have an impact. And depending on their percirved value in the organization thay could have a heavy sway on the direction. So don’t forget tolook within.


Communication Channels

• Example from a recent large project• Team: Average 37 FTEs, 60 people total• Stakeholders:

– Process Owner: 12– Resource Owner: 5– Executive Management: 10

• N(n-2)/2 = 3,698 communication channels

How do we get anything done?


How to optimize?

Develop a team structure and communication plan that complement each other.

• Internal Stakeholder Management tools:– Team rules– Team meetings– Dashboards with allocation of Program Parameters

Product Critical ParametersScheduleRisks

• External Stakeholder Management tools:– Monthly updates to executive stakeholders– Monthly reports to team– Gate Reviews (and dry runs)


Precedence Diagram

• Objectives:– Develop dependencies for schedule– Understand the critical path– Gain full understanding of the interactions

Take care of the customer!

Gate 0 to Gate 2


Internally FocusedSystem

EngineerProgram Manager

Subsystem Leader

Component Engineer

Analysis

Lead Mfg Eng

Reliability

Sourcing Manager

Quality Engineer

Finance

Prod. Manager

Service

Mech. Designer

Subsystem Engineer

Core Team

Design Team

System Integration

Presenter

Presentation Notes

Reminder: There are stakeholders within the team. Sooner or later each member of the team is and should be a stakeholder…..they certainly are a customer Note that the chart is shown from right to left instead of top to bottom. This is because the most senior team or the one with the most authority is not necessarily the program manager. Each has a role to play. Most look to the Program manager for guidance. Sometimes a referee is an appropriate analogy, other times a coach or captain, other times a secretary. Ship captain and navigator is the preferred analogy. Set up the team such that there is a point of contact identified and that it is explained to the team who they go to for information or wquestions first. Ideally the team members have all the information that they need to do their job when it is time to start their job , but that is not reality. The point of contact must manage that communication at a level that is effective and it is critical that there be someone on sight to manage that. T\he farther away the team member is the harder it is to communicate. Distance does matter….as do relationships, but that is for another time. For team meetings each level will be run with on the people who need to be there are invited. This typically happens at each of the levels shown. The MFG organization is not adequately represented. But in order to hold go constructive meetings in this fasion the team needs to be able to make decisions on their own, so how is that done.


Dashboards

Allocate customer requirements and authority

System

Air Subsystem

Refrig Subsystem

Heat Subsystem


Product Picture Here

Program Objectives• Replace Precedent product

− 2010 HCFC phase out− ASHRAE min efficiency

• Reliability and quality improvement

• Margin growth• Minimize cabinet growth• Increased factory and service

safety• Implement the product in Lynn

Haven, FL.

CTQ’sEfficiencyCapacityFootprintCost/Margin

R/Y/GG

G

R

Program Schedule

Project X Phase 2Updated: July 7, 2009

Y

G

2008 20092007 2010

P1 Design Review #2

Design Review #3

P2 M2.5 P31st Ship

8 weeks behind plan due to BOM and equipment run off delays. The risk to 1st

ship is low. Manufacturing Prototype is at an elevate risk due to part delivery.

Financial SummaryCurrent P2

NPV(M) $28.3 / $100.7IRR 42.9 % / 98.8%Margin Rate 38.3 % / 44.2 %

Capital (M) $12.1 / $ 12.9Expense (M) $ 3.7 / $ 2.6

86% Complete

R

R

G

R

G

G

Y

Design Review #4

Design Review #4b

ReliabilityCurrent Target Baseline

Reliability 85.8 83.3 74.1DIW$/Unit $21.17 $19.44 $33.69RIPU 0.156 0.180 0.292


Program Total Spend People

Total Experimental (BAC)Capital: $ 0Expense: $ 1.0 M

Total Tooling/Equipment (BAC)Capital: $ 11.9 MExpense: $ 2.1 M

Notes:• We continue to have a large,

unplanned number of engineers and designers actively working on the design. Rework of the design and BOM has continued much longer than anticipated.

Notes:• Spend rate indicates that we

are about 7-8 weeks behind on equipment run off and related expense items for the new line. Run off of the equipment and process will continue through July.

Notes:

• Due to the latest shipping and handling results, more testing will be required. This MAYresult in additional unplanned expenses consumed. A 3rd

supplement may be required.

Financial

Y Y

YY

<Link>

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Updated: July 7, 2009

http://itrane/portal/server.pt/gateway/PTARGS_32_0_222_0_-1_47/http;/portalcollab;11930/collab/do/document/overview?projID=121132&documentID=209494






Lessons learned

• Identify and protect the customers• Start at the bottom up. Allocate decision authority at

the lowest level. • Build consensus from within.

– Resolve team conflict first. Make absolutely sure the team has buy in (the core team).

• Delegate stakeholder buy in.• Verify.• No surprises.• Go for it!

Presenter

Presentation Notes

Allow the core team to get buy in from management in their function. This will likely be only one level up. However, many times the reviews are held with senior leaders. You do not want to get caught in a situation where the resource owners you depend on were not informed of a critical decision, program issue, or timing change. Care must be give to socialize the information so that there are no surprises. This sometimes results in conflict, but it is usually always best to take that head on when you are in control of the situation.


Lessons learned

• Stakeholder Management is a critical element to success.

• Good management leads to trust– Honest– Consistent– Empathetic– Don’t forget the team.

• Trust makes your life easier.


Ingersoll Rand New Product Development Stakeholder ......Confidential & Proprietary information of Ingersoll Rand. Do not print, save or distribute this slide or discuss its contents

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