Targeting Customer Service and Market Growth Using Lean Methodology Presentation by George Foss, CEO High Performance Manufacturing Consortium Conference.

Targeting Customer Serviceand Market Growth

Using Lean Methodology

Presentation by

George Foss, CEO

High Performance Manufacturing Consortium ConferenceMay 13, 2004 -- Oakville, Ontario

3L Filters Ltd.CambridgeOntario

Presentation Topics

Company Profile

The Need to Change

Why Now?

‘Front Office’ Initiatives

Measured Improvements

Future Vision

What We Do

Engineered Filtration Solutions for Industrial and Nuclear Power Plant Applications

Markets Served

General Industrial

20%

Water Treatment

20%

Waste Management

5%

Automotive 5%

Aviation 5%

Nuclear Power Plants 30%

Petrochemical & Industrial Chemical

15%

• Established in 1965

• Head office and 2 manufacturing plants in Cambridge, Ontario, Canada.

• Total 60,000 ft2 manufacturing capacity

• Design, development, fabrication and servicing of high value-added liquid filtration and separation systems

• Reputation for fast customer response

Company Profile

History of OwnershipE

stab

lishe

d by

Joh

n K

adar

Can

adia

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ldin

g co

mpa

ny

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ompa

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uys

maj

ority

Cur

rent

ow

ners

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pany

Acq

uire

d A

llan

Pip

e Fa

b (1

00%

)

and

Urb

an In

dust

ries

(50%

)

1989 20001965 19951984

History of Market StrategyA

viat

ion

fuel

filte

ring

(Can

ada)

Nuc

lear

app

licat

ions

(Can

ada)

Gen

eral

filtr

atio

n

(Eur

ope

& P

acifi

c R

im)

Nuc

lear

app

licat

ions

(Chi

na)

5 m

arke

ts i

n 15

cou

ntri

es

2000 20051960 1970 1980 1990

Keys to Success

Complementary partnership skills…

QualificationsMarket Focus

Daily Activities

Bob Goel PresidentMSc (1972), P.Eng. (1976), PhD (1977)

Highly engineered & nuclear products

Technical proposals &

accreditations

George Foss CEO CMA (1975), BusAdmin (1984)

Conventional commercial

product lines

Operations Manager for

2 plants

State-of-the-art Engineering & Manufacturing

In-house design, analysis and manufacturing

Design Seismic Analysis Stress Analysis Manufacturing

Core Competencies

Nuclear Products

50% of revenue

Market Focus

CANADIAN

• OPG Bruce-A

• OPG Bruce-B

• OPG Pickering-A

• OPG Pickering-B

• OPG Darlington

• NBEPC Point Lepreau

• HQ Gentilley

• Maple-1 (AECL Chalk River)

• Maple-2 (AECL Chalk River )

INTERNATIONAL

• Cordoba Argentina

• KEPCO Wolsong Unit-1 Korea

• KEPCO Wolsong Unit-2 Korea

• KEPCO Wolsong Unit-3 Korea

• KEPCO Wolsong Unit-4 Korea

• Cernavoda Unit-1 Romania

• Qinshan Unit-1 China

• Qinshan Unit-2 China

• Washington Power

• North East Utility

Nuclear Power Plants Served

Disposable Radioactive Liquid Waste Treatment Filter for Nuclear Stations

Design & Engineering

Test & Performance

Manufacturing & Assembly

Nuclear Products

Permanent Nuclear Filter Vessels with Replaceable Basket

Primary Heat Transport Filter

Moderator System Filter

PHT Gland Seal Filter

Nuclear Products

Disposable Filter Baskets for Miscellaneous Nuclear Filters

Shield Tank & End Shield Cooling System Filter Basket

Pickering-A NGS

Spent Fuel Bay Basket For Pt. Lepreau NGS

PHT Filter Basket for Darlington NGS

PHT Gland Seal and F/M Filter Basket for Pickering NGS

Nuclear Products

4000 SCFM Single Tower Vapour Recovery Dryers3831 DR-1,2,3,4,7,8,9,10

Nuclear Products

600 SCFM Twin Tower Vapour Recovery Dryers

Nuclear Products

Market Focus

Commercial Product Applications

Engineered to Order

50% of revenue

• All major engineering consulting companies– Fluor Daniel– Stone and Webster– SNC Lavalin– Bechtel– Kellog Brown and Root

• All major Refineries and Chemical Plants– Exxon, Shell Oil, British Petroleum, Petro Canada, Chevron– Formosa Chemical, Formosa Plastics, Dow Chemical

• Many industrial and automotive in-plant filtration applications

• Aviation installations

Industrial Clients Served

Vertical Filter/Separators for Tank Farms

• Compact design• Code Qualification• Simplified Maintenance• Field Proven• High Performance

Compact V and VV Series Filter/Separators comply fully with API Bulletin 1581, Third Edition, requirements for Class B equipment.

Compact Filter/ Separator Vessels for Fixed Installations

Aviation Products

Filters with superior performance and reliability for assuring clean, dry fuel, normally used at the final point in an aircraft fueling system.

Custom Designed 3l-400-20

Fuel Monitor

Aviation Products

Fuel Monitors for Mobile Refueling Trucks

Filters designed to remove particles and coalesce emulsified water from hydrocarbon fluids.

The horizontal filter/separator design provides more convenient access to the

cartridges than the vertical design.

Aviation Products

Horizontal Filter / Separator / Monitorsfor Skid Refueling

Components

They can be constructed to

house numerous cartridges

within a variety of diameters to accommodate

flow rates.

Vertically oriented filters using industry-standard pleated paper media to remove particulate to 0.5 microns.

General Industrial Filtration

VF Series Fluid Filters

Vertically oriented filters designed to remove solid contaminants from a liquid stream using standard spunyarn cartridges which create effective separation using depth filtration. May also accommodate pleated elements.

Water / Beverage Industry

FWH Micron Filters

Multibag Filters

As standard or custom design, the BF series filters are able to handle high flow rates and large concentrations of particulate for a wide range of liquids.

Constructed to ASME Sec.VIII, MBF series filters are available as code or non-code vessels.

Paint / Ink Industry

Dehydrators

Repack Cartridges

Horizontally oriented vessels containing replaceable coalescent filter packs. A sump collects separated water and filtered contaminant for easy removal.

Pipeline Course Filtration

The Need for Change

The old ways weren’t working

Target The Vision

Corporate Issues

• Responsiveness to customers

• Availability of skilled engineering personnel

• Employee loyalty

• Rapid changes in technology

• Quality

• Market focus

• Trend forecasting

• Profitability

Market Issues

• Price pressures

• Rising Canadian dollar

• Need for global reach

• Declining customer loyalty

• Customer convenience

• Customer resource depletion

Where to Focus?

• Manufacturing?–Currently as efficient as feasible–Engineer-to-order production entirely

dependent on 'front-end' processes

• Engineering!–Greatest opportunity for improvement–Sales performance directly affected

How to Improve?

Apply principles ofLean Manufacturing

Step #1

Value-Stream Map Analysis

Bid accepted

?

Bid pkg. assembled

The Old Way

Costing done

BOM accurate

?

Preliminary design done

Data complete

?

Specs. collected

Customer Sales EngineeringEstimating / Purchasing

Staff available

?

Quotation requestedQUOTE

NONOSale Lost

NO

Material ordered

BOM accurate

?

Purchase Order placed

Detailed design done

Data complete

?DESIGN

Order processed

RECEIVING -- FABRICATION -- TESTING

Material correct

?

Drawings accurate

?

BUILD

NO NOEngineering

Change

Preliminary design done

Quotation requested

NO

NO NO

Purchase Order placed

Detailed design done

10 weeksTypical Time Frame

Why Now?

TIME

1960s

1980s

2000s

PR

OF

ITA

BIL

ITY

1990s

2002Economic Boom of China & Pacific Rim

1970s

Strategy

1. Get closer to the Customer

2. Eliminate internal layers that waste time and money

3. Build on in-house product knowledge

–Manufacturing delivery lead time

Tactics

• Standardize products and processes

• Empower Sales staff

• Improve company performance

• Require payback in less than 1 year

–Engineering throughput–Quotation success rate

–Quality control

errors

response time

Cost competitiveness

The Steps

Adopting a new Lean

methodology…

1) Management Commitment

• Reviewed technology marketplace–Partnered with established engineering

software development firm–Applied a proven technology platform

• Selected 13 product families for:–Detailed Design–Bill of Materials–Fabrication Planning–Costing

2) Defined Business Requirements

• Analyzed requirements for:– Sales – Engineering– Purchasing– Manufacturing

• Identified problems and constraints– e.g. lack of internal qualified engineering resources

• Collaborated with vendor to:– Create a simple web user interface– Formalize input / output documentation

3) Built Knowledge Database

Configuration ControlRules & Data

AssemblyConfiguration

ComponentParameters

4) Integrated with Operations

• Connected to existing network

• Wrote and tested ERP link to access:–Customer records–Cost standards (purchasing & processing)

• Trained staff–Sales to operate it–Engineering to maintain it

Overview of Implementation

• Multiuser environment suited for operation by non-technical staff

–Custom interface for specification input–Web-based, works on existing PC network–Server with embedded CAD engine, SQL

database, document output translators–Generates detailed 3D CAD assembly–Transfers B.O.M.s to ERP for costing

Intuitive Interface Product Specs

Automated Design 3D CAD Assembly

Costing Detail B.O.M. & Routing

Documentation Quote Drawing

Sales Collaboration 3D Reference

Automation Product Examples

Component Detail Welding Detail

Innovation Is Fostered

With more time for Engineering to improve product, new inventions

yield new competitive advantage…

Compare Old & New Closures

Time-ConsumingSwing Bolt

Effortless patentedEasy Access

Applications

• Sales Quotations– Rapid product configuration and costing– Design visualization and approval documents

• Purchasing - Accurate Bill of Materials

• Production Engineering– 3D CAD assemblies delivered in minutes– Last-minute design check, quick addition of

custom product details where necessary

Improvements (on Commercial Product Lines)

• Reduced average quote turnaround from 14 days to 3 day

• Increased sales success rate 8% to 25%

• Reduced pre-production engineering work 90% with generated CAD model

• Reduced schedule conflicts between standard & custom engineering by 40%

• Product quality delivery lead time

Future Vision

• Improve ERP interface (or replace ERP)

• Generate all low-level manufacturing instructions to improve costing detail

• Expose system to external Internet for access by distribution networks

• Add more flexibility for integrated system product (e.g Skid Packages)

Skid Package Example

Conclusions

• Targets for Lean were met– Commercial products and processes now

standardized– Company efficiency improved dramatically– Initiative payback less than 1 year

• A need for continuous improvement– Further streamlining of processes– Introduction of new products– Accommodating changing legislation

Contact Information

George Foss, CEO

3L Filters Ltd.427 Elgin St.Cambridge, OntarioTel: (519) 621-9949 ext 330Email: [email protected]

Targeting Customer Serviceand Market Growth

Using Lean Methodology