Andrew JonesMay 2011

Trade showsWe’ve manufactured for many of the world’s most prestigious car brands but remain dedicated to the aftermarket. That’s a big difference.

100,000+ parts for 99% of Europe’s most popular cars. 5,600 delivery points in 136 countries. Europe’s largest OE Quality aftermarket manufacturer.

Our complete aftermarket range of OE quality products covers 99% of Europe’s most popular cars. That’s another big difference.

The Klarius Group employs 1,200 personnel across Europe, and has an annual turnover of 350 million Euros

Klarius Group - Key Customers

OE/OES

Fast Fit

Independent Distributors

Klarius Racing

National Distribution

Buying Groups

Klarius Group - OE Quality

OE quality standard of Klarius and QH

products

All our products are produced to reach or to exceed the OE quality. The OE quality is Klarius-QH standard of manufacturing. The continued success in the supply of original equipment (QH products) reflects the Group’s consistently high quality standards across the whole product range.

Klarius Group - In detail

• Headquarters in Manchester (UK)

• 1200+ Employees

• 5 Manufacturing Plants– 3 in UK– 1 in Spain,– 1 in Germany

• 5 Research & Development & Technical Centres

– 3 in UK– 1 in Spain– 1 in Germany

Klarius Group is the largest European manufacturer of aftermarket car parts today. The Klarius Group operates five high-volume Manufacturing Plants, a Research & Development Centre, four European Technical Centres, eight International Logistics & Distribution Hubs, and eighteen national and regional Stock Warehouses based across Europe. Klarius Group Headquarters are located in Manchester (UK).

Klarius Group• Klarius Group supplies: Aston Martin,

GM, Jaguar, Land Rover, Nissan, Renault, Peugeot, VW and many others...

• Major European shock absorbers manufacturer (Bilbao, Spain)

• Largest European type approved exhausts manufacturer (Cheadle & Lancaster, UK)

• Key European manufacturer of OE water pumps (Colwyn Bay, UK)

• Major European rotation electrics manufacturer (Oranienburg, Germany)

Klarius Group Europe’s largest manufacturer of aftermarket car parts

Technical Centre Missions

Klarius Group –Technical Centres

• Klarius Group designed, tested, manufactured and introduced over 5100 new parts so far this year

• Technical centres for Emission Control, Suspension, Braking, Water pumps, Rotating Electrics, Transmission

• Responding to the new market applications

• Conforming to specific legislation• Certified by customers• Lean responsive manufacturing

Klarius Group - World class logistics

We’ve manufactured for many of the world’s most prestigious car brands but remain dedicated to the aftermarket.

It’s one thing to manufacture the parts and another to have them available, but to deliver them on time is a big promise to make.

We don’t just make car parts!

Klarius Group – Logistic organisation

European Distribution OrganisationEuropean Distribution Organisation

§ 8 International Logistics & Distribution Hubs:- France (Lille)- Germany (Unna)- Ireland- Spain (Bilbao)- The Netherlands- UK (Hinkley & Cheadle)

§ 18 National/Regional Warehouses:- France - Germany - Spain (Madrid)- Ireland- Netherlands- UK

Klarius Group now offer over 100,000 parts, covering the majority of the European Car Parc, supplying over 80,000 parts every day, to over 5,600 delivery points in more than 136 countries.

Klarius Group – Broadest Aftermarket product offering

• OE Quality manufacturer

• 97% of the European car parc available

• 5 600 delivery points in more than 136 countries

• 80 000 parts delivered every day

• 1 Klarius QH part fitted every second

ProduitsKlarius Group 7 family product ranges

BrakesBrake DrumsBrake ShoesBrake DiscsBrake PadsBrake CalipersBrake CablesBrake HosesBrake Cylinders

Auto ElectricsAlternatorsDynamosStartersCommercial Ignition

TransmissionClutch Kits & ComponentsDual Mass FlywheelClutch CableClutch Master CylinderClutch Slave CylinderConcentric Slave CylinderCV BootDriveshaftCV JointsWheel Bearing KitsEngine mountingsCablesSpigot bearingsUniversal joints

Emission controlExhaust Tubes & SilencersAccessories / MountingsCatalytic ConvertersDiesel Particulate Filters

Steering & SuspensionSuspension Arm / Ball JointsSuspension BushesStabilizer LinksTie Rod EndDrag LinksTop Strut Mounting Kits & ComponentsSuspension SpheresSteering RacksShock AbsorbersCoil SpringsGas Springs

EngineDrive BeltsDrive Belt KitsTiming BeltsTiming Belt KitsTensionersCrankshaft PulleysEngine Mountings

CoolingWater PumpsThermostatsRadiator CapsRadiatorsIntercoolerExpansion TankAir Conditioning Components

14

Principles of the Klarius Business System

The Customer defines value

Deliver Value to Customers on Demand

Standardize and Solve to improve

Transformational Learning requires deep personal experience

Mutual Respect and Shared Responsibility enable higher performance

Basic ideals derived from decades of experience

15

Deliver Value to Customers on Demand without waste

• Flowing 1-by-1 at “Takt Time”• Zero Defects is achievable• Customer Pull triggers action• Increasing Velocity motivates improvement

16

Standardize and Solve to Improve

• Standard Work, the current best known way• Root cause problem solving vs. firefighting• Deming Cycle of Plan, Do, Check, Act• Constant improvement is sustainment

POLICYUNTRAINED

LACK OF MOTIVATION

LOW STAFFING

APPROVALS

WORK FLOW

INSTRUCTIONS

NO DUE DATES

NO FOLLOWUP

SCHEDULE

COMMUNICATIO

NSUPPLIER

LATE POOR COORDINATION

POLICYUNTRAINED

LACK OF MOTIVATION

LOW STAFFING

APPROVALS

WORK FLOW

INSTRUCTIONS

NO DUE DATES

NO FOLLOWUP

SCHEDULE

COMMUNICATIO

NSUPPLIER

LATE POOR COORDINATION

WRONG FUEL IN CAR

UNTRAINED

LACK OF MOTIVATION

LOW STAFFING

APPROVALS

WORK FLOW

INSTRUCTIONS

NO DUE DATES

NO FOLLOWUP

SCHEDULE

COMMUNICATIO

NSUPPLIER

LATE POOR COORDINATION

17

Learning by Doing

•Rapid Improvement Events

–A highly effective way to practice change.

–How many will we have to do to be

expert at change?

Postponed perfection is the enemy of improvement

Required deep personal experience.

Learn by doing.

How many golf books did Tiger Woods read to get that good?

18

Deliverables

Agree on the Key Performance Measures

Value Stream Mapping (Current, Ideal, Future)

Baseline current performance against Key Performance Measures

Rapid Improvement Plan (DO IT!!!!!)

conducted with leadership team

Value Stream AnalysisA

pp

roach

for

Su

ccess

19

A3 THINKING TITLE:_______________________________________________

Date Started:_______________ Current

Date:______________

Team:__________________________________________

Review Team:___________________________________

1. Reasons for Action 4. Gap Analysis 7. Completion Plans

     

2. Initial State 5. Solution Approach 8. Confirmed State

     

3. Target State 6. Rapid Experiments 9. Insight

     

20

Lean Implementation In Klarius

• I am the Leader in the organisation creating the culture ;

• LEAN is our way of life• Some Examples

• Internal manufacturing projects,

• New Product Development Project

Manufacturing Project• Problem; • Declining sales per part number• More and more part numbers are required to sustain the volume• Large batch sizes were unrealistic• Too much working capital • Poor customer service• Solution• Use Lean tools,• Kanban system for material flow• Setup reduction on each and every process (bottleneck first)• Drive quality improvements• Employee buy-in focus and leadership

Average Batch Size

70

75

80

85

90

95

100

105

110

115

Jun '08 Jul '08 Aug '08 Sep '08 Oct '08 Nov '08 Dec '08 Jan '09 Feb '09 Mar '09 Apr '09

Average Batch Size Exhaust

30

35

40

45

50

55

60

65

70

May

-09

Jun-

09

Jul-0

9

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb-

10

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Series1Average Batch Size - Exhaust

Availability

90

91

92

93

94

95

96

97

98

99

100

Qtr 4 '08 Qtr 1. 09 Qtr 2, 09 Qtr 3, 09 Qtr 4, 09 Qtr 1, 10 Qtr 2, 10 Qtr 3, 10 Qtr 4, 10 Qtr 1, 11 Qtr 2, 11

PercentTarget

Working Capital

1300

1500

1700

1900

2100

2300

2500

Qtr 4 '08 Qtr 1. 09 Qtr 2, 09 Qtr 3, 09 Qtr 4, 09 Qtr 1, 10 Qtr 2, 10 Qtr 3, 10 Qtr 4, 10 Qtr 1, 11 Qtr 2, 11

44% Reduction

The Design Process

Exhaust System Design

Components Preparation

J IG Building

Car Tests

J IG Completion

Tube Bending

Production

The Equipment The Technical Centre has to keep at the forefront of technology. That’s why, the technical centre

department is equipped with every necessary technology. The Office Team designs with the best design softwares on

the market (Catia, SolidWorks & AutoCAD); The J IG Fabrication Team builds with high technologies to

certify quality and precision. The Testing Team has the materials to control every

characteristic of an exhaust system in view of homologation in line with European legislation.

3D CAD

Approved Test Track ISO 10844

Acoustic Holography

Thermo Structural Analysis

Plasma Cutter

Technical Centre – Our Centre of Innovation

• The problem:• Only developing 15 parts per month• 16 weeks leadtime• No customer focus• 15 weeks of work in progress• No competitive edge!!!• Low levels of innovation, low productivity, not

LEAN!!!!!

Tech Centre Improvements - Klarius Year 1

•Productivity increased dramatically•Team size remains unchanged (25 heads)•Work schedule is Customer Focused / Driven•Jobs completed per month from 25 > 100 in 12months period•Rapid Development is possible & improved MFR links•New types of work undertaken by department

Catalyst DevelopmentQuality improvements

Tech Centre – Year 2/3 in Lean - Sustain

• Maintaining 100 per month development run rate (even through Christmas period – team flexed working hours to maintain output)

• Team members cross trained for improved cover and flexibility

• Implementation of visual T Card system to manage work

• Improved customer focus as more customers use our service

• Automated work prioritisation in line with customer demand

• Team continues to improve independently

• Improvement in work area 5S and upkeep

• Creation of office & canteen environments with layout change

Tech Centre – 3 Years in Lean• Productivity increased dramatically

• Team size reduced by 2

• Work schedule is Customer Focused / Driven

• Jobs completed per month from 15 > 100 in 12months period

• Rapid Development is possible

(less than one week is regularly achieved)

• The team has developed confidence to improve for themselves

without needing permission.

Output improvements- Klarius Year 1UK - Total Devlopment Jobs Completed

0

10

20

30

40

50

60

70

80

90

100

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Month

No

of

job

s

Achieved Linear (Achieved)

CI Event

Fast Track Cats

CI Event

Cars Layout & Prep Area

CI Event

Jig Methods

CI Event

Jigs Layout

UK-Total Development Jobs Completed FY09

0102030405060708090

100110120130

Oct Nov Dec Jan Feb Mar APRIL May June Jul Aug

Month

No

of

Job

sOutput improvements- Klarius Year 2

Maintained during Christmas holiday

New office & canteen

Output improvements- Klarius Year 3

Klarius - Product Devlopment Output

0

20

40

60

80

100

120

140

160

Mar Apr May Jun Jul Aug Sep Oct Jan Feb Mar Apr

Month (2010-2011)

Nu

mb

er o

f jo

bs

dev

elo

ped

Technical Centre – Our Centre of Innovation

• The problem; the progress so far• Only developing 15 parts per month, currently 140 per month• 16 weeks leadtime, 3 weeks lead time (tests are carried out every Friday)• No customer focus, now customer focused• 15 weeks of work in progress, 2 weeks of WIP• No competitive edge!!!, Market place has recognised our progress, more

orders!!! • Low levels of innovation, low productivity, not LEAN!!!!! We are using

lean as the way of life!• One every 2.5 years, 2 catalogues issued in one year!