Bill Stankeiwicz Copy Scope 2010 Pentair Company
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Transcript of Bill Stankeiwicz Copy Scope 2010 Pentair Company
Tom PettitVP Global Manufacturing & Supply Chain
Pentair Inc.
SCOPE East ConferenceApril 12, 2010
Lean Material Flow in Production Operations
Any statements made about the company’s anticipated financial
results are forward-looking statements subject to risks and
uncertainties such as continued economic growth, including the
strength of housing and related markets; the ability to integrate
acquisitions successfully and the risk that expected synergies
may not be fully realized or may take longer to realize than
expected; foreign currency effects; retail and industrial demand;
product introductions; and pricing and other competitive
pressures as well as other risk factors set forth in our SEC
filings. Forward-looking statements included herein are made as
of the date hereof, and Pentair undertakes no obligation to
update publicly such statements to reflect subsequent events or
circumstances. Actual results could differ materially from
anticipated results.
3
This Workshop Will…
Describe Who Pentair Is
Highlight Pentair‟s Lean Management System, and
Show Its‟ Impact
Provide you with information to create a material
movement plan from the receiving door to the
shipping door
This Workshop Will Not Go Into Detail On:
Logistics Network Optimization
Plant to Plant, or Supplier to Plant to Customer
material movement.
4
Portfolio Focused
On Two Attractive
Markets
Technical
Products
~ 30%
Water
~ 70%
Revenue By Segment
$3B Global Manufacturer Serving Water & Technology Markets
Strong Position Across Multiple Global Markets
5 Water Divisions: 2 Flow, 2 Filtration and 1 Pool
– Global Markets: Residential, Industrial, Municipal,
Commercial, and Agricultural
1 Technical Products Division: Serving Electrical &
Electronics with protective enclosures
– Global Markets: Industrial, Commercial, Telecom,
Datacom, Medical, Aerospace, Defense
Who Is Pentair?
* On Continuing Basis
Global Diversified Manufacturer
$3 Billion Revenue, 10% ROS
13,000 Employees
Customers in 195 Countries
40 Factories. $1.2B DM Spend
5
We Participate In Entire Water Cycle
Ind
us
tria
lR
es
ide
nti
al
Co
mm
erc
ial
Ag
ric
ult
ura
l
Treatment / Storage /
Distribution
Well
Surface
Desalination
Desalination Pumps, Well Pumps, Municipal Pumps, Residential
Filtration, Residential Pumps, Agricultural Pumps, Industrial and
Commercial Pumps and Filters, Foodservice Filtration, Pool
Equipment … Many, Many Others
Pentair Solutions:
Flow of Water Flow of Water
Municipal
Waste
Water
Waste
Water
6
What is Lean to Pentair?
…the relentless pursuit to
eradicate waste and improve velocity
in all processes within our organization!
Waste is anything that doesn‟t add value
for our customers.
7
Pentair Integrated Mgmt System (PIMS)
PIMS
Is Pentair’s operating excellence system, built on Lean
Provides Pentair team members with the methodology,
processes and tools to reduce waste & improve velocity
Drives a culture of “Improving Every Day”
Helps us become world class and create sustainable
value for customers, team members, and shareholders
Applies to All Functions…. Enterprise Lean
Cuts Across Functional, Divisional, and
Supplier/Pentair/Customer Boundaries
PIMS Is How We Manage Our Business
8
Pentair Operating Excellence -- PIMS
• Centers Around Customer
• Focuses on Reducing Waste
That Doesn‘t Add Value to
Customer
• Begins with our
People
• Talent aprocesses
a sustainable
results
• ―Winning Right‖
Culture -- respect for
& engagement of all
• Active Leadership
• All Mgrs trained
• Sustainable Improvement
through 7 Lean Transformation
Disciplines
• SQDCC Focus –
Safety, Quality,
Delivery, Cost, Cash
• Creates value
through Growth &
ROIC
• PIMS Goals:
OTD >95%
PPM improved by 50%
5% Productivity
DIOH improved 50%
Sales Per Sq Foot up
50%
• Fact Based
9
Increased Returns and Reduced Variability of Returns* Goodwill and Restructuring Charges Adjusted out of Op Margin Calculation
PIMS Has Demonstrated Results
1990 to 1997
―Pre-Lean Era‖
2%
4%
6%
8%
10%
12%
14%
16%
18%
Op Margins
6.5% to 10.3%
1998 to 2003
―Early Lean-Era‖
But, Dot.com Bust
5.4% to 13.3%
―high‖
―low‖
2004 to 2009e
―Lean-Mature‖ But,
High Commodities
PIMS‘ Proof of Concept – Technical Products Div.Full Year Op. Margins By ―Era‖
~12% to 15.5%
2010 - 2014
Sales CAGR
6% 1% 7% TBD
10
“Turn Around Story” -- Pool Division Sanford, NC
PIMS Results In Water Business
Improvement
Safety 55% Now Best in Class From Already Low 2.5 OSHA Recordable
Quality 28% Significant Reduction in Warranty Costs Thru Redesigns
Delivery 24% Increased On-Time-Delivery to 95%
Cost 9% Lean Manufacturing Drives Direct Labor Productivity
Cash 19% Inventory Days On Hand Reduced Through SIOP, Material Flow
Talent
• Doubled & Strengthened
Lean Talent
• Using Rotational Program
for Hrly & Salary Personnel
• Strengthened Production
Leadership & Maintenance
• Restructured &
Strengthened Mat‘ls Talent
Process
1. Strategy Deployment
2. Value Stream Mapping
3. Transformation Planning
4. Kaizen Activity
5. Managing For Daily
Improvement; Layered Audits
6. Return to #1
Culture
• Engaged Leadership;
President Involved
• Reinforced Through
Layered Audits
• Daily Gemba Walks
• Monthly Scorecard &
Lean Transformation
Reviews
Focused On ―Four Walls‖ To Produce Great Results
11
Pentair‟s Lean Ranking
Superfactory 20 -- Pentair Ranking(Based on Total Shareholder Return of Lean Cos.)
Lean Value Creation -- Super Factory Rankings
16
10
6
2007 2008 2009
1 Goal
PIMS Is Creating Shareholder Value for Pentair
12
TPS The Roots of “Lean”
Strategy Deployment
JUST-IN-TIME
- what‟s needed
- when needed
- where needed
- in quantity needed
AUTONOMATION
(JIDOKA)
- Respect for people
- Autonomous
- Defect-free
- Detects abnormalities
Process Evidence
Visual Management & MDI MDI Control Boards / Daily Gemba Walks
Excellent Part Presentation / Timed DeliveriesMaking Material Flow
Creating Continuous Flow Single Piece Flow / Linked Process Cells
Impeccable 5S. High Quality.5S and Standard Work
Transformation Planning Value Stream Maps / Transformation Plans
How? -- PIMS Lean Disciplines7 PIMS Transformation Disciplines
13
Creating Continuous Flow linksMaterial Flow and People Flow
Making Materials Flow links Information Flow, Material Flow, and People Flow.
Keep people inside the cell working continuously!
Move material into cell from outside operators‘ work area
NO INTERRUPTIONS of the workers
14
14
Why Material Flow Management?
Poor Material Flow
Half of Production Delays
Are Due to Material Shortages
2/3 of Material Delays
Internally Caused
Floor Space Is Consumed
By Material
High Resources Are Devoted
to Finding, Delivering, &
Expediting Material
Many Injuries Are Caused By
Fork Trucks
Material Flow Benefits
Better On-Time Delivery(>95%) & Lead Time…. Customer Satisfaction
Improved Logistics Costs
Greater Labor Productivity(DL & IDL)
Improved Inventory Levels
Reduced E&O
Increased Safety
Material Flow Drives Better Delivery, Cost, Cash & ROIC
15
Pentair Lean Material Flow Focus
―Micro‖
Material Flow
Lean
Material Flow= +
―Macro‖
Material Flow
Logistics Network and Transportation Optimization
Plant Level Material Movement
Pentair’s Material Flow Vision:
Common Material Flow Processes
Replenishment Driven By Consumption (“Pull”)
With Integrated Logistics That Are Optimized At An Enterprise Wide Level.
16
16
“Micro” Material Flow Pentair Material Flow Principles
1. Develop a Plan for Every Part (PFEP)…DNA
2. Create a Single Purchased Parts Supermarket
Design & Execute A 3 Year Plant Flow Plan… Eliminate Fork Trucks Everywhere But Docks
3. Pull Parts from Supermarket and Suppliers/ Intercompany, Based on Usage
4. Optimize Scheduling Using Every Part Every Interval
5. Replenish Cells Using Precise, Timed Delivery Routes… Regular Bus Route vs. Ad Hoc Taxi
6. Position Material Optimally at Operator Fingertips
7. Build Strong Materials Supply Mgmt Talent
17
Part Number Number used to identify the material in the facility
Description Material name (Frame, bolt, nut, yoke)
Daily usage Average amount of material used in a day
Usage per assembly Number of parts required for 1 finished product
Hourly usage Maximum number of pieces used per hour
Standard container quantity Piece count of material in 1 container
Containers used per hour Maximum number of containers required per hour
Usage location Process/areas where the material is used (cell 14)
Storage location Address (location) where the material is stored
Order frequency Frequency material is ordered from the supplier (Weekly, monthly, as required)
Container type Type of container (expendable, returnable)
Container weight Weight of empty container
1 part weight Weight of 1 unit of material
Total package weight Weight of a full container of material
Container length Length or depth of the container
Container width Width of the container
Container height Height of the container
Shipment size Size of a standard shipment in days (1 week shipment = 5 days)
Carrier Company providing parts transportation services
Transit time Travel time required from the supplier to the facility (in days)
# of cards in loop Number of pull signals that are in the system
Supplier Name of the material supplier
Supplier city City where the supplier is located
Supplier state State where the supplier is located
Supplier country Country where the supplier is located
Supplier performance rating Supplier performance rating that includes on-time delivery, quality, etc.
1. Develop A Plan For Every Part (PFEP)
What: Database created to gather and maintain information about all part numbers in the manufacturing process.
Part #’s
Usage Volume & Locations
Packaging Size & Quantity
Kanban cards
Supplier Information
Why: THE PFEP IS THE DNA OF YOUR PLANT!
Enables Material & Information Flow Essentials: Supermarket Sizing/Layout, Inventory Levels, Reorder Points
18
Receiving
and
Shipping
Dock
Operations
Office Area
Entrance
and
office
area
Empty Area
Due to Floor
space Gained
in Creating
Continuous
Flow
Activities
Empty Area
Due to
Floor space
Gained in
Creating
Continuous
Flow
Activities
Denotes one skid of inventory
Before
Material
Flow….• Inventory stored everywhere should never be
mistaken for point of use (POU)
• Just because it is in or near the ‗AREA‘ of Use
does NOT mean it is POU.
• Inventory must meet the criteria of Right: Place,
Time, Quantity, Position, Quality
• Inventory is EVERYWHERE –
• There may be a warehouse, but
• Material is not easily found and
• The market is not used to
scheduled replenishment
2. Create A Single Purchased PartsSupermarket
19
Receiving
and
Shipping
Dock
Operations
Office Area
Entrance
and
office
area
Cell
6Cell
5
Cell
1Cell
4
Cell
3
Cell
2
Cell
7
Cell
8
Cell
10
Cell
9
Cell
13
Cell
12
Cell
11
Cell
14
After
Material
Flow
• Supermarket is sized, controlled and
staged via PFEP
• Located by receiving for quick delivery
• Parts may be used in multiple locations of
the operations
• Supermarket is a controlled level of
inventory with a specific location
for each item
• Can be phased in, but get to 1 location
20
Supermarket Elements
Re-order boardOrder Cards
Sized Racks Address System
B
C
A
1 2 3 4 5
B
C
A
1 2 3 4 5Row
A
Colum
n T64
B
C
A
1 2 3 4 5Row B
Rack
1
Rack
2
Rack
1
B
C
A
1 2 3 4 5
Rack
2
Supermarket Example
Before – Legacy Storage After -- Supermarket
• 1 Part Per Pallet Location
• Large & Small Material co-mingled
• Wasted Space
• Unclear if over/under stock levels
• Several Parts Per Pallet Location
• Material Arranged by Size & Value Stream
• 30-50% Less Space
• Visual Indicators Tell If Excess/Short
22
2. Design & Execute A 3 Year Plant Flow Plan… Eliminate Fork Trucks Everywhere But Docks
Why:
Need deliberate, disciplined, prioritized plan for transformation
What
Plant Layout planning to enhance flow and free up space
Consolidate Purchased Material
Create WIP Markets for upstream processes
Relocate Material and Cells to support Receiving, Production, and Shipping
Move cells and machines to support continuous flow
Aisles & Material Handling: One Way, Two Way, People Only
AutoCad of current state and future state plant layout
How
Up front value stream mapping
Plant layout kaizens, updated at least twice/year
23
Plant Layout And Flow – Plant X in 2008
• Material Scattered
Throughout
• Limited flow from
Receiving to
Production cells to
Shipping
• Value Stream cells
not co-located
24
Plant Layout And Flow – Plant X Today
• Material aggregated
into fewer locations
• Beginning flow
improvement from
Receiving to Cells to
Shipping
• Value Stream co-
location underway
25
Plant Layout And Flow – Plant X in 2011
• Material aggregated into
one Supermarket & few
WIP Markets
• Clear flow from Receiving
to Production cells to
Shipping
• Value Stream co-located
• Significant space freed up
26
Before
After
SupermarketFinished
GoodsProduction
Plant Layout – Plant Y Before & After
Material flows smoothly into, through, and out of facility
MaterialMaterial MaterialMaterialProduction Production
No clear definition between Mfg & Warehouse Areas
Little Flow
Material Movement – Defined Flows
•No forklifts
•One Way Pick Aisles
•Fixed locations
•Clear visual signals
• Fork lift managed
• Ad Hoc Movement
• Random Storage
• No visual signals
Before After
28
Too often suppliers are expected to „pay‟ for our unwillingness to
improve ourselves
Assemble a cross functional team to go see what is truly happening
Typically we‟re the ones creating disruption in our suppliers‟ operations
Material Flow Beyond Your Fall Walls
Process Level
Single site
Multiple sites
Across Company
Start by creating
material flow here
Start By Improving Flow Within Your Site First
29Pull From Customer To Production To Supplier
Door To Door Material Movement
Incoming
Receiving
G. Supplier
E. Process 1 D. Process 2 C. Final
AssemblyF.
SupermarketB. Finished
Goods
Information
System
Delivery Loops
A. Customer
Takt Image
High Mix
Takt Time
3. Pull Mat‟l Based on Consumption
Make To Stock
Pull Systems:
• Link cells together…. ONLY WHEN A
SINGLE CELL IS NOT POSSIBLE
• Trigger production activity
• Trigger movement between cells…
Created between cells
• Require discipline
30
Supplier
Need to Order
AlreadyOrdered
Scan/Fax
Cards picked uponce per day
A B COn Order
Receiving / Staging Area
Pull Replenishment –Kanban Card & Info Flow In Plant
Parts Supermarket
31
4. Schedule Upstream Components Using Every Part Every Interval
What Is EPEI?
• Scheduling methodology
Optimizes changeovers and
sequencing
Very helpful for high mix
processes (like machining,
molding, and fabrication)
Why Use EPEI?
• Balance productivity and
delivery
• Reduce lead time and inventory
• Produce based on customer
demand / pull
How to Do It?
• Begin With PFEP Data
• Add Production Data (Run
Times, Changover Times, etc.)
• Run Calculations
• Create Scheduling Board/Wheel
EPEI Scheduler Using Kanban Board
• Mixed Product Scheduling
• Pull Based rather than MRP
Example – Lean SchedulingBefore After
Hunt & Peck Schedule Vs Orderly Schedule
1. Heijunka Board Sets Operator Work
2. Efficiently Incorporates High Mix, MTO:
Set-Up, Sequencing, & Takt Image
3. Improves velocity, reduces inventory
1. Operators perform jobs FIFO, or
based on preference
2. Inefficient change-over sequencing
3. Long lead time, high inventory
34
Tugger
Movement
Fork Truck
Movements
5. Replenish Cells Using Precise, Timed Delivery Routes
35
Delivery Route Principles
Timed, hourly deliveries to the cell
Inventory delivered in schedule order – to the
operators „fingertips‟
5 routes 1. Purchased parts / RM
2. WIP
3. Expendable parts
4. MRO
5. Trash
Standard Work For Delivery Team (Picker, Driver)
2 hours of inventory at cell, line side
Minimize forklift in plant – eliminate from shop floor
36
Benefits of Timed Delivery Routes:
Productivity of Direct Labor and Indirect Labor
Standardize the amount and timing of material delivery to
the production process
Inventory
Floor space
Delivery Route Example
37
Receiving
and
Shipping
Dock
Operations
Office Area
Entrance
and
office
area
Cell
6Cell
5
Cell
1Cell
4
Cell
3
Cell
2
Cell
7
Cell
8
Cell
10
Cell
9
Cell
13
Cell
12
Cell
11
Cell
14
Timed
Delivery
Routes
Route 1
Route 2
Route 3
38
Various Conveyance Devices Manual and Mechanical
Hand Carts
Tugger With Standard Custom Carts Hand Jack Tugger
Tugger With Standard Shelf CartsHand Carts – Simple, Low Cost
39
6. Position Material Optimally At Operator Finger Tips
Why?
Operator Productivity
Keep people inside the cell
working continuously!
Support the Operators --
NO INTERRUPTIONS
What?
Position Material To Minimize
Wasted Motion
Create Convenient Racks
Replenish Material From
Outside of the Cell
BEFORE AFTER
Support Operator Work. Reduce Wasted Motion.
40
BEFORE AFTER
Material Presentation Example
Wasted Packing & Unpacking•Fast Access
•Ergonomic
41
BEFORE AFTER
Material Presentation Example
• Walking, Reaching.
• Consuming Floor Space
• At Operator Fingertips
• Tight Footprint
42
BEFORE AFTER
Material Presentation Example
• Operator Must Reach & Bend
• Takes Up Large Floor Space
• No Operator Bending
• Denser Footprint
Material Presentation Example –5 Days POU Vs. 2 Hrs Line Side Inventory
POU (Point of Use) all Inventory PFEP driven 2 hour line side
BEFORE AFTER
44
Material Presentation Racks
Return Slot
For Bins
Kanban
Card Slot
• Two Bin Kanban
• Great Access For Operators
Material Presentation Example –Old Batch Quantity Vs. 2 Hour Lineside
Before After
Result – Productive,
Happy Team Members
46
7. Build Top Talent & Culture
From
Materials Supply Mgmt Talent as „after thought‟
Limited expertise and depth
Limited lean skills
Limited career pathing
Projects in spare time
Handoffs in the Process (Buyers, Planners, Rcvg)
Inconsistent methods, limited training
Culture of
“Or”
Production-dictated
To
Materials Supply Mgmt Talent as key focus
Hiring & promoting top talent
Deep lean material skill
#2 in plant. Path to bigger roles
Dedicated transformation teams
Materials Supply Manager as the “One Neck to Grab”
Common methodologies driven by significant training
Culture of
“And”
Production Control
Materials Supply Mgmt Talent Is Critical To Transformation
47
How To Sustain Good Material Flow?
Material Flow Audit Process
Teach people the purpose of audits
Audit the PROCESS, not the people
Learn by doing
Discuss results
Create action plan (Root Cause, Counter Measures)
3 kinds of audits
Purchased parts market
Delivery route audit
Pull signal (Kanban card audit)
48
Before “Micro” Material Flow
Too much inventory
Raw material stored in
multiple locations
MRP generated push
replenishment
No standard material
delivery routes
No standard address
systems
Fork trucks delivering
material one pallet at a
time and returning
empty
49
50% Less Inventory
Level loaded schedule driven
by customer demand
Raw material stored in a single
purchased parts supermarket
near Receiving—developed by
PFEP
Mini-WIP markets at point of
manufacture
Timed material delivery routes
Pull system replenishment
Standard address systems
Parts delivered directly from
Supermarket to operator
fingertips
Fork trucks restricted to
Shipping & Receiving areas
After “Micro” Material Flow
50
Material Movement Summary
Docks
Fin
al A
ss
em
bly
Ce
lls
Ma
ch
ine
s
WIP
Pa
rts B
uff
er
• Multiple Deliveries a Day
• Measured On Time Delivery
• Usable Standard Pack (Qty Control)
• Future: Sequenced to Schedule
• Material moved from Dock to
Supermarket
• Placed in unique, fixed location in
Supermarket
• Future: Ready to be delivered
• Future: Frequent Deliveries Skip Supermarket. Direct
to Cell as Sequenced-to-Schedule
Tugger Delivery
• Timed, hourly deliveries to the cell
• Inventory delivered in schedule order – to the operators „fingertips‟
• 5 routes (Purch parts / RM, WIP, Expendable parts, MRO, Trash)
• Eliminate Variation from Std Work in Assy & mat‟l movement
• 2 hours of inventory at cell line side
• Minimize forklift in plant – eliminate from shop floor
Upstream Processes
(e.g., Machining,
Molding, Fabrication)
• Kanban / Demand
replenishment
• Scheduling owned and
controlled by Materials
Foundation:
Customer demand drives production
scheduling and material flow
External and internal pull replenishment,
based upon EPEI
“4 wall material flow” essentials: PFEP,
supermarket, scheduling, timed
delivery/pick-up
Supermarket
Suppliers
51
SUMMARY
Lean Material Flow Provides Benefits in Safety, Delivery,
Cost and Cash
Pull Systems And A disciplined Plan For Every Part Are
The Underpinnings
Consolidated Supermarkets, Timed Delivery Routes, and
Parts Presentation Are How We Improve Flow
Make a Disciplined, Prioritized 3 Year Plant Flow Plan
Focus on Processes, Talent, and Culture