SKF Manufacturing Excellence. Kent Viitanen Director, Industrial Division Manufacturing & Supply

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1 SKF Manufacturing Excellence Kent Viitanen Director, Industrial Division Manufacturing & Supply Capital Markets day 2010

2 What Manufacturing Excellence means for SKF? Our continuous strive to be World Class in Manufacturing by involving all employees and working according to defined principles

3 SKF Manufacturing Excellence in a nutshell SKF - the preferred partner Quality / Zero Defects Service No waste Speed Consistently doing the right things right with speed

4 SKF Manufacturing Excellence in a nutshell SKF - the preferred partner Quality / Zero Defects Service No waste Speed Consistently doing the right things right with speed and continuously improving!

SKF lean manufacturing evolution Single Operation focus

Batch Production Specialized workshops Channel Concept &

Bridge SKF Quality Mgmt System Zero Defects TQM Six

5 SKF lean manufacturing evolution Single Operation focus Flow and methods focus Improvement and people focus Batch Production Specialized workshops Channel Concept & Temple of Excellence The SKF Manufacturing Excellence Bridge SKF Quality Mgmt System Zero Defects TQM Six sigma Temple of Manufacturing Channel Concept

6 Our journey and focus Strong leadership Live the values People involvement

7 SKF Manufacturing Excellence Delivering world class results through.. Improvements everyday, everyone and everywhere Find the problem Fix the problem Keep it from coming back

8 The SKF Bridge of Manufacturing Excellence WE SUPPLIER CHANNEL CUSTOMER STANDARDISED WORK RIGHT FROM ME WE CARE DEMAND DRIVEN FLOW CONTINUOUS IMPROVEMENT

9 The SKF Bridge of Manufacturing Excellence Channel STANDARDIZED WORK RIGHT FROM ME WE CARE DEMAND DRIVEN FLOW Standardized work means that we always need to have a normal situation. That is the defined and agreed way we do things today. CONTINUOUS IMPROVEMENT

10 Standardised work Visual and organised workplace Real time environment where deviations triggers action Support Find root cause Suppliers Support functions A B C D Customers Standardised activities, interfaces and processes

11 The SKF Bridge of Manufacturing Excellence Channel STANDARDISED WORK RIGHT FROM ME WE CARE DEMAND DRIVEN FLOW CONTINUOUS IMPROVEMENT Right from me means that each of us have a personal responsibility to ensure that what we hand over to our customer is according to the defined and agreed standard.

12 Right from me Supplier Customer Supplier dependance Knowing the risks Designed for quality Chain of relationships Our equipment can help us Support

13 The SKF Bridge of Manufacturing Excellence STANDARDISED WORK RIGHT FROM ME Channel WE CARE We care means that we, all SKF employees, care about each other and care about both the internal and external environment. We are the actors of change. DEMAND DRIVEN FLOW CONTINUOUS IMPROVEMENT

14 The SKF Bridge of Manufacturing Excellence Channel STANDARDISED WORK RIGHT FROM ME Demand driven flow means that we produce only what the customers have requested, according to the standard, and on time. WE CARE DEMAND DRIVEN FLOW CONTINUOUS IMPROVEMENT

15 The SKF Bridge of Manufacturing Excellence Channel STANDARDISED WORK RIGHT FROM ME WE CARE DEMAND DRIVEN FLOW Continuous improvement means that we, all employees, always contribute to improve our normal situation, to create a new and better standard. CONTINUOUS IMPROVEMENT

Continuous improvements Eliminate waste Overproduction Waiting Transportations Rework Inventory Motion Overprocessing Under utilised creativity Reduce variation Continuous Improvement Experimenting

16 Continuous improvements Eliminate waste Overproduction Waiting Transportations Rework Inventory Motion Overprocessing Under utilised creativity Reduce variation Continuous Improvement Experimenting as a base for a learning organization Challenge and question our standardised work Right from Me We Care Demand Driven Flow KPI s to identify improvement possibilities Standardised Work The Manufacturing Excellence Slope

We chose the appropriate and deployed methods and tools As always - the RESULTS and TARGETS are measured and tracked on a regular basis

17 The thinking model in Manufacturing Excellence It starts with the thinking model - a model in 3 steps: The PRINCIPLES learn all employees with a way to think. With known and agreed principles we know how to develop The METHODS give us a way to do things. We chose the appropriate and deployed methods and tools As always - the RESULTS and TARGETS are measured and tracked on a regular basis Copyright SAM Consulting AG But.. if we don t reach the result we try to question the method instead of the people and work together to improve the method.

18 Two ways of leadership style Old leadership style New leadership style

Consistently doing the right things right Who with contributes

19 SKF Manufacturing Excellence in a nutshell BEFORE SKF - the preferred partner NOW Quality / Zero Defects Service No waste Speed Consistently doing the right things right Who with contributes speedmore? and continuously improving! Who learns more? Today tomorrow in 5 years!

Manufacturing Excellence status in Industrial Division factories 44 Factories started their journey More then 125 Practice Grounds >4000 People Trained 142 trained facilitators Some voices from the

20 Manufacturing Excellence status in Industrial Division factories 44 Factories started their journey More then 125 Practice Grounds >4000 People Trained 142 trained facilitators Some voices from the team Better sense of teamwork Appreciation for team members responsibility and contributions Each day is better than the day before I think our channel is better now than it was several months ago You can t support all the ideas Deviation meetings in all Industrial Division factories Big increase in number of improvements Significantly higher involvement Very positive improvement in leadership

Manufacturing Excellence key messages The SKF Manufacturing Excellence rests on a long tradition of lean manufacturing Continuous improvement: KPI s remain- but we strive for a higher level a never

21 Manufacturing Excellence key messages The SKF Manufacturing Excellence rests on a long tradition of lean manufacturing Continuous improvement: KPI s remain- but we strive for a higher level a never ending journey Everyone involved and on board in the improvement work Long term continuous improvement requires long term people development individual competence development based on the specific needs of each area Leadership is key WE SUPPLIER CHANNEL CUSTOMER STANDARDISED WORK RIGHT FROM ME WE CARE DEMAND DRIVEN FLOW CONTINUOUS IMPROVEMENT During the factory visit you will be able to do a reality check yourselves.

LEAN MANUFACTURING & TPM.

LEAN MANUFACTURING & TPM. LEAN MANUFACTURING & TPM www.fourprinciples.com BACKGROUND The core area of any manufacturing facility is the shop floor. Manufacturing is most often also the largest function within an organisation. In