2006 Pentair Analyst Day. Del Nickel President Hoffman

Transcription

1 2006 Pentair Analyst Day Del Nickel President Hoffman

2 Technical Products A Pentair Company Cabinets Enclosures Subracks 2 Thermal Cases

3 Expanding Our Markets: Summary Government & Municipal Industrial Commercial Residential Sweet Spot Previous New position Thermal Technical Products Transition Edge-out into adjacent, growth markets -- Thermal Platform Secured existing profitable thermal product sales through Hoffman channel Leveraged operational excellence disciplines as part of integration Electrical, electromechanical and electronic components Electromechanical and electronic subsystems Integrated electrical and electronic systems Installation and integration `` services 3

4 Hoffman Headquartered in Anoka, Minnesota Over 10,000 electrical and electronic enclosure products available Thermal- Air conditioners, Heat exchangers, Motors, and Blowers 4

5 Hoffman Enclosures FACTS North American Market Leader Enclosures Thermal Broad Distribution Network 3000 Employees 5 Manufacturing Locations (1.5 million sq.ft.) 8 Logistics Centers 5

6 Hoffman Division Locations Anoka, MN and Champlin, MN Indianapolis, IN Edison, NJ Mt. Sterling, KY Radford, VA Atlanta, GA Los Angeles, CA Houston, TX Orlando, FL Manufacturing Logistics Reynosa, Mexico 6 Mexico City, Mexico

7 Market Segments Served Commercial Industrial Networking Contractor MRO OEM On Premise Data Center Thermal 7

8 Vertical Customer Segmentation Electrical Pre-1999 Commercial Industrial Networking 1999 Commercial Automotive Auto / MT Mat l Hndlg Consumer F&B, Pharm Packaging Public Water, Petro OEM OEM s Security Defense Thermal Networking Today 8

9 Strategy Drives Lean Implementation Growth + Increase Sales Volume Successful implementation of Growth Initiatives Acquisitions ( Thermal, Other) High growth markets; Commercial, Data New product development Reduced Costs Reduce Cost of Material Increase Productivity and Utilization of Assets Drive Operational Excellence Decrease Current Cost Structure Continued Infrastructure Reductions Product Offering Transformation Lower Cost of Labor Manufacturing growth in Low Labor Cost areas 9

10 Lean: The Foundation of PIMS Waste: anything that takes time, resources or space but does not add VALUE to the products or services we provide our CUSTOMERS -Correcting Errors -Producing Too Much -Transportation -Waiting -Excessive Inventory -Unnecessary Steps -Over Designing -Space 10

11 Lean Tools Present & Future Flow Where You Can - Pull Where You Can t Standard Work TPM SMED Benchmarking Kanban Heijunka production smoothing 5S Value Analysis / Value Engineering Problem Solving Making Materials Flow Visual Factory Lean Accounting VOC - Voice of the Customer Strategy Deployment Jidoka - automation Value Stream Mapping 3P DMAIC Metric Deployment Poke-Yoke - Error Proofing Pull Systems and Kanban Deploy Through Kaizen 11

12 Hoffman s Lean Journey SALES Lean Building Blocks Growth Enterprise Value Stream Six Sigma / DMAIC Business Process Lean Material & Information Flow 150 Manufacturing Flow & Pull, Cell Design 100 5S / Visual Factory / Value Stream Mapping

13 Vision 2007 and Beyond Customer Acquisition Product Development Order Fulfillment Customer Support New Product Introductions Non Standard Order to Delivery Business Process and Operations Lead Time Reduction Information Technology Process Quality 13

14 PIMS - Our Process Hoffman Structure PIMS Leader Hoffman Maintenance "PIMS" SWAT TEAM Kentucky Mexico Wallmount Modular Stainless Logistics Business Proc McLean Aspen PIMS Coordinators 14

15 PIMS Our Process Strategy Deployment Results & Countermeasures Value Stream Maps & Plans Kaizen Events Assessment 15

16 Hoffman s Management System Work Orders, Purchase Orders and Forecasts Released Daily Work Orders Released Hourly Production Control & Purchasing Via JDEdwards / MRP EDI Orders On Demand Phone, Fax or Mail Orders On Demand Mount Sterling Kentucky Large Enclosures Reynosa Mexico IOR Reynosa Mexico COR Purchased Finished Goods (Including Schroff) Daily Daily Weekly Daily MSO Kentucky Warehouse & Distribution Ctr US Customs US Customs Mounds View Warehouse Daily Daily Weekly Replenishment Order Via Phone or Fax Daily Daily Daily Daily EDI Inventory Weekly US Customs California Distributor Distribution Ctr Daily Daily 1700 US & Canadian Distributors Direct User Panel Shops Large OEM User Schroff Germany Schroff RI Automotive Industry Chemical Pharmaceutical Data & Communication Municipal & Government Anoka MN SCO Plant Anoka MN Modular/Aluminum & WallMount Daily Daily Daily Orders Via Daily Orders Via Card Pull System Electronic Pull System Anoka MN Warehouse & Distribution Ctr Weekl y US Customs Mexico City 3rd Party Distribution Ctr Indiana Distributor Distribution Ctr Florida Distributor Distribution Ctr Daily Daily Lean Planning 16

17 Lean Metrics Dashboard Safety Metrics Quality Cost Service Metrics, Delivery and Cycle Time Operational Cost, Productivity, and Conversion Cost Working Capital, Inventory Quality, Defect Rate PIMS Assessment 17

18 Operations Excellence Results Sales 37% Productivity 37% Inventory Turns 40% Delivery Reliability (Build to Order) 14% Cycle Time (Build to Order) 32% Customer Claim Dollars All Products 45% Build to Order 47% Safety (Incident Rate 2.9, Ind. Avg. 10.7) 22% Conversion Cost 23% Floor Space Sq.Ft. 301K 18

19 Thermal Integration Lean Applied to Acquisitions 19

20 Integration Approach Assess Current State Develop Implementation Plans Organize Integration Effort Design Future Operating Company Execute Plan and Integrate We started this process well before the deal close date during Due Diligence 20

21 Integration Highlights First Year Dec Jan 2006 Nov 2006 Deal Close Flawless Day 1 banking arrangements & transfers New employee PNR Code & Lean Orientation- Week 1 New Employees on Lotus notes and On-Pentair- Day 2 Customer & supplier outreach plans launched- Week 1 VSM & 5s Kaizens started in first weeks- PNR experts parachuted in Rapid supply negotiations underway Immediate supply actions Dedicated Lean coordinators assigned for each site Lean embraced Strategy deployment metrics launched- Month 1 Sites reporting through Hyperion Key employee assessments with action plans Safety audits with action plan & new policies in first 60 days Product profitability, pricing analysis, price increase actions Benefit and compensation orientation roll-out to new employees Disconnect from APW IT transition services Secured the Champlin site lease position through 2011 Surpassed most year 1 Synergy goals by Q3 06 Sales/Operating planning & cycle counting disciplines in place Acquired businesses running at record performance levels 21

22 Acquisition Results 2006 YTD vs 2005 Aspen McLean Poway Sales 16% 10% 11% Operating Income 209% 38% 40% ROS 160% 27% 18% Inventory Turns 16% 18% 25% Delivery Reliability 2% 3% 8% Productivity (gross sales/fte) 15% 37% 23% Safety (incident rate reductions) 20% 21% 55% External Quality (drop in ppm failures) 50% 40% 64% Supply Savings Implemented 7.3% 5.8% 8.1% Supply Savings Already Deliv. 3.1% 3.6% 2.2% 22

23 Suppliers Metal, Paint, Parts & Packaging Scheduled Deliveries Receiving All Parts, Materials & MRO Emery, Airborne, UPS FEDX International Containers Signals To Build Supermarket Store & Deliver To Point Of Use Signals To Replenish Hoffman Lean Activity Signals To Replenish Materials Fabrication Cut/Pierce, Bend, Weld, Grind & Buff Customer Service Materials & Production Control Signals To Replenish Finished Goods Paint Powder & Liquid Daily Orders Signals To Ship Assembly Gasket, Add Parts & Package Emery, Airborne, UPS FEDX Standards To Stock, Assemble To Order, or Make To Order Distributor /Customer International Containers Scheduled LTL & Full Loads Warehouse & Shipping Stock, Pick, Pack, Load & Ship Modular Frames & Skins WallMount Bodies, Doors & Panels Floor Mount Bodies, Doors & Panels 23

24 Six sigma process Six Sigma CONTROL Stabilize & sustain the process SPC Set-up Criteria TPM DEFINE Establish project foundation, awareness of problem, variation, define inputs and outputs Establish Project Charter Collect preliminary data Acquired powder cure gauge Powder Thickness Gauge MEASURE Uncover useful information Gauge R&R MSA Attribute Paint thickness baseline data IMPROVE Experiment with the inputs to identify most significant variables Design of Experiments Implement Ideas ANALYZE Describe the relationship of inputs and outputs Fishbone (Cause & Effect Analysis) Brian Garvey Brainstorm 24

25 Paint Thickness- Six Sigma Modular Reduce paint thickness variation Developed DOE to determine key variables Gage Run Chart of M-Chris by pa nu, Ope Gage name: Date of study: Reported by : Tolerance: Misc: effecting paint thickness Determine optimum settings for variables Gauge R&R analysis Create statistical controls for variables to reduce paint thickness variation M-Chris Mean Ope Bernie Chris Lonnie Michelle 1.5 Histogram of total Normal Panel variable: pa nu Ope Frequency total Mean StDev N 201 DOE to determine what variables most effect paint variation Fan Angle Cycles Stroke 1-1 Flat Flat Flat Flat Flat Flat \ Flat Flat

26 Paint thickness Six Sigma Results We tested 3 variables A. Fan Angle B. Cycles C. Stroke Control charting for paint thickness in the process The most significant variable was Cycles 26

27 Paint Thickness Six Sigma Impact Histogram of Total New, Total Old Normal Frequency Total New Total Old Total New Mean StDev N 364 Total Old Mean StDev N 201 Current Paint Costs = New Paint Costs = ESTIMATED ANNUAL SAVINGS = $134,000 $94,930 $39,070 27

28 MATERIAL & INFORMATION FLOW The Leaner a Value Stream Becomes, the More Critical Material Supply Is Material Flow Systems: Define a complete process for how purchased & manufactured components will move throughout our operations Plan for Every Part Lean Material Movement Conveyance Devices & Pull Signals Material Delivery Routes Supermarkets Precise Quantities, When & Where Needed A Plan for Every Part 28

29 MATERIAL & INFORMATION FLOW Material delivery to the point of use Keep the operator engaged in value add activity Information and material arrives to the operator together Increased efficiencies of material delivery personnel and assets 29

30 Productivity 1,488 Heads 1,440 Heads

31 Lean Driving Performance Improvements Air Conditioning Assembly Cell 6 Cell Design Kaizen Units/Labor Hour 0.40 Daily Distance Traveled (Feet) 1502 Space Reduction (Feet) % % 53% Before After Before After Before After 31

32 Freight Terms Business Process Kaizen Eliminate erroneous air freight allowed, streamline process Develop current, future and ideal state maps to identify wasted steps Eliminate causes for erroneous payment of air freight Develop business specifications Standardize process and train customer service and logistics Air Frt A llow - C urrent S tate Entire Rate Shop O rder A ir? Order Chg Frt No QAccess / EDI Terms to Yes Soft E rror Is O rder R ate- Chg Shoppable as NO Requested? YES Contact Route Release Backorder Is Partial No Rep/Dist BOA Order Dist / Rep order rate NO Validate Add TR Hold Exists? places order shoppable? C arrier/s vc Text FX,QA,EI,PH, LN, VMI BOA Process YES Chg Frt Is Q ty on Rate Does Qty Terms to NO separate Yes Shop need to be Chg for shipm ent? Order sp lit? shipm ent YES Chg Qty, create Change Date on n ew line SO Line A ll R e m ain ing Review TR Is O rder R ate- Rate Chg Frt Release B Product Text Shoppable as Yes Shop Terms to Shipment Backorder Current Air State Requested? Order Chg NO Contact CS Remove S pe cific Item S pecific Item Chg Frt Rate Release & Terms & BOA Review Air, only A vailable? YES Terms to Shop Print Route from BOA A ll S hip pa ble C Remaining Chg for Order Shipment SO Hdr, Add Ground shipm ent Process O rders (H ourly) BOA Review TR Text NO Backorder Backorder Line OR Release Backorder All S pecific Item D Mult Items Air, Backorder Backorder Chg Frt Release & Remove Balance Line OR Release Term s to Print Route from Ground Backorder All S pecific Item Chg for Shipment SO Hdr, Add shipm ent BOA Remove S p lit L ine to Backorder Backorder Chg Frt E Release & Term s & Ship Air (only A ll availa ble R lse S pecific Terms to Print Route from Item /Q ty Chg for Shipment SO Hdr, Add shipm ent BOA Autoprocess Pick Slips Whse Process Air Frt Allow - Future State QAccess / EDI Soft Error Dist / Rep places order FX,QA,EI,PH, LN, VMI No Yes Entire Order Air? Is Partial order rate shoppable? YES Rate Shop Yes Order NO Contact Route Rep/Dist BOA NO Validate Add TR Carrier/Svc Text Chg Frt Terms to Chg Release Order Hold Is Order Rate- Shoppable as Requested? YES Backorder Exists? B C No Autoprocess Pick Slips Whse Process Does Qty need to be split? NO Is Qty on separate shipment? Yes Rate Shop Order Chg Frt Terms to Chg D E YES C hg Q ty, create new line Change Date on SO Line Issue Resolution B A ll R em aining Product Backorder Air BOA Review All Shippable O rders (Hourly) Review TR Is Order Rate- Rate Chg Frt Text Shoppable as Yes Shop Terms to Requested? Order Chg Future NO State Contact CS Release Shipment C S pecific Item A ir, Rem aining Ground Review TR Text Specific Item only Available? NO YES Rate Shop Order Update Service Chg Frt Terms to Chg Release & Print Shipment Remove Terms & Route from SO Hdr, Add BOA Backorder Line OR Backorder All Backorder Release S pecific Item D Mult Item s Air, Balance Ground Backorder Line OR Backorder All Backorder Release S pecific Item Rate Shop Order Update Service Release & Print Shipment Remove Terms & Route from SO Hdr, Add BOA E Split Line to Ship Air (only Backorder All available Backorder Rlse Specific Item /Qty Rate Shop Order Update Service Chg Frt Terms to Chg Release & Print Shipment Remove Terms & Route from SO Hdr, Add BOA 32

33 Freight Terms Business Process Kaizen Ideal State Air Frt Allow - Ideal State QAccess / EDI Soft Error Dist / Rep places order FX,QA,EI,PH, LN, VMI Is Order Rate- Shoppable as Requested? No Yes Entire Order Air? Is Partial order rate shoppable? YES NO YES NO Contact Rep/Dist Validate Carrier/Svc Rate Shop Order Rateshop Line Release Order Hold Backorders Exist Yes NO Autoprocess Pick Slips Whse Process Does Qty need to be split? NO Is Qty on separate shipment? Yes Rateshop Line Backorder Release YES Chg Qty, create new line NO Change Date on SO Line Metric Current Future Ideal Chg% Steps to process % Unnecessary Air Alw $s $3K $1k $0 100% No of Erroneous Air Allow % Annual Savings $ 96K 33

34 Strategy / PIMS Impact Growth Faster than Market Profitability Quadrupled! ROS Doubled! ROIC Tripled! Free Cash Flow Doubled! $ % It Is Working! 34