DuPont Production System - A Journey in Operations Excellence
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1 DuPont Production System - A Journey in Operations Excellence TRACC Conference South Africa Kathy Wright, Program Director, Operations Center of Competency April, 2011
2 2 2 DuPont Core Values Safety & Health Environmental Stewardship Highest Ethical Standards Respect for People The Goal is Zero
3 Bradley Model Independent ZERO IS ATTAINABLE Well understood process and operation Personal commitment to safety Supervision/resource comfortable leading or allowing others to lead Ownership for procedures at team level Trust allowing for shared logic and ideas Interdependent ZERO IS SUSTAINABLE Cooperation within and across teams Brother s Keeper Organizational pride Self-managed teams Team fully engaged in goal setting - and improvements 3 Injury Rates Reactive - ZERO IS UNREALISTIC Goal of compliance Safety by natural instinct Driven by Safety Manager Management provided - resource but lack of management involvement Discipline reactive to injuries Dependent - ZERO IS DIFFICULT Management commitment Governed by rules and regulations Management centered - activities Selective communication of objectives Discipline as a development tool Turf -type atmosphere Zero injuries & illnesses Reactive Dependent Independent Interdependent Zero DuPont Internal Use Only Rev. Date: 5/15/10
4 44 The Vision of DuPont To be the world s most dynamic science company, creating sustainable solutions essential to a better, safer, healthier life for people everywhere.
5 55 The DuPont Company Sales $3.1 B $3.0 B DUPONT SAFETY & PROTECTION DUPONT ELECTRONIC & COMMUNICATIONS $9.7 B $6.1 B DUPONT AGRICULTURE & NUTRITION $32.5B* DUPONT PERFORMANCE CHEMICALS $6.5 B $4.2 B DUPONT PERFORMANCE MATERIALS DUPONT PERFORMANCE COATINGS * Includes other sales, excludes inter-segment transfers
6 Aligning Strategic Themes with Growth Trends Growth Trends 6 6 Increasing Food Production Decreasing Dependence on Fossil Fuels Protecting Lives and the Environment Emerging Markets Innovation & Intense Customer Focus Differential Business Management Productivity & Continuous Improvement
7 Aligning Strategies with Megatrends The Needs of the World Drive our Science 7 Megatrends 1. Increasing Food Production 2. Decreasing Dependence on Fossil Fuels 3. Protecting People, Assets & the Environment 4. Growth in Emerging Markets Market Opportunities More food Better food Alternative energy solutions Energy efficiency Renewably-sourced materials Workplace safety Personal protection Environmental sustainability Infrastructure Energy Materials applications customized for local markets Strategies Grow production agriculture Photovoltaics & Biofuels Lightweighting vehicles Accelerate conversion to bio-based raw materials Accelerate innovation pipeline Strategic acquisitions Geographic expansion Increase local application development Drive further penetration
8 DuPont s 13 Businesses 8 8 Pioneer Hi-Bred Crop Protection Nutrition & Health Protection Technologies Building Innovations Safety Resources Electronics & Communications Applied BioSciences Performance Polymers Packaging & Industrial Polymers Titanium Technologies Chemicals & Fluoro Performance Coatings
9 MEGATREND #1: Increase Food Production 99 DUPONT OFFERING ~$9B sales from seeds, crop protection products, food and nutrition products, and food packaging materials for extended shelf life DUPONT SOLUTIONS Constant stream of higher-yielding seeds, grower services Optimum AcreMax, Optimum GAT, Y-series soybeans, Rynaxypyr and Cyazypyr insecticides Next generation food packaging Bio-based Omega-3s
10 MEGATREND #2: Decrease Dependency on Fossil Fuels 1010 DUPONT OFFERING >$2B sales from PV, components for fuel cells, more energy efficient construction with Tyvek, lighter weight polymer composites for transportation DUPONT SOLUTIONS Constant stream of new / improved materials for photovoltaics; cellulosic ethanol, and biobutanol Advanced composites for aerospace
11 MEGATREND #3: Protect People, Assets, and the Environment 1111 DUPONT OFFERING ~$2.5B sales from Kevlar, Nomex, Tyvek, SentryGlas, safety services, environmental protection material solutions DUPONT SOLUTIONS Next gen Kevlar and Nomex fibers and fabrics Next gen Tyvek for construction, worker protection New antimicrobial coatings for food processing Environmental protection solutions for refineries
12 MEGATREND #4: Growth in Emerging Markets 1212 DUPONT OFFERING ~$8B sales across the portfolio Sales $ billions $5.2 $4.9 $6.2 $7.2 $8.8 14% CAGR E $8 $12 DUPONT SOLUTIONS New applications tailored to emerging markets E 2012E Top-line growth > company average
13 Deliver: Directives Toward our Vision In 2011, we will advance our Core Values, deliver world-class innovation with our customers and outpace competition through differential management and industry-leading productivity. STEP-CHANGE IN SAFETY PERFORMANCE ADVANCING OUR CORE VALUES How: Leadership and employee engagement Action plans by unit Improve PSM execution THE GOAL IS ZERO! Company Metrics: The goal IS ZERO MARKET-DRIVEN INNOVATION SUPERIOR REVENUE GROWTH INDUSTRY-LEADING PRODUCTIVITY CASH TO GROW & INCREASE RETURNS (RONA) Accelerate growth in megatrends Drive sustainability with science Aggressively launch new offerings Drive differential choices in growth investments (POIs) Strong focus on customers in high growth markets Expand margin by pricing to value Drive Marketing & Sales Excellence Continue to improve connection of supply chain to the marketplace Strengthen competitive benchmarking Simplify and digitize transactional processes Advance and embed DPS and DIBM Drive asset reliability while improving asset turns Rigorously manage working capital and capital expenditures >XX% of revenue from new products (commercialized the past 4 years) XX% new growth vs. replacement products Meet major growth program milestones Establish & implement metric for return on R&D XX% revenue growth (vs. 2010) X point improvement in Net Promoter Score XX% of revenue from developing markets by 2012 X point improvement in variable margin (vs. 2010) $XXX million of capacity released Top quartile performance vs. benchmarks $XXX million of variable cost productivity $XXX million of fixed cost productivity XX% PTOI growth (vs. 2010) Improve return on net plant, property, & equipment (NPPE) vs. benchmarks $XXX million of working capital productivity SPEED & AGILITY ACCOUNTABILITY TRANSPARENCY DEVELOP PEOPLE JANUARY 2011
14 14 14 DuPont Global Operations At a glance Supply Chain Costs Production Volumes DuPont Integrated Operations Worldwide Global Supply Chains 98 Plant sites 185 Sites Warehouses 400+ Shipping Major Container user Employees (approx.) 35,000+ Countries 45 Contract operations 700+ Sites New Product Launches 5%-20% annually
15 15 How Integrated Operations is Structured for Operations Excellence Business Integration Strong supply chain integration within business teams and business strategies Execution Drive effectiveness and efficiency in execution in plants and supply chains across businesses and regions Operations Center of Competency Ensure organizational capability is in place Standardize and leverage Production System Deliverables Integrated strategies and operational plans Advancing Core Values Productivity and asset effectiveness along supply chains Capability building - People & organizational development Technology ownership & integration along supply chains Mindsets and behaviors that foster engagement and superior execution Everyday, everyone together driving sustainable competitive advantage so our businesses win
16 Production System in Integrated Operations 16 Supply Review DIBM 0-24 months Demand Review Product/project Review Context and Perspective Current and future requirements for capability and performance Production System Manufacturing Locations, S&L, Engineering, Across Supply Chains Required Business Outcomes Current Capabilities & Performance Improvement Opportunities/ alternatives
17 17 DuPont Production System Vision Everyone, everyday in pursuit of Operations Excellence enabling DuPont to win in a dynamic world. Principles Practices We will operate a lean, integrated end-to-end Supply Chain from suppliers to customers. We will maintain standard processes and systems. We will promote enabling technologies, tools, and processes. People Each individual will accept the need for change and respond positively to the challenges it represents. We will foster an open, honest, and trusting environment. We will create an engaged, flexible, and capable Work Force at all levels. 4/18/2011
18 DPS builds on our strong foundation of continuous improvement 18 DUPONT PRODUCTION SYSTEM (DPS): Analysis / Tools / Techniques Engaging and empowering Leadership development and mindset shifts REAPPLICATION OF OPERATIONS EXCELLENCE BEST PRACTICE: Codifying Deploying Use of Standard Management Practices LEAN SIX SIGMA DEPLOYMENT: Standardized Problem Solving Lean Management Continuous Improvement FOUNDATION: Unique Technology/Processes Markets and Customers Core Values 4/18/2011
19 DuPont Production System Model.is designed from a multidimensional view of improvement 19 Business and Asset Requirements Managing Process Keep focus on what really matters, with the right people Technical Model Apply tools and practices to drive focused improvement at all levels Capability Building Insure the right skills and coaching Mindsets & Behaviors Align cultural norms with the organization s vision, mission Required Business Outcomes AND a sustainable top-quartile Performance 4/18/2011
20 TRACC is Integral Part of DPS Sustainability 20 Supported by Current and future requirements for capability and performance Managing Process Keep focus on what really matters, with the right people Technical Model Apply tools and practices to drive focused improvement at all levels Capability Building Insure the right skills and coaching Mindsets & Behaviors Align cultural norms with the organization s vision, mission Required Business Outcomes 4/18/2011 Performance Management Talent Management Foundational Elements SHEA Focused improvement Best practice design Change Agents (Plant Mgrs Champions, Experts,) Training & Development Best practice performance Desired Characteristics Influence
21 21.Our Leadership strongly Supports the Journey of DPS to World Class "I'm a big believer in the DuPont Production System (DPS). We have to be very productive in manufacturing in today's dynamic and competitive global marketplace and DPS allows us to do that. With DPS we engage our workforce in its entirety. The collective power is in the group and the team, and getting the most we can out of our operations. DPS allows us to speak with each other using a common language so together we can drive and sustain world-class operations performance." Ellen Kullman DuPont CEO & Chair of the Board
22 2222.And our Entitlement will deliver Superior Supply Chain Capability Market Needs Supply Chain Network Design Supply Chain Optimization Plant Operation Highest Service with Lowest Total cost of ownership Supply Chain Network Design Sourcing, Operations, Logistics - Potential $>0.XB Total landed Cost Diagnostics Optimize existing supply chains utilizing proven best practices Drive Shifts in Supplier base from traditional sources to emerging regions. Mexico, C and EE, Brazil and China Network Optimization Establish shifts in Asset base with new investment and in-depth Make vs Buy Analysis Supply Chain Optimization Sourcing, Operations, Logistics - Potential $>XB E2E Diagnostics Optimize existing supply chains utilizing proven best practices Drive total cost of ownership' across supply chains - supplier, DuPont, customer Network Optimization Reorganize supply chains production scheduling to efficiently serve variable market base Plant Operations DPS TRACC, CoC, People Engagement - Potential $>XB Gap to perfect Diagnostics Optimize existing Plant Operation utilizing proven best practices Drive total cost of ownership' Within Plant boundaries connected to Suppliers- supplier Employee engagement driving great levels of CI with Managing Process excellence
23 Integrated Operations 23 DPS Deployments Completed 2010 Key Priorities 2011 New 2011 Sites Non Sites 3 7 Productivity ($MM) Fixed Cost XXX XXX Variable Cost XXX XXX Capacity Release XXX XXX Total XXX XXX Working Capital XXX XXX Ensure sufficient trained resources/facilitators Deliver Capacity release to ensure production volumes available for growth in sales and improvement of customer service Vertically align improvement initiatives (DPS across the Supply Chains) Facilitate Advancing DPS in post deployment sites
24 We use an Integrated Standardized Approach to deployment DuPont Production System Standardized Repeatable Leverageable 24 Business & Asset Requirements Diagnostic Priorities Capability Process Operational Capability People Engagement Massive Improvement: Fast Continuous Core Values Understand the Stake, and identify cultural barriers to progress. Gain leadership alignment of where to gain the best Business advantage: Understand the key drivers to strategic success. Improves leadership capability to develop and maintain an ever improving level of performance and trains Operators with new skills for collaborative success Establish leader standard work at all levels to continue the journey and monitor progress
25 25 Advancing DPS...is a Multifaceted approach Everyone, everyday in pursuit of Operations Excellence enabling DuPont to win in a dynamic world. Clear external perspectives And benchmarking process Engaged employees Increasing our continuous Improvement performance Employee and leadership Talent Management Process KPI s integrated With Business strategy DuPont Integrated Operations Managing Processes And Capabilities Robust capability Building engine Leadership Skills And Mindsets and Behaviours Effective Leading and Managing structures Balance of programs all needed to maintain a Sustainable System wide approach
26 26 3 path Diagnostic Deployment Areas Primary Focus Areas Mindsets & Behaviors Technical Diagnostic DPS TRACC Understanding the site s culture Defining and implementing needed changes to improve employee engagement - leadership behaviors - leadership rituals Answering Where s the $$? - cataloging all existing improvement work - defining additional improvement options - establishing stretch targets Prioritized improvement plan Assess where the site is vs. World Class Focus on Frontline capability building - teamwork - problem solving skills - visual performance management Ultimate products: Fully integrated improvement plan developed & owned by site employees Visible progress on the journey to world class 4/18/2011
27 Managing Process Business and Asset Requirements Managing Process Business and Asset Requirements Technical Capability Mindsets & Model Building Behaviors Technical Capability Mindsets & Model Building Behaviors Required Business Outcomes AND a sustainable top-quartile Performance Required Business Outcomes AND a sustainable top-quartile Performance Initial 6-8 month Centrally supported Deployment.the keys Phases 27 Technical Model Managing Processes Mindsets and Behaviors Capability Building Prepare Prepare Rapid assessment Team setup Data collection Site Staff alignment Diagnose Design and plan Implement Structure area transformation Develop implementation organization Technical diagnostics Analysis of improvement leavers and potential Management infrastructure Blueprint Cultural diagnosis Analysis of strengths and weaknesses (OPP, DSIs, Mirror workshops...) Capability building Gap analysis Synthesis Capability building Design interventions and tools (LCD, L2, and Visioning) Enable implementation organization Road map Execute area transformation Establish new site organization and performance management Capability building Support interface management with other functions Support team functioning Build skills Roll-out
28 Licensed to: Competitive Capabilities - Support We use TRACC to provide a framework execution of Standardized Managing Processes Implementation Workshop: Where are the opportunities, and how big are they? Skills and Knowledge: What does everyone need to know? 28 Workshops produce CONSENSUS on the state of practice Teams examine ALL practice aspects to generate maturity ratings Teams agree on the OPPORTUNITY associated with specific aspects of continuous improvement programs 1. Strategy 2. Team Objectives 3. Team Dynamics 4. Leadership 5. Performance Management 6. Meetings 7. Training and Development 8. Decision-Making Scorecard Where are we doing well, and where should we focus? TRACC Progress Chart Teamwork (v3) Area: Soroksar Desc: Assessment Assessor: Administrator Date: Thursday, November 13, 2003 Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Individualism Formation Foundations Relations Performance 100% PERFORMANCE OVERALL EQUIPMENT EFFECTIVENESS 50% 0% PRACTICE RATING 60% - Y2 52% - Y1 Senior management can manage the implementation process across MANY SITES in many LANGUAGES simultaneously. The Performance and Practices axis can be measured on each site and on every line within a site 39% In-depth MANUALS tailored to specific groups (senior leadership, operational management, line workers) COMPETENCY BASED training with ASSESSMENT CRITERIA applied Just-in-Time for the shop floor and Team Leaders Specialist workshops Detailed Roadmap What are the next three steps we need to manage in a focused way? Initial and periodic assessments PRIORITIZE next steps to manage STRUCTURED FRAMEWORK that transcends Leadership changes Provides DISCIPLINE, INTEGRATES prior initiatives and ensures SUSTAINABILITY.
29 .And this gives an assessment of current practice with Operator engagement 29 6/25/09 DUPONT CONFIDENTIAL SPECIAL CONTROL
30 30 During Deployment we plan and secure resources for Site leadership DPS Deployment Team DPS- ALL Site Personnel Start Initial Deployment Turnover Upon kick-off, DPS must drive progress DPS deployment team role Communicate DPS vision Set workplan and run learning events, kaizen events, etc. Align necessary resources Train site personnel to lead initiatives and institute process for continuous improvement Site personnel responsibility Participate in problem solving Capture opportunity value Internalize DPS vision Become an agent of continuous improvement allowing site personnel to take full ownership at roll-out DPS deployment team role Facilitate problem solving Assist leadership in aligning resources and removing obstacles Site personnel responsibility Maintain continuous improvement (CI) focus Uncover new opportunities Prioritize CI initiatives based on business strategy Facilitate problem solving teams Execute From-To Action Plan Communicate. Communicate. Communicate. 4/18/2011 DPS Sustainability = Line-led Transformation
31 31 The results are always overwhelming.. Guarulhos, Brazil Maydown, Northern Ireland Improved profitability 38% increase in batches per person Business, R&D, Operations working as a team Record quality performance 20% improvement Record productivity performance in yield and uptime 1,000 days without a recordable safety incident
32 3232 What we need with our DPS Deployments Alignment in the following Arenas Ensuring a continued standardized approach. Need an effective handle on employee engagement to sustain improvement PMO process must beyond Plant Deployments to ensure maximum Business Benefit and Execution Excellence Staffing and development plans needed to ensure effective resources An agreed on Site Deployment Plan with Business ensures effective value capture Operations Leadership Skills need continued upgrade Role modeling at all levels of leadership. Engage in basics with KPI s:- Performance Dialogues Effective Coaching Engaging in difficult conversations We still have limiting Mindsets and Behaviors which we must address Interrogation vs Exploration Scarcity vs Abundance Under Stress go with what has worked in PAST
33 THANK YOU.Questions?? 33
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