APICS Journey at Ingersoll Rand

Clark Ponthier, CPIM

Vice President, Enterprise SIOP and Materials Management

November 19, 2013

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Agenda

• Ingersoll Rand Company Overview

• APICS Journey at Ingersoll Rand

• APICS impact beyond education and certification

• Current Status / Keys to Success

• Q&A

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Advancing the Quality of Life

A World of Sustainable

Progress and Enduring

Results

We advance the quality of life by creating and sustaining safe,

comfortable and efficient environments addressing the world’s

growing critical needs for

• Clean and comfortable air

• Secure homes and buildings

• Safe and fresh food

• Energy efficiency

• Sustainable business practices

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Ingersoll Rand Overview

• A $14 billion diversified industrial company

• Publicly-held; NYSE:IR

• Operations in every major geographic region

• 67 factories globally

• Strategic brands are #1 or #2 in their markets

• Products and services for commercial, industrial and residential markets

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Our Path to Premier Performance

• Engaged

Employees

• Delighted

Customers

• Confident

Shareholders

Outcomes of Premier Performance

APICS Journey at Ingersoll Rand

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Change was necessary to drive Premier Performance

Journey Starting Point – early 2010

• 4 sectors operated independently with minimal standard work

• Best practice sharing occurred sporadically

• Materials Management talent level was not strong

• Inconsistent Organizational design

• No Materials Management strategy existed company-wide

• Key performance indicators were in poor shape (delivery, turns,

inventory accuracy)

• No “common language” across company regarding materials

management processes

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What Changed – 2010 ?

• Senior VP of Global Operations and Integrated Supply Chain was

hired

• 4 focus areas: Procurement, Operational Excellence, Materials

Management/SIOP, AME/Quality

• 4 senior leaders hired in early 2010 to drive world-class

performance in each functional area across Ingersoll Rand

• Creation of strong functional leadership team

• Creation of Materials Council with cross sector participation

• Responsible for creation and execution of Ingersoll Rand Materials

Management strategy

• Development and deployment of standard work for IR

• Best practice sharing

9 Company Confidential

Materials Competitive Framework / Gaps - 2010 Under-performing Industry Average Best in Class

Process

Materials processes are

ad-hoc

• inventory control

• replenishment

• scheduling

• buying/planning

Materials process is more

refined

• part classification

• inventory accuracy

• long range forecast

Materials processes are consistently

applied across Enterprise

Lean thinking fully incorporated in materials

processes

Organization

Materials organizations

are non-standardized

Talent level is not

consistently strong

Few materials managers

and staff are APICS

certified

Most materials managers

and staff are APICS certified

Talent level is better, with

pockets of excellence

All materials managers and support staff

are APICS trained/certified

Talent level is consistently amongst the

best

Ingersoll Rand Materials Management processes are below industry average

IR

• Inventory control / visibility

• Tools / process insufficient

• Level pull / Heijunka scheduling

• Talent level

• Lack of global inventory planning

• Production plan doesn’t match forecast

• Supply planning (long term supportability)

• Constraint based production scheduling tools

Gaps

10 Company Confidential

Transform Materials Management to be a core competency in Ingersoll Rand

through education / certification, deployment of standard work, organizational

design and deployment of lean techniques.

Enterprise Materials Management Strategy

Education / Certification

Standard Work

Organizational Design

Lean

• APICS training / certification

• Best practice sharing

• Materials Playbook

• Advanced techniques - future

• Common job titles, descriptions, roles & responsibilities

• Talent acquisition / development

• Push Pull

• PFEP

• Level scheduling

• Materials Gemba Walks

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Why APICS ?

• Given its size and complexity, Ingersoll Rand needed outside

support to enable materials management to be a core

competency in the company

• APICS recognized as a global leader in Materials Management

with extensive “body of knowledge”

• Ingersoll Rand employees required education and certification

programs that were recognized both inside and outside company

• Ingersoll Rand had existing relationship with APICS, so we were

optimistic about growing that relationship substantially

• We needed early wins to demonstrate impact to the business

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Key Decisions

• Large commitment by Ingersoll Rand senior leadership

• Ingersoll Rand Executive Leadership Team agreed to fully fund the

education and certification of every Materials Manager (and other

key personnel) globally (initially 100+ employees)

• E- enterprise membership

• Training classes and materials

• Exam cost

• Travel

• Fox Valley Technical College was chosen as our preferred

delivery method for our employees

• All students expected to finish within 18 months of start

• Materials Manager job description rewritten to include CPIM

certification as a requirement

• All new Materials Managers either require CPIM certification or

commit to obtain certification within 18 months of hire date

APICS impact beyond education and certification

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Materials Management Playbook

Enterprise Materials Management June 2012

Process Compliance: 90%Security

Technologies

Climate

Solutions

Industrial

Technologies

Residential

Solutions

Training Complete 100% 100% 100% 100%

ABC Classification 100% 99% 99% 100%

Cycle Counting 88% 77% 70% 100%

ABC/XYZ 100% 95% 100% 100%

Ordering Methods 100% 98% 92% 88%

Safety Stock 95% 91% 86% 100%

Inventory Segmentation 100% 97% 96% 100%

Order Acknowledgement 100% 98% 100% 100%

Shortage Reporting 77% 98% 79% 100%

Receiving Process 100% 100% 100% 100%

Escalation 100% 95% 100% 63%

Input-Output Modeling 46% 27% 89% 0%

Enterprise Total 93% 89% 90% 92%

• Materials “Playbook” was developed in 2011, comprised of core

materials processes

• Materials Council was tasked with development and deployment across

every Ingersoll Rand factory globally

• APICS glossary and practices were used extensively throughout the

development stages

• Governance in place to ensure compliance with IR Standard work

• Results have been very positive

• Playbook content is continuing to

expand

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Materials Management Org Design

• Prior to 2012, no standard organizational design existed for Materials

Management at Ingersoll Rand

• Job titles, job descriptions, reporting relationships, and

roles/responsibilities varied greatly across sectors/regions

• No process existed to assess functional competency for materials

managers

• Standard org design developed and

deployment will be complete by end of year

• APICS materials assisted in development

of job descriptions and org design

• Role of Materials Manager at Ingersoll Rand

was elevated in many locations

Current Status / Keys to Success

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Current Status • Early results are very positive

• Delivery improved 85% since early 2011

• Inventory turns improved ~1 turn on average

• Playbook compliance above 90% globally

• Standard org design implementation completed in 2012

• Substantial improvement in inventory accuracy across many factories

• 4 Materials Managers promoted to Plant Manager position in last 6

months

• Education / Certification

• 200+ employees either completed training or in progress

• Fox Valley / Classroom training / Self-study

• 80+ new CPIM certifications in 2 years (project another 35 in next 3

months)

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Recognition

• Ingersoll Rand journey highlighted in January issue of APICS

magazine

• Recipient of 2013 APICS Corporate Award of Excellence in

Education

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Key Learnings / Areas for Improvement

• Involvement with APICS goes beyond training and certification of

employees

• Companies undergoing similar transformations need to ensure

governance is in place to track employee progress (certifications)

• Fox Valley Technical College training has been positive overall, but

some employees prefer alternate methods of training

• Improvements required for international students (language, testing

locations, testing dates)

• Whenever possible, give employees time to study during work hours

• Don’t compromise when it comes to “standard work”

• Use of balanced scorecards are key

• More “lean materials” content is required for those companies

undergoing Lean Transformations

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