Striving for excellence in Supply Trend Control Systems Journey Tom Pickering, Head of Supply 18 September 2003

Striving for excellence in SupplyTrend Control Systems Journey

Tom Pickering, Head of Supply

18 September 2003

N O V A R I N T E L L I G E N T B U I L D I N G S Y S T E M S

Getting to great

Trend Controls were a good business in 2000, and in 2002 became outstanding

There were lots of mistakes made, but the purpose is to share how we did this along the journey getting to great, and some of the key points for me

Its interesting to note that the success has continued and Trend Controls won another award in 2007, and has enjoyed outstanding profits and growth for many years

Tom Pickering 2012

On Nov 1 2002 Trend Controls were awarded

“Best Electronics and Electrical Plant”

Awarded byManagement Today Magazine in association with the DTI and Cranfield

School of Management

THE INFOCUS CORPORATION AWARD


SecuritySystems

ElectricalAccessories

ConnectivitySystems

ControlSystems

* Includes acquisitions during 2002

The Novar Organisation


Control SystemsBuilding management systems and custom controls

Installation

Non-Domestic BuildingsParticularly:

• Industrial - Including Pharmaceutical!• Health• Retail• Public• Telecomms


Trend Controllers

AnalogueInput

DigitalInput

TempPressureHumidity

RunFaultTrip

AnalogueOutput

DigitalOutput On/Off

math's

logic

control

PulseMeter

OnOn

Positioning

DigitalInput


Examples of Products

Building Controllers Supervisors & Displays Sensors

Actuators & Soft Starters

Network Management


System Elements

Local Area Network (LAN)


Aftermarket Service & Support

Field Services Applications Group Bureau Services MATT

Taking good care of the customer’s investment!

2 year warranty on all products

10 year backward compatibility and obsolescence support


Competitive Position*

Controls UK #1

Controls US - Retail segment #1

Fire Detection Germany #1

Fire Detection Europe #2

Intrusion Germany #2

Structured Cabling Europe #2

Electrical Accessories UK #1

Nurse call Germany and France #1

Access Control and Time Attendance Spain #2

Competitive position


Control Systems - Competitive advantage

Customer Service differentiation by

• Reliable order fulfillment 98-100% in 1-2 days

• Products support wide range of flexible solutions

• Champion of new technology

• 220 prototypes in 2002

• Manufacturing lead time 4 days

• Focus on highly competitive bespoke solutions to suit the route

to market

• Closely integrated product management, warranty management

technical and commercial links with customers

Source of Competitive advantage


Product Options and customer configuration

Current products 2974

Current accessory lines 286

Controllers with configured I/O 725

Obsolete lines built on demand 82

Total manufactured lines 4067


Higher the service… the higher Customer Expectations

Full Order Acknowledgement 2 hours

Internal cycle time 3.5 hrs

Customer lead time 1-2 days

Complete & On-Time 98 - 100%

Passed on to customers increase tie in / should we charge?


Typical Manufacturing Strategy Timeline

Time Strategy / methodology COTD %

FTEs Output %

Lead time

1980s MRP, make to stock (survival) LOW ! 40 50 4-5 wks

1998 MTO, cellular layout, product focus, COTD KPIs, Automation,

90 75 70 3-7 days

2001 Pull from point of proliferation, process focus, self managing teams

91-97 75 100 3 days

2002 Balanced scorecard development 98 64 110 1 day

2003 MCRS, six sigma, supply chain review, focus on intangible assets

99 58 130 1 day


Supply Chain Proliferation and strategy

Proliferation Point

0

500

1000

1500

2000

2500

3000

Vari

an

ts

Current Assemblies IQ3 Assemblies Current Affected By IQ3

Current Affected By New 2 2 2 780

Outsourced Assemblies 18 6 19 66

Current Assemblies 104 128 151 1556

Surface Mount Auto-insertion Manual Insertion Final Assy inc Firmware & Pack

124 136 172

2402Analyse the implication

of outsourcing the activities up to the point

of customer configuration


Original Factory Layout

ROLLER SHUTTER

UP

UP

RAMP

ROLLER SHUTTER

DUC T

FIREEXIT

FIREEXIT

RAMP

DOORC ONTROLGEAR

UPTOSUSPENDEDFLOOR

MALE

FEMALE

UP TOMEZZANINEFLOORLEVEL

FIREEXIT

CELL 2 CELL 3 CELL 6

MANUALINSERTIONMATERIALS

PACKINGMATERIALS

REPAIRS

CMS400CMS402

CELL 5

L\ST

ATIO

NM

AN

UA

L A

SSEM

BLY

REPA

IR

S

EOLFIXTURES

ATEFIXTURES

FURTHEROPS

EOL

TEST

BUIL

D

PREP PREP

PAC

KIN

G

SPEAATE

SPEAATE

SPEAATE

PREP

REPA

IR

S

MA

NU

AL A

SSEM

BLYL\

STAT

ION

PRINTER

FURTHEROPS PREP PREP

BUIL

D

PREP

EOL

TEST

PAC

KIN

G

ATEFIXTURES

RE

PAIR

S

EOL

TEST

ATEFIXTURES

PAC

KIN

G

FUR

TH

ER

OP

S

BUIL

D

PREPPREP

PREP

EOLFIXTURES

ADMIN

FINALASSEMBLYMATERIALS

FINALASSEMBLYMATERIALS

MA

NU

AL A

SSEM

BLY

MAT

ERIA

LPR

EP

AN

C

EOL

FIXT

URE

S

R27 F.ASSY MATL

R10

R8M

\IN

SE

RTI

ON

F.A

SS

Y

MA

TL

R26 F.ASSY MATL

R6 F.ASSY MATL

(2.5Lx0.6Dx2.1H)

(2.5

Lx0.6

Dx2

.1H

)(2

.5Lx0

.6D

x2.1

H)

(2.5Lx0.6Dx2.1H)

M\

INS

ER

TION

R16

F\ ASS

R13

R7

(1.2Lx0.61Dx1H)

(2.5

Lx0.6

Dx2

.1H

)

F.A

SS

Y

MA

TLF.A

SS

Y

MA

TLR14

(2.5

Lx0.6

Dx2

.1H

)

R15

(2.5

Lx0.6

Dx2

.1H

)

R28

(2.5Lx0.6Dx2.1H)

FINAL ASSY MATLS

R9 M\ INSERT

(1.8Lx0.61Dx1.9H)

TRR1LABR4 TRR3

LAB

R5

(1Lx0.4Dx1.5H)TRR2

R11M\

INS

ER

TION

PA

CK

INGR1

7

(1.2

5Lx

1.2

Dx0

.8H

)

PA

CK

INGR1

8

(1.2

5Lx

1.2

Dx0

.8H

)

PA

CK

INGR1

9P

AC

KIN

G

R23P

AC

KIN

G

(2.0

Lx1

.2D

x0.8

H)

R20(1.5

Lx1.2

Dx0

.8H

)

PA

CK

ING R21P

AC

KIN

G R22P

AC

KIN

G

R25

PA

CK

ING

R24

PA

CK

ING

(1.5

Lx1.2

Dx1

.6H

)

Pole 9

Pole 8

Pole 7

Pole 6 Pole 5

Pole 12

Pole 4

Pole 3

Pole 1

Pole 2

Pole 13

Pole 10

Pole 11

Pole ?

Extract 1Extract 2

Extract 3

Extract 4 Extract 5 Extract 6

Pole 14

Pole 15

Pole 16

B

SOFTWARE

…Diluted process focus, long travel and quality feedback loops


2001 Factory Layout

ROLLER SHUTTER

UP

UP

RAMP

ROLLER SHUTTER

DUC T

FIREEXIT

FIREEXIT

RAMP

DOORC ONTROLGEAR

UPTOSUSPENDEDFLOOR

MALE

FEMALE

UP TOMEZZANINEFLOORLEVEL

FIREEXIT

ADMIN

R

RR

R

B R R B B

R RR R

R RBB B

B B B

BB B

B B B

BB B

B B B

BB B

B B B

CMS400

CMS402

L\STATION

MANUAL INSERTION

FLOW SOLDER FURTHEROP'S

PRE-TESTEDBUFFER

MATER

IALS

CO

NTR

OLLER

S

F\SOLDERCONSUMABLES

UNPREP'DM\I MATLS

COMPONENTPREPARATION

ATE

REPA

IRS

DE-PANELLING

DESPATCH

FIN

AL A

SSEM

BLY

MATER

IALS

PHOT

OCOP

IERPR

INTER

B B

B

B

SOFTWARE

SPEAATE

SPEAATE

ATE

FIXTU

RES

ATEFIXTURES

ATETEST

BDM

BDM

F\SOLDERTOOLS

REPAIRSTECHNICIANS

REPA

IRS

BEN

CH

PRINTER

TX

's

PACK

ING

MAT

ERIA

LS

TR

RA

CK

S

R27 F

.AS

SY

M

ATL

R10

R8M

\IN

SERT

ION

F.A

SS

Y

MA

TL

R26F.A

SS

Y

MA

TL

R6F.A

SS

Y

MA

TL

M\ INSERTION

R16

F\

AS

SR7

F.A

SS

Y

MA

TL

F.A

SS

Y

MA

TL

R14R15

R28 F

INAL

ASS

Y M

ATLSR9

M\

INS

ER

T

TR

R1

LAB

R4

TR

R3

LAB

R5

TR

R2

R11 M

\IN

SER

TIO

N

PA

CK

ING

R17P

AC

KIN

G R18P

AC

KIN

G

R19PACKING

R23P

AC

KIN

G

R20

PA

CK

ING

R21

PA

CK

ING

R22P

AC

KIN

G

R25

PA

CK

ING

R24PA

CK

ING

PACKIN

G

CONSUMABLES

F.A

SS

Y

MA

TL

LAB

REVISEDASSESSTO C2

FIXTUREREPAIRS

ATEFIXTURES

RB

RRBB

Pole 9

Pole 8

Pole 7

Pole 12

Pole 11

Pole 4

Pole 3

Pole 1

Pole 2

Pole 13

Pole 10

R6

LAB

PLAS

TICS

EMPTYDROPZONE LABEL RACKS

ATEFIXTURETROLLEY

FIXT

URE

REPA

IRS

M\

INS

ER

T

F\Assy Sup

Stage2 SUP

Pole 13

Pole 12

Pole 17

Pole 17

Pole 10

Extract 4

Extract 5

Extract 6

Extract 1Extract 3

Extract 2

Pole 18

Pole 1

Pole 2

Pole 6

Pole 9

Pole 8

Pole 7

Pole 4

Pole 14

PRODUCTBUILD

EOLTEST

EOLFIXTURES

EO

LFIX

TU

RES

EOLFIXTURES

PREPPACKINGB

CELL 5

AN

C Pole 14

Pole 15

Pole 16

B

PRINTER

PA LLET

REW

ORK

BEN

CH

FLASH \ BUILD

B

PREPPole 3PACKING

EOLTEST

EOLTEST

EOLTEST

PP PREP

PACKING

P P

PREPB

FLASH \ BUILD

FLASH \ BUILD

BPREPPole 5

PACKING

EOLTEST

EOLTEST

EOLTEST

PP

PREP

PACKING

P P

PREP

B

FLASH \ BUILDEOL

EOL

EOL

EOL

ELECTS\D RI V

ELECTS\D RI V

FL ASHTEST

FL ASHTEST

ELECTS\D RI V

FL ASHTEST

FL ASHTEST

EXT 1

<---1.6m---->

<---1.

2m---->

<---1.6m---->

<---1.6m---->

<---1.

2m---->

<---1.6m---->

<---1

.6m

---->

<---2.0m---->

<---1.

2m---->

<---1.

2m---->

<---1.2m---->

<---1

.6m

---->

<---1.6m---->

-Pull from the point of proliferation, load daily, local processfocus with local quality feedback

Velocity 3.5 hrs


MON TUE WED THURS FRI MON TUE WED

100%

Facto

ry C

ap

acit

y

Example shows a 1 day lead timeORDER

1

Pull from Kanban, configure assembly

Customer Delivery

Pull from the point of proliferation


Process layout – process improvement - Summary

Metric 2000 2001 2003

Internal quality % 88 93 96

Output £ 111 123 132

FTEs 75 63 58

Improvements implemented / month

0 15 60

COTD % 93-96 98 99-100

Lead Time 2-6 2-4 2


Benefits for the Team

Opportunity to get very directly involved Daily fulfillment cycle is fast and lively Simple system means all can see their impact Continuous customer feedback and opportunity to

improve performance Have fun!


Typical High Technology Manufactured Cost Breakdown

Typical productmix

Direct Labour10%

Material62%

20%

8%

Volume med complexity

10%

Material55%

12%High Volume low variety

low complexity

19%

Material39%

26%

16%

Material cost down – local Value Engineering is the

greatest opportunity

“no core competence -

outsource design

capability toFar East”

“very little overheadassociated with the

established product”

DFM


Where can we differentiate our customer service? …where are we going to focus resources?

Increasing Value Add

Decreasing differentiation

Cost Sensitivity

On-Site Services

Off-Site Services

Information ServicesHigh volumelow complexity

And Stable

Responsiveness to high

variety on time…customer configuration

High volumemedium

complexity

3000 2000 1000 0

Stable designs & make to buy…

buyStability & DirectCost is key

make


Increasing Value Add

Decreasing differentiation

Cost Sensitivity

Strategy Fit Strategy

Misfit

Make to Buy?

Remaining Sensors

What are our choices?Which products fit the current manufacturing strategy?


Collaborative Supplier Strategy

Supply Vision

We will will remain a centre of excellence in:

•The manufacture of customer customised products

•The delivery of unrivalled customer facing supply solutions

•On time NPI

•Making everything happen on time

We will grow its business and relentlessly reduce the cost

…What can our strategic suppliers do to support our vision

Fragmented Category Spend

Leveraging strategic suppliers

•Establishing new strategic relationships

•Consolidate spend

•Step change in cost reduction

Tactical suppliers<$100Kpa

•Operationally managed

ID Key strategic suppliers >$100K coach and develop capability

•Establish contract KPI review

•Value Engineering

•Cost reduction

•Material liability

•Supply chain development

•Quality

•stretch savings target

•Reduction of 14 suppliers


Supplier Collaboration: Where are we now, what is our opportunity to add more value and win with us…?

m h

m

h

Supply performance

Colla

bora

tive S

up

plie

r valu

e

Maximum supply valueMaximum collaborative value


Plastics Strategy Key Collaborative Op’s Dimensions,

Worl

d C

lass

Supplier Performance

Collab

ora

tive I

mp

ort

an

ce

100World Class

10

KEY:

Far East

Operations Related

CURRENT

0

Ops Mgmt. Cost

Unit Cost (2% total)TBC

St. Asaph?

Fin goods & matl Liability

Secondary Process(Eg No plastics Print in Lugoj)

Clout/Response

VMI (UK?)S’Chain Risk

Quality

VMI/L.T.

Bus. Stability

Design instability

Material leverage

Current: 5 Far East: 3





Focus and organise processes based around customer

LEAN HEDGE AND DEPLOY

AGILECONTINUOUSREPLENISHMENT

DemandingOpportunistic customersHigh customer configurationLow price sensitivityUnpredictable demandNeed to manage yield

Unplanned and unforeseenDemand but tight customer Relationship with highService expectations and agileresponse

Predictable demand, easily managedVia tight collaboration and visibilityof demand. Require a high servicelevel

Offer predictable demandLoose relationship with customerDoes not require high service level.To succeed focus must be on lean and efficient

Predictability of demandhigh low

Rela

tion

sh

ip w

ith

cu

sto

mer

tight

loose

There are 4 basic customer buying behaviours, driven by individuals or corporate culture that change very little Source John Gattorna, Cranfield University


Customer facing Supply business processes

Manage processes not functions

Hedge and deploy agileContinuous

replenishmentlean

Suitableresponse

Organisation& skills review

TypicalBusiness process

Marketrequirement

Economies of scale & low cost Process and capacity

Dedication.Capacity booking based

On forecast Reliable efficient delivery

Team andcustomer

relationship focus

Visibility of demandVia Integrated ITFocussed support

Low variety Reliable processes

Tight customer suppliercollaboration

Short lead timeLow variety

Trusty and reliable service

SelectiveFast, innovative multiFaceted product and Supply requirements,

Very low cost sensitivity

Project based withaccess to aX functional

range of SkillsFocus on fast product

and service configuration

X functional challenging innovationProject and

Delivery focussed

Flexible supply skillsInternal cust-supplier metrics

Customer focussed supplyClear Commitment and

acknowledgement

Make to orderResponsive supply and

Rapid delivery with genericProduct design capabilityFacilitating late Customer

configuration

Tight customerCommunication

Short lead time deliveryTo high variety demand

Low customer loyalty

Low costAnd efficient low

Contact with customerPrice sensitive

Process efficiencyFocus with limited

Variation, productivity,cost & reliability are key

Source John Gattorna, Cranfield University


Intangible assets: your people and business process are the key to realising value from business assets

Most value comes from from intangible assets

Business assets:1. The People

2. The Facility,(anyone can buy)3. The Business processes

4. Strategy

Develop business processesSystems to fully involve all to deliver

the strategy

Customers

Shareholders

Improvement and Development toolse.g. Six Sigma


What is a team? How go we get there?

“A small number of people, with complimentary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable”

The key is to be committed to a COMMON PURPOSE AND GOALS


Focus on Employee Satisfaction

Work relationshipsLeadership and strategy

Personal development

Employee Satisfaction


Team development key: the difference between challenge and threatening environment is a very fine line

No s

up

port

High challenge

Fu

ll s

up

port

Low challenge or notinvolved

Fully functionalTeam with clear

Objectives… Good relationships

Dis-functional teamand or misunderstandings

Unclear Objectives… Volatile relationships

Missed opportunity

MotivatingThreatening

Clarity, involvement how can you make aDifference?, Self managing SystemsBalanced scorecardAnd MCRS

Get to know eachOther, & understand

Differences, fun, open withFeedback, development& relationship focussed

Don’t know how they fit… no feedback

Alienated No challengeWasted value


Team development & feedback on relationships

FeedbackWhat is working

/ What less of

Coachingfeedback

Identify potential

Review & Show don’t do

Feel good

Success& recognition

Learn moreFrom all

Better team work

Clarifyobjectives

•Get to know eachother•Make informal time

•Encourage fun•Show weaknesses


Balanced Scorecard – clear leadership

financial customer Internal processes

EmployeeLearningAnd growth

“Created by a team committed to the common goal of excellence”


How do we create focus and keep the strategy alive?

Vision

strategy

Objectives

measures

Benchmarkexternal

data

Desired futurestate

Differentiatingactivities

What must we do wellTo implement the

Strategy?

How are we goingTo measure

success?

Values

Openness

Integrity, Passion

Commitment to

get things done

Principles

Customer first

Delivery

Focus

Clarity

Mission, why we exist?


X Novar businesses - Where should we leverage best practice?

Site leadership

Site leadershipTeams

Shop Floor

KPIs

Site leadership


Shop Floor

Site leadership


Shop Floor

KPIs

KPIs

KPIsKPIs

KPIs

Visioprime Trend Gent

suppliers suppliers suppliersKPIs KPIs

CFB

Us a

nd

cu

sto

mers

Best practice


Why are we a team? how do individual objectives tie into the strategy?

S u p p ly F ina n ce G rp P ro c u rem e n t M a tls m a na g erS u p p ly C TL

Q u a lity M an a g er M a nu f. M a na g er E n g su pp o rt T e s t T e am R e p a irs P la nn ing F a c ilit ie s D is trib u t ion

T re n d su p p ly V is ion

CostReduction

Cost / ownerDeviation reportsMatls savings

ID strat suppliersCollab reviews£1M target

Inbound logisticsNon strat supplierObsolescence pl.Danfoss Euro DD

Repairs dataScrap reportComp failures

Direct lab red.-outsourcing-C5 layout-operation times

C5 relayoutWaste reductionInvestment plan

Test time reduct.Investment plan

Define org struct.Establish metricsBusiness focus

Cost saving analyProcess AuditsDirect lab in ABC

Measure targets Review contractSLAsSavings TargetsANC-Amtrak

Team Development

Team account’y champions.Embed metrics

Devolve Data coll-to teams-audit systems

Clear metrics/celldev s/card - t/lsDev day-day –tls

ChampionsTraining plans

Review C1 t/lVision Ops suppt-NPI / improv.-cap ex etcTraining plans

Vision Ops suppt.-NPI / improv.-Cap ex etcredefine own role-repairs etcTraining matrix

Implement t/lDefine acctabilityImplement BSCDevelop vision

Devolve-BOM-ABC-Part no.s

Establish MRS-day-day MC-weekly MC

Strategy

Cap ex applnsCost owners reptKey projectsABC review

Support o/sEst. MRCS w strat. SuppliersReview Ansen

EDI reviewVMI devt-Danfoss-Ansen etc

Data structureCustomer servicechecks

ProductivityDirect labour adj.MCRS embed6sigma review

Capacity plans-cap ex-strat fit-product-productivity

Capacity plans-cap ex-strat fit-product-productivity

Develop vision-w Bal scorecard-business svce

ABC reviewChange mgmtComponent database

Contract devt-strategic suppls-KPIs

MCRS embed

NPI

Obsol. planning P Change mgmtNPI acc. CriteriaRFTresponse

NPI acc. CriteriaRFTresponse

NPI acc. CriteriaRFTresponse

NPI skillsPlanned mix vactual

Customer service

Customer Visitsv SLAInt System auditsISO 9001:2000

Define metricsCOTDvcust RDD MCRS embed

Outsourcingprocess

MK best practiceID group proj mgrSupplier selection

Define sourcing requirementsBOMs transferObsolecence planEst. storage space

Quality systems reviewSample sign off

Labour ajustment Process quality standards acc criteria

Test reqmts. Phase in / outMonitor plan v actual

Plan space

Layout - comms

Cost savings by o/s project


Having defined the strategy via KPIs how are we going to review progress?

ReportContro

l

Manufacturing

Operations Meeting

Weekly Production Meeting

Daily Production Meeting

Shift Handover

Operator/Shift Logs

(SIC’s)

MWOR

DWOR

DWOR

Forecast / Plan

Customer Satisfacti

on

COTCD (Cell 5)

COTCD (Final Assy)

Overall COTCD – Int. &

Ext.

Red Alert

Days (Cell 1)

Red Alert Days

(Cell 5)

Red Alert Days(PCB)

Overall Red Alert

Summary

Lead-time

(Cell 1)

Lead-time

(Cell 5)

Lead-time (PCB)

Lead-time

Summary

Training Plan Attainment

Overall COTCD – Int. &

Ext

Overall Red Alert

Summary

Lead-time

Summary

Training Plan Attainment

Dir

ect

or

Manag

er

Team

Lead

er

Training Pan Attainment

(Cell 1)

Training Pan Attainment

(Cell 5)

Training Pan Attainment(PCB)

C.I Actions Closed OTIF

C.I Actions Closed OTIF

C.I Actions Closed OTIF by

Cell

Morale (Monthly)

Absenteeism By Cell(Weekly)

Staff Turnover By Cell (Weekly)

Morale (Monthly)


Issues• Very good performance• 8th April packing lists pulled incorrectly meant 88% OTCD• carrier continue to affect customer perception

• Actions to Resolve• See Red alert • As of 12th May UK will be delivered by new carrier. Waiting

on date to install terminal on site and train.

020406080

100

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Month

% CO

TD

COTD Int COTD Ext Target

Issues• No issues bang on target• • • •

Actions to Resolve• • • • •

0

0.5

1

1.5

2

2.5

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Month

Lead

-tim

e (D

ays)

Cell 5 Final Assy Target Final Target Cell 5

Manufacturing Lead Time

With: FTEs ’01:75, ’02:64, ’03: target 58

Management Control Reporting SystemManagement Control Reporting System

Internal and external COTD

On Nov 1 2002 Trend Controls were awarded

“Best Electronics and Electrical Plant”

Awarded byManagement Today Magazine in association with the DTI and Cranfield

School of Management

THE INFOCUS CORPORATION AWARD


Summary of learning points

Develop a process to get everyone involved and self motivated by results

Process facilitate realisation of intangible assetsClearly define and keep the strategy and accountability

alive at all levelsDevelop and value the team as the main asset and

establish team feedbackUse best practice team development toolsMotivate by success, recognise and reward the team for

their contribution

Documents

Striving for excellence in Supply Trend Control Systems Journey Tom Pickering, Head of Supply 18 September 2003