Six Sigma Awareness Training

3 P’s Purpose: Process Product Introduction to Six Sigma methodology and roll out of I&CIM vision to all employees of Europe Process Presentation & exercises Product Common understanding of Six Sigma

Voice of Stake Holders

Aggressively Change the Way We Do Business with Sustained Improvements I&CIM Mission,Europe Aggressively Change the Way We Do Business with Sustained Improvements Build critical mass thru improved yield Achieve critical mass to achieve culture of Excellence Reduce cycle time Integration of tools and people to achieve the most efficient problem solving.

What is Quality Quality is a state in which ‘Value Entitlement’ is realized for the customer and provider in every aspect of the business relationship In the world of six sigma ‘entitlement’ means that companies have a rightful level of expectation to produce quality products at the highest possible profits; for customers ‘entitlement’ means that they have a rightful level of expectations to buy high-quality products at lowest possible cost.

The Absolutes of Excellence Focus: Your Customer Performance Goal: Do it Right the First Time Method: Innovation & Continuous Improvement Control: Customer Feedback People Caring Style: Teamwork Reward: Recognition and Security

Business Performance

+ How do we work Customer Requirement Quality Delivery Price Various Internal Process Loss Internal Performance FTQ = 10,000 -30,000 Cost = Red Supplier = We don’t Know Design FTQ= 200,0000-3000000 We lose More As We Grow More Performance at Customer Quality Delivery Price New Launches PPM= 30-40 99 % Price = As per Customer SOP On time

Where we lose money 1.5 % of Revenue Traditional Quality Costs Inspection (Easily Identified) Scrap 1.5 % of Revenue Traditional Quality Costs Warranty Rework Rejects (tangible) Hidden Quality Costs Lost sales Six Sigma reveals hidden capacities and capabilities Lost Opportunity Late delivery Engineering change orders Long cycle times Expediting costs Excess inventory (intangible) (Difficult to measure) Lost Customer Loyalty More Setups Customer Sat Field Modifications Customer Productivity Loss Lengthy Installs Employee Morale, Productivity, Turnover T&L Overtime 15-20% of Revenue

A $0.8 Billion Cost Reduction Opportunity in Europe! How much we lose If X is a 3 s Company, Cost of Failure is Estimated to Be at Least 15% of Sales 40% Cost of Failure (% Sales) 35% 30% 25% 20% 15% 10% 5% Defects per Million 3.4 233 6210 66,807 308,537 691,462 Sigma 6 5 4 3 2 1 A $0.8 Billion Cost Reduction Opportunity in Europe! 38

How do we Improve today Random Down Stream Lower Hierarchy Higher Lower Upstream Down Stream Random Down Stream Lower Hierarchy Upstream Down Stream Big $ Improvement in Down Stream Process & Lower in Hierarchy gets PULLED by the Upstream process & Higher in Hierarchy Present Focus Higher Lower Savings are recorded but does not HIT the Profit & Loss A/C Improvement are incremental & unsustainable in Nature & we Need BREAKTHROUGH & sustainable

Change

What to Change $ $ $ $ $ $ $ € $ $ $ $ $ $ $ $ $ $ $ $ We all agree there is a Need to change the way we work But we need to Bring Speed in the change Change the thinking from Cost to profit $ $ $ $ $ $ $ € $ $ $ $ $ $ $ $ $ Don’t look at the cost of the person watering the plants, But look at the impact of the process on the results. $ $ $ There are many “Upstream Process” apples still waiting to get picked

What is the changed methodology Innovation & Continuous Improvement Methodology (I&CIM) is a X’s common global philosophy of doing business by implementing a rigorous, structured & Data driven Continuous Improvement Methodology which Focus on the Customer by driving perfection in the Business processes through Understanding & Eliminating All Sources of Variation. Build critical mass thru improved yield Achieve critical mass to achieve culture of Excellence Reduce cycle time Integration of tools and people to achieve the most efficient problem solving. Business Process Variation is a termite in our growth

Success & Results

Major Projects in Europe Estimated Savings Claim Management process for Model Year & Engineering Changes Connection Systems Capacity improvement In-sourcing of components Tapping Utilization Cutting Machine Productivity Costing Accuracy Trucking efficiency Cost of Value Streams Design Process optimization NC Cost in Mechatronics Over dues A/C Receivables Europe Wide FTQ reduction $30-50Mi. $2-3Mi. $3-4Mi. $1Mi. $1-2Mi. $4-5Mi.

X Global Performance 2002 1.13% We are Here Achieved How does each division define success? What other metrics are needed? Warranty discussion -Delphi is being held responsible for a larger share of our GM warranty impact. NA vehicle manufacturers experienced $6 billion in warranty costs in 1999. Plan

What is Six Sigma

The Many Facets of Six Sigma Focus and commitment to quality must be driven by top leadership Leadership must be fully engaged and accountable for success Six Sigma provides classical problem solving tools enhanced with a fundamental knowledge of statistics and variation 6s Leadership Tools Process Metrics Focus is on statistical process capability and process variation analysis Products must be designed to be manufactured within process capability Process capability must be quantified Goal is defect free products and processes Focus is on process capability (rolled throughput yield) rather than end of line yield All decisions must be data driven

Organisations focus on internal performance Business Performance Customer Dissatisfaction Boat is still there ?? Customer Target Average I Shot the Boat!! Supplier Organisations focus on internal performance

Target Customer Experience Variation of the Upstream to downstream processes creates variation to Customer output

Reducing Variability Is The Key To Six Sigma What Is Six Sigma A 3 s process because 3 standard deviations fit between target and spec Before Target Customer 3 s Specification 1 s 0.27% Defects 2 s 3 s Target Customer Specification After 6 s ! No Defects! Six Sigma is a problem solving methodology using statistical techniques to Gather, Examine, Modify and Sustain quality improvements. Each project follows the same 4 steps, with the ultimate goal being to raise a process’s sigma level, thus reducing defects. The graph explains what a sigma is and shows why a 2 sigma process has more defects than a 6 sigma process. 1s 2s 3s 4s 5s 6s Reducing Variability Is The Key To Six Sigma 4 3 4

No of Parts in the product Why Six Sigma Quality as a Function of Part Count For Average Part Quality Level Product Quality Level PPMs No of Parts in the product 6 sigma Increases probability of shipment of defect free products

Why Today (with ± 1.5  shift) Sigma Scale of Measure 3 6 PPM 1,000,000 100,000 10,000 1,000 100 10 1 PPM IRS - Tax Advice (phone-in) (140,000 PPM) Restaurant Bills Doctor Prescription Writing Payroll Processing Order Writeup Journal Vouchers Wire Transfers Airline Baggage Handling Purchased Material Lot Reject Rate 3 6 Best-in-Class Average Company Domestic Airline Flight Fatality Rate (0.43 PPM) 3 4 5 6 2 1 7 Sigma Scale of Measure Adds Reliability and Competitive advantage

s = S (X – X)2 n The Standard Deviation 3s m 1s p(d) T USL 1 Sigma - 68% 2 Sigma - 95% 3 Sigma - 99.73 % 1s p(d) Upper Specification Limit (USL) Target Specification (T) Lower Specification Limit (LSL) Mean of the distribution (m) Standard Deviation of the distribution (s) T USL 3s 10

Corporate Initiatives Group - Europe What Variation Means to Business L H H L H L H L Cycle Time Reduction Higher Production Inventory Reduction Lower Price Using mean-based thinking, we improve average performance, and we break out the champagne ... But our customer only feels the variance and cancels the next order! Shifting of the mean require heavy capital investment and does not significantly reduce the waste Variation is enemy, just kill it. 3/31/2017 Corporate Initiatives Group - Europe

Stability Factor Stability factor can unfold hidden factories Plant Capacity = 2000 / Year A Six Sigma Best Practice For Generating Free Capacity . . . Capacity Gain Q1 = Quartile 1 (25%) Q3 = Quartile 3 (75%) Q3 Q1 Q3 Stability Factor = Q1/ Q3 IMPACT • Mfg Cycle • Inventory Turns • Promises Kept • Investment Efficiency • Labor Productivity • Delivered Quality (PPM) Q1 Plant Capacity = 1100 / Year When products and services that we sell are truely a reflection of the way we work... then learning more from our current output performance will show how we work, what we need to change and what we need to keep. Early customer Successes in the businesses shows that spending significant time upfront capturing this Outside-In customer signal is of critical importance. Many of our six sigma projects show this to be our weakest link between improvement activity and customer impact. The information locked up in this output signal can be harvested through variance analysis, as I’ll show later. This has been proven to be the most powerful approach in providing insight and significant results. SF <0.9, Control Issue SF >0.9, Technology Issue Stability factor can unfold hidden factories

Would you control shooter or target to get the Gold Medal at Sydney The Focus of Six Sigma f (X) Y X1 . . . XN Independent Input-Process Cause Problem Control Y Dependent Output Effect Symptom Monitor Would you control shooter or target to get the Gold Medal at Sydney

The Inspection Exercise Task: Count the number of times the 6th letter f the alphabet appears in the following text. The Necessity of Training Farm Hands for First Class Farms in the Fatherly Handling of Farm Live Stock is Foremost in the Eyes of Farm Owners. Since the Forefathers of the Farm Owners Trained the Farm Hands for First Class Farms in the Fatherly Handling of Farm Live Stock, the Farm Owners Feel they should carry on with the Family Tradition of Training Farm Hands of First Class Farmers in the Fatherly Handling of Farm Live Stock Because they Believe it is the Basis of Good Fundamental Farm Management.

You can save your self by producing quality not by Inspection The Impact of Added Inspection If the likelihood of detecting the defect is 70% and we have 10 consecutive inspectors with this level of capability, we would expect about 6 escaping defects out of every 1,000,000 defects produced. 1,000,000 ppm 6 ppm 3.4 ppm You can save your self by producing quality not by Inspection

Defects Per Million Opportunities Six Sigma As A Goal Distribution Shifted ± 1.5s s PPM 2 3 4 5 6 308,537 66,807 6,210 233 3.4 Sigma is a statistical unit of measure which reflects process capability. Six sigma means that a process results in only 3.4 defects per million opportunities. Process Capability Defects Per Million Opportunities

FTQ performance of manufacturing quality Process Performance FTQ performance of manufacturing quality What are the over dues as % of the total Receivables What is the shipping window of the suppliers What is the % of pending payables What is the % compliance to the production plan What is the % compliance of the project completion date 5000-10000 PPM 11

Implementation

... Can Be Applied To Every Business Function Where in X….. ... Can Be Applied To Every Business Function Sales Engineering Purchasing HR 6 Sigma Methods Finance Manufacturing, CS, PCL IS&S 7

Philosophy Behind Implementation We don’t know what we don’t know We can’t do what we don’t know We won’t know until we measure We don’t measure what we don’t value We don’t value what we don’t measure Six Sigma is a process of asking questions that lead to tangible, quantifiable answers that ultimately produce profitable results Build critical mass thru improved yield Achieve critical mass to achieve culture of Excellence Reduce cycle time Integration of tools and people to achieve the most efficient problem solving.

Six Sigma Road Map Business Process Organisation Customer Requirements Business Requirements Identify Customer Requirements Identify Business Requirements Identify Broken Processes Allocate resources and execute six sigma project Permanent repair the process Monitor the business performance as seen by customer Broken Process 5 4 6 3 Business Process 7 2 8 1 Organisation Weak Business Process Can’t Meet Customer Requirements

Right Structure can only make it successful Six Sigma Road Map Celebrate -Reward & Recognition Keep Clear Focus Mentor, Coaching & Closure of Projects Grow MBBs Train Green Belts Train Black Belts Train Green Belts Get Master Black Belts Support with Organisation Structure Decide the Business Strategy Right Structure can only make it successful

Break Through Improvement Change Process Convincing Self 1 Convincing Others 2 DMAIC/DFSS Process 3 Break Through Improvement 4 Build critical mass thru improved yield Achieve critical mass to achieve culture of Excellence Reduce cycle time Integration of tools and people to achieve the most efficient problem solving. Point 1 & 2 contribute 70-80% of the success

Organisation

Define clear roles of the people Organisation Six Sigma Structure Coach/ MBB Financial Reviewer Black Belt / Green Belt Project Target “Y” Define clear roles of the people

Who Are These People? Green Belt: Black Belt: 5 days of training Focused on DMAIC Knowledge of PCSs Part time team member Black Belt: 15 plus days of training Normally, highly knowledgeable on a particular process. Respected by peers Full time position, managing 3-6 DMAICs and PCSs “A rising star”

Who Are These People? (continued) Master Black Belt: Quality Professional ~8 weeks of training including electives The mentor to the BB The facilitator of the entire process Supports specific areas of the company Can support 6-8 BBs, 12-20 DMAICs Responsible for validating the linkages of the PCSs for his/her area Does not report to any process owner Sponsor: The process owner Supports the BBs in his/her area Removes barriers for DMAIC teams Responsible for the teams’ success Accountable for SS in his/her area Champion: Responsible for multiple processes Boss to a number of Sponsors Provides the linkage to the business at the highest level A member of Jim Spencer’s staff

Who Are These People? (continued) The Business Leader Jim Spencer Ultimately, responsible for the quality of a particular business function The Quality Leader Mentor of the Business Leader with regards to Six Sigma Example Project Name: Reduce FTQ Deployment Champion- Champion- Site Manager Sponsor- Plant Manager MBB- BB- GB-

Project Selection

Source COST $$$$ $$$$ COST Project Selection Scrap Tickets Scrap FTQ or RRPPM Defect Start-Up (Start-Over) Labor for Replacement Failure Mode Quality Problem Source $$$$ $$$$ Unplanned Downtime Failure Mode Failure Mode Labor for Replacement COST

Project Selection Sales Engg PCL Pur Mfg Cs IT HR 53.1% 21.4% 8.8% 7.3% 1.6% Functional Baskets Gets filled by the Precipitated Cost of the Business Process

Project Selection

Project Selection

Project Selection BB Project

Certification Process

Certification Map Black Belt Six Sigma BB Training Project Application Pass all tollgate review sessions Technical Certification A Six Sigma Yes 4 - 6 months avg. No 1week training per month Improve Tools and Application to Project Project Completed and Final Report Submitted and Approved by Sponsor A Six Sigma Black Belt and I & CIM Certification Yes No Complete Project and Submit Final Report

Certification Map Green Belt Six Sigma GB Training Project Application Pass all tollgate review sessions Technical Certification A Six Sigma Yes 10 weeks (1 day on / 9 days off) 3 months avg. No Improve Tools and Application to Project Project Completed and Final Report Submitted and Approved by Sponsor A Six Sigma Green Belt and I & CIM Certification Yes No Complete Project and Submit Final Report

DMAIC Problem Solving Methodology: An Overview Define Measure Analyze Improve Control Team Chartering Customer Focus Process Mapping The Business Case Preliminary Problem Statement Project Scope Deliverables Roles Definition of Quality Types of Customers Translate Customer Needs Into Specific Requirements Methods of Collecting Customer Requirements Voice of the Customer Analysis Process Definitions Connecting the Customer to Your Process Business Process Mapping Mapping Guidelines Benefits and Applications of Process Mapping

DMAIC Problem Solving Methodology: An Overview (cont.) Define Measure Analyze Improve Control Data Collection Measurement Variation Why Measure? Input/Output/ Process Measures Effective and Efficiency Measures Understand Variation is the Enemy Common Cause/ Special Cause Why, When, and Where? Guidelines of Data Collection Understand Qualitative and Quantitative Data How to Collect Data Develop Data Collection Plan

DMAIC Problem Solving Methodology: An Overview (cont.) Define Measure Analyze Improve Control Process Analysis And Focus Root Cause Analysis Data Analysis Quantify Opportunity Read, Interpret, and Construct Visual Displays of Data Process Data Collection (On-Going) Moments of Truth Analysis Value-Added Analysis Focus on Vital Few Problems Charter Revision Cause & Effect Analysis Verifying Root Causes are Real Focus on Vital Few Problems Determine Opportunity Display/Package Opportunity

DMAIC Problem Solving Methodology: An Overview (cont.) Define Measure Analyze Improve Control Generate Solutions Select Solutions Implementation Planning Solution Parameters (Solution Statement & Solution Criteria List of Possible Solutions Validated Solution Cost/Benefit Analysis Business Proposal for Improvement “Should Be” Process Map Piloting Project Planning Change Management Strategy

DMAIC Problem Solving Methodology: An Overview (cont.) Define Measure Analyze Improve Control Monitor the Process Documentation Institutionalize Standards Control Charts Measurement Plan Developing Procedures Procedure Sheet Template Systems and Structures Problem-Solving Structure Continuous Improvement Attitude

200?

Results and Plan How does each division define success? What other metrics are needed? Warranty discussion -Delphi is being held responsible for a larger share of our GM warranty impact. NA vehicle manufacturers experienced $6 billion in warranty costs in 1999.

Documents

Contract Sheet

Saving Sheet At the Start At the End