Why are we here? Why are we here together? Why did our companies invest the time and money to have us go through this process? (Take responses and put them on chart paper or a blank transparency. Look for the perspectives of seeking new ways to: - do things - learn - become more competitive - lower costs - improve quality, etc.) Key Points: Impart need for competitiveness in QSTP Global perspective of competition Market price/profit squeeze Waste exists everywhere Working together to improve value and win Team must feel they are there to help their company as well as their customer Bring in any unique information regarding specific supplier or situation

Why are we here? To discover how lean organization will help us become more competitive To understand what must be done To have consistent direction To have a shared vision of how to apply the concepts to create a lean organization To begin the change process that will make us more competitive This slide reflects some of the reasons why we are here. Ask if there are any additional suggestions. Why we are not here is important as well: - We are not here to eliminate jobs. Rather, we are here to secure our jobs by being more competitive. We might end up with redeployment, but we will not loose jobs as a result of our efforts this week. - We are not here to make people work harder. What we want to do is learn how to work smarter, be more efficient by reducing waste. - We are not here to dictate a way to do things. Using a methodology, we will tap the brainpower, knowledge, and experience of the team to develop a better way of doing things.

Price - Profit - Cost Equation Past Profit Cost Price Mass Production The price - profit - cost equation is important for all of us in recognizing what has changed in our industries and is driving us to be more competitive if we are to survive into the future. Walk the team through the slide, explaining: In the past (mass production environment) we built our price reading the equation left to right: First we determined the profit we wanted to make. Then we added the cost of our product or service. And finally, we went to the market with our selling price.

Price - Profit - Cost Equation Past Profit Cost Price Mass Production Things sure have changed. Now the market dictates the selling price and applies pressure from right to left to take our costs and squeeze profits, in some cases into a loss condition if costs are not controlled. This need to address costs becomes critical if a company is to survive. Profits are necessary to generate cash for reinvestments, and research and development. Therefore, to remain viable as a company, we must cut costs, while at the same time increasing our profits. Profit Cost Market Price Present Mass Production

Price - Profit - Cost Equation Past Profit Cost Mass Production Market Price Profit Cost Mass Production Present The equation will still be dictated by the market, but a lean organization can decrease cost, thus allowing higher profits. Market Price Profit Cost Lean Organization Future

Today We Are Confronted With We now face tremendous global competition, which is a double-edged sword: If we are competitive, we have an opportunity for growth. If we are not, then we will likely become a victim. Global Competition!

Operating Market Environment Past Present Everyone growing Limited competition Fairly stable product lines Producer sets quality standards Capacity shortages Slow market growth Many competitors (global) Many new products (greater complexity) Customer sets quality standards Excess capacity The market environment has experienced a significant change. During the past the attitude was “if we build it they will buy it.” Quality was not the focus then either. Read the points from the transparency.

Operating Business Environment Past Present Products in great demand Focus was on meeting market demand at all cost Few resource constraints Growth hid waste Fighting for every sale Working to rebuild quality image Very tight resources Waste visibly impacts the business And, the business environment has experienced an equally significant change. Read the points from the transparency.

Competitive Edge Issues There Is No Substitute for Quality. There Is No Excuse for Failing in the Area of Service. There is No Differentiator Without the Advantage Provided by Technology. There Is No Future in Not Being Cost Competitive on a Global Basis. This all boils down to the key competitive edge issues of survival. Read the points from the transparency. 06/10/98

Yeah, but.... We have constraints from the larger system!! We don’t have time!! We don’t know how!! We don’t have the tools!! Typically we see responses to these threats turning into “Yeah, buts”. Read slide, explaining how the team will get beyond these points this week. - You have been empowered by management to make change. - You have been given the time to come up with new solutions. - We are a cross-functional team, with representation across department lines for the entire process. Together we will discover the solutions. - Management will support the new process by providing the appropriate tools to do the job right!

I can’t... but WE can !! Individually, we can’t find solutions. But as a team, pooling our knowledge, experiences and backgrounds, we CAN!

Waste in the Value Added Supply Chain Raw Material Supplier Tier 2 Customer Tier 1 Car Manu- facturer Dealer P & T P & T = Packaging & Transportation It's important to recognize that waste exists everywhere, in all companies and in all departments. Thus, the opportunities to be competitive rests with those organizations that are best eliminating or minimizing waste. This will be the focus of our efforts in this workshop. The better we can work with each link of the supply chain and within our operations, the better all companies in the chain will be. We are only as strong as the weakest link. WASTE exists in each link of the value added chain

Competitive Challenge Improving Productivity Reducing Inventory Reducing Layout Reducing Lead Time Higher Quality + Lower Costs Customer Satisfaction The competitive challenge we face will focus on the four process measurements shown here. We have found that the needs of the customer are met and exceeded through: Improving productivity Reducing Inventory Reducing Layout (floorspace) Reducing Lead Time (total time to complete process) Therefore, quality and service are improved while lowering costs. These are the areas our Implementation Workshop will target for aggressive improvement during the week.