FMS Executive Series Strategy & Objectives

2 Content Leadership A Brief History of Lean Flextronics Today Principles of Operation Cost vs Quality FMS Leadership needs FMS Executive Series Objectives

3 A Brief History of Lean Father of Management Father of Motion-Time Study Father of Assembly Line Concept Industry Quality Transformation Birth of TPS* / Lean Concepts “The Machine That Changed The World” “Lean Thinking”

4 The Toyota House of Quality Quality, Cost, Delivery Shorten Production Flow by Eliminating Waste Just In Time The Right Part at the Right Time in the Right Amount Continuous Flow Pull Systems Level Production Built-In Quality (Jidoka) Error Proofing – Poka Yoke Visual Controls Operational Stability Standardized Work Robust Products & Processes Total Productive Maintenance Supplier Involvement Kaizen Motivated People What makes the whole system function.

5 What Makes Toyota So Successful The Concept of Lead Time - Lean is a manufacturing philosophy that recognizes WASTE as the primary driver of cycle time It is based on people’s education, understanding and motivation to continually drive out waste from all processes within their reach

6 What Makes Toyota So Successful The Concept of Waste – Toyota identified 7 categories

7 What Makes Toyota So Successful The Concept of Kaizen – A team culture established at the root of people’s behaviors Improvement Level Standardi- zation kaizen Time Before improvements have an opportunity to degrade, the team is on to the next improvement.

8 Lean in a Nutshell Lean is a philosophy that focuses on creating “value” through a culture of self-improvement and focus on reduction of waste “We can get brilliant results from average people managing a brilliant process” “We saw many companies often get average or worse results from brilliant people busy managing broken processes.”.Toyota Perspective Value from the eyes of the customer Self improvement to understand and achieve value Focus on wastes and ways to eliminate them Map and understand your Value Streams, and make them Valuable, Capable, Available, Adequate, Flexible, Flowing, Pulled and Leveled.

9 What’s a “Brilliant Process” ? One in which every step is: Valuable … will customer miss it ? Capable …. (Six Sigma, Poka Yoke) Available …(TPM) Adequate …(Kanban System, TOC, capacity utilization…etc) Flexible … (Quick Change Over, SMED…) …and all the steps are linked and coordinated by: Flow … occurs in tight sequence, ideally continuous flow. Pull...occurs only at the command of the next downstream step within available time Leveling … the demand to remove noises and unnecessary variations… Lean in a Nutshell

10 Lean in a Nutshell Tools and methods achieve rapid targeted improvement, but system evolution to new improvement levels and long term success are only achieved by people with the right attitude and behavior  … a philosophy of value driven by a Vision  … a system dependent on the quality of its people  … a management style focused on eliminating waste  … a journey We need to take Lean and Flexizes it…

11 Back-up

12 Lean Manufacturing has its’ root in the Toyota Production System (TPS). Several individuals at Toyota were instrumental in developing and systematizing TPS. Among the most important were: Sakichi Toyoda – Japan’s “King of Inventors.” His concept of jidoka (autonomation) is one of the foundational principles of TPS. First applied to automated looms which would stop if any threads broke. Founded Toyota Motor Co. in Kiichiro Toyoda – Sakichi’s son. He was the first head of Toyota Motor Co. He studied Ford’s production system and adapted it to the smaller, more diverse Japanese market. Developed key concepts behind “just-in-time” inventory management, a term he coined. Eiji Toyoda – Adapted the Ford suggestion scheme into a system for continuous improvement which became known as kaizen. The Origins of Lean Manufacturing Sakichi Toyoda Eiji Toyoda

13 Taichi Ohno - Known as the “Architect of TPS.” He systematized jidoka, JIT, standardized work and kaizen into what we now know as TPS. Father of the supermarket system of inventory control. Dr. Shigeo Shingo – External consultant who developed poka-yoke and SMED methods that allowed TPS to work as efficiently as it does. Worked very closely with Taichi Ohno to systematize TPS. At least as important as the tools that these founders discovered, was the realization by top Toyota management that for the system to work, workers must be continuously trained, motivated, and properly supported at all times. The Origins of Lean Manufacturing: Continued

14 Masaaki Imai - A quality management consultant. Helped popularize kaizen concepts and tools in the West through his book Kaizen: The Key to Japan’s Competitive Success. (1986) Founder of the Kaizen Institute. The Machine that Changed the World. (1990) A study of the automotive industry by James Womack, Daniel Jones and Daniel Roos that pointed to TPS as the most efficient manufacturing system yet devised. A very influential book. The Origins of Lean Manufacturing: Beyond Toyota

15 Flextronics Today Gernot Weiss MOBILE Sean Burke COMPUTING Dan Croteau MEDICAL Herbert Schoeffmann AUTOMOTIVE E.C. Sykes INDUSTRIAL Michael Clarke INFRA- STRUCTURE Greg Westbrook CONSUMER DIGITAL T H E M A R K E T S E G M E N T S T H E M A R K E T S E G M E N T S Paul Read WW FINANCE T H E R O C K T H E R O C K Paul Humphries Human Resource Peter Ho MATERIALS Peter Ho MATERIALS Nic Brathwaite TECHNOLOGY Pat Hehir WW SYSTEMS Peter Tan ASIA Matt Ryan Flex 1 John O’Sullivan LOGISTICS Caroline Dowling NOVOFlex Mike Burger COMPONENTS MULTEK Werner Widman MULTEK Francois Barbier SBS T H E C O R E

16 The Need… Align to the Flextronics Blueprint for Success and evolve into a value driven company that stays ahead of strategies and philosophies that drive today’s markets and customers The Objective… Balance Operational Performance with creation of customer value to increase competitive advantage for both The Challenge… Time to Market Lead Times Lower Costs People Development High Mix/Low Volumes Service features/Flexibility Seamless across operations Whole value chain relationships

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Flextronics Today

19 FMS Key Enablers Initiative and all activities must be linked to Mike’s vision  Objectives, purpose and scope must support the vision and mission  Education content must use the Flextronics vision and mission language as appropriate  There must be a corporate plan in place to insure that all executives understand and deploy the vision as designed All GM’s must own and drive it  Make “FMS” the main scope for the roles and responsibility for a GM (or highest level with direct responsibility for a business group/segment)  GM (or equivalent) is accountable for the execution of FMS The corporation must adopt metrics that support and drive the right behavior  Have performance bonus schemes that are based on operational excellence  Have metrics that do not create conflict between internal and external (customer) performance  Have metrics that do not focus on profit at the expense of value  Have metrics that allow GM’s the flexibility to make decisions about value when appropriate Clear policy deployment  Clear Roles and responsibilities well defined for all levels  Ensure quality of content and delivery Integral communication/Promotion plan  Develop corporate and local promotional activities that ensure FMS visibility and motivation  Establish formal approach to review and recognize successes from FMS work Staffing, organization structure and budget to be successful  People development and promotion (hiring from outside contributes to instability)  Resources according to implementation timeline expectations  Active link with HR people, development/thinking + Rewards and Recognition definition (succession planning)

20 Alignment with The Mission and Vision Our existing and potential customers are driving new and more demanding requirements. Flextronics must change its current philosophy to stay ahead of the strategies and philosophies that drive today’s market and customers Requirements Faster Time to Market Faster manufacturing lead times Lower costs Open book policies High Mix/low volume Maximum flexibility Rapid response time Operate as one company Stronger relationship Flex needs a strategy for profit and growth through… … a philosophy of value … Just In Time thinking and intense focus on quality

21 Management Strategy Compatibility Issues University of Kentucky, Joachim Knuf - Lean Systems Program Good intentions will only get us so far Strategy

22 University of Kentucky, Joachim Knuf - Lean Systems Program Strategy Stock Vision, Mission, Culture Management Philosophy Value Decision making Value driven metrics Execution Executive Strategies must be linked to execution Flextronics Management System Principles, methods and activities that drive the Organization

23 Still a long way yet, but committed to succeed Price – Cost = Profit Market driven Operations Execution Excellence Feasibility - Opportunity - Concept - Development - Production - Phase Out Vision – Mission – Strategy – people – tools Maximum Return Strategy

24 What FMS is asking Flex Leadership… Results oriented All about results (little concern for how) Value rightness Control people for results Control as means for inspection After the fact awareness Answer oriented Power is knowing, having, keeping Based on numbers, goals, reporting Cost QualityDelivery Quality DeliveryCost Paradigm shift Process and Results oriented Understand how things work Value improvement Control the process with people Control as a tool for improvement Real time awareness Question oriented (explore what works) Power is in helping, teaching, supporting Based on sensing, listening, looking

25 Cost Quality Delivery Quality Delivery Cost Paradigm shift Price – Cost = Profit Market driven Operations Execution Excellence Vision – Mission – Strategy – people – tools Deployment – Commitment – Metrics - Drive Result Strategy

26 Leadership to Support a Quality Driven Organization Power Support Power is the ability to make someone do your will because of your position of strength Authority is the skill of getting someone to willingly carry out a task because of your personal influence

27 Focus on Results All about results (little concern for how) Value rightness Control people for results Control as means for inspection After the fact awareness Answer oriented Power is knowing, having, keeping Based on numbers, goals, reporting Focus on Process Understand how things work Value improvement Control the process with people Control as a tool for improvement Real time awareness Question oriented (explore what works) Power is in helping, teaching, supporting Based on sensing, listening, looking Shift Develop leaders focused on Process Execution Excellence

28 Leadership Responsibility Know your customer Understand the value Flex needs to deliver Develop process stability Know your people (trained and empowered employees) Know your process Measure improvement Ensure high level of support (training, time, resources,…) Stabilize Then improve

29 Managers, Supervisors, Leaders Innovation Stabilize Top Mgt Middle Mgt Supervisors Operators Simplify * Massaki Imai, Gemba Kaizen McGraw-Hill1997, p. 4 Improvements must result in new standards that will insure a stable system when discipline and effort are in place to uphold them Steady small incremental improvement through kaizen work simplifies the continuous improvement process

30 Objectives for The Executive Session Learning Objectives Recognize the needs and urgency of 5S and 3 M’s Understand the business and opportunities for improvement through Value Stream Mapping Realize that YOU need to drive changes through participation Provide sense of urgency for Visual Management FMS Motivate and enroll senior management to focus on Quality first Recognize the principles of operation that drive excellence (right behavior) Get motivated, get involved and lead by example Business Objectives Develop higher levels of customer service Establish formal system for improvement Achieve long term planning for Cost efficiency Provide support for local decision making

31 Over these next 2 days we will continue to refer back to the Mission and Vision to check if our thinking supports it

32 The next 2 days This is a very aggressive agenda … no time for waiting Muda

33 We are here to engage in Discovery Learning … MUST!!! Rules Judging will defeat the purpose of the learning process Fixing anything during exercises will interfere with learning Associate your experience to the possibility of creating positive change