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“Chasing Waste”

Utilizing 6sigma and Caterpillar Production Systems (CPS) to Achieve Environmental Goals

Page 1 Caterpillar Confidential: Green

000 Square Feet Current Active Employees – 15 Caterpillar Management – 155 Caterpillar Hourly – 15 Contract Workers (Maintenance and Chemical Management) • Second Largest Manufacturing Employer in Oxford Page 2 Caterpillar Confidential: Green .Facility Overview • • • • Facility Opened in March 1998 30 Acre Site 183.

and Assembly. These couplings are assembled from components that have been machined from near net shape extrusions. Extrusion. Machining. Page 3 Caterpillar Confidential: Green . Coating.Product Line The Caterpillar High Performance Extrusions (HPE) Facility manufactures high-pressure hydraulic hose couplings for use with Caterpillar XT hose in all available sizes from 3/8" to 2" in diameter. or cold-formed steel basics. There are several steps in the process of manufacturing these couplings. These include Annealing.

Tornado February 5. 2008 Page 4 Caterpillar Confidential: Green .

• New energy efficient lighting • New energy efficient HVAC units • New insulated white roof system • Redesigned wastewater treatment system • Redesigned chemical storage area Page 5 Caterpillar Confidential: Green .Opportunity Caterpillar looked upon the rebuilding process as an opportunity to make improvements to the facility. Some of those improvements were specifically aimed at improving environmental performance.

500 mt CO2 equivalents (Year end results 7.8m gals) 2010 Environmental Goals • Goal:100% recycled material • Goal: <8.750) • Goal: <12.5m gals municipal water used Page 6 Caterpillar Confidential: Green .500 mt CO2 equivalents • Goal: <7.5m gals municipal water (Year end results 6.2009 Environmental Goals and Accomplishments • Goal: 90% recycled material (Year end results 97%) • Goal: <12.

6Sigma Caterpillar launched 6Sigma globally in 2001. 6Sigma methodology is used to focus on “real problems”. DMAIC Process Define – How is business impacted? Measure – What is the extent of the problem? Analyze – What is the root cause? Improve – What is the solution? Control – Implementation plan Page 7 Caterpillar Confidential: Green . It allows quick results and helps sustain improvements.

6Sigma (Reduction of Spent Cleaner.Example) Define – Spent cleaner volumes were too high Measure – Drag out and carryover was contaminating cleaner tanks Analyze – Barrels are not allowed to rotate and drip before moving to next station Improve – Add dwell time and rotation to programs to allow excess material to drain before moving to next station Control – Train employees and Implement changes to all Standard work documents Page 8 Caterpillar Confidential: Green .

Guiding principles are. Take the Customers View.Put Safety First. Actively Listen. Make Value Flow. Develop People. Drive Standard Work. Guiding principles are. Go. Act Decisively Page 9 Caterpillar Confidential: Green . Align the Targets.See.Even the Load. Stop to Fix. Pull. Chase Waste.Caterpillar Production Systems (CPS) • In 2006 Caterpillar implemented CPS to provide commonality across the various processes • CPS consists of three sub systems and fifteen guiding principles The Operating system is focused on waste elimination using 6Sigma and lean tools.Act. Guiding principles are. and Validate our processes The Cultural system is focused on making change possible and improving the way we work. Make it Visual. The Management system is focused on creating measurements and the management structure to support continuous improvement.

8 Wastes Page 10 Caterpillar Confidential: Green .

Page 11 Caterpillar Confidential: Green . Develop People – Establish training program for all employees on waste minimization and recycling program.Standard Work created to shutdown boilers and other high energy use equipment during extended shutdown periods.See. Go.Act – Empower employees to make suggestions and report activities that don’t comply with procedures (Continuous Improvement cards).Standardized scheduling and flow at the phosphate coating operation reduced waste from over processing and re-work. Validate our Processes – Investigation of water usage created 6Sigma project to reduce water consumption through flow restriction and recycling of water.Caterpillar Production Systems (CPS) • • • • • • Make it Visual/Align the Targets – Communicate goals and post results so that employees can see progress. Drive Standard Work . Make Value Flow .

Questions? Thank You! Page 12 Caterpillar Confidential: Green .