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Implementing Lean/Six Sigma in Complex

Industries: A Case Study at Endicott
Interconnect Technologies, Inc.

September 6, 2007

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Implementing Lean/Six Sigma in
Complex Industries
A Case Study at Endicott Interconnect Technologies, Inc.

Brad
Terence T. VanBrunt,
Burton, Vice President , Quality
President Terence T. Burton, President
And Business Excellence

The Center for Excellence in Operations, Inc.
Bedford, New Hampshire Sponsored by
Endicott, Ney York

Agenda Part I: Endicott Interconnect Technologies Part II: Lean/Six Sigma Strategy Part III: Five Essential Success Factors Sponsored by .

independent company ƒ Located in Central New York ƒ 1.6M sq. high- performance electronic packaging solutions utilizing a vertically integrated approach ƒ A tradition of technical innovation - former IBM Microelectronics Division ƒ November 2002 spin-off as an entrepreneurial.800 employees ƒ 1. ft. manufacturing and lab floor space ƒ 2006 revenue $220M ƒ 4-5% of revenue spent on R&D 3 .EI Corporate Profile Leading supplier of complex.

Semiconductor Complex Assembly Manufacturing / Circuit Boards Packaging Solutions Services / Other • Multi-Layer PCBs • Wire Bond PBGA • PCB Assembly • Custom Design & • Complex Backplanes • CoreEZ™ • Hybrid Assembly Manufacturing Products • HyperBGA® • Mechanical • Physical Design Assembly/Test • Reliability Test & Modeling • Materials Engineering CoreEZ™ and HyperBGA® are 4 registered trademarks of Endicott Interconnect Technologies. Mission Statement: To provide leading edge first and second level packaging and assembly solutions that bring value and competitive differentiation to our customers. . Inc. Vertically Integrated Provider with Broad Skill Set Printed Precision Equip.

mission critical bond substrate technology assembly • World class quality and reliability –Organic substrates . with high performance with low coupled noise backplane.Highly Differentiated Products & Capabilities PCBs Semiconductor Packaging Complex Assembly • Broad competency set • Advanced flip chip and wire • Complex. –Module assembly –20:1 plating aspect ratio board spaces capability • Unique high-speed boards –Full strip line structures –Full hybrid assembly. EI . chassis and cores system build • Outstanding thermal and • Talented engineering team electrical performance • Focused New Product • Test and analysis Initiative to production • High reliability (2-10 times capabilities launch ceramic) • Extensive test capabilities • Superior System-in- Package solutions • Outstanding service and delivery performance 5 . low profile fits easily in tight board-to.light • Ability to manage large weight military contracts as the • High density-fabrication prime contractor leading edge PCB –High frequency applications • Leading edge assembly –Precision layer-to-layer processes registration –Thin.

Agenda Part I: Endicott Interconnect Technologies Part II: Lean/Six Sigma Strategy Part III: Integrate and Win Big Sponsored by .

Objective: Grow from a “good” company to a “great” company Challenge: Deploy Lean/Six Sigma successfully as the enabler Innovation EVA 2000 SCM CRM PLM ABC SRM Lean/Six Sigma Triz ERP Business Process Six Sigma 1990 Theory of Lean Reengineering (BPR) Constraints Just In Time (JIT) Total Quality 1980 Management (TQM) MRP MRP II Scientific Inventory 1970 Management “Same box. (CEO) . Inc. different ribbon” Quality 1960 Control Circles Toyota House of Qua Production lity 1950 System (TPS) n Kaize ss 1940 Expre ean oL dt oa PDCA heR T Value Stream 1930 ma Sig Statistical Six Box a in Quality Control Control 1920 Charts Avoid the “Tornado of Improvement” and fad improvement programs © 2007 by Endicott Interconnect Technologies. Inc and The Center for Excellence in Operations.

(CEO) . Inc and The Center for Excellence in Operations. Small and Mid-Sized Organizations 6σ Problems with the traditional top-down approach to Six Sigma w Dedication Dedicationof w offull fulltime timeresources resourcesas asMaster MasterBlack BlackBelts. Inc. Belts.Black BlackBelts Belts w Potential Potentialof w of$Millions $Millionsin in“up-front” “up-front”investment investmentwith withaa 11to to2+++ 2+++year yearpayback payback w“Training “Trainingof w ofthe themasses” masses”based basedon onaccepted acceptedratios ratios(versus (versustrue true requirements) requirements)asasthe thefirst firststep step w Too Toomuch w muchfocus focuson on“Belts” “Belts”and andnot notenough enoughfocus focuson on“Results” “Results” „„ Mad MadBelt BeltDisease Disease © 2007 by Endicott Interconnect Technologies.

not notnecessary necessaryto toachieve achievesignificant significant results in smaller/mid-sized enterprises results in smaller/mid-sized enterprises Bureaucratic w Bureaucratichierarchy w hierarchywith withlayers layersof ofChampions. Belts. Inc and The Center for Excellence in Operations. etc.not notsustainable. Belts.Yellow YellowBelts Belts(Counter (Counterto tohow howsmall small and andmid-sized mid-sizedorganizations organizationswork) work) w Organizational OrganizationalComplexity. affordable.Master MasterBlack Black Belts. Small and Mid-Sized Organizations Speed Sigma 6σ Problems with the traditional top-down approach to Six w Speedof w ofdeployment deploymentis istoo tooslow slow––Smaller Smallerand andmid-sized mid-sized organizations organizationswant wantand andneed needresults resultsNOW! NOW! The w Thelarge wlargescale scaleSix SixSigma Sigmadeployments deploymentsof ofGE.Black BlackBelts. Champions. Inc. Belts.Politics. Caterpillar. (CEO) .are arean anoverkill overkill „„ Not Notaffordable. Politics. sustainable. w Complexity.Green GreenBelts.Honeywell. Honeywell. Caterpillar.and andCulture Culture „„ Simplified Simplifiedin inSmaller Smallerand andMid-Sized Mid-SizedOrganizations Organizations © 2007 by Endicott Interconnect Technologies. GE.etc.

Inc. Inc and The Center for Excellence in Operations. (CEO) . Leadership No-Nonsense Full Scale Execution Degree of Six Sigma Deployment Deployment Strategic Partial Improvement Competencies Deployment 20-25 Projects (4-6 months) $3-5 Million + Deep 15-25 Projects Additional Knowledge Pilot (4-6 months) Savings of Business $1.5 Million + Processes Additional and IT 2-3 Projects Savings (6-8 weeks) Six $200K Six Sigma Sigma Savings Most organizations Applications Support accomplish this inside of a 12 Expertise month window Six Sigma Education CEO’s Scaleable Six Sigma™ Methodology © 2007 by Endicott Interconnect Technologies.

Inc and The Center for Excellence in Operations. © 2007 by Endicott Interconnect Technologies. growth. ‹Deploy ‹ Deploymore morerobust robustimprovement improvementtools toolsfor forsolving solvingour our critical business problems: critical business problems: zz66Sigma Sigma zzLean Lean zzKaizen Kaizen(Quick (Quickstrike strike/ /teaming) teaming) ‹Use ‹ Useaadisciplined disciplinedmethodology methodology(DMAIC) (DMAIC)that thatis isEI’s EI’s common commonlanguage languageofofimprovement. increased competitiveness. growth. people. and profitability. (CEO) . involvement. ‹Build ‹ Buildaaculture culturethat thatstrives strivesfor fortotal totalemployee employeeinvolvement. initiatives. Inc. increased competitiveness. What is “Business Excellence” Business BusinessExcellence Excellenceis isaaphilosophy philosophyof ofImproving Improving HOWwe HOW weimprove improvein inEVERTHING EVERTHINGwe wedo doas asan an organization: organization: ‹Create ‹ Createaasolid solidfoundation foundationand andbusiness/leadership business/leadershipprocess process for formanaging managingimprovement improvementinitiatives. ‹Invest ‹ Investin inthe thefuture futureof ofEI’s EI’smost mostvalued valuedresource resource--OurOur people. improvement. and profitability.

(CEO) . Business Excellence DMAIC Foundation Define Ca lib f it ra te e ne B Control Kaizen Measure Lean O pt im 6σ ra ct e riz e ize a Ch Improve Analyze Take Action © 2007 by Endicott Interconnect Technologies. Inc and The Center for Excellence in Operations. Inc.

Lean. Balance KPIV/KPOV Controls Synchronization Complex Variation Standardization The Foundation (DMAIC): People working together with shared values and a common language of total business improvement © 2007 by Endicott Interconnect Technologies. Velocity Process Perfection Containment Cycle Time Statistical Engineering Incremental Improvement Waste Elimination Variation Reduction Flow. Business Excellence Operations and Transactional Business Technology Excellence Process Excellence Integrating Kaizen. and Six Sigma KAIZEN LEAN SIX SIGMA Basic Improvement Value Stream Management Quality Quick Strike Speed. Inc. (CEO) . Inc and The Center for Excellence in Operations.

CEO CEO Mission Critical © 2007 by Endicott Interconnect Technologies. Inc. Burton. Cycle Counting Process (Bill Paulos) New Product Design Verification (Roger Johnsen) Production Planning and Execution (Verner Pekarek) Material Planning Process (Verner Pekarek) Pgms.VP VPQuality Quality *Chair *Chair Technical Advice Bus. Excellence Hire Bus. Business Excellence Deployment STEERING STEERINGCOMMITTEE COMMITTEE VP VPQuality Quality *Chair *Chair CFO Leadership CFO VP VPSP SPPanels Panels&&PWB PWB Weekly Management VP Design for Manufacturability (Paul Marconi) Miscellaneous Transactions (Frederick Gabriel) VPComplex ComplexAssembly Assembly VP VPHR Receiving Process (Elpitha Votsis) Weekly Scrap Reduction (James Anderson) HR VP VPMilitary/Defense Military/DefensePgms. (CEO) . Report CEO. Service Parts Order Fulfillment (Kelly Kightly) Market Strategy Process (Rob Urry) Product Availability (Matt Bush) Local Market Compensation Compatibility (Hema Heimuli) Overtime Reduction (Mick Quigley) CEO. Inc Improvement Initiatives and The Center for Excellence in Operations. Inc. Excess/Obsolete Inventory (Craig Lawson) Card Recertification of B Stock (Dave Fata) Marketing Promotions Process (Randy Thorderson) Redefine New Project (Lynn Alley) Product Development Process (John Hanson) Supplier Selection Process (Rick Lambourne) Component Selection Process (Alan Ottley) Unplanned Maintenance (Steve Townsend) PROJECT PROJECTMANAGEMENT MANAGEMENT Mentoring & Facilitation Brad BradVanBrunt. Excellence Hire Terry Daily Management TerryBurton. VanBrunt. Inc.

how we become the best in our industry Improving Improving Securing our Today HOW we HOW we improve improve Competitive in EVERTHING we in EVERTHING we do do Future as as an an organization organization Investing In our People © 2007 by Endicott Interconnect Technologies. how we work. Inc. Business Excellence How we think. Inc and The Center for Excellence in Operations. how we improve. (CEO) .

Agenda Part I: Endicott Interconnect Technologies Part II: Lean/Six Sigma Strategy Part III: Five Essential Success Factors Sponsored by .

Leadership w 2. Inc and The Center for Excellence in Operations. Business Improvement Strategy w 3. © 2007 by Endicott Interconnect Technologies. Five Essential Success Factors 1. Change Awareness w 5. Inc. Inc. (CEO) . Communication and Closed-Loop Feedback (Performance Measurement) The Center for Excellence in Operations. Deployment Planning w 4. 1.

Incorporate Enterprise-Wide Scope 15. Provide Leadership Commitment and Support 13. Establish Recognition of the Need 12.Demand Frequent Measurement and Feedback 3.Focus on Customers and Results 9.Leverage Successes and Stay the Course DEPLOY 5.Provide Recognition and Rewards 16.Manage Controversy and Confrontation 2.Implement a Structured Project Close-Out Process 4. Success Equals 80% Leadership / 20% Tools 6σ Leadership’s Roles in Lean/Six Sigma Success PLAN EXECUTE 1. Develop Six Sigma Strategy and Deployment Plan 14.Develop Communication and Awareness Effort 8.Implement Regulated Program Management 11. Inc and The Center for Excellence in Operations. (CEO) .Make Proper Investment in Resources 7.Mandate Linkage to Business Plan 6. Inc. © 2007 by Endicott Interconnect Technologies. Inc.Build Teaming and Employee Involvement Culture The Center for Excellence in Operations.Structure Around the Organization’s Needs 10.

Business Excellence A Scaleable Deployment Definition DefinitionofofLeadership LeadershipExpectations Expectations Organization Organization for SuccessfulDeployment for Successful Deployment Agreement on Burning Platforms Agreement on Burning Platforms Business Excellence Detailed DetailedImplementation ImplementationPlanning Planning Improvement Strategy Communication/Awareness Communication/AwarenessPlan Plan Macro MacroCharter CharterDevelopment Development (Fact-Based. (CEO) . Inc and The Center for Excellence in Operations. Needs-Driven) Improvement Improvement Resource/CapacityManagement Resource/Capacity Management Project Selection and Scoping Project Selection and Scoping Baseline BaselinePerformance Performanceand andImprovement ImprovementGoals Goals Validated Benefits Validated Benefits Education EducationPlanning Planning Customized Customized EducationModules Education Modules Customized Implementation Project/Candidate/Team Project/Candidate/Team SelectionLaunch Selection Launch One Size Fad Fits All Programs Business Excellence Launch The Center for Excellence in Operations. Inc. © 2007 by Endicott Interconnect Technologies. Inc.

Team:Steve Young. Need better change and bug tracking tools the month.B. like lot sizes.cycle counting. to manage it. BG 6 HH. Nick Athens-Purchasing release process Team: Rick Krieifeldt-VP SDIG or other quality metrics (bug industry standard source control Execution adjust if possible during capacity. James Anderson. Team: Ernie Morales – Regulatory Engineer.has too many steps and framework and Significant reduction in time-to- Product Musical Instruments (GB). 8 10 4 202 process. rework. Ray Larsen-Mfg from new products features/offerings Engineer processes.C. Engineering. Rick Lambourne-Director of Improve how we select. and to adjust if possible during the 8 8 6 200 Too much variation/noise in the addition it requires a lot of overhead size. © 2007 by Endicott Interconnect Technologies. Extra freight Too many back orders. Jeff using an organized process by Audit the process anf fix any gaps Performance Goals Thompson-Cost Accounting cycle counting system generated Manager. analyze Our current product development Develop the overall Engineer. Zhao-Sourcing Agent Team: Paul Howard-Director Poor performing suppliers destroy and develop the performance of our Supplier selection. Ability to incorporate safety inventory. 100% PO Manufacturing Engineering nettable location for months. This causes excessive improve current process to confirmation. Identical selection. Current material Advance shipping freight. Team: Strategy process our current structure customer/market Product Development Process Paul Howard-Engineering doesn’t allow for convenient standardize the product development strategy to executive review. Lost sales Have products available to contractor orders within 24 hours Product Availability Matt Bush charges for multiple shipments from receiving the order given there within the same month to the same to competitors. Director of freight. Ray Larsen- processes. Team: Georgeann Nichols. Inc • Teaming and The Center for Excellence in Operations. Team: definition process will not scale with strategy and aligns our product process our current structure development strategy to market needs 10 9 9 253 Bill Paulos-Assistant Controller Currently we are doing reactive Baseline Improvement (GB). Christeen Rick Lambourne-Director of A. Jeff Percival. reduction in the (GB). corrective actions for A. performance Lack of formal part evaluation 100% of new parts measurement and development DigiTech Engineering. Post-mortem failure review. AE Steve 13 Townsend 14 Rob Urry X Elpitha Votsis 15 Verner Pekarek X X Lynn Alley X Tammy Allen X Dean Athens Nick Athens X Deployment and Rob Boatright Teresa Brinkerhoff Bob Planken Heather Customized Cowdell Implementation Education David Bybee X Alberto Calleja Larry Corriea Paul Day Rob Deulhlmeier X X • Kaizen Plan Jon Duffin X Merideth Foard • Lean Jim Gary Linda Grow Paul Howard Cross- Cross-Functional X X • Six Sigma Candidate/Team Selection • Leadership Skills The Center for Excellence in Operations. 9 9 9 243 Matt Bush Project Selection charges for multiple shipments within 24 hours from charges increase customer Roger Johnsen-Senior Director Availability within the same month to the same receiving the order given satisfaction and sales Eng Services (GB). also doesn’t development process within Increased revenue needs and Improvement Manager. Rob disruption problems. wrong inventory parts. wrong inventory parts. Reduction in stockouts Execution F/A. D suppliers. measure performance vendors. responsiveness to change. James variability in the supply chain.and improve to manage it. and manage it.warranty costs. Qualification Process Raul Soto-Mfg Supervisor. customers. (Development products) resulting in purchasing measurement variability in the supply chain. JS Hema Heimuli 2 DS Roger Johnsen X 3 SC Kelly Kightly 4 MD Rick Lambourne X 5 GM. no extra freight are no credit holds Product customer.and material. Tammy Allen. Consider management. stock). configuration optimized. Improve how we select. market and incremental Development Rich Ireland. Rob Deulhlmeier. Team: James Anderson- Selection and artificially tight because we don't and qualification process Alan Ottley-Outsourcing Alan Ottley Time spent non-approved parts number of component part Materials Engineer. Put a process in CAD/PCB Designer. tolerances exists Team:Paul Day-Senior Planner. lead times. John Duffin-Director of inventory dollars are too high.C. Team: Jim Ure. lead times.D process creates quality cost and subject to a formal Anderson-Materials Engineer. Optimize our acknowledgement. Use the performance Rick Lambourne value and create too much Fix or phase out C & DigiTech Engineering. Engineer (GB). alignment of actual current month Process Buyer. Poor record of making all new products in one hour. Put a process in place that monitors Material Planning Planning and material shortages. Software is released selected rate-based Actual production with "unshippable" software bugs. growth through new product Improvement Marketing Manager. (CEO) • Project Management . Admin Manager management. Optimize our planning shortages notices. Slow the flow. Buyer.Director of Lexicon John Hanson executive review. returns process for electical and Engineer. Inc.releases of software gets shipped to Technical Suppoort Manager. and understand drivers John Hanson-VP Engineering Production Coordinator 7 7 7 189 process . Business Excellence Implementation & Deployment Planning Dominate Guitar Become Double Revenue Signal “Macro Charter” Audio/Video Aggregate Rank Every 5 Years Processing COE for H-Pro Market Project GB Candidate Problem Statement Objectives 10 9 8 Develop a marketing structure that Our market strategy and product supports our vertical market Improve market/products strategy Rob Urry-President (GB). not Project GB Candidate Problem Statement Objectives Benefits Team Annual Savings Cycle Counting Process Inventory Analyst. David Bybee. This causes excessive Reduce shortages. 9 9 9 243 Too many back orders. business plan new products. increased Process Pro Engineering Jason Lamb- incorporate software development within Harman Pro. Mechanical Design Engineer place that monitors 8 9 8 225 The MPS is not in sync with the Dan Markosian-Master Need a consistent and alignment of actual current docummented source control SOP and /or Resource planning. mechanical Develop a marketing Mechanical Designer structure that supports our Improve Our Market strategy and product Better alignment and Model 9 10 7 236 vertical market strategy Our current product development Market/Product Rob Urry definition process will not scale with innovation between John Hanson-VP Engineering process . 8 8 6 200 Supplier Procurement and Sourcing (GB). there are no credit holds current fill rate 100% fill rate New Product Design Verification Mark Kohagen – Hardware This causes quality issues. Component Cycle New Product Design for Production Material market/produ Product Development development Recertificatio performance Selection and Obsolete Project Counting Design Manufacturin Planning and Planning cts strategy Availability Process and release n of B-Stock measurement Qualification Inventory Process Verification g (DFM) Execution Process process Improvement process and Process development James Anderson X Matt Bush X Dave Fata X Schedule Duration Frederick Gabriel Task # Task Name Responsibility Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec John Hanson X 1 TB. 8 9 7 217 scheduling and point-of. manufacturing inefficiencies. BG Randy Thorderson 12 HH.B. MC 8 RV Dan Markosian X 9 JV Alan Ottley X Bill Paulos X 10 MD. safety discrepancies. Poor performing suppliers destroy Team: Paul Howard-Director Part Number Rationalition and parts are listed under duplicate part Reduce number of parts down to performance of our Jon Duffin the preferred componets. Team: doesn’t allow for convenient standardize the product Current new product On-time and on. Extra freight fullfill contractor orders No lost sales. In parameters (lot size. Jason Lamb-Marketing incorporate software development Harman Pro. planning parameters to the SOP. which gives us reduce kitting order fill rate 98% of MPS Recertification of B-Stock Rick Tanga-Service/Repair perception of poor quality. Raul Soto. increased flexibility and Jensen-Production Supervisor have a source code control system Improve the quality of software Planning and Dan Markosian allows to review and to Software development and Lynn Alley-VP Pro Eng (GB). Doug Robinson – and bad customer experience. Reserve is 25% of inventory. inventory. process creates quality cost and qualification process and promotion bandaiding things due are selected when a numbers and associated Mfg Supervisor. not accurate or not orders to MPS and allows to review Materials manufacturing inefficiencies. and to manage it. Linda reduction numbers (especially for BSS same part across brands suppliers.has too many steps and Develop the overall framework and and aligns our product Musical Instruments (GB). Inc. Large carrying cost. Executive review of market needs Manager. Sr. Supplier Improve Product Software selection. Team: Kurt SOP and /or Resource planning. Team: Kurt Production month orders to MPS and methodology. vs. less F/A. putting out fires. process. not accurate or not reschedules and firefighting Buyer. Poor record of making Executive review of all leadership Mfg Engineer ship dates new products in one hour. addition it requires a lot of overhead safety stock). No reliability. Returned inventory in a non- Too much variation/noise in the Reduce shortages. The working preferred materials to out of spec preferred alternative overhead cost Hardware Engineer Deulhlmeier-Hardware Engineer 7 7 7 189 range of the designs are tighter Craig Lawson-Controller (GB). Team: James Lack of formal part evaluation Formal material selection and Strategic Project Opportunities and Benefits Qualification design to tolerances that our and promotion of the Component Selection and Anderson-Materials Engineer. In planning parameters (lot 0% PO Admin Manager optimized. budget delivery of revenue/market share. Lost sales Have products available to fullfill to competitors. AE Craig Lawson X Paul Marconi X 7 LP. tools.compared to demand Dave Fata. Currently we only Planning parameters. Pilot Valor and Boothroyd-dewhurst the SOP. than supplier specs. of the preferred materials Process suppliers can meet. Define product verification testing customer.. Kim Takemori-Order tracking). Reduction in cycle times. Nick Athens-Purchasing safety inventory. Linda value and create too much suppliers. Reduce Grow-Sr. lead times. like lot sizes. inefficiency and high our manufacturing process. Scheduler(GB). RTS 100% certainty of quality for B- Stock in inventory On-time availability of Manager. so no basis for tracking defect rates releases. reduce overhead to exception Production Planning and Jensen-Production Supervisor Planning parameters. scrap.D suppliers) Procurement and Sourcing (GB). Buyer. 100% Dan Markosian-Master The MPS is not in sync with the Synchronize the MPS and the Scheduler(GB). Richard Rhees-IT cycle counts. suppliers) Improved component quality and Alan Ottley-Outsourcing Engineer Component disruption problems. and inventory inefficiencies. We have too much obsolete Identify and disposition obsolete Obsolete Inventory Andrew Lovegrove-Hardware inventory. also doesn’t development process release to Mfg. lead times. GM Mick Quigley 11 JE.Designs with high variability create the planning parameters to Design for Manufacturing (DFM) Mfg Eng Mgr. 9 5 7 191 and corrective actions for and development Current supplier the number of Materials Engineer. Making specs Formal material selection evaluation and Christeen Zhao-Sourcing Agent 7 7 7 189 approval process. Gary Stout. (Development and Grow-Sr. current process to reduce overhead Material Planning Process New guy material shortages. Preferred parts have not been measure and develop the identified and promoted. ship dates 9 8 8 226 Synchronize the MPS and Paul Marconi-Director of Mfg Robust designs (guidelines) that fit Eng (GB).Director of Sales Unreliable / Outdated products / old use (POU) stocking to plan and customer Actual production Operations (GB). Kim Takemori-Order capacity.

Inc. (CEO) . Inc. © 2007 by Endicott Interconnect Technologies. Inc and The Center for Excellence in Operations. Business Excellence Accelerated Deployment Plan May June July August September October November Deployment Planning Project Kickoffs Green Belt Education Yellow Belt Education Champion Education Process Owner and Awareness Education Basic Improvement Skills Education Completion of 20-22 Projects (DMAIC) Review Points The Center for Excellence in Operations.

Inc. Inc and The Center for Excellence in Operations. Signage. Communication Awareness Establish Recognition of Need •Burning Platforms. Executives to Operators •Continuous Reminders. © 2007 by Endicott Interconnect Technologies. Pain Points •Consequences on No Action •Benefits of Change Create Business Excellence Awareness •Consistent unified Message •Trickle Down. Inc. Hits •Publicize Successes •“Stay Tuned” (What’s Next) •Internal/External Customer Updates Use Multiple Media for Different People •Town Meeting format •Email •Mailers in Payroll (Reference Cards) •Storyboards •Video. (CEO) . Posters •Newsletter •Performance Metrics The Center for Excellence in Operations.

Interpret. (CEO) . Inc and The Center for Excellence in Operations. time. Measure Sense. approach.event-driven event-drivenmetrics metrics ¾¾Sense. measure. Inc. Performance Measurement: Driving the Right Behaviors to Achieve the Right Desired Results ƒƒ Balanced BalancedScorecard ScorecardApproach Approach ƒƒ Use Usethe the“SMART” “SMART”process process SS==Specific Specific M = Measurable M = Measurable AA==Attainable Attainable RR==Relevant Relevant TT==Timely Timely ƒƒ Walk-Around Walk-Aroundor orGood GoodDay-Bad Day-BadDay DayMetrics Metrics ƒƒ Role Rolespecific specificdashboard dashboardapproach.you youmight mightjust justget getit!” it!” The Center for Excellence in Operations. Interpret. © 2007 by Endicott Interconnect Technologies. Decide.visual visualdaily dailymetrics metrics(At (AtAA Minimum) Minimum) ¾¾Moving Movingtoward towardreal realtime.Uniform UniformApproach Approach ƒƒ “You “Youget getwhat whatyou youmeasure” measure” ƒƒ “Everything “Everythingbegins beginsand andends endswith withperformance performancemeasurement” measurement” ƒƒ “Be “Becareful carefulwhat whatyou youmeasure. Act. Act. Measure ¾¾Standardized. Standardized. Inc. Decide.

Inc and The Center for Excellence in Operations. Cycle Time Complex Problems Obvious “No Brainer” Fixes Speed. Inc. Non Value-Added Variation Reduction Obvious “No Brainer” Fixes Speed.&&Other OtherEnabling EnablingTechnologies Technologies The Center for Excellence in Operations. ERP. Process Excellence Cost Reduction Design. Predictability Logistics Stability. Hypothesis Tests Performance Performance Focusofof TPM DOE.Digitization. Kaizen vs. © 2007 by Endicott Interconnect Technologies. RecognitionofofNeed.Recognition Leadership. Cp & Cpk Knowledge OfTools Tools Basic “B&T” Tools Kanban Gage R&R Closed-Loop Of Closed- Closed-Loop Set-Up Reduction ANOVA. Six Sigma Spectrum of Total Improvement Opportunities Leadership. Predictability Cost Reduction Design. (CEO) . Inc. Process Excellence Teaming and Employee Involvement Teaming and Employee Involvement ERP.Innovation Innovation Kaizen Lean Six Sigma Quick Strike One Piece Flow DMAIC. Need. Process Optimization Focus Improvement Improvement Simple Tactical Focus Waste. Digitization. Lean vs. DMADV Processes 1-5 Day Effort Value Stream Mapping Statistical Tools Process Mapping Visual Controls. 5S Variation Knowledge Cause & Effect Pull Systems PFMEA. Cycle Time Complex Problems Containment Standardization Process Capability Containment Standardization Process Capability Plug Holes in Dike Inventory Performance Defection Prevention Plug Holes in Dike Inventory Performance Defection Prevention Logistics Stability. Non Value-Added Variation Reduction Simple Tactical Focus Waste.

Predictability Cost Reduction Design. Process Excellence Teaming and Employee Involvement Teaming and Employee Involvement ERP. Inc. Lean vs. Process Optimization Closed- Closed-Loop Performance Performance driven by Focus of Improvement Improvement process/problem Simple Tactical Focus Waste. Recognition of Need. DMADV Processes Statistical Tools methodologies Knowledge Knowledge Process Mapping Cause & Effect Visual Controls. Cycle Time Standardization Standardization Complex Problems Complex Problems Process Capability Process Capability complexity Plug Holes in Dike Inventory Performance Defection Prevention Plug Holes in Dike Inventory Performance Defection Prevention Logistics Stability. (CEO) . ERP. Predictability Logistics Stability. Inc and The Center for Excellence in Operations. Non Value-Added Variation Reduction Simple Tactical Focus Waste. Cycle Time Speed. Cp & Cpk and tools is Of Tools Basic “B&T” Tools Kanban Gage R&R Closed-Loop Of Tools Focus of Set-Up Reduction TPM ANOVA. Innovation Deployment of Kaizen Lean Six Sigma the right Quick Strike 1-5 Day Effort One Piece Flow Value Stream Mapping DMAIC. Six Sigma Let the Improvement Opportunity drive you to the right methodologies and tools Simple Improvements Complex Improvements Kaizen? Lean? Six Sigma? Spectrum of Total Improvement Opportunities Leadership. Process Excellence Cost Reduction Design. Recognition of Need.Digitization.&&Other OtherEnabling EnablingTechnologies Technologies The Center for Excellence in Operations. Kaizen vs. © 2007 by Endicott Interconnect Technologies. 5S Pull Systems Variation PFMEA. Inc. Digitization. Non Value-Added Variation Reduction Obvious “No Brainer” Fixes Obvious “No Brainer” Fixes Containment Containment Speed. Innovation Leadership. Hypothesis Tests DOE.

MSA OK PFMEA. Education Implementation Plans & Fishbone Mathematical Models Hand- Hand-Off Document Update All Plan Poke- Lean.External: Deliverable $ ToolObjectives. FDM Improvement Goals Project Team Project Plan. & Fishbone Revise Project Plan Containment Actions Define Next Project Management Presentation Process Owner Handoff opportunities. CTQs. Dot Plots Diagram Revised Objectives DOE Design Causal Paretos R&R. KPOVs Sampling InPlan TProcess Shanin. Gantt Sampling Confidence KPIVs. Poka- Poke-Yokes All Documentation Deliverable Objectives KPIVsTool KPIVs. PROJECT Objective: INFORMATION Baseline Performance ATTACHMENTS The Center Project #for Excellence in Operations. FDM DFMEA/PFMEA Causal Paretos Screen Experiments DOE Lean.Define Poke- Poke-Yokes Poka- Project Team Gage R&R. Dot Plots Causal Paretos Confidence Intervals DOE Design DOE Experiments Screen Experiments Mathematical Models DOE Hand- Hand-Off Plan Update Poke- Lean. FDM . 5s. 6 σ Project Kaizen Project Status Status PROJECT INFORMATION 6 flavors of the same thing – It Project # The Center for Excellence in Operations. Education Implementation Plans Monitor Improvement Process Owner Handoff Document Improvement Summarize Benefits to the highest impact Gage R&R. Correlation Replication Experiments DEFINE MEASURE ANALYZE IMPROVE CONTROL Consistency of the approach is Preliminary Analysis Initial Benefits Problem Definition Project Charter CTQs. Project Plan. 5s.External: Annual CostDEFINE Savings $ MEASURE Tool - . Shanin.Internal: COPQ . Shanin. © 2007 by Endicott Interconnect Technologies. SIPOC Diagram Baseline Performance -tests Recommendations Scope Updated Objectives Initial DataANOVA Collection Hypothesis Tests Implement Changes Monitor Improvement Process Value Map Map Stream ANALYZE IMPROVE Documentation CONTROL DEFINE Boundaries MEASURE Quantified Problem BasicStatsRevised Objectives Regression. & FishboneDOE Experiments Next Project ObjectivesProject Charter KPIVs. Correlation Education Replication Experiments Document Improvement Fishbone Diagram Fishbone/CED Diagram Preliminary Analysis ImprovementCpGoals & Cpk Box. Project Name 6 σ Problem ProjectProject Status Objective Statement PROJECT Objective: INFORMATION ATTACHMENTS BaselineProject Scope Performance Stick to DMAIC as the common Project # Project Name COPQ . (CEO) . Inc. CTQs . DFMEA/PFMEA Screen Experiments DOE Objectives KPIVs. Deliverable $ COPQ . DMAIC: The Common Language of Improvement Stop feeding your organization The Center for Excellence in Operations. Shanin Project . MSA OK PFMEA. ANALYZE In Process Project Financial Scope IMPROVE Benefits Complete CONTROL $ COPQ .Internal:Problem Definition CTQs. Inc. RSM Update All Documentation Management Presentation Scope SIPOC Diagram Updated Objectives Baseline PerformanceInitial DataT-Collection tests Hypothesis Tests Recommendations Implement Changes EducationProcess Owner Handoff Containment Actions Boundaries QuantifiedValue Problem Process Map Map BasicStats Stream ANOVA Regression.Internal: $ $ - - Baseline Performance Financial Benefits Project Scope Project Deliverable(s) Objective improvement. Dot Plots Update Process Map.. Inc. MSA OKConfidence Update Process Map.External: $ $ - Problem - Statement Project Deliverable(s) Objective structured language of Objective: Annual Cost Savings COPQ . Inc. BasicStats Financial Benefits Regression. Correlation Documentation Replication Experiments Monitor Improvement Integrate Kaizen. Multi- PlanMulti -Vari Mathematical ModelsEVOP. Multi- Multi Complete EVOP. and Six Preliminary Analysis Initial Benefits Project Charter Improvement Project Team Goals Diagram Fishbone Fishbone/CED Cp & Cpk Project Plan. RSM -Vari Education critical to success. 5s. 6Lean ATTACHMENTS σ Problem Project Project Status Status Statement Project Name confuses people. Multi- Multi-Vari EVOP. Summarize Poka- Improvement Poke-YokesBenefits Documentation Define Next Project SIPOC Diagram Baseline Performance T-tests Revise Project Plan Recommendations EducationManagement Presentation Sigma – Deploy the right tools Process Value Map Map Stream Fishbone Diagram Fishbone/CED Cp & Cpk Diagram ANOVA Containment ActionsDocumentation Revised Objectives Update Process Map. Gantt Gage Box. KPIVs.DOE Experiments Intervals PFMEA. KPOVs Plan Intervals Revise Shanin. Lean. Gantt DFMEA/PFMEA Box. The Center for Excellence in Operations. RSM COPQ . Inc. KPOVs Sampling Deliverable(s) Plan Shanin. Inc and The Center for Excellence in Operations. CTQs. DOE DesignImplementation PlansHand- Hand-Off Summarize Plan Benefits Problem Definition Initial Benefits CTQs. In Process Initial Data Collection Hypothesis Tests Complete Implement Changes Scope Updated Annual Cost Savings Boundaries $ Quantified Problem.

© 2007 by Endicott Interconnect Technologies. Inc and The Center for Excellence in Operations. Lean. CRITICAL SUCCESS FACTOR Standardized Improvement Structure and Discipline DMAIC Problem-Solving Methodology Define Measure Analyze Improve Control What is the What is the What are the Are there any How will you problem? current or major root barriers to measure baseline causes of the your plans for results after What is your performance? problem? change? change? project objective? Have you What are the What metric(s) Does the confirmed the options for will you change solve What is the problem with change? monitor to your problem? improvement data and measure goal? facts? What is the success? Are other best option? actions What are the What are the Do you have necessary? benefits? financial What is the buy-in and benefits of schedule for support from How will you What are your changing? implementing all parties? sustain the next steps? the change? improvement? Common “thoughtware” for Kaizen. (CEO) . Inc. Inc. and Six Sigma The Center for Excellence in Operations.

Consider Excellence optimized. market and incremental measurement and development Grow-Sr. Pilot scheduling and point-of. increased flexibility and Jensen-Production Supervisor Product Development Process Paul Howard-Engineering Planning and Dan Markosian allows to review and to Improvement Manager. safety discrepancies.compared to demand Design for Manufacturing (DFM) Mfg Eng Mgr. use (POU) stocking to plan and customer Actual production Mechanical Design Engineer tools. The working preferred materials bandaiding things due are selected when a Part Number Rationalition and Jon Duffin parts are listed under duplicate part the preferred componets. Kim Takemori-Order Engineer ship dates 9 8 8 226 the month. Inc. budget delivery of revenue/market share. like lot sizes. Kim Takemori-Order capacity. Executive review of Execution adjust if possible during processes. Buyer. (Development and doesn’t allow for convenient standardize the product Current new product On-time and on. current process to reduce overhead process creates quality cost and subject to a formal Material Planning Process New guy material shortages. Team: Jim Ure. not accurate or not orders to MPS and allows to review A.C. We have too much obsolete Identify and disposition obsolete Obsolete Inventory Andrew Lovegrove-Hardware inventory. lead times. Component disruption problems. inefficiency and high Valor and Boothroyd-dewhurst CAD/PCB Designer. lead times. lead times. This causes excessive Reduce shortages. Supplier selection. Richard Rhees-IT cycle counts. Rob Deulhlmeier. RTS Stock in inventory Rick Lambourne-Director of Manager. process creates quality cost and qualification process and promotion Raul Soto-Mfg Supervisor. configuration Project Process management. Large carrying cost. reduction in the (GB). performance Team: Paul Howard-Director Poor performing suppliers destroy and develop the performance of our Product Musical Instruments (GB). putting out fires.releases of software gets shipped to shortages notices. Scheduler(GB). John Duffin-Director of inventory dollars are too high. corrective actions for A. Inc and The Center for Excellence in Operations. Director of freight. Lost sales Have products available to Our market strategy and product supports our vertical market Improve market/products strategy to competitors.C. Selection and artificially tight because we don't and qualification process Alan Ottley to manage it. 8 9 7 217 addition it requires a lot of overhead size. also doesn’t development process within safety inventory. Poor record of making Executive review of all leadership Mfg Engineer Component Selection and Engineer (GB).Designs with high variability create Robust designs (guidelines) that fit our manufacturing process. Post-mortem failure review. Execution Execution F/A. Preferred parts have not been Qualification design to tolerances that our and promotion of the identified and promoted. Nick Athens-Purchasing safety inventory. Identical numbers and associated Mfg Supervisor. Optimize our planning evaluation and Improved component quality and Alan Ottley-Outsourcing Engineer manufacturing inefficiencies. Lost sales Have products available to fullfill vertical market strategy Rob Urry to competitors. Admin Manager Paul Marconi-Director of Mfg selected rate-based Actual production Eng (GB). not accurate or not reschedules and firefighting Buyer. Tammy Allen. In parameters (lot size.warranty costs. structure that supports our 9 9 9 243 Improve Our Market strategy and product Better alignment and Too many back orders. Poor performing suppliers destroy Team: Paul Howard-Director Dan Markosian-Master The MPS is not in sync with the Synchronize the MPS and the performance of our performance Rick Lambourne value and create too much Fix or phase out C & DigiTech Engineering. which gives us 100% certainty of quality for B- Recertification of B-Stock Rick Tanga-Service/Repair perception of poor quality. and manage it. No reliability.cycle counting. of the preferred materials Deulhlmeier-Hardware Engineer 7 7 7 189 Craig Lawson-Controller (GB). 100% Software development and Lynn Alley-VP Pro Eng (GB). and to manage it. Doug Robinson – and bad customer experience. Business Excellence Continual Improvement Management Process Business Performance Metrics Business Excellence Steering Committee Strategic Project Opportunities Project Selection Model Baseline Improvement Dominate Guitar Project GB Candidate Problem Statement Objectives Benefits Team Annual Savings Double Revenue Become Signal Performance Goals Every 5 Years Audio/Video Processing Aggregate Rank COE for H-Pro Market Project GB Candidate Problem Statement Objectives 10 9 8 Develop a marketing structure that Too many back orders. planning parameters to the SOP. Extra freight fullfill contractor orders No lost sales. Team: Kurt Musical Instruments (GB). (CEO) . Christeen Zhao-Sourcing Agent incorporate software development within Harman Pro.B. responsiveness to change. Alan Ottley-Outsourcing processes. measure John Hanson-VP Engineering process . Team: James Anderson. Reduce number of parts down to Process suppliers can meet. capacity.has too many steps and Develop the overall framework and Production month orders to MPS and doesn’t allow for convenient standardize the product Planning parameters. lead times. Reduction in cycle times. Team: definition process will not scale with strategy and aligns our product Product process Matt Bush charges for multiple shipments within 24 hours from charges increase customer our current structure development strategy to market Availability needs 10 9 9 253 within the same month to the same receiving the order given satisfaction and sales Bill Paulos-Assistant Controller Currently we are doing reactive customer.and material. Reduction in stockouts management. Team: Georgeann Nichols. Team:Steve Young. Jeff using an organized process by Audit the process anf fix any gaps Develop a marketing Thompson-Cost Accounting cycle counting system generated Manager. Reduce Grow-Sr. reduce overhead to exception tracking). addition it requires a lot of overhead safety stock). Rob disruption problems. stock). Improve how we select. tolerances exists and inventory inefficiencies. Christeen Buyer. Engineering. customers. business plan new products. scrap. Ray Larsen-Mfg incorporate software development Harman Pro. vs. Team: Ernie Morales – Regulatory Engineer.D Development Rich Ireland. Jeff Percival. Linda Scheduler(GB). no extra freight Rob Urry-President (GB).. Raul Soto. not Cycle Counting Process Inventory Analyst. Team:Paul Day-Senior Planner. growth through new product 7 7 7 189 Improvement Marketing Manager. mechanical Mechanical Designer the SOP. Ability to incorporate release process Team: Rick Krieifeldt-VP SDIG or other quality metrics (bug industry standard source control Sr. Gary Stout. In planning parameters (lot 0% PO with "unshippable" software bugs. James Anderson. D suppliers. inventory. Nick Athens-Purchasing Manager. (Development Production Planning and Jensen-Production Supervisor Planning parameters. measure and develop the Manufacturing Engineering nettable location for months. and understand drivers Production Coordinator 7 7 7 189 Employee “The Project Hopper” Involvement The Center for Excellence in Operations. like lot sizes. Technical Suppoort Manager. also doesn’t development process release to Mfg. wrong inventory parts.Director of Sales Unreliable / Outdated products / old to manage it. Ray Larsen. returns Define product verification testing New Product Design Verification process for electical and the planning parameters to Engineer. James variability in the supply chain. less F/A. Current material Advance shipping Operations (GB). Need better change and bug tracking tools Material Planning Planning and material shortages. Slow the flow. Jason Lamb-Marketing executive review. This causes excessive improve current process to confirmation. wrong inventory parts. Improve how we select. Put a process in place that monitors measurement variability in the supply chain. Dave Fata. Inc. 8 8 6 200 Time spent non-approved parts number of component part Materials Engineer. Put a process in place that monitors 9 10 7 236 The MPS is not in sync with the Dan Markosian-Master Our current product development alignment of actual current John Hanson-VP Engineering SOP and /or Resource planning. Qualification Process Anderson-Materials Engineer. rework. Optimize our acknowledgement. 9 5 7 191 Rick Lambourne-Director of Our current product development Develop the overall Procurement and Sourcing (GB). alignment of actual current month and corrective actions for and development Current supplier the number of Materials Engineer. 8 9 8 225 reduce kitting order fill rate 98% of MPS Need a consistent and On-time availability of docummented source control methodology. suppliers. Team: James Lack of formal part evaluation Formal material selection and ship dates new products in one hour. Team: DigiTech Engineering. and to adjust if possible during the 8 8 6 200 performance vendors.and improve freight. there are no credit holds current fill rate 100% fill rate (GB). Making specs Formal material selection approval process. Zhao-Sourcing Agent Too much variation/noise in the Lack of formal part evaluation 100% of new parts process. 9 9 9 243 Increased revenue needs and market needs Roger Johnsen-Senior Director from new products features/offerings Business Eng Services (GB). Returned inventory in a non- Supplier Procurement and Sourcing (GB). Buyer. Team: process . analyze Engineer. Extra freight Market/Product definition process will not scale with innovation between Product Availability Matt Bush charges for multiple shipments contractor orders within 24 hours and aligns our product from receiving the order given there Strategy process our current structure customer/market within the same month to the same are no credit holds development strategy to customer. 100% PO have a source code control system Improve the quality of software process. Poor record of making all new products in one hour. Use the to out of spec preferred alternative overhead cost Hardware Engineer reduction numbers (especially for BSS range of the designs are tighter products) resulting in purchasing same part across brands than supplier specs. Team: Kurt SOP and /or Resource planning.B.has too many steps and framework and Significant reduction in time-to.Director of Lexicon John Hanson executive review. Synchronize the MPS and Mark Kohagen – Hardware This causes quality issues. David Bybee. increased Anderson-Materials Engineer. Software is released Materials manufacturing inefficiencies. © 2007 by Endicott Interconnect Technologies. so no basis for tracking defect rates releases.D suppliers) Admin Manager optimized. Currently we only Too much variation/noise in the Reduce shortages. Linda value and create too much suppliers. Reserve is 25% of inventory. 8 10 4 202 selection. suppliers) Process Pro Engineering Jason Lamb.

• Unless you are placed at a level at which your opinion becomes data and facts. Inc. • EI is experiencing this “first hand” through their Business Excellence deployment. • If you are fortunate enough to be at this level and you lead your organization this way. Inc and The Center for Excellence in Operations. you are just another person with an opinion. • “You don’t know what you don’t know.” The Center for Excellence in Operations. (CEO) . © 2007 by Endicott Interconnect Technologies. Inc. The Business Excellence Culture Without data. you and your people make many incorrect decisions without data and facts.

Terence T. Ney York . Implementing Lean/Six Sigma in Complex Industries A Case Study at Endicott Interconnect Technologies. Quality Terence T. Inc. Burton. Vice President . Inc. Burton. New Hampshire Sponsored by Endicott. President Brad VanBrunt. President The Center for Excellence in Operations. Bedford.

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