Driving to Zero

An Executive Discussion on Exceptional

Manufacturing Performance & Quality

Jordan Workman, Dir. NA & EMEA

Milliken & Company Background
• Founded in 1865
• Privately held
• ~$2.5 Billion in revenue
• ~7,500 associates 9 Locations
15 Locations

• 45 sites in 6 countries
• Operations throughout the
Americas, Europe and Asia
Corporate Offices
Manufacturing /Warehousing
Sales/Technical Service
Floor Covering Design Studio
Key Markets

Chemical

Apparel &
Performance Specialty
Materials Fabrics

Floor Covering
 Milliken & Company’s Reality
Performance vs Domestic Textile Players
Percent of U.S. consumption
U.S. Textile Mill Production
that is Imported
100% 120

75% Textiles 80
50%
40
25% All
items 0
0%
1950 1960 1970 1980 1990 2000 2010

Textile companies with > $1B sales: 1995 Today

Milliken Milliken
Springs
Burlington
Collins & Aikman
Westpoint Stevens
Fieldcrest Cannon
Who We Were
• Privately held, no debt

• Best equipment & data rich

• Value-based

• Hyper-competitive industries

• Command and Control

• Initiative Driven
Evolution of Operational Excellence

People Excellence Era

1980 to 1985
Over
Process Excellence Era 125
1985 to 1990 Corporate
Initiatives
Business Excellence Era
1990 to 1996

Implementation of the
Milliken Performance System
1996 to Today
Who We Were
• Privately held, no debt

• Best equipment & data rich

• Value-based

• Hyper-competitive industries

• Command and Control

• Initiative Driven

• Award Winning
Life After the Awards

We were not sustaining the gains…

The Performance System
Study Missions to Japan

1994
25

Benchmarking World-Class Manufacturing Practices

Japan Study Mission Results 1994-1996

# of
Companies
Measurement Reporting Improvement

Productivity 9 61%
Milliken sent 120
Process Reliability /
managers on 4
8 32% Study Mission
OEE
Trips
Breakdowns 9 92%

Defects 7 74%

Claims 6 85%
The Leadership Challenge

Western
Management 40% 60%
Daily Operations Firefighting

The Best 20% 20% 60%

in Japan Daily Firefighting Continuous Improvement/
Operations Innovation

Routine Working Through

Cross-Functional Teams
The Milliken Performance System
Performance System Results
# of
Japanese Japanese Milliken
Companies Improvement Improvement
Measurement (Historical) (OE Journey)
Reporting
Productivity 9 61% 78%

Process
8 32% 30%
Reliability / OEE

Breakdowns 9 92% 88%

Defects 7 74% 80%

Safety _ 36%
Milliken Performance System Transitions

Before After
Management Reliance on experience Improved knowledge
System Individual Management Standard work for leaders & operators
Systems

Tools/ initiative driven Common language, common process

Approach (Sustainable)
(unsustainable)
Jobs, training, and operators
Training Variation in operators
use standard methods

Attitude Acceptance of waste Waste elimination

Improvement Incremental,
Break-through; sustainable
unsustainable

Communication Little, infrequent ROI is clear at all levels

 Success & Buy-in Progression
Leadership

Planning
S/C
P/L
PERFORMACNE

Q-TECH
RESUTLS

Maintenance

Operator DMS

Reliable

Quality
Break-
downs
Minor
Stops
LEADERSHIP

time
What is a
What is a
good
CHANGE

good What is a
operator? good What is a
maintenance
department? quality good
What is a
associate? planning
good
associate?
leader?
Mindset &
Behavior
Change
 What are the keys to building a
sustainable performance system?
Key to Implementation - #1
Embrace Zero Loss Thinking

• Strong benevolent discontent

• Stop measuring success internally

• Celebrate the RED as opportunity

What is a Loss?
Total real dollars spent to
Actual Cost manufacture a product.

The
difference
between
Cost
actual cost Loss Reduction
& ideal Opportunity
cost

Absolute minimum cost required

Ideal Cost to manufacture a product
(theoretical cost)
What is Zero Loss Thinking
Loss Categories
JIPM Losses Milliken Losses
1. Equipment Failure 1. Breakdowns
2. Set-up & Adjustment 2. Change Over
3. Cutting Blade Change 3. Start-Up & Shutdown
4. Start-up 4. Minor Stops
5. Minor Stoppage & 5. PM & Cleaning Downtime
Idling 6. Planning
6. Speed 7. Material Handling
7. Defect & Rework 8. Speed Loss
8. Shutdown 9. Off-Quality
9. Management 10. Rework
10. Operating Motion 11. Waste
11. Line Organization 12. Obsolescence
12. Logistics 13. Allowances
13. Measurement & 14. Inventory Variances
Adjustment 15. Training
14. Energy 16. Inspection & Testing
15. Die, Tool & Jig 17. Indirect Materials
16. Yield 18. Purchase Price
Variance/Claims
19. Over/Under Spending
20. Spending not Captured
 Key to Implementation - #2

Associate engagement is structural

Structure Education Measurement Recognition

Provide the Prepare people Measure, track Reinforce and

opportunity via to be and provide recognize
Associates teams, projects successful feedback behavior Engagement
& deployment
Key to Implementation - #3
Become process thinkers
• Facts and data must trump
emotions/political power

• Process health monitored more than results

• Results, without showing process, not

celebrated
Key to Implementation - #4

Align and cascade the strategy

Key to Implementation - #5
Translate system success to financial
results quickly and consistently

25
Loss Analysis
Milliken & Company
Average loss landscape per plant $MM/year

$MM/
175 asso./site
Year
$50MM in rev/site

$11.7MM

Note: All losses

are full variable
Loss Analysis
Milliken & Company
Average loss landscape per plant $MM/year

$MM/
175 asso./site
Year
$50MM in rev/site

$11.7MM

Note: All losses

are full variable
Loss Analysis
Milliken & Company
Average loss landscape per plant $MM/year

$MM/
175 asso./site
Year
$50MM in rev/site

$11.7MM 23% of revenue

Note: All losses

are full variable
Loss Analysis
Milliken & Company
Average loss landscape per plant $MM/year

$MM/
175 asso./site
Milliken & Company
Year reduced losses 30% on average per plant
$50MM in rev/site
within the first 24 months
$11.7MM of implementation
of the Milliken Performance System

$3.5 million reduction

per plant

Note: All losses

are full variable
Loss Analysis
Fixed
Cost

Zero-Based
Raw Cost Opportunity
Material In 1995 By 2016, we had
Cost of Goods Sold

Cost reduced LOSSES by

45% (from 57% of
Losses
COGS to 30% of
COGS)
57%
Losses
Variable 30%
Cost 57% of COGS (excluding raw LOSSES became 30% of COGS
material but including yield (excluding raw material but
losses) was identified as a LOSS including yield losses) was
identified as a LOSS
Milliken Performance System:
Hard Benefits
Production Labor Productivity
Revenue Per Production Associate (Indexed to 2004 = 100)

200 185
176 174
151 154 158
150 130 129 136
121
112
100 102
100

50

From 2004 to 2016: 5% Annual Productivity Improvement

Milliken Performance System:
Hard Benefits
Manufacturing Management Productivity
Revenue Per Manufacturing Management Associate (Indexed to 2004 = 100)

300 282 286

267 275
247
213
200 185
158
127 134 134
115
100
100

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

From 2004 to 2016: 9% Annual Productivity Improvement

Milliken Revenue and Earnings Since 2004
Revenue
200
150 122 127 128 2% CAGR
100 98 104 106 104 105 108 108
100 81 94
50
0

Earnings
600 602 16% CAGR
427 480
500 378
400 290 327
261 229 271
300 205
200 100 134 146
100
0
 Performance Solutions by Milliken

400 + Operations
27 Countries
Industries
• Food & Beverage
• Glass
• Steel Manufacturing
• Agribusiness
• Packaging
• Paper Manufacturing and Converting
• Construction
• Chemicals
• Non-wovens
• Consumer Packaged Goods