Lean decision making

1. Box score Lean decision making

2. Box score • The Box Score shows a Three Dimensional view of the value stream • Provides an understanding of the operational, financial, and capacity impact of actions and decisions • Leads to better understanding and better decisions Operational Measurements Capacity Usage Financial Results

3. Current State Make Product Buy in China Buy Locally Units per Person 29.31 26.05 32.56 32.56 On-Time Shipment 97.2% 98.0% 95.7% 96.0% First Time Thru 54% 63% 52% 60% OPERATIONAL Dock-to-Dock Days 8.90 8.5 16.28 10.21 Average Cost $111.74 $113.10 $113.90 $112.66 AP days - AR days 8.0 8.0 8.8 8.0 Productive 31% 35% 31% 31% Non-Productive 56% 62% 56% 41% CAPACITY Available Capacity 13% 3% 13% 28% Revenue $1,611,456 $1,821,456 $1,821,456 $1,821,456 Material Costs $490,296 $586,296 $575,296 $672,296 Conversion Costs $497,933 $527,036 $545,933 $502,254 FINANCIAL Inventory $221,163 $234,433 $448,961 $316,484 Value Stream Profit $623,226 $708,124 $700,226 $646,905 Value Stream ROS 38.67% 38.88% 38.44% 35.52% 46.00% Hurdle Rate -7.33% -7.12% -7.56% -10.48% Box score used for decision-making

4. Value stream box scorefor weekly performance reporting

5. Box score current state & future state Typical Lean Improvement Short Term Operational Improvement is not Matched by Bottom-Line Improvement What has bridged the gap? What has really happened?

6. Eliminate employees & machines

7. Increase sales

8. Introduce new high-value products

9. Insource currently outsourced sub-assemblies

11. Summary of these decisions

12. 31-Dec 7/31/2004 31-Aug 30-Sep 31-Oct 30-Nov Units per Person 46.01 44.62 43.15 47.11 51.56 33.07 On-Time Shipment 98.0% 98.3% 99.0% 98.8% 72.3% 100.0% First Time Through 82% 84% 84% 82% 76% 86% OPERATIONAL Dock-to-Dock Days 0.00 8.20 7.60 8.10 3.40 5.60 Average Cost $263.04 259.24 255.83 250.89 217.68 244.65 AP Days - AR Days 0 -8 -8 -8 -8 -8 Productive 31% 31% 31% 33% 48% 34% Non-Productive 59% 59% 60% 59% 66% 60% CAPACITY Other 0% 0% 0% 0% 0% 0% Available Capacity 10% 10% 9% 8% -14% 6% Revenue $923,974 $895,549 $865,680 $979,075 $1,142,411 $688,827 Material Costs $317,570 $307,908 $297,735 $336,566 $396,024 $236,667 FINANCIAL Conversion Costs $345,084 $330,159 $315,691 $353,259 $378,838 $242,745 Value Stream Profit $261,320 $257,482 $252,254 $289,250 $367,549 $209,415 Value Stream ROS 28.28% 28.75% 29.14% 29.54% 32.17% 30.40% Box score to assess capital equipment:identify the problem Value stream box score prior to additional people & machines

13. Box score to assess capital equipment:result of the planned action Value stream box score with new equipment and people

14. Box score used for outsourcing decisions The effect of outsourcing to overcome the shortfall of capacity in november.

15. Rationalizing products in the value stream & introducing new products with no capital or employee additions

16. Box score showing the introduction of new product family -- new machines and additional people are required to support the growth

17. Box score showing 3P results