Introduction

2. Introduction Hello! My name is APSY. I will be your guide to introduce you to APS, The Autoliv Production System.

3. Introduction • With the Autoliv Production System (APS), Autoliv is engaged in a process of continuous improvement and breakthrough with the aim of being the leader in our industry and progressing further each day in satisfying our customer expectations. Autoliv will be the most reliable, highest quality, cost effective, and innovative partner in the occupant safety restraint systems industry.

4. What is APS? • APS is the formalization of the Autoliv Manufacturing Culture. • The most important items of this Manufacturing Culture are described in this training. • This training is the culmination of Autoliv Worldwide Manufacturing Experience. • Several plants from around the world have contributed to the development of the Autoliv Production System by sharing experiences and best practices. Input(resources) Man Material Machine Output(results) Customer Satisfaction Employee Satisfaction Profitability Society/Community Benefit Method APS

5. What is APS? • The Autoliv Production System is a method to help every single Autoliv plant grow towards excellence. With APS, every plant is working towards the same manufacturing vision. • Every Autoliv employee worldwide is working from this same training. This training has been translated into several languages. • APS is Autoliv’s chosen method All companies have common inputs (man, material, and machine). All companies desire good outputs. What separates one company from another is the method in which they turn inputs into outputs.

6. Who will benefit from implementation of A.P.S.? Car users through high quality life saving products. Car makers through competitive and high quality products that are delivered on time Shareholders through profit and stock values. Autoliv employees through stable employment, good work environment and personal training and development. Our society through community involvement and good corporate citizenship.

7. Foundation • The APS House • Autoliv has chosen to use a house to illustrate APS. To build a strong, aesthetically pleasing house requires know-how, teamwork, perseverance, and a will to do the job well. • As you proceed through this training, you will see how the Autoliv Production System will help structure your know-how, teamwork, perseverance and will, to do a good job to help Autoliv build a strong company that will exist for a long time.

8. Foundation • To be sure our APS House will hold for a long time, we first must build a strong foundation. This foundation consists of 5 elements: Teamwork, 5S, Standards, • Muda elimination and TPM. We will now explore each of the 5 elements of our foundation Team-work Muda elimination 5S Standards TPM

9. Team Work • Team work is the first element of the foundation of the APS house. Autoliv places a lot of importance on teamwork. Team work is the most effective way for solving problems and achieving defined results. • We are all members of team Autoliv; we are also members of our plant team, department team, and work group team.Team work has proven to provide better results. • Team work provides an opportunity to share experiences and results in stronger commitment. • Team work is essential for the successful launching of new product or equipment, as well as for improvements. None of us is as smart as all of us.

10. Team Work continued. . . • A group is stronger than an individual person. A proposal or suggestion coming from a group,is stronger and has usually considered more aspects of a problem than an individual can. • Team work may take the form of a dedicated team assigned to a specific issue (Kaizen workshop for example). A workshop is a team, coming from several departments (production,quality,etc.) assigned to work on a challenge chosen by management in a predetermined amount of time. The team first grasps the current situation,understands the problem, sets expectations and follows up. At the end of the workshop the team presents the results they achieved and the standards they have implemented.

11. 5S • The 5S is the first 5 initials of Japanese words, the translation of which is: • Seiri = Clear out • Seiton = Put in order • Seiso = Clean and check • Seiketsu = Standardize • Shitsuke = Self discipline • 5S is a rigorous approach to housekeeping that provides a step by step disciplined way of establishing standards to maintain a safe, clean and efficient working environment that we can all be proud of. You never get a 2nd chance to make a first impression.

12. Step 1: Seiri - Clear Out • Find/Decide what is necessary and what is not: • Define area where 5S is to be done • Look trough all documents and items in the area • Decide what will not be used in the coming months/years and throw it out. Sometimes it hurts to get rid of what you don’t need but afterwards it feels good.

13. Step 2: Seiton - Put in order • Choose a place for each item near the location where it is used the most often. • Decide how to tidy things up (according to frequency of use, weight, etc.) A place for everything and everything in its place.

14. Step 3: Seiso - Clean and Check • First perform a deep cleaning • Catch dirt at its source • Eliminate leaks • Correct disorders • Look for improvements in order to ease cleaning (easy access) • Provide necessary means to perform cleaning (create a list and storage place for the material needed to clean (vacuum, cleaning products, etc.) • Make a preventive cleaning form (Who, What, When, Why, Where, How, How Long) to be done after first deep cleaning to help maintain level of cleaning. • Train people concerned.

15. Step 4: Seiketsu - Standardize • Define cleaning and tidying tasks: • Use simple and visual rules • Tidying • Use drawings, photos, colors, anything visual. • Cleaning • Develop a preventive cleaning schedule. • Use control boards where possible. • Standardize and plan preventive maintenance • Use simple methods to maintain cleanliness • Mark normal operating levels (example: green/red mark on a manometer). • Conceive machine so that one can look inside cupboards or machines. • Anticipate having cleaning material at the station. • Inform and train people concerned to the standards • Display standards.

16. Step 5: Shitsuke - Self Discipline • Respect and improve standards • Respect rules • Implement regular audits (daily, weekly, or monthly) • Improve standards • Respect of standards calls for everyone’s rigor and self-discipline • 5S Summary • 5S must be done by the persons working in the area concerned. The 5S process never ends. Improvement by tidying and cleaning never ends. New ideas, stations, offices, facilities, lines etc. . . might be the start of a new 5S activity with its 5 steps.

17. Standards • Standards are also a key element for having a strong foundation in our house. • Autoliv defines standards as • Formalization of any work related activities resulting in a clear, concise and measurable out come. Standards reflect the best, easiest and safest way currently known to achieve a task. • Standards result in • Early identification of abnormalities • All employees using best practices • Variation control • Standards become the basis for verification and diagnosis, for training, maintaining best practices and improvement. Standards have to be improved continuously. Standards are the basis for improvement.

18. Muda (Waste) Elimination • Another key for Autoliv to succeed is to maximize value added work. To do this we must identify and eliminate all non-value added work • Value added work • An activity that transforms or shapes raw materialsor information to meet customer (internal or external)requirements. The part of work for which the customer pays. Example: Value added = assembly of components • Waste • Activities that consume time, resources and/or space, but do not contribute to transforming or shaping materials and information to meet customer needs. Example: Non-value added = transporting components I could not fit more work in my agenda without eliminating waste!

19. 7 Kinds of Muda • 1.Over-Production: Producing over customer requirements. • 2.Producing defective product: (nonconformance) Producing product which does not meet customer (internal or external) requirements. • 3. Material movement: Multiple handling and staging of materials. • 4. Inventory: (machine, materials, manpower) Holding or purchasing unnecessary raw materials, work-in-process, and/or finished goods, maintaining extra equipment or manpower. • 5. Over processing: (adding non-essential labor) The addition of unneeded steps of work activities. • 6. Delay / Waiting: Waiting for materials or previous processes. • 7. Unnecessary motion: Actions of • people or equipment that • do not add value to the job. • Over Production is the worst waste of all because it leads to more waste. Over production is the worst waste of all because it leads to more waste.

20. TPM • TPM (Total Productive Maintenance) is the 5th element of our foundation. • Autoliv uses TPM to achieve the highest level of continuous improvements. In TPM, it is essential that all employees take ownership of the machines in their area and are empowered to perform basic maintenance and improvements on those machines. • TPM is: an innovative approach to maintenance that prevents breakdown and promotes autonomous operator maintenance through day-to-day activities involving the total workforce. • TPM is a method of evaluating, maintaining, and improving machine performance, that includes: • Standard daily, weekly, monthly preventive maintenance • Records of equipment performance (up time) and maintenance • Focused evaluation and improvement activities by multidisciplinary teams

21. Planned stop-pages 6 big losses Opening time Breakdown Stop-pages Availability Loading time Changeover Sub perfor-mance Overall Equipment Efficiency Minor Net operating time Performance Reduced Valuable Operating time Defects Non-quality Quality rate Startup TPM continued. . . • This will result in an improvement in our Overall Equipment Efficiency. I own my car so I keep it clean, change the wiper blades, and check the tire pressure. I can do the same thing to my machines at work. • In order to follow up equipment performance, we use the O.E.E. indicator (Overall Equipment Efficiency). O.E.E. is the rate between <<quantity of good parts produced>> and <<quantity of parts theoretically producible>>, without any disturbation (breakdown, defects, minor stoppages, etc.) • In detail, we measure O.E.E. by multiplying: • the availability rate (loading time / opening time) • the performance rate (net operating time / loading time) • the quality rate (valuable operating time / net operating time)

22. Pillars • Now that our foundation is complete we will start to build the pillars of our house. The pillars must exist before we build the roof. The three pillars of APS house are: • Just-In-Time • Quality First • Employee Involvement

23. Pillars • Just-In-Time • The first pillar of our house is titled Just-In-Time. • The Just-In-Time pillar consists of 6 elements: • Leveling & Capacity • Continuous flow • Pull system • Takt time • Frequent deliveries • Line concepts -Flexible capacity -One Piece flow • Just-In-Time • Leveling & Capacity • Continuous flow • Pull system • Takt time • Frequent deliveries • Line concepts • -Flexible capacity • -One Piece flow Standards

24. Just-In-Time • The objective of Just-In-Time is to have a lean manufacturing process that continuously with cost efficiency, produces quality products at the right quantity to meet customer demand in the required time. • What is needed • When it is needed • Amount that is needed

25. Leveling and Capacity • Heijunka leveling is a Japanese word meaning level production volume and variety over a given period of time (monthly is recommended). When you level the customer demand, it gives you an opportunity to level your Manpower, Material and Machines. Give to production an acceptable variation of resources (Man / Machine / Material) Heijunka Leveling Demand A.P.S. Market Time

26. Capacity • Capacity is our ability to meet customer demand at its highest volume. We must ensure our capacity can adapt to the variable need of the customer; that means: • When the equipment is needed to run, it must be ready to run. • Demand can not exceed capacity. • Be sure that our capacity can adapt to the requirements of the customer. • After the pre-conditions of leveling and capacity are satisfied there are 5 basic elements of Just-In-Time production. They are: Continuous Flow, Pull System, • Takt Time, Frequent Deliveries • and Line Concepts. • Let’s look at each element in more detail. Sorry out of order

27. Continuous Flow • Conventional Organization Definition: • Lets assume that we have a part that passes through the following processes: Machine turning, assembly and press. In a traditional plant all of the machine turning processes, assembling processes and pressing operations would be grouped together. Experience shows us that there will be inventory between the processes, long lead times, and problems will be hidden. • Multi Process Organization Definition: • In a multi-process organization all the processes needed to produce one part are located in the same location. The results are no inventory between processes, shortened lead time, problems are visible, and improved efficiency of manpower. Now that all processes are part of the same line we can apply the one piece flow production system.

28. Continuous Flow continued. . . AAA ABC BBB CCC ABC The old conventional organization ABC The new multi process organization

29. Pull System • All processes in the chain are connected with kanban. • Kanban is a tool for the pull system. • Kanban is a Japanese term meaning signal. Kanban informs the supplier what the customer needs. • Information flows upstream (signal) • Lumber mill send kanban card to the logger = orders more wood • Material flows downstream (product) • The logger cuts the wood and floats it down to the mill

30. Pull System continued. . . (Push System) Producing as much as possible in hopes of it selling. (Pull System) Producing product as kanban signaled by card customer.

31. Takt Time • The pace of production, takt time, is the time required to produce a single component or an entire product in order to meet and not exceed customer demand. • How do we get takt time? Total available production time = Takt Time Customer demand

32. Frequent Deliveries • Suppliers should deliver smaller lots more frequently. • The benefits are • Less money tied up in raw material and finished goods. Less warehouse space needed for storage and few employees and forklifts to manage and track inventory. • Raw material is purchased, manufactured into finished product, and shipped in a shorter amount of time. This shorter lead time reduces the amount of money tied up in inventory. • Quality defects are noticed and reported to supplier in a timely manner thus allowing these abnormalities to be fixed with minimal scrap and rework.

33. Frequent Deliveries continued. . . Would you like your milk to be delivered only once a month!!! This ties up a lot of cash, storage space to contain, and likely hood that there will be scrap as milk sours. Minimal cash investment, small storage space, and product is always fresh. Monthly delivery Daily delivery

34. Line Concepts • Line concepts is divided in two elements: flexible capacity and one piece flow. • Flexible capacity means: • Heavy automation and complicated machines should be replaced with simple working smaller machines. • Process must be flexible. The number of operators must be adjusted to the capacity required. • In order to increase flexibility of the line, and to reduce stock, we need to reduce change-over time. High capacity required Low capacity required

35. A B Total change-over time I E A B Change-over Time • Change-over time is the time between << the last part of product A >> and << the first part, produced at full speed, of product B >>. For that, we use SMED methodology (Single Minute Exchange of Die). It takes 5 steps: 1 2 3 4 5 Separate the sequences of the change over. Identify internal and external operations. Transfer internal to external operations. Decrease internal operations. Now, mixing product A and product B on the line is not anymore a problem. Decrease external operations.

36. One Piece Flow • One Piece Flow is the most efficient way to manage manpower and material resources. When using a one piece flow, each operation must be balanced according to Takt Time. • The Benefits are: • The inventory between each process can be eliminated (Less Work in Process). • Products are created one by one (Shortened lead time). • When changing builds there is less product to purge (Improved SMED). • Product moves through the process in the same order it was delivered (First in First out). One piece flow Large lot production

37. Quality First • Quality First is another pillar of our house. In the quality first pillar we have three elements. • They are: • Quality Assurance • Quality Methods • 6 Sigma • Just-In-Time • Leveling & Capacity • Continuous flow • Pull system • Takt time • Frequent deliveries • Line concepts • -Flexible capacity • -One Piece flow • Quality First • Quality assurance • Quality Methods • 6 Sigma Standards

38. Quality First • To understand the importance of the quality in our process we must keep in mind three rules: B Autoliv C Customer A Supplier Do not Receive Poor Quality Do not Produce Poor Quality Do not Ship / Pass On Poor Quality These rules must be applied also within Autoliv’s companies

39. Quality Assurance • In all our processes we could have failures for different reasons: e.g. bad quality of components, machine failures, bad methods, no discipline. . . At the end, all of these things are muda and we must avoid them. • To prevent and avoid this, we must achieve quality assurance by: • Materials • Man • Machines • Man / Machines (autonomation) Man / Machines (autonomation) Machines ? Products Materials Man

40. Quality Assurance continued. . . • Materials • In order to build quality Products we must have quality materials. To do this we must involve the supplier in the early phases of the development of our products. We have to establish an ongoing partnership with our suppliers. With early supplier involvement we have seen that we can continue to improve our level of quality supplied to our customers at a lower cost because we don not have to inspect, scrap material or stop assembly lines. AUTOLIV SUPPLIER 1 SUPPLIER 2

41. Quality Assurance continued. . . • Man • Use the human senses and abilities to observe, identify and react when a problem occurs. • Examples: • Observe visual aspect • Training and self-learning • Analyze situations • Ownership and responsibility

42. Quality Assurance continued. . . • Machine • Build machines that are able to recognize abnormalities, stop and notify an operator. • Examples • Poka yoke built in • Artificial vision • Operator panel displays information • Andon (light coding)

43. Quality Assurance continued. . . • Man and Machine (autonomation) • “The aim is to be able to prevent the defects in our processes.” One example to illustrate this is the use of “POKA YOKE” in our assembly process. “POKA YOKE” is error proofing either by product design or process design. • With Poka Yoke we will avoid the possibility to produce defects. • Even with our best efforts to prevent quality problems in our processes, the defects might occur. • In the case of an occurrence we must detect it immediately and stop and fix the problem. This will avoid additional muda. Poka Yoke

44. Quality Methods • Many methods could be used to build quality assurance in our processes and products. We’ve already mentioned Poka Yoke. Some others are: • 5 Why • Pareto diagram • SPC • Quality Matrix • Cause and effect diagram (fishbone diagram) • Problem solving process • FMEA • PDCA Wheel Let’s explore each method in more detail.

45. 5 Why • When you are in front of a problem ask five consecutive times, the question WHY? Each answer must be more precise than the previous one. That way, you will identify the cause of the cause. . . of the problem. • This tool is generally used to identify what really happened for the present occurrence of a problem instead of what are the potential causes. 5 why: More and more precise

46. Pareto Diagram • The pareto diagram is the tool that shows the contribution of several causes to a problem. We draw it with the most frequent cause on the left hand of the diagram as follows: • The highest bar indicates which cause must be attacked first to be more efficient. There is a general rule that says that if you correct 20% of the causes, you will solve 80% of the problem. This rule is named <<80/20 rule>>.

47. SPC - Statistical Process Control • SPC is a way to measure and maintain the reliability and capability of a process. By sampling, you continuously measure a parameter and draw the obtained value on a graph. • SPC enables us to identify whether a process stays inside the limits or not and if there is a trend, allows us to start corrective action at the first signs of drifting out of control. HT - Limits LT - Limits SPC

48. Where produced Station 9 Station 1 Station 2 Diagonality Matrix Station 1 Station 2 Where detected T Station 9 Diagonality Matrix • Diagonality Matrix is a tool for improving quality by making visual <<where a defect has been produced on the line>> and <<when this defect has been detected on the line>>. • For each defect, we take actions to eradicate the defect, but also to detect at the exact place where it was produced. Defect detected on station 9, but produced on station 2

49. Cause and Effect Diagram • The Cause and Effect Diagram is a tool to list the potential causes to a problem. It is also referred to as the Ishikawa or fishbone diagram. We write the effect in the head of the fishbone. The different bones are dedicated to a category of cause where the corelines are the main causes, and the lines coming off those, are the subcauses: Cause Material Measures Machine Method Effect Man Environment Management

50. Problem Solving Process • Is both a method and a presentation form for problem solving. It includes 8 steps: • 1. Creation of a team with a champion • establish a small group of people with process and/or product knowledge, allocated time, authority and skills in the required disciplines. • 2. Problem description • describe what is wrong with what, with quantifiable terms (who, when, where, why, how and how many) • 3. Development of interim containment action (ICA) • to isolate the effects of the problem form any internal/external customer until permanent corrective actions (PCA) are implemented. • 4. Research of root causes • test each possible cause