Valmont’s Lean Journey

1. Valmont’s Lean Journey • Stephen LeGrand • VP of Operations • Valmont Irrigations

2. Agenda • Valmont history • Platform for change • VOS • Good to Great • Lean Journey • Transformation • Culture • Roadmap • Lean Leader • Motivational fun

3. Valmont History • 1946, started in farming • World War II vet Marine, Robert B. Daugherty • $5000 in pocket • Valley, Nebraska, named Valley Manufacturing • Building farm elevators for Sears, 1000 elevators • name of the company changed to Valmont Industries, Inc. • Growth search led down the road to Columbus, Nebraska, where a visionary was struggling to breathe life into a revolutionary idea: the center pivot. • Frank Zybach, part-time farmer and tinkerer, prototype center pivot in 1947

4. Background • 1954, agreed to license his patent to Bob Daugherty. • The energy crisis of the mid-1970s brought concern about the cost of operating high-pressure mechanized irrigation equipment • This has driven more efficient irrigation models with Valley being the worldwide product and market leader. • Valmont operates from over 50 facilities located in 14 countries around the world. • Headquartered in Omaha, Nebraska • employs over 6000 highly trained personnel worldwide, 2,000 located in Nebraska. • Today over 180,000 Pivots are operating around the world • 6 manufacturing facilities • Public company: VMI

5. Sounds like a good business • Why change? What’s the burning platform? • Economy is in a deep global recession, impacting all sectors. Magnitude and duration uncertain. • In this business environment the company that creates the most value with the least resources will succeed, in spite of economic conditions. • The past is littered with companies that were once on the top of their respective industry, yet don’t exist today. • To remain the leader 5, 10 or more years from now, we will have to exceed customer expectations.

6. What needs to change? • Purpose, People, Process • Vision • The right assets • Doing the right things, in the right way at the right time. Creating a new: OPERATING SYSTEM “The Valmont Way”

7. What is an Operating System? • A set of Operating Principles • An operating system is a system that is tightly linked to all aspects of an organization. • The Valmont Operating System contains standard improvement tools that are used throughout the company. Operating System refers to the assets and resources configured to maximize flow and value to the customer and stakeholders.

8. Valmont Operating System • Goal of the Valmont Operating System • Maximize Stakeholder Value through the leverage of standard and repeatable best practices and processes • Key Principles of VOS • Customer/Consumer Driven Process Design  Optimize Process Effectiveness • Continuously Reduce Non-value Added Activity  Optimize Process Efficiency • Employee Ownership Address the Impact of Change for the Employees

9. Valmont’s Operating System • Key elements? • Define howwe will conduct business • Good company to being a great company. • Putting our values to work • Using our people’s creativity • Using lean tools to create Centers of Excellence • Standardize on processesused around the world • Culture of waste elimination from everything we do • Extreme focus on our customer

10. Kotter’s Eight Stage Change Model

11. World Class companies strive for Breakthrough improvement… • Shootfor doubling inventory turns • Drastic reduction in lead time • Year-over-year quality improvement • Industry leading Operating Profit (OP) • Double digit Return on Invested Capital (ROIC) …to achieve sustainable, superior financial performance

12. Until now we have… • Performed well and should be proud of our accomplishments. • Been focused on getting results, not necessarily leaving a great process in place. • In other words, we have not focused on installing standardized ways of doing our work across the business. …been a Good company

13. Valmont will become Great, defined by… • An exceptional customer experience • Having the right people and structure • Level 5 leaders (Good to Great) • Embodiment of Core Values • sense of urgency • A laser-like focus on what is important • A culture of creativity and disciplined thoughts and actions • Predictable, transferrable processes • Sustainable superior financial performance

14. Beginning the Journey • CEO – Strategy – Senior executives • Structure – Lean Champions • Lean tools training • Six Sigma tools training • Value Streams (current and future states) • Define your roadmap • Volume, Quality, Cost, Delivery • Stabilize • Quality, Scheduling, Machines • Culture team and support

15. Valmont Operating SystemAligns with Strategic & Financial Objectives Corporate Mission Corporate Initiatives Business Objectives Annual Performance Goals Organization Goals Product/ Process Line Goals and Objectives Dashboard Measures and Gap Analysis Team Goals

16. Vis. Mgmt. Std. Work 5S Our Path to Lean 2009 2010 2011 Value Stream Mapping EPEx Pull OPT KanBan LoadLeveling Smaller Lots ZeroDefects EquipmentReliability Set-upReduction Kaizen

17. You have the ability to minimize this:

18. New Beginning Enthusiasm Anxiety Ending Energy Denial Anger Hope Shock Impatience Fear Frustration Acceptance Confusion Skepticism Chaos Stress Creativity Approach - Avoidance Neutral Zone Reactions to TransitionWhere are you? Your team?

19. Lean Works… FLOW Lean Processes: to minimize waste, inventory, and lead times Organization Cultural Change: Lead from the top to encourage and foster the environment to make and accept change Quality Problem Solving: systematic, logical approach to problem solving

20. The Business Toolbox The Business Toolbox

21. The Valmont Way Cultural Change Process The Valmont Way! Degree of Support for Change Year 1 Year 2 Valmont Today Time

22. Lean Enterprise Transformation Road Map Lean is more than a set of tools, it’s a way of thinking & acting to achieve sustained profitable growth “Live it” “Commit” “Learn” “Traction” Train Sell Install Value Sell Sell Install Value 1 to 2 years Train Install Decide to transform Value Train Train Sell 6 to 12 months Perpetual • Activities/Behaviors • Understand benefits of Lean, develop the business case • Go and see World Class operations • Seek guidance for the Lean Transformation • Activities/Behaviors • Build core team of Lean Practitioners • Form Steering Committee • Provide Lean training for everyone • Create pilot “line” • Activities/Behaviors • Propagate Lean • Engage all employees in PDCA • Use Lean to execute strategy • Activities/Behaviors • DNA shift • Culture of discipline, collaboration and constructive discontent

23. Shingo Assessment COE Criteria 1. Cultural Enablers (175 Points) 1.1 Leadership & Ethics (50 Points) 1.2 Cultural Enablers - People Development (125 Points) 1.2.1 People Development - Education, Training & Coaching (50 Points) 1.2.2 People Development - Empowerment & Involvement (50 Points) 1.2.3 People Development - Environmental and Safety Systems (25 Points) 2. Continuous Process Improvement (400 Points) 2.1 Continuous Process Improvement - Lean Principles (0 Points) 2.2 Continuous Process Improvement - Value Streams & Support Processes 2.2.1 Customer Relations (50 Points) 2.2.2 Product/Service Development (25 Points) 2.2.3 Operations (175 Points) 2.2.4 Supply (50 Points) 2.2.5 Management (100 Points) 3. Consistent Lean Enterprise Culture (150 Points) 3.1 Consistent Lean Enterprise Culture – Enterprise Thinking in a Global Environment (75 Points) 3.2 Consistent Lean Enterprise Culture - Policy Deployment (75 Points) 4. Business Results (275 Points) 4.1 People Development (25Points) 4.2 Quality (50 Points) 4.3 Delivery (50 Points) 4.4 Cost (50 Points) 4.5 Financial Impact (50 Points) 4.6 Competitive Impact (50Points)

24. Tube to Trailer - Change • Productivity to Throughput • Functional to Value Stream • Standard cost accounting to Lean accounting • Tribal knowledge to documented processes • Reactionary maintenance to Preventive maintenance • MTS to MTO • Structured organization to matrix

25. Confidential

26. Production Inventory Control • Creating Flow • Taking control– fixed schedule with limited drop ins • Kanban processes – PULL vs. PUSH • Inventory improvement – IQR, ABC schedule/buy • MTS to MTO • Capacity vs Inventory • S&OP process improvements – align globally • Shorten Supply Chain

27. What is the score of your game? ANADON is required

28. TQM alignment with Lean • One of the first sets is getting quality materials • TQM – 5 Pillars • (Design, Commitment, Organization, Process, Leadership) • Culture of Quality Mindset • Proactive Quality – Prevention • PPAP, Supplier Development, First Pass Yields, Roll through-put yields, PPM/PPB, ISO, MRB • ISO documenting of new value stream processes • Customers – Up front involvement in designs • Track Total Cost of Quality – put a $ on waste

29. DEPARTMENT INFO. DEPARTMENT SCORECARD DOWNTIME TRACKING IMPROVEMENT PLAN DAILYGOALS AND PERFORMANCE

30. The Successful Change Agent/Leader Personal Ownership • Make the change your own • Manage through the paradox • Communicate with honesty and integrity • Recognize quality listening as a powerful tool What you can do as Leaders! • Be aware of your PARADIGM…make the shift! • Be aware of HOW change impacts your team! • Understand the change FACTORS! • OWN the Change at the Team and Individual Level! • KNOW what successful change looks like and model it!

31. Potential Challenges to Change • Not tied to overall strategy • Short-term quick fix or a passing fad • Failure to deal with related emotions • Failure to gain commitment of key stakeholders • Lack of Clear expectations, measures and accountabilities • Lack of Reinforcement of commitment and small successes • Doesn’t fit your paradigm

32. Transition Leadership: You Make A Difference What you THINK True Leadership (Positive Example) What you DO How you ACT What you SAY

33. Lean Leadership Style vs… “Do it my way…” “Do it your way…” “Follow me…and let’s figure this out together” Dictator Style Empowerment Style Lean Style

34. ThreePracticalKeys to Lean Leadership • Go See – Go to the Gemba • “Management must spend time on the front lines.” • Ask Why • “Use the “Why?” technique daily.” • Show Respect • Respect your people.”

35. As a Lean Leader… • Get each person to take initiative to solve problems and improve his or her job. Sense of urgency • Ensure that each person’s job is aligned to provide value for the customer and prosperity for the company. Engagement!

36. In summary, a Lean Leader leads: • By setting the vision • By building systems and processes that cascade responsibility • By influence • By example • By being knowledgeable • By getting into the messy details • By coaching and teaching (ask questions) • By engagement

37. The DeMotivational Series “When you don’t care any more”

49. This is our Marathon/Journey Thanks for inviting me: Questions?