DMAIC Methodology “Catapults” Continuous Improvement Hormel Foods

1. DMAIC Methodology“Catapults” Continuous ImprovementHormel Foods

2. Agenda Hormel Foods, Inc. History of QIP  Six Sigma CIP Reinvigoration Variation Tool – Catapult Questions

3. Getting Started in 1891 Geo. A Hormel & Company Pork Packers and Provision Dealers Founded in Austin, MN - 1891 Processed 610 hogs in the first year $220,000 in sales

4. 118 Years Later……. Fortune 500 Company Over 18,000 Employees Over 2,100 Food products Over 350 Trademarks Internationally recognized Process over 9.0 million hogs annually Process 1.23 billion pounds of turkeys annually

5. Core Competencies Bacon • Pork • Shelf Stable Products Precooked Pre-portioned Chili Raw Precooked Corned Beef Hash Bits Flavored Stews Always Tender Cooked Meats Ham Salsas/Sauces Smoked • Dry Sausage Asian Sauces Cooked Pepperoni (House of Tsang) Genoa Salami SPAM Hard Salami Turkey • Cooked Beef Whole Further Processed • Bread Ready Meats

6. Hormel Foods Corporation Retail Brands

7. All Hormel Manufacturing, Distribution Center & Co-packer Locations (142) Du Breton Farms Campbell Soup Macphie Carapelli Pelopac HORMEL Algona, IA Atlanta, GA Austin, MN Beloit, WI CCPC - Aurora, IL Dold Foods - Wichita, KS Fremont, NE Fort Dodge Foods - Fort Dodge, IA Knoxville, IA Osceola Foods - Osceola, IA Rochelle Foods - Rochelle, IL Stockton, CA DAN’S PRIZE SUBSIDIARY Dan’s Prize – Browerville, MN Dan’s Prize – Long Prairie, MN 71 CO-PACKERS - Herdez DISTRIBUTION CENTERS Atlanta, GA LSI – Eldridge, IA Osceola Foods - Osceola, IA Power Logistics – Dayton, OH Prism – Stockton, CA RECENT ACQUISITIONS Alma Foods – Alma, KS CPC – Farmer John, Vernon, CA Lloyd’s BBQ – Mendota Heights, MN Mark-Lynn Foods – Bremen, GA Mexican Accent – New Berlin, WI Provena Foods – Lathrop, CA Saag’s – San Leandro, CA Valley Fresh – Turlock, CA 8 CO-PACKERS - SPECIALTY FOODS CFI – Sparta, WI DCB – Bondurant, IA DCB – Mitchellville, IA DCB – Perrysburg, OH DCB – Savannah, GA DCB – Visalia, CA HHL – Quakertown, PA 22 CO-PACKERS - JOTS JOTS – Barron, WI JOTS – Faribault, MN JOTS – Melrose, MN JOTS – Montevideo, MN JOTS – Pelican Rapids, MN JOTS – Willmar, MN 2 CO-PACKERS -

8. International Partners Tulip Ltd. Denmark Beijing Hormel Foods Co., Ltd. China Shanghai Hormel Foods Co., Ltd. China Hormel Alimentos S.A.Mexico C.J. Corp. Korea Okinawa Hormel, Ltd. Purefoods-Hormel Philippines Blue Ribbon Panama Australia San Miguel Hormel Vietnam

9. AGENDA - Continued Hormel Foods, Inc. History of QIP  Six Sigma CIP Reinvigoration Variation Tool – Catapult Questions

10. Hormel - Heritage “We should all go to our posts of duty daily with the feeling the work can be done still a little bit finer, a little bit better than we are doing it.” - George A. Hormel

11. Quality Improvement Process (QIP) - 1986 Fourteen principals of quality (simplified to six in 2008) Quality Improvement Teams at each Plant location Education & Training 5 Fundamentals of quality management (next slide)

12. Five Fundamentals of Quality Management The five fundamentals every employee must know and understand: 1 - Definition of quality is conformance to customer requirements 2 - System of quality is prevention and continuous improvement 3 - Performance standard is zero defects 4 - Measurement is price of nonconformance (PONC) 5 - All work is a process (process optimization)

13. QIP Process – early 2000’s Established QIP - Quality Improvement Process Plant specific issues: Productivity, Quality, Yields, Safety Communications, Employee Morale But… we wanted more!

14. Objective – Continuous Improvement Compliment to existing QIP efforts. not replace it Provide a method for a systematic analysis and improvement of key business processes. facts and data – not emotion Be the best we can be in every business process. important to the Customer Target projects that will have substantial favorable financial impact. major consideration for project selection

15. Objective – Continuous Improvement QIP Steering Committee - Research - Six Sigma was getting a lot of attention - Success by other companies/industries - Business publications, consultants - Benchmarked with other companies Began the Process in 2002: - Selected the Juran Institute as consultant - Juran spent 1 day with executives (approval) - Juran started certification process for BB’s

16. Six Sigma - Corporate Deployment Roles and Responsibilities: Champions (34) QIP Steering Committee Black Belts Team Member Experts Ad-hoc team members

17. Six Sigma - Corporate Deployment Champion submits project ideas Process Steering Committee selects projects. Projects are assigned to “Black Belts” Cross-functional “Team Member Experts” D M A I C PROCESS Define, Measure, Analyze, Improve, Control

18. Six Sigma - Corporate Deployment Complete Project List Transactional Administrative Operational

19. Six Sigma - Corporate Deployment Six Sigma Scorecard

20. Six Sigma - Corporate Deployment Bill Snyder Senior Vice President of Supply Chain Bryan Farnsworth V.P. of Quality Management Rod Kekkonen Director of I.E. 55 IE’s 25 Plants 6 Corp. Staff IE’s 7 Co. Certified Black Belts 11 Co. Staff QC Eng.

21. Six Sigma - Corporate Deployment (2008) Bill Snyder Senior Vice President of Supply Chain Scott Christensen Director of I.E./Six Sigma 55 IE’s 25 Plants 1 Co. IE Mgr. 6 Co. Staff IE’s 7 Co. Certified Black Belts

22. AGENDA - Continued Hormel Foods, Inc. History of QIP  Six Sigma CIP Reinvigoration Variation Tool – Catapult Questions

23. Catapult Firing

24. Mission/Vision/Values= Our Way CEO – Jeff Ettinger: • “Over the past 10 years, the size of our team has nearly doubled, and we have begun to grow internationally as well. Our growth has provided us an opportunity to refresh our mission and remind everyone how we strive to do business at Hormel Foods. • This new program, called Our Way, is a clear, systematic and straightforward way to show our priorities and how we operate. Our Way represents a vision for the future as we continue to grow our heritage.”

25. Corporate Reporting Responsibilities Principles • Brand charity programming (like Komen) • Community investments • Educational giving • Hunger work • Major gifts (Hormel Institute) People • Code of conduct • Diversity • Employee wellness programming • Safety • Training and employee benefits Process • Air quality efforts • Animal welfare management • Energy use reduction • Solid waste and recycling • Water use reduction & system protection Products • Food quality • Food safety • Health and wellness brand programs Performance • Corporate governance • Financial sustainability (innovation pipeline)

26. Leveraging a Continuous Improvement Culture DMAIC RELIABILITY SafetySQMCIPOEE Yields Productivity Environmental Sustainability

27. What’s the FIT? • Don’t have time for all of this, I need to focus on my job ! • Where do we apply our resources – only have so much time and so many people ! • Don’t need more, need focus on what we have ! • Is this just the same old QIP, but now called CIP ? • I’ve got Reliability, how does CIP fit into this initiative ? • We already have goals and objectives which drive our efforts !

28. The FIT is……. The Continuous Improvement Process: CIP is not an additional or separate initiative. CIP is a way of bringing our processing objectives together in one focus.

29. CIP Competencies 1 - Teamwork 2 - Setting Goals and Objectives 3 - Problem Solving – DMAIC Process 4 – Team Recognition

30. 1 - Teamwork I. Teamwork Guidelines II. Meeting Mechanics III. Team Leader Role IV. Team Member Role

31. 2 - Setting Goals and Objectives Company-Wide Goals 5, 10, 2-12, <1, <3.5% Vision Priority Division C I P Department Team Goals Personal Objectives

32. 3 – Problem SolvingDMAIC Process Goal: Develop DMAIC problem solving competency at the plant locations. Conducted three – two day sessions Trained 50 employees Working on 40 improvement projects

33. 3 – Problem SolvingDMAIC Process Six Sigma Methodology (DMAIC) Define:Define project and who will work on it Measure:Present Performance and possible causes of performance levels Analyze:Identify key process problems Improve:Optimize process performance Control:Hold the gains

34. 3 – Problem SolvingDMAIC Process Six Sigma Methodology (DMAIC Tool Box) Define: Project Charter, SIPOC, Process Mapping, VOC, CTQ’S (critical to quality), Measure: Y & X’s, Micro Mapping, Data CollectionPlan, Graphing, Six Sigma Defect Rate Analyze:FMEA, Hypotheses Tests, Question ‘Who, What, Where, and How ’, Data Validation, GOYA Improve: Solutions - establish alternatives, Assess Risk, Design of Experiments, Simulations Control: Implementation of Solutions, Time Lines, Savings, Feedback to Project Owner’s, SOP’s, Measurement

35. 3 – Problem SolvingDMAIC Process Small Problem Utilize Task Force “RCA” Problem Cause Map Solutions Define Project Scope and Size Small Project Persistent Team Needed DMAIC Used Select Project Improve Measure Analyze Control Large Problem Chronic Problem Impacts Plant Cross-Functional Team DMAIC Used Improve Measure Analyze Control

36. 3 – Problem SolvingDMAIC Process Methodology: Plant Managers Select Projects & Participants Participants Research & Collect Project Information Attend Training & Apply DMAIC Tools Plant Managers Schedule Monthly Updates Monthly Six Sigma Team Conference Calls with Participants Document Project Progress Complete Projects in Six Months Debrief Projects Start a Second Project in 2009 Serve as a Problem Solving Resource, 2009 Best of the Best 2009 Project Recaps Include DMAIC

37. 4 – Team Recognition • Goal: Linkage to the “BOB” (BOB - Best of the Best) Application to CIP competencies Connect to Corporate initiatives Recognition of winners + 400 projects at Plant level Select Enterprise Winner

38. Agenda Hormel Foods, Inc. History of QIP  Six Sigma CIP Reinvigoration Variation Tool – Catapult Questions

39. How To Reduce Variation & Turn An Art Into Science

40. Process Flow Gas Mileage Driving to Work

41. Process Flow - Catapult

42. Cause & Effect Gas Mileage Driving to Work

43. Cause & Effect - Catapult

44. Continuous Improvement Process Catapult Questions?

45. Agenda Hormel Foods, Inc. History of QIP  Six Sigma CIP Reinvigoration Variation Tool – Catapult Questions

46. Continuous ImprovementMethodologies • Scientific Management • Shewart’s Control Charts • TQC • JTQM • Deming Prize • QC Circles • Juran Trilogy • Lean (TPS) • TPM • Zero Defects • Industrial Engineering • Six Sigma/DMAIC • TQM • MBNQA • ISO • BPR • Workout • Process Management • Balance Scorecard • DMADV • Reliability/RCA

47. Continuous ImprovementDeployment Criteria 1.) Top Down Commitment2.) Linkage to Co. Goals and Strategy3.) Personnel selection and training4.) Common Methodology5.) Project Selection “scope”6.) Financial budgeting and auditing7.) Project reviews and tracking8.) Communication and recognition