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Project HOPE - Hercules Optimization of Process Excellence

Project HOPE - Hercules Optimization of Process Excellence Manufacturing Business Case Presentation for Wave II March 27, 2002 Wilmington, Delaware. Summary. The manufacturing team identified savings of over $40 million v. a target of about $30 million

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Project HOPE - Hercules Optimization of Process Excellence

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  1. Project HOPE - Hercules Optimization of Process Excellence Manufacturing Business Case Presentation for Wave II March 27, 2002 Wilmington, Delaware

  2. Summary • The manufacturing team identified savings of over $40 million v. a target of about $30 million • About $25 million implemented through Q1 2002 • AQD, PPD and Corporate - US and EU • The team recommendations have 3 components: • Manufacturing excellence program • New organization model • Plant specific initiatives • Plant implementation will be site focused by integrating: • Standardized KPIs and key processes • Manufacturing excellence initiatives • Plant specific initiatives

  3. Agenda • Overview 5 min Tuck • The Manufacturing Excellence Concept 30 min Tuck • Sub-process and To Be descriptions • Focus on Improvement Areas • High Level KPIs • Organizational Design 15 min Strang • Plant Specific Recommendations 10 min Lasbats • Implementation Approach 30 min Strang

  4. Scope of Wave II • Wave I • AQD NA And EU, PPD NA • Cost compression • Wave II • Work process improvements As-Is and To-Be • Manufacturing Excellence • PPD EU

  5. Wave II Schedule February 22: “As Is” Completed March 8: “To-Be” Concept Design Completed Diagnosis: As Is Process Analysis Due date Concept Design: To Be Process Design Due date • Top-level vision of process flows, inputs & outputs • Definition of KPIs , new IT requirements • Macro definition of To-Be organization along To-Be- processes • Quantification of cost savings, working capital changes • Estimate required investments and costs for implementation 3/08 3/15 3/15 In Process In Process • As-Is process flows, inputs & outputs and process FTE & costs analysis • Process inefficiencies identification • Improvement Opportunities Identified and Prioritized • Benchmarking 2/22 2/22 2/22 In a level of detail that reflects understanding of the entire process, sub-processes, and related costs Preparation for detailed process and organization design work the staffing process in Q2

  6. Wave II Schedule (con’t.) March 28: Business Case Completed Detailed process design Due date Detailed organization Due date Detailed implementation plan Due date • Detailed process flow and new working procedures • Resolution of interface issues( Dedicated meeting) • Description of process interfaces and inputs/outputs • IT and infrastructure requirements 3/08 3/08 3/11 3/18 • Organization charts • Dimensioned • No names • Roles and responsibilities • Job descriptions and required skills for key positions • Baseline FTE in a name-based list( Chuck Harvey) 3/27 3/27 3/27 3/08 • Refined Business Case • All activity documented in detail based on template to enable implementation tracking • Responsible person • FTE impact • Financial impact • Detailed implementation steps • Timeline and milestones • KPI for benefits tracking • Definitions • Process for data gathering • Responsibilities • Training plan and roll-out communication plan 3/27 3/27 3/27 4/15 In a level of detail which allows implementation without much further detailing/rework Preparation for the staffing process in Q2 Ready for implementation and ready for entry of key data in tracking tool

  7. Team Members MANUFACTURING NORTH AMERICAEUROPE EXCELLENCE David Brown Dan Brooks Andrew Bushnell Dickie Custer Royce Colvin Alain Cairns Andree Dumas WC Crenshaw Saro Currenti Donna Jacobi Henry Heidt Gunilla Dirnberger Sharon Kellis Bina Leahy Till Huonker Derek Legg Bob Pieper Juha Isoherranen Gary Lipson Gary Shelley Pierre Lasbats (L) Torsti Oja Walter Shevchuk Christophe Lieber Scott Reifsnyder Paul Tuck (L) Michael W. Miller Prith Roy Ingo Najda Tom Strang (L) José Santolaya Hans ter Hoek Marc Thijs Marc Vercruysse

  8. Guiding Principles • Efficient work processes dictate a high degree of standardization • Global standards – Hercules wide • Business standards – Business wide • Local standards – site wide • Be different when it adds tangible value, otherwise don’t waste your time. • Some tasks require a local presence. Others can be remote, and leveraged across sites or businesses. Know the difference between the two! • For every person who leaves, we must find work that we will not do. Otherwise, the ball drops. • Empowerment means that not everything will be done as well as you can do it. • Trust is a key factor in increasing efficiency. • One of the biggest causes of inefficiency is a lack of understanding and agreement on the handoffs – between people and processes.

  9. Quantification of Savings and FTE Reduction Roland Berger Savings target Current Plan Amount (million) FTEs Amount (million) FTEs 8.4 - 9.5 141 - 164 8.5 123 PPD AQD Corporate North America 7.9 - 10.6 101 - 147 12.6 104 3.0 27 4.3 62 2.6 50 4.7 67 PPD AQD Corporate Europe 6.2 86 9.6 84 - - 0.8 12 28.1 - 31.9 405 - 474 40.4 Manufacturing total 452 Actual end Q1 2002 Amount (million) FTEs 16.4 262 North America 8.7 107 Europe 25.1 369 Total

  10. December, 2001 Wave I Business Case A total of USD 36.5 million was identified in the December Business case, with a potential reduction of 348 FTEs PRT Manufacturing savings overview Run-rate savings [USD millions] Headcount reduction [FTE] 0.8 36.5 0.8 2.9 11 348 3.81) 11 17 441) 5.6 46 2.61) 191) 6.2 66 6.6 85 Capital: $0.4 m Expense: $9.0 m 5.0 75 15.2 122 Aqualon N. America: $13.5 m Europe: $10.0 m2) Aqualon N. America: 115 Europe: 852) 23.5 9.4 200 AQD (N. America and Europe) PPD (N. America only) Corporate Engineering Corporate SHERA (4Q01 onwards)

  11. Current Opportunity Target The Manufacturing Team has identified an additional $3.9M of savings and 104 FTEs during the Wave I implementations. PRT Manufacturing savings overview Run-rate savings [USD millions] Headcount reduction [FTE] 0.0 3.0 0.0 0.29 104 -9.5 5 0.6 3 -7 10 0.6 98.5 Capital: $0.4 m Expense: $9.0 m 2.40 9.4 Additional Savings

  12. Area Timeline Timeline for Savings Realization (FTEs) Q1 02 Q2 02 Q3 02 Q4 02 beyond 2001 Aqualon NA 103 12 2 3 3 4 Aqualon EU 47 13 13 6.5 10.5 6 1 PPD NA 63 28 9 0 4 0 PPD EU 35.5 2 10 12 6 1.5 Corporate (SHERA/Engineering) 39 7 8 0 0 0 Total 287.5 62 3.5 25.5 19 6.5

  13. Manufacturing Excellence Paul Tuck

  14. WPR Manufacturing Overview • 1) Wave I Focus to date has been cost savings • - Head count reductions • - Plant specific redesigns • 2) Wave II Focus • - Develop standard processes • - Stabilize processes given reductions • 3) Future Focus • - Manufacturing Excellence Organization • - Top Quartile Performance

  15. Description of To-Be concept design FOCUS by Function DESCRIPTION • Manufacturing will focus on its core competences, continually improving to: • Meet product specifications with minimal variability • Increase demonstrated production rates • Reduce raw material consumption and waste generation • Increase employee safety and health • Improve abilities and efficiencies of people in our organization • Delivers highest quality services to the users in the plants Manufacturing: North America and Europe Engineering and SHERA

  16. Description of To-Be concept design Manufacturing will concentrate on three key areas FOCUS by Process DESCRIPTION • Production that consistently meets specifications, the first time • Product that has minimal variability from batch to batch • Product that is identical regardless of the location of manufacture • Standardized Measurement and Control systems and tools • Maintenance systems that emphasize Predictive and Preventive measures rather than reactive • Sharing of best practices across plants to ensure the best technology is being applied to the processes • Developing a “reliability mindset” that looks for root causes to repetitive maintenance and operability problems • Develop highly skilled people by training both in their area of expertise as well as business and administrative skills • Develop an organization that uses team decision making and provides the information necessary to understand and run processes and businesses at al levels • Provide a rewards system that is aligned with organizational goals and recognizes accomplishments that contribute to attainment of those goals Process Capability Process Reliability Empowered Workforce

  17. Description of To-Be concept design FOCUS by Process DESCRIPTION • First Pass hit rates within Aqualon from 60 - 85% (Doel and MCW are exceptions) • SMOG within Aqualon • Capability opportunity for low capital expansion of plant capacity in Aqualon • High Quality niche products maintenance • Consistent products regardless of location to allow us to consolidate capacity • Reduction in maintenance cost and personnel • Low capital expansion for Aqualon plants • Large opportunity for cross division synergy with consistent tools, procedures, equipment • Inventory reduction opportunity with improved reliability • Inconsistent implementation of reliability system -- we have not capitalized where we have been successful • Large productivity gains seen in plants that have successfully implemented HPWO’s • Direct reduction in first line supervision Process Capability Process Reliability Empowered Workforce

  18. Supporting the strategic objectives of the businesses Business Division strategic objectives To my shareholder Financial perspective To my customers Customer perspective In my operations Internal perspective With my ability to innovate • How to differ Innovation and learning perspective Process objectives • Process Capability • Decreased Variability make products more attractive to customers • Consistency across plants allow more flexible sourcing strategy • Increased yields lead to reduced costs • Decreased mixing and blending increase available capacity without capital investment • Centers of Excellence will drive continuous improvement across plants and technologies • Process control will minimize the amount of rework and blending • Product Steering teams increase the available knowledge of best manufacturing practices at minimal cost

  19. Supporting the strategic objectives of the businesses Business Division strategic objectives To my shareholder Financial perspective To my customers Customer perspective In my operations Internal perspective With my ability to innovate • How to differ Innovation and learning perspective Process objectives • Process Reliability • Increased plant reliability increases response time to customer requirements • Reliable source of supply allows customer to reduce inventories • Reliability focus decreases cost by reducing emergency repairs, and OT. • Predictive and pre-ventive maintenance programs extend equipment life • Focus on root cause analysis reduces number of repetitive repairs • Centers of Excellence will drive continuous improvement across plants and technologies • Greater emphasis on fixing the cause rather than repairing the breakdown increases productivity and morale • P & Pd Maintenance programs increase efficiency of craftsmen

  20. Supporting the strategic objectives of the businesses Business Division strategic objectives To my shareholder Financial perspective To my customers Customer perspective In my operations Internal perspective With my ability to innovate • How to differ Innovation and learning perspective Process objectives • Empowered Workforce • Fewer people required to run the business • Informed decision making at lowest level • Focus on business goals • Knowledge of customer needs drives behavior • Job satisfaction increases with recognition of impact on business • Opportunity to share in financial success of business • New skills required to be successful • More control of business in lower level functions

  21. Process Improvement Areas Process Focus Description & Estimate of Process Improvement • Increase standardization of products (same product made in multiple locations without differences) • Increase First Pass Hit rate by 10% • Improve O.A.U. by implementing improved PM programs • Decrease MRO inventories by standardizing on equipment • Drive standardization across similar processes • Reduce required inventories • Substantially reduce number of first line supervisors • Use gain sharing to focus on plant productivity goals • Increase major KPIs while reducing fixed costs • Utilize Center of Expertise for automation to support plants • Capture local expertise in CofE • Drive standardization of equipment and systems • Build value case for implementation of MES and data historian ystems • Enable generation of purchase requisitions from MRP results • Decrease time required for the closing process to 3 days in the plants • Increase the accuracy of product costing information • Decrease the time required to create a new material in SAP by 25% Increase Process Capability Increase process Reliability Develop a highly skilled & motivated workforce Improve Process Automation Improve SAP Data Accuracy

  22. Scope of To-Be Process Manufacturing Sub-Processes Steady State Manufacturing Maintenance & Reliability Process Capability Introduce New Products SHERA • Conduct hazard training and reviews • Conduct pilot trials • Specify raw materials • Develop operating procedures • Commercialize product • Receive feasible Production Plan • Schedule and produce product • Order and inventory raw materials • Stage finished product • Schedule maintenance • Conduct Preventive & Predictive Maintenance Programs • Exchange information to increase reliability • Develop/modify product specs • Analyze and report product quality • Monitor in process indicators to ensure adherence to specs • Utilize SPC tools • Provide technical guidance and resources to plants • Maintain local compliance with policies • Develop compliance processes for new regulations

  23. Scope of To-Be Sub-Processes Sub-Process: Manufacturing Process Release to Logistics and F&C Manufacture Final Product Manufacture Intermediate Product Receive & Stage Raw materials Classify Product Detailed Process Description Enviro No Reclassify No Review Material Raw Material Rework / Handling Prep. Rework Package adjust Shipping Product Process Yes Adjust Monitorning Process Cntl Systems Produce Interim Product Product Interim Storage of Costing Raw Material Manufacturing Finishing Costing product finished Process Charge Operations Product Entries Operations storage product No Process Sample Condition interim Tracking product Yes In process sampling Analyze On Grade samples Quality Control Source: Roland Berger – Strategy Consultants

  24. . Scope of To-Be Sub-Processes Sub-Process: Maintenance (page 1) Process Initiation of Work Request Planning and Scheduling of Work Production Routine Planning Emergency Planning System Triggers Process Engineering SHERA HR

  25. Scope of To-Be Sub-Processes Sub-Process: Maintenance (page 2) Process Schedule Work Schedule Assemble Special Special Tool/ Schedule No No Maint. Specifications Expertise Equipm't equipment/tools Personnel and Checklists Maintenance Planning Yes Available in house Maint. Mat'l Routine Planning . Supplied by Yes Contractor Procurement No No Emergency Planning Create Contract No Contractor Contract Issue Identify Vendor Yes Exists Requisition Identify Qualify/ Create PO in Review Job B Contractor Disqualify "Let" Contract order to better Procedures Candidate Contractor tack cost SHERA Process Engineering No HR Unionized Yes Work force SHERA HR

  26. Scope of To-Be Sub-Processes Sub-Process: Maintenance (page 3) Process Data Analysis Data Analysis Test Equipm't Equipment Okay Maintenance Planning No (1) Measure Troubleshoot D Performance vs. Schedule Maint. Mat'l Control No (2) Routine Planning . Cleanup Work Equipment Area, Tools, Update Test Equipm't Make Time Close Work Yes Release to Equipm't, PPE Equipment Equipment Okay Entry Order Crafts Production and Return to History Proper Location Troubleshoot No (1) Emergency Planning Update PM Program No (2) Reliability Engineers Maintenance Troubleshoot Expenditure Analysis Spare Parts/ C Supples Root Cause stocking Analysis Strategy MTBF Analysis Update PdM Program Procure Process Engineering Identify Maintain HR Vendors Contracts SHERA HR

  27. Scope of To-Be Sub-Processes Sub-Process: Maintenance – Example: Critical Steps for Reliability RED – Opportunity BLUE – Step Name

  28. Inputs: • Completed work request • Prioritization • Equipment Work History B2 B2 B2 Activities: • Identify if job is a change (vs. replace in kind) • Determine if job is an emergency • Management of Change process • Create Work Order • Confirm priority • Estimate magnitude of job • Define job steps • Determine special expertise and equipment B2 B2 C2 A3 Performance Standards: • Work requests are subjected to analysis for alternative methods Outputs: • Work requests elevated to work order where appropriate • Work orders include estimates of labor and materials • Work orders are prioritized B2 B2 B2 Measurements: • Estimates compared to established standards • Turnaround time to act on request • Emergency work order rate Scope of To-Be Sub-Processes Sub-Process: Maintenance - Work Steps

  29. Scope of To-Be Sub-Processes Sub-Process: Capability Process Product Classification Data Analysis Laboratory Analysts . Operationss Process Technology Process Engineering HR SHERA HR

  30. Scope of To-Be Sub-Processes Sub-Process: Capability – Quality Management Systems As Is LOCATION To Be PPD – NA • Product, general sales & customer specs managed centrally in LN database • Local systems for data management and CoA generation • RM specs centrally in LN database • Product, general sales & customer specs managed centrally in LN database • Adoption of the “Portland” Access database. Eventual link to SAP for web enabled access. • RM specs centrally in LN database (minor upgrade) AQD - Hopewell • Product, general sales & customer specs managed locally in LN database • SAP used for data management and CoA generation • RM specs managed locally by hard copy AQD - Parlin • Product, general sales & customer specs managed locally in SAP (difficult to print copies for customers) • SAP used for data management and CoA generation • RM specs managed locally by hard copy • Product, general sales & customer specs managed centrally in LN database, with links to SAP • SAP used for data management and CofA generation • RM specs centrally in LN database (minor upgrade) AQD - Kenedy • Product, general sales & customer specs managed locally in LN database • SAP used for data management and CoA generation • RM specs managed locally by hard copy AQD - MCW • Product, general sales & customer specs managed locally by hard copy • Excel spreadsheets maintained locally for data management and CoA generation • RM specs managed locally by hard copy

  31. In To Key Issues and Dependencies Logistics Manufacturing P2P GBM • Accurate SAP master data • Accurate prodn & inventory data • Quality status of inventory • Detailed Operations schedule • Prodn schedule exception report • Plant capacity/capability • Confirmation of shipment (GI) • HR & supervision for personnel • Certificates of Analysis • Reclassification of inventory • Requisitions for services • Accurate SAP master data • List of P-Card users • GR for MRO receipts • Raw Material specifications • Maintain fixed asset database • Enter/approve time sheets • Performance evaluations • Comp decisions • Accurate data for closing process • Administration of petty cash • Provide site Check Custodian Manufacturing • RM Inventory targets • Summarized freight bills • EOQ for raw materials • Managed inbound freight • GR for raw material receipts • RM use forecast • Invoices with freight on • Production Plan at SKU, by week • RM Inventory Targets • FG Inventory Targets • Manufacturing Sourcing Strategy • Ship Notices w/ Carriers assigned • Loading Schedule (2 day visibility) • Change Order Status • Accurate inventories for closing • Shipment invoices for payment Logistics Out From • Delivered Raw Materials, on time, in full, and on spec • Delivered MRO items • Exception Reporting • P-Card process & controls • Vendor Managed and Consignment inventories • Freight rates (today) • Economic purchase quantity • Point of contact for payables P2P • Support for Labor negotiations • Payroll & accrual administration • Maintenance of H2E systems • Maintenance of SAP personnel data • Plant financial reporting • Data for financial analysis GBM

  32. Balanced Score Card – The "Management Dashboard" KPIs defined at sub-process level Financial perspective Customer perspective Goals KPIs Goals KPIs • Product uniformity • Responsiveness • Accuracy • Environmental and Safety leadership • Conversion Cost • Raw Material yields • SMOG • Capital spending • How do we look to shareholders? • How do customers see us? Internal business perspective Innovation perspective Goals KPIs Goals KPIs • Share knowledge across plants and technologies • Organizational focus on continuous improvement and excellence • Focus on improved reliability • Minimize Variability • Minimize inventories • Can we continue to improve and create value? • What can we do better?

  33. Balanced Score Card – The "Management Dashboard" KPIs defined at sub-process level Unit Plant Business Operations Cost Drivers Productivity Reliability Responsiveness

  34. Organization Model Tom Strang

  35. Global Manufacturing Organization Organization Design to To-Be March 27, 2002 Manufacturing Supply Chain Business Strategy Strategy Strategy Provide Strategic Direction for Improvement w VP Operations (Leader) VP Function Manufacturing VPGMs w Supply Chain Leaders Operations Council VPs w Engineering w SHERA w HR w Procurement Manufacturing Improvement Strategy Supply Chain Organizations Centers of Excellence in: w Demand Specialists PT / Adv PT w Operating Consistency Functional Leaders Engineering Forecasting and Network Organizations w Reliability & w Sourcing Maintenance w Production Planning w People w Project Preparation w Distribution Planning w New Process Scaleup / w Energy w Plant Engineering w FP & RM Inventory implementation w Automation w Construction Management w Capital Project Support w Startup Supply w Manufacturing Assistence & Optimization Chain troubleshooting Link w Initiate and manage cost Process improvement projects Improvement Drivers Production, Maintenance Quality Control & Improvement Production Engineering Regional / Local Support HR Finance & Control Multi-Site Improvement Production Team SHERA Managers Drivers w Communication Avenue IT w Monitoring Improvement Process Purchasing w Change Agent Produce to: w Inventory Targets w Labor NegotiationsDrive w Production Schedule w Cost requirements Excellence w Operating Procedures w Consistently w Drive Strategic Improvement w Quality specs. w Reliably w Provide Site Services w Efficiency Standards Site Support Functions w Safely w Community Relations w Reliability Standards Production Engineering w SHERA standards and regulations Reliability Maintenance Utilities Reduce Variability Training Training and People development QA / QC Manufacturing

  36. Global Manufacturing Organization Organization Design to To-Be Functional Excellence Business Excellence Focus Process Excellence Focus VP Function Manufacturing VPGMs Operations Council VPs Manufacturing Improvement Strategy Supply Chain Organizations Centers of Excellence in: Specialists PT / Adv PT w Operating Consistency Functional Leaders Engineering and Network Organizations w Reliability & Maintenance w People w Energy w Automation Supply Chain Link Process Improvement Supply Chain Drivers Improvement Drivers Regional / Local Support HR Finance & Control Multi-Site Improvement Production Team SHERA Managers Drivers IT Purchasing . Site Support Functions Production Engineering Reliability Maintenance Utilities Training QA / QC

  37. Direct tie to business for Production Unit Devoted resources and management structure to drive excellence (e.g. Centers of Excellence) Common approach and language for improvement throughout the organization Improvement strategy integrated with business strategy Drivers = HPWO, Reliability, Operational Consistence Must focus on 3 key areas Customers Employees Financial Results (EBITA, not just cost - at all levels) Organization Design to To-Be Advantages • Alignment with businesses • More Responsive to Customer’s needs • Easier to move “experts” between sites • Focus Resources on most Profitable Business opportunities • HPWO will lead to fewer FTE’s Disadvantages • Significant changes, will meet cultural resistance

  38. Presents Improvement opportunities to Manufacturing Council Insures resources are allocated to meet the business needs Drive Improvement throughout the manufacturing organization Succession Planning Capital Deployment Roles & Responsibilities Multi-Site/Site Manager Center of Excellence Leader Production Unit - Leader VP Operations • Proven Leadership skills • Change agent • Subject Matter Expert • Leadership skills • Leadership skills • Improvement Driver Qualification • Strong Manufacturing and Business leadership • Site Implementation of the Manufacturing Improvement Strategy • Communicate Best Practices • Drive improvement in area of expertise • Meeting Supply chain needs • Implement Improvement Strategy Accountability • Long term improvement in the utilization of the corporation’s Manufacturing Assets • Leads site improvement effort • Shared services report to this position • Subject Matter expert and leader of network for the center • Managers the daily performance of the Production Unit Scope • Leads the Manufacturing Council and provides Strategic Direction to the Manufacturing Organization • Implementing Improvement Strategy • Site Safety, Environmental and Community responsibilities • Allocation of shared resources • People Development • Fosters Continuous Improvement • Implementation of Manufacturing Improvement Strategy • Develop Standards and Best practices • Perform assessments • Assist in developing Site tactical plans • Monitor and Track KPI’s • Communicate and educate • Act as a change agent • Produce to • Production schedule • Operating Procedures • Quality Specs • Efficiency standard • Reliability Standard • SHERA Standards • Production Optimization • Operating Procedures Responsibilities

  39. Plant Specific Recommendations Discussion Pierre Lasbats

  40. Plant Specific Recommendations (Examples) • PPD Europe • Beringen - eliminate screen operator in dimer • Busnago – blend to order v. produce and inventory finished goods • Sobernheim – change shift model from 2 shifts to 3 shifts • AQD Europe • Doel – Combine quality and production tasks after MC3 is running • Doel – 2 steps caustic addition (non-FTE) • Zwijndrecht – close canteen • PPD NA • Hattiesburg – High performance work redesign allowed reduction of 22 people • Portland – Reduced draft air requirement for boilers led to energy savings of $15K • Parlin – eliminated water blasting contractor, and transferred the work to existing employees, saving $60K • Kenedy – Reduced frequency of process samples allowing reduction of 1 lab technician ($45K) • Hopewell – Conducting trials to replace cotton cellulose with wood cellulose.

  41. Plant Specific Business Case Example Project H.O.P.E. Business Case Tampere TAM_Manu01 MANU_Europe_wave II / “Aquapel - rationalization of dimer melting”

  42. In addition, the business cases provide qualitative information on the proposed process changes • Current situation and “As-Is” process • There is two operators in both shifts working in the Aquapel manufacturing process. During the morning shift other operator takes care of dimer melting. Melting of dimer usually ends at 16.00 a clock. • During the evening shift there is not much work for two operator. • Changes to be made and “To-Be” process • Start to operate with one operator in both shifts, terminate one operator and take one operator to work from 8 to 16.00 • Day operator take care of the dimer melting and supportative actions to other processes which are not officially covered by any operator (Fumaric acid dosing, Adipic acid dosing and internal transportation between warehouse and production processes). • Explanation of quantitative data • 2 shift operators less and one day operator more ( - 1 FTE = 40 k$ in saving ) in Aquapel • Hercobond production may use this FTE instead of recruitment (no severance payment) Source: Project Management

  43. In addition, the business cases provide qualitative information on the proposed process changes • Proposed new organization structure and FTE changes • Current shifts with 6 operators/shift can be reduced with 1operator/shift. One operator will start working at day time. ( - 1 FTE) • Proposed staffing • NA • Any new technology required • NA • Implementation timeline • Before end of Quarter 2 / 2002 • Risks and contingencies • Risk of strike when implemented. • If Herconbond production does not start, there will be severance payment of 18 000 USD Source: Project Management

  44. Implementation Approach Tom Strang

  45. What will be Implemented Manufacturing Excellence Organization Consistent Process KPIs Maintenance & Reliability Purchase to Pay The Manufacturing Plant Process Capability Logistics SHERA Finance & Control IT Human Resources High Performance Work Systems

  46. Proposed Approach to Implementation Many inputs to a single Implementation Plan Logistics Review Standard Processes Detailed Implementation Plans Gap Analyses Form Teams P2P Communication • Actionable • Long vs. short term • Resourced • Identified expertise from outside plants • Based on the Blueprint and training manual • Crafted package • Business Cases • Target areas • Defined Processes • Defined Tools • Identify Best Practices • Skills defined • Plant experts • Training • Leadership • Opportunities identified • Prioritization • Sequencing GBM Manufacturing Excellence Manufacturing Work Processes

  47. Proposed NA Regional Implementation Teams Work in Process Parlin Chicopee Burlington Brunswick Savannah Macon Milwaukee Kalamazoo MCW Portland (ind) Hopewell Franklin Kenedy Hattiesburg Sara (ind) Leader HPWS KPI Logistics Reliability Capability P2P I/T Consulting Cacho Pieper Brown PwC TBD Crenshaw Custer Jacobi Hightower Strang Antic Colvin Johannson Smith Doyle Henry Levens Doorley Tuck Shelley PwC TBD

  48. Proposed EU Regional Implementation Teams Work in Process Helsingborg Tampere Sandame Pendelbury Soberheim Busnago Taragona Alizay Voreppe Doel Beringen Zwjjndrecht Meeusen Thijs, Najda Ter Hoek Larsson Dimberger Isoherranen Dumas Ter Hoek Vercruysse Mille Santolaya Huonker Rossi Santolaya Hounker Leader HPWS KPI Logistics Reliability Capability P2P I/T PIT Teams Consulting

  49. Proposed Implementation Event Line Implementation Events 4/01 4/08 4/15 4/22 4/29 5/27 6/15 Define Team Roles & responsibilities Populate teams Develop Implementation Manual Communicate to Site Mgrs Communicate to Implementation Teams Communicate to Site personnel Define Manufacturing & Business Organizations Select in for MFG Organization Orientation & Training for Team leads Train Regional Teams Plant Implementations Review Implementations and Resources Plans in place for remainder of 2002

  50. EU Integrated Plant Implementation Team( = EUIPIT) Europe Plant Implementation Team (PIT) Plant Implementation Team Lead GBM WPR Representative P2P WPR Representative Logistics WPR Representative Plant HR IT/SAP WPR Representative Plant Manager*) Mnfg WPR Representative *) Plant Manager can decide to have more people on the PIT • Roles and responsibilities • Identifies major connecting points among various WPR implementations • Resolves possible conflicts with plant blueprint of integrated workflows • Accordingly builds local integrated implementation plan, providing synthetic view of all actions, and identifying per line item, responsibilities, time and KPI targets, and corresponding deliverable ($ & FTE’s) • Lead the implementations, closely monitors and reviews progresses, identifies gaps, and launches relevant corrective actions • Regularly reports to European Team, and calls for possible required supports • Identifies and seeks resolution of possible misalignment of local targets with corresponding manufacturing programs • Non-resolved conflicts are escalated to the EU Plant Implementation Steering Committee

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