1.E-Z-GO Shingo Prize Case Study Westy Bowen Vice President of Quality and Six Sigma October 15, 2009 Company Confidential

2. E-Z-GOs Beginning State

History of Autocratic Leadership

• Top down - do as you are told

• Firefighting Heroes

2001 Strategy to Outsource

• Dungeon Facilities

• Aging Equipment

A plaque outside the E-Z-GO weld shop shows the transformation of the facility and commemorates the shops embarking on a journey of continuous improvement. It reads, In 2007 the weld-shop team began a journey of continuous improvement.This ongoing journey will transform the shop into a benchmark of premier fabrication performance.This spot has intentionally been left unimproved, not as a look backward, but as a constant reminder of the importance of moving forward. 3. State of the Business

E-Z-GO was Losing Market Share and Less Profitable than Main Competitor in an Oligopoly Market

4. Textron Vision To bethe premiermulti-industry company recognized for our network of powerfulbrands , world-class enterpriseprocessesand talentedpeople E-Z-GO Mission To be the premier provider of light transportation vehicles achieving global recognition as the benchmark forcustomer satisfactionandfinancial results E-Z-GO Values Statement To fulfill these goals, E-Z-GO will exemplify Textrons values ofintegrity ,trust ,respectand thepursuit of excellencewhich will enable us to become the employer of choice in the industry Strategic Direction: Premier 5. What is the Enterprise Shingo Prize?

Shingo Prize for Operational Excellence:

• Established 1988;

• Enterprise Level Prize Established 2008

Shingo Prize for Operational Excellence is named for Japanese industrial engineer Shigeo Shingo

Business Week stated that the Shingo Prize is the Nobel prize of manufacturing

The Shingo Model Provides Engine for Lean Transformation

E-Z-GO Shingo Prize Video

6. Textron Business System Assessment Section 1: Cultural Enablers (20%) Section 2: Business Operating System (45%) Section 3: Enterprise Thinking (10%) Section 4: Business Results (25%) 1.1 Leadership and Ethics 1.2 People Development 1.3 Empowerment and Involvement 1.4 Environmental, Health & Safety 2.1 Business Management and Lean Principles 2.2 Customer Management 2.3 Product/Service Development 2.4 Operations 2.5 Supply Management 3.1 Lean Enterprise Culture 3.2 Policy Deployment 4.1 People Development 4.2 Quality 4.3 Delivery 4.4 Cost 4.5 Financial Impact 4.6 Competitive Impact TBSA Aligned with Shingo Prize Criteria 7. Goal set in 2004:Shingo Gold in 08

Leadership Right People in Right Place

• 100% Turnover in Sr. Leadership Team (2002-2004)

• Vision Established for Operational Excellence

Textron Challenge to Go for Gold

• Textron Business System Assessment

• Accelerator Pilot

Developed Roadmap

• Lean Maturity Roadmap

• Action Plans for Manufacturing and Functional Areas

Key is to Just Get Started and Include Everyone 8. Implementation Evolution

2004-2005: Cell Improvement

• Single Point Kaizen Events

• Big Impact Kaizen Events

2005-2007: Value Stream Improvement

• Material Flow; Process Flow

• Information Flow; Communication

• Cultures, Mindsets and Behaviors (CMB)

2007-2008: Business Level Improvements

• Goal Deployment (GDP/Hoshin)

• Performance Management

9. Initial TBSA February 2005 10. 2006 High Level Lean Maturity Road Map 11. What is an Accelerator ?

How to build:

• A lean Operating System

• Supporting Infrastructure

• Aligned mindset and capabilities

Skilled practitioners

Team of ~ 20 full-time; 10 part-time

Proven in multiple environments

Standard, but tailored to aspecific situation

On what matters most, as identified by the TBSA

Relevant knowledge

Skilled people

Proven process

Focus

Reach out continuous improvement mindset2-5x faster

A proven process to achieve customer satisfaction, operational and financial improvement in a significantly accelerated sustainable way

A capability engine that builds the skills of management, supervisors and front line workers so they will be able to drive continuous improvement

12. Accelerator Composed of 4 Teams

Process Flow

• Physical Layout; Line Balancing

Material Flow

• Line Side Inventory; Warehouse Mgt.

• Right Part at Right Place at Right Time

Information Flow

• Systems (MIS); MRP; Production Control

Cultures/Mindsets/Behaviors

• Operator Involvement; Training

Order of Physical Activity and Changes Reverse Order of Impact to Sustain Improvements 13. Meeting Cadence Daily, weekly, monthly touch points Established 14. Current State Value Stream Map 30% productivity loss Due to imbalanced line 70% of FTQ issues areFrom material shortage issues 50% of parts have a lead time Greater than the order visibility; parts are ordered from forecast Excess inventory in the yard 15. Future State Value Stream Map Customer Ship Assembly (Paced) Custom Cars SMRs Include Reconfigs OE with TFC Tie SIOP Scheduling MPS, Traffic, Sales, Load Seq MRP Suppliers Receiving Internal Fabrication Cars Accy Internal & Purchased Internal Common Parts Drop-off Warehouse E-Z-GO 3PL RBW Trailers Raw Materials FIFO ECR/ECN FIFO FIFO FIFO Crate Cars Line balanced across models Order and forecasting Closely linked Standard work For incoming Material flow Match orders with FG inventory 16. Design Principles - Metrics

Themes

Impact

FTQ

Inventory accuracy

High impact

Med impact

• Visual management

• Practical problem solving

• Strong performance dialogs

• Shared leadership vision

• Leadership standard work

Culture, Mind-sets, Behaviors

Performance management

Process flow

Low impact

• Production scheduling automated and streamlined

• Orders and quotations integrated material

• Effective control procedures that ensure accurate inventory parameters

Information Flow

• Balance line to takt and build capability

• Redesign line layout

• Design and document safer, more ergonomic and more efficient operations

• Execution of PFEP across all MML parts

• Improvement of material flow via sequencing

• Standard work for all conveyance and material management

Material flow

Keys to driving sustained impact across Mixed Model value stream andE-Z-GO

Productivity

17. Process Flow:Manage to Takt

Future state manning requirements are ~30% less:

Total work content per 2+2G* = 2 hr 15 min

Cars per day = 85

Work content per day = 191 hr 15 min

Number of operators required** = 21 (current = 31)

Some stations very close or over takt (when walking time included) limiting production capacity and causing waiting elsewhere Red = walking Orange = sub-assemblies Yellow = variation Green/blue = 2+2G work elements On average, station cycle time is 30% lower than takt to meet 85 vehicles/day there is significant opportunity to rebalance to fewer stations Takt = 85vehicles/day 18. Business Level Metrics Cascaded throughout Organization

Safety, Quality, Delivery, Cost (SQDC)

19. Material Flow: Sequence Center to Assembly 20.

Improvements Made

Short-Term MPS Tool

Expanded MRP visibility to configured quotes

Reduced PAR volume

SIOP impact tool for what-if analysis

Standard work for Buyer/Planners

Standard work for Change Notice Implementations

Piloting A2 Kanban process for windshields

Information Flow:Scheduling 21. The work has been very hard but in the end has been very rewarding.We know that there are still some things that need to be checked and worked out You can move around the areas a lot easier With the new way the line moves, it give me more time to get done what I need to do Parts are stocked up all of the time now Now we run by the schedule, unless we happen to be out of a particular partNow it is not as cluttered and things are well organized, so we have plenty of room Before the changes on the assembly many people were weary of it and didnt think actually that it would work. So far it has worked out extremely well.I think the process has been beneficial to everyone on the line as well as to E-Z-GO.Parts presentation is a MAJOR changeThe big difference I see is how the line runs now it looks like the line is running slower Communication boards help us know what is going on and what we have to face for the day Now it is a lot SAFER to work CMB Team:Employee Engagement 22. Cultures Mindsets and Behaviors

Most Important Link

Begin to See Shift in Lean Capabilities

John Ward Lean Team Video

23. Evolution to Business Level Improvement

Goal Deployment Process (Hoshin Planning)

• Targets to Improve (TTIs)

• Key Process Improvement Metrics (KPIVs)

Rigorous Reviews with Countermeasures

24. Driving CI Responsibility to Operator

Developed Curriculum and Schedule to Train 80% Workforce in Lean Techniques

• Attend 24 Hours of Training

• Complete 2 projects (team or individual) in 12 Month Period

• Certify as an E-Z-GO Lean Technician

Promotes Kaizen as Way of Life: Everyone Empowered

25. Pay for Performance Metric Driven

Started at Plant Wide Level Quarterly Payout

Currently at Zone Performance Level - Quarterly

Dont be Calling in Sick.youre taking money out of my pocket 26. Accelerator is Results Driven: Be Patient: Likely to Get Worse BeforeImprovement is Realized Metric Before After Operator Load Efficiency 54% 98% First Time Quality 51% 98% Inventory Accuracy 82% 97% Schedule Adherence 62% 95% 27. What is Next?

Sustain is more important than ever

Continuous improvement is part of everyones job

Other recognition for best in class (Industry Week)

Benchmarking tours

Pushing Continuous Improvement to Suppliers and Customers

The Journey Continues