© 2002 Six Sigma Academy

SimplexGrinnell Business Unit Results

Rick Scheusener

© 2002 Six Sigma Academy

SimplexGrinnell Highlights

Targeted Areas

Alarm and DetectionSprinklerSuppression

Assessment LocationsDenverNashuaHoustonChicago

Approximately 170 LocationsFour Locations VisitedOpportunities Leveraged Across SGEBIT Opportunities Identified… $86M

© 2002 Six Sigma Academy

Key Interviews

Ray Broussard, Houston Regional ManagerSteve Guyer, Total Service ManagerConnie Bryer, HR & AccountingRob Phillips , Construction Manager

ElectricalJerry Matlock, Construction ManagerBob Kazmerick, Sales Manager

Bob Kehrer, District GMBill Jones, Service ManagerTammy Schissel, Office Supervisor Bill Bebensee, Electrical ManagerKraig Denking, Mechanical Manager

DenverHouston

Chicago Nashua

Westminster

Greg Gaither, Regional ManagerSteve Hubick, District ManagerBob Lee, ElectricalBob Abrell, Total Service ManagerTom Leman, Mechanical Ops Manager

Ron Brassard, Regional ManagerTodd Buffum, Total Service ManagerFrank Difonzo, ElectricalBrian Cote, Suppression

Bob Chauvin, CFODave Baer, VP Sales and MarketingMichael O’Rourke, VP National AccountsJim Nickerson, Applications

© 2002 Six Sigma Academy

SimplexGrinnell Projects

Project EBIT Source(s)AR $15M Labor / ARPerfect Day $35M Labor / ShipRevenue Enhancement $7.5M RevenueNational Accounts $10.5M RevenueExpedited Shipping $5M ShippingImproper Spec $5M LaborTSP / DO Outside Vendor Shipping / Matl costAHJ Design Change $2.5M LaborADT / SG Combined Opps Labor / RevenueDesign Power Curve LaborFinance Center LaborInventory $5M InventoryTotal $86M

© 2002 Six Sigma Academy

Project 1…Perfect Day

Problem Statement:

• Installation processes builds 4-7% into the job to account for problems that occur on site during the installation process.

• Total cost of non-perfect day = $35M

CTQ: (Critical To Quality):• Margin

Defect Definition:• Margin less than optimal

Project Objective:• Understand what project management

issues to address to ensure that bid margin for a job doesn’t slip.

Current Goal:

Cost Benefits:• Reduce lost annual costs by $35M

Internal/External Client Benefits:• Improve margin and cash flow

• Build customer relationships

Dependencies:• Resolving customer quality issues

Progress to Date:• TBD

• Realize margin improvement of 5%

© 2002 Six Sigma Academy

Margin

Revenue Cost

Labor Design Material

Waiting Install

Strategic Goal

Business Drivers

Drivers

$35M from 4-7% additional builtinto margin

Project Cluster…Perfect Day

PoorSpecs

Wrong Equip

Wrong Parts

PoorDesign

Drill Down

Project (s)

SimplexGrinnell – Houston RegionDesign Process – Contract Business

Work Folder forwarded to

DesignForward to appropriate

Design Project Manager

Design work sorted by job type

(Mech, Elect)

Design Project Manager assigns

DesignerDrawings Prepared

Equipment Ordered

(depends on design type and schedule)

Drawing Submitted for AHJ Approval

Installation

Drawings forwarded to Construction

Drawings Reviewed by Senior Designer

Drawings Complete?

NOYES

Drawings by Senior Designer?

YES

NO

Drawings Approved?

“As is” or “As Noted”

YES

NO

SimplexGrinnell – Houston RegionConstruction Process (Electrical) – Contract Business

Work Folder forwarded to Construction

Customer Contacted and Construction

Schedule Obtained

Customer Contacted

Equipment Ordered

Construction Project Manager

Assigned

Equipment List Reviewed by Project

Mgr.

Determine Job Type?

Fast Track(5-7 Day Work)

Bid Work

Installation Work Scheduled

Approved Drawings Received

Installation

Construction Project Manager

Assigned

Drawings Received from

Design

Project Mgr. forwards

Equipment List to Purchasing

Project Mgr. establishes

Installation Dates

Project Mgr. manages

Construction Schedule

Equipment Ordered

Installation Crew Assigned by work type and schedule

© 2002 Six Sigma Academy

Project 2…Accounts ReceivableProblem Statement:

• Accounts receivable of $365M is $165M above the desired level. In addition, $3.4M is spent on administrative costs to address customer invoicing concerns and finance center opportunities.

• Total EBIT opportunity for accounts receivable = $15M

CTQ: (Critical To Quality):• AR DSO

• Administration expenses to address invoicing and finance center concerns

Defect Definition:• DSO greater than 60 days

• Admin time spent chasing invoicing and finance center errors

Project Objective:• Improve DSO and invoicing errors

• Realize margin improvement of 5%

• Current Goal:• DSO <= 60 days

Cost Benefits• Reduce admin costs by $3.4M

• Cash flow from accounts receivable

Internal/External Client Benefits:• Improve cash flow

• Build customer relationships

Dependencies:• Resolving customer quality issues

Progress to Date:• TBD

© 2002 Six Sigma Academy

Project Cluster: AR

Cash

RevenueAccountsReceivable

Invoicing Terms Systems BillingProcedure

FinanceCenter

Strategic Goal

Business Drivers

Drivers

$11.5M

$1.7M $1.7M

© 2002 Six Sigma Academy

SimplexGrinnell

Six Sigma Deployment Considerations

1. Simplex vs. Grinnell Culture• Tremendous Progress over 20 months• Recognition between management styles • Current SG Activities: CRM Rollout, GL

Merger,Job Costing, Training2. Need for Data

• Anecdotal information - not actionable• Programs coming on line

3. Significant DMAIC Applications• Entitlement from programs• Process Execution