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Improve Your Company & Your Company’s “Problem Supplier(s)”

Don Dees, PresidentFull Circle Quality, LLC4301 66th Avenue NENorman, OK 73026Cell (616) 902-2894ddeeshome@aol.comwww:fullcirclequality.comwww:ddeesllc.com

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History: 2009, DDEES,LLC & FCQ were established in Norman, Oklahoma to provide manufacturing support services to manufacturing facilities in China and in North America.

FCQ has provided Consulting Services, Technical Experts, & Training in areas such as:• Coaching to implement & sustain Quality Systems• LEAN Manufacturing Processes • Problem Solving • General Management/Leadership Processes• Stamping, Welding, Plastic Injection Molding, Painting, Assembly, & Others• Material Handling, Logistics, & Sourcing

•Sales/Marketing/Service/Business Development•Mergers & Acquisitions & Due Diligence

FCQ has found many Permanent or Temporary Technical or Manufacturing Experts for many companies in Asia, China, & in North America.

Results! FCQ clients are obtaining results of between 17 and 35 ROI. In other words, for every dollar spent implementing LEAN, they are saving 17 to 35 times this amount of money the next year.

Present: 2013, FCQ continues to provide project support and services to many Companies in numerous industries in Asia, China, and North America.

FCQ Core ServicesFCQ Core Services

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Inspection & Containment ServicesVisual Inspection (Vehicles & Parts)

Defect Detection

Dimensional Checks

Label Verification

Sequencing Verification

Re-Work to Specification

Functional Testing

Software Re-flashing

Yard Sorts (Finished Vehicle)

Engineered Containment TM

Third Party Metrology (CMM Measuring, Scanning, & Problem Solving)

Portable Dimension Analysis (FARO hard probe & laser scanning)

Reverse Engineering (Converting laser scan data to IGES & CATIA)

“Headhunter Help” in finding you Permanent or Temporary Technical or Manufacturing Experts for your Company

Consulting ServicesProblem Solving

Coach to implement & sustain Quality Systems

LEAN Manufacturing Processes

Process & Through-Put Improvements

General Management/Leadership Processes

New Product Launch Support

Technical ExpertsStamping & Welding

Painting

Assembly

Plastics Injection Molding

Robotics

Quality

Material Handling, Sourcing, Logistics

Process Engineering• Manufacturing & Plant Management

Sales/Marketing/Service/Business Development

Mergers & Acquisitions & Due Diligence

Finance/Accounting

Other Technical Areas

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Engineering Services – Products

Durability Drive Testing of New Model Vehicles

GP12 Pre-Launch Containment

Advanced Quality Planning/PPAP & Documentation Support of New Parts

Receiving Inspection Plans

Portable Dimensional Analysis (CMM)

Reverse Engineering (Laser Scanning)

New Product Launch Support

Others

Engineering Services – Processes

ISO/TS Certification

Process Auditing

Advanced Quality Planning/PPAP & Documentation Support New Processes

Quality System Auditing

Auditing & Verification of Processes & Corrective Actions

• Others

Engineering Services – Provide Team Members

Supply Chain & Warehouse Management of Pilot & Proto-Type Parts

Supply Chain Management (Cross Docks, Warehouses, Kitting, & In-Line Sequencing of Parts, Finished Goods, etc.)

Sub-Assembly of Simple Assemblies

On-Site Technical Liaisons

Containment Avoidance

Supplier Launch Support

Supplier Crisis Support

Contract Quality Engineering

Technical Representation

Third Party Engineering & Containment

Training

Problem Solving

LEAN Manufacturing

Quality System & Quality Engineering

• Technical Training (example Paint Process Engineering)

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Successfully introduced and implemented comprehensive LEAN Manufacturing Processes across 3 Portfolio Companies (at the same time) specializing in stamping and complex welding with annual revenue of $400m. These LEAN Processes included; Toyota Production System, Standardized Operations, SQDCMRS (Safety, Quality, Delivery/Productivity, Cost, People, Revenue, and Speed) KPi Performance Metrics, Throughput Management Process, Quality Gate Launch Process for new parts, Detailed Plant Floor Layered Process Audits, Six Sigma Black Belt Process, Stamping and Welding Standards, Daily Financial Total Cost Management Tracking, and Supply Chain Development.  In the first six (6) months, the annual ongoing cost savings were over $17M per year and with an additional $20M of cash generated from reducing the inventory levels. Specific Achievements include:•Reduced the “Break Even Point” by 33%.•Safety - Reduced OSHA Recordables by 150%. •Quality - Improvements saving $5M/year (Improved PPMs by 700% resulting in reduced internal & external sorting/inspection - $3.5M savings, decreased destruct tests - $1.5M savings). ISO/TS Certifications and Audits to 100% across company.•Delivery - Supply chain cost reductions of $7M/year (China sourcing, Single source scrap control, and Freight Utilization Improvements). •Productivity - Increased throughput by 15% per plant. Realized 25% headcount reduction. - $6M/year savings. •Cash - Instituted Inventory reduction process generating $20M Cash (70% reduction - $30M to $10M) Performance Results:•Safety Frequency Rate now at a World Class Level of 1.1.•Quality PPM rates today at a World Class 4 ppm.•On time delivery now at 100%.

Actual Results from a LEAN Manufacturing Project in USA (Results after 6 Months)

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Actual Results from a LEAN Manufacturing Project in CHINA (Results after 6 Months)

Safety•Have now gone over one year without any Safety Accidents in the Plant(s)

Quality (Customer)•Went from 1,000 PPM’s to Zero PPM’s & Zero QIR’s for over one year•Went for Last Place (#16 in 4/2011) to First Place (#1 in 4/2012) in Suzuki’s Ranking of Stamping & Welding Suppliers in China•Went from being on the “NOT allowed to Bid on New Work List” (because of past performance and lack of quality processes) in Q3 of 2011 to “Preferred Supplier List” in April 2012 with Suzuki, Chang An, JCI, LEAR and other Customers.

Quality (Internal)•Went from Checking & Repairing 300% of the parts to 0% Checking & Repairing of the parts on eight (8) totally different Final Assembly Part Numbers (IP Cross Car Beam, Seats, Steering Column Support Bracket, Radiator Assembly, Engine Tubes, Others)

Delivery•100% On Time Delivery for over one year•Eliminated the need for a Third Party Warehouse for Finished Goods•Eliminated 33% of the Inventory ($4M USD)

Cost•ROI of 17 Times what was spent to Implement LEAN Manufacturing•Saved Manpower, Space, Scrap, Inventory, Needs for new Capital Equipment, Others

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North American Market Analysis• The North American Automotive OEM Production Forecast is seen as to continue to grow at about 10% per year for the next

five (5) years, getting back to the 16M level by 2016cy.

• The larger impending problem is that this additional NA volume will cause the “Problem Suppliers” to have even more quality spills. WHY? Many of these “Problem Supplier Companies” do NOT have: Strong Leadership, Experienced Workforce, Mature Quality Processes, Mature Quality Systems, Ability to Problem Solve, Training, LEAN Manufacturing Systems, etc.; consequently; will have many more Quality Spills that will continue to have negative effects on Your Production in North America.

Your future outlook is to continue with more Third Party Containment Activities

Statement of the Current Situation/Problem

Your Company receives many parts, components, and sub-assemblies from suppliers located in North America. Some of these suppliers struggle with the quality of their products delivered directly to You or to Your Tier 1 Suppliers.

•Suppliers that deliver parts that do not meet Your Quality Standard are put on Third Party Containment (100% inspection of each part until the parts are proven to be OK by achieving X days without a reoccurrence of the same quality issue), at the Supplier’s expense.

•Some of these Suppliers have been on and off of Third Party Containment over and over and over for many years.

•Third Party Containment “Protects the Customer”, but is also very disruptive to You and Your Tier 1 Suppliers. It causes many issues such as the need for floor space in your plant, extra warehouse space, extra inventory, FiFO issues, inefficiencies in indirect labor functions, other cost issues.

•For some “Problem Suppliers”, Third Party Containment is a “Band Aid”, and some of these “Problem Suppliers” have not been able to find and correct the real root cause(s) for shipping parts that do not meet Your Quality Standards; and therefore can not eliminate the very frequent requirement for Third Party Containment.

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Suggested “Pro-Active” Strategy

A. Assign Supplier Plants to us to manage using your Product Development Process:Advanced Quality Engineering Activities

Advanced Quality Planning/PPAP & Documentation Support of New Parts

Advanced Quality Planning/PPAP & Documentation Support New Processes

Run at Rate Studies and Verification

Pilot & Proto-Type Builds

GP12 Pre-Launch ContainmentReceiving Inspection PlansPortable Dimensional Analysis (CMM Laser Scanner) of PartsLaunch Support of new products

Others

B. Let us help you launch new Products with “Good Parts” from your Suppliers

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Suggested “Re-Active” Strategy A. Phase #1 of the Our Process usually takes six (6) months and includes:

Step #1 Understand the current situation by auditing the Supplier’s Quality Process, Quality System, LEAN Manufacturing Capability, and ability to Problem Solve.

Step #2 Develop a Kaizen Team of (4) full time people to work for Our Advisor; including a person from Shop Floor Quality, Engineering, Maintenance/Tooling, Office Quality TS/ISO Person.

Step #3 Containment

Step #4 Improve FTQ to eliminate ContainmentStep #5 Work with and Teach this Kaizen Team the following:

•Quickly teach the Supplier how to deliver parts that meet your Quality Standard. (Containment).

•Teach Real Problem Solving on the Shop Floor.

•Teach & Install Simple Quality Processes & Tools on the Shop Floor in these Work Cells

•Teach & Install Simple Lean Manufacturing Tools on the Shop Floor in these Work Cells

B. Objective of Phase #1 of Our Process:

•Perform with a World Class Quality Level of less than 15 PPM delivered to You for the entire twelve (12) months after completion of Phase #1.

•Improve FTQ to eliminate Containment

•The 4 members of the Kaizen Team will have an excellent understanding of Problem Solving, Quality Tools & Processes, and Simple Tools of LEAN Manufacturing.

•Reduction in the costs of poor quality for both the supplier and You the customer(s).

ROI of 17 Times what was spent to Implement Quality/LEAN Manufacturing

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Provide Your Engineering Team with Rapid CMM Data Using the Latest Version Faro Platinum Measurement Arm

Faro Arm Has 12 Foot Reach Capability7 Axis FlexibilityAccuracy is + or – 0.0029in (0.073mm)Does Not Require Robotic ProgrammingSystem is Completely Portable & Wireless

Provide Reverse Engineering Capability Using Faro Laser Scan Arm V3 with CAM2 Measure X SoftwareLaser Will Scan 19,200 Points Per SecondAccuracy and Repeatability is + or – 0.0014in (0.036mm)Creates a Point Cloud for Comparison to Design Data in MinutesData can be returned to customer in IGES or CATIA file formats

Uses:Rapid measurement and comparison to CAD dataEngineering dimensional change verification and documentationLaunch Build Events for immediate fit confirmationVerify supplier dimensional reports during launch or part submissionsDocument and verify emergency tool, fixture or gauge changesDocument soft part dimensions that can not be measured by CMMAnnual tool, fixture and gauge certifications

Advantages:Equipment and operator can be quickly dispatchedParts or assemblies can be accurately measured in minutes Reports are automatically generated and printed or emailedData can be returned in IGES or CATIA format which can be easily merged with existing CAD drawing files.

Third Party Metrology (Laser CMM) Capability

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What does a truly Great Company with Lean Manufacturing look like?

All employees of our company help us move closer and closer to “True North” every day. “True North” can never be totally achieved, however, everyone works together and strives toward the following:

• Zero (0) Safety Accidents• Zero (0) PPM Rate of Quality• 100% on Time Delivery to

Customers• Lowest Cost Producer in our

Industry• Zero (0) Absenteeism, Zero (0)

Employee Turnover, Many Suggestions to Improve, People Working Together as a True Team

• Innovative & Flexible Organization that can Move Quickly

What does a truly Great Company with Lean Manufacturing look like?

When a problem occurs (Safety, Quality, Delivery); • They find the real root cause and

implement a permanent countermeasure/solution that will never let this type of problem happen again!

• Actions are taken to permanently change the old method of doing business so that the company never has to re-fix the same problem again!

• They seek other places this countermeasure/ solution will resolve other similar issues. This ‘read across’ helps speed up improving the company and also helps our people to learn across the entire company.

• They Write Down and Standardize the New Best Process/Method/Procedure

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Quick true story....we went into a JCI plant in Alabama that had over 100 3rd party inspectors/rework people with three (3) different companies (additionally with all of the fixed cost of supervisors, etc.).  They were 200% and 300% inspecting/reworking parts because of poor performance of the 3rd party companies.

We installed standardized work, got to only 100% inspection/rework, and solved many of their quality problems for them (by finding the root cause) and got this down to only 30 inspectors/reworkers.  Their customers are also very happy with them now because they are really holding "clean points" for countermeasures and/or 3rd party inspection containment.

We charged them the same hourly rate per person but saved them millions of dollars per year through LEAN Manufacturing of the Third Party Containment Activities.

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When the Quality Engineer is combined with our trained inspectors and our manufacturing quality processes, the results have always been impressive. People are accountable, deadlines are met, data is accurate. With each project we provide the following…

Quality Engineer lead inspection teams Detailed work instruction with customer approval Inspector training and management Production process material flow Non-conforming material control 2nd level engineer audit of all completed totes/racks/parts Daily customer data reporting by shift

The bottom line is always cost. The level of service achieved by the addition of our Quality Engineer is typically at no additional cost, however, the value that is provided to this experience is immeasurable! In all cases, the Quality Engineer provides our guarantee that we become the one supplier our customers do not have to manage.

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Don Dees

•Vice President of Quality•Vice President of Manufacturing$1 Billion savings per year from improvements in warrantyInstituted Commonization of Vehicle Sub-Systems and Components; thus saving DaimlerChrysler an additional $2 Billion per year.

• Top American LeaderDeveloped the TPS Training Materials & Trained the TM’s

•CEO & PresidentPrivate EquityThree (3) Portfolio CompaniesTen (10) Manufacturing Plants$400M in Sales RevenueAnnual ongoing cost savings of over $17M per year$20M of cash generated from reducing inventory levels New Product & Markets

Proven Lean Operations & Implementation Experience: (Trained from the “floor up”)Trained by Toyota in Japan (Best Japanese TPS trainers in

the World) not by book, theory, or consultants.Applied Lean Knowledge by starting up New Toyota Plant.

(1st Year it won JD Power) Ground up plant launch: Toyota Hiring Process, Developed

the TPS Training & Trained the first 600 TM’s, Launched the Plants(2), Improved NA Suppliers w/TPS

I have implemented these LEAN/TPS tools in OEM’s (GM, DaimlerChrysler & Hyundai), Supplier Companies (BHM Technologies, China), and NON-Automotive Companies (Deere, Cat & China Suppliers); in Both Union & Non Union Environments and in Countries & Cultures across the World.

Proven Ability to Find Talent, Develop Leaders, Teach & Coach, Develop a Great Team, and Get ResultsMultiple Success Stories in many different Cultures &

CountriesExperience with aspects of corporate financing &

restructuringSuccessful in New Business Start-upsSuccessful in Sales & Marketing USP ProductsSuccessful in Innovating New Products & New MarketsExperience in B2B, B2C, Wholesale, Retail, Dealerships &

Aftermarket

•Director of Paint Engineering•Plant Manager•Experience includes:USA & CanadaGermanyEnglandJapan

•Vice President of Quality & ServiceHyundai Quality improved to the top #1 non-luxury vehicle nameplate Started Service Contract Business Started Certified Used Car Program

DDEES, LLC &FULLCIRCLEQUALITY, LLC

DDEES, LLC &FULLCIRCLEQUALITY, LLC

•CEO & PresidentConsulting Company of Professionals that assists Chinese and NA Companies Quality & LEAN ManufacturingThird Party Inspection & Containment of Suspect Poor Quality PartsTrainingTechnical AssistanceContract Employees“Headhunter” Assistance

Donald (Don) DeesMobile: +1 (616) 902.2894 Email: ddeeshome@aol.com