Hydraulics Grp RevA - Eatonpub/@eaton/@corp/documents/...• Hydraulics Group ... 20022003 2004...

11© 2011 Eaton Corporation. All rights reserved.

Hydraulics Group

• Hydraulics Group introduction, overview, update

• Please contact Scott Krueger with questions: [email protected]

• Fluid Conveyance business unit update

• Please contact Brian Walsh with questions: [email protected]

• Power Motion Controls business unit update

• Chris Pinnegar – presentation attached

• Filtration business unit update

• Please contact Brian Kisiel with questions: [email protected]

• Supplier quality

• Shawn Malek-zadegan – presentation attached

• Materials management

• Mike Hoverman – presentation attached

© 2011 Eaton Corporation. All rights reserved.

Hydraulics Power and Motion Controls SCM overview

Chris Pinnegar


Hydraulics Power Motion Controls, Wide product PortfolioProduct line complexity, need to receive 27m parts per month from 1,300 suppliers to meet the demand

Piston Product Portfolio Fixed Displacement

Portfolio

SiCV & Advanced

Controls Portfolios

Project Products

Portfolio

Electronics and Eaton

F(x) Portfolio

Heavy Duty

Transmissions

Medium Duty

Transmissions

Open Circuit Piston

Pumps

Hydrokraft Heavy Duty

Industrial Pumps

HP and VIS Motors

Vane Products

Gear Products

Spool and Disc Motors

Industrial Valves

Steering

Mobile Valves &

Ultronics

SiCV and HICs

Brakes and Clutches

HPUs and Drives

Std. and XL Cylinders

VFX Displays and

HMIs

Control F(x)

Software

EFX & SFX

Controllers


Source: Regions

Hydraulics Power Motion Controls Business update

0100200300400500600700800900

1000110012001300

2004 2005 2006 2007 2008 2009 2010

Hyd PMC Sales $M

Source: Regions

PMC Market Mix

Mobile,

60%

Industrial

40%

Strong snap back in demand 2010 Strong snap back in demand 2010 (un (un

forecast)forecast)

Main marketsMain markets, Construction , Agriculture, , Construction , Agriculture,

Energy, Lawn & turf, Materials handling, Energy, Lawn & turf, Materials handling,

Primary metal, Marine, Plastics, Machine Primary metal, Marine, Plastics, Machine

tool , Forestry, Mining..tool , Forestry, Mining..

$1.1b


Guaratingueta, Brazil

•

Spencer, Iowa

•

Hutchinson, Kansas

•

Shawnee, Oklahoma

•

Searcy, Arkansas

•

Greenwood, South Carolina

•

Decatur, Alabama

•

Havant / Warwick, , U.K.

•Jackson, Michigan

Segrate, Italy

•

Jining, China

•

Wehrheim Germany

•

Eden Prairie, Minnesota••

Kameoka, Japan

•

•

Reynosa, Mexico

•

Pune, India

•

• Hose Assemblies

•

Eindhoven, Holland

•

Shanghai, China

•

•

•

Guarulhos, Brazil

•

•

22 Manufacturing Plants

Global foot print

Airflex

Cleveland


PMC 2011-2015 GrowthStrategic Objective

PMC 2015 Strategic Objective: Grow business

Will need considerable additional supply base capacity to support this growth

• Growth drivers

• Globalization, emerging

markets (construction, ag)

• Eaton market share

penetration

• New products (piston pump,

valves)

• Acquisitions, alliances

Need supply base that can grow with us globally


Hydraulics Power and Motion Controls

Commodity

Management

(Strategic sourcing team)

Central buying

(Regional buying)

Americas,

Europe UK,

Materials

Management

(Plants 22 globally)

Americas,

Europe,

Plant Supply chain managers,

Material Planners, Schedulers

Supplier

Development

(Regional)

Americas,

China,

India,

New product

Sourcing

Hydraulics Power Motion controlsSupply chain management global org structure

Global matrixed organization


• Growth

• Grow the supply capacity to meet the business growth plan, capacity needs to be in the right place geographically and available in time (take advantage of the opportunity)

• 2011 growth forecast; Americas 16%, Asia 13% Europe 10%

• Strategic suppliers to participate in new product development programs (PMC has approx 28 in work)

• Early supplier involvement in NPD recognized as critical to success

• Supplier alignment (values, horizon..)

Power and Motion Controls Supply Chain Management focus


• Supplier delivery on time

• Supplier delivery on time goal 97%

• Current performance 86%, 2010 at 88%

• 2010 considerable past due challenge, management of capacity constraints as suppliers ramped back up, significant expedite activity

• 2011 continue to be slightly constrained but more focused on a few segments

• Large strategic program in work globally to add supply capacity to support both the current demand and future growth



• Supplier quality• Supplier quality goal, less than 1,028 DPPM

• Current performance, 1,300 DPPM, 2010 at

1,376 DPPM

• Supplier quality a flow disrupter, contributes

considerably to past due, and waste



• Cost• Cost continuing challenge (as always)

• Commodity inflationary pressures getting more aggressive (steel, alum, copper,

oil)

• Currency volatility (yen, RMB, euro)

• Needs to be managed tightly by the whole supply chain

• Have long term view

• Strong 2011 volume should be helping through economies of scale and higher

equipment utilization



Thank you


Supplier Quality

Shawn Malek-zadegan

Supplier Development and Advanced Sourcing Manager

March 30, 2011


Agenda

• PPM Performance Trend

• Closer Look at Performance Profile

• Supplier Actions to Improve Performance

• Supplier Development - Focus Supplier Process

• Standard Sourcing and APQP/PPAP Process

• WISPER - Supplier Scorecard

• EHS Addition to Quality System Assessment

• Performance Expectations

• Take Away


3,700

3,2503,382

2,729

1,573

2,119

1,297 1,354

870693

415250

150 90

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Goal

20%

16% Reduction/Yr

40% Reduction/Yr

Supplier PPM TrendJan PPM = 883

Feb PPM = 1,193

YTD PPM = 1,041 VS goal of 693

300 PPM points are caused by 5 DMRs

�3700 to 870 - THANK YOU!!!

�Require twice as much improvement per year going forward

�Every DMR counts, especially those related to large shipments


A Closer Look at 2010 Supplier Performance

�Thanks to those suppliers without any rejections

�1% Problematic rejects are mostly different from year to year

�Cause: Quality Systems Breakdown, Sudden Business Growth / Shrinkage, Worn Tooling

21% of Suppliers 50% Rejections1% of Suppliers

50% Rejections

78% of Suppliers 0% Rejections


• Improve ISO-9001 or TS-16949 Quality System

� Apply additional rigor in ISO/TS internal audits� Not only it meets the requirements, but improves product quality

� Gage Calibration� Are all gauges calibrated on schedule

� Be aware of any gauges being used for 100% inspection on-line

� Reevaluate the frequency of calibration

� Process Control - SPC� On-line charting VS delayed charting in office

� Are the out-of-control actions appropriate and effective

� Training Program� Step-up, Operators, and QA Personnel

• Systematically Review

• PFMEA and Control Plan• Severity, Occurrence, Detection

• Notify us when you have a suspected lot of material

• Please do not ship

Key Steps to Improve Performance

�Paying attention to details is the key

�Root cause of most quality rejects is very simple and could be easily avoided


• “Focus Suppliers” Selection Process

� Strategic Suppliers

� Highest impact to business and interruptions at plants …. frequent DMRs• High number of part numbers

• Supplier to multiple plants

• Mutual Establishment of Monthly Performance Goals & Exit Criteria

� Perform series of audits and reviews• QSA

• Process Audit

• PFMEA

• Control plan

• Process Controls

• DMR Root Cause

� Identify areas of improvements

� Supplier is responsible to identify the root cause and implement corrective action

� Reevaluate suppliers standing within 6 months

Supplier DevelopmentSupplier Performance Improvement Process

�Eaton is committed to help suppliers improve performance

�Take an advantage of this opportunity

�Improvement progress Impacts future business direction


Multi-Phase Sourcing Process & APQP/PPAP

• Supplier Qualification Process� Quality System & EHS Assessment

� Quality Score 75 – Full Approval

� Quality Score 70 – 74 Conditional A.

� EHS Score of 70 – Full Approval

� EHS Score of 60 – 69 Conditional A.

� Supplier Capability Risk Assessment� 27 Questions

� Core Competencies� Equipment - Mfg capability� Strategic Alignment

� Performance History

STRATEGYSUPPLIER

SELECTION AND AWARD

TRANSITION SETUP

VALIDATION APQP &

PPAPPRODUCTION

Phases 1 2 3 4 5

APQP &PPAP

Submission

PPAP Approval

4.1 4.2

ValidationTesting

CustomerApproval

4.3 4.4

• Advanced Product Quality Planning (APQP)� PPAP run is intended to simulate production run

� Run on Machine planned for production

� Production Operator

� Production Set-up

� PPAP samples must be randomly selected

� On-time Submission of PPAP

� 1st Time Approval of PPAP


New Requirement for Business Award Environmental Health and Safety (EHS)

• Third party certification to ISO-14001 and/or OHSAS-18001

• Documented EHS policy with commitment to

� Regulatory Compliance

� Continuous Improvement

� Pollution Prevention

• Documented Key EHS risks and impacts

• Documented plans and operating procedures

� Risks

� Impacts

• Documented emergency response plan

� EHS requirements is added to Quality System Assessment (QSA) – Nov. 09

� All Suppliers are required to have a documented EHS policy

� EHS compliance is as important as Quality System requirements

� Supplier compliance status will impact sourcing decisions


WISPER - Supplier Scorecard

• Scorecard is currently under

development

• It is a common scorecard

across all Eaton businesses

• It will be available later this

year via pop-up screen or

report in WISPER

• Currently is going under

funding assessment and

approval

• Future plan is to automatically

mail it to all suppliers once a

month via WISPER

• It is intended to summarize

supplier performance in an

easy to read format and

encourage suppliers to take

necessary actions for

performance improvement


Supplier Performance Expectations

PPM = 0

PPAP Submission

100% On-timePPAP Approval

100% 1st Submission

DMR Containment

Within 24 hours

DMR Corrective Action Plan

Within 14 days

Process,

Detection, and

System Root

Causes

100% Compliance to Supplier Excellence Manual

https://www.supplierselect.eaton.com

http://www.eaton.com >> Sign in >> Supplier Select >> Eaton Supplier Excellence Manual

Cpk > 1.33 for all Special Characteristics on Print

Full use of WISPER

� Maintain Correct Contacts and Capabilities Information

� Input DMR Containment and Corrective Action

� Review Your Company’s Performance at Least Once Per Month

� Only 20% of suppliers have logged into WISPER at least once YTD

� Doing business with Eaton

� Supplier Requirements

� Supplier Excellence Award

� Supplier Assessment and Qualification

� Quality Planning and Product Approval

� Cost of Poor Quality

� Closed Loop Corrective Action

� Supplier Development

� Supplier Performance

� WISPER and Supplier Visualization

� Continuous Improvement

� Risk Management and Business Continuity Guidelines

� Global Logistics

� Electronic Commerce


Take Away

• Supplier performance shows a positive trend – Thank You!!!

• 40% year-over-year improvement needed to achieve 2015 goal

� Encourage you to take appropriate actions if your performance does not meet Eaton requirements

• Suppliers are in control of their own destiny

� Supplier commitment to quality is the critical factor to drive performance improvement

• Eaton is committed to help suppliers improve performance


Questions?


Eaton HydraulicsMaterials Management

Mike Hoverman

Supplier Conference 3/30/2011


Agenda

• High Level Strategy

• Our Market Requirements

• Our SIOP Process

• Forecasting

• Production/Supply Planning

• Visibility, Flexibility and Responsiveness


High Level Strategy

• Central control by region with Global

Governance

• Standardized processes and tools


High Level Strategy


High Level Strategy

• Strong SIOP process driving the business

• Improved alignment of our Business Model,

Service Model, Manufacturing Model, Supply

Chain Model and Inventory Strategy


Our Market

• OEM’s provide planning

• EDI

• Web Portal

• Update planning weekly with agreed upon

frozen periods


Our Market

• Pressure to continue to reduce frozen periods

• Changes just outside the period can be

significant


Our Market

• Distributor’s provide only their current at lead

time orders

• Future planning based on statisical forecast

with sales input


Our Market

• Distributors becoming more reluctant to carry

large inventories

• Market pressure to reduce lead times


Our Market

• Significant amount of business shipped

through Eaton facilities in other regions of the

world

• Several of these markets are less mature and

very volatile


Our Market

• Logistics driven lead time already long and

troublesome

• Transitioning to EDI linkages between Eaton

plants


Our SIOP Process

• Disciplined Monthly Cycle

• Links Finance and Materials Planning

• Provides one set of numbers for all functions


Our SIOP Process

• Forecasting

• Built from the bottom up by part number

• Combines Demand/Forecast from all three

channels

• Combines Open Orders, Statistical Forecasts and

Sales Input


Our SIOP Process

• Production/Supply Planning

• Key output of SIOP Process should be a

Build/Procure plan that is attainable

• Predicted supply issues must have a planned

alternative


Visibility, Flexibility and Responsiveness

• Our commitment is to seamless Demand

transparency

• We need a Supply Chain that is flexible and

responsive

Hydraulics Grp RevA - Eatonpub/@eaton/@corp/documents/...• Hydraulics Group ... 20022003 2004...

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Transcript of Hydraulics Grp RevA - Eatonpub/@eaton/@corp/documents/...• Hydraulics Group ... 20022003 2004...