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RED DOT LEAN JOURNEY 2002 To Date

Red Dot’s Lean

JourneyRandy GardinerPresident

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RED DOT LEAN JOURNEY 2002 To Date

Red Dot Corporation“We Create and Deliver

Innovative Climate Control Solutions”

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RED DOT LEAN JOURNEY 2002 To Date

Facilities

Seattle

Memphis

Ipswich

$100 Million In Sales World-wide

Confidential information not to be copied or shared without the express written consent of Red Dot Corporation

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RED DOT LEAN JOURNEY 2002 To Date

Core CustomersCore Customers

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RED DOT LEAN JOURNEY 2002 To Date

Diverse Product Applications

Confidential information not to be copied or shared without the express written consent of Red Dot Corporation

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RED DOT LEAN JOURNEY 2002 To Date

Army & Marine Kits

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RED DOT LEAN JOURNEY 2002 To Date

Red Dot’s Lean

Journey

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RED DOT LEAN JOURNEY 2002 To Date

Why?

Red Dot’s business landscape has changed……

Red Dot must change to survive and….THRIVE!

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RED DOT LEAN JOURNEY 2002 To Date

NEW LANDCAPEMore Products

Shorter Deliver Schedules

Smaller Runs….More Set-ups

More Inventory….More Cash

More Competition = Lower Prices

Lower Prices = Cost Pressure

Employee Ownership

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RED DOT LEAN JOURNEY 2002 To Date

Employee Ownership

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RED DOT LEAN JOURNEY 2002 To Date

MYTH

“We’re just in a down cycle….....

things will be better when the economy

picks up”

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RED DOT LEAN JOURNEY 2002 To Date

"VALUE-ADDED" SALES PER EMPLOYEE

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

World Class Range

Company Will Die

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RED DOT LEAN JOURNEY 2002 To Date

INVENTORY TURNS

0

2

4

6

8

10

12

14

16

18

20

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Company Will Die

World Class Range

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RED DOT LEAN JOURNEY 2002 To Date

ASSET UTILIZATION

$1.38

$3.21

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

World Class

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RED DOT LEAN JOURNEY 2002 To Date

SALES & PROFITS

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001($2,000)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

PROFITsIN THOUSANDS

SALESIN THOUSANDS

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RED DOT LEAN JOURNEY 2002 To Date

Red Dot must change to survive

and….THRIVE!

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RED DOT LEAN JOURNEY 2002 To Date

RED DOT “LEAN”PRODUCTION SYSTEM

What did we do?

Hired A Lean Consultant

Committed Ourselves Entirely

Held Monthly “Kaizen Events”

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RED DOT LEAN JOURNEY 2002 To Date

RED DOT “LEAN”PRODUCTION SYSTEM

What is it?

Elimination of Waste

Creating Continuous “Flow”

“Pull vs Push” Toyota Production

Cellular Manufacturing

Continuous Improvement System

“Kaizen Events”

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RED DOT LEAN JOURNEY 2002 To Date

The “Lean” Journey60 Kaizen Events since December 2001

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RED DOT LEAN JOURNEY 2002 To Date

The “Lean” Journey

Over 1,000 Kaizen Ideas Implemented

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RED DOT LEAN JOURNEY 2002 To Date

The “Lean” JourneyAssembly Lines Revamped

Continuous Flow – Moving BeltsWork balancing Running Change Over – Zero Set-up

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RED DOT LEAN JOURNEY 2002 To Date

The “Lean” JourneyCoil Production Revamped to a Line

Continuous Flow vs BatchReduced space from 7,000sq.ft.

to 1,700sq.ft.

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RED DOT LEAN JOURNEY 2002 To Date

The “Lean” JourneySheet Metal Cells Developed

Reduced Part TravelImproved Cycle Times - Responsiveness

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RED DOT LEAN JOURNEY 2002 To Date

The “Lean” Journey

Set-up Time Reductions

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RED DOT LEAN JOURNEY 2002 To Date

The “Lean” Journey

Management Involvement

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RED DOT LEAN JOURNEY 2002 To Date

Continuous Improvement

“Kaizen Events”

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RED DOT LEAN JOURNEY 2002 To Date

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RED DOT LEAN JOURNEY 2002 To Date

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RED DOT LEAN JOURNEY 2002 To Date

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RED DOT LEAN JOURNEY 2002 To Date

Lean Results Since 200120,000sq.ft. in floor space cleared

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RED DOT LEAN JOURNEY 2002 To Date

Lean Results Since 2001

PRODUCTION LEAD TIME

WAS 12 DAYS

NOW 4 DAYS!!

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RED DOT LEAN JOURNEY 2002 To Date

Lean Results Since 2001 Value Added Sales Per Employee

$95,790 $100,020$109,082 $114,886 $120,362

$140,000$132,062

$118,457

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

2000 2001 2002 2003 2004 2005 2006YTD

2006GOAL

Automotive Industry Average

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RED DOT LEAN JOURNEY 2002 To Date

Lean Results Since 2001Company Inventory Turns

0.001.002.003.004.005.006.007.008.009.00

10.0011.0012.0013.0014.00

1997 2000 2001 2002 2003 2004 2005 2006

2006 Goal 6 turns

Automotive Industry Average

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RED DOT LEAN JOURNEY 2002 To Date

Lean Results Since 2001ASSET UTILIZATION

$3.21 $3.26

$2.69

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

1990 19911992 1993 19941995 19961997 1998 19992000 20012002 2003 20042005 2006

World Class Range

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RED DOT LEAN JOURNEY 2002 To Date

SALES & PROFITS

$1,000

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

($2,000)

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

PROFITIN THOUSANDS

SALESIN THOUSANDS

Lean Results Since 2001

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RED DOT LEAN JOURNEY 2002 To Date

Lean Results Since 200120,000sq.ft. in floor space redeployed (Added 4 assembly lines; totaling 7)

Inventory Turns Increased 46%

Productivity (VASPE) up 32%

Asset Utilization up 95%

Production Lead time reduced from

12 to 4 days

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RED DOT LEAN JOURNEY 2002 To Date

Lean Lessons

Use a consultant Create a sense of urgencyCommit “Full Time” ResourcesDemand Management InvolvementImplement “5S” FirstAnticipate Passive Resistance Remove “Concrete Heads”It’s A “Never Ending Journey”Stay The Course!!

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RED DOT LEAN JOURNEY 2002 To Date

Thank YouQuestions

Welcome!