Supplier Conference 2013 (Combined)
119
Lear Supplier Conference
Transcript of Supplier Conference 2013 (Combined)
Lear Supplier Conference
Welcome
CEO Video
Lear Corporation—Strengths
Business Overview and Growth
Product Leadership—Technology
Operational Excellence
Supplier Expectations
Supplier Diversity
Supplier of the Year
Agenda
2
3
This is Lear
5
Our Vision & Core Values
6
The Lear Difference
• Superior Sales Growth . . . Through Innovation
• Customer and Geographic Diversity
• Continuous Improvement Focus
• Financial Discipline
7
Lear Profile
• Leading Tier 1 global automotive supplier
– 2012 sales of $14.6 billion – rank #189 in the Fortune 500
– Three-year sales backlog of $1.8 billion
• Strong global market positions and low-cost footprint in:
– Seating
– Electrical Distribution Systems
• Diversified sales and customer base serving all of the world’s
major automakers
• Strong balance sheet with $1.4 billion in cash and no debt
maturities until 2018
• Leader in product quality, customer service and innovation
Three-year sales backlog as of January 11, 2012.
8
Global Capabilities with Low-Cost Footprint
Low-Cost Engineering Centers
India, Philippines
Low-Cost Operations
22 Countries
More Than 80% of Component Facilities and More Than 90% of
Related Employment Located in Low-Cost Countries
• Strong Market Position -- One of two
independent seat suppliers with global scale
and complete component capabilities;
2012 sales of $11.0 billion
• Key Capabilities -- Complete automotive seat
systems, seat covers (including cut & sew,
fabric and leather), mechanisms & structures
and foam
• Quality Leader -- Lear is the highest quality
independent major seat manufacturer for 11
of the last 12 years according to the J.D.
Power and Associates Seat Quality and
Satisfaction StudySM
• Benchmark Technology -- Lear’s EvolutionTM
Seat has seven first-to-market innovations
Global Leader in Automotive Seating
ECO Foam
ECO Padding
EVO Mini Recliner
ECO/EVO Structures
Expanded Polypropylene Frame
ProTec® PLuS Whiplash Protection
Dynamic Environmental Comfort Seating (DECS)™
9
Seat*
* Provides up to a 30% weight reduction, environmental benefits and cost savings
RECLINERS STRUCTURES SEAT TRIM
HIGH-POWER WIRE HARNESS
SOLID STATE
SMART JUNCTION BOX™
TRADITIONAL WIRE HARNESS
• Strong Market Position -- One of four suppliers with
global capability in both traditional and high-power
electrical power management systems;
2012 sales of $3.6 billion
• Key Capabilities -- Traditional electrical distribution
systems, emerging high-power systems and related
components including connectors, smart junction
boxes and battery chargers
• Quality Leader -- Outstanding program management
capabilities support thousands of design changes
per year with world class quality
• Benchmark Technology -- Lear’s Solid State Smart
Junction Box™ won an industry-leading PACE
award sponsored by Automotive News
• Sales growth opportunity with improving margins
– Additional consumer demand for features and
functionality
– Greater electrification and signal management
of alternative powertrain design
10
Strong Global Position in Automotive
Electrical Power Management Systems
HIGH-POWER CONNECTORS HIGH-POWER BATTERY CHARGER
11
We Serve all of the World’s Major Automakers
Lear Content On Over 300 Vehicle Nameplates Worldwide
12
Strategic Direction Remains Consistent
• Profitably grow and diversify sales globally
• Continue to expand component capability in emerging and
low-cost markets
• Pursue niche acquisitions to strengthen both core
businesses; no transformational acquisitions needed or
planned
• Maintain strong balance sheet with investment grade
credit metrics
• Consistently return excess cash to shareholders
13
Investment in Component Capacity in Emerging Markets
and Low-Cost Countries
Mexico • Mechanisms & Structures
• Seat Trim
• Wire Harnesses
Brazil • Mechanisms & Structures
• Seat Foam
• Seat Trim
• Wire Harnesses
India • Mechanisms & Structures
• Seat Foam
• Wire Harnesses
Thailand • Seat Foam
• Seat Trim
• Wire Harnesses
China • Mechanisms & Structures
• Seat Foam
• Seat Trim
• Connectors
• Electronics
• Wire Harnesses
Morocco • Electronics
• Wire Harnesses Moldova • Seat Trim
Tunisia • Wire Harnesses
Approximately $300 Million Invested to Increase Emerging
Market and Low-Cost Component Capacity in 2010-2012
Seating Facilities
Electrical Facilities
13
• Produces automotive fabric for seats, headliners and other
interior applications
• Strengthens Lear’s global seat cover capabilities
• Extends Lear’s regional fabric manufacturing capability presently
located in China
• Adds design and technical capability to facilitate future growth
• Strong management team with textile and manufacturing
expertise
• Further diversifies Lear’s customer base
• Majority of restructuring is complete
• Includes small, non-automotive specialty fabric business
14
Guilford Mills – Strategic Benefits
• One of the strongest balance sheets in the industry
• Strong credit metrics in-line with investment grade peers
• Covenants and capital structure provide flexibility to invest in our business and execute our strategic objectives going forward
• Modest pension and OPEB liability – Substantially all U.S. plans are frozen or at
closed locations with no future benefit accruals
• Balanced and flexible shareholder distribution policy – Modest annual dividend – Flexible share repurchase program
Strong Capital Structure and Liquidity
Cash and Debt Balances
15
As of December 31, 2012 (in millions)
(1)
$1,402
$626
$533
Cash Total Debt Pension/OPEB
(1) Cash includes cash and cash equivalents
16
Longer-Term Outlook
• Global growth in automotive demand and further consolidation of supply base
• Increasing customer trend toward global platforms
• Critical success factors: global capabilities, a low-cost footprint and superior quality
• Leading technologies and innovation are key differentiating factors
• Lear well positioned to be successful as the industry recovery continues
Seating – Global capability and scale
– Increasing sales diversification
– Low-cost engineering and manufacturing footprint
– Selective vertical integration in key components
– Among leaders in technology and innovation
– Recognized industry leader in quality
Electrical Power Management Systems
– Significant growth opportunity
– Global presence and capability
– Competitive low-cost footprint
– Investing in key technologies (e.g., high-power and hybrid electrical
systems and components, Solid State Smart Junction BoxesTM and
terminals & connectors)
17
Market Overview
• Market Trends
• Market Growth Forecast
• Lear Growth & Market Position
• New Business Backlog & Key Wins
19
Agenda
• Global vehicle platform proliferation
• Increased direct sourcing of components
• Significant customer expectations regarding pricing,
productivity and cost reduction
• OEMs increasingly shifting costs (warranty, tooling,
engineering, etc.) to suppliers
• Increased fuel economy and emissions standards driving
focus on weight reduction
• Growth in electrical/electronics content on the car
• Aggressive timing in new platform launches
Key Market Trends Affecting Lear
20
• Global industry production forecasted to grow at 4.0% CAGR
– BRIC markets growing at 8.0%
– China the major driver at 9% to 18.5M vehicles
• Largest six China OEMs (SAIC, DFM, FAW, Changan, BAIC,
GAC) forecasted to grow by more than N.A. and EU markets
combined
• The B and C segments remain, by far, the largest segments
globally and are growing the fastest
• All major OEMs forecasted to grow with VW, Toyota, and GM
remaining clear global leaders
– Ford, Fiat/Chrysler, and BMW have higher growth among larger
OEM’s
Industry Production Outlook Summary
21
Full Year 2013 Vehicle Production
2012 2013 YOY
Actual Outlook Change
China 17.0 18.5 up 9%
Europe 16.8 16.2 down 4%
North America 15.4 15.6 up 1%
India 3.7 4.1 up 9%
Brazil 3.2 3.3 up 5%
Russia 2.1 2.0 down 2%
Global 79.7 80.7 up 1%
Vehicle production estimates based on IHS Automotive production forecast and Company estimates.
Units (in millions)
22
Industry Volumes
NA, Europe and BRIC Market Production
15.8 15.8 15.3 15.0
12.68.6
11.913.1
15.3 15.6 16.1 16.9 17.5 17.7
18.7 18.7 19.1 20.218.8
15.6 17.5 18.0 16.6 16.2 17.0 17.7 18.5 19.4
8.2 9.3 11.213.2
14.1
17.4
23.2 24.3 26.128.0
31.234.1 36.8
38.8
60.2 62.8
65.3
68.9 65.8
57.7
72.6 74.8
79.7 80.7
85.6
90.7
95.0
98.5
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
North America Europe
BRIC Global
Source: Wards, IHS and Company estimates as of November 2012
8% 2012 to 2017 CAGR
3% 2012 to 2017 CAGR
3% 2012 to 2017 CAGR
units in millions
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4% 2012 to 2017 CAGR
2009 2010 2011 2012 2013
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Lear’s Growth
Lear 12.4% CAGR
Global Production 8.9% CAGR
Lear is Growing Faster Than Market
Co
mp
ou
nd
ed G
row
th
Growing in Emerging Markets
$0.5
$0.9
$1.1
$1.4 $1.5
2008 2009 2010 2011 2012
Lear in BRIC Countries
(Consolidated sales in billions)
Brazil, Russia and India
China
$1.2
$1.5
$2.0
$2.4
25
$2.7
2008 2009 2010 2011 2012
Lear in China
$1.3
$0.8
$1.7
$2.1
Non-Consolidated
Consolidated
(Sales in billions)
$2.4
$1.5
$1.4
$1.1
$0.9
$0.5
Lear CAGR of 23% vs. Industry CAGR of 17% in BRIC Markets
Full Year 2012
Sales Diversification by Region and by Customer
By Customer By Region
2012 Consolidated Sales
Sales Well Balanced by Region and by Customer
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GM
Ford
BMW
VW/Audi
Fiat/Chrysler
Renault/
Nissan
DaimlerPSA GroupJaguar/Land
RoverHyundaiOther Asian
Mazda
Volvo
Porsche
All Other
Europe
35%
Rest of World
9% Asia
17%
North America
39%
All Segments Growing – B and C are
the Largest and Growing Fastest
Source: IHS Automotive 9/15/2012
C-Segment, 38.6%
B-Segment, 35.3%
D-Segment, 11.1%
A-Segment, 8.0%
Full Frame, 3.8%
E-Segment, 3.2%
Industry Production Outlook
Demand Growth By Segment
Source of Light Vehicle
Demand Growth 2012 - 2017
2012 2017 CAGR Change
A-Segment 9,031 10,524 3.1% 1,493
B-Segment 18,310 24,932 6.4% 6,622
C-Segment 22,471 29,728 5.8% 7,256
D-Segment 14,362 16,452 2.8% 2,090
E-Segment 5,273 5,882 2.2% 608
Full Frame 9,769 10,474 1.4% 705
Global 79,216 97,991 4.3% 18,775
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(units in thousands)
Lear Share by Segment
Sales Diversification by Vehicle Segment
2012 2007
A-Segment
B-Segment
C-Segment
D-Segment
E-Segment
Compact Full-Frame
Full-Size Full-Frame
* Excludes sales in non-consolidated Joint Ventures
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Lear Growth in B & C Segments – Aligning with Market
2013 to 2015 Consolidated Sales Backlog
2013 to 2015 Sales Backlog
Composition of Sales Backlog
• By Product:
– Seating -- 55%
– EPMS -- 45%
• By Region:
– Europe -- $750M
– North America -- $600M
– Asia -- $400M
– South America -- $50M
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(in millions)
$1,000
$400 $450
$150
$800
$450 $200
$150
2013-2015 2013 2014 2015
Seating EPMS
≈$650
≈$850
≈$1,800
≈$300
$1.8B Net New Business ‘13 thru ‘15
Europe: 42%
BMW •Seating JIT Assembly •Trim Assembly
Daimler •Lighting Modules •Amplifiers JLR •Seating JIT Assembly •Amplifiers •Gateway Module
PSA •Seating Harness
GM •Track Assemblies
Nissan •Seating JIT Assembly •Electrical Distribution AvtoVAZ •Seating JIT Assembly
Skoda •Head Restraints
Daimler •Seating JIT Assembly
Asia: 22%
Hyundai/Kia • Seating JIT Assembly
Nissan • Seating JIT Assembly • Electrical DIstribution
DPCA • Engine Wire • Electrical Distribution
Dongfeng • Seating JIT Assembly
VW/Audi • Seating JIT Assembly
GM • Track Assemblies • Fabric
Ford • Seating JIT Assembly
BHNC • Electrical Distribution
CA-Mazda • Electrical Distribution
Suzuki • Seating JIT Assembly
Americas: 36%
Nissan • Seating JIT Assembly • Electrical Distribution Chrysler/Fiat • Seating JIT Assembly
GM • Seating JIT Assembly • Track Assemblies • Electrical Distribution • Fabric
VW • Seating JIT Assembly Ford • Seating JIT Assembly • Electrical Distribution Toyota • Headliner
• Superior Sales Growth with Financial Discipline
• Customer, Geographic, and Platform Diversity
• Continued Market Share Growth in all Key Markets
• Well Represented in Key Global Platforms
• $1.8B Net New Business Through 2015
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The Lear Difference
32
Product Leadership—
Technology
Lear Seating
Product Engineering
• One of the most complex and highly engineered vehicle
systems
• Integral element of the vehicle safety system
• Complex and highly engineered mechanisms
• Intimate vehicle owner experience
• Multiple degrees and aspect of functionality
• Expertise in multiple materials
• Evaluated on objective and subjective criteria
• Major focus of OEM’s for mass and cost reduction
• Requires the integration of many sub-systems
Seats Are Highly Engineered Products
36
The Scope and Complexity of Seat Engineering
Requires the Support and Expertise of the Lear
Supplier Partners
37
Supporting Customers Globally with 40% of
Engineering Resources in Low Cost Countries
Rui’an, China
Germany Gustavsberg
Reitberg
Schwaig
Boblingen
Wolfsburg
Coventry, England
Paris-Velizy, France
Grugliasco, Italy
Tychy, Poland
Presov, Slovakia
Shanghai, China
Pune, India
Yokohama, Japan Seoul, South Korea
Bangkok, Thailand
Cebu, Phillippines
Southfield, USA
Sao Paulo, Brazil
North America Headcount: ~300
Europe Headcount: ~750
Asia Headcount: ~500
South America Headcount: ~50
Pilzen, Czech Rep.
Global Engineering Headcount: 1,600
Global Technology Centers
• Currently developing approximately 200 vehicle programs
with 40 customers
• Global team of 1,600 engineers across 20 global technical
centers
• Developing seat systems as well as vertically integrated
sub-systems
• Industry recognized technology
– History of First-to-Market Technologies
– Lear Crafted Comfort Connect 2013 PACE Award
Finalist
• Lear is the World Leader in Luxury and Performance
Automotive Seating
Global Engineering Scope
38
Global Engineering Scope
Southfield: Full Service Technology & Validation Center
North America Technology Center - Southfield,
Michigan
• 59 vehicle programs across 7 customers
• World class validation center
• Homeroom for mechanisms, fabric, &
leather
• Recent launches:
Ford Fusion & Lincoln MKZ
Cadillac XTS
Chevy Sonic
Fiat 500 Abarth
• Upcoming launches:
Chevy Silverado & GMC Sierra
Chevy Corvette
BMW X5
Chevy Impala
Munich : Full Service Technology & Validation Center
European Technology Center – Munich, Germany
• 62 vehicle programs across 16 customers
• World class validation center
• Homeroom for mechanisms, frames, headrest &
armrest
• Recent launches:
JLR F Type, XF sports brake
Audi A3 RDW Limo
BMW F18, F32, F34,F36
Ferrari F12
• Upcoming launches:
BMW F15/F16
Daimler BR205
Audi TT3
PSA B3/B4, E3
Full Service Technology & Development Centers
Asia Technology Centers – China, India, Korea,
Japan, ASEAN
• 75 vehicle programs across 32 customers
• World class validation center
• Recent launches:
Ford - B515, C520
GM - SGM E18, CN100, T300
DPCA - B73
Proton - P3
Nissan - X11M
• Upcoming launches:
GM - SGM E15, J300, Z2xx, PM7
Ford - B515
Qoros - CF11/14
Mazda - J53
Diamler - BYD
VW -Polo
MM - U206
Lear Seats – On Every Vehicle Segment From
Compact to Full-size Sports Utility
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Seating Core Product Portfolio
STRUCTURES
• ECO Front Seat Structure
• Modular Rear Seat Structures (MRS)
• LS3 Sport Seat Structure
• Laser Welding
MECHANISMS
• Single & Dual Sided Std & Mini Recliner
• EVO Manual & Power Tracks/Adjusters
• EVO Track modular components
• ProTecTM Active Head Restraint
• EZ Entry
• Floor Latch
FOAM / COMPONENTS
• Molded Seat Foam
• SoyFoamTM
• DECSTM Advanced Seat Comfort
• Adjustable Comfort Head Restraint
• Modular Armrest
•LearBond
SURFACE MATERIALS
• Cut/Sew
• CraftedClipTM
• Lamination
• Guilford Performance Textiles
• AventinoTM Leather
• Nappa Leather
43
• Work collaboratively with Lear using your product and process
expertise
• Global platforms – same part everywhere
• Help us manage the sometimes delicate customer / Tier 1 / Tier 2
relationship
• Partner with Lear on product and process technology
• Help us achieve mass and cost reductions
How Can the Lear Supply Partners Help?
44
Breadth and Complexity of Seat Engineering
Requires a Reliance Upon Supplier Expertise
Lear Electrical Power
Management Systems
Product Engineering
High Power Distribution Distributes high power throughout the vehicle
Front Electronic Module - Industry 1st
•State of the Art in Automotive Industry
• Very high level of HW integration
• High grade of safety and security (Fusi)
• Significant cost and weight reduction
S3JB - Industry 1st
• Eliminates fuses and relays
• Self resetting Smart Fuse technology
• Allows wire gauge optimization
• Up to 70% weight & 80% size reduction
Power Distribution - Industry Leading
• Low / High voltage wire harnesses
• Power distribution boxes
• Excellence in change management
• Wire gage reduction 0.13mm2 wire – Copper Clad Steel / Silver Alloy
• Trends
• Increased functionality, Functional integration, Minimize current
consumption, Weight and size reduction, Wire gauge reduction
Complete Architecture Systems: Power Distribution/BCM/ Solid State Smart Junction Box
High Power Distribution Distributes high power throughout the vehicle
Amplifiers
• 1st to Market infotainment platform based on Ethernet architecture.
• 3 D Surround Sound
Active Engine Mount Controller - 1st to Market
• Compensates for vibrations during cylinder deactivation
• Reuse of amplifiers, networking & signal processing technology
LED Lighting Control Modules
• Exterior signal and lighting controls
• Lower power consumption
• 1st to Market Matrix Beam Control
• Spotlight function to highlight people or objects
• Glare free high beam
• Trends
• Higher data transfer rates, increased fuel economy, Minimize Power Consumption, Increased safety, Enhanced vehicle styling
Audio/Lighting
Pace Award for Lear S3JB
High Power Distribution
Charging Systems - 1st to Market & Technology Leader
•EVSE
• Level 1 & 2 charging solutions (Both SAE & IEC)
• Lear Universal Design
• Simplified manufacturing, Economies of scale
•Developing 3 phase IEC version & DC fast Charging Connector
• Battery Chargers
• 1st to market Smart Charger
• 1st to market Rectifier Module
• Industry Leading Efficiency 96%
• Industry smallest charger (4 L for 3.7 Kw)
• Industry lightest charger (4.8 Kg for 3.7 Kw)
• Operating voltage 85– 265VAC (Global compatible)
• Developing wireless charging test systems /technology
• Fast chargers: 7Kw, 22 Kw
• Trends
• Faster Charging, Smart Charging, Customer Convenience
Charging System
High Power Distribution Distributes high power throughout the vehicle
Energy Management Converts power for multiple uses, from vehicle propulsion to accessories
Power Distribution System - Technology Leader
• Industry Highest Power to size ratio terminals
• Industry Highest contact operating temperature terminals
due to steel metal spring innovation
• Industry First conductive plastic connection system
• Industry First fused connection system
•Trends
• Conductive Plastic Enclosures, Aluminum Wires,
Aluminum Terminals, Pluggable contactors for serviceability,
Non Bolted Electrical Power Connection, Solid State Relays
for Drivers, Higher Power Transfer per unit of Contact Area,
Higher Operating Temperature Interconnect
Power Distribution System
High Power Distribution Distributes high power throughout the vehicle
Energy Management – Power Conversion
• Industry leading size and efficiency
• Industry 1st application of Heat Pipes for cooling film
capacitors to reduce overall size and cost.
• Industry 1st impedance matched parallel switches to reduce
cost, size & weight.
• Integration trends with chargers and other hybrid functions
• Trends
• Higher Operating Temperature, Conductive Plastic
Enclosures, Functional Integration, Wide Band Gap
Semiconductor Materials
Energy Management System
• Expertise at the architecture level
• Capabilities to optimize both components and systems
• Product and technology roadmap fully aligned with OEMs & industry trends
• EPMS growing faster than the industry growth
• At Lear, Innovation is a key focus moving forward
From our preferred suppliers, Lear needs strong collaboration – suppliers need to:
– Bring forward new technologies, new components, new materials, new processes that
enable us to achieve:
• Cost/weight/size/complexity reductions
• Quality improvements
– Actively work with Lear engineering to review proposed component designs and pro-
actively offer alternatives that reduce cost/complexity
– Match component roadmaps to Lear product roadmaps. Quarterly reviews with
preferred suppliers to match the technology roadmap.
Conclusion
54
Continuous Improvement
Message From The President and CEO
56
Consistent message – “Operational Excellence” and “Continuous Improvement” is the cornerstone of Lear’s Culture
Global Operations and Priorities:
Relentless pursuit to eliminate “Waste” through out our
business and our supply chain using the Lear Continuous
Improvement culture
Strong focus on results thru process improvements in;
People, Safety, Quality, Delivery, and Costs
Build Quality into our product, and processes, both inside
Lear and at our Supplier base
Strengthen the Organization with new Talent and
Capabilities : External Hires with strong CI background
Continuous Improvement
58
Six Sigma
Projects
Focus on reduction
in variation
Processes
LEAN
Focus on Elimination
of Waste
Relentless pursuit to eliminate “waste” throughout our business and a strong Focus on People,
Quality, Delivery, and Costs
Contractor
Labor (Overtime)
Operations Impact (Freight,..)
Optimized Cost Current Costs
Capacity
Waste
Inventory Management
Operations Excellence Waterfall
Preventable Failures Operations
Preventable Failure Maintenance
Cost Optimization
59
Laser focus on ALL costs in the value chain
World Class training system: “I would say Lear has one of the best Continuous Improvement Websites from any company I have seen” Kaizen Institute 2012
Standardized Teaching
Global
Region
Plant
Process
Daily Weekly Monthly Quarterly
Review
Review
Review
Review Review
Review
Review
KPI Focus Action
Continuous Focus on Lear’s five pillars of Safety, People, Quality, Cost Productivity and Delivery
throughout the organization.
62
Monthly Plant Reviews
Best in Class Comparisons
Every Metric is reviewed and Bench marked against BIC and Minimum acceptable standards
• LPS is a Lear Proprietary software system written by Lear
as a global solution to manufacturing execution.
• LPS runs, monitors, records and controls all the
production processes on our shop floor.
• LPS has been successfully running for 6 years.
• LPS is a flexible system designed to meet the demands of
any build process and layout and meet all TS16949
requirements.
• LPS is designed to interact with existing PLC’s, DC tools
test equipment and all production processes.
Lear’s technical “know how” has developed an Industry leading shop floor tool to deliver the highest
quality, lowest cost to its customers.
Lear Production System
Standardized processes to ensure repeatable and predictable operations
Typical LPS Screen
Lear Visual Factory Standards
WIP INVENTORY
RM INVENTORY TOOLS AND FIXTURES
AISLE, PATHWAY
GREEN Demarcation
Line
BLUE Demarcation
Line
BLACK Demarcation
Line BLACK / YELLOW Demarcation
Line
FG FOR QUALITY VERIFICATION
ORANGE Demarcation Line
FOR DIAGNOSTICS
YELLOW Demarcation
Line
Standardized Visual and Color formats for all 167 Lear Facilities
worldwide.
Map the Current State
The Process
Analyze the Current State and Design the Future State
Tues. & Fri.
PC & L
MRP MSS
# times/day
Steel Supplier
Steel
Pin # pcs
# days
or shifts
I I I
I Stamping
Downtime
Changeover Time=4 hr
2 Shifts
TAKT =
2 Presses
Cycle Time =
Change Over
Welding
Layout
Scrap/Rework
Downtime = 20%
Uptime
# Operators
Cycle Time =
Weekly Build Schedule Daily Ship
Schedule
Finished Goods
Overtime =
# Shifts =
Assembly
DT, Scrap Rework
WIP =
Cycle Time =
TAKT =
Changeover Time =
Layout
= 10%
Scrap
? days ? days ? days ? days ? days ? days ? days
Inventory Time Processing Time
TPc /t = ?
TAKT =
WIP =
WIP = WIP =
X pcs /month
Std. Pack Qty.
# shifts
Customer
Finished Goods Assembly
Layout
Welding
6 x / Day
PC & L
Daily
Level Box
DA1
DA2
DA3
C/O Time =
CT =
TAKT Time
3 Shifts
DT =
Scrap =
Stamping
0 Overtime
2 Shifts
Max Size
# Material Handlers
C/O Time =
CT =
TAKT Time
3 Shifts
DT =
Scrap / Rework =
C/O Time =
CT =
TAKT Time
3 Shifts
DT =
Scrap / Rework=
Small Lot # Operators
Customer
X pcs / month
Std Pack Qty
# Shifts
WIP =
WIP = WIP =
Steel Supplier
Inv .Time
Proc .Time TPc /t = ?
? days ? days ? days ? days
? days ? days ? days
67
Future State
Current State
Ideal State ?
Value Stream Everything We Do
1ST 2ND 3RD 4TH 1ST 2ND 3RD 4TH
Establish TAKT & Flow in Tank Ass'y
Stamping Changeover Reduction
Reduce Stamping Buffer
Move Ass'y to Plant 10
Establish TAKT & Flow in Sender Ass'y
Pull To Sender Ass'y
Training
2011 2012 Activity
0
20
40
60
80
100
Waste Walk VSM Waste Walk VSM
Opportunity Opportunity Total Opportunity Total Opportunity
31
12
81
28 30
8 20
10
Team 1
Team 2
Team 3
Kaizen Workshops
Q1/12 Q2/12 Q3/12 Q4/12
Elimination of waste led to an increase of sales of $2,413/m²/Mo
Transformation of San Luis Potosi
Communication area
Transformation of San Luis Potosi
Reduction in turnover from 6% a month to 0.9%
Plant attitude after changes
CATEGORY METRIC BASE LINE
(2011)
2012 FY DELTA
Space released (sq ft) 0 m² 442 m² 442 m²
Sales / employee
(308 employees)
Sales by month
/ employee ('000) $ 14.8 $17.4 $ 2.6
Total OI Impact
Scrap ('000) $ 375.0 $ 84.0 $291.0
Premium freight out ('000) $ 180 $ 24 $ (156 )
HC Direct ('000) From308 - 274 (-34) $ 408 $ 408
$6.2 M
Before and After Results
Plant Profile:
Initiated operations 1987,
Largest sewing plant in Mexican Trim Operations located in North of Mexico:
• Building size 39,284 m² with 32,200 m² of manufacturing space
• Lamination, cutting, sewing processes and assembly of small components
• 3,800 hourly employees (2 shifts)
• 102 Salary employees
• High complexity :
o 2251 Component part numbers
o 11 Programs
o 18 Customers
Transformation of La Cuesta
Roll goods from warehouse to cutting room
Purchased parts from warehouse to sewing cells
Cut kits from cutting room to lay bay warehouse
Cut kits from lay bay warehouse to sewing cells
Finished goods from sewing cells to shipping area
154 m 240 m 105 m 248 m 191 m
PROCESS ENDS
PROCESS START
Material transportation = 935 m
Transformation of La Cuesta
GERBERS
Lay bay
Purchased
Parts
Rolls
Leather
Available
8 K sqft Availables
Cutting Bruno 2
Lay bay
Rolls
P. Parts
Cutting Bruno 1
12K sqft Availables
Piel
Over Cast
Leather
Overcast
Lay bay
Rolls Purch. Parts
Lamination Warehouse
Pro
toty
pes
Ing. Equipment
Laminadoras
Rollos Laminadora
Receiving 3
Receiving 2 Receiving 1
UQA
Die Room
Rampas 5
Tool crib.
Restrooms
Ramps
Sew
ing
Sew
ing
Sew
ing
Sew
ing
Sew
ing
Sew
ing
Ramp Ramp
BU3 BU2 BU1
7 K sqft Available
BU4
Material transportation = 160 m
Autonomous Business Units led to increased efficiency and ownership of the business
Layout rearrangement of La Cuesta
34,500 m² and no racking!! 2.3 DOH to 0.5 DOH
Transformation of La Cuesta –
Current Shop Floor
CATEGORY METRIC BASE LINE
(2011)
2012 FY DELTA
SPACE &
DISTANCE
Material travel
distance (ft) 935 m 160 m (775) m
Space released (sq ft) 0 m² 378 m² 378 m²
Sales / employee
(668 employees)
Sales by month
/ employee ('000) $ 7.7 $ 9.0 $ 1.3
Scrap ('000) $ 540.0 $ 311.9 $ (228.1)
OI Impact
Material Variance ('000) $ 604.0 $ 262.2 $ (341.8)
External Sorts ('000) $ 335.0 $ 63.2 $ (271.8)
Premium freight out ('000) $ 428.0 $ 84.6 $ (343.4)
HC Direct ('000) From 654 to 582 (-72) $ 267.0 $ (267.0)
HC Indirect ('000) From 122 to 84 (-38) $ 105.0 $ (105.0)
Total OI Impact $ 1.84 M
O I
Impact
Space &
Distance
Before and After Results
10. Future Potential
Area Rollout
3. Workshop Objective
9. Workshop Results
1. Team
2. Team Photograph
7. Improvements Achieved 5. Current Situation
•
4. Lean Training Material
6. Current Photograph 8. After Photograph
• Reduce the scrap in 50% MC E50 station bulge shape.
• Lean Concepts • 7 waste •TPM.
• Scrap average 4 pcs/day • Damaged tooling • Reworks • Overtime • Loss of production time • Excessive corrective maintenance time • Moral loss
The pressure is being monitored and fitting directly from the hydraulic unit: Cyl #30 = 60 bar; Cyl #10 = 58 bar; Cyl #20 = 35 bar; Cyl #40 = 60 bar Installed a fixture to hold the tubing FSC motion link Improved the lubrication system Modified PFMEA, CP and SWI
DEFECTS HOLDING
• All equipment with high down time & producing consistent scarp & rework • Focus support function resources towards satisfying customer and production requirements.
• Reduced corrective maintenance by more than 50% • Eliminated scrap and rework • Reduced overtime work • Improved employees moral (to work on this equipment)
Annual Savings: $30,000
Sergio Zaragoza – Leader David Degollado – Worker Gabriel Avila – Maintenance Supervisor
78
Celebrating Successes – Common
Storyboards utilized at all Lear Plants
10. Future Potential
Area Rollout
3. Workshop Objective
9. Workshop Results
1. Team
2. Team Photograph
7. Improvements Achieved
•
4. Lean Training Material
6. Current Photograph
8. After Photograph
79
Roberto Romero Omar Yzabal Carlos Navarro
• Reduce weekly frequency • Maximum optimization per Container and trailer. • Freight Cost Saving
• VSM • Total Packaging Optimization Software (TOPS: Max Load)
• Analyze Freight optimization for all routes and major commodities.
• Weekly frequency reduced from 9 trucks to 5 trucks. • Reduced overall material handling time at plant due to higher pack density •PHASE 1 Savings: $356,998.00 •PHASE 2 Savings: $207,000.00 Annual Savings: $563,998.00
• Low packaging efficiency. • Std pack of 20 and 78 boxes per truck with 1560 pieces per truck • 9 trucks per week. • Parts origin New Albany , IN and destination is Hermosillo, MX
• Greater pack efficiency. Phase 1: October 2012 • 104 boxes per truck • Std pack of 20 Phase 2: Jan 2013 • 104 boxes per truck • Std pack of 28 • 2912 pieces per truck
•New Albany, IN to Hermosillo, MX via Nogales, AZ Total Dist: 2039 mi
Commodity: Plastics CD4 program to Ford Motor Company
5. Current Situation
Celebrating Successes – Common
Storyboards utilized at all Lear Plants
50% Improvement in TGW since 1999
9% Uptick in TGW due to new vehicle platforms added, not degradation in quality performance, no performance data for 2011
2012 Major Contributors
‒ Fiat 500
‒ Buick Verano
‒ Volkswagen Beetle Hatchback
‒ Chevrolet Sonic
Lear leads the industry in seat quality;
– Best Large Conventional Seat Quality– Chrysler 300
– Best Midsize Sporty Seat Quality-Ford Mustang Coupe
– Best Midsize Premium Sporty Seat Quality-Porsche 911 Coupe
– Best Midsize Premium Utility Seat Quality-Land Rover LR4
– Best Compact Premium Sporty Seat Quality-Mercedes-Benz E-Class Convertible
Source: 2012 J.D. Power Seat Quality Study
Lear’s 2012 J.D. Power Results Things Gone Wrong (TGW)
per 100 vehicles
Leadership in Quality
Highest Quality for a Major Seat Manufacturer For 11 of Last 12 Years
What Can You Expect From Us?
• Partnership orientation: All of us need to be competitive
• Continue reduction on lead time and inventory. DOH will be
key driver going forward
• Relentless emphasis on Continuous Improvement
• Fact based decision making
• Focus on Safety, People, Quality, Delivery and Cost
• We must meet our customers’ expectations
It Starts with you the Leadership
Go See
• “Senior Management must spend time on the front lines”
• Ask Why
• “Use the “Why?” technique daily”
• Show Respect
• “Respect your people.” Fujio Cho, Former Chairman of Toyota Motor Corp.
82
83
Supplier Expectations
Purchasing Strategy
• Drive competitive advantage for Lear
through the supply base with best in class
costs, superior quality and flexible supply
• Establish collaborative relationships with
our supply partners to work in an
environment of continuous improvement
so that we grow and prosper together.
Where We Need To Go . . .
Current State
Over 2400 Production
Suppliers
Current Supplier PPM = 45
At Risk Suppliers = 39
Material Cost Reduction 2.5%
Future State
Fewer Than 700 Suppliers
Less Than 25 Supplier PPM
Less Than 2% of Supply Base
Average Cost Reduction 4%
Partner with Suppliers that offer Technology and Process Capability with a Best in Class Cost Structure
How do we get there?
• Eliminate Waste – Take Costs Out – “Should Cost” Models – ID Gaps and Drive Actions to Close
– Collaborative Continuous Improvement – SCTO Projects
– Early Design Involvement – Design for Cost – Build in Quality
• Complexity Reduction – Fewer Part Numbers – Part Re-use
– Standard Materials – Don’t over spec
• Real Supplier Development – Focus on improving Process Capability - CpK
– Implement Lean Principles
• Supplier Rationalization – Grow the Preferred Suppliers – Exit poor performers and small spend suppliers – Focus limited Lear resources on fewer suppliers
How to Become a Preferred Supplier to Lear?
• Share Current Financial Data to Demonstrate
Health of Company
• Maintain SRS Score of 90% or Greater
• Commitment to Annual Productivity Targets
• Commitment to Annual SCTO Idea Targets
• Demonstrated BIC Cost Structure
• Use Cost Models with Data Transparency
• New Technology & Innovation Offered to Lear First
• Agreement to Terms & Conditions
• Lear is Viewed as a Top Strategic Customer
Why Become a Lear Preferred Supplier?
• Top Choice for New Business Awards and
Resourcing Projects
• Early Involvement in Product Development
• Share Product Plans and Technology
Roadmaps
• On-going Senior Leadership Communication
• Recognized as Preferred Supplier and
Eligible for Supplier of the Year Award
• Grow Your Business Profitably
2011 2012
PP
M
68% Better
Preferred Supplier Growth & Performance
2009 2010 2011 2012
% S
pe
nd
Preferred All Other
69% Better
A Few Words on:
Supplier Cost Technical Optimization (SCTO)
• Process used on current production parts
• Seek to reduce the cost of a part without impact to
performance
• Eliminate features that add no true value but incur cost
• Improvement in quality and/or eliminate waste in the value
stream
Recovers “Avoidable” costs throughout the product life
SCTO Examples
• Change materials or specifications of materials
• Change dimensions or tolerances
• Reduce unnecessary test requirements
• Logistics or packaging improvements
• Manufacturing process improvements or elimination
• Improvements that reduce warranty costs
• Changes that improve manufacturing costs at Lear
• Inventory management improvements
• Alternate component and/or construction
Lear Supplier Expectations - SCTO
• SCTO is a formal requirement for production suppliers to
Lear
• Suppliers must submit SCTO ideas on current
production parts each calendar year
• Annual target for SCTO ideas is given as a percentage
of sales to Lear
• Ideas must be technically and economically feasible – as
mutually determined by Lear and the supplier to count
towards the supplier’s SCTO ideas target
94
Lear Quality Expectations
ZERO DEFECT Performance:
Part Quality and Delivery
Development Activities Completed On Time
Flawless Launch Performance
Service / Responsiveness / Open Communication
Same as Our Customer’s Expectations
Supplier Rating System
• Scorecards rate all suppliers and supplier
locations on Quality, Delivery, Warranty,
Customer Satisfaction and Competitiveness
• Scorecards are reviewed prior to all
sourcing decisions
• Suppliers expected to review scorecards on
a monthly basis
• All discrepancies must be disputed
immediately
96
Supply Viz - Supplier Self Service Access
• Coming soon - Supplier Self Service Access - Lear Supply Viz
• Vision:
– Web based supplier self service tool that provides Lear’s supply base a way to communicate updates on supplier profile data and a means of uploading required business documents both quickly and efficiently.
– Supplier Self Service maintenance requirements
• Corporate / Ownership Information
• Contact Information
• Quality, Environmental Certifications
• Financial Information
• Commodity Information
– Implementation
• July 2013
97
Suppliers Are Key to Lear Success
• Our future depends largely on you – 68% of what we sell comes from our suppliers
• Current performance is not “World Class” – Lear combined Supplier PPM: 45
– Over 1.9 million purchased parts rejected in 2012
– Over 25 thousand supplier complaints (QN’s) in 2012
• Warranty costs shifting to Tier 1’s like Lear
What does Lear need from you?
• A Change in Behavior
– Cooperative & Knowledge Sharing
– Open and honest communications at all levels
• Cost Transparency
– Participate in cost model development
• Relentless Pursuit of Continuous Improvement
– Implement Lean Principles
– Reduce complexity and non-value activities
– Propose innovative solutions to reduce costs
• Consider Lear your Customer of Choice – Put your best resource on Lear business
– Grow profitably with us
99
Supplier Diversity
100
Minorities Represent 36.3% of U.S. Population
Growing to 54% by 2050
Start with the Facts …
2010 Census Data
0%
10%
20%
30%
40%
50%
60%
1900 1960 1980 1990 2000 2010 2050
12% 15%
20%
24%
31%
36%
54%
Minority Population as a % of US Population (1900 - 2050)
Note: Data Source for both charts – Demographics of the United States - Wikipedia
Race Number of People % of Population
Caucasian 196,817,552 63.7%
Hispanic 50,477,594
African American 37,685,848
Asian 14,465,124
Two or more races 5,966,481
American Indian or Alaska Native 2,247,098
Some other race 604,265
Native Hawaiian 481,576
Total Population 2010 308,745,538 100%
Memo: Women 156,842,733 50.8%
36.3%
101
2011 2012 Goal
$514
$639
$1,000
Goal: Billion Dollar Roundtable
(in millions)
Lear Diversity Spending Trends
102
103
Lear Expectations From Suppliers
Diversity Included in Future Sourcing Considerations
1. Achieve 5% Diverse
Spend with Your Supply
Base
2. Report Diverse
Spending Results
104
Lear Supplier of the Year
Coficab Tunisie
Excelling Together
Coroplast Fritz Müller
GmbH & Co. KG
Excelling Together
Grand Rapids Controls LLC
Excelling Together
KOA Speer Electronics Inc.
Excelling Together
Magno International, LP
Excelling Together
MSX International Inc.
Excelling Together
Murata Manufacturing Co.
Ltd.
Excelling Together
Netlink Software Group
America Inc.
Excelling Together
Nifco Inc.
Excelling Together
Ningbo Jifeng Auto
Parts Co.
Excelling Together
Panalpina, Inc.
Excelling Together
119
