Idea Transcript
Lear Supplier Conference
Agenda Welcome CEO Video Lear Corporation—Strengths Business Overview and Growth Product Leadership—Technology Operational Excellence Supplier Expectations Supplier Diversity Supplier of the Year
2
3
This is Lear
Our Vision & Core Values
5
The Lear Difference
• Superior Sales Growth . . . Through Innovation • Customer and Geographic Diversity • Continuous Improvement Focus • Financial Discipline
6
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.
7
Global Capabilities with Low-Cost Footprint
Low-Cost Operations 22 Countries
Low-Cost Engineering Centers India, Philippines
More Than 80% of Component Facilities and More Than 90% of Related Employment Located in Low-Cost Countries 8
Global Leader in Automotive Seating • 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
Seat* ECO Foam ECO Padding EVO Mini Recliner ECO/EVO Structures Expanded Polypropylene Frame ProTec® PLuS Whiplash Protection Dynamic Environmental Comfort Seating (DECS)™
* Provides up to a 30% weight reduction, environmental benefits and cost savings
• Benchmark Technology -- Lear’s EvolutionTM Seat has seven first-to-market innovations RECLINERS
SEAT TRIM
STRUCTURES
9
Strong Global Position in Automotive Electrical Power Management Systems • 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
SOLID STATE SMART JUNCTION BOX™
• Quality Leader -- Outstanding program management capabilities support thousands of design changes per year with world class quality
TRADITIONAL WIRE HARNESS
• 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
HIGH-POWER CONNECTORS
HIGH-POWER BATTERY CHARGER
– Additional consumer demand for features and functionality – Greater electrification and signal management of alternative powertrain design
HIGH-POWER WIRE HARNESS
10
We Serve all of the World’s Major Automakers
Lear Content On Over 300 Vehicle Nameplates Worldwide 11
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 12
Investment in Component Capacity in Emerging Markets and Low-Cost Countries Morocco
• Electronics • Wire Harnesses
Tunisia
• Wire Harnesses
Moldova
• Seat Trim
Seating Facilities Electrical Facilities
China • • • • • •
Mexico
Mechanisms & Structures Seat Foam Seat Trim Connectors Electronics Wire Harnesses
• Mechanisms & Structures • Seat Trim • Wire Harnesses
Thailand Brazil • • • •
Mechanisms & Structures Seat Foam Seat Trim Wire Harnesses
India
• Seat Foam • Seat Trim • Wire Harnesses
• Mechanisms & Structures • Seat Foam • Wire Harnesses
Approximately $300 Million Invested to Increase Emerging Market and Low-Cost Component Capacity in 2010-2012
13
13
Guilford Mills – Strategic Benefits •
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
Strong Capital Structure and Liquidity Cash and Debt Balances As of December 31, 2012
•
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
•
Balanced and flexible shareholder distribution policy
(in millions)
$1,402
$626 $533
Cash (1)
(1)
Total Debt
Cash includes cash and cash equivalents
Pension/OPEB
– Substantially all U.S. plans are frozen or at closed locations with no future benefit accruals
– Modest annual dividend – Flexible share repurchase program
15
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) 16
17
Market Overview
Agenda
• Market Trends • Market Growth Forecast • Lear Growth & Market Position • New Business Backlog & Key Wins
19
Key Market Trends Affecting Lear • 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 20
Industry Production Outlook Summary • 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 21
Full Year 2013 Vehicle Production Units (in millions)
2012 Actual
2013 Outlook
YOY 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 Russia
3.2 2.1
3.3 2.0
up 5% down 2%
Global
79.7
80.7
up 1%
Vehicle production estimates based on IHS Automotive production forecast and Company estimates.
22
Industry Volumes NA, Europe and BRIC Market Production units in millions 98.5 95.0
90.7 85.6
79.7 72.6
80.7
4% 2012 to 2017 CAGR
74.8
68.9 60.2
62.8
65.8
65.3
57.7
8% 2012 to 2017 CAGR 34.1
31.2
18.7 18.7 15.8 15.8
8.2
'04
9.3
'05
19.1
15.3
11.2
'06
20.2 15.0
18.8
17.415.6
14.1 12.6
8.6
13.2
'07
38.8
28.0
23.2
24.3
26.1
17.5
18.0 13.1
16.6
16.2
17.0
17.7
15.3
15.6
16.1
16.9
11.9
36.8
3% 2012 to 2017 CAGR 18.5
19.4
17.5 17.7
3% 2012 to 2017 CAGR
'08
'09
'10
'11
'12
'13
'14
'15
'16
North America
Europe
BRIC
Global
'17
Source: Wards, IHS and Company estimates as of November 2012
23
Lear’s Growth
12.4% CAGR
Global Production
8.9% CAGR
Compounded Growth
Lear
Lear is Growing Faster Than Market
2009
2010
2011
2012
2013 24
Growing in Emerging Markets Lear in BRIC Countries
Lear in China
(Consolidated sales in billions)
(Sales in billions)
Non-Consolidated
Brazil, Russia and India
Consolidated
China $2.7
$2.4
$2.4 $2.1 $2.0
$1.7
$1.5 $1.4
$1.2
$1.5
$1.3 $1.5 $1.4
$1.1
$0.8
$1.1
$0.9 $0.5
$0.9 $0.5
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Lear CAGR of 23% vs. Industry CAGR of 17% in BRIC Markets 25
Full Year 2012 Sales Diversification by Region and by Customer 2012 Consolidated Sales By Region
Asia 17%
Rest of World 9%
By Customer
North America 39%
Ford GM
BMW
VW/Audi
All Other Fiat/ Chrysler
Porsche Volvo
Europe 35%
Mazda Other Asian
Renault/ Nissan Hyundai
Jaguar/Land PSA Group Rover
Daimler
Sales Well Balanced by Region and by Customer 26
Industry Production Outlook Demand Growth By Segment
Source of Light Vehicle Demand Growth 2012 - 2017 Full Frame, 3.8%
E-Segment, 3.2%
A-Segment, 8.0%
(units in thousands)
2012
2017
CAGR
Change
A-Segment B-Segment C-Segment D-Segment E-Segment Full Frame
9,031 18,310 22,471 14,362 5,273 9,769
10,524 24,932 29,728 16,452 5,882 10,474
3.1% 6.4% 5.8% 2.8% 2.2% 1.4%
1,493 6,622 7,256 2,090 608 705
Global
79,216
97,991
4.3%
18,775
C-Segment, 38.6%
D-Segment, 11.1%
B-Segment, 35.3%
All Segments Growing – B and C are the Largest and Growing Fastest Source: IHS Automotive 9/15/2012
27
Sales Diversification by Vehicle Segment Lear Share by Segment
A-Segment B-Segment C-Segment D-Segment E-Segment Compact Full-Frame Full-Size Full-Frame
2007
2012
Lear Growth in B & C Segments – Aligning with Market * Excludes sales in non-consolidated Joint Ventures
28
2013 to 2015 Consolidated Sales Backlog
2013 to 2015 Sales Backlog (in millions) Seating
• By Product: EPMS
– Seating -- 55%
≈$1,800
– EPMS -- 45% • By Region:
$800
≈$850 $1,000
2013-2015
Composition of Sales Backlog
$450
– Europe -- $750M – North America -- $600M
≈$650 $200
≈$300
$400
$450
$150 $150
2013
2014
2015
– Asia -- $400M – South America -- $50M
29
$1.8B Net New Business ‘13 thru ‘15 Americas: 36%
Europe: 42%
Asia: 22%
Nissan • Seating JIT Assembly • Electrical Distribution
BMW •Seating JIT Assembly •Trim Assembly
Hyundai/Kia • Seating JIT Assembly
Chrysler/Fiat • Seating JIT Assembly
Daimler •Lighting Modules •Amplifiers
GM • Seating JIT Assembly • Track Assemblies • Electrical Distribution • Fabric
JLR •Seating JIT Assembly •Amplifiers •Gateway Module
VW • Seating JIT Assembly
PSA •Seating Harness
Ford • Seating JIT Assembly • Electrical Distribution
GM •Track Assemblies
Toyota • Headliner
Nissan •Seating JIT Assembly •Electrical Distribution AvtoVAZ •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
Skoda •Head Restraints
CA-Mazda • Electrical Distribution
Daimler •Seating JIT Assembly
Suzuki • Seating JIT Assembly
The Lear Difference
• 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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Product Leadership— Technology
Lear Seating Product Engineering
Seats Are Highly Engineered Products
•
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
• • • • • •
The Scope and Complexity of Seat Engineering Requires the Support and Expertise of the Lear Supplier Partners 36
Global Technology Centers Global Engineering Headcount: 1,600 North America Headcount: ~300
Germany
Gustavsberg Reitberg Schwaig Boblingen Wolfsburg Southfield, USA Coventry, England Paris-Velizy, France
Europe Headcount: ~750
Tychy, Poland Presov, Slovakia Seoul, South Korea Pilzen, Czech Rep.
Rui’an, China
Yokohama, Japan
Shanghai, China
Grugliasco, Italy
Asia Headcount: ~500
Pune, India Bangkok, Thailand
South America Headcount: ~50
Cebu, Phillippines
Sao Paulo, Brazil
Supporting Customers Globally with 40% of Engineering Resources in Low Cost Countries 37
Global Engineering Scope • • • •
•
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
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
Southfield: 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
Munich : Full Service Technology & Validation Center
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
Full Service Technology & Development Centers
Lear Seats – On Every Vehicle Segment From Compact to Full-size Sports Utility
42
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
How Can the Lear Supply Partners Help? • • • • •
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
Breadth and Complexity of Seat Engineering Requires a Reliance Upon Supplier Expertise 44
Lear Electrical Power Management Systems Product Engineering
Complete Architecture Systems: Power Distribution/BCM/ Solid State Smart Junction Box Front Electronic Module - Industry 1st •State of the Art in Automotive Industry • Very high level of HW integration
High Power Distribution
Distributes highofpower vehicle • High grade safety throughout and security the (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
Audio/Lighting Amplifiers
• 1st to Market infotainment platform based on Ethernet architecture. • 3 D Surround Sound
High Power Distribution
Active Engine Mount Controller - 1st to Market Distributes high power throughout the vehicle
• 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
Pace Award for Lear S3JB
Charging System 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
High Power Distribution • 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
Power Distribution System Power Distribution System - Technology Leader
High• Industry Power Highest Distribution Power to size ratio terminals Distributes high power throughout the vehicle
• 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
Energy Management for Drivers, Higher Power Transfer per unit of Contact Area,
Converts power for multiple uses, from vehicle propulsion to accessories Higher Operating Temperature Interconnect
Energy Management System Energy Management – Power Conversion
• Industry leading size and efficiency • Industry 1st application of Heat Pipes for cooling film
High Power Distribution
Distributes high poweroverall throughout thecost. vehicle capacitors to reduce size and • 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
Conclusion • 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 proactively offer alternatives that reduce cost/complexity – Match component roadmaps to Lear product roadmaps. Quarterly reviews with preferred suppliers to match the technology roadmap.
54
Continuous Improvement
Message From The President and CEO
Consistent message – “Operational Excellence” and “Continuous Improvement” is the cornerstone of Lear’s Culture 56
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 Focus on Elimination of Waste
Focus on reduction in variation
LEAN
Six Sigma
Processes
Projects
Relentless pursuit to eliminate “waste” throughout our business and a strong Focus on People, Quality, Delivery, and Costs 58
Cost Optimization Operations Excellence Waterfall Capacity Labor Preventable Failures Operations (Overtime) Operations Impact (Freight,..) Preventable Failure Maintenance Waste
Contractor Inventory Management
Current Costs
Optimized Cost
Laser focus on ALL costs in the value chain 59
Standardized Teaching
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
KPI Focus Action
Daily
Weekly
Monthly Review
Global
Review
Region
Plant
Review
Process
Review
Quarterly Review
Review
Review
Continuous Focus on Lear’s five pillars of Safety, People, Quality, Cost Productivity and Delivery throughout the organization.
Monthly Plant Reviews
62
Best in Class Comparisons
Every Metric is reviewed and Bench marked against BIC and Minimum acceptable standards
Lear Production System • 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.
Typical LPS Screen
Standardized processes to ensure repeatable and predictable operations
Lear Visual Factory Standards WIP INVENTORY RM INVENTORY TOOLS AND FIXTURES
AISLE, PATHWAY FOR DIAGNOSTICS
GREEN
Demarcation Line
BLUE
Demarcation Line
FG FOR QUALITY VERIFICATION
BLACK
Demarcation Line
BLACK / YELLOW
Demarcation Line
ORANGE
Demarcation Line
YELLOW
Demarcation Line
Standardized Visual and Color formats for all 167 Lear Facilities worldwide.
Value Stream Everything We Do The Process MRP
Customer
MSS
X pcs/month Std. Pack Qty. # shifts
PC & L
Steel Supplier
Weekly Build Schedule
Map the Current State
Daily Ship Schedule
Tues. & Fri. # times/day
Stamping
I
Welding
I
Steel Pin # pcs # days or shifts
TAKT =
Layout
Assembly
I
I
Finished Goods
Layout
TAKT =
# Shifts =
2 Shifts
# Operators
Cycle Time =
Overtime =
Changeover Time=4 hr
Cycle Time =
TAKT =
WIP =
Downtime
Scrap/Rework
DT, Scrap = 10% Rework
2 Presses
Downtime = 20%
Changeover Time =
Cycle Time =
WIP =
WIP =
Customer X pcs / month
WIP = Uptime
Change Over
Inventory Time ? days Processing Time
? days ? days
? days ? days
? days
Std Pack Qty # Shifts
PC & L
Steel Supplier
Scrap
Level Box
? days TPc/t = ?
DA1 DA2
Daily
DA3
Stamping
6 x / Day
Assembly
Welding
Finished Goods
Layout
Analyze the Current State and Design the Future State
3 Shifts
3 Shifts
3 Shifts
# Material Handlers
TAKT Time
TAKT Time
TAKT Time
Max Size
CT =
CT =
CT =
2 Shifts
C/O Time =
C/O Time =
C/O Time =
0 Overtime
DT =
DT =
DT =
Scrap =
Scrap / Rework=
Scrap / Rework =
WIP =
Small Lot
# Operators WIP =
WIP =
Inv.Time Proc.Time
? days
? days ? days
? days ? days
? days ? days
TPc /t = ?
Activity
2011
2012
1ST 2ND 3RD 4TH 1ST 2ND 3RD 4TH
Establish TAKT & Flow in Tank Ass'y Stamping Changeover Reduction
Current State
Future State
Reduce Stamping Buffer Move Ass'y to Plant 10 Establish TAKT & Flow in Sender Ass'y Pull To Sender Ass'y
Ideal State ?
Training
67
Kaizen Workshops
81
100 80 60 40
31
Team 1 30
20
20
28 12
8
10
Team 2 Team 3
0 Waste Walk
VSM
Waste Walk
VSM
Opportunity
Opportunity
Total Opportunity
Total Opportunity
Transformation of San Luis Potosi
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
Plant attitude after changes
Reduction in turnover from 6% a month to 0.9%
Before and After Results
CATEGORY
METRIC
Space released (sq ft)
Sales / employee Sales by month (308 employees) / employee ('000) Scrap ('000) Premium freight out ('000)
Total OI Impact
HC Direct ('000)
BASE LINE (2011)
2012 FY
DELTA
0 m²
442 m²
442 m²
$ 14.8
$17.4
$ 2.6
$ 375.0
$ 84.0
$291.0
$ 180
$ 24
$ (156 )
From308 - 274 (-34)
$ 408
$ 408
$6.2 M
Transformation of La Cuesta 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 PROCESS ENDS
PROCESS START
154 m Roll goods from warehouse to cutting room
240 m Purchased parts from warehouse to sewing cells
Material transportation = 935 m
105 m
248 m
Cut kits from cutting room to lay bay warehouse
Cut kits from lay bay warehouse to sewing cells
191 m Finished goods from sewing cells to shipping area
Layout rearrangement of La Cuesta Ramp
Ramp
Die Room
UQA
Lamination Warehouse
Rolls
Tool crib.
P. Parts Rolls Material transportation = 160 m Purcha sed
Leather
Parts
Available
Restrooms Ramps
Rampas 5
Purch. Parts
Rolls
Cutting Bruno 2 Receivi ng 3
Available
Ing. Equipment
Laminadoras
BU4
Leathe r
Over cast
Piel
8 K sqft Availables
Over Cast
Lay bay
Lay bay
Lay bay
BU3
Sewing
Availables
GERBERS
Sewing
Rollos Laminadora
12K sqft
Sewing
Sewing
Prototypes
Cutting Bruno 1
Sewing
Receiving 2
Sewing
Receiving 1
7K sqft
BU2
BU1
Autonomous Business Units led to increased efficiency and ownership of the business
Transformation of La Cuesta – Current Shop Floor
34,500 m² and no racking!! 2.3 DOH to 0.5 DOH
Before and After Results
CATEGORY SPACE & Space & DISTANCE
Distance
METRIC Material travel distance (ft) Space released (sq ft)
Sales / employee Sales by month (668 employees) / employee ('000)
OI Impact
OI Impact
Total OI Impact
BASE LINE (2011)
2012 FY
DELTA
935 m
160 m
(775) m
0 m²
378 m²
378 m²
$
7.7 $
9.0
$
1.3
Scrap ('000)
$
540.0 $
311.9
$
(228.1)
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)
$ 1.84 M
Celebrating Successes – Common Storyboards utilized at all Lear Plants 1. Team
3. Workshop Objective
Sergio Zaragoza – Leader David Degollado – Worker Gabriel Avila – Maintenance Supervisor
• Reduce the scrap in 50% MC E50 station bulge shape.
2. Team Photograph
5. Current Situation • Scrap average 4 pcs/day • Damaged tooling • Reworks • Overtime • Loss of production time • Excessive corrective maintenance time • Moral loss
4. Lean Training Material
7. Improvements Achieved 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
•
• Lean Concepts • 7 waste •TPM.
10. Future Potential Area Rollout • All equipment with high down time & producing consistent scarp & rework • Focus support function resources towards satisfying customer and production requirements.
6. Current Photograph
8. After Photograph
9. Workshop Results • Reduced corrective maintenance by more than 50% • Eliminated scrap and rework • Reduced overtime work • Improved employees moral (to work on this equipment)
DEFECTS
HOLDING
Annual Savings: $30,000
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Celebrating Successes – Common Storyboards utilized at all Lear Plants 1. Team
3. Workshop Objective • Reduce weekly frequency • Maximum optimization per Container and trailer. • Freight Cost Saving
Roberto Romero Omar Yzabal Carlos Navarro
Commodity: Plastics CD4 program to Ford Motor Company
2. Team Photograph
5. Current Situation • 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
6. Current Photograph
7. Improvements Achieved • 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
8. After Photograph 4. Lean Training Material •
• VSM • Total Packaging Optimization Software (TOPS: Max Load)
9. Workshop Results 10. Future Potential Area Rollout • 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
•New Albany, IN to Hermosillo, MX via Nogales, AZ Total Dist: 2039 mi
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Leadership in Quality Lear’s 2012 J.D. Power Results
Things Gone Wrong (TGW) per 100 vehicles
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
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 Fujio Cho, Former Chairman of Toyota Motor Corp.
• “Respect your people.”
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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
Future State
Over 2400 Production Suppliers
Fewer Than 700 Suppliers
Current Supplier PPM = 45
Less Than 25 Supplier PPM
At Risk Suppliers = 39
Less Than 2% of Supply Base
Material Cost Reduction 2.5%
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
Preferred Supplier Growth & Performance 68% Better
PPM
% Spend
69% Better
2009
2010
2011
2012
Preferred
2011
All Other
2012
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
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 94
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
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
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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
97
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
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Supplier Diversity
100
Start with the Facts … Minority Population as a % of US Population (1900 - 2050) 60% 54% 50%
40%
36% 31%
30%
24% 20%
20%
15% 12%
10%
2010 Census Data Race Caucasian
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
Memo: Women 1900
1960
1980
1990
2000
2010
196,817,552
Hispanic
Total Population 2010
0%
Number of People
% of Population 63.7%
36.3%
308,745,538
100%
156,842,733
50.8%
2050
Note: Data Source for both charts – Demographics of the United States - Wikipedia
Minorities Represent 36.3% of U.S. Population Growing to 54% by 2050 101
Lear Diversity Spending Trends
(in millions)
$1,000
$639 $514
2011
2012
Goal
Goal: Billion Dollar Roundtable 102
Lear Expectations From Suppliers
1. Achieve 5% Diverse Spend with Your Supply Base 2. Report Diverse Spending Results
Diversity Included in Future Sourcing Considerations 103
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Lear Supplier of the Year
BAE Industries, Inc.
Excelling Together
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
W.E.T. Automotive Systems AG
Excelling Together
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