DuPont Production System- A Journey in Operations Excellence

TRACC © Conference South Africa

Kathy Wright, Program Director, Operations Center of Competency

April, 2011

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DuPont Core Values

Safety & Health

Environmental Stewardship

Highest Ethical Standards

Respect for People

“The Goal is Zero”

2

3

DuPont Internal Use OnlyRev. Date: 5/15/10

Dependent -

“ZERO IS DIFFICULT”

• Management commitment

• Governed by rules and regulations

• Management -centered activities

• Selective communication of objectives

• Discipline as a development tool

• Turf -type atmosphere

Reactive -

“ZERO IS UNREALISTIC”

• Goal of compliance

• Safety by natural instinct

• Driven by Safety Manager

• Management -provided resource but lack of management involvement

• Discipline reactive to injuries

Independent

“ZERO IS ATTAINABLE”

• Well understood process and operation

• Personal commitment to safety

•

• Ownership for procedures at team level

• Trust allowing for shared logic and ideas

Supervision/resource comfortableleading or allowing others to lead

Interdependent

Inju

ry R

ates

ZeroIndependentDependentReactive

BradleyBradleyModelModel

Interdependent

“ZERO IS SUSTAINABLE”

• Cooperation within and across teams

• Brother’s Keeper

• Organizational pride

•

• Team fully engaged in goal -setting and improvements

Self-managed teams

Zero injuries & illnesses

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To be the world’s most dynamic science company, creating sustainable solutions essential to a better, safer, healthier life for people

everywhere.

The Vision of DuPont

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The DuPont Company - 2010 Sales

DUPONT AGRICULTURE & NUTRITION

$9.7 B

DUPONT PERFORMANCE CHEMICALS

$6.1 B

DUPONT ELECTRONIC & COMMUNICATIONS

$3.0 B

DUPONT PERFORMANCE MATERIALS

$6.5 B

DUPONT PERFORMANCE COATINGS

$4.2 B

DUPONT SAFETY & PROTECTION

$3.1 B

$32.5B*

* Includes “other” sales, excludes inter-segment transfers

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Aligning Strategic Themes with Growth Trends

Increasing Food

Production

Decreasing Dependence

on Fossil Fuels

Growth Trends

Protecting Lives and the Environment

Emerging Markets

• Innovation & Intense Customer Focus

• Differential Business Management

• Productivity & Continuous Improvement

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Aligning Strategies with Megatrends

Market Opportunities…

More food Better food

Alternative energy solutions Energy efficiency Renewably-sourced materials

Workplace safety Personal protection Environmental sustainability

Infrastructure Energy Materials applications

customized for local markets

Megatrends…

1. Increasing Food Production

2. Decreasing Dependence on Fossil Fuels

3. Protecting People, Assets & the Environment

4. Growth in Emerging Markets

Strategies…• Grow production

agriculture• Photovoltaics & Biofuels• Lightweighting vehicles • Accelerate conversion to

bio-based raw materials

• Accelerate innovation pipeline

• Strategic acquisitions

• Geographic expansion• Increase local application

development• Drive further penetration

The Needs of the World Drive our Science

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DuPont’s 13 Businesses

• Protection Technologies• Building Innovations

• Safety Resources

• Pioneer Hi-Bred• Crop Protection

• Nutrition & Health

• Performance Polymers• Packaging & Industrial Polymers

• Titanium Technologies• Chemicals & Fluoro

• Performance Coatings

• Applied BioSciences

• Electronics & Communications

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• ~$9B sales from seeds, crop protection products, food and nutrition products, and food packaging materials for extended shelf life

MEGATREND #1:Increase Food Production

DUPONT OFFERING

DUPONT SOLUTIONS

• Constant stream of higher-yielding seeds, grower services• Optimum® AcreMax™, Optimum® GAT™, Y-series soybeans,

Rynaxypyr® and Cyazypyr™ insecticides …• Next generation food packaging• Bio-based Omega-3s

1010

• >$2B sales from PV, components for fuel cells,more energy efficient construction with Tyvek®,lighter weight polymer composites for transportation

MEGATREND #2:Decrease Dependency on Fossil Fuels

• Constant stream of new / improved materials forphotovoltaics; cellulosic ethanol, and biobutanol

• Advanced composites for aerospace

DUPONT OFFERING

DUPONT SOLUTIONS

1111

• ~$2.5B sales from Kevlar®, Nomex®, Tyvek®, SentryGlas®, safety services, environmental protection material solutions

MEGATREND #3:Protect People, Assets, and the Environment

• Next gen Kevlar® and Nomex® fibers and fabrics

• Next gen Tyvek® for construction, worker protection

• New antimicrobial coatings for food processing

• Environmental protection solutions for refineries

DUPONT OFFERING

DUPONT SOLUTIONS

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• ~$8B sales across the portfolio

MEGATREND #4:Growth in Emerging Markets

DUPONT OFFERING

DUPONT SOLUTIONS• New applications tailored to

emerging markets

$5.2$6.2

$7.2

$8.8$8

$12

$4.9

2004 2005 2006 2007 2008 2009E 2012E

14% CAGR2009-2012E

Sales$ billions

$5.2$6.2

$7.2

$8.8$8

$12

$4.9

2004 2005 2006 2007 2008 2009E 2012E

14% CAGR2009-2012E

Sales$ billions

Top-line growth > company average

Directives Toward our VisionDirectives Toward our Vision

MARKET-DRIVEN INNOVATION

INDUSTRY-LEADING PRODUCTIVITY

Company Metrics:How:

• Accelerate growth in megatrends• Drive sustainability with science• Aggressively launch new offerings• Drive differential choices in growth investments (POIs)

• >XX% of revenue from new products (commercialized the past 4 years)• XX% new growth vs. replacement products• Meet major growth program milestones• Establish & implement metric for return on R&D

• Strong focus on customers in high growth markets• Expand margin by pricing to value• Drive Marketing & Sales Excellence• Continue to improve connection of supply chain to the

marketplace

• XX% revenue growth (vs. 2010)• X point improvement in Net Promoter Score®• XX% of revenue from developing markets by 2012• X point improvement in variable margin (vs. 2010)• $XXX million of capacity released

• Strengthen competitive benchmarking• Simplify and digitize transactional processes• Advance and embed DPS and DIBM

• Top quartile performance vs. benchmarks• $XXX million of variable cost productivity• $XXX million of fixed cost productivity

• Drive asset reliability while improving asset turns• Rigorously manage working capital and capital

expenditures

• XX% PTOI growth (vs. 2010)• Improve return on net plant, property, & equipment (NPPE) vs.

benchmarks• $XXX million of working capital productivity

Deliver:

In 2011, we will advance our Core Values, deliver world-class innovation with our customers and outpace competition through differential management and industry-leading productivity.

SPEED & AGILITY ACCOUNTABILITY TRANSPARENCY DEVELOP PEOPLE

SUPERIOR REVENUE GROWTH

CASH TO GROW & INCREASE RETURNS

(RONA)

ADVANCING OUR CORE VALUES THE GOAL IS ZERO!

JANUARY 2011

STEP-CHANGE IN SAFETY PERFORMANCE

• Leadership and employee engagement• Action plans by unit• Improve PSM execution

• The goal IS ZERO

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DuPont Global Operations – At a glance

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2007 2008 2009 2010

80

90

10

0

110

1

20 Supply Chain Costs

Production Volumes

DuPont Integrated Operations Worldwide

Global Supply Chains 98 Plant sites 185 SitesWarehouses 400+Shipping Major Container userEmployees (approx.) 35,000+Countries 45Contract operations 700+ SitesNew Product Launches 5%-20% annually

BusinessIntegration

Strong supply chainintegration within business teams and business strategies

Operations Center of

CompetencyEnsure organizational capability is in place

Standardize and leverage

Execution

Drive effectiveness and efficiency in

execution in plants and supply chains

across businesses and regions

Production System Deliverables

Integrated strategies and operational plans

Productivity and asset effectiveness along supply chains

Technology ownership & integration along supply chains

Advancing Core Values Capability building - People & organizational development

Mindsets and behaviors that foster engagement and superior execution

Everyday, everyone together driving sustainable competitive advantage so our businesses win

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How Integrated Operations is Structured for Operations Excellence

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Production System in Integrated Operations16

Dem

and

Revi

ew

Prod

uct/

proj

ect

Revi

ew

Required Business Outcomes

Current and future requirements forcapability and performance

Production SystemManufacturing Locations,

S&L, Engineering,

Across Supply Chains

Supp

ly R

evie

w

Current Capabilities & PerformanceImprovement

Opportunities/alternatives

DIBMDIBM00--24 months24 months C

onte

xtan

d Pe

rspe

ctiv

eC

onte

xtan

d Pe

rspe

ctiv

e

4/18/2011

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DuPont Production System VisionEveryone, everyday in pursuit of Operations Excellence enabling DuPont to win in a dynamic world.

Principles

People•Each individual will accept the need for change and respond positively to the challenges it represents.•We will foster an open, honest, and trusting environment.•We will create an engaged, flexible, and capable Work Force at all levels.

Practices•We will operate a lean, integrated end-to-end Supply Chain from suppliers to customers.•We will maintain standard processes and systems. •We will promote enabling technologies, tools, and processes.

4/18/2011

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DPS builds on our strong foundation of continuous improvement…

DUPONT PRODUCTION SYSTEM (DPS):• Analysis / Tools / Techniques• Engaging and empowering• Leadership development and mindset shifts

REAPPLICATION OF OPERATIONS EXCELLENCE BEST PRACTICE:• Codifying• Deploying• Use of Standard Management Practices

LEAN SIX SIGMA DEPLOYMENT:• Standardized Problem Solving• Lean Management• Continuous Improvement

FOUNDATION:• Unique Technology/Processes• Markets and Customers• Core Values

4/18/2011

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DuPont Production System Model ….is designed from a multidimensional view of improvement

Required Business

Outcomes AND a

sustainable top-quartile Performance

Business

and Asset Requirements

Mindsets & Behaviors

Capability Building

Technical Model

Managing Process

Keep focus on what really

matters, with the right people

Apply tools and practices

to drive focused

improvement at all levels

Insure the right skills

and coachingAlign cultural

norms with the organization’s vision, mission

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TRACC is Integral Part of DPS Sustainability

Required Business

Outcomes

Current and future

requirements for

capability and performance

Mindsets & Behaviors

Capability Building

Technical Model

Managing Process

Keep focus on what really

matters, with the right people

Apply tools and practices

to drive focused

improvement at all levels

Insure the right skills and

coaching

Align cultural norms with the organization’s vision, mission

FoundationalElements

SHEAFocused

improvementBest practice

design

Performance Management

Talent Management

Change Agents(Plant Mgrs Champions,

Experts,)

Training & DevelopmentBest practice performance

Desired Characteristics

Influence

Supported by

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"I'm a big believer in the DuPont Production System (DPS). We have to be very productive in manufacturing in today's dynamic and competitive global marketplace and DPS allows us to do that. With DPS we engage our workforce in its entirety. The collective power is in the group and the team, and getting the most we can out of our operations. DPS allows us to speak with each other using a common language so together we can drive and sustain world-class operations performance."

Ellen Kullman DuPont CEO & Chair of the Board

"I'm a big believer in the DuPont Production System (DPS). We have to be very productive in manufacturing in today's dynamic and competitive global marketplace and DPS allows us to do that. With DPS we engage our workforce in its entirety. The collective power is in the group and the team, and getting the most we can out of our operations. DPS allows us to speak with each other using a common language so together we can drive and sustain world-class operations performance."

Ellen Kullman DuPont CEO & Chair of the Board

….Our Leadership strongly Supports the Journey of DPS to World Class

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….And our Entitlement will deliver Superior Supply Chain Capability

MarketNeeds

Supply ChainNetworkDesign

PlantOperation

Supply ChainOptimization

Highest Service with Lowest Total cost of

ownership

Supply Chain Network Design – Sourcing, Operations, Logistics - Potential $>0.XB• Total landed Cost Diagnostics – Optimize existing supply chains utilizing proven best practices

• Drive Shifts in Supplier base from traditional sources to emerging regions. Mexico, C and EE, Brazil and China

• Network Optimization – Establish shifts in Asset base with new investment and in-depth “Make vs Buy” Analysis

Plant Operations – DPS TRACC, CoC, People Engagement - Potential $>XB • Gap to perfect Diagnostics – Optimize existing Plant Operation utilizing proven best practices

• Drive ‘total cost of ownership' Within Plant boundaries connected to Suppliers- supplier

• Employee engagement driving great levels of CI with Managing Process excellence

Supply Chain Optimization – Sourcing, Operations, Logistics - Potential $>XB• E2E Diagnostics – Optimize existing supply chains utilizing proven best practices

• Drive ‘total cost of ownership' across supply chains - supplier, DuPont, customer

• Network Optimization – Reorganize supply chains production scheduling to efficiently serve variable market base

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Integrated Operations

Key Priorities 2011

•Ensure sufficient trained resources/facilitators

•Deliver Capacity release to ensure production volumes available for growth in sales and improvement of customer service

•Vertically align improvement initiatives (DPS across the Supply Chains)

•Facilitate “Advancing DPS” in post deployment sites

DPS Deployments

Completed 2010 New 2011

Sites 125 40

Non Sites 3 7

Productivity ($MM)2010 2011

Fixed Cost XXX XXX

Variable Cost XXX XXX

Capacity Release XXX XXX

Total XXX XXX

Working Capital XXX XXX

We use an Integrated Standardized Approach to deploymentDuPont Production System

Standardized Repeatable Leverageable

Core Values

OperationalCapability

PeopleEngagement

MassiveImprovement:• Fast• ContinuousD

iagn

ostic

Prio

ritie

s

Proc

ess

Cap

abili

ty

Business &AssetRequirements

• Understand the Stake, and identify cultural barriers to progress.• Gain leadership alignment of where to gain the best Business advantage:• Understand the key drivers to strategic success.• Improves leadership capability to develop and maintain an ever improving level

of performance and trains Operators with new skills for collaborative success• Establish leader standard work at all levels to continue the journey and monitor

progress

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Managing ProcessesAnd Capabilities

Employee and leadershipTalent Management Process

Engaged employeesIncreasing our continuousImprovement performance

Leadership SkillsAnd Mindsets and

Behaviours

KPI’s integratedWith Business strategy

Robust capabilityBuilding engine

Clear external perspectivesAnd benchmarking process

Effective Leading andManaging structures

DuPontIntegratedOperations

Balance of programs all needed to maintain a Sustainable System wide approach

Advancing DPS ........is a Multifaceted approachEveryone, everyday in pursuit of Operations Excellence enabling DuPont to win in a

dynamic world.

4/18/2011

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Mindsets & Behaviors

3 path Diagnostic Deployment Areas

DPS TRACC

Technical Diagnostic

Primary Focus AreasUnderstanding the site’s culture Defining and implementing needed changes

to improve employee engagement- leadership behaviors- leadership rituals

Answering “Where’s the $$?”- cataloging all existing improvement work- defining additional improvement options- establishing stretch targets

Prioritized improvement plan

Assess where the site is vs. World ClassFocus on Frontline capability building

- teamwork- problem solving skills- visual performance management

Ultimate products: Fully integrated improvement plan developed & owned by site employeesVisible progress on the journey to world class

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Initial 6-8 month Centrally supported Deployment……….the keys Phases

• Technical Model

• Managing Processes

• Mindsets and Behaviors

• Capability Building

Roll-out

Road mapSynthesis

• Structure area transformation

• Develop implemen-tation organization

“Cultural”diagnosis• Analysis of

strengths and weaknesses (OPP, DSIs, Mirror workshops . . .)

Capability building• Gap analysis

“Technical diagnostics”• Analysis of

improve-ment leavers andpotential

Management infrastructure• Blueprint

Capability building• Design inter-

ventions and tools (LCD, L2, and Visioning)

• Enable implemen-tation organization

Prepare• Rapid

assessment• Team setup• Data collec-

tion• Site Staff

alignment

• Execute area transformation

• Establish new site organization and performance management

Capability building• Support interface

management with other functions

• Support team functioning

• Build skills

Diagnose Design and plan Implement

Required Business

Outcomes AND a

sustainable top-quartile Performance

Business

and Asset Requirements

Mindsets & Behaviors

Capability Building

Technical Model

Managing Process

Prepare

Required Business

Outcomes AND a

sustainable top-quartile Performance

Business

and Asset Requirements

Mindsets & Behaviors

Capability Building

Technical Model

Managing Process

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PRACTICE RATING

PER

FOR

MA

NC

E

100%

50%

0%

39%

52% - Y1

2.2

60% - Y2

1.4 3.1

OVE

RA

LL E

QU

IPM

ENT

EFFE

CTI

VEN

ESS

Implementation Workshop: Where are the opportunities, and

how big are they?

• Workshops produce CONSENSUS on the state of practice

• Teams examine ALL practice aspects to generate maturity ratings

• Teams agree on the OPPORTUNITYassociated with specific aspects of continuous improvement programs

Skills and Knowledge:What does everyone need to know?

TRACC Progress ChartTeamwork (v3)Area: Soroksar Desc: Assessment

Date: Thursday, November 13, 2003Assessor: Administrator

Licensed to: Competitive Capabilities - Support

Stage 1Individualism

Stage 2Formation

Stage 3Foundations

Stage 4Relations

Stage 5Performance

1. Strategy

2. Team Objectives

3. Team Dynamics

4. Leadership

5. Performance Management

6. Meetings

7. Training and Development

8. Decision-Making

ScorecardWhere are we doing well, and

where should we focus?

Detailed RoadmapWhat are the next three steps we need to manage in a focused way?

• Senior management can manage the implementation process across MANY SITESin many LANGUAGES simultaneously.

• The Performance and Practices axis can be measured on each site and on every line within a site

• In-depth MANUALS tailored to specific groups (senior leadership, operational management, line workers)

• COMPETENCY BASED training with ASSESSMENT CRITERIA applied Just-in-Time for the shop floor and Team Leaders

• Specialist workshops

• Initial and periodic assessments PRIORITIZEnext steps to manage

• STRUCTURED FRAMEWORK that transcends Leadership changes

• Provides DISCIPLINE, INTEGRATES prior initiatives and ensures SUSTAINABILITY.

We use TRACC to provide a framework execution of Standardized Managing Processes

6/25/09 DUPONT CONFIDENTIAL – SPECIAL CONTROL

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….And this gives an assessment of current practice with Operator engagement

4/18/2011

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During Deployment we plan and secure resources for Site leadership

DPS Deployment TeamDPS- ALL Site Personnel

Start Initial Deployment Turnover

Upon kick-off, DPS must drive progress… …allowing site personnel to take full ownership at roll-out

DPS deployment team role• Communicate DPS vision

• Set workplan and run learning events, kaizen events, etc.

• Align necessary resources

• Train site personnel to lead initiatives and institute process for continuous improvement

Site personnel responsibility• Participate in problem solving

• Capture opportunity value

• Internalize DPS vision

• Become an agent of continuous improvement

DPS deployment team role• Facilitate problem solving

• Assist leadership in aligning resources and removing obstacles

Site personnel responsibility• Maintain continuous improvement (CI) focus

• Uncover new opportunities

• Prioritize CI initiatives based on business strategy

• Facilitate problem solving teams

• Execute From-To Action Plan

• Communicate. Communicate. Communicate.

DPS Sustainability = LineDPS Sustainability = Line--led Transformationled Transformation

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The results are always overwhelming ………..

Guarulhos, Brazil

•Improved profitability•38% increase in batches per person

•Business, R&D, Operations working as a team

Maydown, Northern Ireland

•Record quality performance 20% improvement

•Record productivity performance in yield and uptime

•1,000 days without a recordable safety incident

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What we need with our DPS Deployments

Alignment in the following Arenas Ensuring a continued standardized approach. Need an effective handle on employee engagement to sustain improvement PMO process must beyond Plant Deployments to ensure maximum Business

Benefit and Execution Excellence Staffing and development plans needed to ensure effective resources An agreed on Site Deployment Plan with Business ensures effective value

capture

Operations Leadership Skills need continued upgrade Role modeling at all levels of leadership. Engage in basics with KPI’s:- Performance Dialogues Effective Coaching Engaging in difficult conversations

We still have limiting Mindsets and Behaviors which we must address Interrogation vs Exploration Scarcity vs Abundance

Under Stress go with what has worked in PAST

THANK YOU………….Questions??

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