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Copyright A-dec, Inc 2008 A-dec STRIVING FOR THE BETTERMENT OF DENTISTRY WORLDWIDE

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Copyright A-dec, Inc 2008 PROFILE AT A GLANCE FOUNDED - 1964 HEADQUARTERS - NEWBERG OREGON USA HEADQUARTERS FACILITIES - 500,000 SQUARE FEET EMPLOYEES - 900+ MARKET SHARE- USA - 45% SALES - $300 MILLION CUSTOMERS - 470 DEALER LOCATIONS IN OVER 120 COUNTRIES

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Copyright A-dec, Inc 2008 Selection of our Product Portfolio Chairs Delivery Systems Lights Cabinetry

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Copyright A-dec, Inc 2008 In short: High quality products for the benefits of dentists and their patients

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Copyright A-dec, Inc 2008 A-decs Lean Journey LEAN MANUFATURING a

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Copyright A-dec, Inc 2008 Something Had to Change Throughout 1999 and into 2000 A-dec was suffering from a trend of: Increasing Costs Less Than Desired Quality Less Than Desired Delivery Times Conclusion: We lacked a strategy for making sustained operational improvements. a

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Copyright A-dec, Inc 2008 Selected Lean As Our Strategy Lean was the only direction/strategy that would allow us to: Improve Quality Improve Delivery, while Reducing our Overall Costs. a

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Why Lean? Existing Framework and Best- Practices to Reduce / Eliminate The Eight Wastes Copyright A-dec, Inc 2008

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Why Lean? The facts that ultimately make change stick Requires Everyones Involvement Long-Term Focus for A-dec Consistent with the A-dec Way a

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Copyright A-dec, Inc 2008 Statistical Achievements a 19992008Change Manufacturing Employees 618 602 - 2% Inventory Turns 4.61 8.86 + 63% Cash Flow Impact + $11M Lead Time Reduction 33% - 70% Kaizen Events Conducted 645 Employees who have participated 472

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Copyright A-dec, Inc 2008 Lean Timeline Overview 2001 Researched lean Identified a strategy and selected tools Conducted two pilot Kaizen Events 2002 Created five full-time Manufacturing Lean Teams Created dedicated Sales Lean Team Learned to apply concepts and tools Started to build employee acceptance 2003 Created Lean Enterprise Team Started our campaign for 7-day order-to-invoice Commitment to employees they will not lose employment due to lean improvement Focused on Value Streams Noticeable change in employee acceptance

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Copyright A-dec, Inc 2008 Lean Timeline Overview 2004 Formalized Continuous Improvement Department Established Supplier Lean Team Formal training and education program for all employees Focused on foundational tools like 6S, Standard Work, and TPM Company-wide deployment- moved accountability to business units Drove employee involvement 2005 Continue to focus on the basics Enhancing Quality focus- Poka-Yoke and 3P Implementing Pull Systems- internal and external Supply Chain Integration- lean initiatives Product Development- increasing velocity Employee engagement- daily kaizen, expanding training

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Copyright A-dec, Inc 2008 Lean Timeline Overview 2006 Engaging Customer Base including Leadership Training Implemented Visual Metrics and OFI Boards Established A-dec Quality Management System Required manufacturing employees to be fully trained in 6S and Standard Work Established 3% annual goal for whole organization 2007 Established Brace Yourself new employee training with heavy focus on lean basics and quality Continued 3% annual capacity goal through workshops and improvement activities Established goal for leaders to be trained as facilitators Continue focus on employees through 6S and Standard Work

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Lean Timeline Overview 2008 Focus on Corporate Capacity Improvement: 3%, 5%, 7% Established OFI (Opportunity For Improvement) System Developed and Deployed new Corporate metrics and shared results monthly with staff. Cost of Quality External Quality Capacity Gained OFIs per Employee Copyright A-dec, Inc 2008

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Lean Tools Value Stream Mapping Process Mapping 6S Standard Work Work Cells / 1-Piece Flow Kanban TPM 3P Poke-Yoke SMED / Set-Up Reduction Visual Controls OFI (Opportunity for Improvement)

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Copyright A-dec, Inc 2008 Keys to success Understand that Lean is a long term commitment Guarantee that no one will lose their employment because of Lean Time and resources Get people from all levels of the organization involved a

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Copyright A-dec, Inc 2008 A-decs Lean Journey EXTENDING LEAN TO SUPPLIERS a

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Extending Lean to our Suppliers Our Approach 1.Not a S.W.A.T. Team The Boeing, Harley Davidson, or Auto Industry approach would not work for us. Not Part or issue specific. 2.Support and encourage our suppliers to become a Lean Enterprise. Informing, training, and facilitating 3.Supply Chain vs. Supply Chain

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Analyze Supplier Mix and Prioritize Best Lean Candidates Engage Suppliers Top Management and Establish Commitment to Lean Identify and Train a Lean Champion at the Supplier Prepare an initial Kaizen Proposal and Facilitate Events at the Supplier Assess Results-Monitor & Support Growth of Lean **( copies available!)** Overview : Extending Lean to our Suppliers

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Varying opinions about Lean: Lean... That just means more Inventory to us, right? We are a Job Shop, we dont make a product! We are already doing many Lean things! Our Industry is different. Lean sounds great, but where do we start?

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Extending Lean to our Suppliers Responses Varying Supplier Situations: Fence Sitters- No commitment! ( Just accommodating the Customer ) The Timing is not right! (Seasonal Peak, Facility moving, Personnel changes, Change of Ownership, ERP systems, etc.) Discomfort with Customer leading. (Embracing Lean but they want to own it!) Ready, Eager & Willing- but what is the 1 st Step? ( Lean Assessment?) Lean is already in place can they teach us?

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Extending Lean to our Suppliers CEO / President / Upper Management Embracing Lean Accepts Lean as a journey, not a destination. Supports permanent culture change. Embraces the Lean concepts; not just endorse them. Commits adequate resources. Plans for freed resources. Seeks additional Lean knowledge. Adopts Lean performance measures. Aligns business goals with lean. Actively leads lean.

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Extending Lean to our Suppliers Identify Your Lean Champion (LC) Lean Savvy Ability to Build / Lead Effective Teams Action Oriented Ability to Direct Others Presentation Skills Organizational Agility Ability to articulate Why Lean?

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Extending Lean to our Suppliers Establishing a Lean Core team The Lean Champion (LC): Identifies team members, cross functional non/management (or limited) Assesses their Lean training needs. Trains Core team on Lean basics & facilitation. Begin to drive Lean through the organization. Schedules regular team meetings. Lean Core Team Identifies a series of event opportunities. Participates in initial Kaizen events with LC. Team Members then facilitate & drive Lean through-out the organization

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Extending Lean to our Suppliers Lean Leadership & Supplier Training at A-dec: Day 1 (Tuesday) 8 am to 4pm: A-dec's Lean Journey -45 min. Lego Simulation- Single piece Flow exercise/team activity ~ 90 min. Lean Concepts and the A-dec Way - 45 min. Standard Work Concepts - 75 min. 6S Process - 75 min. Day 2 (Wednesday ) 8 am to 4pm: Value Stream Mapping Introduction- 60 min. Current State Value Stream Mapping an actual process 5 hrs Hands on activity ~Admin or Manufacturing process - 5 hrs. Day 3 (Thursday) 8 am to 12 pm: Report on Current State- 30 min. Review the Future State concepts- 30 Min. Kaizen events- 45 min. Mapping the Future State Process- Continued Hands on activity ~2 hrs.

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Extending Lean to Suppliers Case Study: Plastic Molder 6 S and Work Cell Development BeforeAfter

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Extending Lean to Suppliers Case Studies: Plastic Molder WIP Workflow Improvement-Cell Lay-out BeforeAfter

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Extending Lean to Suppliers Case Study: Plastic Molder Results

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Extending Lean to our Suppliers Case Study # 2: Plastic Molder Kaizen Event ScopeKaizen Event Scope Improve quality of A-dec micro valve assembly and eliminate process wastes. Start: At the Molding machine End: Ready for Shipment to A-Dec

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Changes Made Point of use storage Set-Up reduction Added visual aids to procedures Reduced assembly part order quantity Single piece assembly eliminating a sub-assy Re-designed the work station

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Lean Process Tools Used Value stream mapping Poke Yoke Standard work Visual work place Cell design

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Extending Lean to our Suppliers DescriptionGoalActual Inventory50%67% Set-up time 80%50% Travel distance 60%23% Through put time 80%43% Process steps 50%29% Touches50%43% Actual Reduction Stretch Goals :

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Extending Lean to our Suppliers DescriptionCurrentFuture Operators117 Touches148 Through-Put 340 hours 193 hours Cycle Time 90.9 min. 75.4 min. Inventory Dollars $22,800$4,000 Distance 1089 feet 842 feet Set-Up Time 60 min. 30 min. Steps3122 Future State- Results comparison:

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Extending Lean to our Suppliers Lessons Learned Benchmarking is critical (Take pictures, Document like crazy- how did we used to look?) Cost Savings/ Supplier Cost accuracy (Quantifying improvements are often difficult!) Strengthened Alliance/ Cost Avoidances Investment: Time is your friend

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Extending Lean to our Suppliers Summary ( 46) Lean Pulse-taking Supplier visits. Primarily Portland-Spokane areas (19) Lean Champions identified. (24) A-dec Lean Tours with Supplier Mgmt. Teams. (150) Supplier Participants in A-dec Lean Leadership Training (or a Lean Basics 2-day course). (28) Kaizen events with Supplier/A-dec participation. (16) Suppliers in our Top 80% actively deploying Lean!

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Copyright A-dec, Inc 2008 Questions?