TOS Guidance. Nine Lean Principles A Philosophy.

2TOS-Leitlinie

Content. TOS Guidance.

03 Preface

04 Primary Goal: Operational Excellence

06 What does this guidance provide?

07 The Nine Lean Principles

08 Lean Principle 1: Take the long view invest in tomorrows profits today. 10 Lean Principle 2: Go and see.

12 Lean Principle 3: Imagine you were your customer.

14 Lean Principle 4: Only empowered people produce powerful performance.

16 Lean Principle 5: Share openly and borrow proudly.

18 Lean Principle 6: Choose the process focus.

20 Lean Principle 7: Learn quickly from triumphs and from tragedies.

22 Lean Principle 8: Respect, support and challenge your partners and suppliers.

24 Lean Principle 9: Keep it simple!

3 Preface

Preface.

How intensively we utilize TOS for our progress especially depends on our mana-gers, who continuously serve as role models when TOS is implemented. That is why TOS is not merely focused on methods and processes, but also on people and important aspects of leadership and culture. TOS is not merely a project that will be concluded after a definite period of time; it is a comprehensive management system that makes us sustainably success-ful with our customers, maintains our com-petitiveness and secures our jobs.

Fill TOS with life your personal commit-ment and dedication to properly imple-menting the principles are absolutely essential! In the name of TEC I wish you great success!

Yours,Andreas Renschler

Dear Colleagues,

The future is by no means an automatic extension of our successful past. If we want to continue to achieve peak performance, we have to continually improve ourselves and find intelligent solutions for the daily challenges. However, knowledge and insight alone are not enough to reach these goals. In the end, the consistent implementation of our ideas into practice determines our success. We therefore need a system which directs us generally but also provides con-crete, in-depth methods. TOS provides the framework for such a system with the aim of accommodating a learning organization. With TOS, we will be able to put Daimler Trucks on a sustainable track for excellent performance.

Chris Patterson

Head of Trucks NAFTA

Georg Weiberg

Head of Truck Product Engineering

Hubertus Troska

Head of Trucks Europe/Latin America

Harald Blstler

Head of Trucks & Buses Asia

Stefan Buchner

Head of Procurement Trucks & Buses

Dr. Michael Dostal

Head of Truck Powertrain Operations & Manufacturing Engineering

Dr. Albert Kirchmann

Head of Finance & Controlling Trucks & Buses

4TOS Guidance

Primary Goal: Operational Excellence

Building on our four corporate values

passion respect integrity discipline

a company-wide excellence process has been started. This process will infuse Daimler Trucks with a culture of superior performance. TOS is an important success factor for superior performance because it establishes a culture that fosters continu-ous and lasting improvement. Furthermore, TOS contains methods that help people to work more effectively.

TOS is Daimler Trucks comprehensive management system that integrates the well-known methods of DCPS as well as Six Sigma and CVDS. This means that the methods and tools, as well as all hand-books in use to date remain unchanged. They are brought together and supported by the specifics formulated in these guidelines. In the past, we primarily viewed our production system as a tool box containing numerous methods for solving specific problems. In TOS, methodological

competence alone is not sufficient for achieving our higher goal of operational excellence. If we want to be excellent, we need a philosophy of constant improvement that is oriented towards long-term company goals rather than short-term problems. The Nine Lean Principles described in this guidance provide a valuable orientation; they help every manager to make decisions that will improve his or her department. But first, we will have to rethink many minor everyday decisions as well as major strategic decisions, because one thing is clear: If we want to change Daimler Trucks in a positive way, we have to change our-selves. Not our methods and systems, but our individual conduct, the sum of which characterizes our culture. Managers take on an important role model function in this transformation process, because every successful culture needs strong role models.

5 Introduction

In many places TOS has already borne fruit, such as in areas where our focus is on the long-term goal of operational excellence and we have therefore implemented our Lean Principles. In lighthouse projects we have bundled our methodological know-ledge, from which successful systems such

as Shop Floor Management have emerged. A new culture of continuous improvement, a culture of transparency and cooperation is already thriving here. What will your concrete contribution to operational excellence be?

Principles/CultureOrientation of all thinking and action according

to the 4 corporate values and the 9 Lean Principles

ObjectivesTarget achievement of SQDCM

(safety, quality, delivery, costs, morale)

Management SystemStructuring tools into a systems context (Lighthouse, Shopfloor

management, project management, expert projects ...)

Methods & ToolsUsing specific TOS methods and tools

Source: Shingo

6TOS Guidance

What does this guidance provide?

By providing a practical explanation of the Lean Principles, this guidance will furnish insight into which values and aspects of leadership and cooperation in TOS will lead to success. The guidance is also a concrete invitation to implement your future TOS-based improvement efforts with an honest self-evaluation.One positive effect of this that you will likely be even more rigorous in challenging the status quo in order to recognize unused potential.

The Lean Principles illustrate what TOS expects from you as a manager and which guidances and decision-making principles you yourself can utilize when TOS is imple-mented on a consistent basis. The introduc-tions to the following Nine Lean Principles establish parallels to hypothetical situations outside the workplace.

For each of the Nine Lean Principles,practical examples from the Daimler Trucksworkplace that will further inspire you in the concrete implementation of TOS principles can be found on the Best Practice Platform under http://bp-trucks.app.corpintra.net or in the Employee Portal / tab Knowledge/ By Topic / TOS / Best Practice Platform.

Einleitung7 Einleitung7

Overview. The Nine Lean Principles.

Take the long view invest in tomorrows profits today.

Keep it simple!Respect, support and challenge your partners and suppliers.

Learn quickly from triumphs and from tragedies.

Choose the process focus.

Share openly and borrow proudly.

Only empowered people produce powerful performance.

Imagine you were your customer.

Go and see.

8Lean Principle 1:Take the long view invest in tomorrows profits today.

One question: Do you exercise on a regular basis? If so, thats good; if not, imagine that you do. You are a success-ful competitive athlete and your running shoes are already two years old. New models have much better shock absorp-tion. You want to invest in order to keep up with other runners.

You are standing in front of a shelf in a sporting goods store and are spoiled for choice. What determines your decision: price or quality? Or both? You think: Yes, I could save money by buying the less expen-sive ones, but is it worth it? The better quality shoes protect the joints; hence, theyre safer. They also last longer and might then be more economical. And they feel better overall, so I can run faster. The decision is made!

Of course, one doesnt always reach for the best in such situations. The balance between price and quality has to be right. The key to this decision was thinking ahead: considering not what is best for the moment but for the future. But lets apply the concept to the work environment of a manager. TOS requires long-term think-ing, which necessarily includes a detailed analysis of investments. Long-term thinking can lead to decisions against short-term cost savings and in favor of leaner pro-cesses, more quality, more security or more customer satisfaction. In TOS, this is responsible decision-making oriented towards higher goals rather than short-term successes. Think about it: What you invest today in tomorrows success will pay off handsomely.

TOS Guidance

9 Lean Principle 1: Take the long view invest in tomorrows profits today.

Suggestions for Self-evaluation.There is often little time for decision-making in everyday life. Understandably, the focus quickly turns to issues like costs in order to reach a decision. It is more com-plicated but also more sensible to keep our goals in sight and orient our decisions towards them.

Have you developed a vision and a strategy for your department? And have you derived concrete goals from them? Do your employees know your strategy and have you agreed upon common goals with them?

Do you use methods like Value Stream Mapping or the A3 strategic sheet?

Do you consistently evaluate your daily decisions in terms of their compatibility with your goals?

What do you tend to focus on: costs, quality or process?

10

Lean Principle 2:Go and see.

TOS Guidance

Imagine: A completely normal Sunday afternoon. Youre at home, absorbed in a good newspaper, concentrating on an interesting article. Youre interrupted when someone rings the doorbell. You open the door and find your neighbor standing there. He worriedly informs you about a big puddle of oil that he just noticed under your car in front of the house.

First of all, your neighbor deserves praise for letting you know about the damage promptly. This allows you to avoid worse. What would you do next? Obviously, youd grab your house key, dive into the closest pair of shoes and go to your car because you want to see for yourself whats going on!

Although this behavioral pattern appears logical, youd find it doesnt always take

place in the workplace. At work, problems are often not discussed at the scene, but off sides in the office or on the phone. Managers spend a great deal of their time not in their area of direct responsibility, for example out on the production line and close to their team, but in meetings, exter-nal appointments, in the car or in airplanes. This contradicts the undisputed finding and experience that effective management requires the presence of managers on site in their area of responsibility. TOS recom-mends that you spend roughly half of your working hours on site and that you schedule this time scrupulously. This allows you to assess the situation on a daily basis, take an interest in current challenges, familiar-ize yourself with current problems and direct the most important problem-solving efforts. You can make decisions quickly and confidently, because you obtain all of the necessary information without embel-

11 Lean Principle 2: Go and see.

Suggestions for Self-evaluation.

lishment or delay thanks to direct contact with employees. TOS describes this type of management in detail in Shop Floor Man-agement. Many of the insights behind it can

also be applied to other company areas. Form your own impression on site positive changes will come of it!

Due to their many responsibilities, managers often fail to be consistently on site. However, the best preparation for forming an opinion or making a decision is to obtain an impression of the situation personally.

How much time do you spend with your staff and discuss problems and solution strategies?

Do you use a Tactical Implementation Plan (TIP) to realize projects?

Have you personally seen current problems at the site of occurrence?

Is there a standardized and proven problem-solving process in your area of responsibility?

12

Lean Principle 3:Imagine you were your customer.

TOS Guidance

Through thick and thin: Its nice when a friendship is close and long- lasting. We all know this through our best friend. And we all know that this deep friendship is by no means a given, but has to be nurtured.

Yes, wed get up in the middle of the night if he or she had a problem. Yes, we gladly take on the responsibility of being espe-cially reliable to him or her. Yes, we want to know what he or she thinks of us! In short, we are thoughtful, attentive and vigilant. Over the years, we may slip once or twice, but to be honest, commitment is always the best recipe for a functional friendship. And challenges make it grow!

Lets apply this life experience to our work world. In this case, the private friend is our client. And as in our private life, he or she should be the most important person to us in certain situations! Commitment to a client pays off, and brings success and contentment to both sides. TOS therefore requires that managers continually orient themselves towards the needs of their internal and external clients, and that they deliver products or services on time, in the correct quality and to the right place per the clients wishes. In TOS, managers reflect upon the clients feedback and attempt, by means of their own efforts, to boost the quality of the partnership. At the same time, only the client can judge how good the actual quality of the partnership is, and not we! Ask yourself: Would you want to be your own client?

13 Lean Principle 3: Imagine you were your customer.

Suggestions for Self-evaluation.Our clients are not merely the people or companies who buy our trucks and buses. Every one of us has one or more clients! The colleagues whom you assist or who are downstream in the process are clients too!

Do you know your clients and the products or services intended for them?

Do you know if your clients are satisfied and what their demands are?

Have you set down common goals with your customers?

Do you review your processes in a constructive dialogue with your clients?

How do you and your staff contribute to the satisfaction of the customer who buys our trucks and buses?

14

Lean Principle 4:Only empowered people produce powerful performance.

TOS Guidance

You know it: It isnt just the quality of the players of a sports team that decides victory or defeat, but also their motivation. Weve often seen underdogs beat favorites not due to superior skill, but due to team spirit, strong wills and a trainer who unites and motivates his team.

For the trainer and his players, its a long way to victory. To win, one has to train a lot, try a lot, and accept defeat. But one must also learn from mistakes, improve oneself and keep ones eyes on the prize. In sports,

trainers are responsible for these things; in work, managers are. High qualifications may well be a precondition for an employ-ees performance, but they are by no means a guarantee! In TOS, managers strive to be with their team, motivate them, lead them and qualify them. They should make their team aware of the goals and provide the necessary framework to achieve them. That is the wellspring for motivation, which is the basis for peak performance. Natu-rally, managers assume a crucial role model function for if their own motivation isnt high, the game cannot be won!

15 Lean Principle 4: Only empowered people produce powerful performance.

Suggestions for Self-evaluation.Motivation cannot be deduced from key performance indicators. To gauge your teams level of motivation, you need intuition, the courage to reflect and a healthy dialogue with your own players.

How is your teams morale?

Is your feedback open and honest?

Do you utilize specific motivational instruments?

Do you regularly review and nurture your employees qualifications?

Do you set common goals with your employees regarding their qualifications?

16

Lean Principle 5:Share openly and borrow proudly.

TOS Guidance

Imagine: Youre stranded on a deserted island with another person. Around you is nothing but water. You soon realize that to survive, youve got to catch fish. You have no idea how to go about it, but your fellow sufferer is an experienced angler. Meanwhile, you know how to start a fire without a lighter or matches!

What would you do? Naturally, youd both reveal your abilities and experiences right away, contribute your own knowledge and gratefully accept the other persons. In other words, youd help each other and thereby improve your situation together.

But at work, we often attempt to re-invent the wheel (or in this case, the fishing line)! The following wise adage was forged long ago: If Daimler only knew what Daimler

knows! Thats how it is, unfortunately. TOS thus has a clear-cut approach to handling and propagating existing knowledge: we must share what we know with others as well as take in new knowledge to help us master the tasks for which we lack know-how. Not sharing knowledge is egoistical. Accepting knowledge is not a sign of help-lessness, but reflects a positive attitude towards improvement. An important step in sharing knowledge is standardization, which leads to overall valid and accessible knowledge when it is transparently docu-mented. The TOS Best Practice Database is, among other things, a valuable instrument for achieving this and can be found under http://bp-trucks.app.corpintra.net or in the Employee Portal / tab Knowledge / By Topic / TOS / Best Practice Platform.

17 Lean Principle 5: Share openly and borrow proudly.

Suggestions for Self-evaluation.Objectively speaking, its obvious: There is hardly a problem that someone in this firm hasnt encountered before. So why not consider a proven solution?

Do you communicate good solutions to others?

Do you inform yourself about strategies for solving similar problems via exchange with other departments or factories?

Do you actively support standardization in your area and document the results for others?

Do you encourage your employees to address problems openly?

18

Lean Principle 6:Choose the process focus.

TOS Guidance

Well thought-out: Youre pressed for time, but have a long shopping list. You need to go to several stores and buy large and small, light and heavy items. What do you do? You carefully consider which order will minimize mileage and thus save time. And you dont want to lug the heaviest things throughout the entire shopping trip. But youve also got to take the stores opening hours into consideration so that you dont wind up in front of locked doors.

Behind this precise planning of your shop-ping trip is the desire to achieve efficiency. In other words, to accomplish a lot in a short period of time. That is only possible with careful planning of all the individual tasks, which must be in optimal chronologi-cal and spatial order.

We all know the motto Time is money from the workplace: it pertains to the desire to achieve efficiency. The less time, material and manpower we expend for the produc-tion of a part or the completion of a task, the more efficient we are. This also enables us to reduce waste. In order to improve our efficiency on a long-term basis, we therefore need to improve our processes. To accomplish this, we have to lay out all of the individual steps of the production pro-cess and evaluate whether it is in fact the best way to execute the task, the best point in time and the best place to do so.

19 Lean Principle 6: Choose the process focus.

Suggestions for Self-evaluation.Scrutiny of processes is an essential part of continuous improvement and leads to optimization in both production and administrative spheres. The prerequisite for it is precise knowledge of the current as well as the up- and downstream processes within the chain of production.

Are you familiar with your most important processes and the clients that use them? Do you know how to conduct a process analysis?

Do you evaluate the processes in your area in terms of their value added?

Do you firmly adhere to agreements and defined standards in order to secure long-term changes?

20

Lean Principle 7:Learn quickly from triumphs and from tragedies.

TOS Guidance

Youve heard it a million times: Experience is the best teacher. And because we know that, we often have fun becoming better at what we do. We know that every golf ball we hit brings us closer to the birdie. Every Sunday roast makes us a better cook, just as every hole drilled in the wall makes us a better handyman.

If we dont achieve our goal, we try again as if it were the most normal thing in the world. Despite brief frustration with ourselves, we dont give up: we seek advice and adjust our strategy according to criti-cal error analysis. Then when we achieve what weve set out to do, we are justifiably proud of our own efforts and already cast an eye on the next step towards improve-ment.

Now lets take a comparative glimpse at our workplace. We can learn best from our successes and mistakes when we address them openly. In TOS, we are charged with creating a loyal error culture so that mis-takes can begin to be addressed. Here too: Set a good example! Conveying to your staff that mistakes are a chance to learn entails discussing them openly and positively. If a healthy error culture is lacking, and the first order of business is to hunt down the guilty parties, then officially, mistakes will often never be made. If thats the case, what are the chances for improvement?

21 Lean Principle 7: Learn quickly from triumphs and from tragedies.

Suggestions for Self-evaluation.Openly addressing mistakes requires courage both from you and your staff. Leading the way with a good example calls for strengths and discipline.

Do you yourself admit mistakes in front of others?

Are you pleased when your employees candidly report their mistakes?

Is your fi rst response to mistakes usually to hunt down the guilty party or to seek a common solution with all participants?

Do you follow up on problems until the true cause is deduced from the symptoms?

Do you openly praise employees for a good performance and analyze why it was a success?

Do solved problems lead to changed processes and their standardization under your watch?

22

Lean Principle 8:Respect, support and challenge your partners and suppliers.

TOS Guidance

Good idea: Humans often look to the animal world for inspiration. Especially exemplary are ants, which organize themselves brilliantly and seemingly never run out of team spirit. This suc-cessful species enters into a symbiotic partnership with other organisms so that both sides profit. For example, ants raise aphids and actively protect them from enemies. In return, the aphids give the ants a sweet nectar.

To linger in the ant world: If the aphids were not protected and nurtured, there would be no nectar. Even in an ant colony, the client-supplier principle applies: all ants have a fixed task, with which they support other ants with different functions. This principle makes the entire colony successful.

Now lets transfer this successful principle to our workplace. We too must build and nurture effective partnerships in order to be successful. For example, with suppliers, who provide us with products or services that we cannot provide ourselves. In TOS, these partnerships are characterized by mutual respect and support. One-sided, ex-ploitive relationships usually dont last long. They end up demoralizing one or both sides, which has a negative impact on teamwork, which in turn adversely affects performance and quality.

23 Lean Principle 8: Respect, support and challenge your partners and suppliers.

Suggestions for Self-evaluation.As a manager, you have to engage in dialogue with your internal and external partners or suppliers. Regular exchange, precise knowledge of your own network as well as joint improvement of performance capacity are critical success factors.

Do you know the spectrum of services provided by your suppliers and partners?

Do you regularly initiate constructive dialogues with your most important suppliers and partners and set common goals?

Do you help suppliers and partners to solve their problems?

24

Lean Principle 9:Keep it simple!

TOS Guidance

Picture this: You meet your best friend in a downtown cafe after an eventful day at work. He or she works in a different field, but of course encourages you to talk about whats going on at work.

Wearily, you explain that you spent your precious time in innumerable meetings today on this or that topic. Sometimes you presented a topic, sometimes you were in the audience. Your companion in the cafe wants to know more about the topic you presented. In just ten minutes you are able to coherently convey the essence of your presentation, which lasted an hour this afternoon.

If it had really happened that way, youd be enviable and pitied! Too bad that a topic ate up an entire hour when you could have explained it in ten minutes. Enviable would

be your ability to distill the facts quickly and clearly. Naturally, the information conveyed in a work presentation cannot be condensed into a cafe chat, but perhaps thirty minutes would have sufficed for your presentation.

TOS argues for simplicity. It may sound easy, but it isnt. What we need here is concentration and discipline. And a diffe-rent mindset. Concentration is key because we need to re-learn how to concentrate on the essential. Coming more quickly to the point, engaging less unnecessary discus-sion, squandering less time all of these measures foster discipline. We also need to understand that it isnt the scope, but rather the content of a presentation that im-presses. Further, it is also a sign of respect towards your colleagues that you want to take up as little of their time as possible.

25 Lean Principle 9: Keep it simple!

Suggestions for Self-evaluation.The KISS formula is often cited: Keep it Short and Simple. Simple things are easy to remember. As a manager, you should remember to lead by example, and thereforeconvey your messages more clearly and coherently.

Do you always try to concentrate on the essential?

Do you set down the topics with time limits in an agenda before every meeting?

Do you actively encourage your employees to express themselves succinctly?