productivity and competitive power

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B S H E V A L E T L E R I S A N A Y I V E T I C A R E T A.S.

Productivity and competitive power

İSTANBUL CHAMBER OF INDUSTRY - 7th INDUSTRY CONGRESS

4th of December 2008

BSH-TR/FIG, Dr. Jörg Ulrich

Productivity and competitive power; 04.12.2008 I slide: 2

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Productivity as a holistic approach to be competitive

Need for continuous productivity

Production System as key success factor for productivity increase

Content

Market trend in white good business

BSH TR – Household appliances for Turkey


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BOSCH AND SIEMENS HOME APPLIANCES GROUP

BSH Bosch und Siemens Hausgeräte– %50 Robert Bosch, Stuttgart– %50 Siemens AG

Info– 43 factories in 14 countries– 70 companies in 44 countries– 14 brands– 39,000 employees– 8.8 billion euro turnover

BSH – NUMBER THREE WORLDWIDE– NUMBER ONE IN EUROPE


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BSH Ev Aletleri Sanayi ve Ticaret A.Ş.

Shareholders– BSH Bosch und Siemens Hausgeräte (%95.936)– Deutsche Bank (%0.866)– Other (%3.198)

Financials– Turnover 1.076 million Euro (2007)– Employees 3300

Location– Headquarters in Istanbul – Production Facilities in Çerkezköy – Spares Part Warehouse in Silivri


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BSH Cerkezköy - Biggest Production Location within BSH Group

450.000 m² facility. 3 million units of LDA Production. (2007) Production of cookers, Refrigerators, dishwashers, washing machines


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0

500

1000

1500

2000

2500

3000

3500

2003 2004 2005 2006 2007 2008

T U

nit

s

0

500

1000

1500

2000

2500

3000

3500

Production quantity

Nr. of Employees

Nr.

of

em

plo

ye

es

Production output vs. Employees in BSH-TR factories

Refrigerator, Washing Machine, Cooking Appliances, Dishwasher

% 125

% 65

Average yearly employee productivity of 6.4 %


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Price changes of major white good appliances compared to the previous year in %

Market trend in white good business

Increasing competition by internationalisation of worldwide business Price reduction by aggressive Asian competitors End customer are focussing more and more on value price segments High pressure on profit margins by trade partner

Decreasing trend in market price and margins in white good business are challenging production sites for cost reduction and therefore for continuous productivity increase

(Source: GFK Germany)


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Need for continuous productivity – survive in competition

Cost driver like raw material, energy, logistic costs are clearly increasing in long term trend In production cost Turkey is competing with the new boom region in eastern Europe,

countries like Poland, Bulgaria, Rumania are setting cost trends Constantly increasing labour and energy cost are jeopardizing Turkeys position as low cost

production area

Increasing international competition and decreasing margins require a clear focus on cost position. The market shows a clear consolidation trend, even speeded up by the new worldwide economical situation. Only companies with a clear focus an cost and productivity will be competitive and survive in future business

High productivity and efficiency and smart and lean investment are the key success factors for future successful business


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Productivity as a holistic approach to be competitive

Direct labour cost reduction is the classic field of productivity increase. But productivity in modern production sites is more. The whole production chain offers areas for sustainable increase of productivity and efficiency

80 %

5 %

5 %

6 %Other OH cost/Fix costs

Invest amortization

Indirect labour cost

Direct labour cost

Material (including logistic cost)

Process improvement Smart and lean investment, machine productivity Processes improvement and increase of efficiency Constant increase of staff productivity

Constant focus on material rationalization Supplier development Improvement of whole logistic chain

4 %

Typical breakdown of production costof a white good appliance in Turkey:

Areas for productivity improvement:


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Look at it individually Look at it as a whole

A Production System is a holistic approach for the sustained optimization of all production processes. The objective of which is to produce exactly what the customer wants"

The Production System is everyone’s business It is the foundation for the ongoing optimization and further development of all processes

along the value creation chain Processes, methods and tools have to be standardized in all areas A production system has to become a part of the corporate philosophy

Production System as key success factor for productivity increase


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BSH Production System – A holistic approach for improvement

= principle

Avoiding wasteRobust product

phase-in / phase-outDemand oriented

productionChallenging and

fostering our peopleAvoiding defects

(zero-defects)

BSH Production System

Only producewhen and where demand exists

Product phase-in and phase-out must be of a robust design

Employees need to be challenged and supported. They are a critical success factor for the success of the BSH Production System

Defects are avoided during all phases of the value creationchain

Waste is continually identified and eliminated along the value creationchain

Standardization and Sustainability


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BSH Production System – A holistic approach for improvement

= method= principle

Standardized work

Visual management

CIP

Avoiding waste

Variants management and ECO

Project management

Product developmentprocess

Phase-in / phase-out management

Robust product phase-in / phase-out

Pull-principle

Procurementmanagement

Customer takt

Demand oriented production

Team work

Employee qualification and development

Performance orientation

Challenging and fostering our people

Defect prevention

6 - SIGMA

Defect analysis / correction

Defect detection /test planning

Avoiding defects(zero-defects)

Standardization and Sustainability

BSH Production System


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Avoiding waste as starting point for productivity increase

The seven types of wasteAvoiding waste

• Work place organization (5S)• Standard operating sheet• Total Productive Maintenance

(TPM)

Standardized work

• KPI management• Labeling and markings

• Problem solving techniques• Improvement workshops

Visual management

CIP

Transportation

Waiting time

Rework/ Scrap

Inventory

Overproduction

Unnecessary processing

Movements


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Continuous productivity increase as the key for future competitiveness

Global standards in production

…instead of individual solutions!

Increasing competition and decreasing market prices are challenging production costs Only by sustainable productivity increase in all areas future requirements to a competitive

production can be fulfilled A holistic and standardized production system is the key for continuous productivity

increase

productivity and competitive power

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