《Integrating The Lean Enterprise》Lean Transformation A Business case

Lean transformation: A Business case Lean Transformation A Business case Noel nightingale y

1 Lean Transformation: A Business Case Lean Transformation: A Business Case Noel Nightingale

Lean transformation: A Business case Pressure Exists From Investment Community For Companies To grow earnings

2 Lean Transformation: A Business Case Pressure Exists From Investment Community For Companies To Grow Earnings

Lean transformation: A Business case Earnings growth Can Be Accomplished Through Sales growth Organic(New Products markets ° Acquisitions Margin growth Increased prices Reduced costs A Lean Enterprise Affects all of These strategies

3 Lean Transformation: A Business Case Earnings Growth Can Be Accomplished Through: - Sales Growth • Organic (New Products & Markets) • Acquisitions - Margin Growth • Increased Prices • Reduced Costs A Lean Enterprise Affects All of These Strategies

Lean transformation: A Business case BUT. Return on Invested Capital Is Critical(RoIC) Invested Capital Reflected In: Inventories Fixed Assets: Plant equipment Goodwill A Lean Enterprise manages Invested capital

4 Lean Transformation: A Business Case BUT: • Return on Invested Capital Is Critical (ROIC) • Invested Capital Reflected In: - Inventories - Fixed Assets: Plant & Equipment - Goodwill A Lean Enterprise Manages Invested Capital

Lean transformation: A Business case Outline The business case Lean assessment Lean assessment results Summary

5 Lean Transformation: A Business Case Outline • The Business Case • Lean Assessment • Lean Assessment Results • Summary

Lean transformation: A Business case Company Summary Multi billion dollars in sales Twelve(12) Separate Major businesses Forty(40)operational Plants °12,000 Employees Eight( 8)Different Countries Nine 9) million Square Feet In Facilities

6 Lean Transformation: A Business Case Company Summary • Multi Billion Dollars In Sales • Twelve (12) Separate Major Businesses • Forty (40) Operational Plants • 12,000 Employees • Eight (8) Different Countries • Nine (9) Million Square Feet In Facilities

Lean transformation: A Business case LEAN TRANSFORMATION: A BUSINESS CASE 2 1.5 0.5 0 1991 1992 1993 1994 1995 1996 997 1998 1999 2000 YEAR Sales Earnings ROIC

7 Lean Transformation: A Business Case L EAN TRAN S F O R M ATIO N: A BU SINE S S CA S E 0 0. 5 1 1. 5 2 2. 5 1991 1992 1993 1994 1995 199 6 19 9 7 1998 199 9 2000 YEA R Sales Earnings ROIC RELAT VI E PERFORMANCE

Lean transformation: A Business case Relative performance: 1992to1995: Sales growth: Organic Earnings Growth: Leaning Out operations ROIC: Balance sheet Management 1995t01999 Sales growth: Acquisitions Earnings growth Follow sales at a Lower rate ROIC: Initial Growth Followed by Deterioration

8 Lean Transformation: A Business Case Relative Performance: 1992 to 1995: Sales Growth: Organic Earnings Growth: Leaning Out Operations ROIC: Balance Sheet Management 1995 to 1999: Sales Growth: Acquisitions Earnings Growth: Follow Sales At A Lower Rate ROIC: Initial Growth Followed By Deterioration

Lean transformation: A Business case LEAN TRANSFORMATION: A BUSINESS CASE 5 4.5 4 3.5 2.5 2 1.5 0.5 0 1991 1994 1995 1996 1999 YEAR

9 Lean Transformation: A Business Case L EAN T RANS F ORM ATION: A B U SINE S S CA S E 0 0. 5 1 1. 5 2 2. 5 3 3. 5 4 4. 5 5 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 YEA R RELATIVE PRICE Share Pric e DJ A

Lean transformation: A Business case Share price 1992to1995: Share price growth parallels general market 1995t01999 Market rewards higher growth rate with share Price Increase beyond market Trend 10

10 Lean Transformation: A Business Case Share Price 1992 to 1995: Share Price Growth Parallels General Market 1995 to 1999: Market Rewards Higher Growth Rate With Share Price Increase Beyond Market Trend