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Milliken’s

Operational Excellence

Journey

… Achieving and SustainingOperational Excellence

Phil McIntyre – Sr. Director of Business Development and Marketing

Jordan Workman – Director of Client Development

2

Founded in 1865

Privately held

Over 48,000 products

~7,500 associates

4 Divisions: Floor Covering, Chemical, Performance

Products, Specialty Fabrics

40 Manufacturing Operations in 6 countries

Operations throughout Americas, Europe and Asia

Milliken & Company Overview

Seth Milliken Gerrish Milliken Roger Milliken

Twenty years ago we had at least 8 competitors in the U.S. with sales over a Billion dollars.

Today we have none.

our reality...

How has Milliken

survived and thrived?

our question...

1. Positioned in the right markets

2. Innovation

3. Operational Excellence

…..with Safety as the Foundation

Business Case for Change

1. Global

Competition

2. Textile Industry

under attack

“Burning Platform” Visionary Aspiration

Malcolm Baldrige National Quality Award (US)

Malcolm Baldrige National Quality Award

British Quality AwardCanadian Quality Prize

Japan Institute of Plant Maintenance

TPM Prize

ISO Registered

QS Registered

54 JIPM Awards

… in Quality

Operational Excellence

European Quality Award

Life after Awards

We were not “Sustaining the Gains”

1994

25

Benchmarking World-Class Manufacturing Practices

Study Missions to Japan

WesternManagement 40%

Daily Operations

60%Firefighting

The Bestin the World

20%Daily

Operations

Routine

20%Firefighting

Working ThroughCross-Functional Teams

60%Continuous Improvement/

Innovation

The Leadership Challenge

Product

Produced

Copier Parts Deming, TPMRicoh

Auto Parts Deming, TPMNippondenso

Electronics Deming, TPM, TPM SpecialNEC

Butyl Rubber TPMJapan Butyl

Automobiles Deming, TPMNissan

Lighting Deming, TPMToshiba

(Kanuma)

Lighting Deming, TPMToshiba (Himeji)

Air Conditioners Deming, TPM, TPM SpecialDaikin Industries

Plastic Film Deming, TPM, TPM SpecialSekisui Chemical

Textiles TPMGunze

Textiles TPMDynic

Corporation

AwardsCompany Name

Study Mission – Companies Visited

# of Companies Reporting ImprovementMeasurement

6

7

9

8

9

85%

74%

92%

32%

61%

Claims

Defects

Breakdowns

Process Reliability

ProductivityMilliken sent 120

managers on 4

Study Mission

Trips

Japan Study Mission Results 1994-1996

Safety is the foundation and the ‘Trust Component’ of our manufacturing operating system.

Milliken Hires JIPM

# of Companies Reporting ImprovementMeasurement

_

7

9

8

9

74%

92%

32%

61%

36%Safety

80%Defects

88%Breakdowns

30%Process Reliability

78%Productivity

MillikenImprovement

Milliken & Company Results

Performance System Foundations

• 100% of employees engaged in cross

functional teams (everyone is a problem-

solver)

• A structured and systematic way to work

• Highly Visual – ‘touched’ daily

• Lead from the top

• Owned by everyone

• Accept Zero-Loss Thinking

• The Foundation starts with Safety

Over

125CorporateInitiatives

Era ofPeople Excellence

1980 to 1985

1985 to 1990

Era ofProcess Excellence

1990 to 1996

Era ofBusiness Excellence

1996 to 2015

Implementation of theMilliken Performance System

1980

1985

1990

2015

Evolution of Operational Excellence

350 + Operations23 Countries

IndustriesFood ProcessingGlassSteel ManufacturingPackagingPaper Manufacturing and ConvertingConstructionChemicalsNon-WovensAnd others………

Performance Solutions by Milliken

© 2015 Milliken & Company

Our situation

We didn’t move onto initiative # 127 for 2

reasons…

1. Associate Engagement

2. Losses – we weren’t nearly as good as we

thought we were

© 2015 Milliken & Company

What is a ‘Loss’ ?

Cost

Reduction

Opportunity

The

difference

between

actual cost

&

ideal cost

Loss

Actual Cost

Total real dollars

spent to manufacture

a product.

Ideal Cost

Absolute minimum cost

required to

manufacture a product.

(theoretical cost)

© 2015 Milliken & Company

Loss Categories (Understood But Not Copied)

1. Equipment Failure2. Set-up & Adjustment3. Cutting Blade Change4. Start-up5. Minor Stoppage & Idling6. Speed 7. Defect & Rework8. Shutdown9. Management

10. Operating Motion11. Line Organization12. Logistics13. Measurement & Adjustment14. Energy 15. Die, Tool & Jig16. Yield

JIPM Losses

1. Breakdowns2. Change Over3. Start-Up and Shutdown4. Minor Stops5. PM & Cleaning Downtime6. Planning7. Material Handling8. Speed Loss9. Off-Quality10. Rework11. Waste12. Obsolescence 13. Allowances14. Inventory Variances15. Training16. Inspection & Testing17. Indirect Materials18. Purchase Price Variance/Vendor Claims19. Over/Under Spending20. Spending Not Captured

Milliken Losses

© 2015 Milliken & Company

Loss Analysis

11.7

Millions $ /

Year

Average “loss” per plant (millions) / year

Milliken & Company

Note: All

‘Losses’ are

Full Variable

175 asso/site

~ 50 mil in rev/site

Milliken & Company

reduced losses 30% on average

per plant

within the first 24 months of implementation

of the Milliken Performance System

3.5 million $ reduction per

plant

© 2015 Milliken & Company

Loss Analysis

Co

st

of

Go

od

s S

old

Fixed Cost

Raw Material

Cost

VariableCost

Zero-BasedCost Opportunity

In 1995

Losses

57%

57% of COGS (excluding

Raw Material except but

including Yield Losses)

was identified as a LOSS

Losses

31%

By 2014, we had

reduced LOSSES by

45% (from 57% of

COGS to 31%of

COGS)

LOSSES became 31% of

COGS (excluding Raw

Material except but

including Yield Losses)

was identified as a LOSS

~ 375 Mil $ taken out

of the Supply Chain

since inception

MPS and Operational Excellence

© 2011 Milliken Design, Inc.

Benefits Achieved Through Milliken Performance System

Hard Benefits (“Real Financial Results”)

• Production Labor Productivity (Revenue per Production Associate)

• Manufacturing Management Productivity (Revenue per Mfg. Mgmt. Associate)

• Asset Utilization (Invested Capital Turns: Revenue/Invested Capital)

Milliken Performance System: Hard Benefits

Production Labor Productivity

Revenue Per Production Associate (Indexed to 2004 = 100)

From 2004 to 2014: 5% Annual Productivity Improvement

Milliken Performance System: Hard Benefits

Manufacturing Management Productivity

Revenue Per Manufacturing Management Associate (Indexed to 2004 = 100)

From 2004 to 2014: 12% Annual Productivity Improvement

Milliken Performance System: Hard Benefits

Asset Utilization

Invested Capital Turns: Revenue/Invested Capital (Indexed to 2004 = 100)

From 2004 to 2014: 6% Annual Productivity Improvement

Milliken Revenue and Earnings Since 2004

Revenue

Earnings

1% CAGR

16% CAGR

MPS and Operational Excellence

© 2011 Milliken Design, Inc.

Benefits Achieved Through Milliken Performance System

Softer Benefits

• Highly Engaged Workforce

Employee Satisfaction/Morale

Minimal Management Oversight (No Off Shift Supervision)

• Ability to Focus on Innovation

Rapid Prototyping (Samples)

New Product Development Cycle Time (Product Validation)

Reallocation of Resources

© 2015 Milliken & Company

Strategic Imperatives to Implementation

The “Modeling” Approach The Model machine approach within a

Model site enables Associate Engagement

which is key to sustainability

With Safety, acts a cornerstone to

Culture Shifting

The “Zero Loss Thinking”

Analysis Challenges existing paradigms as to

‘what’s possible’

Allows for strategic resource allocation

discussions

If embraced, eliminates wastes as

opposed to reduces wastes

“Proof of Concept (ROI)” Allows for ‘intelligent design’ when

considering horizontal replication (within

the site) and vertical replication (to other

sites)

Validates successes early…step on the

gas or step on the brake !

Drives Capability Building.