EXECUTIVE SUMMARY 3TTO5/3TT06 PROJECT

August 24 2012

Prepared by Julian Kalac, P.Eng

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BUSINESS SITUATION

• Don Park (DP) makes over 440,000 Units of3TT05”/3TTO6”/year which contributes to ~$627,000

• Both products are SKU’s for all customers including Home Depot

• Current capacity is 550,000 pcs/year , at peak season customer demands exceed machine capacity

• The cost of producing 1- 3TTO6” is $1.28/pc with a Labour cost of $0.59

• There are 2 critical labour intensive operations that cost $0.26/pc and are BOTTLENECKS preventing additional capacity—continue next slide

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Current Situtation

• Currently the 3TTO5” (263,000/year) are being made by Trillium Stamping and shipped to us as a completed sub-assy, which costs us $0.12/Pc

• Trillium stamps the parts in a Progressive Stamping Die at a cost ~ $ 0.02/Pc

• The 3TT06” (176,000/Year) are made in house using 2 labour intensive operations and cost us $0.30/Pc in labour only

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GROSS MARGIN

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PROFITABILITY ANALYSISAvg from 2011

SKU July QTYEst Annual

Volume3TTO5/6 STD COST MFG COST Sale Prices* Annual Sales GM

3TT05 17000 254,829 1.16$ 295,601.64$ 1.39$ 354,212.31$ 16.5%

3TT05HD 720 8,640 1.16$ 10,022.40$ 1.39$ 12,009.60$ 16.5%

3TTO6 17712 170,915 1.28$ 218,771.20$ 1.48$ 252,954.20$ 13.5%

3TT06HD 468 5,616 1.28$ 7,188.48$ 1.48$ 8,311.68$ 13.5%

35,900 440,000 531,583.72$ 627,487.79$ 15.0%

440,000

NEW STD

COST

Est Annual

VolumeMFG COST

Annual SalesNEW GM

5% Sales Increase Delta

0.98$ 254,829 249,732$ 354,212.31$ 29.5% 371,922.93$ 17,710.62$

0.98$ 8,640 8,467$ 12,009.60$ 29.5% 12,610.08$ 600.48$

0.98$ 170,915 167,497$ 252,954.20$ 33.8% 265,601.91$ 12,647.71$

0.98$ 5,616 5,504$ 8,311.68$ 33.8% 8,727.26$ 415.58$

440,000 431,200$ 627,487.79$ 31.6% 658,862.18$ 31,374.39$

263,469

176,531

PROFITABILITY

• Our current annual sales ~$627,000, with Gross Margin of only 15.3%

• By implementing this proposed solution we would be able to reduce our STD COST by $0.32/Pc

• That would increase our Gross Margin from

15% to 31.6%

• This would open the opportunity to new sales

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6

TOP-TO-BOTTOM TAKE-OFF

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3TT06”

BAND SAW

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BLANK SIZE FROM CUT 2 LENGHT

BAND SAW CUT PATTERN

1-BAND SAW-LABOUR INTENSIVE

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REQUIRES SKILL, STRENGTH AND EXTENSIVE LABOUR

FISHLOCKING

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1-FISHLOCKER MACHINE

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FISH-LOCK MACHINE IS THE MAIN

BOTTLENECK IN THE BOOT

PRODUCTION.

ONLY 1 M/C and NO BACK-UP. NO

SPARE PARTS/TOOLS,

WIP BOX

PROPOSAL

• Replace the 2 Labour Intensive Operations which cause capacity problems with a High Speed stamping press and a Progressive Stamping Die

• The Progressive Die will perform the 2 operations in 1 stroke

• Currently this is how our supplier/customer makes the parts for us (3TTO5”)

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SOLUTION HIGH SPEED STAMPING PRESS

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USING PROGRESSIVE DIE

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2 Operations @ 1 TIME

BENEFITS

• Increased capacity by over 1,000,000 units/year

• Reduced labour cost from$0.59/pc to $0.30/pc

• Current Std Cost= $1.28/pc (GM=15%)

• Future Std Cost =$0.98/pc (GM=31.2%)

• Assuming 5% sales increase, GM=35%

• Total savings= $158,000/Year

• 1.26 Payback period, ROI= 77%

• Ability to run a Lean 1-piece flow instead of a Batch & Que type of production

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QUESTIONS/COMMENTS?

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