P09457 Process Improvement Project Project Review Eric MacCormack – Chief Engineer (IE) Colin Roy – Project Manager (IE) Duke Bonaventura – Engineer (IE) Jimmy Ichihana – Engineer (IE) Cody Rath – Engineer (ME)

Agenda  Engineering Specifications  Concept Summary  Design Updates Plant Layout Weld Booth Layout Hydrostatic Testing Table  Kaizen Results Weld Stick Order Procedure Consignment Inventory Reduction  Case Hydrostatic Testing Area Design  Consignment Checkout Suggestions  MSD II Quarter Progress  Objective Project Evaluation 2

Engineering Specifications Engr. Spec. # Import ance Source Specification (description)Unit of Measure Margina l Value Ideal Value Results Comments/ Status ES11CN1Recordable InjuryInjuries / yr 00Should be ES21CN1Near Miss Injury Near Miss Injuries / yr 00Should be ES31CN2 Increased floor space for new opportunity sq ft10%30%23% ES41CN3Finished products out the doorParts / yr5%15% Capacity increased 33% ES52CN4Standard welding stationsSpecs SameYYYYes/No ES62CN5Total distance materials travelft-15%-40%-34% ES73CN6Consignment part availabilityPercent Available 90% 100% ES83CN6 Trigger response to recognize what seeing Response Time <5s <1s ES93CN7Inventory turnoverTime30 Days 16 DaysMinimize Importance: 1=must have, 2=nice to have, 3=preference only Marginal Value: Minimal improvement value Ideal Value: Best case scenario given constraints 3

Design Summary  Improve safety and increase plant capacity by relocating weld booths off of the Final Packaging floor  Standardize weld booths for increased productivity  Redesign the Hydrostatic Testing area to ensure worker safety  Reduce Consignment inventory  Develop standard work for the weld stick ordering procedure 4

Design Status Updates 5

6 Plant Layout Status Update  Most equipment and material has been ordered; remaining are in quote processes  Changes have been made resulting from floor personnel input  Planned completion date end of third quarter 2009  Maintenance department has started required departmental improvements Electrical Drops

Final Plant Layout 7

8 Weld Booth Layout Status Update  No longer need to dig trenches as work benches have been reoriented  Rollers have been received  Weld curtain framework has been received  Welders have chosen personal booths

9 Hydrostatic Table Status Update  Waiting on second quote for safety cage  6S executed on flange inventory  Gauge board components have been quoted  Gauge board placed on order from weld shop

Kaizen 1 - Weld Stick Order Procedure 10

11 Needs  Inventory for weld stick rods should never be zero Reordering process Information flow

12 Current State

13 Future State

14 Storage Location Example /16” /32” /8” /16” /32” /8” /16” /32” /8” 70S-6 1/16” 70S-6 3/32” 70S-6 1/8” 70S-3 1/16” 70S-3 3/32” 70S-3 1/8” XX XXX XXXX XXXXXX XXXXXXXX XXXXXXXXX XXXXXXXXXX XXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXXXX XXXXXXXXXXXXXXX XXXXXXXXXXXXXXX XXXXXXXXXXXXXXX XXXXXXXXXXXXXXX

/16” /32” /8” /16” /32” /8” /16” /32” /8” 70S-6 1/16” 70S-6 3/32” 70S-6 1/8” 70S-3 1/16” 70S-3 3/32” 70S-3 1/8” Storage Rack 3D /16” /32” /8” /16” /32” /8” /16” /32” /8” 70S-6 1/16” 70S-6 3/32” 70S-6 1/8” 70S-3 1/16” 70S-3 3/32” 70S-3 1/8”

16 Benefits  Quick, visual way to identify what needs to be ordered  Responsibility falls in one individual’s hands  With correct buffer and safety stocks, weld sticks will never run out  Reduced number of weld sticks on hand  Eliminate need for expedited orders  Less time and resources needed to maintain the system

Kaizen 2- Reduction of Consignment Inventory 17

18 Needs  Reduce consignment footprint to make use of the space in alternative ways Determine part usage Eliminate parts and empty shelves

19 Usage Data Last 18 Months 83 different parts 770 units of parts

20 Results CurrentTargetDay 1Final% Improvement Space (sq. ft.) Inventory of different parts Visual controls010 0

Consignment Checkout 21

22 Consignment Checkout Current State Process

23 Costs ItemTotal Wireless Barcode Scanner$500 - $1500 Total$500 - $1500 Barriers BarrierContingency Additional software might be neededDevelop or purchase software necessary Workers may still not check out partsControlled gate access or stricter policies Positives  Automated ordering No need to manually input information Information sent directly to supplier and Wendy  Shorter lead time (Real-time update)  Less time and effort to check out  Better part availability  Robust technology  Easy implementation Negatives  Repair/Maintenance of infrastructure  Training  Database Manager Product Process: Barcode ScannerLocation: Consignment Owner: RIT TeamDate: April 2009 Process Flow

24 Costs ItemTotal Scratch-Off Lottery Ticket$1/Day Total$260/Year Risks RiskContingency Workers will want lottery tickets for other process they are expected/paid to do Workers will be verbally positively reinforced by management when they are seen following procedures. Workers will fill out multiple cards when only one needs to be If it is determined that this is occurring, the person(s) will not be allowed to win for X days/weeks. Only pipe fitters will be receiving lottery tickets Put reward on other systems to benefit welders, test, etc. Performance Management Process Product Process: Consignment Check OutLocation: Piping and Packaging Owner: Dave Thompson & RIT TeamDate: April 2009 Positives  Improves conformity of workers to the consignment check out process.  Yellow cards filled out more frequently/correctly will improve:  Visibility of inventory  Assurance that customer’s parts are going to the proper skids  Workers will gain a feeling that their work is being noticed and appreciated.  It is a low cost solution to help combat a high cost problem. Negatives  Not 100% accurate  Consignment data must be recorded twice  Slow process

25 Product Process: Consignment CheckoutLocation: Piping and Packaging Owner: Dave Thompson and RIT teamDate: April 2009 Material Handler Process 1.Walk loop and collect consignment orders at the same time, d elivers consignment parts to workers, and deliver parts between welders and pipe fitters 2.Tracks consignment levels as parts leave the consignment area Costs ItemTotal 1 Worker’s Salary$15 / hour Kanban Post$1000 Total Barriers BarrierContingency Potentially a bottleneck Conduct up front study to evaluate conveyance time Positives  Helps prevent missing parts by having a single worker responsible for checking out parts  Eliminates welder and pipe fitter downtime associated with travel  Real time data tracking eliminates the lag between running out of parts and placing the order for more  Creates a proactive approach to ordering necessary parts Negatives  Additional personnel  Additional information flow (request for parts made)

26 Case Hydrostatic Testing Area Design

27 Case Hydro – System Needs  Primary Needs Incorporate HAZOP recommendations to improve safety Improve control layout Improve Standard Operating Procedure Documentation  Analysis: Reviewed the current procedural documentation and made suggestions about possible improvements Developed several concepts that implement safety components into two mechanical systems involved in case testing: Hydro and Air Compared and weighted the concepts to determine an ideal design for the given application

28 Hydro System Concepts Concept #1 Concept #3 Concept #2

29 Air System Concepts Concept #1 Concept #2

30 Concept Assessment  To compare the different concepts, a Pugh assessment was completed  Hydro Concept #1 proved to be the ideal solution for the hydro system  Air Concept #2 proved to be the ideal solution for the air system Hydro Pugh Assessment Air Pugh Assessment

31 Final Design – Hydro System

32 Final Design – Air System

Run Kaizen Event Check Improvement Act Upon Observations 33 Finish Ordering Parts and Tools Ensure all orders have been made Identify lead times Work with maintenance to develop work schedule Generate Move Schedule MSD II Quarter Progress Week 1Week 2Week 3Week 4Week 5Week 6Week 7Week 8Week 9Week 10 Look at Kaizen Bursts Already Established Choose ones that can be accomplished Set Priorities Obtain Data on Consignment Parts Understand process Obtain usage and stock out numbers Perform Statistical Analysis on Collected Data Determine Schedule of Orders, Quantity, etc. Establish New Checkout Procedure Propose Monitor Process Make Changes & Adjust to Observations Begin Moves in Accordance to Move Schedule Observe Changes Made to Weld Booths Make Additional Changes Where see Fit Run Kaizen Event Check Improvement Act Upon Observations Run Kaizen Event Check Improvement Act Upon Observations Make presentation to D-R personnel

Objective Project Evaluation  Design Strengths Successfully moved 9 welders out from under a 250 ton overhead crane Designed new safety cage for the Hydrostatic Testing table Improved final packaging capacity by 33%  Design Weaknesses The original intent was to develop lean improvements at little or no cost The full extent and the results of the changes to be implemented can not yet be proven  Potential Future Projects Analysis of the advantages/disadvantages of having a dedicated conveyance operator in the Consignment cage Development of a barcode or other tracking system for parts in Consignment Further consignment inventory reduction and thorough analysis of part re-order points 34

Questions?

Cost Analysis ItemSystemDescriptionPart. No.PriceQty.Total 1 Hydro High Pressure Ball Valve - 10,000 psi max 4FL-HB4LPKR-SSP High Pressure Gauges - 10,000 psi SS04BXS4TS0S High Pressure Safety Head – 10,000 psi 10-61AM High Pressure Rupture Disc - 10,000 psi RD Air *Pressure Gauge SW02B30/ *Control ValveTBD Blow Off ValveModel Hydro Total Air Total Total * Indicates an Estimation