© 2002 Six Sigma Academy Tyco Safety Products Business Unit Results Steve Marra

© 2002 Six Sigma Academy Tyco Safety Products - Assessment Scope About Half of TSP Represented By Assessment Sites TSP Westminster DSC (Canada) Sensormatic –Boca –PR –Atl Walthamstow Scott ANSUL ManufacturingSuppressionDCs $677/$292 $368/$0 $702/$535 $1,747/$828 47% Business Unit Total / In Scope Key: $(000s) USD Atlanta Westminster Letchworth Echt

© 2002 Six Sigma Academy TSP Assessment Highlights ~$50 M+ in Observed Improvement Opportunities Targeted AreasAssessment Locations Order Admin Manufacturing Repair & Warranty Boca, US Spare Parts Westminster, US Finished GoodsCork, Ireland Distribution & Logisitcs Walthamstow, UK Distribution Centers Atlanta, US Westminster, US Letchworth, UK Echt, NL

© 2002 Six Sigma Academy Who We Talked To…TSP Europe David Stonehouse: Operations Director, Europe Micheal Corkery: VP Supply Chain Alex McNutt: Managing Director, Europe Tony Carabin: Finance Manager, Europe David Roberts: European Finance Adrian Casey: European Products and Marketing Hans Verrhelst: GM business Europe Westminster Michael Fieramosca: VP, Operations Paul Woodbury: Director, Manufacturing Operations Randall Zomar: Controller Steve Ferry: Manager, Customer Service Howard Hersey: Director, Corporate Purchasing Marc Mineau: VP, Business Development Boca and Atlanta Kenneth Chmiel: VP, Operations Rick Henderson: Director, Engineering Services David Urban: VP, Service Operations Dave Harris: Director, Service Operations Brian Mutter: Sr. Mgr., Distribution Operations Richard Tanaka: Controller

© 2002 Six Sigma Academy TSP Six Sigma Opportunities ($000)

© 2002 Six Sigma Academy Charter – Capture Honeywell Sales to ADT Problem Statement: Currently, Honeywell Adempco supplies $17 MM in sales to ADT Canada CTQ: (Critical To Quality): DSC to supply these products to ADT 15% manufacturing margin … Defect Definition: Not supplying the Adempco products to ADT Canada Project Objective: Supply products to ADT this manufacturing margin Current Goal: Cost Benefits Supply product at lower price (secondary) Internal/External Client Benefits: Integrate ADT in functional design of features Improve sales and parts opportunity Build customer relationships Dependencies: Resolving customer quality issues Willingness to sell 15% manufacturing margin Improve DSC sales to ADT Canada to supply $17 MM in 15% manufacturing margin

© 2002 Six Sigma Academy CTQ Flow Down – Capture Honeywell Sales to ADT Profitability ADT Canada Strategic Goal Business Channels Drivers Drill Down Project (s) Dealers Product Design Product Design Technical Support DSC Sales Customer CTQ’s Require- ments Price Supply Chain Inventory Customer Training Direct Potential Causes of non-sales Shipping Service

© 2002 Six Sigma Academy Value Stream Analysis - Capture Honeywell Sales to ADT ADT Canada Order Inquiry Compare Product Features Inventory Status Compare Price Relationships Flow Down of User Wants to Design Rqmts Service Process Competitive Activity Order Confirmation

© 2002 Six Sigma Academy Charter – Order Admin Heat Calls Problem Statement: Westminster provides 85% of the product to SimplexGrinnell CTQ: (Critical To Quality): Westminster averages 8,000 expedite/inquiry calls per month … Driving increased labor and premium freight cost in addition to poor customer satisfaction Defect Definition: Reducing the number of calls rather than the duration of the call Project Objective: Reduce the HEAT expedite calls by at least 90% per month Current Goal: Cost Benefits: The Westminster business would create an additional $1.2 MM EBIT caused by premium freight. Internal/External Client Benefits: Reduce cost of premium freight. Build customer relationships Dependencies: Resolving customer issues Determine the root causes of the need to expedites. Progress to Date: TBD Reduce & improve the quantity of HEAT expedite calls per month.

© 2002 Six Sigma Academy CTQ Flow Down - Order Admin Heat Calls Profitability Strategic Goal Drivers Drill Down Project (s) Cost QualityHEAT Calls Geographical Areas Same day orders Same day orders Different Systems Facility Involved Demand Forecast Time of Year Critical Month Order Entry Material Availability Material Availability Emergency Orders Nature of Projects Delivery Inventory Drivers

© 2002 Six Sigma Academy Value Stream Analysis - Order Admin Heat Calls Enter Order Schedule Shipment Date OK? Fulfill Order Ship Product Yes No HEAT CALLS CAN OCCUR ANYTIME DURING THE PROCESS OASys Manual Legacy Prompt Legacy Product Location Request Date Order Current Schedule Request Date vs Promised Date Schedule Plan Order in placePromised DateOrders ready to go Heat Call Heat Call Heat Call HEAT: Help desk Expert Automated Tool BaaN WMS

© 2002 Six Sigma Academy Tyco Safety Product Considerations Strengths –Commitment and readiness to implement six sigma –Willingness to challenge tradition and status quo Opportunities –Baseline process capabilities across multiple manufacturers and distributors –Leverage improvements across manufacturers and distributors –Understand Dealers’ and End Customer’s CTQ(s) and translate downstream –Create more customer focused metrics –More aggressive End of Life product management Recommendations –Target the “big picture” opportunities consistent with business vision –Product rationalization and channel rationalization Obstacles –Westminster PIDs grew from 15,000 to 25,000 over few months –Best Practices database across businesses –Timing, ongoing priorities and competitive pressures –Existing goal alignment and incentives that do not reward across silo-thinking –Systems integration –Local EBIT neutral metrics misses bigger picture opportunities