1. Parker Hannifin Hydraulic Filter Division Metamora, Ohio AME Presentation 11-18-2010 Presented By: Tom Albaugh

2. 2 Metamora, Ohio Division of Parker Hannifin’s Filtration Group Since early 1970’s 107,500 sq. ft. ISO 9001 Certified Hydraulic Filter Division

3. 3 Product Range Pressure Filters 3000-6000 psi Medium Pressure 1000-3000 psi Low Pressure 100-500 psi 18/28/38P 15/30P50P Spin-ons Moduflow CN Series IL8 Series KLS/KLT

4. HFD Main Asset – The employees 4 Monthly Plant Meetings Division Staff

5. Focus of Presentation A.Two Best Practices (Things the Parker Hydraulic Filter Division has done well) B.Two Lessons Learned / Opportunities C.The Value of applying for the AME Award 5

6. A. Two Things We Now Do Well 1.Converted a no-flow, no-visual management, massive warehouse, all 7 forms of waste facility into a Lean continuous improvement facility with a Supermarket in an open visual plant with uninterrupted flow. 2.Instilled a Lean culture of ☺ employee empowerment. 6

7. 7 HFD Lean Journey History Started with Parker Filtration Group Lean kickoff February 2002 in Ypsilanti Michigan Had to overcome the ‘We’re Different’ (high-mix) mind set 1+ Kaizen events per month for first 3 years 50+ events Gradually changed culture Work with Lean Sensei’s in beginning Three Major Site Plan Phases (now phase 4) Continuous Improvement

8. 8 Vast Massive Storage Hid Problems Warehouse Before:

9. 9 Before: Central Wall & Mezzanine Impeded Flow & Hid Material

10. 10 Assembly Before:

11. 11 Mezzanine & Central Wall Coming Down:

12. 12 Supermarket Instead of Warehouse

13. 13 Receiving After

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15. 15 BEFORE AFTER Massive random storage W/H Central mezzanine/wall blocked flow Inventory Turns < 3 150 tall racks Lost parts regularly 1200 ft travel & handle 20 times 12 recorded accidents All 7 forms of Waste No Supplier Kanbans Annual Inventory took 3+ days No 5S’s Supermarket, PFEP, Supplier Kanbans, Water-spider Inventory Turns 11 Open visual management Travel & Handling reduced 85% Eliminated 150 tall racks Freed up 5000 sq ft Safety recorded accidents reduced 83% Surplus two fork lifts Annual Inventory now 1 day 5S Everywhere PFEP & Making Material Flow @ HFD

16. Instilling Employee Empowerment Training Teams Kaizen VS 5S HPWT 10X10 All Hands On Deck Commitment Communication Celebrations 16

17. 17 A Few HFD Initiatives 5S Golden Broom & Golden Duster 10 X 10 teams Lean Training  All Employees trained on Basic Problem Solving  Lean Boot Camps rolled out Lean Work Shop Monthly Plant Meetings Quarterly News Letter Forklift Free Production Areas Safety Cook Outs Safety Suggestion Program On Site Physicians Assistant

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19. Parker’s Lean Tracking System The Boards Tell HFD’s Story 19

20. A Few of the Results Lost Time Accidents at 0 72% Reduction in Scrap WIP Reduction of 75% Inventory Returns Improved by 270% Productivity Improved by 115% 20

21. Celebrate 21

22. Lean Celebration 22

23. Lessons Learned Lean must be treated as a complete continuous improvement process and not just pick and choose a few Lean tools. The Lean journey must lead to true culture change with employee empowerment if you want it to stick. Lean can work for high mix operations too—it takes that extra effort. Positive peer pressure can be an effective tool. 23 Opportunities Inventory Turns can improve more to high double digits Careful not to become complacent

24. Value of Applying for AME Award Benchmark to peers Challenge: Writing a summary of your Lean Journey gives you a great perspective as to how far your company has come and what is still left to be done. Very professional volunteer examiners will give you honest feedback, including suggested opportunities for improvements. A good indicator of Lean progress No Fees Good Company / Division PR 24

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