1. Team 682 - Phase II Short Form - Summer 2007 Phase II Executive Summary Lean, Six Sigma, Quality Transformation Toolkit Lean Six Sigma Improvement Project: Conducted for Chilco Presented to: Dr. John Sinn Prepared by: Team 682 Summer 2007 Phase II Final Report

2. HOME Team 682 - Phase II Short Form - Summer 2007 Project Team The project team is comprised of Ph.D. students and working professionals located around the world. The project team has a breadth and depth of specializations and experiences. Team Members Michael CarperJared Phipps Mark ChandlerNicole Radziwill Randy DeMik Scott Stamm Mike DeVoreMark Thomas Travis Felton Evan Wood

3. HOME Team 682 - Phase II Short Form - Summer 2007 Project Overview Problem: The problem for this project is to move Chilco towards achieving its mission and goals by conducting a lean six sigma improvement project focused on the Chilco organization's production and quality processes.

4. HOME Team 682 - Phase II Short Form - Summer 2007 Project Objectives: 1. To generate an electronic project portfolio composed of all tools completed, improved based on instructor feedback, done in the context of the workbook applications provided. 2. To control existing variation in the Chilco organization's production system, while increasing production by 20 percent based on application of lean six sigma principles and tools. 3.Chilco's current defect/rejection rate is 51,000 PPM defective based on 2006 data. The goal is to improve the defect/rejection rate by 10% to 45,000 PPM defective within one year. 4. To create a lean six sigma model documentation system based on the LSSQTT materials provided. 5. To learn all eight tools and all assigned applications, per the syllabus, with each team member gaining new knowledge and experience.

5. HOME Team 682 - Phase II Short Form - Summer 2007 Methodology The analysis method is to complete 8 tools in the Lean, Six Sigma, Quality Transformation Toolkit (LSSQTT) between May and July. The tools will be completed in 2 phases, with 4 tools being completed in each phase. The following diagram provides a graphical representation of LSSQTT: Documentation Tools, Lean Data Tools, Six Sigma Service, Tools Manufacturing, Non-Manufacturing JIT,Synchronous Tools, New Product Development Kaizen Project Team Cultural Foundations, Assessed Change, Continuous Improvement Applied Research, Innovation, Projects Advanced Problem Solving, Decision Making Time-based Management For Global, Supplier-Customer Relationships (ISO) Leadership, Personal Growth, Knowledge Human, Technological Infrastructure Lean, Six Sigma, Quality Transformation Toolkit Internal, External, E- commerce Relationships Information Analysis, Communication System

6. HOME Team 682 - Phase II Short Form - Summer 2007 Key Findings Chilco consists of three manufacturing facilities: Greensboro, Clinton and Beijing Project team conducted analysis at each facility. Key findings are presented for each facility.

7. HOME Team 682 - Phase II Short Form - Summer 2007 Key Findings: Greensboro Production Annual Productivity: 1,520,640 units (253,440/station) Annual Income: $145,972.80 Capacity Utilization: 72% Scrap Rate: DPMO: 57,222 Cost: $43,507.20 Top Defects: Gapping, Mold Flash, Rough Surfaces / Orange Peel. Gap from mold not closing properly (TRIZ). Cavity pressure from injection molding machine (TRIZ). Mold not heating properly (TRIZ). Process Issues: Receive damaged materials unknowingly (FMEA). Faulty retractor (8D, TRIZ). Cleaning agents applied during machine operation (8D, TRIZ).

8. HOME Team 682 - Phase II Short Form - Summer 2007 Key Findings: Clinton Production Annual Productivity: 992,640 units (330,880/station) Annual Income: $126,024.80 Capacity Utilization: 94% Scrap Rate: 2.7 DPMO: 26,667 Cost: $6,617.60 Top Defect: Fractured Thermoforms Highest-performing site Process Issues: Receive damaged materials unknowingly (FMEA).

9. HOME Team 682 - Phase II Short Form - Summer 2007 Key Findings: Beijing Production Annual Productivity: 3,026,150 units (657,587/station) Annual Income: $73,569.30 Capacity Utilization: 46.25% Scrap Rate: 8.1% DPMO: 80,598 Cost: $20,660.20 Top Defects: Out of Tolerance, Poor Finish, Burrs. Lack of automation from CAD to production (TRIZ). Process Issues: Customers aggravated (FMEA). Improper receiving methodologies (FMEA). Cleaning agents applied during machine operation (8D, TRIZ).

10. HOME Team 682 - Phase II Short Form - Summer 2007 Sub-Projects Initiated Based on key findings, a series of sub-projects were initiated to improve performance at each plant. 4 Key Sub-Projects: Greensboro Six Sigma: Gapping Rejects Beijing Six Sigma: Out of Tolerance Rejects International Market Research: Market Potential in Germany Product Innovation: Design for Environment

11. HOME Team 682 - Phase II Short Form - Summer 2007 Outcomes: Six Sigma Greensboro Project Initiation: May 1, 2007 2006 Reject Occurrence: 37% 60-Day Results: July 30, 2007 New Reject Occurrence: 8% Mold ordering process modified to include stress relieving the mold purchasing process.

12. HOME Team 682 - Phase II Short Form - Summer 2007 Outcomes: Six Sigma Beijing Project Initiation: May 1, 2007 2006 Reject Occurrence: 26% 60-Day Results: July 30, 2007 New Reject Occurrence: 9% Preventative Maintenance (PM) program updated to include close inspection of all wear surfaces and bearings on each machining center.

13. HOME Team 682 - Phase II Short Form - Summer 2007 Outcomes: Germany Market Research Western European Global Food Packaging Market: 30% of world market (and growing). Value of European Food Packaging Industry: $53.8 billion (US). Germany 2 nd largest producer of consumer packaging. Eastern Europe: According to Frost & Sullivan in their report on European markets, "In contrast to the competition prevailing in the mature Western European market, penetrating this market will require less investments by companies, thus allowing them to expand their operations“. Western European Markets for Plastics in Flexible Food Packaging ( 2005). Retrieved July 27, 2007 from http://www.mindbranch.com/catalog/print_product_page.jsp?code=R1-4692http://www.mindbranch.com/catalog/print_product_page.jsp?code=R1-4692

14. HOME Team 682 - Phase II Short Form - Summer 2007 Outcomes: Design for Environment Design Results: new alloy/blend of Polyethylene Terephthalate (PET) and Polytrimethylene Naphthalate (PTN). Bottles made from PET/PTN can be tunnel pasteurized for protecting beverages to its maximum shelf life of >180 days. New alloy/blend allows for reduction in material usage by 31%, weight reduction by 22% and cost reduction by 34%. Recyclability of used bottles into bottles, fibers and strappings has been established. Monolayer bottles made with the new alloy/blend are part of a growing trend for packaging that is environmentally-friendly, and do not adversely affect quality.

15. HOME Team 682 - Phase II Short Form - Summer 2007 Results: Objective 1 Objective: To generate an electronic project portfolio composed of all tools completed, improved based on instructor feedback, done in the context of the workbook applications provided. Full portfolio completed. Available in detail in Long Form.

16. HOME Team 682 - Phase II Short Form - Summer 2007 Results: Objective 2 Objective: To control existing variation in the Chilco organization's production system, while increasing production by 20 percent based on application of lean six sigma principles and tools. Greensboro: 2% increase Clinton: 0% (requires new plant for added capacity) Beijing: 6.7% Objective not fully met in year 1. Based on new plant in Germany and other recommendations, Objective 2 is expected to be met in 2008.

17. HOME Team 682 - Phase II Short Form - Summer 2007 Results: Objective 3 Objective: Chilco's current defect/rejection rate is 51,000 PPM defective based on 2006 data. The goal is to improve the defect/rejection rate by 10% to 45,000 PPM defective within one year. Greensboro: 47.86% reduction Clinton: negligible change Beijing: 50% reduction Objective 3 fully met.

18. HOME Team 682 - Phase II Short Form - Summer 2007 Results: Objective 4 Objective: To create a lean six sigma model documentation system based on the LSSQTT materials provided. Full portfolio completed. Available in detail in Long Form.

19. HOME Team 682 - Phase II Short Form - Summer 2007 Results: Objective 5 Objective: To learn all eight tools and all assigned applications, per the syllabus, with each team member gaining new knowledge and experience. Project team successfully learned all tools and applications. Results of learning displayed in full portfolio.

20. HOME Team 682 - Phase II Short Form - Summer 2007 Conclusions The Lean Six Sigma Quality Transformation Toolkit has been used to successfully improve the performance of a typical manufacturing organization as represented by Chilco. The team setting has proven to be very successful for applying the LSSQTT tools to improving decision making, planning, and execution to allow improvements throughout an organization. These tools have proven to be useful for improving current business practices as well as providing direction for future success. The LSSQTT tools can be used continuously to monitor and adjust the business practices of an organization.