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10/13/2014

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PARKER CONFIDENTIAL - DO NOT COPY OR DISTRIBUTE

Lean Accounting Summit

October 21, 2014

Our Lean Accounting Journey

Donna Tremblay

Division Controller

Monica Lee

Division Lean & Quality Mgr


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Who are we and what do we do?

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1918 1957 2007 Arthur Parker founds the Parker Appliance

Company.

Parker acquires the Hannifin Company. Parker Hannifin reaches $10 Billion in Sales.


Key Facts about Parker The Global Leader in Motion and Control Technologies (NYSE:PH)

$13.2 Billion in Revenue

875,000 Products Sold

450,000 Customers

57,500 Employees

13,000 Distribution/MRO Outlets

1,100 Markets

142 Divisions

323 Manufacturing Plants

50 Countries

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Porter Instrument Platforms

Healthcare - Dental Process Instrumentation Microelectronics

Need a few

more photos

Oil & Gas, Power Gen, Chemical -Petrochem, Water, BioPharm, Analytical

Semiconductor, Solar Dental, Anesthesia


Porter Instrument Technical Competencies

Tight Tolerance Machining

• Bubble tight metal to metal

sealing

• Orifice drilling

• High resolution threads

• Instrument clean – burr and

hydrocarbon free

Glass tube forming and

coating

• Proprietary Static Free Tube

Coating

• Mandrel Making

Value Added Design and

Assembly

• Clean Room Capabilities

• System/Sub-System Design

• Tube Welding(Orbital)

• FDA Requirements

Mass Flow Control And

Calibration

• Thermal Mass Flow

• Complex Flow Calibration

• Communication Protocol

Support

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How did it Begin?


Traditional P&L

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Value Stream P&Ls


Box Scores

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Which led us to the Work Order

Elimination Initiative…


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Business Case

• Hours a day releasing work orders

• Recording labor & transactions several times a day

• Incorrectly applied labor to work orders causing rework

• Lost docs with key customer requirements

• Dual scheduling systems

• Too much paper handling

• Processes waiting for work orders

• Continuous interruption throughout the day

• Extra walking to distribute work orders

• Production Variance hard to understand

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Current State

Overall Leadtime 6 days

Total Process Time 3 hrs


Why Do We Use Work Orders?

Needed to make sure the new

process addressed these

items

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Future State


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EPEI and FIFO – Machine Shop

Cleaning & Deburring FIFO

Lane

EPEI board at ea machine

MTS

MTO

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Outside Services and Inspection

Has dedicated shelves for

Machine Shop & Outside Services


Financial Integrity – Back to the

Basics

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Where is the WIP Lab & OH?

Focus on the Machine Shop, the remainder accounts for less

than .4% of gross inv


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Machine Shop WIP Standard Work

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Machine Shop WIP Valuation Model

1. Parts on the machine

• Assume 50% of the standard lab & OH of the part on the

machine

2. At the vendor

• Accumulate the standard lab & OH of the previous operations for

the kanban cards on the outside service board

3. In Inspection

• Accumulate the standard lab & OH of the previous operations for

the kanban cards on the rack


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Operational Benefits

• Eliminated the logging in and out of work orders

• Backflush labor and overhead at standard

• Created visual system of on/off track tools to manage

the business

• Increased capacity of buyer/planners & operators

• Moved reporting & analysis to the decision makers

• Less time to close

• One scheduling system

• Reduced use of paper, printing, distribution waste

• Reduced walking and interruptions

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Lessons Learned

• Be Patient

• Go to the Gemba

• Review Kanban Quantities

• Meet often after go live

• If you can, wait for stability

• Keep asking why

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How are we helping?

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On-Track/Off Track Visuals

AR and AP Daily Heijunka

Boards w/problem solving

Monthly Close Heijunka Board

Stress Level


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Month End Close Labor Balancing

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Standard Work Issues:

• Tribal knowledge

• Not all tasks documented

• If documented, not current

• No cross training tool

• Mistakes when covering for vacations or items missed

Solution:

• Compiled list of tasks & backups trained

• Wrote procedures for all tasks

• Instituted layered audits to sustain

• Created database to track audits


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Kamishibai Board • Controller schedules audits

for the month for the auditors

• Auditor flips card to green

when audit completed

• Audit card is placed in bin

when done

• Team creates action plans

for any audit findings

Auditor is a second set of eyes. Can suggest process

improvements.

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Audit Database

Contains all

Finance tasks,

trained

backups, &

procedure no. List of tasks that need a backup

• Can run reports to see what

procedures relate to AR, AP, etc.

• If training on an area, know all

procedures that one must learn.

Audit Results to sustain the gains. Shared at

weekly TIB meeting


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A/P Current State Value Stream Map

(portion)

Date

Stamp

Invoices

A/P Clerk

Issue

Payment

Corp

Date

Stamp

Invoices

A/P Clerk

Review

Rec

Actg Mgr

Date

Stamp

Invoices

A/P Clerk

Compare

APOS w/

JIT

A/P Clerk

Date

Stamp

Invoices

A/P Clerk

Bind

APOS

Rpt

A/P Clerk

Voucher

in JIT

A/P Clerk

Stamp

APERS

Rpt

Entered

A/P Clerk

Run

APERS

A/P Clerk

Date

Stamp

Invoices

A/P Clerk

Run

Update

A/P Clerk

Date

Stamp

Invoices

A/P Clerk

File

Invoices

A/P Clerk

Date

Stamp

Invoices

A/P Clerk

Stamp

Invoices

& APURA

Entered

A/P Clerk

Date

Stamp

Invoices

A/P Clerk

Enter

Invoices

into JIT

A/P Clerk

Run

APURA

A/P Clerk

Date

Stamp

Invoices

A/P Clerk

Match

Invoice to

Receiver

A/P Clerk

Sort

Invoice by

Type

A/P Clerk

Recycle

ERS

Invoices

Place in

Folder

Date

Stamp

Invoices

A/P ClerkA/P ClerkA/P Clerk

Sort Mail

Reception

ERS

EPO

P-Card

MRP Inv

Mail

arrives

during

lunch

Next

Day

ERS Flow

Next Day

Mthly

Date

Stamp

Invoices

A/P Clerk

Upload to

Parker

IT

6:45 PM

Non-ERS Flow 16 Sec

165 Sec

93 Sec

Min

22 Min

14 Hrs

15 Min

Min

164 Sec

15+Day

s

Min

Min 161 Sec

1 Hr 12 Hrs

15 Sec

164 Sec

78 Sec

Min

20 Sec

Manual 3-way

MatchNot Needed

Manual

Voucher

July 2010

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A/P Kaizen Key Takeaways

• Vouchering of ERS is manual

• Batching

• High stress and at full capacity

• Rework of EPOs required

• Double entry – 2 systems

• ERS vendors still sending invoices


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A/P Kaizen Action Items

• Vouchered ERS automatically

• Have ERS vendors note on mail

• Developed variance thresholds

• Tracked EPO errors

• Identified pcard candidates

• Verify payment accepted

• Created a Heijunka Box

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Debit Memos – Current State

Issues:

• 40 day leadtime between rejection & process of debit memo

• Financial Integrity of financial statements at risk due to transactions crossing

periods

• Manual process subject to errors or missed transactions

• Cash flow not being maximized


Debit Memos – Future State

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• Automated the debit memo generation as well as underlying transactions

• Leadtime reduced to 7 days

• Eliminated 16 hand-offs/transactions

• 10% Increase Productivity (2 hr. x 2 people/wk.)

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AR Collection Database Created

•Daily Task lists

•Collection Letters

•New Accounts

•Account Status


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Status Report with Conditional Formatting

Highlights Items due today

or prior

Color Codes by oldest Aging Bucket

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Thank You!

Questions, Comments ,Discussion.


Appendix

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Scheduling and On/Off Track – Tubes

VS

AWP Accounts for 80% of tubes

AWP Forming Supermarket AWP Stations after Forming


Dental/Medical VS

Kanban/Pull Signals Day by Hour

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Scheduling Board – F&P VS

Complete 6-10 pcs/hr Complete 50/day

Assume 50% completion

Industrial Assembly Order Board AWP Regulators


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Mass Flow VS WIP Map MASS FLOW DEPT WIP LOCATIONS MAP

RACK

STATION 6 STATION 7

ASSY TABLES (3)

STATION 8 ASSY RACKS

ASSY BENCH

STATION 10

STATION 5

ASSY BENCH

STATION 4 STATION 9

CLEAN ROOM

STATION 3

STATION 11 MOBILE CART RACK

STATION 2 ASSY TABLES (3)

ASSY TABLE

MASS FLOW ROOM

STATION 1

MOBILE CART RACK

TEST TABLES TEST TABLES

TEST TABLE

ASSY TABLES (2)

ASSY TABLES (3) RACK

EPC ROOM TEST TABLE

SHIPPING ROOM

CAL

BENCH

CAL

BENCH

CAL

BENCH

ULTR

ASON

ICRO

OM

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On/Off Track and FIFO– Mass Flow Assembled MFC waiting for

calibration – 30% Complete

Ex. of on/off track

90% Complete – Waiting for pre-ship

work


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FIFO– EPC

If at test, 100% complete

FIFO Rack for Internal Assy –

50% Complete

Schedule and on/off track

Max 2 orders open at a time

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