Scania Production System. Stefan Palmgren, Senior Vice President, Powertrain Production

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1 Scania Production System Stefan Palmgren, Senior Vice President, Powertrain Production

2 Provider of transport solutions Products Services Financing Heavy trucks Workshops Operational leases Heavy buses Service agreements Financial leases Engines Parts Hire purchase Driver training Insurance solutions Scania Assistance

buses Service agreements Financial leases Engines Parts

3 Premium products and services Haulage Construction Distribution Special purpose Network and services City and suburban Intercity and coach Used vehicles Engines

4 Modular system

5 The world of Scania Production units Regional Product Centres Sales and services untis Production units 1891 Sweden 1957 Brazil 1964 Netherlands 1976 Argentina 1992 France 1993 Poland Sales and services units 1,000 sales points 1,600 workshops More than 95% parts availability Round-the-clock assistance Number of employees 41,000 persons

France 1993 Poland Sales and services units 1,000 sales points 1,600 workshops More

6 Global production system Europe Latin America

7 Scania s Philosophy

8 Scania s Core Values Customer First Respect for the individual Quality Scania s core values permeate its entire corporate culture and influence its day-to-day work. Customer first, Respect for the individual and Quality are closely linked and apply in unity. They constitute the starting point for all business development.

work. Customer first, Respect for the individual and Quality are closely linked

9 Scania Production System

10 Background 1980 Production Leadership Personnel Instructions from engineers No common way of working Leadership focused on result and inspection High absence High employee turnover

11 Background Production Leadership Personnel Flexible production Leadership High absence systems focused on result High employee Hard to detect waste Unclear priorities turnover

12 Background Production Leadership Personnel Standardised processes Visualized waste Method improvement by operators Coaching with focus on working methods Clear priorities Empowered personnel Lower absence Lower employee turnover

by operators Coaching with focus on working methods Clear

13 Continuous Improvement SPS a journey that has no end P-90 / P2000 Modular system SPS Involvement Improvement teams Motivation Leadership Principles Methods

14 Focus on process results From functional excellence to process excellence Tool Production target Engineer Quality Assurance Production Maintenance

15 SPS Development Standardised methods & common targets Prod. & SPS Industrial Mtrl. Control SHE HR Eng. Finance Production process with integrated maintenance & logistics cost 15

16 Integrated Maintenance TPM Methods Production Maintenance Production Maintenance 16 Info Class Confidential P/PHG/P&L Strategy

17 SHE Methods Risk Management & Safety Behaviour Scania Ergonomic Standard Energy Efficiency 17 Info Class Confidential P/PHG/P&L Strategy

18 Training Training trainers and managers Securing transfer of learning in awareness, ability to practice SPS in own organization, ability to train and lead others into on line application

19 Small Teams & Present Leadership Before 2012 Large groups Large work content Small focus on our deviations Lack of present leaders After 2012 Deeper competence Fewer positions Ownership Organized to work according to standard S/V S/V PS PS Team leader Team leader Team leader Team leader Andon Andon

Deeper competence Fewer positions Ownership Organized to work according to

20 Real Time Management - RTM

21 Standardized Work Focus on training

22 Problem Solving

23 Continuous improvement Modular system P-90 / P SPS Involvement Improvement teams Motivation SPS a journey that has no end Small teams RTM SHE Methods Basic Skills & Quality Gates Integrated maintenance Logistics methods Leadership Principles Methods 23

24 Health attendance 100% 98% 96,7 96% 95,1 95,6 94% 93,0 93,0 92% 90,5 90% 88% Q3 Info class Internal P Per Hallberg

25 Number of accidents with sick-leave per one million worked hours Global Production Info class Internal P Per Hallberg

26 Global production Environment responsibility Energy consumption, MWh/vehicle 25 Veichles MWh/vehicle Info class Internal P Per Hallberg

27 Product Quality (C+M) Quality Audit results, average Deviations Truck Cab Axles Gearbox Engine Info class Internal P Per Hallberg

28 Productivity improvement Vehicles Employees Productivity , , , , , , Q3 0 Info class Internal P Per Hallberg

29 OPE improvements machining factories Q3 Info class Internal P Per Hallberg

30 Production cost 250 Production cost (KSEK) per vehicle Industrial Control Info class Internal P Per Hallberg

31 Small teams Target Achievement 0 / 0 / 85 / cost

32 Leadership WHAT HOW WANT TO Involved Competent Secure Business excellence through motivated employees Coaching leadership Challenge feed back / recognition

33 The journey continues Evolution steps not Revolution steps SPS = The Total Business P90 (1990) Modular system (1980) P2000 (1995) SPS S (1996) Improvement teams Motivation SPS next steps (2010) Small teams RTM Problem solving Involvement Leadership Basic Skills Training and support Integrated maintenance

34 Thank you

35 SPS Development Forums P&L Common Development Group D M O PRU Managers TD TH TE H Q IF Metall 35 Assembly Development Group Machining Development Group Logistics Development Group M PRU Managers Assembly TD, TE D PRU Managers Machining TD, TE O Logistics Managers TD, TE DP1 DP2 DP3 DP4 Preparation Pilot (Verification) Develop Global Standard & Training Content Master process Global Training & Workshops Global Implementation Info Class Confidential P/PHG/P&L Strategy

36 Getting Started 1.< 5+1 Nyckeltal för Underhåll 2.Närvaro PL >85% kontroll & 0. Nuläge Anläggnings - register Daglig Underhålls - rapportering Kostnads - Uppföljning 3.RTM Produktivitets Uppföljning Daglig Planering 4.Störnings uppfölj Utrustnings - historik Nyckeltal För Tillförlitlighet Veckovis Underhålls - rapportering 5.Ta hand om störningar Motåtgärder mot Källan till Problem Reservdels - listor 6.Maskin ägare Resurs och Kompetens - matris Kortinervalls - kontroll 7.Initialrengöring UFO/FU Veckoplanering Initial Rengöring 8.Potentiella fel Kritisk Maskin- utrustning Arbetsorder - System Info class Internal QT/Magnus Ordning Rylander 36 och reda på Arbetsplatsen

37 Logistics: Three loop system Logistics Scania Suppliers Centres PRU Sequencing NILE toring Unit supply Goo ods reception/s Repacking Low value Kitting Platforms Trains Packaging breakdown Platforms 37 Info Class Confidential P/PHG/P&L Strategy

38 SPS a journey that has no end Scania Production System

39 Focus on process results From functional excellence to process excellence Tool Production target Engineer Quality Assurance Production Maintenance

40 Standard interfaces Production and material control R&D + Purchasing Production process Maintenance Safety, Health & Environment HR All functions support stability by ZERO defect focus

41 Cross-functional work throughout the value chain

42 Cross-functional work throughout the value chain Production = The whole value chain Alt 2 Input: -R&D - Purchasing - Planning - Marketing -Etc. Manufacturing due to takt time Output: Sales Department

43 Processkunskap Maskinkunskap Maskinägaren i Köra rätt centrum Produktkunskap Q- Kontroller Riggning C T - Är & bör Maskin Pågående ordrar & planerade jobb Topp 3 störningar PUS 5S 5S 5S MASKINÄGARE 5S 5S Metod Verktygsbyten 5S 5S Initialrengöring UFO- Utföra och driva uppdateringar tillsammans med PS UH Rengöring -säkra kvalitet på produkten och livslängd på maskinen. 5S FU - Kommande insatser och utfallet av föregående 5S 5S Fördjupa kunskapen Vägen mot självständigt Operatörsunderhåll enligt trappan Bygga kunskap genom ansvarskänsla, som på 50-talet!?

44 Leadership Principle 1 Co-ordinate but work independently take responsibility

45 Leadership Principle 2 Work with the details and understand the context

46 Leadership Principle 3 Act now think long term

47 Leadership Principle 4 Build know-how through continuous learning

48 Leadership Principle 5 Stimulate commitment through involvement

49 Sales and service network Non-captive Captive More than 1,600 sales and service points globally 1,000 in Europe

50 Customer First Good knowledge of customer s operations Deliver solutions The customer s operations are at the centre of the entire value chain

51 Respect for the individual Recognising and utilising all employees knowledge Ideas and inspiration from day-to-day operations

52 Quality High quality solutions Improvements are triggered by Customers needs Deviations

53 Connected flows Global Production/AFR Central method development Common IT systems Plant Manager HR Q F/C Operation Plant Manager HR Q F/C Operation Plant Manager HR Q F/C Operation

54 SPS next steps (D & M inputs) Method development Small Teams Base Organization RTM STD. Work (incl. 5S, 4- step) Scania Basic Skills Integrated Maintenance Asset number system Critical equipment Initial cleaning KPI Performance Training & Support SPS Development Process SPS Training Center SHE Methods Quality Methods Logistics Methods Risk Management Process Load Ergonomics 1980 Quality gate Containment Performance Mgmt. Capable Processes Picking Quality Modular system P-90 / P2000 Platform Train Internal Supply Methods Packaging Selection Sheet SPS Involvement Improvement teams Motivation SPS a journey that has no end Small teams RTM SHE Methods Basic Skills & Quality Gates Integrated maintenance Logistics Methods Leadership Principles Methods 54

55 55

Integration of Safety, Health and Environmental Scania CV AB

, Safety and Work Environment Engineer Integration of Safety, Health and Environmental Scania CV AB Provider of transport solutions Products Services Financing Heavy trucks Heavy buses Engines Workshops