DuPont’s Six Sigma Journey… Projects to Process

1. DuPont’s Six Sigma Journey… Projects to Process Lean, Six Sigma, and TQM Beyond Manufacturing August 7, 2003

2. DuPont Overview • 2002 Sales- $24Bn • 79000 Employees • Operates in 70 countries with 135 Manufacturing locations • 75 Development and Customer Service Labs in the US and 11 other countries

3. DuPont Celebrated 200 Years of Corporate History in 2002 Survival has depended on Change • A gunpowder manufacturer • Innovation… Led the materials revolution • The future… • Integrated Science • Knowledge based Solutions • Six Sigma

4. More change is coming…. DuPont Electronic & Communication Technologies $2.5 B DuPont Coatings & Color Technologies $5.0 B DuPont Safety & Protection $3.5 B DuPont Textiles and Interiors $6.6 B DuPont Performance Materials $4.9 B DuPont Agriculture & Nutrition $4.5 B Planned for Separation in 2003

5. Six Sigma is the way we are transforming the company

6. The Beginning of Six Sigma in DuPont • DuPont contracted with the Six Sigma Academy to provide initial deployment guidance and training • Six Sigma was seen as a results driven process that has a track record of dramatically improving productivity the “right” way, by removing defects • Deployment began in February 1999 with a decision by DuPont CEO Chad Holliday and his key leaders

7. Our Journey started like most others… in manufacturing focused on cost Cost + Growth + Customer Cost +Growth Six Sigma is a Multi year Journey!! Cost 1st three years 2nd three years 3rd three years Era “Focus & Win” “The Way We Work” “at the Customer, For the Customer” Important Project Selection Integration w/Work Customer Projects Organization Driven by Specialists Driven by Leaders Driven by All People Metric Benefits Benefits + Engagement Share + Reputation

8. Building the Infrastructure to Support Six Sigma

9. The pieces must fit together to deliver business results as the organization develops six sigma competency

10. IT Tools & Results Tracking Financial Validation Standards Corporate Governance People Process Six Sigma Infrastructure is Important

11. IT Tools Process Mapping and modeling Statistical Analysis Project Tracking and Management Corporate Roll-up Management Dashboard

12. Financial Validation Standards • Common Corporate standards for validating Six Sigma Project Benefits • Training process for people authorized to validate • Finance network to manage consistency over time • Audit process for control plan effectiveness and assessing project benefits over time

13. Common HR Processes • Corporate Certification Process for Champions, Black Belts and Master Black Belts • Training standards for GBs, BBs, MBBs, Champions • Stock Options for BBs and MBBs • Green Belt Certification required for Promotions for Senior Leaders and Professionals • Full time Six Sigma Assignment required for people designated as corporate promotables

14. Corporate Governance • Clear “federal” requirements managed by VP level corporate leader and a network of SBU champions • Network subteams to develop Six Sigma best practices and recommend “federal” rules • SBU champions together with SBU leadership teams govern implementation specifics for each individual business • Common Six Sigma targets set each year by the CEO and corporate officers

15. What is unique about DuPont Six Sigma Deployment? We did it fast…. ??? 2003 Top Line Growth, DfSS 2002 Green Belts- 6000 at the end of 2001 Black Belts and MBBs- 1200 at the end of 2000

16. We have been developing a six sigma culture…. Sense of Urgency CUSTOMERS Training and Development for all employees Management Passion Accountability Fact Based, Data Driven Decisions Bottom Line Results Capable, Disciplined Processes Focus on Inputs Values Communications

17. …Built on a simple formula • Execute projects to take out defects and drive results to the bottom line • DuPont will continue to perform Projects focused on bottom line results… • ...but future projects will be built on an integrated approach to business processes, examples Supply Chain Finance Engineering- Capital

18. 2003 and Beyond…Taking Six Sigma to the Next Level Top Line Growth Design for Six Sigma Business Process Improvement

19. Earnings Growth Model DFSS ACQUISITION INNOVATION 6s Earnings ON TREND LINE GROWTH (TLG) SIX SIGMA PRODUCTIVITY RESTRUCTURING Time

20. Emphasis in 2003 • Continue Delivering Results- >$2Bn Finally Validated Benefits in 3 years • Expand Design for Six Sigma- 700 Projects by year end 2003 • Expand Green Belt Training- 15,000 Trained • Intended to be a competency • Top Line Growth Team- $1Bn in Revenue (run rate) projects targeted by Year end 2003 • Targets Six Sigma at improved revenue • Moving toward projects at the customer for the customer

21. DMAIC and DMADV for Growth- Evolution in DuPont • Full time, marketing experienced top line growth champions assigned in each SBU to extend the use of Six Sigma into development areas (market and product) • Each SBU set deployment goals in terms of resources (BBs, MBBs) and new revenue growth • Design for Six Sigma is a critical element of the Top Line Growth Deployment

22. DMAIC and DMADV- the right tools for the right projects Process (Mfg, business) Product, Service, Offering Use, Market, Customer All needed processes already exists Same product, service, or offering Design Existing use, Target Market and Customers Existing Same basic offering adapted with new technology Modifications needed to adapt existing process Extend Target Mkt or Seek New Cust. Extension New New process or technology needed New product, service or offering New end use, Target Mkt or New Customers DMAIC DMADV DEVELOP IMPROVE

23. DfSS- a key part of our Top Line Growth efforts • Voice of the Customer is Critical • Patience is needed - DMAIC brings fast results, Development and customer data takes time • Measures of Success are different-- • Failures are not defects • Cycle time, products commercialized, % revenue from young products are important • Full engagement of Technology and Marketing

24. What Types of Projects are “Top Line Growth”? • One DuPont business has 151 top line growth projects • Application extensions- fighting the “fade” • At the Customer for the Customer • Sales and Marketing Processes • Sales lead mining • Price management • Sample management • Seller efficiency

25. At the Customer for the Customer Projects • Contribute significant hard final benefits. • Projects benefit customers AND deliver validated $ to DuPont. We must get paid too! • ACFC projects engage the selling organization and spread the culture of Six Sigma. • Most GB projects (90%?) for Marketing and Sales professionals should be ACFC. • The prestige of DuPont allow projects to be completed quickly. Being outside their organization helps.

26. The Future is about Processes • DuPont has invested $xxxMM in systems to support business process • e-Business- web based transactions and information • ERP systems- SAP • Although costs have improved, business processes have not been ready to fully capitalize on the huge potential of these systems

27. I.D. & Develop Markets & Channels Develop New Technologies, Products & Services Develop Customer Solutions Provide Solutions Manage Physical Resources Financials Manage People Resources Manage Information/ Knowledge Process View of DuPont … end-to-end work Manage the Corporation & Business Portfolio Govern/ Plan/ Report Create/ Renew Deliver Current Offering Acquire/ Develop Enabling Infrastructure and Assets

28. ? What’s the Problem with Today’s Situation? Needs Activity 1 Activity 2 Activity 3 Activity 4 Customer • Managed by Activity • Sub-optimization; Not focused on “end of process” outcomes & priorities • Weak mechanisms for understanding and responding to customer needs • Inadequate understanding of end-to-end work flow • Hand off defects • Leaders running out of ideas for improving their activity

29. Y’s Z Six Sigma Process Management is the Solution Needs Activity 1 Activity 2 Activity 3 Activity 4 Customer • Manage the End-to-End Process • End-to-End Process Owner Exists • Process, Standards and Improvement goals are defined; used for improvement prioritization across entire work flow • Conformance is measured • Gaps are closed with Six Sigma projects • Natural incremental improvements result from alignment across work groups • Changes to reinforce this new management style exist

30. Measures of Process Success • Clear results measures for process performance • Evaluation of performance versus entitlement, not last year • External validation of the opportunity • Projects that shift entitlement • High level, Active Process Ownership

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