Improving Fleet Productivity Through Quality and Lean Initiatives

1. Attention Attendees: • Thank you for attending! • The presentation will start in a few minutes at 1:00 PM Central. • Please use your computer speakers to listen to the event. If you have audio issues, dial-in info is below. • You will be muted during the event. • Please use the Question feature to text questions to “Q & A”. We’ll try to answer them during the Q&A period if they are not covered in the presentation. • The slides and recording will be posted within 7 days at: http://www.jjkeller.com/nptcinfo Improving Fleet ProductivityThrough Quality and Lean Initiatives This webcast will cover ... Overview on Lean, How to Use Various Lean Tools, How Lean Tools Have Been Used to Drive Out Waste at Frito-Lay, and Question & Answer Moderator Dr. Gary Petty, President & CEO, National Private Truck Council Panelists Tom Moore, CTP, Senior Vice President, National Private Truck Council Bob Rose, Editor – Transportation Management, J. J. Keller & Associates, Inc. Mari Roberts, CTP, Director, Network Optimization, Frito-Lay, Inc.

2. Dr. Gary Petty President & CEO National Private Truck Council

3. Introduction • Overview on Lean – Tom Moore • How to Use Various Lean Tools – Bob Rose • How Lean Tools Have Been Used to Drive Out Waste at Frito-Lay – Mari Roberts • Housekeeping issues: • You will be muted during the event. • Please use the Question feature to text questions to the Q&A Panelist. We’ll try to answer them during the Q&A period if they are not covered in the presentation. • If you lose sound at any point, you can dial-in by phone using the number and Pass Code listed below. • If you lose the program window and need to re-loginbe sure to enter a different e-mail address to avoid being denied access for multiple logins. Gary Petty National Private Truck Council

4. Introduction and Disclaimers • This is an introductory course and is intended to highlight quality and lean methods. Time constraints limit our ability to go in depth. • We invite you to ask questions. We will answer them throughout today’s webcast. Gary Petty National Private Truck Council

5. Tom Moore, CTP Senior Vice President National Private Truck Council

6. Private Fleet’s Role in Supply Chain Optimization Tom MooreNational Private Truck Council

7. Lean is a systematic approach to continuous improvement that eliminates waste. Waste within a process is defined as any activity that adds no value to the end product: Key Principles Customer focus Value driven Continuous improvement Definition of “Lean” Tom MooreNational Private Truck Council • Waiting • Over-processing • Motion • Inventory • Defects • Un-utilized talent • Transportation • Processing Waste

8. Plan, Do, Check, Act Plan Tom MooreNational Private Truck Council Do Check NO YES Act

9. Define, Measure, Analyze, Improve and Control Define Tom MooreNational Private Truck Council Measure Analyze Control Improve

10. Qualifying Opportunities • Consumes too many resources (quality, costs, timeliness, etc.) • Its improvement is important to leadership • Has clear owners and stakeholders • Can be clearly defined • Has performance metrics in place • Is worth the time/effort needed to improve it Tom MooreNational Private Truck Council

11. Communication Dock wait time Out-of-route miles Backhauls Drivers and MPG Tractor and trailer utilization Maintenance down time Shipment staging Organization and cleanliness “Low Hanging Fruit” for Waste Reduction Tom MooreNational Private Truck Council

12. Reduce lead times Improved on-time shipments Decreased Work in Process Better customer responsiveness and flexibility Employee empowerment Better resource management Ultimately, a better bottom line! Benefits of Lean Tom MooreNational Private Truck Council

13. Mari Roberts, CTP Director, Network Optimization Frito-Lay, Inc.

14. Frito-Lay Fleet Operations • 28 Traffic Centers • Equipment • 1,040 Tractors • 3,800 Trailers • People • 115 Managers • 195 Admin • 1,550 Drivers (5.8% Turnover – includes retirees) • Network • Hauls 86% of Frito-Lay Volume • Delivers 630,000,000 Cases/Year • PF Drives 130,000,000 Miles/Year • CC Miles 30,000,000/Year • Generates millions of Inbound & Backhaul Revenue/Year Mari RobertsFrito-Lay

15. Frito-Lay Distribution Network Mari RobertsFrito-Lay

16. Frito-Lay Lean Staff Mari RobertsFrito-Lay

17. Frito-Lay Lean Six Sigma LeanSpeed + Waste + Implicit Approach Six Sigma Quality, Cost + Explicit Approach Mari RobertsFrito-Lay • Goal – Reduce waste and increase process speed • Focus – Bias for action/ Utilize existing, proven Lean Tools • Method – Kaizen events, Value Stream Mapping • Goal – Improve performance on Critical Customer Requirements • Focus – Use repeatable DMAIC approach for sustained results • Method –Focus on projects, performance improvement a key leadership activity Lean Speed Enables Six Sigma Quality (Faster Cycles of Experimentation/Learning) Six Sigma Quality Enables Lean Speed (Fewer Defects Means Less Rework)

18. Bob Rose Editor, Transportation Management J. J. Keller & Associates, Inc.

19. Value Stream Mapping 5 Whys Process Walks (aka Gemba Walks) 5S Fishbone Diagrams Smart Automation (aka Jidoka) Lean Methods Bob RoseJ. J. Keller & Associates, Inc.

20. Value Stream Mapping • Value stream mapping is a lean technique used to analyze and design the flow of materials and information required to bring a product or service to a consumer. • Steps: • Identify the target product. • Draw a current state value stream map, which shows the current steps, delays, and information flows required to deliver the target product. • Assess the current state value stream map in terms of creating flow by eliminating waste. • Draw a future state value stream map. Work toward the future state condition. Bob RoseJ. J. Keller & Associates, Inc.

21. Frito-Lay Example:Hostler Efficiency Mari RobertsFrito-Lay

22. 5 Whys • The 5 Whys is a question-asking technique used to explore the cause-and-effect relationships underlying a particular problem. • Problem: The vehicle will not start • Why? - The battery is dead. • Why? - The alternator is not functioning. • Why? - The alternator belt has broken. • Why? - The alternator belt was well beyond its useful service life and not replaced. • Why? - The vehicle was not maintained according to the recommended service schedule. • Why? - Replacement parts are not available because of the extreme age of the vehicle. • Solution: Start maintaining the vehicle according to the recommended service schedule. • Solution: Purchase a different vehicle that is maintainable. Bob RoseJ. J. Keller & Associates, Inc.

23. Process Walks(aka Gemba Walks) • A method of carefully observing a process to find where waste exists • Process: • Notify those being observed • Watch and try to understand the process • Envision what should happen in perfect world • Establish awareness of what is actually happening • Analyze possible root causes for deviation • Examples: • Driver speed management, shifting and fuel efficiency • Driver vehicle inspections and maintenance flow Bob RoseJ. J. Keller & Associates, Inc.

24. Frito-Lay Example:“Traffic Center of the Future" • Methods applied: Process Walks, 5 Whys • Designed optimal work around internal and external customer requirements to develop Transportation Strategy Mari RobertsFrito-Lay

25. 5S • The 5Ss are: • Sort • Straighten • Sweep • Standardize • Sustain • Examples: • Truck cargo securement supplies and material handling equipment • In-cab truck repair supply kits Bob RoseJ. J. Keller & Associates, Inc.

26. Frito-Lay Example:Garage/Parts Storage • Methods applied: 5S • Incorporated 5S into our Maintenance Garages and Parts Storage areas • Enables Mechanics to work safely and more efficiently Mari RobertsFrito-Lay

27. Fishbone Diagram • Visual representation of the causes of a specific event where “bone” categories of process inputs represent possible causes: • People • Methods • Machines • Materials • Measurements • Environment • Examples: • Inventory loss/damage • Out-of-route miles Bob RoseJ. J. Keller & Associates, Inc.

28. Frito-Lay Example:Fuel Efficiency Mari RobertsFrito-Lay

29. Smart Automation(aka Jidoka) • Automation with a human touch; machine with elements of human decision making • Examples: • Geo-fencing and remote shut down • Ignition controls for HOS and pre-trip inspections • Anti-roll over and collision avoidance on trucks • Dispatch and trip planning that checks hours available, weather, etc. • Automatic shut-off on tanker pump • Autonomous powered trucks in warehouse with radar/laser guidance Bob RoseJ. J. Keller & Associates, Inc.

30. Frito-Lay Example:Fuel Efficiency • Methods applied: Kaizen, Smart Automation • Kaizen identified waste • Tractor speed governed at 65 mph • Smart automation shuts down tractor after 5 minutes of idling • Savings: Reduced idling from >20% to <5%; $100,000 savings Mari RobertsFrito-Lay No Idling

31. Frito-Lay Example:Dynamic Direct To • Methods applied: Smart Automation, DMAIC • Cross functional team identified opportunities with process and systems to reduce supply chain cost • Savings: $1 million Mari RobertsFrito-Lay

32. Question & Answer Please submit questions to“Q&A” using the Q&A tool Mari RobertsFrito-Lay Gary Petty National Private Truck Council Bob RoseJ. J. Keller & Associates, Inc. Tom MooreNational Private Truck Council

33. Closing Remarks • Checkout the archive of past topics at: http://www.jjkeller.com/nptcinfo • PowerPoint slides and recording up in 1 week • Topics for 2012: • October 3 – Effective Motor Carrier Safety Training Programs Gary Petty National Private Truck Council