Quality Updates to NPD 2.0

1. Quality Updates to NPD 2.0 NPD Conference Presenter: Bernie Deubel May 29, 2008

2. New Product Development Roadmap http://sps.emrsn.com/sites/npd/default.aspx

3. Quality Updates to NPD 2.0 • Why were Quality Updates made to NPD 2.0? • Who Made the Changes? • What Has Changed? • What is the Magnitude of the Changes? • When are the Changes Effective? • How do I Know What has Changed? • What’s Next?

4. Background: Quality Updates to NPD 2.0 • As NPD 2.0 rolled out, the need to improve Quality Content and Linkages between Supply Chain Management and New Products was noted by Senior Management • Quality Council and Corporate Technology were tasked by Senior Management in October 2007 to vastly improve Quality Focus and Content of NPD 2.0 • Specific Request made of the Team to Incorporate more Emerson Quality-Related Best Practices and Tools into NPD 2.0 Why Were Quality Updates Made to NPD 2.0?

5. Quality Updates to NPD 2.0 are Part of our Continuous Improvement Culture For several years now, we have followed a New Product Development (NPD) roadmap with the Phase-Gate Process. That has worked extremely well for Emerson. The Phase-Gate approach moved products to market faster. It also drove parallel, cross-functional decision-making, and helped eliminate marginal projects. In short, this Phase-Gate approach proved once again that good processes lead to a better outcome. Now, we have evaluated actual performance from 300 Emerson individuals that show how we can make our Phase-Gate Process even more productive and more profitable. A cross functional team, drawn from all Emerson Business Groups and Corporate staff, has developed updates for Emerson’s NPD process, raising it to the next level and aligning it with our Key Emerson Growth Initiatives. The new and updated content has been added to the NPD Process in the areas of Innovation, Customer Orientation, Portfolio Management, Launch Review and Procurement. This new NPD Website has been developed and is being rolled out to the divisions as another useful tool. The web-site is easier to use and menu driven, containing work templates and new best practice examples. The website is located on the secure Emerson Intranet to protect our confidential information and examples from our competitors. This more focused, web based Phase-Gate Process offers a unique potential because it is adaptable to individual Emerson companies. It will provide a foundation for your division to refine a better new product process suited to your organization and needs. Also, it builds in the necessary Emerson accountability and measurement benchmarks. We have experienced excellent success with Phase-Gate. But our internal evaluation shows that we can do better, and we must. That is what Emerson always has been about – continuous improvement, always working to be best in class. I am confident that your division, our customers and Emerson will benefit by adopting and adapting the New Product Development process laid out in this new website. Thanks for your support and commitment to win. David N. Farr Chief Executive Officer From the Chief Executive Officer: NPD2.0 Website 10/07 ……. We have experienced excellent success with Phase-Gate. But our internal evaluation shows that we can do better, and we must. That is what Emerson always has been about – continuous improvement, always working to be best in class. I am confident that your division, our customers and Emerson will benefit by adopting and adapting the New Product Development process laid out in this new website. Thanks for your support and commitment to win. David N. Farr, Chief Executive Officer

6. Background: Quality Updates to NPD 2.0 • Emerson Quality Council and Corporate Technology led the Cross-Functional Team Effort • Each Business Group Represented on the Team: • Climate Technologies, Industrial Automation, Motors and Appliance, Network Power, Process Management, Tools & Storage • Corporate Groups Represented: • Manufacturing, Safety, Supply Chain Management, Technology, Training • Updates and Changes were Reviewed and Approved by Ed Monser (COO) and Randall Ledford (CTO) Who Made the Changes?

7. Quality Updates to NPD 2.0 - Team Members * denotes Quality Council Member James Ancharski (Inter Metro) *Mike Androlewicz (Corp Training) *Greta Bai (Process) Tom Baldrick (Network Power) *Jim Bent (MAC) Jason Blackburn (Corp Tech) Don Bly (Corp Tech) Ernst Brouwer (Corp Manufacturing) *Charles Bruce (IA & QC Chairman) *Bernie Deubel (MAC) Joann Donelon (Corp Procurement) *Steve Frauen (Corp Product Safety) *Elio Fumagalli (Corp Procurement) Fei Hong (Corp Tech) Pam Jackson (Corp Tech/ Facilitator) *Ray Keefe (Corp Manufacturing) *Tim Layer (Process) *Kevin McCalla (Network Power) *Chris Morris (Network Power) *Bob Norwood (Process) * Lee Smith (Process) *Dale Tempinson (Climate)

8. Quality Updates to NPD 2.0 What Has Changed? • Quality Content in NPD 2.0 Explicitly Brought to a Level on par with Other NPD 2.0 Elements: • Strategic, Financial, Market, Operational and Technical Criteria • Quality now a Distinct Focal Point of the 7 Gates • 30+ Specific Quality Related Questions Added to the 7 NPD 2.0 Gates • Quality Metrics (5) Added • Quality Organization named an Input Resource for 12 existing Deliverables • Added 6 New Quality Related Best Practices • Added 8 New Quality Tools, Content and/or Web-Links • Strengthened NPD 2.0 Deliverable Wording and Phase Content in more than a Dozen Quality Related Subject Areas • Added a New Deliverable into the Design & Development Phase: • Communicating Project Specific Quality Requirements

9. Added Gate Quality Criteria & Flow

10. Added Gate Quality Questions & Flow Question Specificity & Quantification Increase as Projects Progress down the Funnel

11. What are the 1st level product/service CTQ parameters and initial targets? Added Gate Quality Questions & Flow

12. What are the final product/service CTQ parameters, targets, and plans to mitigate the risks? Added Gate Quality Questions & Flow

13. Have the CTQ risks been mitigated? Added Gate Quality Questions & Flow

14. New Gate Questions Added Added Quality Criteria At Every Gate

15. Quality Metrics Added • Recommended Quality Metrics at Gates 2 through 7 • Provided a Quality Metrics Template as a Best Practice at Gates 2 through 7 • Fall 2009 Goal: Add the Quality Metrics to the 10M

16. New Gate Template with Quality Metrics Added Quality Metrics At Every Gate

17. Quality Organization added as Input Resource for 12 existing Deliverables • Concept Feasibility Phase • Down-Stream Value Proposition • Concept Development & Product Planning Phase • Project Management Plan • Development Plan and Level of Effort • Value Based Pricing Strategy & Plan • Updated Product Lifecycle and Phase Out Plan • Review of Design for Serviceability • Services Plan and Level of Effort • Updated Financial Analysis • Ramp-Up Phase • Product Launch Matrix • Product Support Strategy • Analysis of Existing Contracts • Updated Financials

18. Quality Organization added as Input Resource for 12 existing Deliverables: Example Concept Feasibility: Down Stream Value Proposition Added Quality as An Input For Determining Value Proposition to Customer by Including Target Costs for Warranty, Service, etc.

19. Quality Related Tools Added to NPD 2.0 • Exhibit 135 and Cost of Quality (COQ) Instructions • Profit Review Presentation Model (Quality Performance and Risk Mitigation) • Emerson Supplier Audit Checklist (ESAC) • TechSource Tool • ANSI Link and Instructions (Safety Standards) • New Product Safety Checklist • Emerson Capability Analysis Tool (ECAT) • Emerson Supplier Audit Database Quality Tools also Accessible via the NPD 2.0 Tools and Best Practice Quick Launch Tool Bar

20. Added Quality Tool: ESAC

21. Added Quality Tool: New Product Safety Checklist Update Includes Addition of Corporate Wide Standard Safety Checklist

22. Added Quality Tool: Profit Review Presentation Model Profit Review Template Provided As A Tool To Help With Quality Performance and Risk Mitigation

23. Quality Related Best Practices Added to NPD 2.0 • Emerson Software Center of Excellence (SCOE): • Capability Maturity Models (CMM) or Capability Maturity Models Integration (CMMI) • Emerson Capability Assessment Model (ECAM) (link) • Highly Accelerated Life Testing (HALT) Example • Highly Accelerated Stress Audit (HASA) Testing Example • American National Standards Institute (ANSI) Examples • Introduction to Testing for Significance – Outlier Detection during Parametric Function Testing Example • Design for Manufacturing Review Quality Best Practices also Accessible via the NPD 2.0 Tools and Best Practice Quick Launch Bar

24. Added Quality Best Practice: Example – HALT and HASA Presentation On HALT (Highly Accelerated Lifetime Testing) and HASA (Highly Accelerated Stress Audit) Provided Along With Examples

25. Strengthened Deliverable Content Across All NPD 2.0 Phases • Quality • Reliability and robustness (the degree of margin under abnormal conditions) • Critical to Quality (CTQ) flow down characteristics and tolerances • Risk analysis, plans and mitigation • Quality training and employee qualification plans • Competitive intelligence • Validation and Verification • Cost of Quality (COQ) • Service, Serviceability, Failure Rate, Repair, Warranty • Product Obsolescence • DFMEA, PFMEA • Value Stream Mapping

26. Strengthened Deliverable Content: Example - Cost of Quality (COQ) Concept Development and Project Planning: Product Cost Model Added Cost Of Quality And Link To Exhibit 135

27. COQ Metric Update Objectives • Better define the cost elements • Focus on significantwaste • Costs of waste that the customer does not value • Costs that can be avoided/eliminated • Costs that impact the P&L • Goal is easy……..it is zero! • Link to Emerson financial exhibits or standard practices, where possible

28. COQ Exhibit 135 elements

29. Strengthened Deliverable Content: Example - Critical to Quality (CTQ) Concept Development and Project Planning: Detailed Product Specification Added Critical To Quality Content To Many Of The Deliverables

30. Strengthened Deliverable Content: Example - DFMEA and PFMEA Added PFMEA and Other Quality Related Content- Still Looking to Find Best Practice For DFMEA and PFMEA

31. New Deliverable Added: Communicating Project Specific Quality Requirements New Deliverable Page

32. New Deliverable: Communicating Project Specific Quality Requirements

33. Other Procurement Related Quality Changes

34. E-Sourcing Opportunity Assessment Added ESAC content

35. Preferred Supplier Identification & Engagement Added communicating quality requirements

36. Preliminary Sourcing Plan Added ESAC content

37. Procurement Plan and Level of Effort Added ESAC content

38. E-Sourcing High Level Process Flow Added ESAC content

39. Suppliers for Component Parts Added ESAC content

40. Cost Containment Assessment Added ESAC content

41. Process Control and FMEAs for Mfg Added Procurement

42. Gate 2 - Project Charter Added for early Procurement involvement

43. Gate 3 – Business Plan Added

44. Quality Updates to NPD 2.0 • Web-site Changes Effective April 18. • Notification and Training Package Posted prominently on Website • Training Sessions Scheduled for: • Quality Council: April 9 (completed) • Web-Ex Training Sessions: Week of May 5 • 3 WebEx Training Sessions, 1 each targeted for Americas, Europe and Asia • Target: Corporate Quality Leadership, Brand Officers, TBLs and PBLs • Division Specific Training: May and June • Quality Council Members will Deploy the Quality Training Within Their Own Divisions to Key NPD Staff When are the Changes Effective?

45. All Updates and Changes Will be Documented Under the ‘What’s New’ Tab on the NPD 2.0 Home Page Users Who Selected the Update Notifications (ISO Recommended) Option on the Website will receive an e-mail notifying them of the update. Quality Updates to NPD 2.0 How do I Know What has Changed?

46. Quality Updates to NPD 2.0 What’s Next? • Quality Council Members Gathering and Vetting additional Quality Tools and Best Practices to Incorporate into NPD 2.0 during Q3 FY08 and Q4 FY08. Potential Examples Include: • Processes: Change Management, Traceability • Plans: Quality Risk Mitigation, Manufacturing Quality Verification, Product Life Cycle Phase In/Out • Examples & Resources: dFMEA, COQ, QFD, Preliminary Validation Test, Design for Serviceability, Estimating Mean Time to Service • Competitive Benchmarking: Quality • Update Advanced Design Center (ADC) NPD Guidelines and Link to NPD 2.0: Target Summer 2008 • Exhibit 10M: • Refresher Training: Summer 2008 • Update 10M to include Quality Metrics: October 2009 (tentative)

47. Questions? • Quality Specific contacts: • Charles Bruce Charles.Bruce@emerson.com or • Quality Council NPD 2.0 Team Members: • Mike Androlewicz (Corp Training) Greta Bai (Process) • Jim Bent (MAC) Bernie Deubel (MAC) • Steve Frauen (Corp Product Safety) Elio Fumagalli (Corp Procurement) • Ray Keefe (Corp Manufacturing) Tim Layer (Process) • Kevin McCalla (Network Power) Chris Morris (Network Power) • Bob Norwood (Process) Lee Smith (Process) • Dale Tempinson (Climate) • NPD 2.0 contacts: • Pam Jackson Pamela.Jackson@emerson.com or • Jason Blackburn Jason.Blackburn@emerson.com http://sps.emrsn.com/sites/npd/default.aspx

48. Backup

50. Communicating Project Specific Quality Requirements