PENTAIR LEAN ENTERPRISE

PENTAIR INTEGRATED MANAGEMENT SYSTEM

October 2012

Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012
PIMS: THE TOOLKIT

Building Growth Capabilities

Prioritizing Investments & Innovation

Staffing

GLOBAL
Attracting & Developing Top Talent Rewards PeopleSoft Performance
TALENT
Development
SYSTEM

LEAN
Safety, Quality, Delivery, Cost and Cash Focus ENTERPRISE

Hold Your Teams Accountable For Using The Processes

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 2
4 KEY ENTERPRISE PROCESSES

PIMS Defines 4 Key Enterprise Processes:

1. Lean
2. Talent Management
3. 3D
4. Rapid Growth

This Module Focuses on Lean

PIMS Unites The Puzzle Pieces

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 3
LEAN…PENTAIR”S COMPETITIVE ADVANTAGE

The relentless pursuit to

eliminate waste
– anything that is not valued
by our customers
– and improve velocity in all
processes within our
organization.
5 PIMS Elements:
Relevant to ALL Functions

Lean is Part of Pentair’s

VelocityDNA … Driving
Is Key Competitive
Focus for 2012 Advantage
PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 4
PIMS LEAN IS…

• Customer First – at the center of Lean

• People – Lead Improvement

• Data Driven Actions

• Process Focused Improvement

• The Outcome is Breakthrough Results

Every Person, Improving Everyday & Wining Right!

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 5
WHAT YOU REAP IS WHAT YOU SOW
Lean Enterprise Improvement Correlation
Lean Process Results:
Talent: Resources & Excellence: YOY
Development PIMS SQDCC
Assessment Gains

GBUs With • Aquatic Systems • Aquatic Systems • Aquatic Systems

Greatest • Tech Products • Tech Products • Tech Products
Relative
Performance

Sample • Aquatic: From 17 • Aquatic Systems: Highest • Aquatic Systems

Heads in 2010 to 21 PIMS Score of all GBUs – 96% OTD
Evidence in 2011 3.14 X bps GM Expansion
• Tech Products: • Tech Products: Next 3 45 DIOH
From 22 in 2010 to highest PIMS Scores – • Tech Products:
32 in 2011 2.95, 2.69, 2.59 95% OTD
X bps GM Expansion
53 DIOH

Best Performing GBUs Know And Execute The Formula Well

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 6
PENTAIR’S LEAN JOURNEY
Goal: Lean Across The Enterprise

Vision For Pentair’s Lean Journey

High
World-Class
Lean
Leadership Commitment

•2 GBUs as Enterprise
“Proofs Of Concept” Lean across
•Others Making
Enterprise  Growth/Commercial
Strong Progress  NPD
Lean as Supply  G&A
Chain System
Lean as  Quality
Ops Standard  Value Engineering
 Supplier Development
Lean as  Logistics
Lean as Events
Tool Set  Deeper Into Operations
 Creating Managed Daily Improvement Culture
Low  Impact vs. Optics

2000 2014

Go Up The Maturity Path… Lean System. Enterprise.

Must Continue Moving Up the Maturity Curve 10

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 7
OPERATIONAL EXCELLENCE…2013 PRIORITIES

Three Priorities for 2013

1. Strategy Deployment to Prioritize and Drive Breakthrough Objectives

a) Deliver Our Synergy Commitments

2. Transformation Planning

a) What specific Actions are required to deliver results

3. Flow Talent and Resources to the Largest Opportunities

a) Talent Management and Development Critical

For Our Customers, Our Shareholders, Our Employees

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 8
FOUR KEY CONCEPTS OF LEAN

• Value is work our customer is willing

and expects to pay for

• Waste is anything that does not add

value for our customers

• Velocity is how fast we create value for

our customer

• Eliminating waste and increasing

velocity improves value and drive
Growth

Improving Customer Value Is ‘Winning Right’

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 9
KEY MESSAGES FOR OPERATIONS LEADERS
• Results Where Invested Resources On Process Transformation

– Direct Correlation: What You Reap Is What You Sow

• Huge Opportunity Still Available To Capture!

– Pursuing Shingo Has Opened Our Eyes

• 2012+ Lean Needs & Focus Are Clear

– Developing & Driving Standard Work and Adoption on 7 Lean Transformation

Disciplines

– Modeling Enterprise Value Chain Focus… Spotlighting Champions

– Focusing Corp Lean Support On Focus Sites… Flowing Resources

– Supporting Building Lean Talent … Hiring, Training, Development (“Bubble

Assignments”, Rotations), Hourly Employee Engagement

Good Progress. Huge Opportunity. Clear Plan.

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 10
THE HOUSE OF LEAN ENTERPRISE

The PIMS House of Lean is comprised of Two Pillars…

• Continuous Improvement
• Stabilization

And Seven Transformation Processes or Disciplines

1. Strategy Deployment
2. Transformation Planning
3. 5S
4. Standard Work
5. Creating Continuous Flow (CCF)
6. Making Material Flow (MMF)
7. Visual Management & Managing Daily
Improvement (MDI)

Lean Enterprise Makes Pentair Lean In All Business Processes

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 11
#1. STRATEGY DEPLOYMENT

• Driven from Top Down

• Align the organization around the

Objectives

• 3 – 5 Breakthrough Objectives

• Actions are Specific and

Measureable

Breakthrough Objectives Require Significant Process Improvement

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 12
PIMS … Our Process for Transformation
Strategy Deployment – Results & Countermeasures
Bowling Chart A3 & Countermeasures
Operations Matrix 2002

Plan
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Target / YTD
Root Cause Analysis:

12
Plan Actual
0

10
Actual
8
Plan 6
4
Actual
2
Plan 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Actual

Plan
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Actual Plan 7.32 7.44 7.56 7.68 7.8 7.92 8.04 8.16 8.28 8.4 8.52 8.64

Actual 8 9 10 10 10.4
Plan
Variance -8% -17% -24% -23% -25%

Actual

Plan
Action / Countermeasure Responsibility Target Date Status
Actual

Plan

Actual

Continuous Improvement through Lean

Current Value Stream map Future Value Stream map Lean Transformation Plan Kaizen Event List A3
A3 & Countermeasures
Root Cause Analysis: 0
Plan Actual

12
10
8
6
4
2
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Plan 7.32 7.44 7.56 7.68 7.8 7.92 8.04 8.16 8.28 8.4 8.52 8.64

Actual 8 9 10 10 10.4

Variance -8% -17% -24% -23% -25%

Action / Countermeasure Responsibility Target Date Status

PIMS Assessment

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VISUAL STANDARD - “GLASS WALL” & A3s
Plant SQDCC Results Value Stream Maps & Transformation Plan

All examples
courtesy of Pisa,
Italy Plant

Details On
Each SQDCC
Dimension

A3s Posted

Provide Centrally Located Summary Of Lean Progress And Plans

PENTAIR Pentair Proprietary Information LEAN ENTERPRISE PLAYBOOK – Rev 2.0 Oct 2012 14
LEAN CULTURE -- EMPLOYEE ENGAGEMENT
Shingo/TPS Thinking “Zero Harm” Safety Culture

• “Friends Helping Friends” mindset

• Employees look after each other
– Proactively identify unsafe conditions
– Reinforce accountability with one another
• Implemented in Hanover Park. Launching in Delavan
• Lead With Humility and Brookfield
• Respect Every Ownership & Involvement Culture
Individual
• Empower & • Rationale – Front Line Associates:
Involve Everyone – Get More Passionate & Committed
• Develop People – Feel Deeper Job Satisfaction
• Assure A Safe – Identify Great Solutions
Environment • 2012 Operations Strategy Deployment Objective:
Measure & Drive Hourly Employee Engagement

Harnessing The Power Of Our Greatest Asset: Employees.

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LEAN TALENT – GROWING & FLOWING
Promoting Lean Ops Rotations More Flowing
Champions As New Norm Between GBUs

Site OPS
Talent Talent

• Larger job in same Ops function
– From Site Lean Ldr to GBU
Lean Ldr
– From Site Ops Dir to GBU
Ops VP
• Rotational assignments in Production, • Moving talent to biggest
Lean, Materials, Quality opportunities in Pentair
– Site Ops Ldr Pipeline • New hires shadow & learn from
• Develops career w/o relocation Pentair benchmark sites
• Int’l “Bubble Assignments”

“Lean To Line” And Cross-GBU Moves Seed Lean Change Agents

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