Du Ponts Six Sigma Journey Projects Process Lean

Du. Pont’s Six Sigma Journey… Projects Process Lean, Six Sigma, and TQM Beyond Manufacturing August 7, 2003

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

Du. Pont 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

More change is coming…. Du. Pont Safety & Protection Du. Pont Electronic & Communication Technologies Du. Pont Coatings & Color Technologies $2. 5 B $5. 0 B $3. 5 B Du. Pont Performance Materials Du. Pont Agriculture & Nutrition $4. 9 B $4. 5 B Du. Pont Textiles and Interiors $6. 6 B Planned for Separation in 2003

Six Sigma is the way we are transforming the company

The Beginning of Six Sigma in Du. Pont • Deployment began in February 1999 with a decision by Du. Pont CEO Chad Holliday and his key leaders • Du. Pont 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

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

Building the Infrastructure to Support Six Sigma

Th to e p d e ie ce l i as v e s de t h r b mu v e e us st o co lop rg i ne fit m s s an ss tog pe ix iza re e t e s t io su the nc ig n lt r s y ma

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

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

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

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

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

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

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

…Built on a simple formula • Execute projects to take out defects and drive results to the bottom line • Du. Pont 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

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

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

Emphasis in 2003 • Continue Delivering Results- >$2 Bn 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- $1 Bn 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

DMAIC and DMADV for Growth. Evolution in Du. Pont • 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

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

Df. SS- 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

What Types of Projects are “Top Line Growth”? • One Du. Pont 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

At the Customer for the Customer Projects • Contribute significant hard final benefits. • Projects benefit customers AND deliver validated $ to Du. Pont. 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 Du. Pont allow projects to be completed quickly. Being outside their organization helps.

The Future is about Processes • Du. Pont has invested $xxx. MM 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

Process View of Du. Pont … end -to-end work Govern/ Plan/ Report Create/ Renew Deliver Current Offering Acquire/ Develop Enabling Infrastructure and Assets Manage the Corporation & Business Portfolio 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

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

Six Sigma Process Management is the Solution Y’s Activity 1 Activity 2 Activity 3 Activity 4 Needs 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 Z

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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