Daktronics, Inc. Lean Implementation

Background "you can act your way into a new way of thinking faster than you can think your way into a new way of acting" - Matt Kurtenbach Vice-President, Daktronics

Background (cont.) Headquarters in Brookings, SD Leader in digital signage Products range from $1000 to $40 million

Background (cont.) 5 Product Families Scorecards in sports Automated rigging and hoist systems Video Display Systems Commercial Products Time/temperature displays Transportation Road management, parking, Aviation

Background (cont.) Profits School / Theatre / Live Event = 57.7% Commercial = 26.8% International Business Unit = 9.6% Transportation Business Unit = 5.9%

Background (cont.) 2006 Sales - $309,370 Gross Profit - $94,074 EPS - $0.52 2009 Sales - $581,931 Gross Profit - $155,538 EPS - $0.64

Background (cont.) Lower margins on large orders Seasonal orders Football - Summer Baseball - Spring Basketball - Fall Hockey - FallBackground (cont.) Lower margins on large orders Seasonal orders Football - Summer Baseball - Spring Basketball - Fall Hockey - Fall

Primary Components Display Lamps to LCDs to LEDs LCD for smaller displays LED for larger displays Raw materials sourced from limited suppliers Quality control Controller Computer hardware / software Power Supplies Cables & Cabinets

Manufacturing Component manufacturing PCBs System manufacturing Assembly Sub-contractors Metal fabricationManufacturing Component manufacturing PCBs System manufacturing Assembly Sub-contractors Metal fabrication

Manufacturing (cont.) Modular Approach Standard modules / components Limited inventory ERP System Communication between various teams Order entry Production schedules Customer service

Company April 2006 1400 full-time employees 700 part-time employees Students from SDSU No unions Area-wise breakup Manufacturing - 900 Sales & Marketing - 700 Engineering - 300 Administration - 200 2009 2500 full-time 1000 part-time Area-wise breakup Manufacturing - 1200 Sales & Marketing - 1500 Engineering - 500 Administration - 300

Accomplishments in 2009 Yankee Stadium Citifield New Meadowlands Stadium

Company (cont.) 2006 Brookings Facility - 375,000 sq. ft 2007 Sioux Falls Facility - 120,000 sq. ft Larger billboards Brookings Facility - additional 80,000 sq. ft Redwood Falls, Minnesota Facility - 100,000 sq. ft Smaller displays 2008 Shanghai, China - 17,000 sq. ft Leased for sales, service

Competition Adaptive Micro Systems ANC Sports Capturion Barco LG Electronics Lighthouse Technologies Mitsubishi Electric Panasonic Corporation Sony and many more...

Lean Journey Prior to 2006 No standardization Too many parts and tools Fixed-price contracts Cost overruns ate into profits

Lean Journey (cont.) Partnered with consulting firms The Pragmatek Consulting Group Bloomington, MinnesotaLean Journey (cont.) Partnered with consulting firms The Pragmatek Consulting Group Bloomington, Minnesota

Lean Journey (cont.) Lean Team Lean Manager 2 Lean Manufacturing Engineers 6 Lean Coordinators Commercial - Sioux Falls Commercial - Redwood Falls Transportation - Brookings Schools / Theatres - Brookings Live Events - Brookings Corporate - Brookings

Lean Journey (cont.) Lean Training 5S and Lean 101 All manufacturing employees Lean Tools As-needed and when time permitted Value-Stream Mapping Lean Coordinators / Lean Engineers

Lean Journey (cont.) Prior to Lean Batch processing Shelving Units scattered throughout Storing tools and other items Staging area for parts waiting Lot of searching for work orders Capacity redundancy built-in

Lean Journey (cont.) LED Assembly Area Broken down into manageable parts Time-study analysis Prototype selected Current process Simple carts used to push assembly between stages New process Gravity conveyors - 100 ft

Lean Journey (cont.) Roll-out Electronics Assembly Area 350 parts Lot of walking - 8 miles in a day! Searching for tools Batch processing

Lean Journey (cont.) Roll-out Electronics Assembly Area Develop Value Stream Maps Institute continuous flow Single production line with duplicate machines Allows concurrent setup - product mix Two production lines Redundancy Machine failures could be catastrophic Develop Standard Work Instructions Critical for mixed-model scheduling 4-hours worth production inventory maintained in kit-prep area

Lean Journey (cont.) Roll-out Electronics Assembly Area 5S in the work area Visual workplace Total Productive Maintenance Daily cleaning schedules

Lean Journey (cont.) Accomplishments Recovery of 925 sq ft - 50 shelving units removed WIP reduced by 50% Electronic Work Instructions Conveyor installation Less product handling Order Completion time reduced from 20 days to 3 days Quality improved significantly - 97.5% 6-sigma ?? In-line testing Scrap costs reduced by 70%

What next? Lean in non-manufacturing areas Office area?What next? Lean in non-manufacturing areas Office area?

QUESTION:

Was Daktronics lean implementation successful? Do you have enough information? What are the performance measures? What do you think should be next steps? What are the pros and cons of extending lean to non-manufacturing areas?