1.1.4 Continuous Improvement Management Process

1. 1.1.4 Continuous Improvement Management Process June 4, 2012 Tim Holland, CEO/President Aman Sangha, Business Systems MGR/CI

2. What we do? Distribution, Packaging and Vendor Managed Inventory Services of Industrial/Specialty Supplies such as Adhesives, Sealants, Paint and Composite Manufacturing Materials for the Aerospace and Composite Structure Industries.

3. Who we are? • Serviced Aerospace Industry Since 1959 • Owner Change 2011 • Revenue 2011 ~ $43.7 MUSD • AS9100/AS9120 Certified, NADCAP Accredited • Headcount 79 FTE • Locations • Fort Worth, TX (HQ) • Wichita, KS • Tulsa, OK • Ball Ground, GA • High Point, NC

4. Adopted “Gazelles” One-Page Strategic Plan. • Gazelles was founded by Verne Harnish in 1996 (Author of: Mastering the Rockefeller Habits)

5. Process: This process is owned and lead by the VP of Operations/Director of Quality and includes selected team members throughout the Company. The Continuous improvement process is perpetual. Projects are identified through numerous sources and may be suggested from “top down” or “bottom up”. We are a Distribution/Value-added Services Company. Projects address all key processes in the company, so Kaizen activities may take on different forms to address the specific needs of departments.

6. 1.1.4 Continuous Improvement Management Process Purpose: to define and deploy a Continuous Improvement Process to drive performance improvement. CONTINUOUS IMPROVEMENT PROCESS Project Scope and Desired Outcome Kaizen Event Project Identification Deployment Follow up Determine Success (Desired Outcome Reached) If DO not achieved determine next Kaizen event and scope to address shortcomings. Define Project Need Financial Analysis Operations Analysis Customer Feedback/Analysis Competitive Analysis Supplier Feedback Standards – AS9100, SEA • Define Project Scope/Dates • Customer Interviews/Surveys • Employee Interviews/Surveys • Supplier Interviews/Surveys • Identify Participants • Identify “Pre-Event” efforts • Location • Data necessary for success • Tools/supplies Kick-off Scope/Desired Outcome Review Available Data Problem Solving Objectives – Action Plans “Just Do It” Teams/Process Owners Capture New Processes Implementation Teams Report Outs As required: Employee Meetings Supplier Meetings Customer Meetings Department & Individual Goals Reward Recognition Communication 1.1.4 Continuous Improvement Management Process – How does your organization select improvement priorities and reviewprogress on improvement initiatives? How are process owners, master trainers, and strategic champions included in thisprocess? How are improvement projects and teams selected and given direction? How is a standard problem-solving modeldeployed throughout the organization? How are recognition and sharing of key learning accomplished? How are processimprovement ideas solicited, reviewed, approved, and implemented? How is a high level of workforce participation ensured?How are improvement suggestions recognized? How are suggestions made visible in work areas?

7. Performance Metrics APRIL 02, 2012 EMPLOYEE MEETING

8. Q4 FY 2011 Q3 FY 2011

9. KAIZEN EXAMPLE SALES ORDER ENTRY

10. Thank You!Tim Holland: tholland@gracosupply.comAman Sangha: asangha@gracosupply.com