Iowa State University Transportation Student Association

1
Iowa State UniversityTransportation Student
Association

• October 25, 2004
• Jeremy Hansen

2
Agenda

• Who is Pella Corporation?
• Pella Manufacturing Philosophy
• Supply Chain Challenges
• New DOT Hours of Service Regulations
• Increasing Fuel Costs
• RFID Technology
• Performance Measurement
• Internship and Coop Program

3
Pella Corporation
4
Pella Corporation
Producer of premium windows and doors Privately
held founded in 1925 Ten U.S. Manufacturing
Facilities 7,100 Total Employees Product
Distribution

Pella Direct Sales Network 3,500 employees 350
Pella Window Stores / Windowscaping Centers
National Accounts
2,500store locations
Lowes, Menards,
large lumberyards
International
5
A Great Place to Work
One of FORTUNE Magazines 100 Best Companies
to Work For 2004 - 5th Year in a Row! One of
only a few Manufacturers One of only 2 Iowa
Companies 22 in 2004!
2000 47 2001 21 2002
39 2003 12 2004 22
6
Pella Products
Serving

Trade New Construction Remodeling
Homeowners Replacement
Architects Commercial
Residential
National Accounts Retail, Pro Dealer
Large Builders
With Quality Products
Windows Patio Doors
Wood, Composite Vinyl
Entry Storm Doors
7
Location, Location, Location
Portland, OR
Clear Lake, IA
Sioux Center, IA
Gettysburg, PA
Story City, IA
Carroll, IA
Fairfield, OH
Pella, IA
Shenandoah, IA
Chicago
Murray, KY
People Carroll 602 Clear Lake/St. P- 389
Fairfield - 213 Gettysburg 320 Murray
438 Pella - 3,632 Portland 154 Shenandoah
507 Sioux Center - 502 Story City 336 Total -
7568
Tempe, AZ
PDSN Rockford - 75 Minneapolis - 101 Chicago -
203 Toronto 35 Tempe - 61
8
Pella Corporation

• Pella Manufacturing
• Philosophy

9
The Total Competitiveness System
Pella Corporation



ENABLING STRATEGIES
IMPERATIVES
MISSION
VISION
CUSTOMER FOCUSED PROCESSES
Market Leadership through Total Competitiveness
Provide the highest quality, highest
value, window and door products and services to
customers in our selected markets, at a level of
profitability sufficient to encourage risk-taking
and to reward employees and shareholders
Market Share Growth Customer Satisfaction Pro
fitability
Manage by Process Continuous Improvement
Market Segmentation High Performance
Teamwork LeadershipDevelopment
Product Development Order Acquisition Order
Fulfillment Service Support
Satisfy Customers Better than the Competition in
terms of Total System Quality, Cost, and Time
MOMENTS OF TRUTH

Each time a customer judges our products or
service and each decision an employee makes is,
by itself, a Moment of Truth At the end of the
day, the sum of those Moments of Truth add up to
either increase or decrease The Value of
our Products The Satisfaction of our
Customers The Rewards we Share The
Pride associated with Pella
Ownership of our Values, Vision, Mission, and
Imperatives Team Players who place business
success above functional success Goal-oriented
passion to act and be involved Developing and
coaching employees Critical thinking necessary to
achieve sustainable competitive advantage
LEADERSHIP
Pella Corporation Values include Primarily a
Human Institution that values Teamwork, Safety,
and Respect for the Individual Total Integrity in
everything we do External Focus that measures
our actions by how well we Satisfy
Customers Continuous Improvement through Total
Employee Involvement and Best Global
Practices Rewarding Simplicity over Complexity
and Action over Bureaucracy Sharing the Rewards
of our Success
VALUES
Strengthening the Pella Culture by building on a
solid foundation established in 1925
Revised 12-03
10
The Total Competitiveness System
Pella Corporation



ENABLING STRATEGIES
IMPERATIVES
MISSION
VISION
CUSTOMER FOCUSED PROCESSES

• Values
• Human Institution
• Teamwork, Safety, Respect
• Total Integrity
• Customer Focused
• Continuous Improvement
• Simplicity Over Complexity
• Action over Beauracracy
• Sharing the Rewards of our Success

Market Leadership through Total Competitiveness
Provide the highest quality, highest
value, window and door products and services to
customers in our selected markets, at a level of
profitability sufficient to encourage risk-taking
and to reward employees and shareholders
Market Share Growth Customer Satisfaction Pro
fitability
Manage by Process Continuous Improvement
Market Segmentation High Performance
Teamwork LeadershipDevelopment
Product Development Order Acquisition Order
Fulfillment Service Support
Satisfy Customers Better than the Competition in
terms of Total System Quality, Cost, and Time
MOMENTS OF TRUTH

Each time a customer judges our products or
service and each decision an employee makes is,
by itself, a Moment of Truth At the end of the
day, the sum of those Moments of Truth add up to
either increase or decrease The Value of
our Products The Satisfaction of our
Customers The Rewards we Share The
Pride associated with Pella
Ownership of our Values, Vision, Mission, and
Imperatives Team Players who place business
success above functional success Goal-oriented
passion to act and be involved Developing and
coaching employees Critical thinking necessary to
achieve sustainable competitive advantage
LEADERSHIP
Pella Corporation Values include Primarily a
Human Institution that values Teamwork, Safety,
and Respect for the Individual Total Integrity in
everything we do External Focus that measures
our actions by how well we Satisfy
Customers Continuous Improvement through Total
Employee Involvement and Best Global
Practices Rewarding Simplicity over Complexity
and Action over Bureaucracy Sharing the Rewards
of our Success
VALUES
Strengthening the Pella Culture by building on a
solid foundation established in 1925
Revised 12-03
11
The Total Competitiveness System
Pella Corporation



ENABLING STRATEGIES
IMPERATIVES
MISSION
VISION
CUSTOMER FOCUSED PROCESSES
Market Leadership through Total Competitiveness
Provide the highest quality, highest
value, window and door products and services to
customers in our selected markets, at a level of
profitability sufficient to encourage risk-taking
and to reward employees and shareholders
Market Share Growth Customer Satisfaction Pro
fitability
Manage by Process Continuous Improvement
Market Segmentation High Performance
Teamwork LeadershipDevelopment

• What Separates us from our Competition
• Culture
• Brand
• Financial Strength
• Manufacturing Excellence
• Distribution
• Values

Product Development Order Acquisition Order
Fulfillment Service Support
Satisfy Customers Better than the Competition in
terms of Total System Quality, Cost, and Time
MOMENTS OF TRUTH

Each time a customer judges our products or
service and each decision an employee makes is,
by itself, a Moment of Truth At the end of the
day, the sum of those Moments of Truth add up to
either increase or decrease The Value of
our Products The Satisfaction of our
Customers The Rewards we Share The
Pride associated with Pella
Ownership of our Values, Vision, Mission, and
Imperatives Team Players who place business
success above functional success Goal-oriented
passion to act and be involved Developing and
coaching employees Critical thinking necessary to
achieve sustainable competitive advantage
LEADERSHIP
Pella Corporation Values include Primarily a
Human Institution that values Teamwork, Safety,
and Respect for the Individual Total Integrity in
everything we do External Focus that measures
our actions by how well we Satisfy
Customers Continuous Improvement through Total
Employee Involvement and Best Global
Practices Rewarding Simplicity over Complexity
and Action over Bureaucracy Sharing the Rewards
of our Success
VALUES
Building on over 75 years of Pella Culture and
GeneralCompany Objectives.
Revised 3/01
12
The Total Competitiveness System
Pella Corporation



ENABLING STRATEGIES
IMPERATIVES
MISSION
VISION
CUSTOMER FOCUSED PROCESSES
Market Leadership through Total Competitiveness
Provide the highest quality, highest
value, window and door products and services to
customers in our selected markets, at a level of
profitability sufficient to encourage risk-taking
and to reward employees and shareholders
Market Share Growth Customer Satisfaction Pro
fitability
Manage by Process Continuous Improvement
Market Segmentation High Performance
Teamwork LeadershipDevelopment
Product Development Order Acquisition Order
Fulfillment Service Support
Satisfy Customers Better than the Competition in
terms of Total System Quality, Cost, and Time
Most Importantly though... Our People
MOMENTS OF TRUTH

Each time a customer judges our products or
service and each decision an employee makes is,
by itself, a Moment of Truth At the end of the
day, the sum of those Moments of Truth add up to
either increase or decrease The Value of
our Products The Satisfaction of our
Customers The Rewards we Share The
Pride associated with Pella
Ownership of our Values, Vision, Mission, and
Imperatives Team Players who place business
success above functional success Goal-oriented
passion to act and be involved Developing and
coaching employees Critical thinking necessary to
achieve sustainable competitive advantage
LEADERSHIP
Pella Corporation Values include Primarily a
Human Institution that values Teamwork, Safety,
and Respect for the Individual Total Integrity in
everything we do External Focus that measures
our actions by how well we Satisfy
Customers Continuous Improvement through Total
Employee Involvement and Best Global
Practices Rewarding Simplicity over Complexity
and Action over Bureaucracy Sharing the Rewards
of our Success
VALUES
Building on over 75 years of Pella Culture and
GeneralCompany Objectives.
Revised 3/01
13
The Pella Journey
Quality Business Process Design Sales
Suppliers Managing For Daily Improvement
Quality Circle Program Established
1st Shopfloor Event
Focused Plants Established
Initial JIT Efforts
Lean Sigma
1987
1989
1/93
93-96
98-99
2001
1981
14
Lean is...

• The least-waste way to manufacture high quality
  products throughout the entire value chain.
• A way of doing business (not a tool)

15
Reducing Lead-Time
16
Value-Add vs. Non-Value-Add

• Value-Adding Activities
• ...transform materials and information into
  products services which the customer wants.

Non-Value-Adding Activities... consume
resources, but don't directly contribute to the
product or service.
17
Pella Corporation

• Supply Chain
• Challenges

18
Hours of Service

• Old Rules
• All CMV drivers may not drive
• More than 10 hours, following off-duty
• After 15 hours on-duty, following 8 hours
  off-duty
• After 60/70 hours on-duty in 7/8 consecutive days

• New Rules
• Property-Carrying CMV drivers may not drive
• More than 11 hours, following 10 hours off-duty
• Beyond the 14th hour after coming on-duty,
  following 10 hours off-duty
• After 60/70 hours on-duty in 7/8 consecutive days

19
Impact of the Change

• 3 20 loss in driver productivity and
  utilization
• Increased transit times for shippers
• Pay increases for long haul drivers to compensate
  for loss in productivity
• Increases in accessorial charges such as stop-off
  and detention charges for shippers

20
Steps Taken to Mitigate Impact

• Reduced the number of stop-offs at National
  Account stores
• Added drop trailers at additional consignees
  enabling the carrier to do a drop and hook
• Only live load as a last resort
• Do not require driver assist in unloading
• Looking at ways to make our freight more
  friendly to the shippers and consignees

21
Current Pella Load
22
Fuel Surcharge Activity
23
Effect on Freight Cost

• Example
• Route going from Pella, IA to Fall River, MA
• Total miles 1,265
• Carrier A charges Pella 1.64/mile to deliver to
  MA
• Total cost of this route 1,265 x 1.64
  2,074.60
• Current fuel surcharge is 18, therefore this
  route will cost Pella an additional 373.43
• Average fuel surcharge over the past 3 years is
  approximately 6, or 124.48 in this example

24
Effect on Freight Cost (cont.)

• Impact on the bottom line 248.95 on this route
• Imagine that Pella ships 55 routes similar to
  this each day. 248.95 x 55 routes 13,692.25
  per day
• Yearly impact 13,692.25 x 250 working days
  3,423,062.50

25
What is RFID?

• RFID in generic terms is a technology that uses
  radio waves to automatically identify people or
  objects
• Technology has been around since the 1970s
• Radio frequency identification does not require
  direct line of sight to recognize a tag like a
  barcode does

26
Why the Big Buzz?

• Major retailers such as Wal-Mart, Home Depot and
  Target are requiring vendors to become RFID
  compliant
• Enables companies to better track product through
  their own facilities and throughout the entire
  supply chain
• Current cost is much higher than a standard bar
  code

27
Barriers to Widespread Use

• Currently no standards in technology or RFID
  readers
• You cannot continue to track an RFID tag after it
  leaves your facilities unless the next company is
  using the same technology and readers
• Cost
• RFID chips currently cost between 20 50 cents
  each
• RFID readers cost over 1,000 each. A typical
  company would need to install hundreds of readers
  throughout a facility to gain the full benefits
  of RFID tracking

28
Performance Measurement

• What should a company measure?

29
Performance Measurement

• Determine your ultimate goal and create metrics
  that measure the steps involved in meeting that
  goal
• If your goal is on-time, damage free delivery to
  the final customer then measuring only on-time
  shipment or on-time manufacturing will not be
  sufficient
• Many supply chain software providers are
  developing programs to assist in data collection
  and analysis
• Internal programmers and systems can be an asset
  as well

30
Pella Corporation
Internship and Cooperative Education Program
31
Definitions
Pellas definitions Intern summer Coop
spring summer OR summer fall
32
Opportunities

• Full Time Positions
• Department Manager
• National Account Sales
• Pella Direct Sales
• Coop Intern Positions
• Marketing
• Human Resources
• Accounting
• Information Technology
• Customer Service
• Graphic Design
• Communications

33
Why Intern or Coop?

• Better understanding of likes and dislikes
• Area of focus in major / electives
• Work desires
• Connection between studies and work
  responsibilities
• Better student
• Head start with career
• Increased likelihood of landing your job of
  choice
• Opportunity to try it before you buy it

34
Why Pella?

• -Real-world responsibilities, projects, learning
  and evaluation
• -One-on-one learning with
  managers mentors
• -Continuous Improvement
  Kaizen Team Opportunities
• -Leadership Development Program
• -Pella Grant Award
• -Excellent Pay and Benefits

35
5 Components of the Program
1. Leadership Development Coops and Interns
participate in a number of activities geared
toward developing leadership skills.


These activities include
-Ropes Course -Speaker Day -Etiquette
Dinner -Intern/Coop Olympics
36
5 Components of the Program

• 2. Professional Development
• Interns Coops become part of the Pella team
  through things such as

My mentor and manager have made me feel like a
real employee here at Pella Corporation. They
have given me projects that I am in charge of,
and I have even been given the responsibility of
being a team leader. I will definitely leave
here with a great engineering experience that
will benefit me in my long-term career. Sarah
Olmer Engineering Coop University
of Nebraska Lincoln
-Corporate Orientation -Manager/Mentor
Relationships -Feedback -Team Participation -Pella
Direct Sales Network (PDSN) Branch Visit -Job
Shadowing -Friday Forums -Intern/Coop Expo
37
5 Components of the Program
3. Diversity The diversity initiative mission is
to enhance the Pella culture as one that embraces
diversity in all functions within the company and
one that encourages and enables all stakeholders
to participate to their full potential for the
benefits of the company.
38
5 Components of the Program
4. College Relations Pella Corporation values the
various colleges and universities from which the
Interns and Coops are completing their education.
Both during and after and Intern/Coops time with
Pella Corporation, they may be asked to
participate in various on-campus activities.
39
5 Components of the Program
5. Community Relations Interns and Coops get
involved in both Pella Corporation and the
community of Pella through things such as
-Local Disability Center -RAGBRAI -Klompen
Classic Kids Run -Tulip Time -Pella Food
Shelf Thursdays in Pella Fridays in Pella
40
Why Choose Pella?

• Compensation
• College Juniors earn 75 of entry-level, full
  time salary
• College Seniors earn 85 of entry-level, full
  time salary
• Paid Vacation/Paid Holidays
• Relocation Assistance
• Educational Expense Reimbursement
• Housing Assistance
• Short-Term lease referral

Social Activities -Monthly Forums -Pella Sales
Trips -Leadership Series -Pella Sponsored
Tournaments -Intern/Coop Dinner Out -Lake Red
Rock State Park -Positively Pella
41
Questions?
www.pella.com/careers