Shell Solutions for Smithfield Foods

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Shell Solutions for Smithfield Foods
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Introduction

• Dean Hager Shell Oil Products
• Key Account Manager Food Beverage Sector
• Rick Harr Shell Oil Products
• Director of Key Accounts US Industrial
  Lubricants

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Overview

• Goals
• Challenges
• Needs
• Shells Solution
• Benefits of Partnering with Shell
• Implementation Plan
• Shells Investment in Smithfield

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Goals

• Protect Smithfield Brands from lubricant
  contamination issues
• Reduce overall manufacturing costs
• Use quality H1 lubricants to reduce TCO
• Reduce lubricant consumption
• Increase equipment efficiency
• Enter into a partnership to design and implement
  Smithfields lubrication food safety program (H1
  lubricants)

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Challenges

• Many applications dont currently use H1
• H1 lubricants are more expensive
• Lubricant consumption is a concern
• Many H1 lubricants are inferior to industrial
  lubricants can reduce equip. efficiency
• Lubrication training and skills vary
• Geographically diverse plants
• Historically varied corporate cultures
• Currently using 85 lubricant manufacturers

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Needs

• Implement a consistent Smithfield policy
• A lubrication partner with expertise in H1
• At the corporate and plant level
• Implement a comprehensive training plan
• Improved lubrication skills reduced maintenance
  costs
• Increase awareness of FDA/H1 requirements and
  lubrication food safety responsibilities
• Improve storage and handling processes for H1
• Local technical support that becomes part of team
  
• Supplier that drives and documents savings
• Reduce costs of inventory and lead time with
  local supply and warehouse points

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FDA Regulations
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Lubricant Regulations

• Code of Federal Regulations (CFR) issued by Food
  Drug Administration (FDA)
• 21 CFR 178.3570 Food Machinery lubricants with
  potential for incidental contact defined.
• Regulation lists acceptable components of H1
  lubricants and their contamination limits.
• Non-H1 products have zero ppm contamination
  limit.
• H1 products have a ten ppm contamination limit.
• NSF H1 certifies that product meets 21 CFR
  178.3570
• Formerly USDA H1
• Makes no determination of product performance

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H1 lubricants are only part of the solution
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Lubricant Contamination Potential
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• Protect Your Brands

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• Food Safety Training

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Total Cost of Lubrication
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Where are the costs of lubrication?
Disposal
Admin Management
Total Cost of Ownership
Training
Concentrate in these areas where real cost
reductions are achievable and implementation is
practical
Oil analysis
Handling dispensing
Inventory
Cost
Leaks
Lubricant products
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Total Impact of Lubrication on Costs
Downtime and Loss of Production
Total Costs Impacted by Lubrication
Component Failures and Parts Costs
Increased Maintenance Labor Costs
Disposal
Admin Management
Significant savings and efficiency improvements
Training
Total Cost of Ownership
Oil analysis
Handling dispensing
Inventory
Effective effort here

Cost
Leaks
Lubricant products
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JIPM Study of 696 Mechanical Failures
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JIPM Study of 696 Mechanical Failures
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Proper lubrication and inspection is critical
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No oil in gearbox, over-greasing, disconnected
lines
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Reducing Lubricant Consumption
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Training and Skill Building
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Lubrication Training
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H1 Lubricant Storage and Handling Improvements
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Lubricant Handling
Contamination Control
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Proper H1 Lubricant Storage Application
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Corporate Partnership WithLocal Supply and
Support
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Corporate Partnership

• Reduced corporate pricing
• Price change mechanism
• Dedicated customer service
• Corporate agreement with local inventory and tech
  service for all Smithfield locations
• Shell Distributor network
• Shell Field Based Lubrication Team
• Every Shell technical support rep has been
  trained on H1 and lubrication food safety
• Key Account level partnership to help design and
  orchestrate program implementation

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Shell Distributor Network
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Shell Distributor Network for Smithfield
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• Shell Distributor Network for Smithfield and
  Shell Technical Support Territories

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Superior Performance H1 Lubricants for Every
Application
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Superior H1 Lubricants

• Shell Cassida
• Fully synthetic H1 lubricants
• Equal or greater performance
• Extended drains reduced labor
• Increased equipment efficiency
• Shell FM
• White oil based H1 lubricants
• Suitable for normal operation

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Implementation
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Corporate Implementation Plan

• Define Lubrication Program
• Policy Scope
• Plant Requirements
• Whats optional, whats not
• Shell Service Requirements
• Standard support levels
• Define Measurements and KPIs
• Define timeline for implementation and adherence

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Plant Level Implementation

• Standardized plant assessment
• Lubricant consolidation
• H1 recommendations
• Lubrication storage and handling improvements
• Create and implement standardized training
  program
• Implement Oil Analysis program
• Assist with improving CBM/RCM
• CMMS evaluations

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Lubricant Consolidation
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Investment in Smithfields Business

• With a long term (3-5 years) contracted
  partnership
• Shell will provide up to 10,000 in laboratory
  oil analysis services
• Shell will provide up to 30,000 for purchase of
  new lubricant storage tanks and equipment
• Shell will rebate up to 0.50/gal on H1 gallons
  converted to Shell in 2005

If thresholds for purchases are met.
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Conclusion

• Reduce Total Cost of Ownership
• Protect the Smithfield brands
• H1 lubricants are the first step
• Shell will become lubrication partner at
  corporate and plant level
• Design, Implement, Monitor (KPIs)
• Shell will invest in a partnership with
  Smithfield