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  1. 1. SIX SIGMA & BUSINESS IMPROVEMENT CEO OF THE YEAR:MARK PIGOTT, PACCAROver the course of 102 years, PACCAR has successfully evolved from a manufacturer ofrailcars and, later, trucks into a global technology-based capital goods and financecompany. Superior product quality, technological innovation, and balanced globaldiversification are three key operating characteristics that define PACCAR’s businessphilosophy.In 1997, Mark Pigott’s first year as Chairman and Chief Executive Officer of PACCAR,PACCAR launched a broad-based Six Sigma initiative to reduce or eliminate defects,nonvalue-added processes, and other inefficiencies in all facets of the business. He sawSix Sigma as a good fit with a corporate culture that emphasized quality. Mark and hisstaff were the first PACCAR group to receive Six Sigma training, exemplifying seniormanagement’s sense of purpose and establishing a strong foundation to build upon.Today, more than 12,000 employees and suppliers are trained to use Six Sigma tools toevaluate everything from engineering design and assembly procedures to sales orderingand financial transactions. Since inception, more than 7,600 Six Sigma projects havebeen implemented, delivering over $1.5 billion in cumulative savings.Six Sigma has played a major role in PACCAR’s growth and profitability. Revenuesincreased from $6.5 billion in 1997 to $15.2 billion in 2007. Over this period, Six Sigmainitiatives have contributed to the following outstanding shareholder results:
  2. 2. • Average annual total shareholder return was 22.7 percent versus the Standard &Poor’s 500 index return of 5.9 percent.• Total dividends increased 305 percent, and a total of $3.1 billion in dividendswere distributed to shareholders.• Average annual return on beginning shareholder equity (ROE) was 25 percent.In addition to growth and profitability, PACCAR and its employees are firmly committedto strong quality growth and are proud of their award-winning products.• PACCAR’s Kenworth division achieved the highest ranking in customersatisfaction among Class 8 truck owners in the Over the Road, Pickup and Delivery, andVocational segments, according to the J.D. Power and Associates 2007 Heavy Duty TruckCustomer Satisfaction Study. Kenworth is the first truck manufacturer to sweep all threemajor product segment awards since the customer satisfaction survey was introduced.• PACCAR’s Peterbilt division earned the J.D. Power and Associates CustomerSatisfaction Award for its conventional medium duty trucks in 2007 for the secondconsecutive year.• Since 1999, PACCAR has earned 24 J.D. Power awards.• PACCAR’s DAF division’s XF105 was named 2007’s International Truck of theYear at the International Motors Show.Six Sigma plays a central role in PACCAR’s focus on quality, innovation, and customersatisfaction. It’s the common language used to identify customer needs and incorporate
  3. 3. them into products, services, and processes. Consistent training, methods, andcommunications drive a consistent and aggressive focus on performance improvement.From the onset, Mark has emphasized that quality and innovation are keys to growth atPACCAR. He reinforces this message at shareholder meetings, with the investmentcommunity, and in company publications.To further drive quality improvements at the source, PACCAR launched a Design for SixSigma (DFSS) initiative in 2001. Today, engineers and suppliers developing newproducts, services, and processes in every area of the organization attend DFSS training.One of the most successful and visible Six Sigma initiatives at PACCAR is the HighImpact Kaizen Event (HIKE). Initiated at DAF in 2002, HIKEs combine the power ofLean and Six Sigma to make significant improvements across large areas of an operationin just four weeks. HIKEs have been deployed throughout all PACCAR locations andbusinesses.HIKEs were so successful at PACCAR sites that Mark encouraged expansion of theprogram to suppliers, dealers, and customers.. As a result, HIKE methods were used toincrease service technician efficiency at dealers by an average of 20 percent. This is theequivalent of four additional technicians, in a market where technicians are in shortsupply, and customers get their trucks back on the road faster.
  4. 4. Environmental responsibility is also one of PACCAR’s core values. The companyregularly develops new programs to help protect and preserve the environment,.PACCAR has established ambitious goals to further reduce emissions and enhance fuelefficiency in its truck models. Recently, all of PACCAR’s manufacturing facilities inEurope and North America earned ISO 14001 environmental certification.To recognize outstanding results from the application of Six Sigma methods, Mark hasestablished a Chairman’s Six Sigma Award. The award distinguishes those individualswho complete projects that best support PACCAR’s goals to provide unsurpassedcustomer satisfaction, superior quality, and outstanding financial results. PACCARdivisions submit projects and a panel of judges recommend one winner from each of thefollowing four categories:• Quality• Revenue/ Profit Generation• Productivity/ Efficiency• Green/ EnvironmentalThe winner of the Chairman’s Six Sigma Award is selected from these four projects.Six Sigma and the dedication of employees worldwide have earned PACCAR industry-leading recognition. PACCAR had a record year in 2006 and its second-highest revenueand net income in 2007 due in part to superior product quality and process efficiency
  5. 5. propelled by Six Sigma. PACCAR set new market share records in North America,Australia, and Mexico, and record industry sales for commercial vehicles above 15 tonsin Western and Central Europe for 2007.