ENGINEERING ADP BUSINESS CASE

Instructions
Presented below is a fictional business case study pertinent to Ingersoll Rand. This is an
opportunity to showcase your communication and presentation skills, as well as your functional
knowledge. Your task is to develop and present an action plan to a panel of assessors from your
function in a 10 minute oral presentation. After you present, you will be asked to defend your
position during a “Question and Answer” session.

The Situation
Recently, the CEO of Ingersoll Rand announced that, as a strategic move, the company is going
to acquire Swift Technologies (fictional company). Swift Technologies is headquartered in
Zurich, Switzerland and provides energy-efficient heating, ventilation, and air conditioning
(HVAC) unit solutions for commercial and residential customers. Swift Technologies is a $50
million growth-oriented company known for high-quality products, innovation, flexibility, and a
large overseas customer base. Swift Technologies enjoys a high degree of customer loyalty due
to its ability to respond to changing needs with superior and timely-delivered products, excellent
customer service, and its ability to stay on top of the latest advances in technology. Between its
strong presence in emerging markets and its focus on sustainable products, Swift Technologies is
a highly attractive acquisition for Ingersoll Rand.

Ingersoll Rand has completed much of the due diligence work required for the acquisition. The
next step is to develop the action plans for carrying out the acquisition. Considering the scope
of the acquisition and its potential for positioning Ingersoll Rand as the industry leader in all
product categories, the acquisition presents significant future challenges and opportunities for
employees in all functions.

Ingersoll Rand Company Information

Ingersoll Rand (NYSE:IR) is a world leader in creating and sustaining safe, comfortable and
efficient environments in commercial, residential, and industrial markets. Its family of strategic
brands includes Club Car, Schlage, Thermo King, and Trane, among others. The employees at
Ingersoll Rand work together to enhance the quality and comfort of air in homes and buildings,
transport and protect food and perishables, secure homes and commercial properties, and
increase industrial productivity and efficiency. Ingersoll Rand employs approximately 60
thousand people and is a $13 billion global company committed to sustainable business
practices. There are two ways that Ingersoll Rand supports the integration of sustainability
principles into day-to-day operations. First, the Sustainability Strategy Council is a cross-
functional team of business leaders that leads and monitors enterprise-wide performance.
Second, the Center for Energy Efficiency and Sustainability (CEES) is a non-profit entity made
up of a dedicated team of experts who work with outside partners to shape the vision of
sustainability for Ingersoll Rand and other organizations on issues that range from customer-
driven green innovation to facility operations. The company itself is structured into eleven
strategic business units in two segments, Climate and Industrial Technologies.

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Ingersoll Rand’s 3-pronged Approach to Achieving Premier Performance

• Fostering a Progressive, Diverse, and Inclusive (PDI)
• Encouraging Customer-Driven Innovation (CDI)
• Demonstrating exemplary service to customers through Operational Excellence (Op Ex)

Definitions of Ingersoll Rand’s Progressive, Diverse and Inclusive Culture

Progressive Diverse Inclusive
Provides innovative solutions Recognizes employee diversity Fosters a sense of belonging
Creates and supports high
Rapidly adapts to change Appreciates differences
performance teams
Promotes and celebrates
Empowers employees to effect Supports individuals functioning at
individual and collective
change full capacity
achievement
Fosters individuals’ feelings of
Rewards and recognizes those Embraces diversity of thought and
being valued and included in the
who effect change diversity of experiences
mission

Goals of Ingersoll Rand’s Customer-Driven Innovation

To create an empowered, high- To bring solutions to market that To become a premier performing
velocity environment where create value, as seen through the company by achieving 25% revenue
customer needs and wants drive eyes of Ingersoll Rand customers. from customer-driven innovation.
IR’s innovation activities.

Ingersoll Rand’s Operational Excellence Focus

Continuously enhancing the value delivered to customers and the capability of IR employees.
Continuously reducing waste, variation and overburden.
• Waste - anything that does not add value to customers.
• Variation - the unevenness that is caused through unstable processes.
• Overburden - the excess work placed on people, processes or equipment that causes failures over time.

Ingersoll Rand’s Strategic Goals

• Customer Satisfaction: Improve quality, delivery and services to our customers across
sectors by 20%.
• People: Engage employees in understanding our mission and the benefits to all of us when
the company succeeds.
• Cash Flow: Deliver available cash flow equal to 100% after-tax profit.
• Growth through Innovation: Drive organic growth of 8% from emerging markets,
innovative solutions, and services.
• Margin Expansion: Generate operating margin improvement greater than 2 percentage
points over the prior year, including gross productivity of 5%, and margin expansion from
the top line margin expansion (TLME) initiative that meets or exceeds material inflation.

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Substantial integration efforts will be needed in each department in order to fully capitalize on
the opportunities afforded to Ingersoll Rand through the acquisition of Swift Technologies.
Although its product offerings are similar to Ingersoll Rand’s Climate Solutions sector, Swift
Technologies differs from Ingersoll Rand in key strategic ways. The following are the functional
leaders at Ingersoll Rand who will play a key role in the acquisition process and implementation:

Name Title
Leslie Bigg President and Chief Executive Officer (CEO)
Pat Purchase Vice President of Sourcing
Morgan Wrench Vice President of Manufacturing
Kendall Dollars Chief Financial Officer (CFO)
Chris Partner Vice President of Human Resources
Kendra Cross Vice President of Marketing
Alex Lean Vice President of Engineering
Dakota Cloud Chief Information Officer (CIO)

Swift Technologies Company Information

Swift Technologies is a medium-sized company based out of Switzerland that provides energy-
efficient HVAC unit solutions for commercial and residential customers. Its customer base is
rooted largely overseas in China and Brazil. The company was established 10 years ago and has
since increased its sales to $50 million, last year. Swift Technologies’ success has largely been
based on its nimble, close-to-customer approach in the marketplace and its presence in emerging
markets. However, its profit margin has hovered around 2% in the past 3 years and is not
consistent across customers, as it occasionally sells its product at a loss to gain aftermarket
service business. The leaders of the company are entrepreneurial and willing to risk profitability
in the short-term to grow market share and long-term revenue streams, seen as both a strength
and a weakness.

Swift Technologies’ strengths include a satisfied customer base, its ability to adapt quickly to
customer demands, a high level of employee engagement, its focus on innovation, and a presence
in emerging markets. However, Swift Technologies’ inadequate Information Technology (IT)
systems, problems with accurate and timely financial information tracking, underdeveloped
marketing team, and lack of Standard Operating Procedures (SOPs) have crippled Swift’s ability
to capitalize on its strengths.

Swift Technologies’ Strategic Goals

• Enhance Efficiency and Profit: continually improve internal processes to realize
efficiencies, increase profitability, and reduce the impact of the business on the environment.
• Brand Presence: build a strong brand presence in the market.

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• Customer Service: achieve and maintain outstanding customer service by anticipating future
customer needs.
• Market Growth: capitalize on new opportunities for growth in external markets, despite its
already large emerging market base.
• Innovation: drive innovation by investing in product research and development.

The Acquisition
The acquisition, which will be finalized in mid-June of the coming year, is rooted in several
factors on each side. Swift Technologies’ leaders know their company’s financial situation is not
sustainable over the long term, and they are hoping that this acquisition will remedy their
financial issues by enabling beneficial improvements (e.g., information tracking). Further, Swift
Technologies has also suffered from lack of attention to critical back-end details to support the
business. Lastly, Swift Technologies’ tunnel-vision focus on innovation has put marketing
initiatives (e.g., researching the competition) on the backburner, thereby preventing the
development of a strong brand identity. Through the acquisition, Swift Technologies’ goal is to
benefit from Ingersoll Rand’s marketing expertise, financial stability, and sophisticated operating
procedures. Swift Technologies will also achieve greater brand recognition under Ingersoll Rand
than it did as its own entity, increasing capability in emerging markets.

From Ingersoll Rand’s perspective, the company President and CEO know that the acquisition of
Swift Technologies will provide increased penetration in emerging markets, access to an existing
base of satisfied customers, and increased organizational capability in HVAC unit product
innovation and design. Additionally, the price of Swift was at an all-time low, making it a prime
target for acquisition. While the HVAC unit business is not new for Ingersoll Rand, the addition
of Swift is a good complement to Ingersoll Rand’s already strong HVAC unit business in its
Climate Solutions sector. Swift Technologies’ focus on energy-efficient HVAC unit systems
supports Ingersoll Rand’s strategic goal of leading the way in environmental sustainability.
While customer service at Ingersoll Rand is considered a company strength, there is always room
for improvement. Finally, Ingersoll Rand’s leaders anticipate that Swift Technologies’ focus on
customer service can be leveraged to increase future customer loyalty, chiefly abroad.

While it is clear to the leaders of Ingersoll Rand that acquiring Swift Technologies will benefit
the company, each Ingersoll Rand sector and function has several steps to complete to make the
acquisition successful. Below you will find information specific to your function’s role in this
acquisition. This functional information will highlight the issues you should address in your
presentation.

More information about Ingersoll Rand can be found at

http://ingersollrand.com/Pages/default.aspx

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The Situation for Engineering

You are an Ingersoll Rand engineer who has been assigned to serve as Project Manager for a
Swift Technologies New Product Development (NPD) team that is 12 weeks away from
launching a new heating, ventilation, and air-conditioning (HVAC) unit model that uses
microchannel coils (please see Figure 1). Because traditional copper tubes with aluminum fins
are easier to damage and require twice as much refrigerant as microchannel coils, the use of
microchannel coils would decrease quality complaints while also making units more cost
efficient.

This new technology has not been introduced to the market and would therefore give Ingersoll
Rand a competitive advantage over other companies. This project could be a great opportunity
for Ingersoll Rand to leverage Swift Technologies’ strengths in innovation and improved time to
market, both of which are expected through the acquisition. The project is on schedule but is
already over-budget and your boss has concerns over whether or not the new technology will
meet Ingersoll Rand’s high standards for quality and safety.

Last week, you held a meeting with the Swift Technologies NPD team to learn about the current
status of the project and engineering work. Your boss, Vice President of Engineering, Alex
Lean, expects a briefing of the meeting regarding the following:

• An accurate picture of what you think the next action items and schedule for the
remainder of the project need to be.
• Estimates of future cost, considering safety and quality, and preexisting deadlines.

Other people who will hear your briefing include the Ingersoll Rand Vice President of
Manufacturing, Morgan Wrench, and the Ingersoll Rand Vice President of Sourcing, Pat
Purchase. Alex has already announced to these individuals and to corporate management (i.e.,
Ingersoll Rand CEO, Leslie Bigg) that production will begin in 12 weeks. It is clear that Alex
places a high priority on meeting this timeline. Furthermore, the leaders have emphasized that,
like your boss, they are very concerned about the profitability of this technology after production
and with meeting Ingersoll Rand’s quality and safety standards. This means that, while the
leaders are frustrated by the exceeded budget, they want to ensure that the HVAC units with
microchannel coils are of high quality so that post-production costs can be avoided.

Below is your summary of the notes you took during your meeting with the Swift Technologies
NPD team. There were quite a few differences between how Swift Technologies handles a NPD
project and how Ingersoll Rand traditionally manages a NPD project.

What you know

Swift Technologies has a very informal phase gate process for tracking, reviewing and approving
projects. Most of the Swift Technologies employees have been in their positions long enough to
“just know” what needs to be done and who they need to get approvals from. This is very
different from Ingersoll Rand, where there is a well-established, 5-Gate process to ensure that

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ENGINEERING ADP BUSINESS CASE
new products meet Ingersoll Rand’s high quality and safety standards and do not exceed budget.
You ascertain that the project is currently at Ingersoll Rand’s equivalent of Phase Two (the
“Planning Phase”) and is ready to be moved into Phase Three (the “Development Phase”). At
Ingersoll Rand, moving to Phase Three requires a formal Gate Review the project and sign-off
by key project stakeholders. It would take at least three weeks to create and pull together all of
the deliverables traditionally required for a Gate Review meeting. These include a validated
business case, a complete project plan, and a project risk assessment and risk management plan.

When you asked your Ingersoll Rand coworkers about reviewing lessons they have learned from
previous projects, with the hope of creating a similar project plan, you learned that Ingersoll
Rand only had project reviews of HVAC units produced with copper tubes and aluminum fins,
which only somewhat relates to this new microchannel coil engineering project. When you
talked to the Swift Technologies NPD team, its members told you that two years ago one of the
company’s innovation teams engineered a similar product. Unfortunately, this product had
several major issues and, as a result, was never launched. Luckily, this Swift Technologies
innovation team did a summary review of what went wrong and simply never followed up on its
findings. It would take about 10 business days to look over the lessons learned from the Swift
Technologies innovation team and Ingersoll Rand’s previous HVAC unit engineering projects,
and doing so might save time down the line.

Design and Materials

The week before you received this assignment to be Project Manager for the Swift Technologies
NPD team, a Conceptual Design Review was held. For Swift Technologies, this means that
Marketing reviewed the preliminary designs created by Engineering for HVAC units with
microchannel coils and evaluated whether the designs will meet customer needs and
expectations. Swift Technologies’ Marketing department requested the addition of supplemental
features that it feels will be key selling points for the HVAC units with microchannel coils. If
these additional features are not included,the marketing department will lower the sales forecast
by 12%. However, you learn that there was no additional discussion about whether the extra
features would be technically feasible or how much their addition would increase the production
cost of the HVAC units. It would take approximately four weeks to fully vet the technical
feasibility of adding all the market-preferred features and adjust the current design.

After reviewing the current status, you discussed the project schedule and upcoming actions with
the Swift Technologies NPD team. You found that there are no plans for a formal Design
Failure Modes and Effects Analysis (DFMEA), which is a critical step required by Ingersoll
Rand for any new product project. It would add at least two weeks to the schedule to conduct a
DFMEA and may uncover additional testing requirements or design changes.

Testing

Next, the team discussed plans for testing. Traditionally, Ingersoll Rand develops its own testing
procedures and conducts most testing at its internal labs. This process ensures a robust, quality
product at launch but can often extend the launch date because testing procedures must be
tweaked several times in order to ensure that all of the desired variables are tested. Swift

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Technologies, on the other hand, was planning to have an outside lab conduct all the product
testing. The lab has a very quick turn-around time but is also very costly – about $10,000.00.

Cost

The project’s original budget was $500,000.00. However, the project is currently running over
by $5,000.00 and there are still significant expenditures.

The current tube and fin coils can currently be manufactured in house by Swift Technologies,
and thus have labor and burden costs associated. The microchannel coils must be purchased
complete from Cool-Coil Company, and will not require any additional labor once received at
the factory besides installation. The expected annual forecast for these new units was provided
by Marketing and is shown in Table 1.

Talking with the plant manager, you learned that there is some concern that replacing the tube
and fin coils with the microchannel coils will mean that several large machines currently in use
will no longer be needed, requiring 12 employees to be laid off due to excess capacity. The
machinery has a current book valueof $700,000.00 but is probably only worth $250,000 on the
used equipment market..

The tooling for the microchannel coils has already been ordered and mostly paid for. However,
Swift Technologies has yet to receive the first coils from the tooling for prototype testing
because the tooling is not yet complete. The tool and die maker is currently overloaded and so
they would require additional funds to expedite the tooling. If you were to pay an additional
$10,000.00, the lead time to finish the tooling could be reduced from six weeks to two. (Please
see Table 1.) You learn that Swift is not planning to conduct a formal Production Part Approval
Process (PPAP) for the new coils, a process required ty Ingersoll Rand to ensure new parts meet
all requirements before being included in a customer unit. A full PPAP usually takes 6 weeks
after tooling is completed.

Additional information

Some additional information you gleaned from your meeting was that Swift Technologies’
closest competitor, Fire and Ice Corporation, is scheduled to launch a competitive HVAC unit
with microchannels 20 weeks from now. You also got the feeling that Swift Technologies is
very anxious about potentially losing its internal capabilities to quickly deliver new products to
the market as a result of its acquisition by Ingersoll Rand. Swift Technologies’ fear is that
Ingersoll Rand’s emphasis on quality and process makes it slow to market on new products. Both
Ingersoll Rand and Swift Technologies use ProE 3D CAD software.

Your Task

The senior leaders whom you will be briefing will expect you to answer the following questions,
as well as address the project planning issues raised by your boss, Alex Lean:

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ENGINEERING ADP BUSINESS CASE

• Given the cultural differences between Ingersoll Rand and Swift Technologies, on which
issues might you have to compromise and why? On which issues would you not be
willing to compromise and why? Be sure to consider:
o On-time delivery of project
o Overall budget of project
o Quality of final product
o Financial benefits of the project
• How do you think Swift Technologies and Ingersoll Rand employees’ motivation might
be affected by your decisions?

In addition, you will be evaluated on how well you demonstrate the following:
• Clear and persuasive communication
• Innovation and creativity
• Demonstrate work ethic and a drive for success
• Articulated the clear rationale and used technical knowledge to produce an effective plan
• Created well-executed plan and explained project monitoring
• Applied processes and design tools for problem solving and product improvement

*Note: You should not just regurgitate information from the business case during your
presentation. Focus instead on how you assessed the problem and be sure to walk through
your decision-making and problem-solving process.

Instructions on preparing your presentation

• You will have 10 minutes to present your recommendations, followed by 20 minutes for
questions and answers.
• Limit your presentation to 5-7 slides.
• The preparation work should take you no more than 3-4 hours.
• Flip charts and markers will be available in the presentation room.

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