Daikin Applied


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Daikin Applied’s new quality and supply chain executive focuses on increasing efficiency and revamping the supply chain.

By Kat Zeman

Ramon Gonzalez likes efficiency. In his new role as vice president of corporate quality and supply chain management at Daikin Applied, Gonzalez plans to concentrate on regionalization, standardizing the supply chain process and improving forecasting. “Our customers are very focused on efficiency,” he says.

Minneapolis-based Daikin designs and manufactures technologically advanced commercial HVAC systems. Its products, solutions and services are sold globally. “Daikin is the world’s No. 1 air conditioning company,” says Gonzalez, who joined the company about six months ago. “We are more technologically advanced than our competition and we are developing products that are more efficient and use less energy. We’re always looking at the future.”

Daikin clients – such as hospitals, schools, apartment buildings, hotels, casinos, shopping centers and stadiums – demand eco-friendly HVAC systems that use less energy and save them money, he says. “And people are very conscious about size. They want units that take up less space, making more room for people to live, learn, work and gather,” he adds. “Also, sound is very important. These three areas and others is where we differentiate ourselves.”

Daikin Applied fact box

Daikin places high value on developing sustainable solutions for its next generation of eco-friendly HVAC systems and considers itself an industry leader for such solutions. Its investments in innovation, technology and sustainability earned the company Frost & Sullivan’s 2016 Manufacturing Leadership Award.

Daikin prides itself on developing and manufacturing products that save energy, reduce environmental impacts and help facilities earn points toward LEED certification with EPD verification. Daikin was also recognized by the U.S. Department of Energy’s “Better Buildings, Better Plants” program, which challenges companies to reduce their energy intensity by 35 percent in five years.

Setting Standards

There’s always room for improvement. One of Gonzalez’s areas for enhancement is regionalization. Determining how fast a supplier can respond and where the company is located in relation to Daikin’s five factories are top priorities. Daikin has a single factory each in Arizona, Virginia and Mexico, and two factories in Minnesota. “We have many suppliers,” he says. “I’m currently working with both existing and new suppliers. The ultimate goal is to determine which supplier wants to be a true partner and support us with the fastest response to match our customers’ requirements.”

In addition, Gonzalez is focusing on standardizing Daikin’s supply chain processes. His focus will be on identifying the best company practices and possible business opportunities in areas that include purchasing, inventory, management and evaluating the possibility of consolidating suppliers.

“We need to find the right suppliers with the right product at the right price and location,” Gonzalez says. To identify best practices and opportunities, Gonzales is also working with Daikin’s three sister companies: Goodman Manufacturing, American Air Filter and Daikin America.

Forecasting the Future

He doesn’t use a crystal ball, but Gonzalez forecasts the future based on research, management insight and sales and operations planning.

“Forecasting is very important and we need to continue to improve and take this to the next level,” he says. “We are working on developing a better forecasting process as a part of a companywide sales and operations planning process. We’re looking at different systems and doing a lot of information gathering.”

A better forecasting system will help the company be more efficient, especially when it comes to supply and demand at its factories and with suppliers. “We want to give the suppliers and our factories the right information at the right time so they can be ready to support our customers’ demands,” Gonzalez adds.

Daikin is using its factory in Virginia as a pilot for the new forecasting process.

Safety Nets

Committed to workplace safety, Daikin’s Staunton, Va.-based facility pledged this year to become a Voluntary Protection Programs (VPP) site, an OSHA cooperative program. VPP is OSHA’s initiative to encourage private industry leaders and federal and state agencies to raise safety standards above legal requirements to prevent workplace injuries and illnesses. The initiative encourages hazard prevention through worksite analysis and training.

The VPP process often takes a few years for a business to fully adopt. Companies and organizations are asked to demonstrate improvements in safety. The program sets forth stringent requirements that push companies to create safe and healthy working environments for their employees.

The team at Daikin’s Staunton facility, which primarily produces chillers for large HVAC installations, has been focused on becoming a VPP site for more than two years. Daikin’s management, employees and OSHA officials have been collaborating to develop a comprehensive safety and health management system.

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“We envision a workplace that incorporates a proactive safety approach into everything we do,” stated Matt Ledford, Staunton’s environmental, health and safety manager, in a press release. “This means a safety culture that is embodied by every employee, incorporated into every process we do and is visible every day. Becoming a VPP site is essential to demonstrate the importance of workplace safety to our business.” Daikin has partnered with other VPP Star sites in Virginia for their mentorship, including NIBCO INC., which is serving as a mentor to help achieve Daikin’s VPP goal.

Daikin believes that its employees are central to the collective success and growth of the business. It operates under the promise of People-Centered Management, which pledges a safe work environment and advocates the goal of becoming a VPP site. “Our ultimate goal is to make sure our employees go home at the end of the day in the same condition they came to work, if not a little bit better,” Ledford stated.

Big Parent

Aside from selling new HVAC systems, Daikin also offers maintenance agreements and repair services, replacements or upgrades for existing systems and rental chillers and temporary cooling products. In addition, it operates a parts business with a centralized warehouse in Dayton, Ohio.

Its parent company, Daikin Industries Ltd., is a Forbes 1000 global company that reports revenues in excess of $20 billion and has more than 60,000 employees worldwide, making it the largest HVAC manufacturer in the world. It has customers in more than 140 countries and more than 80 production sites globally.

The company is engaged primarily in the development, manufacture, sales and aftermarket support of heating, ventilation, air conditioning and refrigeration (HVACR) equipment, refrigerants and other chemicals, as well as oil hydraulic products. Daikin Industries was named one of the world’s most innovative companies by Forbes magazine.


Daikin Applied