Healthcare Benefits: Transformed Businesses within the Healthcare Sector

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Healthcare Benefits Transformed Businesses within the Healthcare Sector

IBP Delivers Growth Top Business Benefits Attributed to Integrated Business Planning (% respondents) Improved Asset Utilization

Increased Revenue

Improved Logistics Planning

Developing and Executing Demand Shaping Programs

19%

17%

52%

20% Capital Planning and Asset Management

21%

Improved translation of Demand into Procurement requirements/buy-side

31%

21%

Improved Forecast Accuracy

31%

27% 28%

31%

Improvements in the Perfect Order/Customer Service

Reduction of Inventory

Source: AMR Research, a Gartner organisation

Improved New Product Inventory

Better Supply Planning / Schedule Adherence

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Business Benefits Delivered Medical Devices <88%

Cost and Service

Finished Goods (days)

>84 days

88 94%

>94%

Customer OTIF % (by line)

84 - 37 days

Stockturns Finished Goods <37 days

6 - 10 turns

>10 turns

<6 turns

Oliver Wight Clients

Disadvantage

Parity

Advantage

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>83%

IBP Metrics

<76%

Forecast Accuracy %

76 83%

Overall Supply Chain Metrics Total Supply Chain Cost % Sales

>8%

Perfect Order Probability %

8 - 6%

74 83%

>83%

<74% <6%

Oliver Wight Clients

Disadvantage

Parity

Advantage

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Pharmaceutical <89%

Finished Goods (days)

>93%

6 - 12 turns

>12 turns

Customer On Time In Full % (by line)

Cost and Service

>91 days

89 93%

91 - 47 days

<47 days

Stockturns Finished Goods

<6 turns

Oliver Wight Clients

Disadvantage

Parity

Advantage

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Forecast Accuracy %

IBP Metrics

<74%

74 77%

>77%

Overall Supply Chain Metrics Total Supply Chain Cost % Sales

>7%

Perfect Order Probability %

7 - 5%

>81% <70%

70 81%

<5%

Oliver Wight Clients

Disadvantage

Parity

Advantage

Case Study

Issues Performance levels as low as 5% Incorrect master data Poor communication flow between departments

Company:

Poor visibility of production schedule

Value Delivered Production doubled ÂŁ1.5 million savings in one year NPS performance levels improved from 5% to above 95% Greater visibility of production schedule Inventory obsolesce reduced by 40% Plantâ&#x20AC;&#x2122;s freight budget reduced by 10% Departmental barriers removed and communication improved

Achieving the IBP milestone showed we had good control over our medium to long term planning, which helped ensure the data & plans coming into the near term horizon would be better & more coordinated.

Jon Sinnott, Supply Chain Solutions Lead

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Company:

Issues Culture of firefighting within the business as a result of striving to maintain minimum service levels

Germany

Unplanned changes commonplace with people solving mini-crisis to ensure the right products were produced at the right time There was a need to compete effectively against low-cost economies Fragmented business processes with no integration or communication between different functions Ever-growing capacity resulting in a backlog of between 1-2 weeks No rough-cut capacity planning tool

Value Delivered Demand variability decreased by more than 40% Service levels boosted to 99.5% Inventory levels reduced by more than 15% Materials management costs cut by 10% Duplication of effort removed More controlled and structured processes

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Company:

Multinational Pharmaceutical Company

Issues Integrating the product portfolio planning with financial planning Short-term planning horizon of 12 months Supply point vs supply chain view No established demand planning role in the organisation

Value Delivered Improved forecast accuracy and reduced bias Improved global product launch visibility and impact on demand 24 month rolling business plan Full operating area business visibility

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Company:

Issues Little attention paid to formulating a single supply chain management process Decisions made in the supply chain not aligned with overall business strategy A growing and complex supply chain with little flexibility across divisions Initiatives driving only short-term benefits Capital tied up in inventory No trust in the supply chain to deliver and forecasting bias to ensure supply

Value Delivered Redesigned business management flows to achieve full integration Total ownership of process across the board Reduced inventory stock Integrated financials Improved staff engagement and defined decision-making responsibilities

Almost overnight the bias started to drop, and continued to do so. Weâ&#x20AC;&#x2122;re now achieving low average bias in most areas.

Don Harding, Project Director

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Company:

Issues Insufficient demand management creating production instability and buffers in stock No key performance indicators Diminished motivation and trust amongst workforce Increased complexity due to companies business acquisitions and growth Customer service levels below 75%

Value Delivered Customer service levels improved to 95% Supply chain performance and reliability improved Efficiency savings of more than â&#x201A;Ź2 million Inventory reduced Continuous improvement culture imbedded

Over the duration of the process so far, we estimate that the process improvements have delivered savings of approximately â&#x201A;Ź2million.

Dr Egiziano Iencinella, Supply Chain Director

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Company:

Multinational Healthcare Company

Issues No ownership and unclear process for inventory management Excess warehouse space Extensive firefighting caused by changing priorities Firm-planned time fences ignored with regular daily line reschedules Customer delivery performance as low as 10% High level scrap rate in packaging

Value Delivered Revised proactive process for inventory management with cost savings of 8 million Improved capacity utilization down from 93% to 77% Annual cost saving of nearly 1 million for external warehousing services Improved communication and alignment between business functions to ensure planned predictable performance Delivery performance increased to >95% Reduced scrap rates in packaging by up to 60% incurring an annual saving of nearly 6 million Average actual delivery date reduced from 15 days late to 5 days early

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Company:

Global Biotech Company

Issues Informal planning; operating off spread-sheets with separate sets of data instead of leveraging the ERP system High levels of excess inventory Unnecessary buffers in the process Recognition of a need to improve, grow and introduce new products

Value Delivered Robust decision making, KPIs and business cycle One set of numbers Reduced inventory Reduced expediting â&#x20AC;&#x201C;QC headcount saving More collaboration with suppliers Team are clear and aligned to meet the same end goal

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Company:

Human Therapeutics company

Issues Increasing number of SKUs Geographic expansion Smaller batches and shorter lead times Increased tender business and volatility Increased compliance and shelf life requirements Cost pressure

Value Delivered Significant site cost reduction Improved capacity utilisation Reduced lead times Back order eliminated Better strategic focus Gross expense decreased by 10% while volume increased by 10% Waste reduced by 33% Master data accuracy increased by 33%

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Company:

Global Healthcare Company

Issues Out of control and fire-fighting Business Management horizon was only looking short-term Visibility not clear No single identity Old fashioned budgeting process Complicated IT tools Too many people dependent processes Vision, mission and strategic plan not fully understood

Value Delivered Well thought-out and meaningful business objectives Clear and compelling vision statement Single company identity, moved away from independent silos Improved empowerment More clearly defined measures structured in a hierarchy that links to the strategic business objectives Actionable strategic roadmap and measurable success factors Robust two-way communication framework Cultural transformation programs to drive employee engagement Common continuous improvement tool training and deployment Root cause problem solving drive a two job culture

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Company: Australian Red Cross

BLOOD SERVICE

Issues Changing funding model requiring better control of inventory Finding out problems as they occurred Planning chaos

Value Delivered Forecast accuracy improved Inventory levels stabilised within acceptable limits Order fulfilment increased from low 80% to high 90% Positive impact on age of red blood cells New operating model enabled

Overall, we’re very happy with both the process and the outcomes. We are still on the journey, however we’ve come a long way and continue to learn as we go. The Oliver Wight approach really helped us to train and develop our own champions, instead of relying heavily on consultants. We’ve managed to embed the principles into our operating model, which was our goal.

Jacqui Caulfield, Executive Director of Manufacturing

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Company:

Global Healthcare company

Issues Poor systems capability Limitations to manufacturing execution system Manufacturing process robustness â&#x20AC;&#x201C; biological in nature with a degree of natural variations Change of site leadership team and organisations structure Division-wide SAP implementation built with a financial focus rather than a financial/planning focus and on a different project timeline within each division

Value Delivered KPIs integrated and aligned with improved data quality One set of numbers Reduced workload in several areas allowing for process improvement activities Better integration with divisional demand team Preparation and readiness for upcoming SAP implementation, in particular data accuracy Allowing capability to reduce lead time in operations

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Company:

Global Healthcare Company

Issues Lack of accountability â&#x20AC;&#x153;Victimâ&#x20AC;? mentality Lots of firefighting Poor relationships with external stakeholders Changes in division level metrics Lack of integration between maintenance, production and quality New site leadership

Value Delivered 63% reduction in planning effort 40% reduction in schedule changes 33% reduction in overtime incurring in a saving of $100k Cycle time reduced by 24% Hit financial plan for the first time in six years 100% training compliance Repair program on equipment resulting in saving of $600k OTIF improved from 30% to 95% consistently Schedule adherence increased from 80% to 95% Days on hand inventory decreased from $18M to $9M

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Company:

Multinational Pharmaceutical Company

Issues Backorder impacting supply to customers Customer service measure not reflecting the reality of poor service Excess inventory Organisation operating in functional silos Not clear on how to deliver the aspirational strategy for the business

Value Delivered Backorder eliminated completely Reduced global inventory by 30% Customer service measure realigned and increased from 22% to >95% Moved from silo mentality to process focused business model High performing leadership team environment created Clear roadmap, tracked monthly to deliver the business strategy

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Company:

Multinational Healthcare Company

Issues Silo mindset Increasing number of customer complaints No measures in place

Value Delivered Production performance increased to 100% Reduced inventory by 25 million CHF Data accuracy increased to 99 â&#x20AC;&#x201C; 100% Released lead time reduced from 120 days to 56 days Delivery performance increased to 100%

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Company:

Multinational Healthcare Company

Issues Support functions had bottlenecks No cross-functional alignment No measures in place Schedule changes were high on production lines Informal planning Some production sites working in silos

Value Delivered Order lead-time reduced by 20% Speed of decision making has increased Package released lead-time from 10 days down to 2- 4 days 150,000 CHF annual savings on consumables Routing changes on production lines allowed for 1 shift to be eliminated with production continuing at the same volume 800,000 CHF saved on external storage Damage reduction through SOP improvement Re-occurring discrepancies from 30% down to 15%

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Company:

Multinational Medical Equipment Manufacturer

Issues No visibility of the strategy across the business Decisions on investment and new product introduction were being driven by 'who shouted loudest' Demand forecast not aligned with financial forecast or operational forecast Over-optimistic as a business about what could be achieved Culture of underperforming by chasing overstretched targets, which had a negative impact on motivation New product development was taking too long to launch products and often missing the launch date

Value Delivered Manufacturing capacity increased by 20% Average order size up 60% in some markets Greater visibility with a clear 24-month picture of the demand One set of financial numbers Silo mentality eradicated Improved inventory levels, with SKUs reduced by 50% More efficient and effective decision-making

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Company:

Issues Out of stock on a daily basis Customer service levels decreased to 97% The supply performance reliability of its manufacturing operation was negatively impacting the commercial side of the business, putting it at risk of competitive disadvantage OTIF delivery reliability was down to 40% Lack of understanding of both the supply and production models Cultural challenge around metrics

Value Delivered Improved teamwork given staff a better quality of life Customer service levels up to 99.75% Daily stock-outs reduced from 400 to 24; a 94% improvement Aggregate OTIF delivery reliability improved to an average of 92% Customer lead times reduced by 22% and up to 50% on some product lines Waste has been cut by up to 79%

The partnership with Oliver Wight was crucial but it was also important that we developed the programme to suit our own personality. We consciously created something that we owned and that was really important.

Ian Anderson, NOSSCE Global Program Head

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Some of our Healthcare clientsâ&#x20AC;¦ Acraf-Angelini Allergan Australian Red Cross Molnlycke Healthcare Novartis

For further information on how Integrated Business Planning can help transform your business performance please contact us on +44 (0) 1452 397200 or hello@oliverwight.com

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