A Roadmap to Continuous
Improvement through
Collaborative Partnerships
Genentech
Murat NecefPrincipal Business Process Excellence Lead
Brian ZiskieHead of Global Facilities Procurement for North America
www.sig.org/eval
A Roadmap to Continuous Improvement through
Collaborative Partnerships
Brian Ziskie & Murat Necef
3/12/15
©2014, Genentech
Genentech at a Glance
Founded more than 35 years ago, Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes medicines to treat patients with serious or life-threatening medical conditions.
Personalized Healthcare is a key element of our research and early development strategy. We're focused on tailoring treatments to specific diseases and patients and identifying which patients are most likely to respond.
Fast Facts
• Founded in 1976
• Became a member of the Roche Group in March 2009
• Headquarter in South San Francisco, California for all Roche pharmaceutical operations in the United States
• Over 14,500 employees
• Genentech sells approximately 40 products in the US
• US Pharmaceutical sales were $17.4 billion in 2014*
• gRED has approximately 20 new molecular entities in clinical development
*15,822 CHFm; average exchange rate 0.91.
3
To reduce total cost of ownership we need to develop a world-class
supplier network
• With the principle of challenging and helping them to improve
• Ensuring that our Key Suppliers understand that having Lean Capabilities is requirement as a partner Supplier of Genentech
• Drive the Message to Suppliers that continuous improvement and innovation is an expectation as a Strategic Partner
• Most companies seem to focus on price-squeezing their suppliers instead of partnering with them on continuous improvement initiatives
There is a Burning Platform…
4
Supplier Lean Process Model
Partner
Educate
CollaborateExecute
Deliver
Results
5
Global Facilities ProcurementStrategy to Value – Supplier Lean Training Program
• Enables Genentech to collaborate with our
Suppliers to leverage their innate expertise and
knowledge to drive out waste from current
practices to ensure sustainable cost reductions
• Ensuring that our Key Suppliers understand that
having Continuous Improvement capabilities in
their organization is an expectation as a
Genentech Strategic Partner Supplier
• Provides a structured way to embed the
continuous improvement mindset as the way our
company does business for both our Strategic
Partner Suppliers and Category Managers
6
Improved working realtionships
between Suppliers & Category
Managers
Builds capabilities in Category
Managers and Suppliers to drive
innovation
Allows Suppliers to apply learnings
with other customers
Ensures Genentech has customer of
choice standing with Key Partner
Suppliers
BPE
STRATEGIC PARTNER
SUPPLIERS
CATEGORY MANAGERS
SUPPLIER LEAN
TRAINING PROGRAM
Benefits of Supplier Lean Training Program
The goal of Supplier Lean Training Program is to drive and deliver enhanced
value through partnership and collaboration with selected Strategic Suppliers
7
Supplier Lean Training Process
8
The Process for Identifying Opportunities
and Selecting Projects
Identify Suppliers
• Strategic
• Business/Financial
• Customer Satisfaction
• Operational (Process)
Prioritize Value Levers
Identify/Quantify
Improvement
Opportunities
Translate Opportunity
Areas into Project
Ideas
Prioritize Project Ideas
based on Impact &
Effort
Assign Project Ideas
to Project Sponsors
for Chartering
Understand Current
State
Process Flow
Generate Business
Case & Problem
Statement
Desired Outcome
Benefit Analysis
Define
Measure, Analyze,
Improve & Control
Discover Problems
ID Root Causes
Develop Solution(s)
Implement Solution(s)
Comparisons to
Control Data
Key Performance
Indicators (KPIs)
Action Items for
Follow-up
Identify Supplier Identify/Prioritize
Project
Opportunities
Scope and Define
Projects
Improve Process Monitor Results
Build Capability Thru Lean Training & Project Execution
Issues
9
Supplier Lean Members 2014 Results
Level 0
Initiative Charter
Level 1 Charters
Supplier Level
Level 2 Charters
Affinitized
Issues
Level 3 Project
Charters
Supplier Lean Program partners with key
Strategic Suppliers to enable the best
procurement performance in our industry
via identifying & eliminating waste utilizing
Lean Six Sigma (LSS) methodology
10
The Focus of Lean and Six Sigma
Lean and Six Sigma share many similarities, but have a different focus:
• Lean focuses on system efficiency by improving work flow and process
stability.
– Eliminate waste throughout the system to increase speed and lower
cost
– Deliver value to the customer.
• Six Sigma focuses on improving process effectiveness through variation
reduction.
– Improve the yield and quality of processes and products.
– Improve quality for the customer.
Note: Lean and Six Sigma aim to improve quality and reduce cost to satisfy
customers.11
What is Lean?
• Focuses on speed increase and waste elimination.
• Uses tools to analyze the process flow and wait times of each activity in
the process.
• Identifies activities that add value and eliminates those that do not
– Activities that increase lead time and cost do not add value.
– These activities are referred to as waste.
“Quality is free, if we do it right the first time” –Right First Time.”– Wayne McCarty, Director of Manufacturing, Boeing 777
12
1,000,000
DEF
ECTS
PER
MIL
LIO
N
100,000
10,000
1,000
100
10
1
SIGMA QUALITY LEVEL SCALE OF MEASURE
2 3 4 5 6 7
Best-of-Class
Average Company
Cost of Poor Quality is <1% of Sales Revenue
The Basic Objective of Six Sigma
Cost of Poor Quality is 25% to 40% of Sales Revenue
13
Is “99% Good” Good Enough?
“99% good” results in:
• 20,000 lost articles of mail per hour
• Unsafe drinking water for almost 15 minutes each day
• 5,000 incorrect surgical procedures per week
• Two short or long landings at most major airports each day
• At least 200,000 incorrect drug prescriptions each year
• No electricity for almost 7 hours per month
14
DMAIC Methodology
DMAIC is a structured methodology within Six Sigma. It is used to identify
and eliminate defects in existing data driven processes.
DEFINE MEASURE ANALYZE IMPROVE CONTROL
Measure: How often does the problem occur? What is the current
performance? M
Define: Which process will be improved? What is the problem or defect?D
Analyze: When, where, and how does the defect happen?A
Improve: What must be done to correct the process? How do we do it?I
Control: What must be done to avoid a recurrence of the defect?C
15
Supplier Lean Program – Training Curriculum
Training Title Duration What
Lean Six Sigma
Foundations1 day
High Level Overview of Lean Six Sigma DMAIC
Methodology and Introduction of some process
improvement tools through fun exercises.
DMAIC Kaizen
Facilitator Training1 day Overview of Kaizen Facilitation and Planning
Introduction to Kaizen
Training2 hrs.
Overview of Kaizen methodology for quick improvements
and identification of 8 Types of Waste
5S Training 1.5 hrs. Overview of 5S Process and potential benefits
Mistake Proofing
(Poke Yoke)1 hr.
Overview of Mistake proofing practices including the value
regarding quality, speed & cost
A3 Project Chartering 2 hrs.
Overview of A3 Chartering Methodology including how to put
together Business Case and Problem Statement including a
Charter Building exercise.
16
Keys to Success
17
Sponsorship
18
How to Effectively Sponsor Change
Clarify Intent
Sell “The Dream”
Align the Organization
Build the Sponsor Spine
Cascade the Change
Build Commitment
Manage Resistance
Manage Adaptive Capacity
Realize Desired Results
19
One Team Workshop
20
One Team Workshop:
1 Day Workshop hosted by Procurement and Business Process
Excellence with Strategic Supplier Partner
Attended by Key Employees from Genentech and Strategic
Supplier Partners
High Level Strategic View on Taking Performance to the Next
Level
Workshop Focus on Driving Innovation (Collaboratively)
21
Developing “One Team” Behaviors:
Creating a shared vision for the relationship and defining what
success would look like
Reflecting on the successes, challenges and learnings as a team
and identifying opportunities and challenges ahead
Better understanding the perceptions share of each others’
cultures and what it feels like to be in each others’ shoes
Defining a set of expectations and guiding principles for the
relationship
22
Visual Learning
In order to identify the high value ideas for Genentech, it was
critical to find ways to drive active participation during the Lean
Training Workshops. In order to accomplish this, we utilized Visual
Learning to drive increased participation and ideas.
23
Celebrate Success
24
Supplier Recognition Awards Ceremony:
Provides Recognition for Suppliers participating in Supplier Lean Program
Creates Friendly Competition between Strategic Suppliers
Rewards and Recognizes Outstanding Suppliers in area of Innovation
Sends the Message that Innovation is Important
25
Results: Case Studies
26
GPP Supplier Lean 2014 Results by the Numbers
Genentech and Roche Suppliers participated in the Supplier Lean Program in
2014
million in cost savings enabled as a result of Supplier Lean Training Initiatives
Genentech, Roche and Supplier Employees trained in Lean principles
Supplier Lean Workshops facilitated (SSF, Basel and
Italy)
Continuous Improvement ideas generated
Projects initiated27
Results: Case Study One
28
Non-Financial Outcomes
• More engaged stakeholders
• Future state controls
• Expanded JIT capabilities
• Inventory levels optimized to usage
• Automation to support service (VSR+)
• Streamlined SMI work-areas
Supplier Lean Initiative Project Outcome from
Genentech Strategic Partner Supplier (Project duration 4.5
Months)
Financial Results
$279,800 Hard
Savings
$43,400 Efficiency Savings
$461,200 Inventory Reduction
29
Project Review - Reflections
• What worked well?
– Supplier Lean provided structured approach to train Suppliers/Category Mgrs.
– Great collaboration among crossfunctional groups: Procurement, BPE,
Business Partners and Supplier
– Genentech Executive & Supplier Management Executive Sponsorship
– Process and data-driven discussions and analysis
– Project team had clear sight of future state; results-oriented
• What are lessons learned?
– Stakeholders resistance to change: Procurement approach to influence the
business
– DMAIC is an effective strategy for improving processes
– The importance of focusing/prioritizing our problem to a manageable level
– Not having SOPs and clear documentation can lead to inefficiencies30
Results: Case Study Two
31
Challenges with Supplier Performance
• Inefficient Work Processes
• Excessive Expediting Requirements
• Lack of Clear Roles & Responsibilities
• Customer Satisfaction Issues
• Labor Efficiency Challenges
Create Notification
Planning Scheduling Parts Execute Work
32
Bullwhip Effect
High Effort to Fix issues,
too late, too costly, drives
frustration & blaming
Fix inputs such as
Priority of Work, Parts
& Resource Availability
Mitigation - What are we going to do about it?
Work InitiationWork
Execution
Current State
Future State
How to Improve: Focus on Leading Indicators
P1 Notification, Planning Accuracy, Parts Tracking 33
Planning
Executing
Expediting
Parts
Logistics
Parts Order
Scheduling
Sub Contract
Scheduling
Planner and scheduler
Chiefs & Assistant chiefs
Engineers
Planner and Scheduler
Chiefs & Assistant Chiefs
Engineers
Procurement desk – New role with procurement focused tasks
Parts Runner (Low Skilled)
Roles Rationalization ProposalCurrent Process Proposed Process
34
Kaizen Workshop
24 Potential Solutions in 4 Key areas:
Parts Tracking
Work Order Notification
Work Order Backlog
Planning Accuracy
15 Targeted Solutions ($2 M annual savings realized)
Roles rationalization identified for improving efficiency
Wrench time measured and used to increase efficiency, which
improved on-time Work Order completion % and lowered costs
Lowered Work Order backlog and improved customer satisfaction 35
Results: Case Study Three
36
Process ImprovementEmployee Time Clocks
Problem Action Taken Results
1 Analog time clock located in B54 at startup.
7 Biometric time clocks installed throughout campus
An estimated gain of over 1700 value added hours per month
BEFORE IMPROVEMENT AFTER IMPROVEMENT
Over 1700 NVA hours per monthAverage gain of 27.5 value add minutes per employee per day
37
Process Improvement Project:Warehouse Workload Balancing Kaizen
Problem Action Taken Results
The night shift had
approximately 28 employees
performing a variety of tasks.
We wanted to understand the
distribution of work to ensure
that the workload was
balanced properly between the employees.
Company staffed 4 employees
on the night shift in the
Warehouse to perform a variety
of tasks. These tasks were not
properly balanced between the
employees resulting in an inefficient workforce.
After the analysis, the data showed
that the workload for the 4
employees on the night shift in the
Warehouse were not properly
balanced between the employees
resulting in an inefficient workforce.
The workload was balanced,
headcount reduced by 2, which
resulted in a $120,000 annual savings.
BEFORE IMPROVEMENT AFTER IMPROVEMENT
A analysis of the individual tasks clearly showed that the workload was now more evenly distributed.
The distribution of tasks among the night crew was not clearly understood or evenly distributed.
38
Sponsorship at all levels within Business Process
Excellence, Procurement & the Suppliers is key to
success
Resource commitment by Supplier Executives to work on
improvement and waste elimination
The building of Lean capabilities ensures employees can
solve problems for themselves and sustain the
improvements
Involvement and collaboration with the business partners
to ensure we are solving ‘real’ business problems
Early-on holding people accountable for follow-through
using monthly reviews and dashboards to ensure
everything is on-track.
Supplier Lean Training Initiative: Key Take Aways
39
Doing now what patients need next
41
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Session #27
A Roadmap to Continuous Improvement through
Collaborative Partnerships
Brian Ziskie
Genentech760-529-3552
Murat Necef
Genentech650-270-0134
Speakers:
www.sig.org/eval