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

brianaz@gene.com

Murat Necef

Genentech650-270-0134

muratn@gene.com

Speakers:

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