Bioscience

Driving Culture Change

An on-going journey

Baxter BioScience

Presented by:Michael Teasdale

Bioscience

8.9 Billion in sales in 2003 Over 50,000 employees More than 110 countries in 250 facilities Three key business areas

– Medication Delivery: delivering fluids, drugs and medication

– Renal Therapies: serving the needs of patients with chronic kidney disease

– BioScience

Baxter Fact SheetBaxter:

Providing Critical Therapies for people with life- threatening conditions

Bioscience

BioScience Overview

$2.9 Billion in sales in 2004

Over 9,000 employees

Three key product areas:

– Proteins derived from human plasma or recombinate technology to treat hemophilia, immune deficiencies and other blood related disorders

– Products to help wound treatment and tissue regeneration

– Vaccines for Meningitis C, and TBE

Bioscience

Baxter BioScience - SituationBaxter BioScience - Situation

Product supply exceeds demand in most products

Plasma prices have dropped continually since ’02

Growing competition in recombinant products

Product quality is no longer a guarantee to sales

Customers wantproduct quality and service quality at lower cost

Bioscience

Quality Leadership Process: ValuesQuality Leadership Process: Values

Meet Customer RequirementsQUALITY IS MEETING

REQUIREMENTS

PreventionIS THE WAY WE ACHIEVE

DEFECT-FREE WORK

ContinuousImprovement

KEEPS US AHEAD

OF OUR COMPETITORS

ZeroDefects

DEFECT-FREE WORK

MEETS REQUIREMENTS

100% OF THE TIME

TotalEmployee

InvolvementIS ESSENTIAL TO

ACHIEVING QUALITY

DEFINITION

STANDARD

METHOD

ATTITUDE

ORGANIZATION

Bioscience

Process Improvement - SituationProcess Improvement - Situation

Various sites and functions had made significant efforts and gotten results – but variability from site to site

Lack of common vision and language from one site to another about process improvement

Corporate “Six Sigma” program provided tools but no process of improvement

Growing reliance on multi-site process to produce product

Both Lean and Six Sigma needed to drive operational excellence

How to built on previous efforts while making a significant change in the culture?

Bioscience

Strategy for Culture ChangeStrategy for Culture Change

Two pronged approach to drive culture

Change Change SuperstructureSuperstructure

Change Change FoundationsFoundations

• Vision: Where do we want to go?

• Metrics: How do we judge success?

• Management knowledge

• Communication / Leadership presence

• Robust Project Selection

• Training Green and Black Belts

• DMAIC, Lean, Six Sigma

• Dedicated Black Belts

Bioscience

11stst Steps- Change Superstructure Steps- Change Superstructure

Gather input, train stakeholders (Plant Mgrs, Quality, Mgrs)

DMAIC, Lean and Six Sigma training

Identify needs and gather input

Operations Leadership (VPs) establishes a vision of a Green Belt company – a new leadership culture

Build on Previous Efforts and “Raise the Bar”

Bioscience

Our VisionOur Vision

An operational culture recognized as excellent in the following areas:

-Customer focused-Fact based-Process oriented-Results driven

An organization known for developing and rewarding the best operational performers

Bioscience

4Cs – Results Focus for 2004-64Cs – Results Focus for 2004-6

Cash Flow Days in inventory, cycle time

Cost Yield, cost reduction

Customer Fulfillment

Compliance Quality Systems

Key Metrics Drive Focus

Bioscience

Metric DevelopmentMetric Development

Identified the right metrics for the business based on customer / business requirements

Developed new, common definitions for the metrics to drive the right business / operational behaviors

Applied these metrics across plants, functions and products

Quality Systems dashboard already rolled out and successfully driving compliance

Engaged site leadership to build understanding, buy-in

Bioscience

DecNovOctSepAugJulJunMayAprMarFebJan

90

80

70

60

50

40

30

20

10

0

month2

BD

S C

T

BDS CT

DecNovOctSepAugJulJunMayAprMarFebJan

80

70

60

50

40

30

20

10

0

Month

CT

60%63%66%69%72%75%78%81%84%87%90%93%96%99%

Ja

n-0

4

Fe

b-0

4

Mar

-04

Ap

r-0

4

Ma

y-0

4

Ju

n-0

4

Ju

l-0

4

Au

g-0

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Sep

-04

Oc

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Dec

-04

YT

D 0

4

month

gra

ms

FG

/ g

ram

s B

DS

ACTUAL TARGETACTUAL TARGETJan-04 88.1%Feb-04 87.8%Mar-04 88.9%Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04YTD 04 88.0% 87.0%

87.0%0%

10%20%30%40%50%60%70%80%90%

100%

Ja

n-0

4

Fe

b-0

4

Ma

r-0

4

Ap

r-0

4

Ma

y-0

4

Ju

n-0

4

Ju

l-0

4

Au

g-0

4

Se

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4

Oc

t-0

4

No

v-0

4

De

c-0

4

YT

D 0

4

%a

ge

hit

ACTUAL TARGET

ACTUAL TARGET

Jan-04 42.9%Feb-04 52.2%Mar-04 71.4%Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04YTD 04 53.4% 80.0%

80.0%

Fulfillment

Standard Plant DashboardStandard Plant Dashboard

Fill date to release date for each committed batch

Business Yield

>= Budget Business Yield

N/A

< Budget Business Yield

Green

Yellow

Red

Value of Unplanned ProductionCycle time

75th percentile

Median

25th percentile

* outlier

Average

ACTUAL TARGET

Jan-04 -$ Feb-04 -$ Mar-04 -$ Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04YTD 04 -$ -$

-$

$0

$2

$4

$6

$8

$10

Jan-

04

Feb-

04

Mar

-04

Apr-0

4

May

-04

Jun-

04

Jul-0

4

Aug-

04

Sep-

04

Oct-0

4

Nov-

04

Dec-

04

YTD

04

$MM

>= 80%

N/A

< 80%

Green

Yellow

Red

(Not actual data)

Bioscience

ACTUAL TARGETJan-04 88.1%Feb-04 87.8%Mar-04 88.9%Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04YTD 04 88.3% 87.0%

87.0%

Fulfillment - XXX

Common Product DashboardCommon Product DashboardBusiness Yield - XXXX

Days of Inventory held - XXXXX

< +or- 10% of target

N/A

> +or- 10% of target

Green

Yellow

Red

Forecast Error

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

% Absolute Error Rolling 6 Mo. bias>0% – % oversold forecast

<0% – % undersold forecast

60%63%66%69%72%75%78%81%84%87%90%93%96%99%

Ja

n-0

4

Fe

b-0

4

Mar

-04

Ap

r-0

4

Ma

y-0

4

Ju

n-0

4

Ju

l-0

4

Au

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4

Sep

-04

Oc

t-04

No

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4

Dec

-04

YT

D 0

4

month

gra

ms

FG

/ g

ram

s B

DS

ACTUAL TARGET

>= Budget Business Yield

N/A

< Budget Business Yield

Green

Yellow

Red

0153045607590

105120135150165180

Jan-

04

Feb-

04

Mar

-04

Apr

-04

May

-04

Jun-

04

Jul-0

4

Aug

-04

Sep-

04

Oct

-04

Nov

-04

Dec

-04

YTD

AVE

Day

s In

vent

ory

held

WIP FG LSL USLActual LSL USLJan-04 178Feb-04 169Mar-04 176Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04

YTD AVE 174 94 116

94 116

0%10%20%30%40%50%60%70%80%90%

100%

Ja

n-0

4

Fe

b-0

4

Ma

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4

Ap

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4

Ma

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4

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Dec

-04

YT

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4

%ag

e h

it

ACTUAL TARGET

ACTUAL TARGET

Jan-04 42.9%Feb-04 52.2%Mar-04 71.4%Apr-04May-04Jun-04Jul-04Aug-04Sep-04Oct-04Nov-04Dec-04YTD 04 53.4% 80.0%

80.0%

>= 80%

N/A

< 80%

Green

Yellow

Red

(Not actual data)

Bioscience

Ensuring Leadership EngagementEnsuring Leadership Engagement

6 Key Elements for robust improvement

Strategic Planning

QLP Structure

Quality Improvement Teams

Operating Mechanisms

Project Selection

Operational Strategies

Building a common framework for excellence

Bioscience

Categories, Criteria, ConditionsCategories, Criteria, Conditions

Strategic Planning - The development of key actions, their deployment and measurement with the aim to enhance competitive position, overall performance and ensure future success.

C o ndit io ns a re

0% Implemented

C o ndit io ns a re

33% Implemented

C o ndit io ns a re

66% Implemented

C o ndit io ns a re

100% Implemented

C o ndit io ns a re

Operational Excellence

C o ndit io ns a re

World Class

Strategic Business plan exists including key analytical sections (i.e Stakeholder/ competitive analysis, Market analysis, SCOT)

5

The strategic imperatives are translated into no more than five key metrics (Key Focus Areas) which track progress towards strategic objectives.

4

Precise and progressive targets are set for short-term and long-term horizons aligned with Key Focus Areas (KFAs)

3

Short and long term action plans are in place to enable progress to goals.

0

There is periodic communication of the strategic plan, metrics and performance to all employees using both electronic and visual methods

1

Average Score2.6

Definition of Main Categories

5 to 6 Criteria for each main Category

% implementation, then ops excellence and

world class

Measure per criteria and overall average

Bioscience

Tool Description and AuditsTool Description and Audits

• Criteria evaluated from 0 to 100% implementation in self-review

• “Operational Excellence” and above awarded by peer review

Common tool to measure progress

Self Review Peer Review

Strategic Planning - The development of key actions, their deployment and measurement with the aim to enhance competitive position, overall performance and ensure future success.

C o ndit io ns are

0% Imple mented

C o ndit io ns are

33% Imple mented

C o ndit io ns are

66% Imple mented

C o ndit io ns are

100% Imple mented

C o ndit io ns are

Operational Excellence

C o ndit io ns are

World Class

Strategic Business plan exists including key analytical sections (i.e Stakeholder/ competitive analysis, Market analysis, SCOT)

5

The strategic imperatives are translated into no more than five key metrics (Key Focus Areas) which track progress towards strategic objectives.

4

Precise and progressive targets are set for short-term and long-term horizons aligned with Key Focus Areas (KFAs)

3

Short and long term action plans are in place to enable progress to goals.

0

There is periodic communication of the strategic plan, metrics and performance to all employees using both electronic and visual methods

1

Average Score2.6

Bioscience

Measurement Tool OutputMeasurement Tool Output

• Spider Chart displays scores

• Drives balanced improvement

• Pinpoints health of process improvement process

QLP Assessment

2.6

2.0

2.0

2.8

1.8

1.8

Strategic Planning

QLP Structure

QIT

Operating Mechanisms

VIP

Operational Strategies

Bioscience

Driving Cash, Cost, Customer, and Compliance

Key Focus Areas

QLP Structure

Value Stream Maps / Metrics Cascade

VIP Project Selection

DMAICBlack Belt /Green Belt /Team Member

6 Sigma Kaizen Lean

(2) Change Foundations: QLP Process(2) Change Foundations: QLP Process

Just do it Programs:

6Ss

Standard Work

Bioscience

-20 -10 0 10 20 30 40

USLUSL

Process Capability Analysis for QAR TAT

USL

Target

LSL

Mean

Sample N

StDev (Within)

StDev (Overall)

Cp

CPU

CPL

Cpk

Cpm

Pp

PPU

PPL

Ppk

PPM < LSL

PPM > USL

PPM Total

PPM < LSL

PPM > USL

PPM Total

PPM < LSL

PPM > USL

PPM Total

5.0000

*

*

11.0625

16

7.10304

9.30774

*

-0.28

*

-0.28

*

*

-0.22

*

-0.22

*

625000.00

625000.00

*

803311.26

803311.26

*

742586.42

742586.42

Process Data

Potential (Within) Capability

Overall Capability Observed Performance Exp. "Within" Performance Exp. "Overall" Performance

Within

Overall

Metric Cascade / Project SelectionMetric Cascade / Project Selection

Customer

Fulfillment

Release Time Variability

Biggest Bang for our Buck

Internal release Product value stream

Release to shipping time

PMMold Defect

Rubber Stain

Crack

Alumi. Stain

OthersCap Off

Bottle Stain

511 400 213 171 152 39 27 25

33.1 25.9 13.8 11.1 9.9 2.5 1.7 1.6

33.1 59.0 72.8 83.9 93.8 96.3 98.1 99.7

0

500

1000

1500

0

20

40

60

80

100

Defect

CountPercentCum %

Per

cen

t

Cou

nt

Visual Inspection Result (TDC) Human Albumin Vienna

Data Walk to High Value

Projects

Targets and root cause analysis drive project

selection

Future state and root cause analysis drive

project selection

Tools: Standard Work, Change Over Reduction, etc.

Tools: T –tests, ANOVA to find root cause and reduce ERs

Bioscience

Change Foundations: Link to Change Foundations: Link to StrategyStrategy

Solid line to Strategic goals

All projects should show a link to measurable change for issues management loses sleep over

Project tracking data base essential to show this link

Strategic Initiative Link

At GE, drive for growth, paperless culture, VCP

At Baxter, inventory and fulfillment initiatives

Communicate, Communicate, Communicate

Bioscience

Change Foundations: TrainingChange Foundations: Training

Training goals

1% of the population dedicated to process improvement: QLP managers, Black Belts

Green Belts: 15% of leadership population trained for 2004, 30% for 2005

Skill transfer strategy

Integrate Six Sigma and Lean under DMAIC project management process

Drive some Lean approaches as programs

Bioscience

DMAIC: Right Tools for the ProblemDMAIC: Right Tools for the Problem

•Project ID Tools•Project team charter

• Internal Rate of Return Analysis

•Discounted Cash Flow Analysis

•Stakeholder analysis

•RACI•Presentation templates

•Process Mapping•Value Stream Mapping

•Brainstorming•Capability Studies•Pareto Charts•Fishbone Diagrams

•Run – Control Charts

•Takt time•MSA/Gage R&R

•Added/Non Value Added Analysis

•Multi-Vari•Analysis of Flow• Interaction Plots•Regression•Change Point Analysis

•ANOVA•C&E Matrices•Benchmarking•Constraint analysis

•Pull/Kanban•Lot size Optimization

•Setup Reduction•TPM•Process Redesign•Robust Tolerancing

•DOE •Cross Training•Standardized Work

•Kaizan

•Run Charts•Histograms•Capability Studies

•Control Charts•Control Plans•6Ss•Mistake Proofing

•Visual Management

DDefineefine MMeasureeasureAAnalyzenalyze Improve Control

Process

Inputs

Outputs

Towards Lean Six Sigma Integration

Bioscience

Black Belts: the rubber hits the roadBlack Belts: the rubber hits the road

Fully dedicated !!!!!

Choose your best, hungriest people

Provide them with the best tool kit, method to get results

Support and monitor projects to address the key issues- leadership presence!!!

Ensure transition back to prestigious jobs

No pain, No gain; Dedication = quicker results

Bioscience

Keys to SuccessKeys to Success

Leadership

Strategic focus

Measures

Dedicated resources

Employee Engagement

• Communication, presence and focus • Demand rigor, learn DMAIC

• Link to strategic planning process • Customer sat, ROI drive selection

• Track measures on results, rigor• Track enabling metrics (forcing metrics)

• Select your best, high potentials• Part of a dedicated team

• Mobilize all employees, across departments • Common language, common vision

Focus your best resources on what matters