Challenges in a complex Supply Chain

Arne Dyngeland

VP Supply Chain & Manufacturing

November 26, 2015

Laerdal Medical

24 Sales Companies Major Distributors 4 R&D Center 4 Manufacturing Units 4 Centralized Distribution Centers

Laerdal Medical – One Global Company

Laerdal Medical

1400 employees in 24 Countries

Turnover 2014 - 2.8 Billion NOK

Laerdal Global Health

17 employees in 4 countries

Laerdal Foundation

Research foundation providing financial

support for research in acute medicine

SAFER – Simulation center established

by Stavanger University Hospital,

University of Stavanger

and Laerdal

Laerdal Medical

The story began in 1940

Resusci Anne – Since 1960

Childrens books and Tomte Toys

Laerdal Medical

Mission and Vision

Our Mission

Helping Save Lives

Our Vision

“No-one should die or be disabled unnecessarily during birth or from sudden illness or trauma.”

Laerdal Medical

Why we do what we do

500,000 Lives

Marshall Hastings (9) was swimming when his heart stopped. Due to swift CPR, Marshall survived.

Laerdal Medical

How will we get there?

We can best achieve our mission by following our six Guiding Stars:

• Implement what has been shown to work

• Collaborate to help save more lives

• Simplify products and programs

• Drive therapy through education

• Embrace customer responsiveness

• Deliver quality in all we do

Laerdal Medical

How will we get there?

Collaborate to help save more lives

We have learned that we can achieve far greater

impact by working in collaboration with valued

partnerships and alliances.

Laerdal Medical

Resuscitation

It is estimated that over 1 million people die of sudden

cardiac arrest in higher resource countries annually.

By helping improve the implementation of the Chain

of Survival, we believe the average survival rate can be

raised from 7% to 12% in 2020, representing 50,000 more

lives per year.

Laerdal Medical

Emergency Care

Medical errors are believed to be the cause of over

250,000 deaths per year in higher resource countries.

A 20% reduction in these errors by the use of simulation

education and related activities could contribute to a

further 50,000 lives per year.

Laerdal Medical

Laerdal Global Health

Life-saving potential

Around 800 mothers and 8000 babies die during birth every day,

99% in developing countries.

Laerdal Global Health established in 2010 to focus on helping

save lives of mothers and babies on the day of birth in low

resource countries.

Solutions

Products and programs which train and equip health workers to

help save lives of newborns and mothers in low resource countries.

Laerdal Medical

What are we going to do?

Market Development

Our Core Markets

• Healthcare Education

• Healthcare Delivery

• Pre-Hospital Medicine

• Military

• Lay Public via First Aid and Professional Organisations

Laerdal Medical

What are we going to do?

Unique Solutions

More than just products – Laerdal offers integrated solutions where products, programs and services work seamlessly together in unity.

Laerdal Medical

T T

Unique solutions and a very diverse Product Range

13

T

Laerdal Medical

The Value Chain & Supply Chain & Manufacturing

Distribution

& Logistics

Sales &

Services Customers

Suppliers Suppliers

Manufacturing Stavanger

Manufacturing Monterrey

Manufacturing Gatesville

Manufacturing Suzhou

Sourcing &

Procurement Manufacturing

Stavanger

Suzhou

Gatesville

Suppliers

Suppliers Suppliers

Partners

Suppliers Suppliers

OEM Suppliers

Sales Companies

Sales Companies

DC Europe

DC Americas

DC Norway

Sales Companies

C

C

C Sales

Companies

Sales Companies

Sales Companies

Local

inventory

No inventory

DC UK

DC AsiaPacific

Laerdal Medical

Our Business is changing

The implication is higher complexity for

Supply Chain, Sales, Customer Service,

Services and Finance

• Sale of Programs in addition to traditional sales/deliveries • Gradual shift means higher complexity

• For Programs, customers pay “per use” or on a Subscription model • Laerdal owns products and systems

• Selling a Program is a “Project sale” • Laerdal sells a total solution • Laerdal installs and train/educate customers

• Handling of Deployment, Release, Changes • Physical stream vs virtual/SW product delivery • Data collection (Measurement, Assessment, Feedback)

• Income over long time through long contracts • Cost to secure and fulfill the “contract” incurred in all parts of value chain over entire contract period

Laerdal Medical

What are we doing to meet new business requirements

IT Business System development,

Process Management, Standardization

Develop

e-Supply Chain processes and responsibilities

Introduce better tools to manage complexity:

Product Configurator

Laerdal Medical

IT Business System development & Process Management

• New IT/IBS organization & Process owners in the line • Corporate/Executive ownership of IT system development

initiatives, investments and plans for all main business systems

• New solutions & processes are being developed in cross functional teams and -projects with participation from line mgmt and IBS team

Laerdal Medical

Process Management – our approach

Require Senior mgmt focus • Change of behavior is difficult (Silo/functional focus)

New work methods • Document & create good communication tools

Need to allocate senior resources • Process management can only work well if you have

your best people involved in developing new processes

Laerdal Medical

Business System development - Basic rules we apply

• Common systems and solutions • Same system cross all sites for same function (recently upgraded all ERP installations world wide on Cloud solution) • Define and deploy our Standard processes cross all units and geographies (Takes time, and need to accommodate for some local (legally driven) differences)

• «Vanilla» solutions and processes: • Preferable……… • But less and less applicable with the new business requirements due to need to “automate” cross processes, functions, and systems • However: Customizations to Standard processes area has to be justified, specified and need approvals before development and implementation

• System architecture and Integrations are tightly managed and controlled

Laerdal Medical

Principle IT Business System overview

QAD ERP

& Accounting

Siebel CRM

E-com

Agile PLM

Product Development

ER

Finance

Enable CMS

Manufacturing

Supply Chain / Distribution

Sales / Marketing / Services

Laerdal Medical

IT Systems are quite well integrated already API mgmt using Sonic secure Data transfers and real time updates

Laerdal Medical

Develop e-Supply Chain processes and responsibilities

Why do we need to focus on e-Supply Chain ?

• Development and sale of many new SW products increase complexity for all functions (who is really responsible for what ?)

• New Software products are developed internally at two sites, but also by Suppliers and Partners

• Control and coordination of in-phasing, deployment, change control of SW products towards customers, factories, suppliers and services organization need to be managed as any other “box product”

Laerdal Medical

Our (draft) e- Supply Chain and how it fits in the operation

Product Development

Partners & Suppliers

Cloud Based SW access & Downloads

for customers

Customers

SoftWare

products

e-Supply Chain

Software Products

Release – Deployment - Mgmt

Laerdal Medical

Establishing and e-Supply Chain team can drive other changes

This drives need for SC&M to focus on:

• Knowledge of the new products (SW and SW combined with regular products)

• How to identify needed changes in “back office” business / transaction processes and IT systems

• How to secure that new business processes fits into existing systems that still have to support sale and distribution of “boxes”

An observation we have done in the SC&M function as well as in Sales, Marketing and Services: We need to educate and «transition» the line organizations that is used to «article number sales» of Boxes to selling Programs, services and Software based products

Laerdal Medical

Better tools to handle complexity – Our Challenge

The Products are becoming increasingly complex.

We want to offer customers a “product and services solution” that is tailored to their need.

Combining physical product with Software products

and Services offerings on a Quote/Sales Order require

very skilled people in Sales and Customer Service

selecting the right products and services

The traditional method of offering multiple options

and variants by pre-defied, assembled, stored

“article numbers/boxes” are not very scalable and

cost effective, nor customer friendly

Laerdal Medical

Configuration Management - Our Conceptual Approach

Configuration Management

Strategy

Modular Design/Build

SW/Services Management

Product Configurator

Delivery Methods

Sales and Marketing Strategy

Sales and Marketing Business Systems

Supply Chain Manufacturing

Strategy

Meet customer

needs

Laerdal Medical

Our approach

• The Configurator is placed “in” the ERP system (QAD´s configurator module)

• Configuration of products will be done in the Distribution Centers (not the factories)

• Configurator will be used by Customer Service when taking quoting/taking orders

• We will have handle configured products and article number based products in parallel

• The configurator and related business processes must be capable to handle physical and

Virtual products, Software products/licenses and Services

Laerdal Medical

System overview

Customer Service

CRM System(Siebel)

E-Commerce(Enable)

CMS System

MRP System(QAD)

Sales Orders(QAD)

Configurator(QAD)

Customers

Information Flow

Product Flow

Production Site

Laerdal Medical

Implementation approach

• We have set up a dedicated cross functional project team

Sales & Services, Supply Chain, Manufacturing, Business Unit (Product Management), IT / IBS, Finance

• Extensive work invested in developing, defining and test all business and transaction processes

and integrations between the IT systems

• Test of all system solutions through Conference Room pilots (ongoing)

• Test of the full concept technically and operationally through a Pilot in Europe directly with

customers (Q1 2016)

• Review and assessment of customer feedback and overall results (Q2 2016)

• Define next steps, and potential implementation plan (2016 - ………..)

Laerdal Medical

IT Business System development,

Process Management, Standardization

Develop

e-Supply Chain processes and responsibilities

Introduce better tools to manage complexity:

Product Configurator

Laerdal Medical

Thank you for the attention!