![Page 1: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/1.jpg)
Operational Excellence in the Medical Device & Orthopaedics Industry
Sales & Operations Planning SummitSeptember 15-16, 2011 | InterContinental | Bostonhttp://www.theiegroup.com/SOP_Boston/Overview.html
Dan Dodd, Vice President of Operations and Supply Chain
![Page 2: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/2.jpg)
Presentation Structure
• Defining operational excellence• The opportunity in the medical device industry• The barriers• The dynamics of the industry• Key changes in the landscape• #1 reason S&OP does not achieve potential
![Page 3: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/3.jpg)
Operational Excellence – Two Keys
5
24 month Demand, Supply, & Inventory
plans
ManagementBusiness Review
DemandReview
SupplyReview
ProductReview
Finance IRReview
Start(Begin Month)
MRP
• Executive led• One plan aligned
with financials
Doing the Routine Routinely
Sales & Operations Planning
Modern operational excellence is 75% lean and 25% S&OP in terms of effort/focus, but
S&OP comes first because it sets the direction
S&OP Lean Six-Sigma
![Page 4: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/4.jpg)
How Well Does It Work?Danaher stock significantly outperforming:• General Electric• Berkshire Hathaway• Dow Jones• Even Microsoft
Cooper Industries prior to Danaher attempted acquisition, underperforming to Dow Jones
Cooper tracking to Danaher since
![Page 5: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/5.jpg)
The Opportunity in Med Device
The opportunity for operational excellence is significant
Medical device/orthopaedic companies, avg=2.1 ||Other
Zimmer
Stryk
er
Medtro
nic
Smith
& Nephew
Johnso
n and Jo
hnson
Integra Li
fescience
s
Synth
es
Strau
mann
TeleflexDell
Hewlett-Packa
rd
Cooper Industr
ies
Danah
er02468
10
1.1 2.3 2.5 1.1 3.6 1.9 1.2 2.1 2.9 42.6 15.3 7.8 5.9
Inventory Turns
![Page 6: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/6.jpg)
The Barriers/Current Focus
Zimmer
Stryk
er
Medtro
nic
Smith
& Nephew
Johnso
n and Jo
hnson
Integra Li
fescience
s
Synth
es
Strau
mann
Nuvasiv
e0%
20%
40%
60%
80%
Gross Margin
The great margins are going to SGA (37%) and R&D (6%)
![Page 7: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/7.jpg)
Is the SG&A and R&D paying off?
Market share is stable – is it all hot air?2004 2005 2006 2007 2008 2009 2010
0%10%20%30%40%50%60%70%80%90%
100%
Other(1)ZimmerWrightStrykerSmith&NephewDePuyBiomet
![Page 8: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/8.jpg)
Key Industry Dynamics
Cost
Delivery
Quality
Cost is #1 forHigh-tech, CPG, etc
MedDevice
Required and increasing government controls have meant the industry moves slowly, including the adoption of new practices, such as six-sigma… but this is changing
![Page 9: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/9.jpg)
A Changing Landscape
Operational excellence is coming• 55% of practices are now
hospital owned (up from 30% in 2003)
• IP for 75% of devices expired/ing
• More outpatient and commodity surgeries….don’t need the rep in the OR
![Page 10: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/10.jpg)
Compensation
S&OP
#1 Reason For Lackluster S&OP
More than one plan!...which is relevant to all industries
![Page 11: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/11.jpg)
Next Steps In Medical Device
S&OP •X 1Lean Six-Sigma •X 3
![Page 12: Operational Excellence in the Medical Device Industry](https://reader035.vdocuments.net/reader035/viewer/2022062709/5591f5c71a28ab570b8b4690/html5/thumbnails/12.jpg)
Thank you!