Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey
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  • 1. CULTURAL TRANSFORMATION Beyond Operational Excellence March 2014 Christian Houborg, Vice President Sponsor of C.I. @ Lundbeck
  • 2. VISION, MISSION & VALUES 2 OUR VISION OUR MISSION OUR VALUES is to become a world leader in psychiatry and neurology is to improve the quality of life of people suffering from psychiatric and neurological disorders Imaginative – Dare to be different Passionate – Never give up Responsible – Do the right thing
  • 3. LUNDBECK’S TRANSITION 3 FROM … EUROPEAN “ONE PRODUCT” COMPANY TO THE NEW LUNDBECK GLOBAL GROWTH PLATFORM • Expand in new geographic markets A MULTIPLE PRODUCT COMPANY • Deliver on late-stage pipeline • Execute new product launches • Drive growth of diversified portfolio
  • 4. NOT FOR PROMOTIONALUSE Lundbeck’s focus areas rank high in terms of burden to society Lundbeck has products within 7 of the 25 most burdensome illnesses The world’s most burdensome illnesses 1. Cancer 14. Osteoarthritis 2. Depression and anxiety 15. Bipolar disorder 3. Ischaemic heart disease 16. Liver cimhosis 4. Cerebrovascular disease 17. Dementia 5. Chronic obstructive pulmonary disease 18. Endocrine disorders 6. Refractive errors in the eye 19. Macular degeneration 7. Hearing loss 20. Nephritis and nephrosis 8. Congential anomalies 21. Drug abuse 9. Alcohol dependence 22. Hypertensive heart disease 10. Diabetes mellitus 23. Epilepsy 11. Cataracts 24. Migraine 12. Schizophrenia 25. Rhematic heart disease 13. Asthma *) Disability adjusted life years, Source: Lundbeck based on Global Burden of Disease 2004, WHO
  • 5. NOT FOR PROMOTIONALUSE WHY LUNDBECK? 5
  • 6. THE CULTURAL TRANSFORMATION
  • 7. 7 Ambition of Supply Operations & Engineering In order to improve the overall competitiveness of Lundbeck the ambition for Supply Operations & Engineering is to create: The Best Supply Chain in The Pharmaceutical Industry
  • 8. NOT FOR PROMOTIONALUSE 2013 8 Years towards excellence… Phase 1: Better for Less Phase 2: Create Results – Together Phase 3: Own the Future Phase 4: Principle Driven Culture Results: Be Ambitious and Take Action 2006 2008 2010
  • 9. Phase 1: 2006 BETTER FOR LESS Flow and Pull Value Focus on Processes Embrace Scientific Thinking Assure Quality at the Source Seek Perfection
  • 10. 10 Value Stream Analysis (VSA) and Kaizen Events Value Stream Analysis: Mapping of processes and activities across departments (Current, Ideal and Future State) Purpose: Create transparency and flow, visualize activities, identify what adds value to your business – and what does not. Bring attention to areas of improvements
  • 11. 11 Value Stream Analysis (VSA) and Kaizen Events EventEvent EventEvent Kaizen Events: A group of employees across departments are dedicated for 3 - 5 days to solve a specific issue and/or constraints Purpose: Secure continuous improvements by finding real solutions and implementing them
  • 12. 12 Example of a Kaizen Event Reduction of setup time by 40% 70 Kaizen Events in 2007
  • 13. 13 Establish Lean Support & Lean Academy Project Organization established to facilitate Lean initiatives All managers received training in Lean tools (mistake) Lean Ambassador Program established to train employees in: the ability to execute Lean events systems principles tools change management
  • 14. 14 Implementation of Control Boards and Board Meetings Visualizing status, activities and results in all departments Short and frequent meetings with focus on delegation of assignments
  • 15. 15 Close link between training and learning by doing Lean transformation was driven by events rather than daily management What characterized the “Better for Less” phase Lean Academy and coaches Lean Coaches as the driving force in implementing Lean rather than Line organization
  • 16. Phase 2: 2008 CREATE RESULTS – TOGETHER Respect Every Individual Lead with Humility
  • 17. 17 What is good Leadership Identification of: Success stories involving good leadership Good leadership characteristics More than 100 carateristics 17 categories 24 behavioural descriptions
  • 18. 18 Developing Lundbeck Lean Leadership (3L) Leadership Model Lundbeck Lean Leadership The Lean Leadership Foundation Lean People Leadership Lundbeck Lean Acceleration Sustaining Lean 1 2 3 4 115 Leaders received 12 days training during 2008 split on 4 modules Personal leadership Relations Business focus Execution Internal Leadership Program that integrated traditional Leadership development techniques with the Lean principles
  • 19. 19 Lundbeck Lean Leadership Style Group Facilitator ”You have the responsibility” Bureaucratic Leader ”follow the rules” Task manager ”This is what you need to do and in this order” Leadership Focus ProcessesGeneral Management Leadership Style Control Employee Involvement The creator of a Learning organization ”This is our goal: I will coach as we go along” A Lundbeck Lean Leader should: Have the combination of detailed knowledge of the processes and the ability to develop the employees Be coaching and asking questions not giving solutions Learn others to learn through their own experiments and errors
  • 20. 20 Two roles of the Lundbeck Lean Leader Strategic • Vision • Values • Goals • Policy Deployment • Innovation • Breakthroughs • Customer focus Mentor • Tolerance • Learning • Coaching • Reflection • Role model • Challenge
  • 21. 21 Increased Leadership commitment and motivation for Lean Created a strong network among managers Increased knowledge and best-practice sharing What characterized the “CREATE RESULTS – TOGETHER” Phase Managers became the driving force in implementing Lean
  • 22. 22 ”Business Week referred to the program as the Nobel prize of manufacturing because it establishes a standard for world-class excellence” The Shingo Prize The Shingo Prize is awarded to organizations that demonstrate a culture where principles of operational excellence are deeply embedded into the thinking and behavior of all leaders, managers and associates
  • 23. 23 We decided to face reality “The first responsibility of a leader is to define reality.” – Max DePree The Shingo Prize is a powerful way to help your organization “tell the truth” about itself (define reality) and know as well as they can about where they really are on their journey of continuous improvement!
  • 24. Phase 3: 2010 OWN THE FUTURE Create Constancy of Purpose Think Systemically
  • 25. 25 Self-inspection based on the Shingo model Process All managers were trained in assessment using the principles in the Shingo Model of Operational Excellence Managers paired up and assessed areas outside own division Each assessment concludes with feedback on principles and systems, and concrete “Strengths” and “Opportunities”
  • 26. 26 Supply Operations & Engineering Division Department Team Development of Policy Deployment Clear link between target of SOE and targets/activities at division, department and team level Targets and activities are prioritized across functions and departments
  • 27. 27 So how do we use Policy Deployments? Supply Operations & Engineering Divisions Departments Teams 1. Top down break down 2. Bottom up review
  • 28. 28 All About People 2011 – teams took ownership of the Business System Change Readiness Driving Change 2006 2011
  • 29. 29 Ideas and Improvement Boards Idea Boards: All departments implemented idea boards. Structured work with a target for number of implemented ideas Purpose: Improve idea generation and implementation. The employees are responsible for improving their everyday work ”We need a routine not just for doing the work, but for continually improving the work” Source: Liker & Rother
  • 30. 30 First Shingo Silver Medallion in Europe
  • 31. 31 What characterized the “OWN THE FUTURE” Phase ”Just Do It” environment Empowered the employees to drive improvements and take initiatives All employees became the driving force in implementing Lean
  • 32. Phase 4: 2013 Principle Driven Culture
  • 33. OWN THE FUTURE OPERATING PRINCIPLES SOE SUPPORTING PRINCIPLES BE AMBITIOUS AND TAKE ACTION CREATE RESULTS – TOGETHER BETTER FOR LESS Create Constancy of Purpose Think Systemically Create Value for the Customer Respect Every Individual Lead with Humility Flow and Pull Value Focus on Processes Embrace Scientific Thinking Assure Quality at the Source Seek Perfection
  • 34. 2013: Monthly Living Principles Process Extended Management Group: Align the message Explain in Departments/Teams Video: Leadership explanation of the monthly principle Improvement of the Month VP/DD/HoD/HoS/ TL 13.000 Ideas implemented in 2013
  • 35. SOE STRATEGIC PRIORITIES 2014 - 2015 OUR VISION is to become a world leader in psychiatry and neurology OUR MISSION is to improve the quality of life of people suffering from psychiatric and neurological disorders OUR VALUES Imaginative – Dare to be different Passionate – Never give up Responsible – Do the right thing People We want a safe workplace with good working environment and a no blame culture. A workplace where personal development and continuous improvements are high on the agenda. Fundamentals : Implemented improvements, Lost time accidents Reliability We secure high delivery performance in all areas of SOE. Throughout the supply chain we deliver the expected output on time. Fundamentals: Fill Rate, Stock Outs Quality Patients and their safety depend on us making things right. We continuously pursue that quality is built in to our processes in order to secure a robust supply chain Fundamentals: Complaints, Recalls, Major observations Cost We manufacture Lundbeck’s products at the lowest price possible without compromising our high quality and supply standards. Fundamentals: Cost of Sales, Stock Value BETTER FOR LESS Flow and Pull Value Focus on Processes Embrace Scientific Thinking Assure Quality at the Source Seek Perfection OWN THE FUTURE Create Constancy of Purpose Think Systemically CREATE RESULTS – TOGETHER Respect Every Individual Lead with Humility BE AMBITIOUS AND TAKE ACTION Create Value for the Customer OPERATING PRINCIPLES In order to become the best, we focus on more than mere results. The way we act and behave in our daily life will determine whether we achieve our ambitions or not. With Operating Principles and SOE Supporting Principles we secure that we have the right behavior – and with the right behavior, we improve our chances of achieving our ambition. Launch New Products We face many new launches that are key to Lundbeck’s future success. SOE plays a significant role in the planning and execution of the launches. In SOE we prepare robust supply chains and launch with no delays. Increase Productivity The production task will change dramatically in the coming years. The forecast predicts an overall decline in volume primarily due to patent loss of Cipralex. On the other hand the number of batches and process orders will increase due to the new product launches. We prioritize initiatives that secure high productivity despite the more complex product portfolio. Increase Contract Manufacturing The contract manufacturing business is important for SOE to maximize the capacity utilization and thereby reduce fixed costs for our internal production facilities. The external business can help us increase the turnover and cover our fixed costs. Reduce Spend The loss of exclusivity for Cipralex and Ebixa will decrease our revenue in the coming years, and at the same time significant costs are needed to develop and market our new products . In this period Lundbeck must carefully control the spend base, and in SOE we will prioritize spend reduction initiatives. SUCCESS FACTORS / FUNDAMENTALS MUST-WIN BATTLES The Best Supply Chain in the Pharmaceutical Industry
  • 36. Results BE AMBITIOUS AND TAKE ACTIONS Create Value for the Customer
  • 37. 37 Value Stream Thinking Solution Mode TrustLack of Trust PEOPLE The greatest result was overcoming the wall of: ”...a very large percentage of those we had evaluated were experts at implementing tools of Lean but had not deeply embedded them into their culture” Robert Miller, Executive Director of the Shingo Prize, 2010 Blame Culture Silo Thinking
  • 38. 38 Reliability - Delivery Performance 99,50% 99,60% 99,70% 99,80% 99,90% 100,00% 2005 2006 2007 2008 2009 2010 2011 Fill-Rate Fill-rate
  • 39. 39 Cost - Cost of Sales as % of revenue 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% Cost of sales as % of revenue Excl. One-off items, trading goods & Inc.
  • 40. 40 Quality – Diviations per batch 0 10 20 30 40 50 60 70 80 90 100 2005 2006 2007 2008 2009 2010 2011 Index on Non-Planned Deviations per Batch
  • 41. 41 25% 16% Pharmaceutical Industry 20% 21% Lundbeck Cost of Sales percentage R&D percentage Adding value to patients Source: Future Pharma – Five Strategies to Accelerate the Transformation of the Pharmaceutical Industry by 2020. KPMG 2010 Source: H. Lundbeck A/S Annual Report 2011
  • 42. NOT FOR PROMOTIONALUSE 2013 8 Years towards excellence… Phase 1: Better for Less Phase 2: Create Results – Together Phase 3: Own the Future Phase 4: Principle Driven Culture Results: Be Ambitious and Take Action 2006 2008 2010
  • 43. QUESTIONS?
  • 44. NOT FOR PROMOTIONALUSE FGP set to win its OEE MWB 44 Support management in building stronger Lean systems, thinking and behaviour Approach is guided by shared commitment to ambitious business goals
  • 45. Linking Operating Principles to the daily work Articulate living by the Principles Articulate principle based behaviour To give recognition Living Principles 2014 Recognition of Principle Based Behavior
  • 46. MATERIAL: RECOGNITION CARD - FOR RECOGNITION OF GOOD BEHAVIOUR
  • 47. Living Principles 2014 - TOOLS Overview of the principles. Can also be accompanied by the 10 descriptions of the principles Support to articulations and discussions about the good behaviour, - and to recognition of it! Support to collection of the good examples. Can also be used to collect recognition from other teams and employees Support to structured recognition of the good behaviour. Make sure relevant teams/persons recieve the recognition. Support to the discussion about witch principles links to the good example. It was kind of you to help me finalize my task even though you had done your part.. Henrik Anne
  • 48. 1 What went well since our last meeting? Hm… 2 What have made you happy? The other day I got help to complete my tasks so I didn’t have to work overtime Why? What happend – Who helped you? Henrik helped me, he helped me getting the task done instead of going home early EXAMPLE ON RECOGNITION BASED ON LIVING PRINCIPLES (example on how to use the Living Principles 2014) Manager Employee
  • 49. 3 4 What principle(s) relate(s) to this behaviour? Hm.. There are more than one.. Which principles are relevant? At least Respect every individual and Think systemically Which is the most relevant? That must be Respect every individual It was kind of you to help me finalize my task even- though you had done your part.. Henrik Anne Please, Henrik – This is for you! Thanks Anne – I had already forgotten that  EXAMPLE ON RECOGNITION BASED ON LIVING PRINCIPLES (example on how to use the Living Principles 2014)