The document outlines a project to reduce processing times for an AWD product line by 50% or more. Key aspects of the project include analyzing and mapping current processes, identifying defects, developing solutions to address top defects, and implementing changes with the goal of avoiding additional costs from a anticipated 50-100% increase in product volume. The project team developed solutions such as eliminating redundant data entry of serial numbers, reducing unnecessary inventory transfers, and standardizing order cutoff times. Process mapping and time studies were used to measure improvements.

1. AWD Cycle Time Reductions Suwanee, GA, Smith & Nephew September 25, 2009

2. In Scope: All processes associated with the AWD product line from arrival of product at the warehouse to shipment of product will be analyzed, mapped, and, where indicated, process changes will be made. Out of Scope: There will be no system enhancements or changes to computer hardware or software. No processes outside of this product line will be considered. Project Team: Champion: Terri Trawick Team Leader: Dana Franklin Co-Team Leader: Lois Marshall Team Member: Yvonne Perryman Team Member: Michael Bedsole Team Member: Steve Molini Business Case: The anticipated throughput increase of the AWD product is expected to be 50% to 100% or more during the 2009-2010 time period. Product does not fit the receiving and distribution process well due to the additional processes that must be performed including the individual manual notations of serial numbers and outfitting per order requirements, as well as the charging process. In order to facilitate the increased customer capacity our goal will be to decrease the processing times. Problem Statement: Current processing times for product from arrival to put away are currently approximately 17 to 18 hours based on time studies and value stream mapping. The customer sales projections call for a 50% increase in volume of this product line by December 2009 and a potential increase of 100% or more during 2010. Based on these sales projections and processing times the business will need to hire additional personnel or find some way to increase the efficiency of the process to avoid additional costs. Goal Statement: Our goal is to reduce the processing time of this product line by 50% or more so as to allow for improved efficiencies and avoid additional costs. Start / Stop Points for Project: Starting on September 14, 2009 with full testing and implementation of all changes by October 30, 2009. Project Charter Statements Charter

3. Metrics Primary Metric: Time to process, beginning to end of AWD process Secondary Metric: No Secondary Metrics Identified

4. Primary Metric

5. Lean Project Team 100% 100% + SUPPORT 100% + SUPPORT 100% + SUPPORT 100% + SUPPORT 100% + SUPPORT 100% + SUPPORT Time Commitment # of Lean Projects Completed Expertise Team Role Name 100+ Six Sigma Black Belt Facilitator Todd Parrish 0 On-site Customer Mgr. Team Member Steve Molini 1 Key Process Member Team Member Michael Bedsole 0 Key Process Member Team Member Yvonne Perryman 2 Floor Supervisor Co-Team Leader Lois Marshall 0 Customer Rep Team Leader Dana Franklin 3 GM Champion Terri Trawick

6. Value Stream Map - Current

7. AWD Process Map - Current

8. AWD Process Map - Current

9. Defects – Affinity Process List of Defects Coordinator utilizing phone to communicate with customer prior to material transfers Serial numbers are hand written 5 times during entire process Inadequate inventory causes excessive and time consuming transfers from warehouse to warehouse Expedites Not enough charging stations Five forms containing repetitive data and excessive and un-necessary writing Too many warehouses containing material or no material Space limitations in kitting WH space limitations

10. Defects – Affinity Process List of Defects (cont.) Bar codes non-functional S & N does not trust their system requiring writing serial number at pulling Printing is slow Lack of understanding for S & N and APL of cut off times for orders Multiple people doing allocations Lack of equipment IFU’s not ID’d by lot numbers individually Carrying case (compoinent including in kitting process) sticks together and is ugly Inventory inaccuracies (starps, cords, cases, and IFU’s)

11. Defects – Affinity Process List of Defects (cont.) Incorrect certs, labels and serial numbers 100% touch policy * 5 Maintenance requirement to open and close container results in box deterioration and added, un-necessary work Inventory is excessive for 40 day requirement (186 only) Requirement to provide S & N serial numbers after inventory transfers Walk to Dana identifying those pumps requiring maintenance Pullers writing down lot/serial numbers (6 th time number has been written down)

12. Defects-Affinity Process Defect Elimination Team Discussion resulted in the following list of those we determined we could not influence or change: Warehouse space limitations Bar code is not functional (S&N is working) Printing slow (network issue) Lack of equipment (not true; based on monthly analysis adequate equipment is available) Carrying case (it is what it is) Certs, labeling and lot # inaccuracies (rare and handled through existing process) 100% touch policy (required for traceability) Inv excessive for 40 day maintenance requirement (186 only)

13. Defects – Affinity Process List of Chosen Defects Phoning customer for authorization for inventory transfers Serial numbers repetitively written (connected to #6: repetitive forms) Need for inventory transfers (connected to #7: too many warehouses) Expedites (connected to #13: APL and S&N lack of understanding of rules associated with order cut off) Number of charging stations too few Space limitations in kitting Multiple people doing allocations IFU’s not id’d by lot number individually Inventory inaccuracies (straps, cases, cords, and IFU’s) Maintenance requirement to open and close cases Requirement to provide S&N serial numbers after inventory transfers Walk to coordinator to inform of pumps requiring maintenance Pullers required to write down lot/serial numbers

14. Solutions Issue: Phoning customer for authorization for inventory transfers; This does not comply with the customer’s process as it is defined. Phone calls are not acceptable as an authorization method. All authorizations must be in writing and/or through e-mail. Excessive time being spent making phone calls and waiting by the phone for authorization Solution: E-mail only. Once e-mail is sent, a return e-mail authorizing the transfer is the only acceptable means to allow transfer.

15. Solutions Issue: Serial number written repetitively on numerous forms A total of three forms and an additional two times VERY time consuming, especially if one serial number is written incorrectly which occurs frequently Forms contain duplicate and un-necessary information Bar codes are not utilized effectively Solutions: Utilize scanning equipment to record serial numbers in the system and eliminate writing Results No more writing serial number at receipt Eliminate 2 of 4 forms at receipt by re-ordering process Will validate time savings through use of random time studies

16. Solutions Issue: Need for frequent inventory transfers Inventory is placed into one of three warehouses in a seemingly random fashion OR current levels maintained due to outdated data A great deal of time is spent searching for materials to fulfill orders, then a great deal of time is spent requesting and receiving authorization for transfers Solution S&N to research sales out of WH 7 and establish a realistic, data-based inv level Move all other material into WH 1 Future receipts into WH 1 Results Material will only be moved once to meet order requirements

17. Solutions Issue: Expedites S&N and APL do not adhere to existing rules for cut off times for orders Solution: S&N to meet with Customer Care to explain rules and gain consensus for cut off times, then observe APL to train personnel to ensure they adhere to the established and agreed to cut off times Issue: Space Limitations in Kitting Team consensus was that any changes to the area would not result in significant efficiency improvements currently due to volume but that this issue should go into the parking lot for later consideration if necessary

18. Solutions Issue: Multiple personnel performing allocations Team determined that this is actually a non-issue Issue: Requirement to provide S&N serial numbers following inventory transfer Solution Report exists that shows serial numbers transferred and is available to S&N Advantages No more e-mails listing serial numbers (one less writing of the serial numbers!)

19. Solutions Issue: Walk to coordinator to inform of pumps requiring maintenance Solution: This is an un-necessary process step as the coordinator is informed following completion anyway as the final step in the process when the system is updated Issue: IFU’s not id’d by lot number individually Solution: S&N to request that the supplier perform this action

20. Solutions Issue: Inventory Inaccuracies These are $0 items that have no impact and each time there is a variance it requires cycle counting and inventory adjustments. The only real impact is to APL and their ability to ensure meeting the contract required 96% Inventory accuracy. It is assumed that these variances originate at the supplier during packaging. Solution Establish within S&N an expected variance level that is acceptable (i.e.: + or – 5%) Eliminate the requirement for cycle counts and inventory adjustments Take these issues out of the metric for inventory accuracy as they are $0 items that cannot be controlled at the supplier

21. Solutions Issue: Pullers required to write down serial numbers Discussion: Utilized for a backup record in case of recall Before B-pics this was THE method allowing for recalls There is no current solution without further discussions with S&N. It was suggested that we broach this topic during the upcoming meeting with S&N. To eliminate this requirement we will need to: Show that traceability is maintained 100% without the need for the written documents Gain consensus with the customer and establish process Show the potential savings if this step were eliminated from the process

22. Solutions Issue: Open and re-sealing cases following maintenance Constant cutting and re-sealing and tape removal results in box integrity being lessened Tape removal results in sloppy “look” to packaging Time is wasted doing this repeatedly Solution: End this practice. Once container is open, do not reseal until pulled and kitted Kitting also requires removing the tape Removing this process step at maintenance eliminates the step here as well as at kitting To protect the top layer we will place a piece of cardboard or plastic across the top to provide protection to the contents

23. Solutions Inadequate number of charging stations Max that can be charged at one time is 21 and there are 60 per pallet, on average Repeated loading and unloading of pallet wastes time and causes additional congestion in the area Current set-up was established when volumes were much less and the result is that as the volume has increased there are numerous electrical cables and support material everywhere causing an eyesore and safety issue Solutions Add similar rack at end of other aisle to increase capacity to 60 Re-configure stations to be permanent rather than temporary Route and channel electric cables and strips to be safe and off of floor

24. 5S Workplace Organization - Before Sort What did we do in this phase? Set In Order What did we do in this phase? Shine What did we do in this phase? Standardize What did we do in this phase? Sustain What did we do in this phase?

25. 5S Workplace Organization - After Sort What did we do in this phase? Set In Order What did we do in this phase? Shine What did we do in this phase? Standardize What did we do in this phase? Sustain What did we do in this phase?

26. Process Map – Current/Future

27. Process Map – Current/Future

28. Value Stream Map - Current

29. Value Stream Map - Future

30. Implementation Plan Template

31. Benefits Summary Approximately $37,000 hard savings based on customer volume projections and results of time studies and improvements Additional benefits not calculated relating to lessened cycle counting, reduced walking and waiting times No cost of implementation Greatly improved safety in maintenance area The most important benefit of this project is the pre-emptive actions we have taken, based on customer projections, which have resulted in significant reductions in product cycle time allowing the operation to meet the needs of the customer without additional headcount.

32. Safety Review Organized Electric cables ordered and no longer all over the floor More room for work to be conducted Positive Effect Maintenance Area Comments IMPACT Proposed Improvement

33. Financial Benefits Detail Calculated dollar benefits for the 12 months

34. Continuous Improvement Ideas (Parking Lot) Obsolete parts taking up otherwise useful space in a facility at 120% capacity Can this process be applied to other, similar material receipts? STILL would like to find some way to avoid writing serial numbers on pick tickets The kitting area was unchanged because even at volumes of 100% more than current levels it was not seen as adequate value added. This can be reconsidered in the future.