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Process improvement without technology investments?

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In today’s economic environment, all companies strive to control expenses and manage resources efficiently. Most feel this goal is achieved through deploying technology. That is not always the case.

In this session, learn how Amylin Pharmaceutical’s top continuous improvement project surpassed tough targets in procurement and accounts payable, without introducing technology. Discover how to:

- Use Kaizen methodologies with a cross-functional team
- Find solutions without adding software or capital expenditures
- Save money and redirect staff to perform value-added tasks

Published in: Education
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Process improvement without technology investments?

  1. 1. Process Improvement Without TechnologyInvestments: a LEAN approachKathy Tanner, APMManager, Accounts PayableChris AllbritainAssociate Director, Strategic Sourcing/ProcurementAnnual Procure-to-Pay Leaders’ MeetingMay 2012 Chicago
  2. 2. About Amylin Challenging Science. Changing Lives. Amylin Pharmaceuticals is a biopharmaceutical company dedicated to improving lives of patients through the discovery, development and commercialization of innovative medicines. > Headquartered in San Diego, CA; Manufacturing facility in West Chester, OH > ~1,500 employees > Founded in 1987 > IPO in 1992 > Two innovative, first-in-class diabetes products launched in 2005 > Third product – first once weekly diabetes treatment – launched in 20122
  3. 3. Presentation Agenda• Project background – business problem• Project objective• What are KAIZEN, MUDA, and DMAIC?• KAIZEN process steps• Results• Lessons learned3
  4. 4. Business problemAnticipated volume increases coupled with no additional resources required that we implement efficiency improvements without investment in systems integrations. P2P Volume + + $ ? =4
  5. 5. Key objective, goals and processObjective:To identify and implement process improvements in the procure-to-pay process which improve efficiencies, reduce costs andenhance scalability for growth given known constraints.Goals:Achieve 10% reduction in processing times in Accounts Payable and 5% inProcurement.Out-of-Scope:Integration of MRO, requisition and invoice imaging systemsProcess:Conduct LEAN Kaizen Event though Amylin’s Operations Excellence Program5
  6. 6. What is a LEAN Kaizen event? KAIZEN (Japanese Term ) Kai Zen Break Apart / to change Study / Make BetterDefinition: A short term focused improvement activity (usually 2 to 5 days)during which a cross functional team implements improvements to a definedprocess, generating rapid results (30-60 days)Tools Used: Lean & Six Sigma MethodologiesPurpose: Focuses on the elimination of “MUDA” (WASTE)6
  7. 7. MUDA The Seven Types of Waste Processing Waiting People Waiting Motion Transportation Inventory Moving Things Quantity Overproduction Defects/Inspection Quality Overproduction Inventory7
  8. 8. LEAN events follow the DMAIC methodology Define Define the opportunity from both business and customer perspectives Measure Understand the process, its metrics, and its performance Search for the key factors that have the Analyze biggest impact on process performance and determine the root causes Develop improvement Improve solutions for the key factors Implement the solution and control Control plan8
  9. 9. Practical steps to the KAIZEN process 1. Define > Set the Project Charter including scope > Identify team 2. Measure > Identify Current State Process Map > Assess value add/essential non-value add/non-value add steps 3. Analyze > Brainstorm improvement ideas > Organize ideas by Affinity Diagram > Perform Benefit/Effort Analysis to set priorities 4. Improve > Define Future State Process Map > Set the Implementation Plan with timelines & actions 5. Control > Lock in the improvements and Future State Process9
  10. 10. P2P Kaizen Step 1: Define Project Charter (our template) Business Justification & Problem Statement Goal Statement & Project Scope Goal Statement:Business Case / Justification: Identify and implement process improvements in the procure-to-pay process In support of a Procurement Steering Committee initiative, an which improve efficiencies, reduce costs and enhance scalability for growth. assessment performed by the Finance and Operations Procurement Targeted efficiency gains are 10% in AP and 5% in Procurement. Leads identified that in addition to anticipated efficiencies gained by integrating the requisition and invoice imaging systems, unidentified In Scope: process improvements could result in additional capacity improvements. Purchase requisition entry through invoice payment A focused VSM or Kaizen event on the procure-to-pay process will support this effort. Out of Scope:Problem Statement: Commercial requisition entry to PO creation. The current company objective of reducing operating loss requires that we evaluate the processes we are responsible for to identify and eliminate waste and reduce costs. Timing & Milestones Measures Measure(s) Baseline Goal Data SourceSTART DATE: Kaizen Event ANALYZE: June 2010 Process Times/Cycle Times Current State 5-10% reduction Process OwnersJune 14-16, 2010 IMPROVE: 2Q10-3Q10DEFINE: June 2010 CONTROL: 3Q10 Financial Impact: Increased efficiencies in AP by 10% and Procurement by 5% will produce Tier 3MEASURE: June 2010 savings estimated at ~$50K annually. Team Members Voice of Customer• Executive Sponsors: Jane Ryskamp, Laura Clague• Project Champion: Dave Mohr• Team Members: Chris Allbritain (Co-lead), Sandy Calvin (Co-lead), Dorene Shughrue, Sheryl Hauser, Sudhakar Yadavalli, Kathy Tanner, Annette Navarro, Michele Galper, Kim Lyon, Randy Sapp, Henry Wu, (ad hoc) David McCormack (ad hoc), Kenny Lofgren (ad hoc), Kathryn Hathaway (ad hoc) 10• Facilitator: Tareyn Walsh
  11. 11. P2P Kaizen Step 2:Measure Current State Process Hand-Off Non-Value Wait11 Points Activity Points Steps to Eliminate
  12. 12. P2P Kaizen Step 3:Analyze improvement opportunities Brainstorm ideas Affinitize ideas 12
  13. 13. P2P Kaizen Step 3:Perform Benefit/Effort Analysis Rapid Decision Possible Making Opp! Project High Best Extra WorkBusiness BenefitBusiness Impact (Home Run) (Sliding Home) Good Waste of Time (Single) (Foul Ball) Low Easy Hard Ease of Implementation Level of Effort 13
  14. 14. P2P Kaizen Step 4:Define Future State (improved) Process Map Before After - Eliminated 30 process steps14
  15. 15. P2P Kaizen Step 4:Develop detailed Implementation Roadmap15
  16. 16. P2P Kaizen – improvements and resultsProcurement: Implemented electronic PO’s with digital signatures, eliminating need for printing/scanning Streamlined New Supplier Form process Increased secondary PO review threshold from $100K to $250K Reduced PO order confirmation retention to material orders onlyResults: Goal 5% Achieved 17%Accounts Payable: Eliminated Workflow Invoices Paid Report Implemented archived invoice workflows after Results step vs. after payment date (invoice images now available to users earlier) Eliminated duplicate copy of wire requests/confirmations in the invoice workflow Consolidated wire request forms from one per vendor to one weekly Excel worksheet w/links Eliminated distribution of Check/Wire Reports via emailResults: Goal 10% Achieved 13% TOTAL PROJECT $187K ANNUALIZED SAVINGS Average of 15% Improved Efficiency!16
  17. 17. P2P Kaizen Step 5:Control plan and future opportunitiesControl plan: Mistake-proofed process improvements by modifying our ERP and invoice workflow systems to ensure compliance Created/modified work instructions to document new processes Updated SOX compliance narratives to reflect process changes Informed stakeholders, trained process owners, and audit for complianceFuture opportunities (Ideal state with integrated systems): MUCH SIMPLER PROCESS!17
  18. 18. Key lessons learned LEAN/Kaizen methodology very effective for evaluating the P2P process and identifying improvements Mapping out the current process step-by step identified that processes were not always being performed as documented Process mapping with the cross-functional team provided a better understanding of the entire process for all stakeholders Mapping the Ideal Future State Process with systems integrations clearly demonstrated further efficiency gains, and provided foundation for a business case for future project18
  19. 19. 2011 Top LEAN Project winner19
  20. 20. P2P Kaizen Questions?20 BBBB
  21. 21. Contact us! Kathy Tanner, APM Manager, Accounts Payable kathy.tanner@amylin.com Chris Allbritain Associate Director, Strategic Sourcing/Procurement chris.allbritain@amylin.com21

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