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Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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CULTURAL TRANSFORMATION Beyond Operational Excellence March 2014 Christian Houborg, Vice President Sponsor of C.I. @ Lundbeck
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Page 1: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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CULTURAL TRANSFORMATION

Beyond Operational Excellence

March 2014

Christian Houborg, Vice President

Sponsor of C.I. @ Lundbeck

Page 2: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 3: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 4: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

NOT FOR PROMOTIONAL USE

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

Page 6: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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THE CULTURAL TRANSFORMATION

Page 7: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 8: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

NOT FOR PROMOTIONAL USE

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

Page 9: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

Phase 1: 2006 BETTER FOR LESS

Flow and Pull Value

Focus on Processes

Embrace Scientific Thinking

Assure Quality at the Source

Seek Perfection

Page 10: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 11: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

11

Value Stream Analysis (VSA) and Kaizen Events

Event Event Event Event

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

Page 12: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

12

Example of a Kaizen Event

Reduction of setup time by 40%

70 Kaizen Events in 2007

Page 13: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 14: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 15: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 16: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

Phase 2: 2008 CREATE RESULTS – TOGETHER

Respect Every Individual

Lead with Humility

Page 17: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

17

What is good Leadership

Identification of:

Success stories involving good leadership

Good leadership characteristics

More than 100

carateristics

17 categories 24 behavioural

descriptions

Page 18: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Personalleadership

Rela

tions

Business focus

Execution

Internal Leadership Program that

integrated traditional Leadership

development techniques with the

Lean principles

Page 19: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Processes General 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

Page 20: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 21: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 22: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 23: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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!

Page 24: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

Phase 3: 2010 OWN THE FUTURE

Create Constancy of Purpose

Think Systemically

Page 25: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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”

Page 26: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 27: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

27

So how do we use Policy Deployments?

Supply Operations & Engineering

Divisions

Departments

Teams

1. Top down break down

2. Bottom up review

Page 28: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

28

All About People 2011 – teams took ownership

of the Business System

Change

Readiness

Driving

Change 2006 2011

Page 29: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 30: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

30

First Shingo Silver Medallion in Europe

Page 31: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 32: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

Phase 4: 2013 Principle Driven Culture

Page 33: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 34: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 35: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 36: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

Results BE AMBITIOUS AND TAKE ACTIONS

Create Value for the Customer

Page 37: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

37

Value Stream Thinking

Solution Mode

Trust Lack 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

Page 38: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 39: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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.

Page 40: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 41: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 42: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

NOT FOR PROMOTIONAL USE

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

Page 43: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

New or existing slides are

easily formatted using built-in

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the Home tab

New or existing slides are

easily formatted using built-in

layouts that can be applied via

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QUESTIONS?

Page 44: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

NOT FOR PROMOTIONAL USE

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

Page 45: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 46: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

MATERIAL: RECOGNITION CARD - FOR RECOGNITION OF GOOD BEHAVIOUR

Page 47: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 48: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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

Page 49: Beyond Operation Excellence - Christian Houborg, Lundbeck - Shingo journey

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)


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