Medical Device Supply Chain Council

Oct 2, 2013

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Agenda

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• Welch Allyn Overview • EME Deployment

– Objectives – Supply Chain Optimization – Implementation Plan

• NFIA Overview • NDL Overview

Company Profile

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• Founded: 1915

• Business: Global developer and manufacturer of medical devices and technologies

• Ownership: Privately-held (family-owned)

• Corporate headquarters: Skaneateles Falls, N.Y.

• Operations: Sales, service, research and development, and manufacturing facilities in more than 50 countries

• Employees: 2,400 (worldwide)

• CEO: Stephen Meyer

European Landscape Current State

Shared Service Centre

Location with infrastructure

Warehouse and Distribution

Location without infrastructure Service

Centre

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Marketing

Technical Training Centre

Sales Training

EME Deployment Objectives

• Create a co-located, highly functioning unit of key EME leadership that can effectively set and execute strategy.

• Locate the EME HQ in an area with world-class infrastructure.

• Select an EME HQ location that can enable talent access and retention.

• Implement an EME HQ location that provides a favorable business climate.

• Optimize the EME supply chain improving operational excellence and overall logistics costs.

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EME Deployment Strategy

• Ninety (90) day evaluation • Two primary work streams:

– Strategic investment decision – Supply Chain optimization

• Approach: – Defined process, roles and partnered with PwC – Key stakeholder analysis to define program objectives – Application of data rich quantitative, qualitative, and

benchmark analysis

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• Leaders in supply chain management, operations strategy, and innovation

• Specific expertise in market entry and supply chain network strategy, operating model design, and distribution and logistics for pharma / life science companies

• Leader in management consulting, tax, and accounting services

• Specific expertise in payor arena and global pharmaceutical regulations

• Deep experience in supply chain management

• Distinct capabilities in site analysis and alignment to regional strategies.

Value to Welch Allyn • 700+ global healthcare strategy consultants in

over 50 countries that develop strategies and support execution

• Global supply chain and operations strategy leader, with a strength in life sciences distribution

• Deep knowledge and understanding of local market dynamics and entry requirements in Europe

• Unmatched expertise across service areas to ensure robust, tax efficient, and flexible supply chain strategies

Management Consultants

PRTM, S&V and PwC combined firm

Consulting Partner-PwC Advisory

European Landscape Future State

Ireland

• Customer Care • Supply Chain • QA/RA

Netherlands

EME HQ • Product Training • Technical Training

Netherlands Operations Centre • Tech Support • Bench Repair • Logistics • Configuration

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Supply Chain Optimization

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Core Team

Steering Committee

Supply Chain Optimization Project Plan : 90 day schedule

define scope

gather and analyze data

Finalize recommendation

Build AS IS model and define scenarios

evaluate scenarios

17 – 21 Sep 21 Sep - 9 Oct 9 - 19 Oct 19 Oct – 9 Nov 9 – 30 Nov

Data validation

Validation data

Scenario evaluation

Scenario recommendation

Sensitivity test input validation

Validation ASIS simulated

Sensitivity

Validation of recommendation

Mid SEP Mid DEC

Scenario definition

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European SC Landscape & Scope

In scope: • Configuration activity in Ireland • Warehouse and Distribution in the Netherlands • Service activities in Germany • Insource versus outsource

Product Configuration

Inventory location

Warehouse and Distribution

Service location

Configuration location

Service Centre

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AS IS simulated

Scenario evaluation

AS IS Actual (Sep2011 –

Aug2012)

Data Collected & Validated • Transactions & Cost

information: • Inbound receipts • Outbound internal and

external shipments • 3PL volumes & costs • Inventory information

• Master Data information: • Sales Order Data • Material Types • Vendor & Customer

Master Data • Material Master Data

Scenario evaluation • 11 long list • 4 short list

• Outsource • Insource • Combination

As Is Data Modifications • Changes for AS IS data

simulation: • One time, large

orders • Go to market strategy • Insource vs.

Outsource strategy

Sensitivity and Recommendations

Sensitivity: • Changes in demand • Changes in service level • Changes in Incoterms • Economic/environmental factors

Europe Deployment Strategy Supply Chain Optimization: Evaluation Process

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Initial scenarios were evaluated along 2 dimensions:

Quantitative (60%) Qualitative (40%)

Overall results show small differences between the shortlisted scenarios

As a result the recommendations form part of a strategic direction that will evolve over time.

Europe Deployment Strategy Supply Chain Optimization: Base outcome from analysis

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Current location

Gravity region

Logistics is currently located in the gravity region (Outsourced)

Move Configuration from Ireland to the Gravity Region and co-locate with logistics (Outsourced)

Move Service Centre from Germany to the Gravity Region and co-locate with logistics (Bench Repair In -house)

Potential further co-location opportunities if EME HQ would also be located in the Gravity Region.

The evaluations show a clear preference for the options that reflect co-locating the 3 main activities

Amsterdam

Antwerp 150 kms

Belgium

Netherlands

Europe Deployment Strategy Collocation

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Goal is to outsource low complexity activities and keep complex ones in-house:

1.Segment complex configurations and complex repairs

2.Choose the best allocation in-house vs outsourced based on technical complexity

Complexity

Outsource

In-house

Conf

igur

atio

n Bench Repair

Partnership and cooperation should evolve over time towards the recommended option.

Given the outsourcing objectives success is dependant on having the right partner. An RFP at the start of the implementation needs to clarify the capabilities of potential partners on all 3 activities.

Europe Deployment Strategy Insource versus outsource

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EME Deployment Strategy Operations Centre

Improve Operational Efficiencies

Collocate distribution, service and product

configuration

Achieve Critical Mass Establish Strategic Partnerships

Create World Class Infrastructure

Improve Customer Experience

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EME Operations Centre

Europe Deployment Strategy Implementation Plan

• Process • System • Organisation • Communication

Confirmation of provider

Change management

Detailed solution SC

RFQ/Contract :

- Logistics - Config - Bench Repair

Migrate Bench Repair

Migrate Configuration

Quick Win tracks

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Move Logistics

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

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Welch Allyn Netherlands Landscape

Two locations with ~35 employees • EME HQ in Leiden

– EME senior management team and NL commercial team

– Product and Sales Training Centre – Technical Training Centre – Customer Experience Centre

• EME Ops Centre in Tilburg – Product repair – Technical support – Warehouse and distribution – Product configuration

EME HQ

Ops Centre

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Strategic Partnerships Netherlands

• Welch Allyn partnered with two (2) key institutions as we established a greater presence in the NL – Netherlands Foreign Investment Agency – Holland International Distribution Council

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The government authority for promoting and assisting foreign investment in the Netherlands Established in 1978 Operational unit of the Dutch Ministry of Economic Affairs NFIA HQ in The Hague, 21 NFIA offices abroad Close collaboration with broad network of domestic partners, as well as with

Dutch Embassies, consulates-general and other organizations representing the Dutch government abroad Total staff: approx. 95 worldwide

About the NFIA

About NFIA

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Set up preliminary in-person meetings and provide up-to-date, personalized information Offer personal guidance and counseling, starting in the country of origin Arrange contacts with relevant business partners, government authorities, a variety of

Dutch networks and service suppliers, and other relevant contacts Organize customized fact-finding trips together with network of regional economic

development partners Support preservation and further enhancement of a favorable Dutch investment climate Present concrete solutions that simplify and optimize establishment in the Netherlands Provide matchmaking assistance for foreign technology companies seeking

European partners Offer tailor-made support by NFIA agri-food and chemical industry specialists Deliver advocacy towards national and EU governments

NFIA support from A to Z

About NFIA

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Technology Matchmaking Service (TMS) with NL Innovation Logistics Matchmaking Service (with NDL/HIDC) Tax ruling practice for large foreign investors

(with Tax Inspectorate and Ministry of Finance) Knowledge Migrant Facility for new foreign investors

(with IND) Orange Carpet Visa Facility

(with relevant consular departments)

Special NFIA services

About NFIA

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The Hague London Istanbul New York Boston Atlanta Chicago San Francisco São Paulo Dubai Tel Aviv

New Delhi Mumbai Tokyo Osaka Seoul Taipei Shanghai Beijing Guangzhou Singapore Kuala Lumpur

NFIA worldwide

About NFIA

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Priority sectors

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Agri-food Horticulture High Tech Systems and Materials (HTSM) Energy Logistics Creative industries Life sciences & Health Chemicals Water Headquarters ICT: Ditigal Gateway

Priority sectors for the Dutch economy

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25+ years of experience

Private, not for profit organization representing 400 members

Founded by the Dutch logistics industry in 1987

Ministry of Economic Affairs

Unique position within Europe

3 traveling ambassadors

APAC, MEA & Turkey

Europe, East US/Canada

Mid West & West US/Canada, Brazil

In close cooperation with the NFIA

LSP

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How we can support…

Promotion of the Netherlands as “The Logistics Gateway to the European market”

Advisory role to Intl companies in setting up or re-structuring their European Supply Chain (all complimentary and confidential)

Covering multiple industries (Life Sciences)

Logistics partner selection

Organize Customized Fact Finding visits to the Netherlands

Stimulating research and innovation

Raise public and political support for the logistics industry, provide input for governmental bodies

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Why focus on Life Sciences?

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Trend: Going Global Sooner

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Going Global Sooner - Implication

Smaller firms need expert advice on operating global supply chains

Your potential customers are greater in number and smaller in size

They will have greater dependence on your local expertise and capabilities

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Logistics are at the intersection

Hospitals want: Just in time Ready access to expensive and

vital technology Low inventory costs Knowledgeable ‘sales’ people who

are not ‘selling’ Appropriate utilization Lowest possible price Standardization High patient outcomes

Manufactures want: Somebody to take title and

position of the product Sales growth Sales people who sell Maximum utilization Highest possible price License to sell High patient outcomes

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and Supply Chain contributes…

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1. Gateway into the EU market for intercontinental sea and air freight

2. Dutch Logistics industry equals USD 50 Billion (8% GDP)

3. Orchestrator of European sustainable supply chains: the Dutch represent 0.25% of the worlds population and 1% of global production, but facilitates 3.7% of global trade!

Logistics in the Netherlands

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Logistics Hotspots 2013

1. Venlo 2. West Brabant 3. Tilburg – Waalwijk 4. Port of Rotterdam 5. Eindhoven 6. Schiphol 7. Maasvlakte 8. Tiel – Geldermalsen 9. Arnhem – Nijmegen 10. Twente

Logistics in the Netherlands

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NDL/HIDC – Holland International Distribution Council Eric Willems Sr Manager Supply Chain Solutions USA & Canada & Brazil E: e.willems@hidc.nl I: www.hidc.nl C: +31 6 23 7292 51 Address: Louis Pasteurlaan 6 2719 EE Zoetermeer The Netherlands

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