Visualizing Customer Delivery

Kent M. Payne, Ph.D.Catalent Pharma Solutions

2

Lean Simply Stated

Lean is…“Getting the right things to the right place at the right time in the right amount, while minimizing

waste and being open to change.”

James Womack, Chairman and CEO of Lean Enterprise Institute

Lean System For Managing (LSFM)Catalent Pharma Solutions – RTP FacilityCase Study

4

Who we are: The basics

• $1.7 billion in annual revenue

• 9,000 employees worldwide

• 29 facilities on 5 continents

• Comprehensive provider of proprietary, best-in-class solutions:

— Oral

— Injectable

— Respiratory

— Advanced drug packaging

…to the clinic…

…to the market

From the laboratory…

5

Who we are: By the numbers

Number of doses made or packaged annually100,000,000,000

Patents and patent applications1,400

Quality and regulatory experts1,100

Number of customer countries100

Portion of “Top 200” selling drug compounds we support80%

Years experience in serving pharma industry75

Number of the top 50 pharmas we serve49

Portion of recent new drug approvals supported by Catalent40%

Number of the top 100 biotechs we serve90

Ratio of scientists to overall employee base1 in 10

6

Our Company

Right offerings

Speed

Right investment

Process excellence

World Class Provider

…had a vision…

7

Visualizing the Current State

$-$20,000$40,000$60,000$80,000

$100,000$120,000$140,000$160,000$180,000$200,000

Wat

ers

Cor

pV

WR

Sci

entif

icF

ishe

rS

cien

tific

Wes

tP

harm

aceu

tial

US

Pha

rmac

opia

Sig

ma-

Ald

rich

Agi

lent

Tec

hnol

ogie

sP

heno

men

exN

atio

nal

Wel

ders

Mill

ipor

e C

orp

Bio

Mer

ieux

Hac

h U

ltra

Ana

lytic

sQ

uant

umA

naly

tics

Rem

el

Dio

nex

Cor

p

RT

Cor

p

0%10%20%30%40%50%60%70%80%90%

Spend Cum % Spend

8

Time Well Spent?

Non-Value Add Activities

Business Value Add Activities

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Quote Pre-PhaseProtocol

Analysis Data Review QualityAssurance

NVABVAVA

Value Add Activities

9

Project Delivery Tied to Month EndSite Wide Projects Submitted by Week

0

10

20

30

40

50

60

5/4/2007

5/11/2007

5/18/2007

5/25/2007

6/1/2007

6/8/2007

6/15/2007

6/22/2007

6/29/2007

7/6/2007

7/13/2007

7/20/2007

7/27/2007

8/3/2007

8/10/2007

8/17/2007

8/24/2007

8/31/2007

9/7/2007

9/14/2007

9/21/2007

9/28/2007

10/5/2007

10/12/2007

10/19/2007

10/26/2007

11/2/2007

11/9/2007

11/16/2007

11/23/2007

11/30/2007

12/7/2007

12/14/2007

12/21/2007

12/28/2007

Week

# P

roje

cts

Project activity was reactive and batched at month end, not proactively planned and leveled across the month.

10

BusinessDevelopment

General Manager

Contract Management

StabilityLab

AnalyticalR&D Lab

StructuralLab

To theCustomer

…to complete the Testing Process…

Pre-phase/Protocol Data Review

MaterialManagementLaboratory

QualityAssurance

Lab OperationsFinance QAHRBusiness

Development

Functionally, We Were Silos

11

Even with customer data, many remained skeptical of the need for change.

We needed to learn to see.

Opening our Eyes

12

Lean System For Managing (LSFM)

Vision

Objectives

Team Goals

Objectives Objectives

Key Performance Indicators (KPIs)

Team Goals Team GoalsTeam GoalsTeam Goals

Plan Communicate

Implement

Review/Adjust

Report Daily Rigor

13

Our Plan for Implementation

Phase I – Core Lab Teams with Consultant Support

Phase II – Remaining Lab Teams and Support Functions

Phase III – Rollout to Sister Site

14

We Defined Key Improvement Objectives And Established A Balanced Scorecard

Metric Site Level Description Actual Goal Status

On Time Delivery (OTD)% of external customer deliverables (from operations) delivered on or before commitment date vs total number of projects delivered.

99% >95%

Right First Time (RFT)% notebooks with no major defects and fewer than 5 minor defects as noted during technical review

96% >95%

Safety # of days with no recordable incidents 7 days 7 days

Sales WonWeekly revenue dollars signed versus dollars planned

95% >100%

Projects Completed to PlanNumber of projects actually completed versus number of projects planned for the week

131% >100%

ARROW COLOR ARROW DIRECTION

100% or more of Goal Better than last report period

90% to 99% of Goal No change from last report period

Below 90% of Goal Worse than last report period

RTP SITE DASHBOARD

Legend

15

We Developed Team-Owned Metrics

Rev 9/4//07

R

For the week of:

CUSTOMER PLEASING METRICS

Mon Tues Wed Thur Fri Wkly

# Projects Sent: (Goal is Qty Planned for Week)

# (%) Projects On Time: (Of the Sent Projects, Qty of Projects On Time / Total Qty of Projects Sent)

# (%) Notebooks Right First Time: (Of the Tech Reviewed Notebooks, Qty of Notebooks Right First Time / Total Qty of No tebooks Reviewed)

# In-Process Projects Past Dues: (Qty of RED Projects / Total Projects Tracked On VCB)

# In-Process Projects At Risk: (Qty of BLUE Projects / Total Projects Tracked On VCB)

OUR GOAL =

OUR GOAL =

OUR GOAL =

OUR GOAL =

OUR GOAL =

Daily Metrics recorded directly from Visual Control Boards

Trended at team and Site Level

ALL LABS Metrics - Rolling Four Week Avg.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

15-Oct-

07

22-Oct-

07

29-Oct-

07

5-Nov-

07

12-Nov

-07

19-Nov

-07

26-N

ov-07

3-Dec-

07

10-Dec-

07

17-Dec

-07

24-Dec

-07

31-Dec

-07

7-Jan

-08

14-Ja

n-08

21-Jan-0

8

28-J

an-0

8

4-Feb-0

8

11-Feb

-08

18-Feb-0

8

25-Feb-0

8

3-Mar

-08

10-M

ar-0

8

17-M

ar-08

24-M

ar-08

31-Mar-0

8

7-Apr-0

8

14-Apr-0

8

21-Apr-0

8

28-Apr-0

8

5-May-

08

12-May-

08

19-M

ay-0

8

26-M

ay-0

8

2-Ju

n-08

9-Jun-0

8

16-Ju

n-08

23-Ju

n-08

30-Jun-0

8

7-Jul-0

8

14-Jul-0

8

21-J

ul-08

28-J

ul-08

4-Aug-

08

11-Aug-

08

18-Aug-

08

25-A

ug-08

Week

ALL LABS %Notebooks RightFirst TimeALL LABS % On-Time Delivery

ALL LABS %Projects Past Due

Linear (ALL LABS% Projects PastDue)

16

And Engaged Teams in LSFM

Name Larry Lab

Date Tuesday, May 13, 2008

10.5 10.5

7:00 AM Admin/email 0.5 0.5 g7:30 AM Compliance 1 1 g8:00 AM

8:30 AM DR CSA-aminolysis 2 0.5 r Awaiting for updated Excel sheets to be added to notebook

9:00 AM

9:30 AM LSFM 0.25 0.25 g10:00 AM

10:30 AM

11:00 AMTTP-VJO-C0005 assay LIR writeup & PR complettion/revision 1.5 1.5 g

11:30 AM lunch 0.5 1 y took longer than planned

12:00 PM

12:30 PM TTP-VJO-C0005 RS LIR writeup & completed PR 1.5 y Unplanned

1:00 PM TTP-IPC-C0001 investigation ?? 4.25 0.5 r Priority change see line 21

1:30 PM

2:00 PM DR TTP-VJO-C0005 RS 6 month retest 1.75 y Priority change

2:30 PM

3:00 PM DR TTP-VJO-C0005 LOD 6 month retest 1 y Priority change

3:30 PM

4:00 PMDR pH calibration record and microbalance calibration 0.5 y Unplanned

4:30 PM Admin/email 0.5 0.5 g5:00 PM

5:30 PM

6:00 PM

6:30 PM

7:00 PM

7:30 PM

Total Time

Barrier Description (Required for Yellow and Red flag)Plan Time TASK Description

Task Status Red

Yellow Green

LEAN SYSTEM FOR MANAGING WORK PLAN

Est. Hours

Act. Hours

IT = Systems / Technology issue; U = Underestimated Time/Task; IN = Internal Interruption; X = External Interruption; IA = Instrument not Available; IR = Instrument Rework; I = Instrument/Machine not Working OR = Operator Rework; DR = Data Review; G = Supplies; SR = Science / Protocol; P = Priority Change; C = Customer caused delay; O = other

17

Teams Trained on Identifying and Removing Barriers

Plan WorkIdentify Barriers

Analyze Barriers

Engage Barrier Remover

Manage Removal

Confirm Improvement

18

Team Leaders Resisted

This will go away...I already

have a process that

works!

My customers are happy!

I don’t have time for a daily team meeting.

The Consistent Message…

This is the way we do business! Period!

19

Leaders Walked the Walk

Management Involvement

Team Success

20

We Began to Reward and Recognize

Team-Based insteadof Individual

Rewards Based on Performance and Trajectory

Candy Bars-show up on time-complete work plans

Gift Cards-Week with all projects delivered on time

2 days off-Exceeded Site’s Quarterly Target

TeamCelebration-3 months meeting OTD goal

21

And Then the Consultants Left…

22

“LSFM works for them, but We are Different”

Labs SupportFunctions

Manufacturing

Phase II Brought Challenges

The principles of LSFM apply to every team!

23

Sustaining the Gains is Paramount

24

Barrier Removal Takes Disciplined Action

Barriers

Improvements

Projects

- Identified daily at VCB by team members

- Every team has at least one active barrier removal project at all times

Teams continually identify and eliminate waste.

25

Barrier Blitz Workouts

Focused Teams Yield Results

Teams Identify Barriers…

…and Make Improvements

26

We Continue to Monitor Progress

Mentor Audits Formal Assessments

Frequent Observations by Management

Consistent, Frequent

Engagement at multiple levels

27

Have We Changed?

Project Lead Time

20

25

30

35

40

45

50

55

Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08

Month

Lead

Tim

e (d

ays)

Just making work visible drives down lead times!

LSFM Implemented Here

28

Have We Changed?

LSFM has led to significant improvementsin performance!

Since LSFM…

< 5%37%Projects Past Due

> 95%76%Reports Right First Time

> 95%63%On Time Delivery

29

Have We Changed? The Signs are Everywhere!

Metrics

Control Boards5S Boards

Event Posters

We arebecoming a

Visual Workplace

Trending

30

A Growing Coalition…

5S Boards

Employees at all level are engaged

ProjectTeams

Mentor

Table Leads

KaizenLeader

31

Takeaways

• Define a clear vision and demonstrate that vision through consistent, unwavering actions

• Outline Key Performance Indicators and communicate/establish expectations of performance

• Align every individual’s and team’s objectives to KPIs and Goals

• Commit to daily rigor and PDCA cycles - extinguishing old habits is hard

• Make the work visible

• Reward and recognize desired behaviors

• Share and communicate successes

• In the words of Deming, “You have to manage the system. The system does not manage itself.” Stay the course.

32

“Without changing our patterns of thought, we will not be able to solve the problems that we created with our current patterns of thought.”

- Albert Einstein

33

Questions?

. . .