Lonza OE Deployment Case Study

Lonza Operational Excellence (OE)

DeploymentDeployment

Successful Operational Excellence

Deployment Case Study

Key Takeaways

• An appreciation of

– a complete successful OE deployment with the key elements & success factors

– globally standardized & locally customized OE approaches for both new and mature businessesapproaches for both new and mature businesses

– three core processes of OE deployment

• OE culture building

• OE capability development

• OE project management & execution (translated into ROI, tangible financial benefits)

2

Presentation Content

• Lonza Global OE deployment

• Greenfield implementation of Lonza (China)

OE deployment – Life Science Ingredients (LSI),

Lonza Custom Manufacturing (LCM)Lonza Custom Manufacturing (LCM)

• Summary & Conclusion

3







4

Lonza Company Overall Strategy

In clearly defined

life-science markets,

we focus on

customers’

We offer technology

solutions based on

biological and

chemical platforms

We deliver

Operational

Excellence

in innovation,

1 2 3Tech

no

log

y a

nd

Inn

ovatio

n

Sa

fety

& H

ea

lth

En

viro

nm

en

t & E

ne

rgy

OUR VISION We strive to be the leading supplier using science and technology to improve quality of life

OUR MISSION We work with passion, using advanced technologies to transform life science into new possibilities for our customers

OUR VALUES Influential, Enterprising, Connected

External Partnerships

R&D and

manufacturing needs,

as well as end-

consumer needs.

chemical platforms

and end-use

applications within

these platforms.

leadership,

operations and all

processes which are

valued by our

customers.

Tech

no

log

y a

nd

Inn

ovatio

n

Sa

fety

& H

ea

lth

En

viro

nm

en

t & E

ne

rgy

Consumers Patients Customers

5

Why Lonza Global OE Deployment?

To be the best at what we do for

customers & being better than our customers & being better than our

competitors is our right to exist!

6

Our Vision:

“Finding the lowest cost way of

consistently meeting customer

requirements”

Our Mission:

Lonza Global OE Deployment

Accountability

& Recognition

Our Mission:Lonza Operational Excellence aims to

Enable the organization to grow a

continuous improvement culture� by engaging, empowering, teaching &

coaching people

� to find the lowest cost way to continuously

achieve customer satisfaction using lean

principles to reduce waste, improve

effectiveness, efficiency and generate flow.

Annual

Targets

Training &

Mentoring

Quick

Wins

Collaboration &

Communication

7

Lonza OE Globally Standardized Elements

• Every site must fully aligned to company overall

strategy - delivering Operational Excellence in innovation,

leadership, operations and all processes which are valued by

our customers

• Engagement of external consultancy expertise –

Green Belt training program, etc.

• Lonza Excellence Program utilizing Lonza Excellence

Assessment

8

Hoshin BoardsPerformance Boards

PDCA Management Control System

9

Overview of OE Deployment – Run the

Business & Improve the BusinessDashboard

Run & monitor the overall business

X-Matrix

Improve the business

Dashboard Operations Overview 2010

YTD Results (Jan - March 2010)

BT

Pep

tid

es B

rain

e

BT P

ep

tid

es

Vis

p

BT C

on

juga

tes

BT E

arl

y P

hase

BT L

ate

Pha

se V

isp

BT

Late

Ph

ase N

an

sh

a

BT L

ate

Pha

se R

ive

rsid

e

Safe

ty

Number of accidents (> 1 day lost time) 0 0 0 0 0 0

OTIF (on time in Full) avg of on time in full 87% 25% 100% 100% 98% 100%

number of complains / shipment 0 1 4 0%

TT Success Rate Technology Transfer n/a n/a n/a n/a

Batch Success Rate 100% 91% 100% 98% 97%

Cleaning Success Rate 99% 92% n/a

Overdue Deviations vs total number of deviations 32% 3.0%

Number of Deviations per Batch 4 0.81 0.29 0.90

BR

T

Batch Release Time < 30 Days 32% 0% 93% 79% 96%

Cu

sto

mer

Qu

ality

ProcessProcess

PeoplePeople

AttractionAttraction DevelopmentDevelopment RetentionRetention

Purpose/Vision/StrategyPurpose/Vision/Strategy

PerformancePerformance

CustomerCustomer

PD

CA

Co

re P

roce

ssC

ore

Pro

cess

SHE

Delivery CostQuality

Innovation Value

KPIV’sKPIV’s

Co

re P

roce

ssC

ore

Pro

cess

KPIV’sKPIV’s

Business:

Process:

ProcessProcess

PeoplePeople




CustomerCustomer

PD

CA

Co

re P

roce

ssC

ore

Pro

cess

SHE


Innovation Value

KPIV’sKPIV’s

Co

re P

roce

ssC

ore

Pro

cess

KPIV’sKPIV’s

Business:

Process:

ProcessProcess

PeoplePeople




CustomerCustomer

PD

CA

PPDD

CCAA

Co

re P

roce

ssC

ore

Pro

cess

SHE


Innovation Value

KPIV’sKPIV’s

Co

re P

roce

ssC

ore

Pro

cess

KPIV’sKPIV’s

Business:

Process:

SHE Core Process 1Quality/Delivery/Cost

Core Process …Quality/Delivery/Cost

Customer Value People Innovation

1 2 3 4 5 6

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

Result

Measur

es

10

LCM Strategy Flow Down Based on PDCA

LCM(Visp, Braine, Nansha)

LCM-E Visp LCM-P BraineLCM-L VispLCM-L Nansha

11

PDCA Production Lines PDCA QC PDCA LCRD Projects

Visual Management is Key to Get Employees Engaged at All Levels

Success Factors for Leading

Improvement!

Vision Skills Incentives ResourcesAction

PlanImprovement!

Skills Incentives ResourcesAction

PlanConfusion�

�Skills Incentives Resources

PlanConfusion

Vision Incentives ResourcesAction

PlanAnxiety

Vision Skills ResourcesAction

Plan

No/Slight

Improvement

Vision Skills IncentivesAction

PlanFrustration

Vision Skills Incentives Resources False Starts

��

��

�12

So, What is OE?

Improvement Journey towards

Excellence

Improvement usually means doing something that we have never

done before

~ Shigeo Shingo

13







14

Results & Outcomes

• Achieved a total of 1000Mil JPY (10Mil USD) bottom-line savings

• Lonza OE maturity improved to System (Silver) level

Greenfield implementation of Lonza (China) OE deployment

level

• Nurtured and developed next level of leaders

– 50+ (5%) managers/supervisors,

– 400+ (35%) supervisors/senior engineers and

– 1000+ (90%) employees in different levels of problem solving capabilities

15

Beginning of Lonza China (4 Sites) OE

Deployment

• Triggered in the summer of 2008 due to a new LCM

investment in China Guangzhou, Nansha

• A Team of 4 was formed to support both LSI and LCM

• Started with building lean fundamentals


• Started with building lean fundamentals

– Workplace Organization (5S, Visual Management),

– Kaizen system setup and

– Management Yellow Belt training

• Lonza Excellence Assessment baselining

• Conducted 1st wave of Green Belt Program

16

Visual Management - Examples


17

LSI & LCM Business Characteristics

• Achieved superb strong fundamentals after 1st year deployment

• OE approach for the 2 BUs were customized to align with their

business objectives & characteristics

Characteristics LSI BU (Mature Business) LCM BU (New Business)

Business objective Sustain business with great To establish new business,


Business objective Sustain business with great

profits

To establish new business,

standards and customers

BU Maturity Business/Operations

ongoing for 10+ years with

old guards, change averse

“One year old BU” in China

with new employees,

hungrier for improvement

Leadership Sponsorship Top down Fully buy-in

Resources Relatively abundant Scarce

Processes Established and stable –

running for 10+ years

New processes

OE Competencies Low Low 18

Lonza OE Deployment House


CustomerCustomer

SHE


Innovation Value Business:

Process:

Ma

na

ge

me

nt

&

Ca

pa

bil

ity

Bu

ild

ing

(LE

A)


Lon

zaO

E/C

I D

eliv

er S

ign

ifican

t

Business

enabling

&

support

� BluB/YB/GB Program

� Kaizen system

� Key theme workshops

� Best practice sharing

� Annual Excellence

Contribution Award

PeoplePeople

AttractionDevelopment &

TrainingRetention


Pro

ject

Exe

cuti

on

Pro

ject

Ma

na

ge

me

nt

&

Exe

cuti

on

OE

Ca

pa

bil

ity

Bu

ild

ing

OE

Cu

ltu

re

Bu

ild

ing

(LE

A)

19

Pro

mo

te &

De

ve

lop

Lo

nza

Cu

ltu

re

De

live

r Sig

nifica

nt F

ina

ncia

l Be

ne

fits

Lonza Excellence Assessment (LEA)


CustomerCustomer

SHE



Process:

Ma

na

ge

me

nt

&

Ca

pa

bil

ity

(LE

A)


Lon

zaO

E/C

I D

eliv

er S

ign

ifican

t

Business

enabling

&

support


� Kaizen system




Contribution Award

PeoplePeople


TrainingRetention


Pro

ject

Exe

cuti

on

Pro

ject

Ma

na

ge

me

nt

&

Exe

cuti

on

OE

Ca

pa

bil

ity

Bu

ild

ing

OE

Cu

ltu

re

Bu

ild

ing

(LE

A)

20

Pro

mo

te &

De

ve

lop

Lo

nza

Cu

ltu

re

De

live

r Sig

nifica

nt F

ina

ncia

l Be

ne

fits

Lonza Excellence Assessment LevelBRONZE (41% - 60%)

(12 – 24 months)

SILVER (61% - 80%)

(12 – 18 months)

GOLD (> 80%)

(12 – 18 months)

Evidence of tools in use Evidence of systems in

use

Evidence of Principles

are widely understood

� Existence of some static

ideas

� Many good effective,

efficient Systems

� Clear & ingrained

understanding


� A significant amount of

appropriate tools and

techniques application

� Structured use of human

and technical resources

� Systems linked to

strategic priorities

� Systematic improvement

across supply/value

chain

� Improved business

performance

� Widespread involvement

and empowerment

� Strategic focus on high

value added processes

� Sustained business

success

Scoring adopted from Shingo Prize requirements

21

LEA Improvement Focus

LSI LCM

Continual strengthening of

fundamentals such as 5S, Visual

Mgmt, Standardized work

Advanced lean tools & techniques

such as SMED, VSM, TPM, etc.

Focus improvement projects using Process design, standardization &


Focus improvement projects using

DMAIC methodology

Process design, standardization &

management utilizing PDCA

Mainly tangible financial results (Cost) Other output KPIs (Safety, Quality,

Delivery)

Kaizen System, Best practice sharing, Annual Excellence Contribution Award

22

LEA Deployment Top Tips

• Need to set an improvement target every 6 months

• Need to conduct JIT training and hands-on workshops

to provide skill set and work hand-in-hand with do-ers

• Must engage stakeholders & do-ers of LEA


• Must engage stakeholders & do-ers of LEA

improvement roadmap with rewards & recognition

• Must match speed of improvement with resources

(sponsors & do-ers), business needs and situation

• Must generate half yearly action plan, execute and

monitor it at least monthly

23

Lonza Excellence Assessment Results


60.1 61.0

67.5

70.0

60.0

70.0

80.0

90.0

100.0

LE

A S

co

re (

%)

Lonza Excellence Assessment (LEA): Lonza China

24

6.2

20.0

29.5

38.0

42.4

51.1

6.9

26.4

42.0

51.0

0.0

10.0

20.0

30.0

40.0

50.0

Apr-09 (Baseline) Nov-09 May-10 Dec-10 Jun-11 Apr-12 Dec-12 Dec-13

LE

A S

co

re (

%)

Time of AssessmentLSI Actual LCMC Actual LSI Plan LCMC Plan* Note that 2 different LEA tools were used for LSI and LCMC

before 2012 and an improved standardised LEA tool is used in

2012 where a new baseline was established

Lonza Excellence Academy


CustomerCustomer

SHE



Process:

Ma

na

ge

me

nt

&

Bu

ild

ing

(LE

A)

Ca

pa

bil

ity


Lon

zaO

E/C

I D

eliv

er S

ign

ifican

t

Business

enabling

&

support


� Kaizen system




Contribution Award

PeoplePeople


TrainingRetention


Pro

ject

Exe

cuti

on

Pro

ject

Ma

na

ge

me

nt

&

Exe

cuti

on

OE

Cu

ltu

re

Bu

ild

ing

(LE

A)

OE

Ca

pa

bil

ity

Bu

ild

ing

25

Pro

mo

te &

De

ve

lop

Lo

nza

Cu

ltu

re

De

live

r Sig

nifica

nt F

ina

ncia

l Be

ne

fits

Lonza Excellence Academy Philosophy

• Train and develop all levels of employees with

appropriate skills & competencies

• Increase capability used to solve larger, more

complex problems & projects


complex problems & projects

• Structured tiered layer of coaching support to

the levels above

• Recognise and value the expertise of our

people

Lean, entrepreneurial and learning organization26

Lonza Excellence Academy Thinking

Tell the people how to do itDevelop solutions together

with the employeesLine Managers

Lonza Excellence ThinkingTraditional Thinking

Top-down Customer FocusOrientation


Far away from the daily work

Functional view Process view

Integrated in the daily work

Everybody solves problems

Brush them under the carpet

Problem Solving

Problems

Decisions

Procedures

Specialists solve problems

Chance for improvements

27

Blue BeltAll employees – Basic Scientific Problem Solving

Workplace Organization (5S, Visual Management),

Standard Work, Kaizen system, Root Cause Analysis

Yellow BeltShift leaders, Supervisor & above

Tiered Accountability Process, SMED, Leaders’

Standard Work, Process Mgmt, Project Mgmt

Developing and

recognizing all levels

1000+ (~90%)

400+

(~35%)

Lonza Excellence Academy Framework


Standard Work, Process Mgmt, Project Mgmt

Green BeltsManagers

Hoshin Planning - BU (Strategy Deployment)

Black BeltExperts

VSM, TPM

Coaching support to the

levels above

Increased capability to

solve larger, more

complex problems &

projects


of employees with

appropriate skills &

competencies

50+ (~5%)

4 (~0.5%)

28

Lonza OE Project Management


CustomerCustomer

SHE



Process:

Ca

pa

bil

ity

Ma

na

ge

me

nt

&

Bu

ild

ing

(LE

A)


Lon

zaO

E/C

I D

eliv

er S

ign

ifican

t

Business

enabling

&

support


� Kaizen system




Contribution Award

PeoplePeople


TrainingRetention


OE

Ca

pa

bil

ity

Bu

ild

ing

Pro

ject

Exe

cuti

on

Pro

ject

Ma

na

ge

me

nt

&

Exe

cuti

on

OE

Cu

ltu

re

Bu

ild

ing

(LE

A)

29

Pro

mo

te &

De

ve

lop

Lo

nza

Cu

ltu

re

De

live

r Sig

nifica

nt F

ina

ncia

l Be

ne

fits

Lon

zaO

E P

roje

cts Ca

teg

oriza

tion

Financial Impact

High

Green Belt projects

Improvement projects

3 depts)

6 months

Black Belt projects

Large Improvement projects

High complexity (>3 depts)

Complete within 6-12 months

Low complexity (within 1 dept)

>3

0K

US

D/Y

>1

00

KU

SD

/Y

>2

00

KU

SD

/Y

Gre

en

field

imp

lem

en

tatio

n o

f Lon

za(C

hin

a) O

E d

ep

loym

en

t

30

Inp

ut / R

eso

urce

s (Tim

e, co

st)

Hig

hL

ow

Low

Green Belt projects

Mid-s-ze Improvement projects

Mid complexity (1-3


Black Belt projects

Large Improvement projects

High complexity (>3

Complete within 6

Yellow Belt projects

Small Improvement projects

Low complexity (within 1 dept)


Do

no

t tou

ch

30

~2

5

10

to 1

5

1 to

2


• OE team responsible for the overall portfolio of projects management

• Typical periodic, monthly key milestones review session with sponsors,

• Regular coaching session with project leaders during project execution

• Selected Yellow Belt projects


– Financially impactful projects within a department

• Green Belt projects

– Supply/Value Chain projects cutting across a couple of departments

• Black Belt projects/program

– Hoshin Planning

– VSM

– TPM

• Annually, focus on selected 20 to 30 YB, 10-15 GB and 1-2 BB projects

31


• Improvement projects from all areas of operations and Supply

Chain - Planning, Manufacturing, Maintenance, QC, QA,

Logistics, etc.

– Overall value chain lead time reduction

– Planning forecast accuracy improvement,


– Planning forecast accuracy improvement,

– Manufacturing cost savings in yield improvement, product quality

improvement, key raw materials and energy reductions

– Maintenance cost reduction in Plant availability improvement, spare

parts, consumables, Changeover time reduction

– QC & QA productivity improvement

– Logistics cost reduction in inventory optimization, transportation cost

Total savings of 3Mil USD annually for 3 consecutive years

ROI of 750KUSD (75Mil JPY) per Black Belt per year32







33

Lonza OE Customized Approach

Summary

LSI (Mature) LCM (New)

Continual focus on Lonza Excellence Assessment. Focus of LEA topics is different

Continual strengthening of fundamentals

such as 5S, Visual Mgmt, Standardized

work

Application of advanced lean tools &

techniques such as SMED, TPM, VSM, etc.

Focus more on Blue, Yellow & Green Belt Focus more on specific key lean

34

Focus more on Blue, Yellow & Green Belt

trainings

Focus more on specific key lean

techniques such as Leaders’ Standard

Work, Process Mgmt, Hoshin planning

through Kaizen events & workshops

Full engagement of middle and shopfloor

employees in Kaizen suggestions and

improvement projects

Very selective engagement of employees

in OE projects that gave maximum returns,

mainly managers and supervisors

Focus more on financial savings through

improvement projects targeting at specific

problems such as overall Cost, Quality,

plant availability

Focus more on standardizing process

using PDCA, Tiered accountability process,

and further process optimization. Other

output KPIs (Safety, Quality, Delivery)

Lonza China OE Improvement Model

• Vision –“Finding the lowest cost way of consistently meeting customer requirements” translated to achieving Gold (Principle) level at the end of 2013

• Skills – Blue, Yellow and Green Belts Trainings and many Lean topic workshops

Vision Skills Incentives ResourcesAction

PlanImprovement!

• Skills – Blue, Yellow and Green Belts Trainings and many Lean topic workshops such as Hoshin Planning, Standardized Work, Leader Standard Work, etc.

• Incentives & Recognition – Monthly Kaizen Stars, improvement projects success celebration, CFO Award, Lonza Annual Excellence Contribution Award, Performance incentives, intrinsic incentives such as personal growth

• Resources – External consultancy, global OE Team, local OE Team, senior managers, department managers and all employees

• Action plan – Multi-year OE strategic plan with half yearly action plan targeting on improving Lonza Excellence Program level (overall Lonza OE culture) and identifying, executing projects with significant financial benefits

35

Lonza China OE Results

• Lonza Excellence Assessment representing Lonza OE maturity level improved from <10% to > 60%, achieved Silver level

• Lonza Excellence Academy nurtured & developed next level of leaders– 4 Black Belts

20.0

29.5

38.0

42.4

51.1

60.1

26.4

42.0

51.0

61.0

67.5

70.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

LE

A S

co

re (

%)

Lonza Excellence Assessment (LEA): Lonza China

– 4 Black Belts

– 50+ (5%) managers/supervisors,

– 400+ (35%) supervisors/senior engineers and

– 1000+ (90%) employees in different levels of problem solving capabilities

• Achieved a total of 1000Mil JPY (10Mil USD) bottom-line savings through OE improvement projects

6.2 6.9

0.0

10.0

Apr-09 (Baseline) Nov-09 May-10 Dec-10 Jun-11 Apr-12 Dec-12 Dec-13

Time of AssessmentLSI Actual LCMC Actual LSI Plan LCMC Plan* Note that 2 different LEA tools were used for LSI and LCMC

before 2012 and an improved standardised LEA tool is used in

2012 where a new baseline was established

36

Blue BeltAll employees – Basic Scientific Problem Solving

Workplace Organization (5S, Visual Management),

Standard Work, Kaizen system, Root Cause Analysis

Yellow BeltShift leaders, Supervisor & above

Tiered Accountability Process, SMED, Leaders’ Standard Work,

Green Belts

Coaching support to the

levels above

Increased capability

to solve larger, more

complex problems &

projects

Developing and


of employees with

appropriate skills &

competencies

1000+ (~90%)

400+

(~35%)

50+ (~5%)

4 (~0.5%)

Lonza China OE Value


CustomerCustomer

SHE



Process:

Ma

na

ge

me

nt

&

Ca

pa

bil

ity

Lon

zaO

E/C

I D

eliv

er S

ign

ifican

t Achieved a total of

1000Mil JPY (10Mil USD)

bottom-line savings

From 2009-2012, Lonza OE maturity

level increased from < 10% to > 60%

Bu

ild

ing

(LE

A)

37

Business

enabling

&

support


� Kaizen system




Contribution Award

PeoplePeople


TrainingRetention


Pro

ject

Exe

cuti

on

Pro

ject

Ma

na

ge

me

nt

&

Exe

cuti

on

OE

Ca

pa

bil

ity

Bu

ild

ing

Pro

mo

te &

De

ve

lop

Lo

nza

Cu

ltu

re

De

live

r Sig

nifica

nt F

ina

ncia

l Be

ne

fits

OE

Cu

ltu

re

Bu

ild

ing

(LE

A)

Operational Excellence is an

Improvement Journey ...

... not a Destination

And the Journey continues…

38

Thank You!

Lonza Operational Excellence (OE)

DeploymentDeployment

Successful Operational Excellence

Deployment Case Study

Documents

Lonza OE Deployment Case Study