Chanelles’ Journey to Operational Excellence

We diversified in 1985 into the development & manufacture of generic veterinary pharmaceutical products and are now the second largest developer of veterinary generics in the EU.

Diversification in 2000 with Chanelle Medical, established as a developer & manufacturer of generic medical pharmaceuticals and is now a leading generic developer in EU.

The Chanelle Group was established in 1983 as a distributor of veterinary products & is now the largest veterinary pharmaceutical manufacturer and distributor in Ireland.

1983

1985

2000

2008

A brief history…

In 2008 we opened an R&D development laboratory in Jordan, Middle East to support our growing R&D program of generic pharmaceuticals.

A brief history…

The Chanelle Group has over 2,300 generic product licenses (both Veterinary & Medical) granted to date in 80 countries. The Group is privately owned, has a turnover of €85m & 300 employees with head office in Loughrea, Co. Galway and offices in UK, India & Jordan.

A brief history…

Chanelle Group operates from its Headquarters Site in Loughrea, Co Galway:

• Manufacturing, Administration, Warehouse & Distribution Facility – 170,000 sq. ft

Chanelle International Offices:

• Berkshire, United Kingdom - Business Development

• Amman, Jordan – Analytical and Research & Development Laboratories

• Mumbai, India – Commercial Offices

Chanelle is an IMB licensed company for the manufacture of human and veterinary pharmaceuticals

• Chanelle holds: (in the EU)

• 1500+ Veterinary Licences

• 800 Medical Licences

300

Employee Growth

• Chanelle recognized that continued growth needed to be managed such that business processes are as optimized as possible.

• The approach taken by the company was to launch a Lean program, aligned with Enterprise Ireland’s Lean Transform approach.

• Following management awareness workshops during 2011, the Program was launched in November 2011.

• We wanted to brand the Program, so we held a competition for employees to name it to create Employee ownership and engagement.

Managing Growth Efficiently

TUROE –

“Together United Reaching for Operational Excellence”

The Turoe Stone is a 2000 year-old

Celtic work and is located in the

village of Bullaun, near Loughrea.

TUROE

Lean

Culture and People

Six

Sig

ma

Ris

k

Man

ag

em

en

t

Desig

n fo

r

Excelle

nce

The

Lea

rnin

g

Org

an

isa

tion

Change Management

The Program

The Tools

Enabling Change

Proven tools & active change Management

• The first wave of improvement projects began in December 2011 and were completed by summer 2012

• We focused improvement activities in most key areas of the business:

Production Quality Regulatory Engineering Planning Sales

The first wave of improvements

The first wave of improvements

Improving Operating Efficiency on Blister Packaging

lines

Reviewing batching rules and planning parameters

Standardizing artwork design guidelines to save time

… making an impact across the whole business…

Improving Batch Record Accuracy

Optimizing the Change Control Process

Streamlining Sales Order Processing

• The projects described were led by Green Belts.

• Training was delivered in-house by external trainers.

• The Green Belts worked with colleagues and deployed tools such as Lean and Six Sigma using

the DMAIC (Define, Measure, Analyse, Improve, Control) cycle.

• As these projects rolled out other tools were deployed to deliver rapid improvements:

• Kaizen – one-week focused projects

• 5S – getting the workplace organized and eliminating clutter

Applying the tools…

11

• External support with proven expertise to help catalyse the programme.

• Board & Senior Management Leadership.

• Front-loaded investment with >6 months before first payback due to training,

awareness and project selection.

• Start small with a few identified individuals that can act as coaches, mentors and

advocates of the programme in subsequent phases.

• Initial workload underestimated from a time management perspective.

• Learning forums for exchange of challenges and issues throughout the project phases.

Phase One Learnings…

• Following the successful completion of the first wave of projects,

the company is now training a second group of Green Belts and the

Program Leader, already a certified Green Belt, will lead a Black Belt project.

•Areas in which new projects are being implemented include:

•Production Line Operating Efficiency •Quality testing •Purchasing order optimization •5S in Production •Freight & Distribution •Bill of Materials process •Energy Management

•In parallel to these activities, over 20 other projects

(Kaizen or “Just Do It”) are being implemented.

Moving up a gear!

13

• We are now applying Visual Management techniques in multiple tiers

• Performance is tracked and recorded at the workplace (Gemba) for daily review and

issue resolution

• Issues which can’t be solved locally are fed to the next tier for resolution

• The TUROE program will come to the end of its natural life after 2 to 2 ½ years.

Then the tools and drive for change will be a normal part of ongoing daily business

Taking it further…

178 Yellow Belts

19 Green Belts

1 Black Belt

We’ve been training!

•Ensure the scope of each project is carefully defined and agreed up front.

• Ensure team leaders and team members have enough time to work on their projects as well as the

“day job”.

• Phase training to balance resource availability.

• Process owners and departmental managers have ultimate responsibility for ensuring improvements

are sustained.

•Identify a full-time Operational Excellence Champion.

•Weekly & monthly review meetings with the entire Green Belt Population and 1-2-1 Coaching.

•Monthly project updates to a Steering Committee.

• Celebrate success!

Lessons Learned

•A mix of financial benefits;

•Hard Savings: i.e. can be traced to the bottom line, quantifiable, and auditable.

•e.g. reduction in man hours, increase in product yield, reduction in processing errors

•Soft savings: not generally visible to finance, difficult to quantify.

•E.g. reduction in admin activities

•Belts: As a rule of thumb, we target €30k for Green Belt projects and €100k for Black Belt

projects.

• Greater visibility of issues and actions to be taken.

• Our people have significantly improved their skill levels through the training provided during this

program and these skills are being deployed on a daily basis.

• A change in culture to identify waste, spot opportunities and improve efficiency.

Benefits achieved

€0

€500,000

€1,000,000

€1,500,000

€2,000,000

Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14

Belt Projects

Kaizen Projects

Target by Dec 13

Hard Cash Realised

Total Savings

Turoe – Projected Savings!

Projected future savings

€450K

•We implemented lean and proved that it works!

•To end April 2013 savings of €443K achieved

•The senior management team and board review progress on a monthly basis

•The programme is fundamental in sustaining our continued growth and success

•Pride in the projects and a sense of accomplishment and individual growth is evident

•Cross-Departmental barriers have been broken down

•The Company has a new vocabulary – Lean terminology has become part of our daily conversations…

The Punch-line…

“There is nothing so useless as doing efficiently that which should not be done at all…”

Peter F. Drucker

Thank you!