transformational process improvement project: define...
TRANSCRIPT
Define
Measure
Analyze Improve
Control
Transformational Process Improvement Project: Contracting Process Application of Lean Six Sigma methodology enabling step change improvement in Contracting Process Performance and setting foundation for further transformational journey.
Siddika Demir & Tej Singh
©2014, Genentech
Genentech at a Glance
Founded more than 40 years ago, Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes medicines to treat patients with serious or life-threatening medical conditions. Personalized Healthcare is a key element of our research and early development strategy. We're focused on tailoring treatments to specific diseases and patients and identifying which patients are most likely to respond. Fast Facts
• Founded in 1976 • Became a member of the Roche Group in March 2009 • Headquarter in South San Francisco, California for all
Roche pharmaceutical operations in the United States • Over 14,500 employees • Genentech sells approximately 40 products in the US • US Pharmaceutical sales were $17.4 billion in 2014* • gRED has approximately 20 new molecular entities in clinical development
*15,822 CHFm; average exchange rate 0.91.
2
• Go Simple- Contracting Process Improvement
• Initiated in response to a crowd-sourcing event in which employees stated issues with contracting process
• Represented the greatest number of challenges for the highest number of people
• Contract volume increasing year over year
Burning Platform…
©2014, Genentech 3
1- Identify Need for External
Services/ Goods
2- Determine Supplier Contract
Engagement Process
3- Sourcing (Select
Supplier)*
4- Request Contract & Business Approval
5- Draft & Negotiate Contract
6- Approve & Sign (Execute)
Contract
7- Obtain Purchase
Requisition & Approval
8- Retain Contract Record
& Support Searches
9- Amend Contract
10- Manage Contract
Execution Compliance
11- Manage Contract
Payments Compliance
12- Manage Contract Record/
Delete/ Purge Contract
Go Simple – Contracting Initiative spans across Global Pharma Procurement
Commercial Contracts
Global Product Strategy Contracts
CMO/Direct Materials Contracts
Project Scope and Global Groups
Procurement Services Contract Services
Procurement Services Contract Records
Scientific Sourcing – Contracts & Outsourcing
Scientific Sourcing – US Site Contracts
©2014, Genentech 4
Project Structure
Steering Committee:
Subset of Global Pharma Leadership
+ Legal + Finance + IT
Initiating Sponsor & Project Sponsor
Core Team
Project Lead, BPE Lead, Process Lead, System Lead, Project Mgr., Communication Lead
Extended Team Members: GPP Contract Teams, Legal, Finance, IT, Representatives from Contract global customers
Processes Technology Customer Relations
©2014, Genentech 5
Approach Used: Lean Six Sigma DMAIC cycle of BPE framework
Culture
People
Process
Technology
Structure
Vision GPP Value To Patients
BPE is a philosophy & methodology that engrains end-to-end process thinking and enables routine delivery of excellent performance.
Define
Measure
Analyze
Improve
Control
©2014, Genentech 6
What is the Problem & Goals?
What’s current state/ Baseline?
What are key contributors?
How can we solve this problem?
How can we ensure solution sticks?
Process 1
Process 2
Process 3
Customer
VA – 5% BVA – 35% NVA – 60%
Focus of Traditional process improvement approaches
Focus of Lean Six Sigma based process improvement approaches
Different Way of looking at Opportunities to drive Process Improvement
©2014, Genentech 7
Increased Output
NVA / Waste
Value Add Work
BVA / Incidental Work
Increased Output from an Inefficient Process
©2014, Genentech 8
NVA / Waste
Value Add Work
BVA / Incidental
Work
Value Added Work
Additional Value Add BVA /
Incidental Work
NVA / Waste
Raise productivity through process improvement
Thru Process Improvement
Apply Process Excellence
NVA / Waste
Value Add Work
BVA / Incidental
Work
Increased Output through a More Efficient Process
©2014, Genentech 9
DEFINE: Why, What, When
Work Stream Goals (for project closure)
People and Process
DOA Cycle Time Produc?vity
• Develop Financial recommenda5on • Deploy Legal DOA • 30% reduc5on (priori5zed areas) • Define demand-‐to-‐contract process efficiency measure • 10% improvement
Technology Select System
• Develop System requirements & Proposal • Implement quick wins
S2P Program Implement • Single System: 80% GPP Contracts in one system • Paperless Contrac5ng: >50% of GPP Contracts “Paperless”
WHY: GEOS, Go Simple Feedback and Corp Audit findings (post project kick-off)
WHAT & WHEN:
It is too complex, requires too much effort and takes too long to get a third-party contract
Clearly defined intent & what success will look like ©2014, Genentech 10
Percent Time Spent (avg.)
Time when work is being done on contract Wait ?me
3%
97%
MEASURE: Current State
Gained current state understanding and developed baselines
Average Cycle Time
45 Days
for sub-steps selected for improvements review
©2014, Genentech 11
MEASURE: System Landscape
contracting)process)steps
Sci)Sourcing)C&O
Sci)Sourcing2)USSC
US)Commerci
al) GPS)BA GPS)US TOP)Basel TOP)US G&A Research Fac
PS)Contract)Services WE)Sites
Other)NA)Sites
LATM/CEMAI)sites
APAC)sites
3"#Sourcing Ariba&9 Ariba&9 Ariba&9 Ariba&8)some
Ariba&9)some
4"Request#Contract#(incl.#Business#approval)
C4 Nextance CR3&(US) CR3&(US) CR3&(US) CR3 C4,&Ariba&9
5"Draft#&#Negotiate C4 C4&(gRED)
6"Approve#&#Execute Ariba&9 C4 Nextance Ariba&9 Ariba&8)some C4&(gRED)
7"Contract#Purchase#requisition#&#Approval
Ariba&9,&Ariba&8,&g2g g2g g2g Ariba&8 Ariba&8 g2g g2g Ariba&9,&
Ariba&8,&g2g g2g g2g Ariba&8 g2g.&Aria&9 Ariba&8 Ariba&9
8"#Manage#Record#(Contract#to#repository)
Ariba&9,&Ariba&8,&Nextance
C4&and&Nextance Nextance Ariba&9 Ariba&9,&
Nextance Ariba&9 Ariba&9,&Nextance Nextance Ariba&9,&
Nextance Nextance Nextance Ariba&8 C4,&Ariba&9,&Nextance
Ariba&8)some
11"#Contract#Compliance#(Payment/Order)#
Ariba&9,&Ariba&8&
Ariba&9,&Ariba&8& Ariba&8 Ariba&8
System and System Usage Variation by GPP Group and Site
Nextance Repository
60%
C4 19%
Ariba 8 11%
Ariba 9r1 10%
Contract Distribution Across 4 Main Systems
>225K contracts
Current State • Too many systems & processes- confusing for our stakeholders
• Difficult to collaborate & leverage contracts across GPP groups and sites
• Limited use of systems functionality to increase efficiency
• Complicates reporting & data analysis to enable further improvement
• Limits ability to make improvement to systems, as 4 systems would need changes
• Controls not in place to ensure that all contracts are in the repository
Gained current state understanding and developed baselines ©2014, Genentech 12
ANALYSE: Focus areas identification
• IP Involved ?
• Strategic relationship agreement?
• Outside SME reqd.?
• In-house template used?
• HCP involved?
• EHS Involved?
• Common contract type across teams?
• Internal SMEs reqd.?
• Existing MSA with rate card in place?
• Is this an SOW ?
• Amendment Agreement?
• Amendment SOW?
• Multi-groups Involved in contract?
• Global?
Factors considered for creation of Groupings
Developed way to simply complexity of the analysis & enable identification of focus areas
Access agreement
CRA
CDA > 110
Contract types
Master Agreement
SOW
Complex SA
IT Focused
Sponsorship / Grants
Complex non
template
IP
Other
13 ©2014, Genentech
% Volume X Cycle Time
% V
olum
e ANALYSE: Focus areas identification
Analyzed Cycle time & Volume to identify potential focus areas
SOW, GSA/MA
CDA, Sponsorship Grants Wider scope
involvement in Complex SA
CRA
MA & SOW
CRA
CDA
©2014, Genentech 14
0 20 40 60 80
100 120 140 160 180 200
Bus
ines
s su
bmits
the
cont
ract
to V
endo
r and
ne
gotia
tes
Lega
l rev
iew
s th
e dr
aft
and
mak
es c
hang
es
Con
trac
ts te
am
gene
rate
s a
draf
t of t
he
cont
ract
Con
trac
t tea
m m
akes
ch
ange
s an
d pr
epar
es a
fin
al v
ersi
on
Con
trac
t is
sent
for t
hird
pa
rty
sign
atur
es
Con
trac
t is
appr
oved
an
d si
gned
by
inte
rnal
si
gnat
orie
s
Con
trac
ts T
eam
revi
ews
and
does
due
dili
genc
e
Con
trac
t is
sent
to
reco
rd te
am fo
r arc
hiva
l
Req
uest
or (B
usin
ess)
su
bmits
con
trac
t re
ques
t
Pro
Valid
atio
n ch
eck
MA/ SOW Process Step & Time Spent
ANALYSE: Deeper Focus Areas Prioritization
Identified deeper focus areas ©2014, Genentech 15
IMPROVE: Approach to Address Prioritized Areas
Developed approach for desirable impact on CT, Productivity, DOA & System landscape
Develop GPP wide efficient & harmonized processes
Self Service
Contract Team Approved
Min Legal Review
Complete Legal Review (strategic)
Align process complexity with level of risk
GPP Std.
GPP Std.
Cat./Work Type Std.
©2014, Genentech 16
Prioritized Risk levers
• Frequency
• Compliance
• Business
• Impact of alignment with legal
Intellectual property (IP) Confidentiality Indemnification GMP EHS Subcontractors Firewall Insurance HCP Exclusivity PII/PHI Term Publication Rights Access To Records Conflict of Interest Liability allocation Subject Injury Payment terms Definition of Scope/ Information Governing law & Jurisdiction, entity selection
IMPROVE: Prioritized Risk levers (Legal) For development of Decision Trees & Playbooks to enable DOA
Definition of Scope/ Information
Governing law & Jurisdiction, entity selection
Intellectual property (IP)
Confidentiality
Publication Rights
Indemnification
Liability allocation
Exclusivity
©2014, Genentech 17
Product / Goods or Service?
Product/ Goods Service
Customized to Roche
Y N
$ IP
Y N
Developing product / process
– IP concern Generic service
IP review Template?
Y N Non-core biz (Std./ Language)
Core biz (pipeline until
launch)
Other side paper Check for certain items (3rd Party)
IMPROVE: Conceptual Decision Tree (IP related)
Similar process repeated for each prioritized risk lever to be consolidated overall ©2014, Genentech 18
Desired Shift
Self Service
Contract Team approved
Low Legal Review
High Legal Review
IMPROVE & CONTROL: Driving Shift to Improvement
Striving to drive shift to better tomorrow- Go Simple!
Cycle time Productivity Legal Risk Mgmt. Empowerment Simpler Systems
©2014, Genentech 19
Impact Analysis Avg. Current State Cycle Time (Business days) 45 Days
Major Changes
% CT Reduc?on (normalized for
whole popula?on)
1. U5lize PO if contract not needed 5% 2. Self service op5on for selec5ve contracts 8% 3. Provide Concierge help 2% 4. Approved Templates 6% 5. Approved Alternate languages 6% 6. Legal SOP/Playbook 11%
7. E-‐Signature 8% 8. Business Review & electronic ini5al 6% 9. Centrally Managed Repository 1% 10. User Training 3% 55% Based on Contrac?ng Team SME's inputs Current State legal Review % 51% Future State legal Review % 23%
~ 30%. Major part of this can be achieved through current Contracting systems with patch on processes as short-term solution
0
5
10
15
20
25
30
35
40
45
50
Current State Future State
Cycle Time (Business Days)
CT
55%
0
2
4
6
8
10
12
Current State Future State
Touch Time (Hrs)
TT
28%
©2014, Genentech 20
Summary: Impact
Cycle Time Productivity Legal Risk Mgmt. Ownership & Empowerment
Simpler Connected
Systems
10% increase 23% reduction in prioritized areas
Playbook developed for prioritized contract types
DOA- prioritized contract types
Global Process Owner
System requirements and selection recommendations generated
By Project Closure
20% Increase 50% reduction in prioritized areas
Playbook developed for additional contract types
DOA- expanded
Functional Excellence leader driving continued process improv.
Implementation in progress (one Global Contract Repository functional)
Further driven by Contract
Team
©2014, Genentech 21
Key Takeaways and Lessons Learnt
• Comprehensive perspective: People, Process, Technology and Structure
• Sponsorship: Heart- Strong will, Mind- Clarity of what changes will lead to, Body- Time commitment and be there, Voice- Say consistent words within meetings & around water coolers
– Getting sponsorship from the executives in legal, GPP, IT before starting the project.
• Harmonized Process and IT system: Preferred vs Pre-requisite
• Build Trust: Deliver quick wins early enough, ensure inclusion and transparency, explain why
©2014, Genentech 22
Doing now what patients need next
23