There is no single solution to touching that other 90 percent in a way that helps billions of people live healthy lives. Doing that requires innovation, high quality, superior distribution, local presence, long-term commitment, alliances with local health officials and an integrated, one-company strategy ­ in other words, the very transformation in which Becton Dickinson is engaged.

Another imperative is low cost. Becton Dickinson's highly developed manufacturing expertise allows the company to produce consistently high quality syringes, hypodermic needles and sample collection devices in the millions and billions, some for just pennies apiece. To broaden the opportunity for further quantum gains in efficiency, Becton Dickinson is optimizing manufacturing around common processes. Hypodermic manufacturing has been rationalized across Europe. Senior Vice President ­ Company Manufacturing Bill Kozy has been named to head a new manufacturing organization designed to capture competitive advantage by promoting efficiencies throughout company manufacturing facilities.

But manufacturing is one cost among many in the supply chain. About half of a typical sales dollar is absorbed by the cost of goods sold ­ that is, getting a finished product into the warehouse, including service and support. Approximately another quarter of the sales dollar goes to distribution costs. Research and development combined with interest, amortization, foreign exchange and other costs claim another 10 percent or so.

In that context, two additional saving opportunities are in procurement and in selling, general and administration costs. Strategic sourcing initiatives ­ not just raw materials, but everything from temporary staff to rental cars ­ are targeting additional annual savings. Reengineered SG&A ­ seeking to drive this expense down from 27.6 percent of revenues in fiscal 1998 to 22 percent ­ is one of the opportunities being pursued through the Genesis project, which is described below.

The Distribution Machine in Belgium
Becton Dickinson's distribution center in Temse, Belgium, demonstrates how the company is achieving compatibility between disparate worlds: efficient, low cost, centralized distribution and customer-centric, localized products, sales and service. There was a time when Becton Dickinson had 22 inventory stocking locations throughout Europe ­ a fragmented approach that stood in the way of on-time deliveries, accuracy and full order shipments. By comparison, Temse is a "distribution machine" in the words of John Hanson, President of Becton Dickinson Europe. State-of-the-art facilities feature automated tracking and retrieval systems linked to a host computer for integrated transactional and operational processing. Operational efficiencies permit lower inventories without compromising service, and first-in, first-out inventory management cuts waste.

Incorporating Acquisitions Seamlessly
Becton Dickinson's European distribution center holds another success story: the company's ability to incorporate acquisitions seamlessly. The products of acquisitions completed as recently as March 1998 were fully transitioned into the Temse distribution center by year-end 1998. Customer orders have been integrated into Becton Dickinson's invoice transaction center, which serves all of Europe. The company's information technology costs in Europe, as a percentage of sales, are under 1 percent and declining. A key to the company's speed and flexibility is the concept of a "virtual organization" that can quickly adapt to pan-European or country-specific strategies as conditions dictate.

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