|
Operational effectiveness:
The complement to innovation
|
|
The focus of this annual report is innovation
at BD. Innovation, however, is just one
dimension of overall Company performance.
For BD, operational effectiveness is equally
important. Innovation helps to drive top line
revenue growth. Operational effectiveness
not only impacts bottom line profit performance,
it also complements innovation
because of its focus on productivity, efficiency,
resource utilization and customer satisfaction
–all combining to drive competitive
advantage. In my view, operational effectiveness
feeds innovation, delights customers
and rewards shareholders.
What exactly do we mean by operational
effectiveness? It's the end-to-end process
that embraces everything from production
planning to order fulfillment, and all the
activities that support that process, including
procurement, manufacturing, distribution
and customer service.
As the accompanying charts demonstrate,
key performance metrics reflect the strides
we've made in operational effectiveness over
the last few years. How are we achieving these
improvements? Here are some examples:
Medical Surgical Systems' three largest
plants in Europe are matching production
and demand so well that, for the month of
September, total backorder was negligible.
In the U.S., BD no longer conducts a costly
and time-consuming annual physical inventory
–because overall inventory accuracy is
99.9 percent (as measured by continuous
cycle counts). Starting in 2005, the IT organization
is accelerating the pace of Six Sigma
literacy. By 2007, we expect 100 percent of
IT associates worldwide to earn Six Sigma certification,
including certifications at the greenbelt,
blackbelt and master blackbelt levels.
The progress of recent years has been
achieved through establishing core capabilities
in lean manufacturing, Six Sigma and process
validation. In addition to building core capabilities,
the organization has focused on three
broad-based initiatives:
Genesis – Our SAP-based global enterprise
resource planning system is the enabler that is
facilitating business process optimization.
Genesis functions as the information backbone
of the Company, putting information at
our fingertips and allowing us to see what is
happening throughout every stage in the
manufacturing and supply chain process. As a
result of this new capability, we have established
global metrics in the areas of forecast
accuracy, finished goods inventory turns and
backorders that will push us to a best-in-class
level of operational efficiencies.
Business processes – After completing
Genesis, we established a Business Process
Organization to drive process optimization in
the areas of procurement, supply chain planning,
distribution and customer service. We
have seen marked operational improvements
in all of these areas. Five years ago, we
launched a procurement initiative that is
delivering tremendous value. We put together
a purchasing organization to leverage
Company spending across businesses, sites
and regions. North America distribution
costs as a percent of sales have been on
the decrease for the past three years. Sales
and Operations Planning has come under
a new focus, and we are looking to drive to
a best-in-class process over the next three
years. In customer service, we have reinvested
in a skills development program and driven
better service to customers by better aligning
resources to key customer requirements.
Consolidation of customer service resources
is also paying dividends. Finally, we are reevaluating
our distribution networks in North
America, Asia and Europe in an effort to
re-optimize our network to drive higher levels
of customer satisfaction.
Cultural change – BD associates are focusing
on integrated processes rather than
isolated functions. Manufacturing, for example,
now views itself as a key contributor to
fulfilling customer needs. Individual manufacturing
sites have always done a superb job.
The difference today is that each site is part of
a larger, two-stage manufacturing strategy
that we call "the engine and the enterprise."
The engine is world-class manufacturing at
the site level. The second stage is contributing
to the enterprise and supporting the sales ful-
fillment process because, at the end of the
day, customers want the right product at the
right time at the right place.
The common link among these initiatives
is that superior performance in supply chain
logistics and business processes makes BD
easier to do business with and, thus, has a
major impact on customer satisfaction. As is
true with innovation in the marketplace, BD's
operational effectiveness is having tremendous
impact–and I am confident that in the
future we are only going to get better.
–Edward J. Ludwig
|
|
|
