Cardinal Health is a global healthcare company headquartered in Dublin, Ohio that generates $81 billion in annual revenues. It provides medical products, pharmaceutical distribution services, and clinical technologies to support the healthcare industry. Cardinal Health aims to transform its operations through three priorities: organic growth through customer-driven innovation; leveraging scale and operational excellence to drive superior customer value; and empowering employees. The company pursues operational excellence through a disciplined approach to consistently meet customer expectations with minimum cost and optimum speed. This involves engaging employees at all levels to continuously improve processes through lean techniques. While progress has been made, challenges remain to achieve stability, excellence, and a culture of continuous improvement enterprise-wide.

1. 1
Transforming Cardinal Health
June 25, 2007
William Owad
SVP, Operational Excellence
Cardinal Health

2. 2
Who we are
Cardinal Health is a global
company dedicated to
making healthcare safer
and more productive

3. 3
Highlights
• Headquartered in Dublin, Ohio
• The leading provider of products, services
and technologies supporting the health care
industry:
• Develops, manufactures, packages and
markets products for patient care
• Develops drug-delivery technologies
• Distributes pharmaceuticals and medical,
surgical and laboratory supplies
• Offers consulting and other services that
improve quality and efficiency in health care
• Annual revenues of $81 billion
• Ranked No. 19 on the Fortune 500

4. 4
Global presence

5. 5
How we support healthcare
• Medical / surgical manufacturing
and distribution
– Gloves, surgical gowns,
drapes, instruments
• Pharmaceutical distribution
– Safe, efficient delivery of pharmaceuticals from
manufacturer to retail, independent
and hospital pharmacies
• Nuclear pharmacy services
– Capable of delivering radiopharmaceuticals
to 90% of U.S. hospitals within 3 hours
• Medical and supply automation products
– Aid doctors and nurses in ensuring
patient safety, greater focus on patient care

6. 6
Healthcare Supply Chain
Services
Market leader in
medical supply,
pharmaceuticals
and nuclear
pharmacy services
Medical Products
Manufacturing
Leading manufacturer
of products used in
50% of U.S.
surgeries
Clinical
Technologies and
Services
Market leader with
Pyxis® and Alaris®
products, and
extensive clinical
expertise
Pharmaceutical
Technologies
and Services*
Largest provider
of contract
services to
pharma and
biotech industry
93%revenue
2%revenue
3%revenue
2%revenue
*Cardinal Health sold its Pharmaceutical Technologies
and Services segment to the Blackstone Group
Healthcare Supply Chain Services
Revenue greater than $75B

7. 7
Three Cardinal Health Priorities
• Organic growth through customer-driven
innovation, expanding product offerings, and
international expansion
• Leveraging our scale and operational excellence
to drive superior customer value and reduce non-
value added costs
• Unleashing the power of our employees to
achieve their full potential through thoughtful career
planning, skill and capability building, in an
engaging and inclusive work environment

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Operational Excellence is about execution
• A disciplined way of conducting
business that consistently meets
customer expectations at minimum cost
and optimum speed
• A sustainable competitive capability that
differentiates on the ability to execute
Source: SLT – October 2005

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Simple transforming idea
• Engage people at every level
• Teach them to see the value stream
• Provide them with the knowledge to
challenge and improve the value stream
• Empower the people and managers close
to the value stream with the imperative to
improve

10. 10
Original vision of Operational Excellence
was transformational
• Not an event. This is the way we work, from
now on
• A capability that defines us and creates
competitive advantage
• A relentless pursuit of speed, efficiency, and
effectiveness in everything we do
• Drives loyalty by improving what we do for
our customers and each other
Source: Operational Excellence Executive Summit, December 2005

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Essential elements to an Operational
Excellence enterprise
• Clear understanding of the organization’s
customer value proposition
• Lean and consistent processes for delivering
the value proposition
• Culture of relentless improvement by the
people closest to the value stream

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Cultural objective
• Drive the business from the customers’ point of view
• Align projects and resources to key strategic drivers
• Drive continuous improvement methods broadly into all areas of
the business (the way we work)
• Embed common language / process thinking/skills /
methodology throughout Cardinal Health
• Require Lean Six Sigma as a leadership
development tool
• Achieve zealous leadership involvement and support
Deployment principles

13. 13
Operational Excellence accomplishments
• Created an Operational Excellence infrastructure
– 29 Deployment Leaders and 18 Master Black Belts / Lean Masters
– 149 LSS Black Belts and 840 Green Belts and Kaizen Leaders
– 1600 Sponsors
• Built a pipeline of 1400+ projects
• Delivered over $130M in total benefit, $110M Type 1 benefit
• Expanded Operational Excellence into all businesses and
functions
• Delivered projects that demonstrated the wide reach and power
of Operational Excellence
• Gained wide exposure and recognition of Operational
Excellence
– i.e., Town Hall meetings, Gallery walks, Innovation awards, GLT
meeting, Budget and QBR proces

14. 14
Key challenges
• We must achieve stability before we can
achieve excellence
• Stability means:
– Product
– Process
– Information flow
• We must become an operationally excellent
company in order to become premier

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Enterprise transformational initiatives
• Provisioning / supply processes
• Order-to-case process
• Development processes
• Cultural/mindset transformation

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Imperatives for the Operational
Excellence team
• Pursue project portfolio that drives strategic value
• Drive engagement and active participation by
Sponsors and middle management
• Ensure resources and commitment to chartered
projects
• Drive penetration in unproductive sites and
organizations
• Establish a continuous improvement mindset
enterprise wide