1.
APICS is not responsible for statements or opinions expressed by individuals in its publications or at
its meetings.
The views expressed are solely those of the individual and are not necessarily endorsed by APICS.
An Integrated Approach to
Global Supply Chain
Transformation
Gary Kilponen, Senior Manager –
Deloitte
Mark Hardison, CPIM, CHBC,
Global Director of Supply Chain Management –
Banner Pharmacaps Inc.

2.
Global Manufacturing Industry
Benchmarking Study Background
Geographic Coverage
• Nearly 750 companies and business units from
Europe, North America, and Asia/Pacific
participating as of July, 2004
Focus
• Global Manufacturing Strategies
• Operations
• Business Performance
• Metrics
Regional Profile
North America
36%
Western
Europe
46%
Asia / Pacific /
Africa
7%
Central
Europe
11%
Automotive
11%
Consumer
Products
30%
Diverse
Manufacturing
25%
High
Technology
8%
Life Sciences
7%
Process /
Chemicals
18%
Aerospace &
Defense
1%
Industry Profile
Size Profile
<$50 million
13%
$50 - 200 million
29%
$200 - 600 million
27%
$600 - 1 billion
11%
$1 - 5 billion
16%
>$5 billion
4%

3.
Profiting From Complexity?
(37%)
(7%)
(7%)
$$= 73%= 73%
MOREMORE
PROFITABLEPROFITABLE
€€
$$= 19%= 19%
MOREMORE
PROFITABLEPROFITABLE
€€
$$ ==
BASEBASE
€€
(49% of Respondents)
LowGlobalValueChainComplexitylobalValueChainComplexityHigh
Low Value Chain CapabilitiesValue Chain Capabilities High
$$= 17%= 17%
MOREMORE
PROFITABLEPROFITABLE
€€ Two dimensions:
Degree of Globalization
Based on the geographic
diffusion of:
• Sourcing
• Manufacturing
• Engineering
• Marketing and Sales
Level of Value Chain
capabilities
• Based on the following areas:
• Product innovation and Time
to market
• Sourcing effectiveness
• Product quality
• Manufacturing flexibility,
productivity and lead time
• Cost effectiveness
• Logistics effectiveness
• Customer service
• Supply chain cost structure
Only 7% of the companies combine globalization with outstanding value chain
capabilities – and they are 73% more profitable than the baseline companies.

4.
The Challenge:
From Complexity to Profitable Growth
CUSTOMER
PRODUCT
SUPPLY CHAIN
What is the path to
profitable growth?
LowGlobalValueChainComplexitylobalValueChainComplexityHigh
Low Value Chain CapabilitiesValue Chain Capabilities High
Cost Efficiency / Quality Gains
Time-to-Market Improvement
Service Level
Improvement
Manufacturing Productivity
Newmarkets
Newproducts
Newgeographies
The Goal:
Profitable Growth

5.
Initial Findings:
The Paradoxes of Complexity
1. The Optimization Paradox
• Most Companies still are optimizing locally, not globally
2. The Customer Collaboration Paradox
• Despite customer service being the #2 supply chain priority, only a small % of
manufacturers report a strong commitment to customer collaboration
3. The Innovation Paradox
• Product innovation is the #1 factor for revenue growth, yet is the lowest of the
supply chain priorities
4. The Flexibility Paradox
• Despite being a critical capability, cost reduction focus is driving behaviors
that inversely impact flexibility
5. The Risk Paradox
• Keeping quality high is a #1 priority, yet more and more companies are
making radical supply chain changes that can increase the risk profile
These paradoxes indicated the discrepancies between what companies say is important and
what they are actually doing

6.
Why Globalize?
Multi nationals are sub-optimizing
Today Tomorrow
Disparate affiliate business
processes and systems
There will be two types of processes: global and standardized local. Global
processes will be performed by members of a global organization. Standardized
local processes will be performed by employees at the plant level, but in accordance
with defined standards that facilitate global management of results.
Ineffective leveraging of global
employees and organizations
Optimally sized and structured global organizations will be put in place to drive
global processes and manage local activities.
Metrics focused on maximizing
local profits and efficiencies
resulting in conflicting metrics
between global and plant
organizations
All employees, functions and processes will be measured by key performance
metrics that clearly link to strategic objectives and financial performance.
Lack of clear accountability for
global performance
Emphasis will be placed on making fact-based decisions, globally and locally, and
using consistent data to evaluate operational and financial performance.
Performance of all plants, functions and employees will be reviewed regularly and
acted upon promptly.
No global standard for data,
names and terminology
Standard nomenclature for data, tools, processes and terminology and the
necessary processes in place to ensure ongoing compliance.
IT architecture that inhibits the
ability to collect and analyze
global data
Information systems characterized by a single software instance and centralized
technical architecture hosted in a high availability data center environment. These
systems will enable both real-time availability of global data and centralization of
regulatory validation.

7.
Global Supply Chain Transformation –
A Conceptual Model
Note: Incremental benefits as
the business moves up the
spectrum.
Returnon
Investment
Resources (People, Time, Cost)
Technology
Implementation
Business
Transformation
Competitive
Advantage
 New Technology
 Visibility of Business
 Processes & Information
 Reduced IT Support
Expenditure
 Customer Satisfaction
 Profits
 Global Integration
 Operating Expenses
 Inventory Costs
 Direct/Indirect Material
Costs
 Market Share
 Supplier of Choice
 Strategic Alignment
Software driven approach
with process improvement
only related to technology-
enabled processes
Process driven approach with
technology as an enabling
platform. Concentrates on
Supply Chain & infrastructural
process improvement.
Strategy driven approach
which aligns entire effort
with strategy. Assess
business direction,
competitor positioning,
etc.

8.
Supply Chain Process Model
Material
Releases
Material
Releases
Enterprise
Material
Planning
Enterprise
Material
Planning
Plant Level
Material
Requirements
Planning
Plant Level
Material
Requirements
Planning
Source
Execution
Level
Scheduling
Execution
Level
Scheduling
Enterprise
Production
Planning
Enterprise
Production
Planning
Plant Level
Master
Production
Scheduling
Plant Level
Master
Production
Scheduling
Make
Inventory
Deployment
Inventory
Deployment
Enterprise
Distribution
Planning
Enterprise
Distribution
Planning
Distribution
Requirements
Planning
Distribution
Requirements
Planning
Deliver
Strategic
Operational
Tactical
ERP SYSTEM
Enterprise
Demand
Planning
Enterprise
Demand
Planning
ForecastsForecasts
Plan
OrdersOrders
Concept/
Markets
Concept/
Markets
Prototype/
Testing
Prototype/
Testing
Design
Pilot/
Launch
Pilot/
Launch

9.
Supply Chain Technology
Material
Releases
Enterprise
Material
Planning
Plant Level
Material
Requirements
Planning
Source
Execution
Level
Scheduling
Enterprise
Production
Planning
Plant Level
Master
Production
Scheduling
Make
Inventory
Deployment
Enterprise
Distribution
Planning
Distribution
Requirements
Planning
Deliver
Strategic
Operational
Tactical
ERP SYSTEM
Enterprise
Demand
Planning
Forecasts
Plan
Orders
Concept/
Markets
Prototype/
Testing
Design
Pilot/
Launch
Supply Chain Network Optimization Demand
Planning
Production and Distribution Planning
Production
Scheduling
Warehouse
Management
ERP Backbone
e-Procurement
Business
Intelligence
Product
Lifecycle
Management Supply Chain Event Management

10.
Global Supply Chain Transformation
Benefits
Benefit Area
Demand
Mgmt S&OP Source Lean Mfg
Demand
Pull
Move from facility to GLOBAL view X X X
Consistency of data X X
Collaboration with suppliers/customers X X X X
More accurate demand for our suppliers X X X
Improved customer response time X X X X X
Knowledge of optimal product mix X
Improved product quality X X
Focus on constraints X X X
Increased capacity X X X
Reduced lead times X X X
Reduced costs X X X X X
Improved yields X
Reduced inventory X X X X
Improved flexibility X X X X
Ability to prioritize capital expenditures X X
Tax efficient supply chain X X X X X

11.
Banner Transformation Program
Background
• Business Transformation Program (BTP) –
New business strategy and objectives
• Global Transformation Scope
 Complete Business Process Redesign
 Standardization of Process and Data nomenclature
 Organizational Change Management
 ERP & APS Implementation
 Approx. 420 Users
• Global Geographic Scope
 Multi National “Profit Center” Business Model
• Limited internal resource availability

12.
Business Strategy
Key strategic initiatives:
• Shift from a multi-national to a global business model
• Develop and market new drug delivery technologies
• Leverage these by registration of a Banner portfolio of
products and by offering superior value to branded and private
label manufacturers
• Maintain a substantial presence as a contract manufacturer by
improving quality, price competitiveness, timeliness and
reliability of the supply chain
• Align R&D, Commercial and Supply Chain functions
• Build direct-to-market capabilities where applicable
• Improve communication, training and development of the
workforce to ensure commitment, alignment and execution of
the strategies
The Business Transformation Plan was developed to support the strategic direction as
defined above.

13.
Business Transformation Plan
Approach
The integrated approach for developing the BTP is detailed below:

14.
BTP Vision
The framework for the BTP since inception has been based on a
holistic approach to create and sustain improved operating
performance
Global Business
Re-engineering
Nomenclature
Standardization &
Rationalization
ERP
Implementation
• Standard, global business
processes
• Leading industry and
Banner practices are
considered
• A chance to fix the
process prior to
automation
• Enterprise view of
customers,
suppliers, products,
raw materials
• Duplicate data
eliminated
• Foundational
requirement for ERP
implementation
• Foundational requirement
to support and sustain
business process changes
• Single repository of global
data
• Reduction in the number
of systems requiring
support

15.
Business Transformation Framework
The approach will be integrated with the strategic plan and the “Under
One Banner” reorganization
Information Systems:
Banner Transformation Program
Business Process: Underway, BTP
Org: Global Functions
Strategy:
Business Plan
Strategy/Policy
- Key overall business
drivers
Organization
- Aligned with Strategic
Drivers
Business Process
- Processes which enable
the new strategy
Information
- Supporting Information
Systems to enable the
Processes
FieldFeedback
Dependencies

16.
What is a process reference model?
Process reference models integrate the well-known concepts of business
process reengineering, benchmarking, and process measurement into a
cross-functional framework
Quantify the
operational
performance of
similar companies
and establish
internal targets
based on “best-in-
class” results
Quantify the
operational
performance of
similar companies
and establish
internal targets
based on “best-in-
class” results
Benchmarking
Characterize the
management
practices and
software solutions
that result in
“best-in-class”
performance
Characterize the
management
practices and
software solutions
that result in
“best-in-class”
performance
Best Practices
Analysis
Process Reference
Model
Capture the “as-is”
state of a process
and derive the
desired “to-be”
future state
Capture the “as-is”
state of a process
and derive the
desired “to-be”
future state
Business Process
Reengineering
Capture the “as-is” state
of a process and derive
the desired “to-be” future
state
Quantify the operational
performance of similar
companies and establish
internal targets based on
“best-in-class” results
Characterize the
management
practices and
software solutions
that result in “best-in-
class” performance

17.
Supply Chain
Implementation Framework
SupplyChainOperationsReferenceModel
1
2
3
4
(Decompose
Processes)
Implementation
(Decompose
Process Elements)
Balance Production Resources with
Production Requirements
Establish Detailed
Production Plans
Identify, Prioritize, and Aggregate
Production Requirements
Identify, Assess, and Aggregate
Production Resources
P3.1
P3.3 P3.4
P3.2
Level Description Schematic Comments Tool
Plan
MakeSource Deliver
• Process element definitions
• Process element information inputs, and
outputs
• Process performance metrics
• Best practices, where applicable
• System capabilities required to support
best practices
• Systems/tools by vendor
SCOR &
SPEED
SCOR,
SPEED &
SolutionPrint
SolutionsPrint
& Applications
SupplyChainOperationsReferenceModelSolutionPrint
11
22
SupplyChainOperationsReferenceModel
11
22
33
44
As Is Assessment
Approach
Planning
(Decompose
Processes)
Implementation
(Decompose
Process Elements)
Balance Production Resources with
Production Requirements
Establish Detailed
Production Plans
Identify, Prioritize, and Aggregate
Production Requirements
Identify, Assess, and Aggregate
Production Resources
P3.1
P3.3 P3.4
P3.2
Phase Description Schematic Comments Tool
Plan
MakeSource Deliver
Plan
MakeSource Deliver
The Approach Planning phase refines the “To
Be” state to the next level of detail. This level
consists of:
• Process element definitions
• Process element information inputs, and
outputs
• Process performance metrics
• Best practices, where applicable
• System capabilities required to support
best practices
• Systems/tools by vendor
Processes enabled by technology are
implemented at this phase. Implementation
defines the tools, processes, and practices to
Enable the organization to improve its supply
chain.
Phase 1 assesses the current supply chain and
reviews the supply chain processes “As Is”
SCOR &
SPEED
SCOR,
SPEED &
SolutionPrint
SupplyChainOperationsReferenceModel
To Be
SCOR &
SPEED
SCOR &
SPEED
Phase 2 determines the “To Be” future state of
the supply chain. This phase aligns the supply
chain with the corporate strategic goals.

18.
Building a World Class Supply Chain
Differentiator
Synchronized
Value Chain
Qualifier
Customer Product
Supply
Chain
Technology
Customer strategic
planning
Collaboration – new
products
Collaboration - cost
reduction
Customer / channel
profitability
Inventory
replenishment
Collaboration -
demand planning
Customer
segmentation
Customer service
levels - fulfillment
Customer
collaboration-
quality
Product Lifecycle
Management
Design for
Manufacturing
Product Data
Management
Common Parts /
Common Platform
Product profitability
Design for Quality
Cross-functional
design teams
SKU rationalization
Supplier collaboration
new materials /
new processes
Product quality
Supply Chain Network
Optimization / Tax
Structure
SCM organization
Program Management
Flexible capacity
Production Schedule
Optimization
Transportation
Optimization
Integrated Sales &
Operations Planning
Quick Changeover
Six Sigma / SPC
Demand planning
Lean Manufacturing
ISO Quality Certification
Scenario Planning
Business Intelligence
Customer / Supplier
Portal
Product Lifecycle Mgmt
Advanced Planning
Systems
Customer Relationship
Management
Transportation Mgmt
Product Data Mgmt
Warehouse Mgmt
Demand planning
EDI
Quality Mgmt
ERP
Capability
Focus of Banner Transformation Program

19.
BTP Implementation Timeline
Scoping &
Planning
Visioning &
Targeting Design Construction Implementation
Scoping &
Planning
Scoping &
Planning
Visioning &
Targeting
Visioning &
Targeting DesignDesign ConstructionConstruction ImplementationImplementation
Change Leadership
FDA Validation
I nfrastructure Development
Program Management
FormalProgramLaunch-10/03
Site # 3
Site # 6
Site # 5
PLM I mplementation
Completion
Phase 3
Global S&OP (Plan) and APS I mplementation
Nomenclature Phase 1 Nomenclature Phase 2
Completion
Phase 1
Deliver, Make & H/ R
Global Model Build
Finance & Source Global Model Build
& I mplementation at all sites
Site # 1
Project Review
Q1 Y1 Q2 Y1 Q3 Y1 Q4 Y1 Q1 Y2 Q2 Y2 Q3 Y2 Q4 Y2 Q1 Y3 Q2 Y3 Q3 Y3 Q4 Y3 Q1 Y4
Global Business Transformation Plan
Site # 4
Completion
Phase 2
Site # 2

20.
Challenges/Critical Success Factors
Without these critical success factors a BTP will not be successful
Organization • Complete transition to global management structure
Metrics • Define success metrics for global business and transformation program
Accountability • Tie personnel compensation metrics
Tools • Enable and sustain global process changes using technology
 Enterprise Resource Planning (ERP)
 Advanced Planning and Scheduling (APS)
 Product Lifecycle Management (PLM)
Resources • Provide necessary resources for program execution
Ownership • The GMT must own and be held accountable for the success of the BTP
Business
Leadership
• Allow the business to drive the program utilizing IT as a support, not an
initiative
Change
Management
• Implement a Change Management plan including necessary resources
Program
Management
• Utilize a Program and Project Management Office to manage activities
through each phase of the implementation
Transformation • Transform the business focusing on translating the strategic plan into
financial results

21.
BTP Value Drivers
Improve Cash Flow & ROCE
Revenue Growth Asset EfficiencyOperating Margin
Time to
Market SG&AProduct
Availability COGS
Property,
Plant &
Equipment
Inventory Receivables
Payables
FinanceGlobal Strategic
Sourcing
ValueDriversBTPRecommendations
S&OP
Manufacturing
Process
Improvement
Nomenclature
 Improve production
operations
 Move from inventory
push to demand pull
 Improve shop floor
execution
 Reduce
manufacturing costs
 Reduce inventory
 Increase order
visibility
 Improve demand
management
capability
 Improve forecasting
 Reduce global
inventory
 Increase leverage
through competition
 Reduce # of suppliers
 Adopt global
governance
 Increase
consignments & VMI
 Improve spend
compliance
 Reduce total spend
 Maintain pricing
standards
 Improve accounting
process
 Improve cash flow
management
 Standardized
products and
processes
 Build the foundation
of transactional
system
 Reduce total spend
Order
Management
Increase Shareholder Value

22.
Supply Chain Implementation
Framework
Plan
Improved Supply ChainImproved Supply Chain
ProcessesProcesses
Enabling Technology:
Infrastructure, Enterprise Data Model, PeopleSoft
Supplier
Internal or External
Customer Customer’s
Customer
Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliver
Internal or External
SCOR Model
Source
PharmaPrint
Process Models Mapped to PeopleSoft/JDE
SPEED
Supply Chain Diagnostic Tool
SCOR
Supply Chain Strategy Reference Model

23.
Banner’s Goal is to become a
Complexity Master –
Two dimensions:
1.Globalization Complexity
Based on the geographic diffusion of
• Sourcing
• Manufacturing
• Engineering
• Marketing and Sales
2. Capabilities
Based on the following areas:
• Product innovation and time to market
• Sourcing effectiveness
• Product quality
• Manufacturing flexibility, productivity and lead
time
• Cost effectiveness
• Logistics effectiveness
• Customer service
• Supply chain cost structure
Low CapabilitiesCapabilities High
LowGlobalComplexitylobalComplexityHigh
100 =
base
(49 % of
respondents)
17% more
profitable(37%)
Complexity
Masters
(7%)
73% more
profitable
(7%)
19% more
profitable

24.
Closing Slide
Gary Kilponen, Senior Manager, Deloitte
gkilponen@deloitte.com
www.deloitte.com/us/manufacturing
Mark Hardison, CPIM, CHBC, Global Director of Supply
Chain Management, Banner Pharmacaps Inc.
MCHardison@Banpharm.com
www.banpharm.com
Please return your completed session survey to the room monitor
or the collection boxes near the exit.
APICS programs are noncommercial forums. Speakers have agreed to refrain from the use of brand names and
specific product endorsement whenever possible. Speakers understand that the association’s podium cannot
be used as a place for direct promotion of the presenter’s product, services, or for monetary self interest.
Please visit: www.supply-chain.org

25.
Questions?

26.
Must Attend Session at APICS
Overcoming the Challenge of Innovation:
Synchronizing your Supply Chain and Improving
Product Lifecycle Management
Tuesday, October 12, 2004
11:00 a.m. – 12:15 p.m.
Session: H-10
Room 7 A&B
Speaker: Doug Engel, U.S. Manufacturing Practice
Leader, Deloitte