Bridging the Great Divide

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Bridging the Great Divide Supply Chain
Management and Information Technology

• Ken Hartman, C.P.M.
• SAP Procurement Business Process Manager
• Boston Scientific Corporation

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Brief Background

• 19 Years of systems implementation experience
• 11 Years implementing SAP at PwC / IBM Business
  Consulting Services

• Processes
• Purchasing and Strategic
• Sourcing
• Inventory
• Accounts Payable
• Warehouse Management
• Planning

• Industries
• High technology
• Publishing
• Consumer Products
• Investment Banking
• Aerospace and
• Defense
• Public Utilities
• Media

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Boston Scientific (NYSE BSX) is a worldwide
developer, manufacturer and marketer of medical
devices with revenue of 5.6 billion in 2004.
For more than 25 years, Boston Scientific has
advanced the practice of less-invasive medicine
by providing a broad and deep portfolio of
innovative products, technologies and services.
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The Boston Scientific Mission
To improve the quality of patient care and the
productivity of health care delivery through the
development and advocacy of less-invasive medical
procedures. This is accomplished through the
continuing refinement of existing products and
procedures and the investigation and development
of new technologies which can reduce risk,
trauma, cost, procedure time and the need for
aftercare.
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Boston Scientific Businesses
Business Groups Cardiovascular Endosurgery
Neuromodulation (Advanced Bionics)
Neurovascular
Electrophysiology
Endoscopy
Interventional Cardiology Peripheral Interventions
Vascular Surgery Oncology
Urology Gynecology
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BSC Worldwide Locations
Direct Sales

• Worldwide headquarters Natick, MA,
• 16,000 employees (approx.)
• 22 manufacturing facilities

January 2004
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SAP Procurement Business Process Manager

1. Build a high functioning BPL organization
2. Implement best in class business processes
3. Advance the use of supporting technology

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Todays Agenda

• I. Whats the problem?
• II. Three organizational methodologies
• Special Project
• Business as Usual
• Cross Functional
• III. Five techniques for implementing and
  maintaining a Cross Functional organization
• Business Process Leadership Role
• Knowledge Management
• Shared long-range vision and integrated planning
• Project management
• Metrics

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SCM and IT Challenges

• SCM initiatives fail to achieve anticipated
  benefits
• Company isnt in upper right quadrant
• Implement SCM best practices or enabling
  technologies
• Limited budget for IT projects in support of SCM
• IT and SCM see the companys needs differently
• Initiatives take forever to get off the ground

To achieve results in Supply Chain improvement
projects, and to maintain these results,
companies must craft a collaborative Supply
Chain/IT culture
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Observations
Information Technology
Supply Chain

• Functional tribes
• Objectives, expertise, management
• Perspectives
• Differing definitions of success
• Different languages
• Companies hire professional translators

Consultants
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Special Project Organization

• Large project team
• Big budget
• High visibility
• Program/Project manager
• Focus on user requirements
• Design optimal IT solution
• New technologies/systems
• Well -trained users
• Manage org. change
• Track and report benefits
• Top management cross functional commitment
• However these are exceptional events!

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Business As Usual Organization

• After the Special Project
• One tribe drives the initiative
• Other tribe may not be included
• Not all tribes contribute to defining objectives
• Differing options on critical success factors
• Little thought to post-implementation support
• Difficult to secure top management support
• Disconnect between IT and end-users
• Communication is strained

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Common SCM Initiatives and Tribal Perspectives
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Six s/Lean

• Supplys Perspective
• Visual measurements
• Elimination of waste
• Process analysis
• IT solutions are last resort

• ITs Perspective
• Mostly a process oriented
• activity
• Generates some IT requests
• Easier than implementing new
• technology

• Common Ground
• Implement automated methods of collecting
  performance metrics
• Involve IT expertise to automate manual
  activities
• Sequence process improvement to match IT
  initiatives

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e-Procurement

• Supplys Perspective
• End-user focus, self service
• Easy to set-up and maintain
• Simpler than ERP
• Technology solves all issues
• Focus on deployment

• ITs Perspective
• New systems, technologies
• Vendor communication
• challenges
• Very technology dependent
• Not as easy as purchasing thinks
• Benefits not well understood

• Common Ground
• Equal technology and process requirements
• Without both halves, e-procurement will not
  achieve promised ROI

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Strategic Sourcing

• Supplys Perspective
• Mission Critical
• Need 3rd party technology
• Process intensive
• Excellent ROI
• Relies on better reporting

• ITs Perspective
• Questionable new technology
• Painful interfaces to ERP systems
• Primarily a process activity?
• Reporting requirements must be defined

• Common Ground
• Need for intensive automated reporting
• Can be greatly facilitated by technology
• Must be supported by robust process re-design

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Implementing a Cross Functional Organization
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Objectives of Cross-Functional Organization

• Integration of processes and technology
• Increased communication of value-added ideas
• Increased peer-to-peer communication
• Shared long-range planning
• Culture of collaboration

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Implementing a Cross-Functional Organization
A business philosophy that recognizes that
process and IT cannot be completely successful in
isolation
Five activities necessary to sustaining a
cross-functional organization

1. Business Process Leadership Role
2. Knowledge Management
3. Shared long-range vision and integrated planning
4. Project management
5. Measure Success - reinforce

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Business Process Leads

• Resident in each facility or business unit
• High credibility within the organization
• Trained and experienced in process and IT
• Viewed as a career path
• Adept at leading or participating on teams
• Will work in these 3 areas

• Enablers
• Business Process redesign
• Lean/6 Sigma
• Change management
• SOP documentation
• Training
• Project management
• Supplier negotiation

• Technologies
• ERP configuration
• System implementation
• Data clean-up and enhancement
• Barcode/RFID
• Supplier communication (XML, EDI)
• Business Warehouse and data analytics

• SCM Processes
• Kanban
• Consignment
• VMI
• e-procurement
• Spend datamart
• Supplier collaboration
• Pay on receipt (ERS)
• Recurring payments
• Supply normalization

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Boston Scientifics' BPL Program

• Who are they?
• Virtual team of 30 people
• 50/50 IT and process backgrounds
• 30 are dedicated BPLs, 70 have line
  responsibilities
• Support purchasing, planning, and/or inventory
• 2 are new hires

• Results to Date
• Implemented new SAP functionality
• Shared best practices resulting in significant
  efficiencies
• Prioritized IT projects - quarterly voting
• Increased visibility for initiatives
• Cross communication between materials functions

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Boston Scientifics' BPL Program (continued)

• Characteristics of a Successful BPL
• Experienced in either IT or process
• Former super user
• Demonstrated aptitude in the other discipline
• Experienced managing or working on virtual teams
• Politically neutral savvy
• Comfortable working with conflicting objectives
• Creative problem solver
• Good sense of humor!

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BPL Career Progression
Principle Responsibilities Associate Business Process Analyst Business Process Analyst Senior Business Process Analyst Principle Business Process Analyst
Business Process Redesign and Implementation Responsibilities
Work with users to identify areas for business process improvements and define solutions using appropriate methods Identify areas for improvement within their department Identify areas for improvement multiple Materials functions. Leads a team Provide direction
Implement lean business processes based on or independent from new technology projects Contributes as part of a team to the the plant Contributes individually within the plant. Takes individual ownership within the plant Leads among several plants
2. Information Technology Responsibilities
Using SAP as the primary information system, work with users to identify, diagnose and solve system issues Recognize system issues Determine cause and potential solutions Determine causes and work with IT to solve Ensure that solution is implemented across all sites
Define, test and implement current and new business systems enhancements, modules and releases as well as non-systems tools requested by Materials functions Work with functional users Identify enhancements within department Identify enhancements, within materials organization Identify enhancements, across plants
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Your BPL Program Action Items

• Secure top SCM and IT management support
• Identify personnel in each location/function
• Identify strengths and development opportunities
• Work with HR to formalize role
• Build the virtual team
• Determine and agree on the teams objectives
• Schedule face-to-face meetings
• Document value added by the program

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Knowledge Management

• Information Technology
• System configuration decisions
• Rationale for scope of technology
• Potential new IT functionality not yet
  implemented
• Short, medium, and long range IT strategy

• Business Process
• Process decisions for system configuration
• Clearly documented SOPs
• Up to date system training documentation
• Accessible best practices
• Public metrics and results

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Knowledge Management

• Access to Information
• E-mail newsletters Gazette
• SCM/IT Intranet site
• Discussion forums
• Tie in with help desk disseminate answers to
• questions
• Reinforce BPL as the source for information
• Learn _at_ Lunch
• Appoint at department liaison

Knowledge is only useful if you can quickly find
it and put it into practice
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Your Knowledge Management Action Items

• Assess current state of knowledge IT and
  process
• Assess accessibility and usability of knowledge
• Determine Knowledge Transfer status
  (consultants)
• Build KT into all professional services
  contracts
• Document Knowledge Management objectives
• Build KM value proposition and metrics
• Implement!

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Integrated Planning

• Short Term within 6 months
• Medium Term - within 12 months
• Long Range 12 months

Must be joint IT Business Process!
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Integrated Planning (cont.)

• Elements of Integrated Planning include
• SCM functional initiatives
• Technology initiatives
• What are the anticipated ROI business benefits?
• Level of resources to implement and sustain
• Sequence and priorities
• Coordinated and reconciled plan
• Small, medium and large initiatives
• Must be packaged for all to understand

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Integrated Planning (cont.)

• Short Term Planning - Tactical
• Within 12 months
• Immediate resource requirements
• Redirect current year budget
• Prioritize current projects?

• Intermediate Term Planning - Semi Strategic
• Next calendar or fiscal year?
• Budget cycle?
• Prioritize initiatives according to ROI?
• Require RFP for software/services

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Integrated Planning (cont.)

• Long Range Planning - Strategic
• Capital Funding
• Infrastructure, other IT constraints
• Technology upgrades
• New product introductions
• Business acquisitions/divestments
• Integration issues

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Your Integrated Planning Action Items

• Locate departmental plans (if any)
• Engage SCM and IT management
• Research current and future best practices
• Create an overall vision
• Identify opportunities and constraints
• Document 3-year plan
• Communicate!

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Project Management

• Develop PM skill set
• Budgeting
• Planning
• Resourcing
• Issue Resolution
• Stakeholder Management
• Benefits realization
• MS Project
• Fundamentals are valid regardless of size of
  initiative
• Awareness of process, IT, change management etc.
  considerations
• Must be part of job competencies for promotion

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Project Management

• Focus on objectives and measurable benefits
• Rotate PM responsibility among PBLs
• Methodology Process, IT
• Project Templates - accelerators
• Consistent deliverables
• Project charter
• RICE design documents
• Issue resolution
• Project status
• Understand IT, process project interaction
• Ex system test and end user training

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Your Project Management Action Items

• Identify successful projects
• Identify successful project managers
• Determine if accelerators and pro forma
  deliverables
• are available
• Work with HR to build PM competencies into job
  descriptions
• Create a PM curriculum for all team leads and
  team members
• Create a library of standard project metrics
• Begin compiling project actuals

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Measure Success

• Define success
• Reduced cycle time (8 days to 2 days)
• Reduced transaction cost (29 to 8 per
  transaction)
• 5 Unmatched invoices
• Aim for industry benchmarks
• How do you know if you are successful?
• How will you collect raw data?
• Who is responsible for data analysis
• Start with metrics and work backward to design
  processes and systems

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Your Measurements Action Items

• Identify areas where performance metrics are
  being
• used successfully
• Ensure that every proposal contains a section
• entitled How I will know if I am successful
• Ask senior management for their definitions of
• success
• Ensure that all initiatives are capable of
  capturing
• success metrics
• Include IT and process metrics

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Closing Thoughts

• SCM/IT disconnect costs
• Cross Functional Organization
• Business Process Leads
• Knowledge Management
• Integrated Planning
• Project Management
• Top management must believe

This is a journey that has short term and long
term benefits
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Questions - Comments
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Thank You!
Ken Hartman C.P.M. SAP Procurement Business
Process Manager Boston Scientific One Boston
Scientific Place Natick, MA 01760-1537 508-650-831
6 Hartmank1_at_bsci.com