Boston Scientific

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(No Transcript)
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Boston Scientific Michel Darnaud President
- Europe
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Agenda

• Background
• BSE Customer Service and Logistics Objectives
• GHX contribution
• GHX Implementations
• Summary
• Questions

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Corporation Profile

• Boston Scientific Corporation (NYSE BSX) is a
  medical device company dedicated to less-invasive
  therapies with 14,000 employees and 15
  manufacturing facilities
• Its products and technologies reduce risk,
  trauma, cost, procedure time and the need for
  aftercare
• Driven by the needs of the medical community for
  innovative products, the Company grew from
  revenues of 2 million in 1979 to approximately
  3 billion in 2002

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Boston Scientific in Europe

• 3700 Employees
• 800 Sales/Marketing/Customer Service
• 2900 Manufacturing, Research Development
• Strong Country presence
• Direct sales organization in 20 countries
• Marketing Clinical support in all major markets
• Local language customer service

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Boston Scientific in Europe
Local Sites
Manufacturing Sites Galway, Cork, Lisnenan -
Ireland
European Distribution Center Maastricht - The
Netherlands
European Headquarters Paris - France
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Boston Scientific Portfolio
Neurovascular Interventions
Cardiac Electrophysiology
GI Endoscopy
Interv. Cardiology Cardiovascular Peripheral
Vascular
Interv. Radiology Vascular Surgery Oncology
Urology
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Distribution Model
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Distribution Centre Performance

• Key Performance Metrics
• 125 Employees
• gt 1500 Orders per day
• gt 99.9 In time handed over to carrier
• gt 96 Next day delivery
• gt 99.6 Stock accuracy at DC
• lt 0.05 Service complaints

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Boston Scientific Europe CS and Logistics
Objectives
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Objectives

• Reduce the level of returns due to human error
• Reduce the level of service complaint
• Reduce DSO level
• Reduce past due Receivables
• Reduce Logistic costs by increasing the units
  per order
• Change business practices to match changing
  balance
• of control at the customer

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GHX contribution
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Boston Scientific and GHX

• In 2000, Boston Scientific joined GHX, an
  international, supply-side B2B exchange which was
  created in order to eliminate inefficiencies in
  the health care supply chain and streamline
  purchasing of products and services
• It is a web-based, B2B approach, enabling cost
  savings for both providers and suppliers

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Returns / Service Complaints

• Target - Reduce the level of returns to below 1
• Currently at 1.4
• Target - Reduce service complaints to below 2.5
• Currently at 2.65

GHX - AllsourceTM Catalogue ensures that correct
manufacturers part numbers and pack quantities
are on orders
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DSO Levels

• Target - Reduce DSO level

GHX - Invoice queries are reduced due to all
processed transactions being price verified and
all part numbers being correct due to the
AllsourceTM Catalogue
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Past due Receivables
GHX - All processed transactions are price
verified and a better relationship exists with
our customers
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Ordering Patterns

• Target - Increase lines/units per order

• GHX - Transactions can be combined across
  departments / hospital
• eg. Leeds 40 orders per week to 2

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Supplier Relationship

• Target - Change business practices to match
  changing balance of control at the customer

GHX - Much greater communication between all
sides involved in the purchasing chain leading to
more of a partnership
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Additional Benefits

• Changes in Customer Service/Logistic Department
• following GHX implementation

• If we can change the routing of orders into the
  company this will relieve frontline customer
  service pressures
• It will also give us the opportunity to
  re-evaluate the type of positions we have within
  the group (more VAS orientated)
• All orders processed via GHX due to its
  integration direct into the purchasers and
  suppliers systems will carry a minimal cost
• Reduction in shipments (by increasing the
  units/order) will reduce drastically Logistic
  Costs (Pick - Pack and Ship) and assist in
  achieving environmental targets

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Additional Benefits

• GHX versus EDI
• EDI is a point-to-point technology. GHX
  consolidates the connections and is therefore
  more cost effective to implement.
• EDI requires catalog updates for each provider.
  GHX requires one catalog update by supplier and
  provider.
• GHX more cost effective than EDI.

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GHX Implementations UK and Germany
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Implementation Summary UK

• Leeds
• Implementation took 3 months Oct to Dec 2001
  including testing
• Plymouth
• Implementation took 1 month May 2002 including
  testing
• Durham / Teeside
• Implementation took 3 weeks Nov 2002 including
  testing

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Live Transactions UK

• So far for the Boston Scientific UK has processed
  a total of
• over 300 Orders total value of 750 K
• zero return
• zero price queries

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Implementation Summary Germany

• St. Johannes, Dortmund
• Implementation took 3 months Dec 2001 to Feb 2002
  including testing
• Helios, Erfurt
• Implementation took 1 month May 2002 including
  testing
• Medizinische Hochschule Hannover
• Implementation took 2 weeks July 2002 including
  testing

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Live Transactions Germany

• So far for the Boston Scientific Germany has
  processed a total of
• 300 Orders total value of 250 K
• 1 return ( exchange of consignment )
• zero price queries
• Full product range ordered by the hospitals via
  GHX

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Catalogue Clean

• This is probably the single most important part
  of the implementation if good results are to be
  obtained
• It is your opportunity to have a discussion with
  your customers regarding the state of your
  business with them
• It is also where most of the easily achieved
  savings can be made through less invoice errors
  and returns

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Going Forward

• Assist Customers in implementing GHX across other
  departments and sites as required
• Make full catalogue available for uplift as
  required, otherwise continue to approach in a
  sectional manner
• Develop and test the procedure for the
  incorporation of new products and the removal of
  discontinued products

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GHX Benefits to Customers

• More regular order flow
• Simplified administration for the hospital
• Staff released to direct patient care
• Less out of stock risks
• More reliable deliveries
• Reduced number of invoices
• Streamlined payments and collection
• Boston CS focussed on support for the customer
  rather than order processing

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GHX Benefits to Boston Scientific

• Its what our customers want (Added value)
• Accurate reliable order fulfillment
• Facilitates streamlined ordering and logistics -
  taking costs out of the system and improving
  profitability
• Improves cash flow through reduction in invoice
  issues
• Improved service levels
• Catalogue cleansing prior to GHX going live is
  time well spent, leading to elimination of
  order/invoice queries thus improving payment
  collections
• More time managing relationship

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Take Home Messages

• For Boston Scientific GHX implementation has been
  a good thing for a number of reasons

• It has bought us closer to our customers and will
  continue to do so
• As implementation speeds up it will allow us to
  reconfigure the way we do business
• Fits into our strategy of taking cost out of the
  supply chain and order/ invoicing for ourselves
  and our customers
• We are developing a preferred supplier status
  through innovative solutions to help our
  customers improve patient care by improving
  productivity and clinical outcomes
• More functionalities to come (e-invoicing,
  Consignment)

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Any Questions ?