Best Practices

in Strategic

Planning Charles Aubrey

V.P. Performance Excellence

AndersonBrecon An AmerisourceBergen Company

1

Where do We Begin?

Foundation

2

Hoshin Kanri Policy Deployment

Management by Planning

Customer-focused Strategic Quality Planning

HOSHIN KANRI

Systematic Approach

Team Oriented – Maximum

Participation

Deploys Quality

Organization Wide

Aligns Organizational

Resources

Creates Maximum

Buy In

3

Strategic Planning Cycle

4

FOUNDATION ENGAGE & ALIGN HOSHIN KANRI

2007 2008 2009 2010 2011 2012

Mission & Vision Yes

Values 7 7 7 6

Goals 3 3 3 BSC 26 BSC 23 BSC 21

Quality Policy Yes

Strategies 6 5 5 + Teams 5 + Teams 5 + Teams

Initiatives 10 18

Projects 70 85 117 52

Organizational Assessment

(Baldrige +/-) Yes

Core Competencies 4

Situation, Market & Growth

Statements Yes

White Paper Yes

SWOT Analysis Yes

Financial Projections Yes

People Involved 6 35 70 130 150 200

Strategic Plan Evolution

5

FOUNDATION

2007 2008

Mission & Vision Yes

Goals 3 3

Strategies 6

Initiatives 10 18

Situation, Market &

Growth Statements Yes

Financial Projections Yes

People Involved 6 35

Strategic Plan Foundation

6

Foundation –Vision, Mission

•To be recognized leader in pharmaceutical packaging through industry leading performance in quality, operational excellence and customer satisfaction.

Vision

•To achieve superior returns and increasing value for all stakeholders by providing a competitive advantage to our customers by high-quality and continuous improvement of pharmaceutical packaging solutions in innovative and cost-effective ways.

Mission

7

Goals:

1) Sales Growth

2) ROCC levels

3) Zero Recalls

Foundation – Goals & Strategies

Strategies:

1) Focused Marketing

2) Strong Regulatory Profile

3) Customer Service

4) Continuous Improvement Culture

5) Leverage Information Technology

6) Process & Product Excellence

8

Initiative:

“Form strategic partnerships/successful

account penetration”

Situation:

U.S. market growing 15% annually

Market/Competitors:

Cardinal Health, Sharp, etc.

Growth:

Market share 30%

FOUNDATION – Examples

9

FOUNDATION ENGAGE & ALIGN

2007 2008 2009 2010

Mission & Vision Yes

Values 7 7

Goals 3 3 3 BSC 26

Quality Policy Yes

Strategies 6 5 5 + Teams

Initiatives 10 18

Projects 70 85

Organizational Assessment

(Baldrige +/-) Yes

Situation, Market & Growth

Statements Yes

White Paper Yes

SWOT Analysis Yes

Financial Projections Yes

People Involved 6 35 70 130

Strategic Plan ENGAGE & ALIGN

10

ENGAGE & ALIGN Statements

•We will be the preferred strategic partner to pharmaceutical and biotech manufacturers supporting their drug development and commercialization activities through industry leading performance, agility and customer satisfaction.

Vision

•Our place in this universe is to provide pharmaceutical packaging excellence and innovation to the world’s pharmaceutical manufacturers so that they may effectively bring life changing and life saving medicines to patients.

Mission

•Customer Focus, Teamwork, Respect, Improve, Engage, Coach Values

•We will engage every employee and customer to continuously improve QUALITY in our processes, achieving world class performance and global regulatory compliance while surpassing customer expectations

Quality Policy

11

White Paper Topics: Global Perspective

Patent Cliff

Regulatory & Quality Requirements

Challenges

Market Segment Perspective

Changing Customer Requirements

Market Diversification

Quality, Service & Technology

Current Situation

Market Environment

Competitors

Customer Needs

ENGAGE & ALIGN White Paper

12

Strengths, Weaknesses, Opportunities

& Threats Analysis

SWOT Vision, Mission,

Values, Quality Policy

Satisfaction Survey Results

Customer & Employee Feedback

Competitive & Regulatory

Data

Horizon Scan (White Paper)

Metric Gap Analysis

ENGAGE & ALIGN - SWOT Analysis

13

Example SWOT

ENGAGE & ALIGN -SWOT Example

Customer Service:

Our customer service distinguishes us from competitors.

Marketing:

The ability to market our newly patented package designs.

Out-Sourcing:

Cost and capital constraints make us a viable alternative to in-sourcing.

In-Sourcing:

In-sourcing could provide sustainable cost savings for customers.

SWOT

Str

en

gth

O

pp

ort

un

ity

We

akn

ess

Thre

at

14

Self - Assessment Mission, Vision, Values, Quality Policy

Workforce – capabilities, diversity, culture,

satisfaction

Customer – requirements, expectations,

drivers

Competitors –environment, changes,

innovations, limitations

Operations – efficiency, effectiveness, quality

Suppliers –roles, key products,

communications

Metrics and Analysis – measure & improve

Results – how do we perform

ENGAGE & ALIGN – Self Assess

15

Value Driven Leadership “To create vision, values, strategy, and governance which are effectively

modeled, communicated, and deployed to motivate each employee and team to achieve their highest potential and performance.”

Surpass Customer Expectations “We meet and exceed customer expectations both stated and

anticipated, and create exceptional value and innovative offerings that delight our customers and engender long term relationships, trust, and loyalty resulting in growth, greater market share and business expansion.”

Superior Technology & Innovation “We encourage creativity, develop innovative solutions and values for

customers, employees, and leadership by leveraging our technology and advancing knowledge.”

World Class Workforce “Create a compelling, sustainable strategy to build and inspire a skilled,

engaged, motivated and diverse workforce.”

Process & Quality Management “We provide ever-improving customer value and sustainability by

developing and operating work processes and systems that create and leverage our strengths.”

ENGAGE & ALIGN – Strategies

Sample by Team

16

Teams / # of Projects:

Value Driven Leadership – 16

Surpass Customer Expectations - 15

Superior Technology & Innovation - 12

World Class Workforce - 11

Process & Quality Management – 31

# of Projects tied to Bonus’s: 28

# of Associates Involved: 130

Teams Included: All Sr. Leaders, All Directors,

Selected Managers, and other Associates

ENGAGE & ALIGN Teams/Projects

17

Value Driven Leadership “Develop & implement a proactive Associate Communication

strategy”

“Develop & implement a formal succession planning program”

Surpass Customer Expectations “Develop Compliance packaging strategy”

Superior Technology & Innovation “Create metrics tree that links all KPI’s to departments”

World Class Workforce “Benchmark, develop & implement a Workforce and Workplace

engagement strategy”

Process & Quality Management “Develop & implement the Visual Factory concept to enhance

communication & visibility”

“Create a Maintenance Excellence benchmarking system”

“Collaborate to develop Core Competencies and intellectual property vision and approach”

ENGAGE & ALIGN Sample Projects

Sample by Team

18

FOUNDATION ENGAGE & ALIGN HOSHIN KANRI

2007 2008 2009 2010 2011 2012

Mission & Vision Yes

Values 7 7 7 6

Goals 3 3 3 BSC 26 BSC 23 BSC 21

Quality Policy Yes

Strategies 6 5 5 + Teams 5 + Teams 5 + Teams

Initiatives 10 18

Projects 70 85 117 52

Organizational Assessment

(Baldrige +/-) Yes

Core Competencies 4

Situation, Market & Growth

Statements Yes

White Paper Yes

SWOT Analysis Yes

Financial Projections Yes

People Involved 6 35 70 130 150 200

Strategic Plan HOSHIN KANRI

19

HOSHIN KANRI - Statements

• To be the preferred partner to healthcare providers and pharmaceutical manufacturers Vision

• To improve patients’ lives by delivering innovative products and services that drive quality and efficiency in pharmaceutical care Mission

• Accountability, Collaboration, Customer Focus, Innovation, Integrity, Passion Values

• We will engage every employee and customer to continuously improve QUALITY in our processes, achieving world class performance and global regulatory compliance while surpassing customer expectations

Quality Policy

• Quality/Continuous Improvement/LSS Culture, Packaging Line Technology & Integration Systems, Unbridled Customer Focus, Packaging Solutions

Core Competencies

20

Best Practices Continue

HOSHIN KANRI – Best Practices

Mission, Vision, Values, Quality Policy, Core Competencies Re-evaluated

5 Strategy Teams

5 Strategies Reviewed and Confirmed

Team Goals Reset: 2011–23, 2012-21

New Projects Selected: 2011-117, 2012-52

White Paper Refreshed

SWOT Renewed

Self-Assessment Retaken

# of Associates Involved: 2011-150,

2012 - 200

21

Develop the Balanced Scorecard Top level processes identified

Senior management identified as Owner

Owners identify top level metrics for each process

•Sales & Marketing

• Project Management, Planning & Purchasing

•Quality

•Operations

•Receiving, Warehouse, Shipping

•AP, Invoicing, AR

HOSHIN KANRI – Core Processes

•President

VP

Level

22

Balanced Scorecard – Level 1

Top level processes

Develop Balanced Scorecard

Review metrics regularly

Identify gaps and take action

Add or change measures & goals from feedback

Measures aligned with 5 strategy teams

HOSHIN KANRI – L1 Measures

23

Develop the Departmental Scorecard Level 2 process identification

Mid level management determine measure for each process to support top level metrics

Regular review, identify gaps, and take action

HOSHIN KANRI – L2 Process Map

• Validation

• Documentation

• Quality Control

• Quality Assurance

• Training

•VP of Quality

Director

Level

24

Level 2 Measures – To Drive Improvement

HOSHIN KANRI – L2 Scorecard

Look deeper for potential root causes to

develop solutions to close the gap

25

Level 2 Measures – ID Specific Project

Develop and deliver a robust training program with an

eye on scrap reduction, eliminating defects, meeting

regulatory requirements and creating and retaining a

talented workforce.

Goal: 40 training hours per associate annually

Execution Goal: This project is to be completed by

Fourth Quarter of FY 2011.

HOSHIN KANRI – L2 Goals/Initiatives

Goal – to close the gap – add project to

strategic plan

During regular review if gap is identified project

may be started at any time

Pro

jec

t

26

Level 3 Measures

Develop Level 3 process maps

Identify measures with goals

Develop associate awareness & accountability:

How does your process impact others?

How do other processes impact you?

How do your actions impact our measures?

How can we improve?

Create new lines of communication

Benchmark

HOSHIN KANRI – L3 Cascade

27

Dive Into the Detail – Level 3

HOSHIN KANRI – L3 Measures

28

Three Year Development Plan

HOSHIN KANRI- Ongoing

Define &

Prioritize

3 Year Strategic

Objectives

1 Yr. Strategic Plan with

Cascaded Initiatives & Measures

Monthly Project/Metric

Reviews by Strategy Teams

Workforce C/C Plans &

Budget

Measures/Goals, Strategies, Projects,

Assessment & SWOT

Mission, Vision, Values, Quality

Policy, Core Competencies & White Paper

Tie to Reviews, Merit Pay, Bonus Structure

& Succession Planning Process

29

Strategic Planning Cycle

3rd Quarter FY1

4th Quarter FY1

1st Quarter FY2 + Ongoing Restart

30

AndersonBrecon

Sales

31

AndersonBrecon

Operating Income

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2009

$10,000

$8,000

$12,000

$14,000

$16,000

$6,000

$4,000

$2,000

32

2010 2011 2012

(000)

33

AndersonBrecon Non-Diversification FY Sales 2010

High Potency , 0%

Traditional , 77%

Scheduled Drugs, 3%

Clinicals, 0%

Generic , 2%

Cold Chain, 2%

Spec/Med Dev, 16%

High Potency

Traditional

Scheduled Drugs

Clinicals

Generic

Cold Chain

Spec/Med Dev

34

High Potency $3,787

2%

Traditional $105,147

65%

Scheduled Drugs

$11,516 7%

Clinicals $13,486 8%

Generic $1,316 1%

Cold Chain $10,450

7%

Spec/Med Dev

$16,349 10%

High Potency

Traditional

Scheduled Drugs

Clinicals

Generic

Cold Chain

Spec/Med Dev

AndersonBrecon Diversification

FYTD Sales - 2012

(000)

35

Comparison of 2010 to 2012

Diversification

FYTD Sales - 2012

0%

77%

3% 0%

2% 2%

16%

2010 2012

$3,787 2%

$105,147 65%

$11,516 7%

$13,486 8%

$1,316 1%

$10,450 7%

$16,349 10%

High Potency

Traditional

Scheduled Drugs

Clinicals

Generic

Cold Chain

Spec/Med Dev

(000)

36

Market Share

Best Practices

in Strategic

Planning Charles Aubrey

V.P. Performance Excellence

AndersonBrecon An AmerisourceBergen Company

37