1 © The Delos Partnership 2006 Sanofi Aventis What are “Process Ways of Working” – and would they be a solution ?

2 © The Delos Partnership 2006 A typical Vertical Functional Organisation MD Sales Marketing Technical Operations Finance, IT Finance, IT HR ENG‘RSENG‘RS ENG‘RSENG‘RS MKTGMKTG MKTGMKTG SALESSALES SALESSALES OPSOPS OPSOPS ACCTSACCTS ACCTSACCTS HRHR HRHR Directors Managers Supervisors/Team Leaders Quality INSPRCTINSPRCT INSPRCTINSPRCT

3 © The Delos Partnership 2006 Functional Measures Actual Volume vs Budget Actual Sales vs Budget Inventory Level Project Costs Leads to Silo Management Mentality Manufacturing Director Manufacturing Director Sales Director Sales Director Finance Director Finance Director Development Director Development Director Managing Director Managing Director

4 © The Delos Partnership 2006 Functional Excellence Reasons for : Concentration of expertise Centralisation of scarce knowledge based resources Central point for external agencies Builds on educational qualifications More “cost-effective”

5 © The Delos Partnership 2006 Why process ? Product crosses functional boundaries on the way to the customer, and for product to get to customer on time and in-full then all functions need to work together to achieve the common goal Product crosses functional boundaries on the way to the customer, and for product to get to customer on time and in-full then all functions need to work together to achieve the common goal Week 1 Week 2 Week 3 Week 4 Week 5 Quality Supply Chain Finance Production HR Engineering Receive and Test Raw Materials Issue RMS to Manufacture Manufacture Product Test Product Maintain Machines Issue Product To Manufacturing Collect costs Pack Product Maintain Machines Store Product Deliver Product Test Product Arrange Overtime Collect costs CUSTOMER

6 © The Delos Partnership 2006 Customer Service Failures When only 80 % of orders get delivered on time in full whose “fault” is it? Supply Chain for not getting the materials in on time? Engineering for not having the engineers there when they are needed? Quality because they did not release the materials soon enough? Finance because they insisted on the vendor having approval which is why the materials were not delivered on time? The operator because they did not have time to make the product? The performance measures because the manufacturing manager made what best recovered overheads? HR because they did not organise overtime in sufficient time for the night shift?

7 © The Delos Partnership 2006 Customer Service Failures Is it because we have a functional organisation ? Is it because we have conflicting KPI’s? Is it because we are thinking “function” not “process” ? Is it because we are not organised and viewing the organisation as a series of processes that need managing in an integrated way ?

8 © The Delos Partnership 2006 Why process ? Activities like “Innovation” – like new production line or MES system - cross functional boundaries and require co-ordination of the various groups. If each group operates to functional goals and plans, then there is no way of ensuring innovation gets completed on time and in full Activities like “Innovation” – like new production line or MES system - cross functional boundaries and require co-ordination of the various groups. If each group operates to functional goals and plans, then there is no way of ensuring innovation gets completed on time and in full Month 1 Month 2 Month 3 Month 4 Month 5 Quality Supply Chain Finance Production HR Engineering Approve Capex Purchase and Deliver Put in machine Recruit Trial machine Test batches Purchase RM’s Refine operation Trial Batches Purchase RM’s Test batch Test RM’s Calculate costs First Batch

9 © The Delos Partnership 2006 Failure to deliver Innovation on time If we fail to get the new Line in on time is it because : Engineers were never available when they are needed to install the equipment? Quality because they took too long to test the batches? Supply Chain for not getting the Raw Materials available on time to manufacturing? Finance for insisting on three sources of supply for the Capital Equipment? Finance on insisting that the Vendor details must be on the system before receiving product? Manufacturing because they needed to get product to existing customers, rather than work on the new line

10 © The Delos Partnership 2006 Failure to get innovation in- time Is the failure due to the fact that we fail to: Have an Innovation process which plans and manages all the activities across functions ? Having a cross-functional approach to managing the innovation across the site ? Operate within functional boundaries managed to functional goals and guidelines ?

11 © The Delos Partnership 2006 Problem FINANCEHRIT FINANCIAL IMPLICATIONS ENGINEERING FunctionalAgendas SUPPLY DEMAND

12 © The Delos Partnership 2006 Functional Excellence Reasons for : Concentration of expertise Centralisation of scarce knowledge based resources Central point for external agencies Builds on educational qualifications Reasons against : Information is power Lack of availability of resource Creates “congestion points” Creates walls of “ignorance” Supports an immature organisation.

13 © The Delos Partnership 2006 Reason for Process type “organisation” MD Sales Marketing Technical Operations Finance, IT Finance, IT HR ENG‘RSENG‘RS ENG‘RSENG‘RS MKTGMKTG MKTGMKTG SALESSALES SALESSALES OPSOPS OPSOPS ACCTSACCTS ACCTSACCTS HRHR HRHR Directors Managers Supervisors/Team Leaders Quality INSPRCTINSPRCT INSPRCTINSPRCT GOODS CASH INFORMATION

14 © The Delos Partnership 2006 Process Based Organisation MD Sales Marketing Technical Operations Finance HR R&DR&D R&DR&D MKTGMKTG MKTGMKTG SALESSALES SALESSALES OPSOPS OPSOPS ACCTSACCTS ACCTSACCTS HRHR HRHR Directors Managers Supervisors/Team Leaders Innovation Process [Idea, Test, Deliver first of kind] Support Processes [HR,Finance,IT] Supply Process [ Buy, Make, Store, Test, Deliver]

15 © The Delos Partnership 2006 Comparison of Functional and Process Cultures DimensionFunctionalProcess Focus of DecisionsMy departmentCustomer needs Understanding of FunctionsMy own expertiseThe big picture and other functions with whom they need to collaborate Impact on other functionsDon’t understand what other departments need Understand the inputs and outputs that link them to other functions Relationship to other functions Confrontational, competitiveProblem-solving and collaborative MeasuresMeasures that relate to its own functionsMeasures of internal and external customer service Type of measuresMeasure functional resultsMeasure processes Process improvement“If it ain’t broke don’t fix it”“We’re not as good as we could be” Information sharingDo not share across functionsShared across all functions routinely Involvement in decisionsFunctional boss takes decisionsCross-functional teams make decisions Employee RewardFunctional ability and contributionOrganizational contribution Issue ResolutionResolved through functional chain of command Resolved on a peer-to-peer basis

16 © The Delos Partnership 2006 People Values TraditionalNowFuture Process problems Not my jobOwnershipAccountability Management Style SuperviseFacilitator/ Team Leader Coach Working Style IndividualTeamEmpowered Teams Training and Education Non-existentLuxuryNecessity KnowledgeIgnorantUnderstandsExpert Attitude to People LiabilityCostAsset

17 © The Delos Partnership 2006 Implications of Process ways of working Working cross-functionally. Understanding of what our function does and our impact on other functions. We work for each other, not just for our own function. We have a common objective – the customer! We work as a real team – not just a group of people.

18 © The Delos Partnership 2006 Teamwork A common vision and shared strategy allows: Common goal Common objectives Agreed targets Consensus on performance measurement

19 © The Delos Partnership 2006 “Team” Solution DEVELOPMENT FINANCEHRIT DEMAND SUPPLY BUSINESS IMPLICATIONS IntegratedApproach

20 © The Delos Partnership 2006 An effective team focuses on a common goal The performance of the whole company – not a functional area Each function plays a part and is responsible for achieving the aims of the site The supporting functions are intertwined with all of the processes

21 © The Delos Partnership 2006 Example of Team Working

22 © The Delos Partnership 2006 Workshop Group A – Process Organisation How would a process view be different for Dagenham What are the key processes at Dagenham ? Group A – Process Organisation How would a process view be different for Dagenham What are the key processes at Dagenham ? Group B – Cultural issues What differences would be required at Dagenham to get a “Process culture” in place How would the SLT need to change to create a “Process culture” Group B – Cultural issues What differences would be required at Dagenham to get a “Process culture” in place How would the SLT need to change to create a “Process culture”