1. Prepared by Dr. Leonard R. Hepp All Rights Reserved Lean Six Sigma Case Study Examples Prepared by Dr. Leonard R. Hepp January 5, 2010 All Rights Reserved

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18. Prepared by Dr. Leonard R. Hepp All Rights Reserved Average Baseline Performance: 126 Days with Standard Deviation of 90 Days Range of 0 to 642 Days 40% of Key States Approved in 100 days 50% of Non-Key States in 100 Days

19. Prepared by Dr. Leonard R. Hepp All Rights Reserved Improved Performance: Average Performance 90 Days with Standard Deviation 70 Days 80% of State Approvals now within 60 Days A Major "Ah-Ha"...ability to deliver a significant % in ZERO days. Competitive Benchmark Key States Non-Key States

20. Prepared by Dr. Leonard R. Hepp All Rights Reserved “I don’t know where documents go after scanning” “No clear process for what is being scanned and when.” “Searching for documents is too time consuming.” “Turnover and loss of institutional knowledge have caused process breakdowns.” “Huge backlog that keeps building up.” “Do not even know what a comprehensive deal file should contain for legal, customer reference...” “The late submission of [closing documentation due to backlog issues] … is raising our level of concern regarding operations” >$30B market worth Baseline Performance Average Time To Locate a document... 515 minutes with Standard Deviation 780 Minutes Range of 0 to >4500 minutes (basically lost document issues)

21. Prepared by Dr. Leonard R. Hepp All Rights Reserved Segmentation Analysis Best-in-Class Identified After Project Results: 1.5 minutes Average with 1 minute standard deviation Elimination of Lost Documents

22. Prepared by Dr. Leonard R. Hepp All Rights Reserved Management of Associate Complaints 50% lead to next level resolution requirements Significant legal cost issues in some cases Morale & Employee Engagement is Suffering (Average Survey Satisfied Ranking-@47%)

23. Prepared by Dr. Leonard R. Hepp All Rights Reserved Policy & Procedure 2001 Inventory Too Many Policies 2001 Bad Complaints Inconsistent Adherence: Focus On Labor Practice & Performance Management Policy & Practices: Unstable Environment: Massive Restructuring & Turmoil in Environment (Acquisition, Integration, Downsizing)  Quantity of Policies  Adherence to Policies/Practices  Communication  Huge Variation in Practices After Project: Less than 5% next resolution issues Near elimination of legal case issues Quality-Growth Survey…Average @65% Mgmt Practice Changes Policy Changes Communication Bad Complaint Complaints that occurred when the proper Policy & Process were not followed Good Complaint Complaints that occurred when the proper Policy & Process were followed Tracking Mechanism Put in Place IMPROVEMENT FOCUS

24. Prepared by Dr. Leonard R. Hepp All Rights Reserved Multiple, competing Compensation approaches No standards for key elements No cross-business comparisons or market differentiations.

25. Prepared by Dr. Leonard R. Hepp All Rights Reserved Trotter Matrix FMEA After Project Single standards policy with 6 key criteria assessments 55-95% reduction in Compensation Programs across businesses.

26. Prepared by Dr. Leonard R. Hepp All Rights Reserved BEFORE Project: Multiple missed PICs and Count Adjustments (35% Defects) Empty, Lost, damaged Containers (18% Defects) Bar Code errors; lost signals from portable readers > “bad” data (56% Defects)

27. Prepared by Dr. Leonard R. Hepp All Rights Reserved After Project: Less than 0.1% PIC Defects (99.8% Reduction) 95 % Reduction in empty/lost/damaged containers “Bad” Data issues reduced by 85%

28. Prepared by Dr. Leonard R. Hepp All Rights Reserved “Production Up 35% in 2008 yet Inert Gas Usage has increased by 150% … something has to change!” Brainstorming of Gas Usage Issues Project Opportunity: >$100K in Savings if usage is in balance Streamlined processes and procedures Position for growth in 2009

29. Prepared by Dr. Leonard R. Hepp All Rights Reserved Project Results: $90K in Saving; additional $50K with investment New Technology to monitor systems in place Game Changer Opportunity in Alternate Material

30. Prepared by Dr. Leonard R. Hepp All Rights Reserved Project Spotlight Exubera® Make-Release Cycle Time Key actions by the team:  Stable work practices  Step visibility  Cross training in Mfg. & QA  In-process BPR clearance in July  Reduced redundancies  Identifying & addressing issues early  Reduced material transfer work (i.e. Hold)  Team empowerment action items  QC data packet reduced to 1 level review  Batch Disposition Group improvements A Cross-Function, multi-project team approach to this critical business metric: Exubera® BPR Sub-process: BPR Team Leads: XXX & YYY Disposition Release QC BPR EM ER Mfg BPR Cycle Time MFG Start B P R O K - M F G E n d 9/1/20068/1/20067/1/20066/1/20065/1/20064/1/20063/1/20062/1/2006 80 70 60 50 40 30 20 10 0 Scatterplot of BPR OK - MFG End vs MFG Start *Undefined Endpoint 14Apr06–Identification of Process Improvements 02May06–1 st Process Improvement Meeting 21Jun06–Team Empowerment Session 14Jul06–In-Process BPR Clearance *

31. Prepared by Dr. Leonard R. Hepp All Rights Reserved NO IMPACT ON ACCEPT/REJECT DECISION BY NEKTAR! There is no statistical (to 99.9% confidence) difference between vendors. Establish Performance Criteria Baseline & Run Statistics After Results: Supplier CoA Verified…no in-coming QC Reassessment Cost Savings $60K; Cost Avoidance >$125K!

32. Prepared by Dr. Leonard R. Hepp All Rights Reserved Complicated QC Internal/External Process >>> Simplified Lean Value Stream >>> 7 Key SubProcess with 4 driving Cycle Time! 40% Reduction in Mean and 90% Reduction in Variance! Business grew 2X but required NO additional resources Major Ah-Ha … Opportunity to REDUCE Testing by sample changes DramaticImprovements