Low Segment Project Program Scaling Lean

Transcription

1 Low Segment Project Program Scaling Lean Eric Smith Engineering Director Merck Global Engineering Solutions October 5, 2016

2 Background Global Engineering Solutions OUR VALUES MISSION VISION STRATEGIC IMPERATIVES Ethics Compliance Inclusion Business Acumen World Class Supply Knowledge Effectively deliver compliant facilities and reliable capacity to support Merck s products and people. Be an integral part of GSTC, highly valued by our customers for the business solutions that we provide. Business Focused Solutions Segmented Sourcing We link to colleagues upstream and work across boundaries to select the right business solution. We link to colleagues downstream to insure projects are safely delivered as promised and are transitioned to supply to realize business benefits. We prioritize our work and collaborate with procurement to leverage the market and manage risks. LEAN Engineering systems Technical Excellence Collaborative, motivated people We continually innovate so our end to end processes remove variability and improve flow efficiently. We develop the technical capability required to support the future supply chain, including areas like Biological, Pharmaceutical and Chemical processing and Contracting and Project Management.. We value and develop people, create a diverse and inclusive work environment, and our teams perform at a high level. OUR FOUNDATION FOR GROWTH Self-induced action and personal ownership

3 Small Project Problem Previous Condition Engineers Mid-2000s S-P Merger: 30 to 90 sites 2014 Americas Small Project Program Today Mid-1990s Downsizing and consolidation 2009 GES Transformation Engineers Complex/high business impact projects under-resourced Small projects executed similarly to large and complex ones (inefficient) Inconsistent project performance across entire portfolio Fewer GES resources increased need to prioritize 3

4 Small Project Problem Target Condition Organized and well-run small project portfolios in all areas Encourages innovation, continuous improvement and flawless execution Tools/training are available and continuously shared between areas End-users seek assistance GES resources are focused on the more complex and business critical projects People Safety Quality Cost Delivery One FTE Leading: DART, RIR Lagging: Near Miss, Observations Portfolio cost and spend with 5% Engineering Cost <15% 30% Savings Zero Operations Impact Within 4 Weeks of Plan 4

5 Leadership Principles and Boundaries Start slow especially with new partners Team must resolve or escalate problems Maintain safety program Governance and approval limits established Comply with Merck standards, guides, procedures Not to be in Merck project reporting system. Seek to minimize use of Merck systems Follow Procurement policies but not procedures Expectations/requirements reduced Spending tracked and measured as a portfolio Search for solutions that eliminate project work Learn from lessons to rapidly and continuously improve Robust Delivery Simplification Mindset 5

6 Segmented Portfolio to Prioritize Project complexity and business impact assessed cost business justification location Safety Health Environment technology product characteristics quality/compliance Small project team = Lower complexity and business impact projects 6

7 Partnership with Engineering Procurement Construction Mgmt Firms EPCM partners for each area Criteria: team, experience, cost, safety, project controls, diversity Leverage resources across entire portfolio KPIs established Consistent team Enormous amount explicit knowledge Even more tacit knowledge Engineers build site knowledge, relationships and trust Not Achieving KPI Target Value Requires Attention to Identify Cause Achieving KPI Target Value Exceeding KPI Target Value PROJECT KPIs Total score will be factored into the project QFDs for each project. Failure Meets Expectations Exceeds Expectations <50 = = 4 >75 = Merck Objective Weight Category KPI Actual Target Weight Performance COMPLIANCE 40% Cost 40% Safety (On Merck Projects) Audits Environmental SUPPLY 20% Schedule RIR % DART % Safety Observation Reports Near Miss Reporting Audits (Internal / External) Reportable Incidents 14 > 13 5% 0 > 8 5% 0 0 5% 0 0 5% Weighted Score > Performance Weighted Score Performance Weighted Score Reporting Interval < 3.7, > <.75 5 Monthly > >2.0, < <.18 5 Monthly < >20 5 Monthly < >10 5 Monthly > Quarterly > Quarterly Supplier Diversity Diversity Awarded 100% 25% 10% <30% % 7.5 >40% 10 Monthly Monthly Spend >+-5, < % +-10% 5% Accuracy >+-10% % 3.75 <+-5% 5 Monthly Spend Re-Authorizations % >20% 7.5 <20% Quarterly Savings Project Savings 29% 15% 20% Schedule Performance Yes Yes 10% <10% % 15 >15% 20 Monthly Monthly Close-Outs N/A 100% 10% <75% % % 10 Quarterly 100% 100%

8 Scaling Lean Old Functional teams Transitions between stages Many different teams Execution Focus Inconsistent teams React when asked Three bids and a buy Lessons project end Same requirements all projects New Small project teams Same team from beginning Enable work across projects Strong focus on the right solution Dedicated EPCM Link closely with capital planning Dedicated EPCM partner; Design assist Continuous Improvement Simplify, simplify, simplify 8

9 Center of Excellence Small project teams from Americas sites Work through common challenges Provide consistent approach Include EPCMs Highest Quality, Lowest Cost, Shortest Lead Time Just-In- Time Continuous Flow Takt Time Pull System People Development Built-In Quality (Jidoka) Stop to notify of abnormality Separate human work from machine work Share learning and build on successes Look for ways to simplify Level Loaded Demand (Heijunka) Kaizen (Continuous Improvement) Stability (Practical Problem Solving) Standardized Work 9

10 Less Complex Projects = Simpler Approach EPCM leads entire project Governance structure established GES Road Map used but scaled Project Value (Capital + Expense) <$0.8MM $0.8-5MM >$5MM Site Lead A,R R R Area Director I A C Regional Director I I A EPCM procedures/practices in lieu of GES ones Process to use Tech Centers 10

11 Less Complex Projects = Simpler Approach EPCM cost reports include everything GES estimate review requirements Internal Order established to provide immediate support Portfolio procurement plans CII s PDRI for FEL assessments 11

12 Communication Daily and weekly Tier meetings Continuous Improvement Sessions Monthly portfolio reviews 12

13 Successes 5 GES employees managing portfolios of over 225 projects worth ~$100MM Right solution savings Lines of Business are starting to come to us for small projects Getting closer to target conditions KPIs driving behavior 13

14 Challenges Partner PM capabilities Level loading work Does partner EPCM get it? Sites straying from boundaries Achieving diversity targets Portfolio reporting 14

15 Backup 15

16 To Do to Presentation Incorporate IPA SEUS data into previous condition slide Pictures tier board, team, How to get approval from Merck to present? Confirm that everything in abstract is addressed Simplify = Easier + 16