A “Process Driven” HospiraIntroduction to the Framework

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The World’s Leading Provider of Injectable Drugs and Infusion Technologies

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Hospira at a glance

• Market leadership positions in:– generic injectable pharmaceuticals globally– biosimilars in Europe and Australia– medication management systems globally

• 70+ years experience; public independent company since 2004• 2011 annual revenues of $4.1B• 15,000 employees

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Our philosophy

Integrity Ownership/Accountability Speed Entrepreneurial Spirit

Values Our customers and patients, delivering on

our promise by serving their needs with integrity, trust and innovation

Our employees, by embracing diversity of thought and cultural perspective, fostering an environment of empowerment, fairness and respect

Our shareholders, by safeguarding their investment and providing a fair return

Our communities, acknowledging our social responsibility through active citizenship and thoughtful giving

Unwavering Commitment to ...

VisionAdvancing Wellness™… through the right people

and the right products

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Hospira addresses critical healthcare needs

Key Products Customers Critical Needs

Specialty Injectable Pharmaceuticals (SIP)

• portfolio of ~200 products• many differentiated

Medication Management Systems (MMS)

Hospitals and alternate site

healthcare providers

To reduce:• costs• medication errors• infections

To improve:• patient safety• worker safety• productivity

• ~575,000 installed devices globally

Hospira product categories

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MedicationManagement

Systems

24%

Specialty Injectable Pharmaceuticals

(SIP)

63%

OtherPharma

12%

2011 Net Sales$4.1B

• Generic injectables• Proprietary drugs• Biosimilars

• Infusion devices, dedicated administration sets, software and services

• Gravity administration sets

• Large volume solutions• One2One™ contract manufacturing services

Specialty Injectable Pharmaceuticals (SIP)

Medication Management Systems

Other Pharma

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Driving operational and quality excellence

• We are reinforcing the foundation and preparing the organization for global expansion

• We are making sustainable change in our process and quality procedures across our global manufacturing footprint

• We are investing in the future with strategic capacity, best-in-class processes and people

• Quality improvement and remediation efforts will position us favorably for long-term success

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Driving Process Behavior - Background

• Hospira has made a commitment to become a more “process driven” organization – desiring to increase integration and collaboration between functions and locations

• This is a 5-7 year cultural journey which was started in 2011

• The Journey included– Laying foundations for process work to evolve in the

overall enterprise– Enabling specific projects or initiatives to improve process– Creating language and tools for people to utilize in

process efforts– Providing more clarity on process ownership and

accountability

Process Charter – Vision/Mission

• VISION: Hospira, will be known as a process-driven enterprise, that

– supports, empowers and energizes employees, – encourages their initiative to work across silos, – enables and allows its people to perform process work to

achieve desired corporate objectives.

• Mission: The process platform will enable:– Hospira wide process understanding, – competency to manage, – frameworks to define, measure and sustain process focus

in our company at the right levels at the right time for the defined outcome.

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Why a Process Enterprise

• Process enterprise enables people to do process work• A Process Enterprise defines and organization by

behaviors and attitudes of all personnel– not purely defined by organization chart

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A process-managed enterprise supports, empowers and energizes employees, encourages their initiative, enables and allows its people to perform process work.Process work is

work that is focused on the customer, directed toward achieving results rather than being an end in itself, follows a disciplined and repeatable design.

Michael Hammer, Agenda

In a process centric organization, all employees can answer…

• What process or processes are you a part of? • How does the process create value for customers?

How do you personally contribute to value? How do others?

• What do people immediately before and after you in flow of process do?

• By what measure does Hospira judge performance of your process? What is current level of that measure?

• What other processes interface with yours? What do these processes need from yours? What does yours need from them?

• What efforts to improve your process are now under way?

11 Business Process Thinking Check ListBy Michael Hammer, the author of Agenda

What is a Business Process?

• Designed group of related tasks that work together to create a result of value for a particular customer

• Characteristics of a process– has defined triggers (initiating events)– has defined inputs– adds value– produces defined outcomes and deliverables– has customers (internal or external)– normally crosses existing organization or functional boundaries– Measurable

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A process is not a…. Methodology , standard operating procedure, training document, system, transaction

What isn’t crystal clear?

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Finance

Operations

ARAPFA

1 1 We know how our functions are organized

2 It is not consistently clear what activities/hand offs are performed by each function

Activity 2

3 We have not used consistent terminology in our processes – making it difficult for decision making, ownership, etc.

4 Value Streams with Owners responsible for providing direction and clarity

People perform “activities” which should align to processes.

SCProcurementQuality

Value Stream4

Processes should follow the direction of an overall value stream. People Report to Functions

Process 3

Why a Framework?

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Process is a Fundamental Component

Tech

nolo

gy

Enab

lem

ent

→ 1

→ 2

→ 3

→ 4

→ 5

LEA

N in

O

pera

tions

Prod

uct a

nd

Com

mer

cial

izat

ion

Exce

llenc

e

Process Driven Organization

Business Results

Process work and enabling ToolsPrimarily Process work

Process KPIs Measurement

Process & Tools

Process Frameworks

Continuous Improvement Techniques

Communication & Education

An Enterprise Framework?

• Originated in IT– Large Transformation

Programs– ARIS Modeling Tool– Previous GPO/Global

Construct• Focused on Driving

Common Language• Still in the Early

Stages

Framework Objectives

• Common Frame of reference/translation tool– Internally

• Within a group• Across groups• Globally

– Externally• Benchmarking Partners• Integrators Consultants• Outsourcers

• Consistent Method of Organization– Integrated view of process (non-silo)– Supports standardization– Helps map processes to functions– Helps identify ownership

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Components of a Framework

• Vocabulary• Structure• Naming Conventions• Templates/Tools• Decomposition Rules• Modeling Rules/Guidelines• Repository Structure

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Processes Should Be Grouped into a Framework (Sometimes also called “architecture”)

• Common Frame of Reference• Consistent Method of

Organization• Ease of Navigation

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Frameworks are increasingly being used as a translation tool with external partners.

Hospira’s framework should …

• Define all business activities, organized by process

• Allow processes grouped into end-to-end chains – Called “Value Streams”

• Provide One global common business process framework

– underlying procedures and work practices may vary by site or region

• Drive process based performance metrics

– Enterprise excellence vs. functional excellence

– Common industry framework enables benchmarking

Establish a common language across the enterprise

Many frameworks to choose from• APQC (American Productivity and Quality Center)• SAP • SCOR (Supply Chain)• etc

Sup

plie

r pro

cess

esProduct Design

DCOR™

Custom

er processes

Supply Chain SCOR™

Sales & SupportCCOR™

Product Management

Hospira Process Framework (The HPF)

At Hospira we started with:

APQC general industry

+ Pharmaceutical industry

+ Automotive Industry

+ Aerospace/Defense .

= comprehensive base inventory list of 400 processes classified into 12 process categories

This ??? Or This??

Can you visit me in Chicago???

Framework Levels

Level & Name Description1 Process

CategoryHighest level of process in the enterprise Eg: Source to Pay

2 ProcessGroup

Group of related processes Eg: Procurement

3 Process Series of interrelated activities which convert inputs into results (outputs) Eg: Determine sourcing strategy

4 Activity Key events performed when executing a process. Eg: Negotiate Contract

5 Procedure Step-by-step instruction on how to perform tasks within activity Eg: Step 1: Review vendor history

Drill down for more details

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Base process inventory list sample

2 Develop and Manage Products and Services (10003)(Pharma) 2.1 Discover Products (12752)(Pharma) 2.1.1 Manage research (12753)(Pharma) 2.1.2 Perform research/ licensing (12757)(5.0.0) 2.2 Manage product and service portfolio (10061)(5.0.0) 2.2.1 Evaluate performance of existing products against market opportunities (10063)(5.0.0) 2.2.2 Define product/service development requirements (10064)(5.0.0) 2.2.3 Perform discovery research (10065)(5.0.0) 2.2.4 Confirm alignment of product/service concepts with business strategy (10066)(5.0.0) 2.2.5 Manage product and service life cycle (10067)(5.0.0) 2.3 Develop products and services (10062)

2.3.1 Design, build, and evaluate products and services (10080)(AD) 2.3.1A (AD) Manage Configuration (11703)(AD) 2.3.1B (AD) Develop and implement manufacturing/services (11717)(AD) 2.3.1C (AD) Plan product resource requirements (11730)

2.3.2 Test market for new or revised products and services (10081)(5.0.0) 2.3.3 Prepare for production (10082)(Pharma) 2.3.4 Compile and submit dossier (12763)(Pharma) 2.3.5 Manage regulatory requirements (12771)(AD) 2.3.6A Maintain product/process data (11740)(AD) 2.3.7A Manage transfers of product data (11751)

3 Market and Sell Products and Services (10004)

category

group

Process

“Value Streams” Tie Core Processes Together to Achieve Desired Business Results & They Cross Organizational Silos

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7.5.4 Create IT Services & Solutions

8.1.1 Perform Planning/ Budgeting/

Forecasting

4.1.2 Manage Demand for

Products/ Services

3.3.1 Develop Sales

Forecast

Value Stream: e.g. Forecast to Plan

Integrated KPIs

The Collaborative Forecasting Tool Touches a Subset of the Forecast-to-Plan Value Stream

Core Business Processes (global)

Value Stream a.k.a. End-to-End Business Process, is a designed group of related core processes, tasks and systems, spanning functions and regions, that work together to create and deliver ultimate value to stakeholders; Value Streams are led by an internal leader across a matrix organization.

Business Process, is a series of value-added activities and tasks, performed by both people and equipment, to purposefully achieve a common functional goal for one or more value streams; Core Processes are owned by Global Process Owners (GPO).

“Value Streams” Cross Organizational Silos

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7.5.4 Create IT Services & Solutions

8.1.1 Perform Planning/ Budgeting/

Forecasting

4.1.2 Manage Demand for

Products/ Services

3.3.1 Develop Sales

Forecast

Value Stream: e.g. Forecast to Plan

Integrated KPIs

Business Processes (global)

Value Stream Leader• Highly respected Hospira business

leader• Owns the value stream KPI and identifies

gaps requiring process work• Accountable for driving process

improvements now and in the future• Collaborates and work closely with

Global Process Owners associated with the Value Stream

Global Process Owner• Globally represents processes within

specific value stream/s• Identifies ways to eliminate, streamline or

simplify a process• Deliver global results across functions

and regions• Design and manage business processes• Represent process enterprise-wide in

decisions affecting processes• Participates in technology selection and

deploymentNote: process ownership doesn’t imply it needs to be the same from site to site or centrally managed.

Examples….

• What else can we do with a framework?– Show ownership– Show information about processes

• Maps• Information• Metrics• Training

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• As the world around us changes, so do business strategies and organizations, but framework remains intact and withstands the test of time

• Transformation efforts focus on process groups, such as P2P. – Can’t manage transformation at the holistic framework level

• Transformation must consider all impacted functions but process ownership must be with one organization with representation/advice from impacted functions

• Process owners must collaborate and focus on complete end to end process, not just their portion

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Framework key messages

Success of a Framework

• Centralized management/maintenance– While the processes and decisions are owned by the

value stream and process owners, centralized maintenance is critical

• “Adopt before Adapt” to maintain external benchmarking/reference links if at all possible

• Adopt, Govern and provide oversight before locking in tools

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Realize we are in a multi-year journey…

So now what?

• Common Process Language will be a critical component to us moving to a process driven organization

• Process Names and the Process Framework Should stand the test of time

• Centralized management/maintenance of process information is critical to success

• Process owners must collaborate and focus on complete end to end process, not just their portion

• Processes will need to be owned - typically by a function • While Process focus is Critical, transformation efforts typically

target on groups of processes (value streams)• Transformation efforts must consider all impacted processes,

value streams and functions • Function is still important – keeping skills relevant, providing

structure and accountability within a discipline33

Key Messages - Process/Value Streams

What do we ask of you in general?

• Understand the process framework – how it works and – What is an process– What is an activity

• Understand the role of the Value Stream Leaders/GPOs – start using, supporting and spreading the new terminology

• Stay connected – provide feedback, work with Value Stream leaders and help us collectively to get this right

– What is challenging– How would you suggest next steps– What specific messages can we give– How do we get the right people identified

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Next Steps

But the Process Framework only Tells us “the What”

Our Value Streams and Strategic Direction/ Objectives Tell Us the How and What For….

Hospira Value Streams

Business Process Framework (Michelle Sheedy)

Risk to Mitigation

Idea to Market*

Market to Sell

Forecast to Plan

Insight to Strategy

Record to Report

Source to Pay

Acquire to Retire

Recruit to Attrition

Define to Implement Support to Retire

Awareness to Implement Issue to Satisfaction

Finished Goods to Customer

Order to Cash

Sell to Service

Plan to Finished Goods*

Market to Retire

Pharma = Templeman & Schott Device = DeWitt & Pelletier Consumables = Schechter Biologics = Hahn & Noffke

GETTING STARTED WITH PROCESS THE HOSPIRA PROCESS FRAMEWORK

VALUE STREAMS AND GLOBAL PROCESSESClick here to understand:

• What do we mean by process?• What is a value stream?• What are value stream leaders

and global process owners• What is a framework

Click here to connect to: • The Framework Customized for

Hospira • Key Attributes Of our Processes

& Activities

Click here to connect to:• See the Hospira Value

Streams and their leaders• Understand which

processes are covered by which value streams

• Additional content on Value Streams and Processes

Hospira Value Streams and Processes

TOOLS AND TEMPLATES THE PROCESS PERSPECTIVE HOSPIRA 101Click here to connect to:• Example templates for various

process mapping/modeling activities

• The ARIS tool (Process Modeling Enterprise Wide)

• Sources of good process tools/templates

Click here to read about/talk about: • Hospira specific process efforts• External process viewpoints,

perspectives, best practices

Click Here to access helpful documents about Hospira’s• Processes• Data• Product Flows

Performance assessment techniques (standard work, KPI evaluation)

Skilled performance improvement resources (Lean, Six Sigma)

Capability/skill building (academy)

Advanced and accelerated improvement techniques

Diagnostics/Evaluations

Overall knowledge management foundation

VSL/GPO ownership tracking Process Modeling Tools Benchmarking membership

point Process education series Process data (policies,

documents, data, etc.)h

Business Process Management Services

Enterprise Performance Enablement

Performance/ Assessment / Improvement

Process Enabling/ Alignment/ Knowledge

Program execution /mobilization

Alignment/Dependencies Strategic KPIs Driving performance culture Eliminate KPI conflict Establish VS KPIs

Technology/Tools

Senior Leadership Support

Name 1

Name 3

Name 4

Name 2

Enterprise wide program/ project management assistance

* Structure as of early 2013