Achieving Class A certification requires a most extensive and intensive focus of company resources. Regaining this status, once lost, requires a rare amount of dedication and resolve. Doing it twice deserves a closer look.

Background

Dade Behring Chemistry Systems of Glasgow, Delaware, manufactures reagents for medical diagnostic testing. Formerly a part of the DuPont Medical Products Department, they were the first division of DuPont to achieve the coveted Class A designation in May of 1991. The implementation effort lasted close to two years and resulted in a robust and institutionalized manufacturing planning process and cross-functional communication and decision-making process. Their Sales & Operations Planning (S&OP) process was and is an area of particular pride.

The First Slip

The benefits were achieved and maintained for over four years. But by September 1995, customer service performance had begun to slip. Misses in manufacturing schedules scattered across several product lines caused the line item fill rate to fall from the targeted 99% down to 98%. While many companies would not see this as a customer service problem, Dade Behring Chemistry Systems prides themselves as a reliable supplier based on delivering a very high level of customer service.

What happened to cause the slip? Organizational distractions such as the impending sale of the division by DuPont to Dade International (which was consummated later in 1996), the introduction of a variety of new products, and a downsizing program reducing staff all contributed to declining performance. Things were changing, and people were losing focus on their business process without realizing it.

But Dade had a big advantage. The President of Chemistry Systems and Vice President of Manufacturing, along with the rest of the management team, saw the resource management process (they called it Business Resource Planning, or BRP) not as a past successful project, but rather as a vital management process that needed to be maintained and faithfully adhered to.

In February of 1996, Senior Management commissioned an effort to develop and implement an improvement plan. This improvement plan included weekly meetings run by Manufacturing Directors aggressively attacking all manufacturing reliability problems; a renewed emphasis on the operating metrics that allowed root cause analysis and process improvement; and even a memo written to each and every employee describing the problems, the proposed solutions, and the importance of everyone focusing on regaining their "Class A edge."

By May of 1996 they had reduced total backorders dramatically. By October of 1996 they had regained their Class A level of performance!

More Challenges

Once the sale of the business by DuPont was complete, the Chemistry Systems Group needed to replace DuPont-developed and maintained systems with commercial software. This led, in the fall of 1997, to the start of a project that switched their focused and effective forecasting process from a DuPont-developed system to the SAP Flexible Planning Module. The objective was simple: substitute software tools while maintaining the high level of functional performance. The results were disastrous. Due to a lack of software functionality and support, they found themselves in a position where they had to get off the DuPont systems but didn’t have anything to replace it with!

For eight months, from March of 1998 until October, they couldn’t update the forecasts at all. And, as luck would have it, this also represented a period when a significant number of new products were being introduced, many of which were quickly and positively accepted by the marketplace. In other words, sales boomed! But, since the few people who could develop fresh forecasts or update the forecasts manually were consumed in trying to fix / save / finish the forecasting system implementation, the schedulers had to plan and schedule based on the old forecast and the latest inventory and customer sales figures. Manufacturing and Purchasing were under control, but often buying and making the wrong things due to the lack of good forecast information. Customer service suffered. The line item fill rate fell once again from 99% to 98%, and the order fill rate (the percentage of orders that could be shipped 100% complete on time) fell from 95% to 91%. Soon the short-term manufacturing schedules experienced a lot of last-minute changes which led schedule performance in some areas to fall into the low 90% range.

Recovery

The good news was that no one took the system for granted. Instead of waning, management’s attention to operating metrics, business performance, and process improvement became more focused. In the words of Manufacturing Director, Barbara Green: "If we didn’t have such a strong BRP system, with an almost religious adherence to our Sales & Operations Planning meetings, the damage would have been much worse. We avoided what could have been potentially a business disaster of major proportions. Instead, we continued to make the system work in time of great, great stress. Demand for new products was taking off and we didn’t have a forecasting system to plan for it. But we became stronger because of it. Everyone pitched in. Product managers spent long hours working directly with schedulers to overcome the lack of updated forecasts. Scheduling and manufacturing personnel understood the issues and worked hard at staying flexible and reacting to unanticipated customer demands. And most importantly, everyone stuck with the Sales & Operations Planning process to highlight and resolve key issues. By early 1999 we turned the trend around and order fill rate had increased to 93-4%. We’re confident we will reachieve Class A level performance by the second quarter of 1999."

Lessons Learned

The hallmark of a truly robust management process is that it can survive change and stress, and help a company steer successfully through the "bad times." This re-emphasizes that effective management and superior operating results is not about software (and, in fact, sometimes software can be a hindrance, as they learned), it’s largely about people. Dade Behring was certainly lucky to have a President and Vice President of Manufacturing who stayed in place and maintained their resolve throughout this ten-year period. But other managers changed.

Senior Management at Dade Behring feel strongly that as people change, the systems and communications forums should not. Newcomers will be brought "into the fold." Their process is permanent, and will not only resist the pressures of a changing business climate, but also help them manage and improve their performance as they go.

At Dade Behring, the BRP and S&OP process is considered a model best practice and all other divisions of the company are enthusiastically implementing similar processes. Maintaining such an impressive level of proficiency over a ten-year period marks a truly outstanding group of people. Congratulations to Dade Behring Chemistry Systems Division!

_______________________________________________