1. © 2001, 2003 Six Sigma Academy Executive Workshop Project Pathways Workshops

2. © 2001, 2003 Six Sigma Academy Pg 1 Project Pathways Workshops The intent of these workshops is to: -Facilitate the identification of Project Clusters and projects to fill the pipeline for potential Black Belt projects -Begin at the Executive level of the organization and align these projects to the balanced scorecard/strategic goals of the organization -Take the results of the workshops at the Executive level and use them as the foundation for the same workshops at the next level in the organization, and so on until actionable Black Belt projects are identified -Ensure that we have not missed an opportunity to identify a project that can benefit both internal and external customers

3. © 2001, 2003 Six Sigma Academy Pg 2 Five Project Pathways 1.Balanced Scorecard/Strategic goals Flow Down 2.Operational assessment 3.Financial analysis 4.Performance to budget 5.Organically bubble up ideas

4. © 2001, 2003 Six Sigma Academy Pg 3 Pathway #1 Balanced Scorecard/Strategic Goal Flow Down Beginning with the Executive Strategic goals this workshop identifies those factors that, based on data, drive these goals We then take each of these factors and determine those factors that impact and then flows down to each level in the organization. This process is similar to a series of cascading y = f(x…) equations as shown below

5. © 2001, 2003 Six Sigma Academy Pg 4 Pathway #1 Alignment Process 1.Strategic Goals 2.Determine Project Clusters (Key drivers of Goals) 3.Define Y=f(x) relationships 4.Cascade relationship to a project level 5.Conduct Six Sigma projects 6.Realize project results 7.Roll-up process metrics to Management Dashboards 8.Manage Business based on Dashboards

6. © 2001, 2003 Six Sigma Academy Pg 5 Deployment And The Data Stream Project Champion/Leaders Workshop Executive Summit Black Belt Training Strategic Alignment Project Clusters Project Charters Completed Projects Amount of data required to complete

7. © 2001, 2003 Six Sigma Academy Pg 6 1. Strategic Goals Financial targets -Rev, OI, NI, FCF, DEPS People development -PMP, TRP Compliance -cGMP, SOX, Growth -Pipeline (filings and launches), Customer service Process improvements -Safety, Six Sigma, Lean, SIOP, Yields

8. © 2001, 2003 Six Sigma Academy Pg 7 Project Clusters are large-scale issues within the organization that have: -Levels of complexity which allow the issue to be broken into smaller pieces -A measurable financial impact -Potential for long-term customer and company benefit -Metrics which can roll up into dashboard-level measures of process performance 2. Determine Project Clusters

9. © 2001, 2003 Six Sigma Academy Pg 8 3. Define Y=f(x) Relationships Identify the key drivers of obtaining desired performance within the Project Cluster Depict as Y=f(x) Y=f(x 1, x 2, x 3 … x n ) Measurable Output Key Performance Drivers

10. © 2001, 2003 Six Sigma Academy Pg 9 4. Cascade Relationships Project Example Production Cycle Time Production Forecast Accuracy Demand Forecast Accuracy Does “Inventory Reduction” align? Revenue and OI Growth – Yes (reduce wastage) Cost Saving – Yes (reduce holding cost and external warehouse space requirements) Customer Service – Yes (increased responsiveness) Y= f(x, x, x,) Inventory Value Black Belt Project 1 RM Purchased for Potential Opportunities Others RM Consumption Planning Y= f(x, x, x,) RM waiting for use 4 days =8% 17 days =40% 43 days =25% 17 days =15% Y= f( x, x, x, x) Production Cycle Time 23 days =21% FP Testing RM Test Manufacturing RM Waiting for Use 14 days =12% 24 days =21% 113 days =75% 22 days =52% 43 days =38% Data suggests: Black Belt project improvements will produce benefits that represent a portion of the overall opportunity Project benefits will be approximated as part of the initial Project Charter and validated with greater specificity as project progresses 2.1 Turns Black Belt Project 2

11. © 2001, 2003 Six Sigma Academy Pg 10 Pathway #1 Working Session Instructions: 1.Break-out into designated teams 2.Select a team leader and person to report out the results 3.Beginning with your Goals work with your team leader to fill out the y = f(x) template 4.List potential data sources in your organizations, list functional champion(s), and key personnel 5.The teams will have 60 minutes for the exercise 6.Prepare a 10 minute summary to report out to the entire group 60 Minutes

12. © 2001, 2003 Six Sigma Academy Pg 11 Y=f(x) Y = f(x1, x2, x3, x4, x5) Y = f(x1, x2, x3) Y = __________________ x1 = x2 = x3 = x4 = x5 = Y = ___________________ x1 = x2 = x3 = x4 = x5 = Y = ___________________ x1 = x2 = x3 = % % 100% $ $ $ % $ % $ % $ % % % $ $ $ $ % % % $ $ $ $

13. © 2001, 2003 Six Sigma Academy Pg 12 Y=f(x) – Details Potential Data Sources: 1. 2. 3. 4. 5. Project Champion(s): 1. 2. Key Personnel: 1. 2.

14. © 2001, 2003 Six Sigma Academy Pg 13 Going Forward ½-Day One-on-One Functional Champion Sessions -Concur on Project Clusters -Verify Level One and Level Two cascade Percentage impact Financial impact 3.5-Day Project Champion/Leadership Training/Workshops -Flow cascade to Black Belt Project Level (L3, L4, …Ln) -Develop individual Black Belt Project Charters

15. © 2001, 2003 Six Sigma Academy Pg 14 Project Charter

16. © 2001, 2003 Six Sigma Academy Pg 15 Pathway #2 Operational Assessment An Operational Assessment of the Elizabeth facility is going to be conducted the week of January 12 th, 2004 A Team of Six Sigma Academy Master Consultants will work with Elizabeth plant leadership to prepare and conduct this Assessment As an entire facility cannot be assessed in one week, through the use of data analysis and Cause & Effect Matrices, the scope of the assessment will focus on those products/processes that most significantly impact Alpharma’s strategic goals

17. © 2001, 2003 Six Sigma Academy Pg 16 Pathway #2 Operational Assessment Opportunities to be identified will be: - Cycle time reduction - Inventory reduction - Walking time reduction - Lead time reduction - Factory floor space recovery - Standard operation set-up - Set-up time reduction - Scrap reduction - Variability of a particular operation - Design of a new product (DFSS) - Yield improvement through design of experiment

18. © 2001, 2003 Six Sigma Academy Pg 17 Pathway #2 Operational Assessment Working Session Since at this Summit we cannot perform an Operational Assessment, we are still interested in your thoughts regarding priority opportunities at the various Alpharma facilities that would focus the Lean Six Sigma effort against your strategic goals Instructions: 1.Break-out into designated teams 2.Select a team leader and person to report out the results 3.Identify an Alpharma facility 4.List the potential opportunities at that facility, what data supports that it might be an opportunity, what Strategic Goal would this be tied back to, and who would the person at that facility to contact about that opportunity 5.The teams will have 20 minutes for the exercise 6.Prepare a 5 minute summary to report out to the entire group

19. © 2001, 2003 Six Sigma Academy Pg 18 Pathway #2 Working Session Name of the Alpharma Facility:_____________________ Description of the Opportunity Data source(s) that tells you it’s an opportunity (or your suspicion) Strategic Goal Impacted ContactYour name

20. © 2001, 2003 Six Sigma Academy Pg 19 Pathway #3 Performance To Plan – Facilitation Historical Budgets are reviewed and the performance to plan for these budgets are analyzed Identify ongoing Program/Project performance to plan discrepancies Areas showing large gaps in performance are opportunities to identify project clusters and projects When executing this pathway, to prevent chasing false opportunities need to understand whether: -The budgeted targets are to far of a stretch -How do your budgeted targets compare to your industry

21. © 2001, 2003 Six Sigma Academy Pg 20 Pathway #4 Financial Analysis – Facilitation The financial data of the Company is analyzed to determine whether your financial measures are inline with your industry, for example: -Inventory turns -DSO -Accounts Receivables -Accounts Payable -Etc. Gaps in these areas are potential opportunities for project cluster and project identification

22. © 2001, 2003 Six Sigma Academy Pg 21 Pathway #5 Organic Bubble Up Ideas Organic project definition -A project that may not be strategic in nature, but is a good idea and will save money or improve customer/employee satisfaction Brainstorming and soliciting peoples ideas are the means by which Organic Bubble Up projects are identified Based on the Project Selection Continuum this pathway by itself is the least desirable method

23. © 2001, 2003 Six Sigma Academy Pg 22 Project: Overpayment Of Taxes To U.S. Government Background Information -A routine audit of purchased products showed a line item that was misclassified as “capital” instead of “expense” What was done -A Black Belt project was created. Investigation showed a flaw in the purchasing process that allowed the mistake to occur repeatedly. The process was changed and misclassifications were eliminated. Results -The Government returned the $10M excess payment. No further misclassifications occurred.

24. © 2001, 2003 Six Sigma Academy Pg 23 Project: Improve Measurement System For Precious Metal Fabrication Background Information -A plants profit margin had deteriorated over time. Several people tried to find the root cause but they were unsuccessful. What was done -A Master Black Belt project was created. The project identified a poor measurement system which incorrectly measured the amount of precious metal required for production. Results -$44 M/year savings

25. © 2001, 2003 Six Sigma Academy Pg 24 Project: Recovery Of Customer Requested Engineering Costs Background Information -An executive wasn’t sure if a good process existed to recover customer-driven engineering change order costs What was done -A Greenbelt project was created. The project identified several holes in the process which made it difficult to charge customers for the change orders. Results -$1.2 M recovery + cost are captured correctly on new change orders

26. © 2001, 2003 Six Sigma Academy Pg 25 Project: Standardize Printers, Copiers, Scanner And Fax Machines Background Information -A transactional area had several types of copiers, printers, fax and scanners that were randomly dispersed in the department. Employees spent time configuring their computers to use each of the devices. Maintenance agreements were made with various companies to support the equipment. What was done -A Greenbelt project was created. The project identified 4-in-1 units from one manufacturer that met the users needs. The units were placed every 50’ in the office. One purchase agreement and one maintenance agreement covered all the equipment. Each printing area had placards showing how to operate the equipment. Results -Reduced purchase and maintenance cost $250K savings. Standardization reduced frustration.

27. © 2001, 2003 Six Sigma Academy Pg 26 Pathway #5 Organic Project Pathway Exercise Instructions: 1.In groups of 3 or 4 members use the previous concepts and apply them to your organization. Consider processes that were slow or produced defects at: -Your last position -Your current position -What your customer wants from you (internal/external) -What you want from your supplier Problems with your current position 2.Complete the table on the following page 3.Time: 30 mins. 4.Select a spokesperson to report out

28. © 2001, 2003 Six Sigma Academy Pg 27 Pathway #5 Organic Description of the Opportunity Data source(s) that tells you it’s an opportunity (or your suspicion) Strategic Goal Impacted ContactYour name

29. © 2001, 2003 Six Sigma Academy Pg 28 Next Steps The results of these exercises will be the foundation of the project Champion/Leadership Training The Project Champions and Business Leaders will attempt to further drill down to the actionable project level in order to: -Complete Project Charters -Further scope improvement opportunity -Execute the Lean Six Sigma project The availability of data will be key in identifying actionable Black Belt projects.

30. © 2001, 2003 Six Sigma Academy Pg 29 Project Pipeline Maintenance Establish feedback loop for “discovered” projects -Black Belts to Project Champions -Project Champions to Functional Champions -Function Champions to Steering Committee Pipeline repository -Projects in queue -Aligned to Project Clusters -Accounted for in Dashboard development Review completed projects -Look for replication opportunities -Re-evaluate pipeline for relevance

31. © 2001, 2003 Six Sigma Academy Pg 30 Next Steps After Executive Summit Key dates for Alpharma’s Lean Six Sigma deployment -One-on-One Functional Champion Training Sessions – Week of December 15th -U.S. Project Champion/Leadership Training/Workshop – Week of January 5 th -Elizabeth Operational Assessment – Week of January 12 th -European Project Champion/Leadership Training/Workshop – Week of January 26th

32. © 2001, 2003 Six Sigma Academy Pg 31 Closing Remarks Final Thoughts

33. © 2001, 2003 Six Sigma Academy Pg 32 Trademarks And Service Marks Six Sigma is a federally registered trademark of Motorola, Inc. SigmaFlow is a trademark of Compass Partners, Inc. MINITAB is a trademark of Minitab, Inc. VarTran is a trademark of Taylor Enterprises. The following are trademarks of Six Sigma Academy as of November 2003 (alphabetical): Breakthrough Design Breakthrough Software Design Breakthrough Diagnosis Breakthrough Execution Breakthrough Lean Breakthrough Sigma Lean Breakthrough Six Sigma Breakthrough Strategy ® Breakthrough Value Services FASTART INTELLEQ METREQ SigmaCALC ® Weaving excellence into the fabric of business

34. © 2001, 2003 Six Sigma Academy Pg 33 Six Sigma Academy www.6-sigma.com US Tel: (480) 515-9501 US Fax: (480) 515-9507 International Tel: +44-1403-783456 International Fax: +44-1403-218788 8876 E. Pinnacle Peak Road, Suite 100 Scottsdale, AZ 85255