Op Ex & Lean Six Sigma / Contract Manufacturing

2006 TOTY Finalist Profiles: Wyeth Contractor Performance Management Team, Collegeville, Pa.

Wyeth is using metrics to improve its contractor relationships, but the real payoff can’t be measured.

By Paul Thomas, Managing Editor

Measuring and Fostering Contractor Relationships at Wyeth Consumer Healthcare

Editor's Note: To read the introduction to all five Team of the Year Finalists' stories and access links to the other teams' profiles, click here.

Wyeth Consumer Healthcare (WCH) External Supply (ES) in Collegeville, Pa. is a virtual plant, so optimizing its performance means improving relationships with the contractors who make products such as Advil, and encouraging them to deliver quality product, on time.

There were times in the past, though, when contractors would send shipments late or incomplete, or fail to notify WCH ES of impending supply issues. “We were often caught off guard,” says Jim Anthony, associate director of supply planning. “We needed to have a consistent, reliable supply,” says Anthony.

And thus the Contractor Performance Management (CPM) initiative was born. Started by a seven-member team to strengthen relationships with Consumer Healthcare’s 20 main contractors, the program’s objectives are to:

  • Improve the reliability and timeliness of product supply;
  • Improve communication between WCH ES and contractors;
  • Measure contractor performance to foster continuous improvement.

After one year, “Version 1.0” of the project is completed and these goals have been met. “We’re seeing our contractors now as an extension of the Wyeth network,” says Anthony, the CPM team’s leader.

Internally at Wyeth, “pride in the program is spreading,” says Jane Wong, compliance director for Consumer Healthcare’s external supply. And the small team — comprised of members of the site’s Quality, Technology, Planning, Sourcing and Operations groups — has become a tight-knit crew.

Sharing the blame

Borrowing from other Wyeth sites, the team chose the metrics by which it would monitor contractor performance, with the goal of:

  • Flawless execution resulting in fewer investigations;
  • Improving customer service through earlier notification of supply and quality issues;
  • Improved compliance resulting in reliable product quality and supply.

When the team sat down with the contractors to discuss CPM, it became clear that past supply problems were attributed to communication issues. “We’d give contractors a purchase order and expect product on a due date, but never told them what our priorities were,” says Anthony. Some contractors were surprised. “That’s important to you?” one asked. “Why didn’t you tell us?”

Communication is now proactive, and the program has been rolled out to seven contractors so far. The following are now measured monthly:

  • Accuracy of batch records;
  • Percent of Investigation Reports completed within 21 days of initiation date;
  • Percent of batches without investigations;
  • Percent of samples delivered within -5/+3 days from shipment;
  • On-time product delivery performance.

Wyeth’s team members grade contractors on a quarterly basis in three areas: technical support, customer support and quality responsiveness.

Not a scorecard

At first, CPM made some contractors a bit defensive. After all, in the automotive industry, where Anthony previously worked, scorecards are often used to sever relationships. “It’s not a scorecard process,” says team member Todd Davenport, supply manager. “It’s a management process.”

Contractors were also concerned that CPM would be used mainly as a contract negotiation tool. “They’re now coming to us saying, ‘Here’s how we’re going to get better’” he says. And contractor performance has improved significantly:

  • A pilot contractor improved its rating 130% in the first 10 months;
  • Supply reliability of a core product was maintained while the contractor increased output by 20%;
  • One contractor improved its Service/Value rating by continually submitting cost saving proposals

Version 2.0

CPM’s Version 2.0 will refine metrics, customize them for contractors with unique or challenging situations, and award top performers. One goal this year is to integrate data using the site’s SAP software, to automate data collection and dissemination so that information is more easily distributed to contractors.

Many of the contractors are now instituting performance management programs with their own suppliers, and CPM has become a model within Wyeth. “The payback is a reliable supply chain,” Davenport says. But, he adds, the project “really hones your understanding of how important relationships are, and builds a lot of pride and enthusiasm about what you do every day.”

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