Resource Management at Philips-Respironics: Optimizing Allocation and Prioritization

Situation Overview

Philips-Respironics Critical Care is a leading developer and manufacturer of medical devices for hospital respiratory care. Respironics was acquired by Philips Healthcare in 2007 and reports annual revenue exceeding $300 million. Respironics’ research and development efforts are conducted by a staff of 400 in Carlsbad, California, and Wallingford, Connecticut.

Like many engineering organizations, Respironics used to rely on ubiquitous project management software to guide the product development process. However, the company discovered that the resource management component of its project management software did not provide the level of resource visibility and production efficiency it needed.

While common project management tools serve Respironics well, the company realized that the resource planning capabilities of these applications are limited. As a result, company personnel often resorted to spreadsheets as their human resource allocation plan of record. This informal and unstructured process, while marginally functional, was prone to errors, and, more critically, information contained in these spreadsheets was available only to a small number of managers in the impacted engineering departments. For a growing company with several products and multiple facilities, the situation was untenable.

Michael Duich, Vice President of Research and Development at Respironics, was very aware of the limitations and risks involved in using ad hoc tools for the critical task of forecasting and managing demand for human resources. Prior to joining Respironics, Duich was responsible for program management and R&D at another company where he managed a shared resource pool of 400 people across multiple business units and locations. In that position, Duich determined that informal resource allocation practices were adversely affecting his company’s ability to compete and acquired the PDWare resource planning application from Portfolio Decisionware to manage all engineering resources.

PDWare, a resource management software application, enables enterprises to plan, allocate, and manage human resource demand across business lines and physical sites. It consolidates resource and skill demand at the project level, unlike the microlevel scheduling approaches that limit traditional project management and project life-cycle applications. PDWare allows companies to make allocation decisions based on project priority using fresh, credible, resource supply-demand data.

Prior to the adoption of PDWare at his former employer, Duich observed that “all of the business units thought they had access to all the people. So, I was looking for a more general product life-cycle management tool, specifically looking for how do we solve this resource management issue that I had been handed. However, the PLM tools are complex and to fulfill our requirements we would need to modify existing processes to fit the tool.” A similar scenario presented itself at Respironics. Based on his experience, Duich knew that the PDWare platform could be implemented rapidly and with minimal impact to existing processes.

 

The Approach

Solution Selection

Under Duich’s direction, Respironics embarked on a review of resource planning applications. Duich’s team soon discovered that, while several tools were capable of delivering the required functionality, most of the enterprise-class applications were expensive and too complex to ensure adoption throughout Respironics. Moreover, deploying these tools would undoubtedly require significant customization and modifications to existing workflow processes, further increasing costs and delaying implementation. PDWare, on the other hand, uses a familiar Microsoft Excel user interface and required no customization.

According to Duich, “PDWare has a user interface that end users can relate to because everybody uses Excel. Also, PDWare is focused on one issue: resource planning.” The common Excel user interface is an important feature of PDWare because it enables rapid and broad deployment across corporate disciplines. The adoption process was not viewed by managers as arduous, partly as a result of PDWare’s ease of use.

Based on his past experience, Duich knew that PDWare would meet Respironics’ resource planning objectives. Following the company’s internal application review, Duich became a “repeat customer,” and Respironics selected PDWare’s resource planning tools.

 

Business Value

Today Respironics is using PDWare to manage its entire portfolio of human assets across all locations, including contractors and temporary engineering workforce. The single resource pool makes all engineering personnel available on an as-needed basis. This level of visibility has helped Respironics not only staff specific engineering projects but also avoid unnecessary full-time hires.

Duich articulates the scenario well: “There are situations when we require three electrical engineers, yet we have only two available. Do we increase full-time staff for a project that has a clear end date, or do we go outside the organization? PDWare allows us to reach consensus on these types of matters quickly.” Furthermore, PDWare helps decision makers at Respironics determine whether the company should insource or outsource tasks or, alternatively, whether it should purchase rather than develop subsystems.

According to Duich, “PDWare allows us to play ‘what if’ scenarios much more quickly and efficiently than if we were trying to do the same using a collection of spreadsheets. PDWare allows us to change the priority based on data-derived facts. Coming to conclusions related to alignment of priorities and the sequencing of events would not be possible less a common and accessible platform such as PDWare.”

Project prioritization at Respironics has improved since the inclusion of PDWare. Duich says, “PDWare allows managers to look across the company and determine what the agreed-upon priorities of the organization related to product and technology development are. Via PDWare we are able to quickly determine where skill deficits may reside and where and how certain competencies may be repurposed. The flexibility to make adjustments across the portfolio based on clear data is very valuable.”

It is apparent that improved resource allocation and prioritization intelligence are allowing Respironics to understand and manage risks better. PDWare helps managers understand the impact of shifting scarce resources from a lower-priority project to support high-priority initiatives and the impact of project delays on the rest of the portfolio. According to Duich, “even though you may have a product that’s going to show up late [to market], at least it’s predictably late.”

Though Respironics has not yet established data exchange between PDWare and its SAP ERP system, the company believes that there are benefits in integrating intelligence gained from PDWare into other applications. Respironics envisions a single interface providing unified access to data from the ERP system, PDWare, and the project management platform to provide even greater planning and execution intelligence.

 

Conclusion

Today Respironics is using PDWare to manage its entire portfolio of human assets across all locations. Though other tools may still be in use, primarily to give managers individual flexibility within their own group, they always transfer internal group information into PDWare, which maintains the company’s single verifiable system of record.

Data-driven demand and allocation intelligence are critical for sustained growth in resource- and capital-constrained portfolios. Although Respironics did not quantify the financial benefits of using PDWare, the company believes that PDWare serves a key role in making informed resource allocation decisions and increases corporate confidence in making critical market and product planning decisions.

 

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