Please create a high-level masters level PowerPoint (13 slides) with speaker notes on each slide for the following attached HBR case study
Focus on what you think is most important. Imagine you’re a news reporter and you’ve only got time to provide the headlines.
**Please utilize the following Attached PDF case study**
Philips Healthcare: Global Sourcing in a Post-COVID-19 World IMD-7-2223 15.09.2020 PHILIPS HEALTHCARE: GLOBAL SOURCING IN A POST-COVID-19 WORLD So ur ce : R oy al P hi lip s Inès Augier, University of Amsterdam, prepared this case under the supervision of IMD Professor Niccolò Pisani as a basis for class discussion rather than to illustrate either effective or ineffective handling of a business situation. Copyright © 2020 by IMD – Institute for Management Development, Lausanne, Switzerland (www.imd.org). No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means without the prior written permission of IMD. This document is authorized for use only by Kristopher Durham in Capstone Experience IV - Summer 2022 at Wake Forest University Medical School, 2022. www.imd.org IMD-7-2223 PHILIPS HEALTHCARE The healthcare sector faced incredible strain following the outbreak of the COVID-19 pandemic as hospitals around the world struggled to accommodate surges of Corona patients and to protect their healthcare workers. As a global leader in healthcare technology, and a manufacturer of critically needed medical equipment such as CT- scanners and ventilators, the Netherlands-based corporation Royal Philips (Koninklijke Philips N.V.) found itself in the eye of storm. With demand from hospitals surging around the world, Philips faced unique business opportunities and challenges. On Monday April 20, 2020 Philips published its first quarter (Q1) results and hosted its quarterly earnings conference call. CEO Frans van Houten announced during the Q1 results conference that, although on the business-to-consumer (B2C) side demand for the products in their Personal Health portfolio had significantly decreased, the opposite was the case for the business-to-business (B2B) side of their product offering. Due to the COVID-19 pandemic, there had been a strong increase in demand for professional healthcare products and solutions, particularly within the Connected Care and Diagnosis & Treatment business units. Medical equipment order intake had grown by 23% compared to last year, driven by the strong demand for diagnostic imaging, patient monitors and hospital ventilators.1 This prompted a number of questions from investors and financial analysts in the call. An analyst at Morgan Stanley inquired about the visibility Philips had concerning the deliveries of parts necessary to fulfil the order backlog of ventilators, and whether the company had already secured all parts needed to deliver on orders for Q2. Another analyst, at Merrill Lynch, asked van Houten whether the sales forecasts for ventilators were sustainable from a production standpoint. Yet another analyst, at Bernstein Research, wanted details on the expenditures needed to ramp up production and asked whether Philips’ supply chains had enough redundancies in place to ensure manufacturing continuity if any one location were to get hit particularly hard.2 The conference call ended at 10:38, after an hour-long Q&A session with participants. Closing his laptop, van Houten leaned back in his chair and set his glasses down on the desk. It was evident throughout the call that having a future-proofed global value chain was more important than ever for Philips and its investors. This was a critical issue not only for meeting delivery commitments in Q2 and the rest of 2020, but also to ensure business continuity in the longer term. Looking out of his window, van Houten wondered how the COVID-19 pandemic would change the healthcare industry in the coming years and how Philips’ healthcare businesses should adapt. He reflected on the company’s global supply chains strategy, asking himself what could be improved to make the company more resilient against disruptive events in the future. There were several important questions that needed to be addressed sooner rather than later. How would Philips’ Healthcare businesses be affected by the changing industry landscape of the healthcare sector? Were the company’s medical equipment supply chains diversified, flexible and resilient enough? What would be the winning sourcing strategy for Philips Healthcare post-COVID-19? © 2020 by IMD 2 This document is authorized for use only by Kristopher Durham in Capstone Experience IV - Summer 2022 at Wake Forest University Medical School, 2022. IMD-7-2223 PHILIPS HEALTHCARE THE HISTORY AND GROWTH OF PHILIPS Philips was a multinational and multi-industry corporation with a history that went back over 125 years.3 The company was founded in 1891 by Gerard Philips and his father Frederik Philips who financed the set-up of a factory in Eindhoven, the Netherlands, where the firm began manufacturing carbon-filament lamps with just 12 employees. In 1895 Anton Philips, Gerard’s younger brother, joined the family business, and Philips quickly became one of the largest incandescent lamp producers and exporters in Europe. By 1901 the company had produced over 1.5 million lightbulbs. In 1912, Philips became a limited company listed on the Amsterdam Stock Exchange. In 1914 the firm established the Philips Physics Laboratory to study physical and chemical phenomena and hired Dr Gilles Holst – who later went on to invent the low-pressure sodium lamp – as science director. Under Holst’s leadership, Philips’ industrial reach laboratory became a world- renowned center for technical competence and innovation. Beyond incandescent lamps, the laboratory conducted research and produced patents across other areas, such as X- ray radiation and radio reception. In 1916, the company built a factory to produce the glass needed for lightbulbs to avoid dependency on external suppliers. Additional factories were built to produce cardboard, gas and Bakelite, all in Eindhoven. By the end of the 1920s, Philips had become highly self-sufficient, owning virtually all its supply chains from raw materials to the packaged end-product to transportation. Throughout the 1930s, 40s and 50s Philips rapidly expanded its portfolio far beyond lightbulbs, producing vacuum tubes, radios, Stirling engines and televisions (TVs) among many other things. It introduced a number of landmark inventions to the consumer market, including the electric rotary shaver in 1939, the compact cassette tape in 1962, the video cassette recorder (VCR) in 1972 and the compact disc (CD) in 1982 (the CD was co-developed with Sony, with whom Philips also co-developed the DVD which was introduced in 1997). By the 1990s, Philips had become an electronics giant and an international household name. The brand was especially known for its lightbulbs and TVs, but its extensive portfolio included many consumer products including vacuum cleaners, sonic toothbrushes and CD players. In 2001 the company moved its headquarters to Amsterdam while Philips Research, its R&D center, remained in Eindhoven within the High-Tech Campus innovation ecosystem. In April 2011, Frans van Houten took over the position of CEO of Royal Philips, additionally becoming the Chairman of the Board of Management and the Executive Committee.4 At the time, Philips was seeing declining profits in a number of key segments, therefore van Houten was tasked with reinvigorating the business.5 Under his leadership, Philips gained a new strategic focus on healthcare technology with the mission to make the world healthier and more sustainable. As part of the restructuring led by van Houten, the company drastically pruned its portfolio. In 2012, Philips sold its then loss-making television business and subsequently its audio and video business in 2014. Philips Lighting was cut loose in 2016 to become a separate entity, Signify, and in early 2020 Philips announced that the same would be done with Philips Domestic Appliances (e.g., kitchen appliances), which was deemed to no longer be a strategic fit © 2020 by IMD 3 This document is authorized for use only by Kristopher Durham in Capstone Experience IV - Summer 2022 at Wake Forest University Medical School, 2022.