Link Magazine

Issue number 1October 2014

In this edition…

Awards keep on comingPage 3

Elekta global newsPage 3

A vision of excellencePage 4

The inside trackPage 5

The secret of supplier longevityPage 6

Strategic agenda to outgrow the marketPage 8

The magazine forElekta suppliers

Changing LivesElekta has celebrated its milestone 100th Versa HD sale with the launch of a new world-first communications initiative for suppliers.

See page 2

2

Elekta celebrates 100 Versa HD milestone with New Supplier Initiative

Sourcing Team introduce Business Reviews to launch Supplier Relationship Management Programme

The Elekta purchasing team outside Linac House

In April, Elekta was awarded The Queen’s Award for Enterprise in the International Trade category for the third consecutive year.

The country’s highest accolade for business success is presented each year by the Queen on the advice of the prime minister, who is assisted by an Advisory Committee that includes representatives of government, industry and commerce, and the trade unions.

The Queen’s Award for International Trade acknowledges Elekta’s third-consecutive year of continuous improvement in the company’s overseas sales. Exports have more than doubled over the last six years.

Bill Yaeger, Elekta’s Executive Vice President, Oncology, said: “We felt last year’s second award was a historic moment. But to receive our third consecutive International Trade award – and sixth Queen’s Award in total – is an exceptionally proud moment for the company.

“Crawley is where the life-changing digital linear accelerator first fulfilled its commercial destiny. The management and staff here are committed to maintaining the intense pace of innovation that has made Elekta and Crawley renowned the world-over for excellence in radiotherapy.”

This award is the latest in a series of accolades for Elekta this year. In March, Elekta won the award for Supply Chain Excellence at the prestigious annual Gatwick Diamond Business Awards 2014 in recognition of its engagement supporting local industry.

Bill Yaeger, said, “The Supply Chain Excellence award is another wonderful recognition of all our efforts here in Crawley. Everyone at Elekta is acutely aware of how important our supply base is to us. This award is for everyone who comes together to make Elekta such a dominant force in the global radiotherapy market.”

Elekta also won the Made in the South East awards and an Institute of Export award.

Awardskeep oncoming

“an exceptionally proudmoment for the company”

Bill Yaeger, Executive Vice President Oncology, Elekta

Mesi Medikal AcquisitionElekta has acquired Mesi Medikal A.S., a leading distributor of radiation oncology solutions in Turkey. The acquisition significantly strengthens Elekta’s market position in a country with a shortage of radiotherapy devices and software and a growing incidence of cancer.

Around 100,000 Turkish patients are estimated to need radiotherapy each year – a figure expected to reach approximately 170,000 by 2023*. Elekta will increase its commitment to this high-growth market by establishing an office in the country, staffed by Mesi Medikal’s current employees.

The Christie Hospital joins Elekta and Philips research consortiumElekta (NSE:EKTAb) and Royal Philips (NYSE:PHG, AEX:PHIA) announced today that The Christie NHS Foundation Trust (Manchester, UK), a specialist cancer center, will join a consortium whose mission is to develop the clinical value of an integrated magnetic resonance imaging (MRI) guided radiation therapy system. Such a system would, in principle, improve the practice of radiotherapy via real-time visualization of cancer targets.

Uppsala University Hospital and Elekta to further cancer research in SwedenUppsala University Hospital (UUH) and Elekta today announced that they have signed an agreement to jointly work at the forefront of imaging in cancer care research.

With this research agreement, Uppsala University Hospital and Elekta seek to contribute to the field of personalized care by using Magnetic Resonance Imaging (MRI) and Positron Emission Tomography (PET).

Elekta to bring big data analytics to oncology and radiosurgery registriesElekta has selected Birst, the global leader in cloud-based business intelligence (BI), to help clinicians, researchers and business managers exploit the potential of big data in their decision making.

Elekta’s health care analytics will bring together clinical, financial, administrative and operational data from Elekta’s and other systems across the cancer care continuum to drive personalized care. By delivering a comprehensive solution that handles everything from data extraction to rich visualization capabilities, Elekta will give users access to real-time clinical and business dashboards, standardized and ad hoc reports, and customized views. This enables them quick and easy access to information – with the objective to drive better patient outcomes.

In FiguresElekta’s annual report for 2013/14 can be downloaded from the Investor section on the Elekta website – www.elekta.com

ElektaGlobalNews

Business Reviews are a major vehicle for sharing knowledge and enabling consensus for all Elekta supplier-related

activity. They’re just one element of the Elekta Supplier Relationship Management programme.

Purchasing manager Steve Reynolds said, “Our supply chain is one of our most important assets here at Elekta. That’s why we work so

hard to improve the way we interact with our suppliers, and that’s where the Supplier Relationship Management (SRM) programme comes in.

“It helps us to identify who our key suppliers are using evaluation criteria; it brings consistency in the way we engage with suppliers using standardised meeting formats; and it offers

It’s been another incredible year for industry and business accolades for Elekta.

Many Elekta suppliers have now had a unique opportunity to discover more about the business, share best practice and ensure equal awareness of critical activities.

Link | The magazine for Elekta Suppliers

3

Changing Lives has already been piloted within the Elekta Crawley site to empower staff and foster inclusivity.

It celebrates the massive impact of Elekta teamwork on the global healthcare sector with a range of collateral communications material and online hubs encouraging a new dawn of transparency and awareness amongst valued staff.

Now, in another first for Crawley, Elekta UK suppliers will now be the first in the world to be included in the Changing lives initiative.

Bill Yaeger, Executive Vice President Oncology, said, “With so many innovations

and business successes, Changing lives is already playing an important role in inspiring and motivating staff within the Elekta business. But now it is time for suppliers to enjoy the fruits of this fresh new approach.

“At a time of massive global success, it is important that everyone shares in our achievements; employees and suppliers alike.”

The new Suppliers’ Changing Lives initiative comes at time when Elekta is already outstripping the market for R&D investment: Cancer rates rising 3-4% whilst business growing by 7%. The unique relationship between in house expertise and outsourced

skills continues to bear fruit with the world’s fastest MLC Agility powering the successful new Versa HD treatment system.

Changing Lives aims to keep everyone in the extended Elekta family up to speed with the daily evolving landscape in global healthcare and cancer treatment. An evolving new range of updates, events and online and offline publications like LINK will encourage two-way communication at all levels.

Bill adds, “We have so much to celebrate. And. like all businesses, we have much to learn. Changing lives helps us inform and listen like never before.”

huge opportunities to discuss strategic, tactical and practical issues.”

Business reviews ensure insight and awareness into critical activities. And the discussions challenge and often lead to improved understanding and further opportunities. Where appropriate it also encourages executive level engagement – an aspect actively promoted to top tier suppliers.

Many aspects of this approach have now been employed, and the adoption of SRM is a natural evolution which will provide greater structure and visibility in the way we engage with our supply chain.

“At a time of massive global

success, it is important that

everyone shares in our achievements;

employees and suppliers alike.”

Bill Yaeger,Executive Vice President Oncology, Elekta

Link | The magazine for Elekta Suppliers

Crawley has a proud history for innovation in radiotherapy stretching back to 1949,

pioneering many oncology treatment firsts.To innovate and develop equipment that

will improve millions of lives we need space and modern facilities. With over 350 of our 900 plus Crawley staff solely dedicated to innovation, we work with many academic institutions and hospitals, not only in the NHS, but from around the world. We needed to develop an international innovation campus. Our focus was to work with the best clinicians and experts to develop new ideas, technology and hope in the global fight against cancer.

Working with a selection of leading architects, design and environmental experts, Elekta are looking to create a contemporary, sustainable and functional centre of excellence. We need to develop a state-of-the-art campus that will give our staff the facilities to develop the

next generation of cancer treatment machines and attract and progress high calibre individuals by providing a modern, comfortable, efficient and inspiring working environment.

The design will incorporate the latest inarchitectural and environmental design including:• Large modern flexible floor spaces to allow

large multi-national project teams to be accommodated on single floors.

• Cutting edge design for research and demonstration making the most of light and space, taking the opportunity whenever appropriate to use environmentally friendly sustainable materials in its construction.

• Modern communal facilities, where we can host Elekta, local business and international medical business events.

For more information visitwww.cornerstonehub.net

Elekta linacs treat over 1,000,000 patients every year around the world. Elekta’s global oncology business is headquartered in Crawley, which also serves as the home of our European business.

A vision of excellence

“You really start to geta sense of what a

significant landmarkthe building will

become”Bill Yaeger, Executive Vice President,

Oncology, Elekta

Hi Mark, What do you do at Elekta?For every company that I’ve worked for

the role of purchasing tends to differ. It’s never consistent. It’s very broad for Elekta. There are a lot of diverse activities that fall under my area of responsibility.

We own the strategic relationship with the supply chain and look after all the commercial activity from a purchasing perspective. That includes all the contractual elements and, most importantly, managing those supplier relationships.

I also have responsibility for all the supplier performance activities. Because we are a manufacturing organisation we place a great deal of emphasis, in fact all of it, on receiving quality parts from our supply chain. We don’t inspect the quality in, which means we place the onus on the suppliers to supply quality parts.

There’s a sizeable SQA (Supplier Quality Assurance) and Supplier Development function here. We have an engineering change function to help us manage product development.

We have engineering support which looks after lean activities, and value engineering and which monitors our internal performance. We support the development of new products with our NPI team (New Product Introduction) and also benefit from a dedicated R&D Purchasing team. We have a small group looking at purchasing materials and services for the Crawley site as well. On top of that I have an indirect reporting responsibility for teams in Germany and China.

That’s what I mean by diverse!

What do you enjoy most about your role?There’s nothing I don’t enjoy about my role.

I was with Thomson Reuters in the City for 10 years before I came here. It was a completely different beast. A very large global corporation with completely different challenges, compared to a manufacturing organisation. There are many things I get involved in now which I haven’t done for a while which makes my typical day very interesting and challenging.

I love taking the team forward; working with them to develop ideas and introduce new concepts, all the time, understanding and measuring our progress.

What are the biggest challenges you face in your role?

Honestly? This is an organisation that has grown very rapidly and the infrastructure is catching up with that growth. That’s not necessarily a bad thing because there are always plenty of opportunities to really make a difference.

We’ve seen a good pace of positive change over the last 18 months and I hope that continues.

How do suppliers buy in to the Elekta difference?I suppose when I first arrived I was a little

cynical. I wondered if people really cared about what we manufacture as much as I’d been told. They’re often making a component that goes into a remote end product after all. But I’m really impressed that everyone has a level of awareness about what the end product actually does and just how important our cancer solutions are for the end customer – the hospital patient.

We’ve done a lot of good work in the past year with our programme to introduce the staff from our key supplier’s to Elekta. We’ve encouraged suppliers to bring particularly shop floor staff who wouldn’t normally get an opportunity to visit.

We show them what we make and help them understand a little more about the finished product. That’s worked well for us because it gives people a real sense of the value we deliver.

What advice would you offer to suppliers to help make the most of their relationship with Elekta?

We place a great deal of emphasis on the quality of our end product, so any Elekta supplier needs to acknowledge their responsibility to partner with us to deliver that quality product.

It’s not as prescriptive as in other places I’ve worked. It’s not as simple as just making something to drawing.

4

The inside track withMark Rye Weller

Elekta Global Purchasing Director Mark Rye Weller joined Elekta 18 months ago. His 30-year career has seen him enjoy purchasing roles at British Gas, GEC Marconi, Siemens and latterly Thomson Reuters. Each role has required Mark to get up to speed very quickly in a different industry. It’s a skill that has stood him in good stead for his remit here at Elekta.

It’s about flexibility and a willingness to develop. We work closely with our suppliers to achieve this. Our relationships are strong and we expect our suppliers to partner with us. We have a significant record of growth and so far these strong relationships have worked very well for us and of course for our suppliers.

Even though we produce such technically complicated components and equipment, our supply chain issues are thankfully few and far between. That flexibility and accountability means we can work very quickly with our supply partners to do something about it should issues arise.

Even in the short time I have been here I have seen some big improvements in supplier performance. To enable these improvements we’re doing a lot to improve how we work with our suppliers. We’re upgrading our ERP System, implementing a Logistics Control Tower and taking a long hard look at improving our material planning and demand forecast accuracy.

We need our Supply Chain to be responsive to this, and we need suppliers to continue to take up opportunities when they occur for them to improve their performance as well.

Ultimately I’d say, work with us as we continue to evolve. We are implementing a lot of changes and improvements at the moment to make life for our Supply Chain that much easier and more rewarding.

5

The secret ofsupplier longevity

Muffett Gears’ evolving importance as a key Elekta supplier is no overnight success story. Over more

than 30 years, the Tunbridge Wells based precision engineering subcontractor has wooed successions of managers and buyers from EK Cole, MEL, Philips Medical and, latterly, Elekta.

The journey has seen both supplier and customer enjoy changes and success as Tony explains, “The Elekta business has grown significantly through the years we have dealt with them. We enjoy the fact that the business continues to grow, year on year, irrespective of the global economic situation. It is fairly recession proof and every supplier enjoys having customers who are doing well. That’s what we need!

“Our company has grown almost in parallel with Elekta. We’ve grown year on year for the last 10 years. The last four or five years we have enjoyed 10% growth each year, which is good

going in the manufacturing sector.“We’re a family business with 45 staff. We’re

all highly dedicated and highly skilled. Like all our customers, we try to give Elekta exactly what they want and thankfully they keep coming back.”

Muffett Gears make kits of parts, which are supplied to Elekta for building their machines. The majority of work for Elekta includes in-house manufacture of gears, gearboxes, mechanisms and assemblies and these assemblies are then fitted with electric motors, wiring etc., which are supplied to Elekta for inclusion in some of the most powerful digital linear accelerators on the planet.

The relationship with Elekta has inspired and coincided with transformations in efficiency and specialisation throughout the industry, as Tony continues, “As a company 30 years ago, we employed more people – as many as 50 or 60 – but our turnover was smaller.

Today, machinery has improved, offering many manufacturing efficiencies, so we don’t need quite so many people.

“We have core expertise in small, high precision engineering and as a result of this expertise and skill, we have several customers in the medical sector.

“We also supply many other industries, including Aerospace, (we have AS9100 Rev C approval), TV Camera control, Hydraulic Pumps, etc. That level of specialisation powers our referrals through reputation in each industry and our work and unique skills encourage the lifeblood repeat business, which gives us security and helps us to grow.”

Tony believes the amount of work both parties put into understanding each other’s business has fuelled the success of the customer-supplier relationship. However, there are other reasons why working for Elekta has a special place in the Muffett portfolio, Tony adds; “One great example is that Elekta invite us to take our Apprentices and other members of our shop floor staff for site visits. It’s very important for everyone to understand where our work fits it. I think we take even more interest in the Elekta work because we feel so involved and understand precisely how our parts fit into the bigger picture. Where is goes and what it does.

“But our work with Elekta goes a bit deeper than that. Everyone knows someone who has been touched by Cancer. You can’t help but feel it’s worthwhile to play a part in that fight. We

Link | The magazine for Elekta Suppliers

In six years, Muffett Gears will celebrate its centenary. For almost a third of the company’s lifetime, Muffett have supplied Elekta and several others of its predecessors, here in the UK. So, who better to discuss the secret of supplier longevity and its business benefits than Muffett Gears Managing Director, Tony Smith.

treat it as very much the most important thing we do. The manufacturing standards don’t change, but the context is different, and because we’ve been doing it so long, we take great pride in what we do.”

What tips would Tony give to a new supplier hoping to build or maintain a profitable new relationship of their own? “We have regular meetings with senior buyers and engineers and we try to sort out issues, whilst adding value in other areas. For us, it’s all about understanding client needs. Elekta are always innovating, occasionally we will encounter needs, which we currently can’t manufacture. It might need a special machine. We’ll often invest in the machinery we need to deliver new excellent engineering solutions for Elekta.

“Elekta have some incredible engineers. They’re relentlessly innovative and a global

leading in a growing market and the fight against cancer. The South East needs companies like Elekta.

“I don’t feel the region always gets the balance quite right between services and manufacturing. We can only survive on what we make or grow and we need companies like Elekta to keep the region competitive and maintain our global reputation for engineering excellence.”

“If you’re lucky enough to supply Elekta I’d say ‘look after them’. Because in the long term, as we have shown, Elekta will be a wonderfully loyal customer and we’re very proud to do the work we do for them.”

Find out more about Muffett Gears atwww.muffettgears.co.uk

“The South East needs companies like Elekta”Tony Smith, Managing Director, Muffet Gears

6 7

Speaking at The capital markets day in Stockholm in June, he elaborated on the market opportunity for Elekta,

particularly in emerging markets, which account for 35 percent of its business, and gave insight into a research-based market model that Elekta uses to calculate global growth levels.

Savander also outlined four strategic focus areas: Innovation Leadership, Commercial Transformation, Life Cycle Management and Grow the Pie. “Our Innovation Leadership will continue with increased attention to software and business model innovation. Commercial Transformation is about the capability of selling solutions as well as order-to-cash management. Life Cycle Management is about leveraging the installed base in order to optimally capture value. And Grow the Pie is about the potential for radiation therapy to take a bigger share in the cancer care continuum.

“These four focus areas are the core of Elekta’s strategic agenda, which will enable Elekta to

continue its growth track record and leadership in radiation therapy and brain disorders,” he added.

“For this fiscal year net sales is expected to grow by 7-9 percent in local currency, including a weak first quarter,” he said, while stressing the importance for Elekta to continuously work to improve efficiency. Programs related to this were announced in the year-end report on May 28, including a restructuring program of SEK 100 million.

Elekta CFO, Håkan Bergström, restated the target of a strong growth with increased profitability. He explained how Elekta will continue to leverage on the fixed cost base. “We will focus our efforts on becoming more efficient in our commercial processes,” he said. “We target to reach net working capital of 10 percent of net sales within two years”.

Bergström reiterated that cash conversion is targeted to return to around 70 percent for fiscal year 2014/15.

The new Elekta President and CEO, Niklas Savander, has underpinned the company’s ambition to return to growth levels above 10 percent. “The growth drivers behind radiation therapy are striking. Elekta is very well positioned to capture the potential,” he said.

New Elekta President reveals strategic agenda to outgrow the market

Link | The magazine for Elekta Suppliers

“OurInnovation Leadership

will continue with increased

attention to software and

business model innovation.

Niklas Savander,President and CEO, Elekta

Other capital markets day highlights included:

• Strengthened market position in North America; consolidation benefits Elekta

• Strong drivers for long-term growth intact in Asia Pacific

• Continued success in China, the company’s second largest market, with over 50 percent market share

• Leader in established and emerging markets in Europe & AFLAME

• Clinical benefits of MRI-guided radiation therapy look promising; recent progress includes an expanding consortium

The capital markets day was held on June 17 in Stockholm.

The presentations and video replay are available on www.elekta.com/ir.

Link | The Magazine for Elekta SuppliersIssue 1 | October 2014Published by ElektaEmail: [email protected]