Archive for the ‘Pharma and life sciences supply chain management’ Category

Kinexions, a tale of growth and potential

Published December 9th, 2014 by Trevor Miles @milesahead 0 Comments

building-kinexions-trevor-milesI’m on my way back from Tokyo where I attended our user conference, Kinexions Tokyo, in Japan, just 5 weeks after our Kinexions North America user conference in San Diego. As a side note, I had a stunning view of Mount Fuji from my hotel room on two of the three days I was in Tokyo. I have become so lazy about carrying a camera with me that I could only capture this photo with my smart phone.

If attendance at both conferences is anything to go by, 2015 is going to be even busier than 2014. In both cases we had about 50% increase in attendance over last year. In both cases we had the largest contingent of prospects ever and the largest contingent of partners ever. We also had the most customer presentations with 11 case studies in total including:

• ASICS
• Avaya
• Buffalo Technologies
• Dow AgroSciences
• Keysights
• Schneider Electric
• TE Connectivity
• Qualcomm

Kinexions `14 graphic recording

Kinexions graphic recording

The diagram above captures the essential elements of the San Diego conference in which you can see how important the customer case stories were to the overall conference. What struck me most is the diversity of the industries and the breadth of supply chain maturity represented. Before I comment further on specific stories, let me state that while the destination reached is important, it is the distance traveled that most impresses me. In other words, while I love the stories of the customers that are doing amazing stuff, it is the one that changed the most that really impresses me. For example, you only have to look at the Gartner Top 25 to see that Apple has been number one for the past 5 or so years. Yawn. I’m always looking for the companies that have started low in the ranking and are making rapid progress up the ranking. Change is hard, but change is necessary. It is easy to follow, and a lot more difficult to lead. Or, as Angel Mendez of Cisco likes to say, yesterday’s stretch goal is today’s benchmark.

And our customers are leading the charge in the transformation of supply chain, which is captured nicely in our tagline of ‘Know Sooner, Act Faster’. At the conference, that transformation was captured best by a pharmaceutical manufacturer and Schneider Electric. Their industries couldn’t be more different and their product portfolios and supply chain structures couldn’t be more different. But both were faced with deteriorating market positions a few years back that have necessitated huge transformations in their organizations, with supply chain being at the heart of the change. The pharmaceutical manufacturer was facing a massive patent cliff with many small molecule blockbuster drugs reaching patent expiry and have now made a radical shift into biotechnology. Schneider Electric has grown by acquisition and was faced with shrinking margins because of inefficient and poorly thought out supply chain operating models. Both companies needed to do something radically different. They both chose Kinaxis as the enabler of that change. Both realized that they could not transform their organizations by following the 1990’s supply chain mental model of functional optimization. You can’t cross the Grand Canyon in 10 min by walking. You need a helicopter for that.

Schneider said it best: The speed at which information flows across the supply chain is more important than what gets done with the information at each node in the chain. Now, to be honest, in my opinion they are expressing the area in which they had to make the largest mental leap, the greatest transformation. I would reword Schneider’s statement to state that the speed of information flow is just as important as what gets done in each functional box. In fact, I am not much of a fan of simple visibility solutions. What really matters is the speed of decision making, and that takes more than transmitting information quickly or being able to calculate quickly. You need both. This is the ‘Know Sooner’ part. And you need a third element too. You need to be able to bring people together as a team to make trade-off decisions quickly, as well as capture all the assumptions and provide a full audit trail of the decisions made. This is the ‘Act Faster’ part.

To be honest, our customers typically find it easier to describe the barriers to change and the inefficiencies of their previous operating models, than the new capabilities adopted. And this is true for most companies, and is where Avaya comes into the story, and to some extent Buffalo Technologies. Avaya have turned the value pyramid on its ear to focus on the real value generation of prediction/action/innovation. Dick Ling, the ‘father’ of S&OP said it best: It is far better to be approximately right than precisely wrong. Your data is never going to be 100% correct. You processes are always going to be in flux. Move on. Focus on how people will use the information you have to make a decision that will drive the company forward. At some point speed is quality. Plan. Monitor. Respond. In days, not months. By focusing on speed of decision, and quality of decision, Avaya has posted some truly amazing financial and operational gains. Obviously it is up to Avaya to share these gains publicly.

Avaya Kinaxis supply chain conference slides

Josh Greenbaum wrote a great summary of his impressions of the Kinexions conference in San Diego, specifically the unusually high number of women in attendance. Josh makes the point that it is perhaps our focus on supplier collaboration that draws more women to Kinaxis. If that is true, it is a most welcomed side benefit. To be honest I do think women are better at driving consensus and making compromises through trade-offs. Whether this is true because of nature or nurture is far beyond the scope of this discussion. What is important is the realization that the speed and manner in which people reach agreement across competing objectives is really important, and that it is a consensual process. If women are better at this, then all the more reason to bring them into senior leadership roles to drive change. We need the change. And we need more women in supply chain.

In wrapping up, let me give a quick shout-out to Watanabe-san of Abeam Consulting who presented the keynote in Japan. I ran a panel in San Diego discussing the technology innovations that will drive change in supply chain management. This was theme of Watanabe-san’s presentation, but he did a much better job of giving concrete examples of how these technology changes have already made changes to supply chains. My only (admittedly selfish) wish was that he has used English slides. I could only follow along on the simultaneous translation. For example, he used IKEA as an example of crowd sourcing in supply chain. After all, they are relying on the ‘crowd’ to do the final assembly, which has a radical impact on their cost to manufacture, distribute, and sell their products. What I found interesting was the manner in which he made new terms familiar and less alien, and therefore easier to accept and adopt.

So, all in all, a really positive set of conferences providing a great launch pad for 2015.

 

Posted in General News, Milesahead, Miscellanea, Pharma and life sciences supply chain management, Supply Chain Events


On-demand Webcast: Continuous S&OP for Life Sciences – Breaking the Mold

Published December 5th, 2014 by Melissa Clow 0 Comments

Today’s Friday post is to let you know that we have posted the on-demand version of last week’s webcast on “Continuous S&OP for Life Sciences – Breaking the Mold” (registration required). In this webcast, learn about the unique S&OP challenges for Life Sciences companies, the importance of changing S&OP mindsets, and how to break the S&OP mold from both a process and technology perspective.

Webcast: Continuous S&OP for Life Sciences - Breaking the Mold

 

You can also view the slides that we’ve posted to slideshare:

 

Webcast Abstract
Trevor MilesView the recording of Trevor Miles, VP of Thought Leadership, Kinaxis, as he presents on the following topic.

Business realities have changed so tremendously in the last thirty years that the traditional ‘plan then execute’ S&OP model has become highly ineffective. It is unable to facilitate decision making amid acutely complex supply chain networks, or within the time horizons required. This is particularly true for Life Sciences companies faced with varying regulatory requirements and aging product portfolios.

In response, there is an emerging recognition that operational information must be accessed and evaluated on a continuous basis, whereby decisions that may have once only been considered as part of a scheduled S&OP process can be made as needed throughout the cycle. In this capacity, process execution evolves into operational orchestration.

Watch the recording >>

 

Posted in General News, Milesahead, Pharma and life sciences supply chain management, Sales and operations planning (S&OP), Supply Chain Events, Supply chain management


Kinaxis on the road: 12th American Supply Chain & Logistics Summit

Published November 27th, 2014 by Melissa Clow 1 Comment
SCL Summit

The American Supply Chain and Logistics Summit, now in its 12th year, brings together senior executives from across the Supply Chain and Logistics fields to enjoy an unbeatable mix of networking, expert case studies, interactive debates and master classes over three exceptional days.

Join Benji Green, Director of Global Sales, Operations, Supply and Inventory Planning at Avaya for the Kinaxis supply chain optimization workshop on December 9th. Register using the link below to receive 25% off your registration.

December 8-10, 2014
Dallas, Texas

Learn More and Register for the Summit

Schedule Meeting

 

Posted in General News, Pharma and life sciences supply chain management, Sales and operations planning (S&OP), Supply chain collaboration, Supply Chain Events, Supply chain management


Mentoring, Sponsorship and Quotas: What are their relative merits in bringing more women into supply chain management?

Published May 27th, 2014 by Melissa Clow 0 Comments

Next week, June 5, 2014, we are excited to host a webcast on women in supply chain management.

We have a fantastic panel of accomplished female supply chain practitioners as well as industry expert Lora Cecere serving as the moderator. Register for the webcast to hear them discuss the thorny issues of mentoring, sponsorship, and quotas as mechanisms to get more women into supply chain, and the relative merits and drawbacks of these approaches.

Mentoring, Sponsorship, & Quotas: What are their relative merits in bringing more women into supply chain management?

Event Details:
Mentoring, Sponsorship, & Quotas: What are their relative merits in bringing more women into supply chain management?
Date: Thursday, June 5, 2014
Time: 2:00 PM to 3:00 PM ET

There is a consensus that since women constitute over half of the workforce but just 10% of top supply chain executive positions in Fortune Global 500 companies that something needs to be done to address this imbalance. While a great deal of attention gets placed on the ‘glass ceiling’ concept, there are a lot of women who face barriers and discrimination at mid and entry level positions too.  There is a clear social responsibility need and this panel will focus on the practical advantages to having more women in supply chain including:

  • Do women and men make decisions differently? If so, why does this matter to supply chain?
  • Has supply chain become more relevant to women as a career option?
  • What does a career path look like for women in supply chain?

Reserve your spot!

P A N E L I S T S :
Verda Blythe, Director, Grainger Center for Supply Chain Management, Wisconsin School of Business
Laura Dionne, Director, Worldwide Operations Planning, TriQuint
Elisabeth Kaszas, Director, Supply Chain, Amgen Inc.
Shellie Molina, VP, Global Supply Chain, First Solar

M O D E R A T O R :
Lora Cecere, Founder, Supply Chain Insights

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Posted in General News, Pharma and life sciences supply chain management, Supply chain collaboration, Supply chain management


7 Life Sciences Supply Chain Processes That Require an Integrated Approach

Published April 7th, 2014 by Trevor Miles @milesahead 0 Comments

The emerging or intensifying industry dynamics that I discussed in an earlier blog post, along with significant shifts in strategy, are having a direct and material impact on the way Life Sciences supply chains must operate. The compounded effect of a host of complexity drivers is creating the need for supply chain transformation. By satisfying the following seven supply chain processes in an integrated manner, Life Sciences teams will be better equipped for success in today’s new, complex world.

  1. Collaborative launch management – clinical, regulatory and commercial
  2. Jurisdictional control to respect regulatory needs during planning
  3. Consensus demand planning across affiliates and countries
  4. Risk evaluation and recovery to deal with shortages and FDA shutdowns
  5. Shortage analysis and reporting for FDASIA compliance
  6. Supply and capacity planning to balance demand across regions
  7. Expiry management to balance long supply lead times and shifting demand

Let’s take a look at each of these in more detail.

Coordinated Launches

The effective launch of a new product is critically important in any industry, but it is of particular importance in the Life Sciences industry given the long time it takes to bring a new drug to market from discovery through clinical trials and commercialization, with regulatory oversight and conformance throughout the process. When the ‘long tail’ trend is coupled with shorter patent protection, the margin and market captured during the early launch period will be crucial to the recovery of the R&D investment, and thus the pressure to streamline and coordinate clinical trials and the regulatory process with the commercial launch has become intense.

Revenue Trends throughout the Product Life Cycle

phamacutical supply chain graph

Jurisdictional Control

In addition, mandates by regulatory bodies require jurisdictional control of demand satisfaction to account for third country sourcing, validation, and shelf life requirements, amongst others. This requires sophisticated attribute based planning to link demand characteristics to supply characteristics while simultaneously analyzing and reducing expiry risk, especially when inventory postponement strategies are used.

Consensus Demand Planning

For tax, legal, and regulatory reasons, many Life Sciences companies establish semi-independent sales affiliates or subsidiaries in some jurisdictions or sell through third parties. Creating a consensus demand plan across all the affiliates and subsidiaries is not a trivial task. Often, each demand region will forecast in different units (doses, standard packs, grams of API, etc.); almost always in different currencies; at a different cadence (quarterly, monthly, weekly); and over different time horizons. However, manufacturing needs to create a single forecast using a consistent unit of measure so that they can net the demand against available supply and determine future manufacturing capacity needs. To make matters worse, the affiliates are often less than fully transparent about their on-hand inventory.

Risk Evaluation and Recovery (including Shortage Analysis and Reporting)

Current technical architectures do not provide the capabilities needed to address new requirements under FDASIA ̶ reporting obligations for drug shortage issues and more active inspection of production facilities for instance. Information flow is typically limited to EDI exchanges with little or no ability to understand, for example, the impact of an API supply de-commit on future treatment —drug or device— availability in a regulatory region. To do this, Life Sciences companies will require much greater visibility and what-if scenario capabilities to both inspect and affect the global supply chain across Third Party Operators and into the supply base.

Tender Analysis and Management

Many manufacturers lack the required process standardization in manufacturing, inventory and expiry management, and other core business disciplines to make the required trade-offs during tender analysis between demand satisfaction, expiry risk, and constrained capacity utilization, ultimately leading to effective supply and capacity planning to balance demand across regions. Collaboration across the players in the supply chain is often insufficient and inefficient to achieve these tradeoffs. Given the harsh penalties imposed for non-conformance, being able to make the trade-offs to maintain profitability span the life cycle of the tender, not simply the tender acquisition phase.

Expiry Management

Streamlining manufacturing and distribution processes in order to satisfy demand while reducing unit cost is therefore becoming increasingly important in order to maintain profitability, reduce inventories and enhancing competitiveness within the industry. This is especially true given the long manufacturing lead times, often as long as 12-18 months in bio-pharmaceuticals, which lead to the need for expiry risk and stop sell analysis capabilities to balance effective demand satisfaction with efficient capacity utilization.

A New Technology Paradigm for a New World

phamacutical supply chain graph #5Legacy demand planning and supply chain planning systems were not designed for today’s complexities, and consequently don’t meet the many challenges that have emerged. As a result, Life Sciences companies are adopting process improvements and new technologies targeted at removing business “silos,” improving collaboration, and increasing productivity.

For a true breakthrough, you need an integrated solution. People must be able to leverage a single system with one set of data, supported by comprehensive analysis and decision-making capabilities, no matter what the process or the problem.

To keep a finger on the pulse of the supply chain, today’s solutions must:

  • Embrace the reality that today’s supply chains are multi-enterprise in nature and, thus, must provide comprehensive visibility into the extended supply chain to regain an understanding of the manufacturing commitments and inventory positions throughout the supply network. Visibility is an essential pre-requisite for effective orchestration of the business.
  • Proactively bring to light major variances to plan, identifying not only specific events, but also identifying and quantifying the consequences to customer service, revenue, margin, and a number of other financial and operations metrics, and thereby flagging those that could do most harm to the business.
  • Arm decision-makers with scenario simulation capabilities for risk trade-off and response, to model and compare situations quickly and appropriately to ensure a profitable response is put into action. And it must facilitate and incorporate human judgment, since many of the decision requirements are extremely difficult, if not impossible, to capture in a mathematical model — the foundation of an optimization system.
  • Foster collaboration for team-based decisions that tap the collective insight of the right people in the organization — those that understand the potential impact of any event and proposed action alternatives.

 

Posted in Best practices, Demand management, Milesahead, Pharma and life sciences supply chain management, Supply chain management


5 Drivers of Supply Chain Complexity in the Life Sciences Industry

Published March 31st, 2014 by Trevor Miles @milesahead 0 Comments

I’ve attended several Life Sciences events recently (including Biomanufacturing Summit) and it’s quite clear that these supply chain teams are working in a new, complex world. Not only do they need to meet diverse customer expectations, but they need to do so while coordinating an extended supply chain, in an environment that is constantly changing. Additionally, they’re faced with a set of five industry trends that are driving complexity even further.

1.       Exceedingly Distinct Markets

Through accidents of history and industrial capabilities, the Life Sciences industry has developed to satisfy principally the diseases of the affluent West, such as cardiovascular disease, diabetes, respiratory disease, and obesity, while paying less attention to the diseases prevalent in the developing world, such as malnutrition, malaria, HIV/AIDS, and TB. This has led to a drug market segmented by geography and demographics, with companies in the emerging markets focused on satisfying the ‘local’ diseases. But in recent years, with the rapid expansion of the middle class in many emerging economies, many of the ‘Western’ diseases are increasing rapidly in the middle classes of the emerging markets – for example diabetes in India – stretching local healthcare provision while opening opportunities for expansion into these countries. While at the same time innovations by companies in emerging markets are challenging the market leadership of well-established Life Sciences companies in the West.

2.       Increased Outsourcing

With tremendous opportunities for growth in emerging markets, many manufacturers have executed aggressive globalization and outsourcing strategies, while relying increasingly on Third Party Operators (TPOs) in India and China for Active Pharmaceutical Ingredient (API) supply and subcomponents, or even the manufacturing of complete devices. Coming along with these shifts is an increase in business complexity and supply chain risks given the varying regulations across global supply chains and longer and riskier supply chains.

3.       New Regulations

With this rapid increase in the use of TPOs has come added risks to quality and of counterfeiting, leading the US Food and Drug Administration (FDA) to push for the passage of the Safety and Innovation Act (FDASIA), which focuses on the risks inherent in an increasingly global Life Sciences supply chain. Much of the public comment has been on the two user fee reauthorizations, as well as two new user fee programs, and the reauthorization for pediatric research. But buried deep in the text are provisions for supply chain validation – in both domestic and off-shore plants – and drug shortages that will have a profound impact on outsourced and global supply chains.

Stefanie Johns, Ph.D., Program Manager, Xavier Health Initiatives, commenting on conference sessions at Xavier University, states that:

“The new powers from FDASIA will level the playing field between foreign and domestic sites, enhance transparency and collaboration with foreign regulators, and shift focus “away from the border to a global safety net.” FDASIA also provides the FDA with new tools to destroy counterfeit products, misbrand products on the basis of inspection refusal, and deliver criminal penalties for intentional adulteration. In order to streamline resources, the FDA will be moving towards a risk-based inspection system and will work with foreign regulatory counterparts.”

In summary, the impact of FDASIA on the Life Sciences supply chain will come from provisions for:

  • reporting of drug shortage issues, and the penalties associated with not informing the FDA;
  • and more active inspections of production facilities, including sites in other countries, including those belonging to Third Party Operators.

 

Outsourcing in the Pharmaceutical Industry

phamacutical supply chain graph #1Source: Frost and Sullivan Global Bio-Pharma CMO Market Report,“ May 2010

 

4. Shift in Treatment Focus

One side effect of FDASIA is the fast-tracking of approval for treatments that address an ever narrower spectrum of diseases. Of particular importance to rare disease patients, and likely to help encourage further investment, is the Breakthrough Therapies Act addressing the need to provide expedited development and evaluation of potential therapies that show promise early in the research process; and the Therapeutics for Rare and Neglected Diseases which aims to encourage and speed up the development of new drugs for rare and neglected diseases.

Included in the Breakthrough Therapies Act is a voucher system that allows companies developing rare pediatric diseases to obtain a transferable voucher which they can use for the expedited approval of another treatment, whether that treatment satisfies the requirements for priority review or not.

The trend to ever more targeted products is widespread across most industries whether Life Sciences, High-Tech/Electronics, or Consumer Goods. In the past, the limited markets coupled with the fact that many of the patients were in less affluent areas of the world, were a disincentive to major Life Sciences companies that were addressing a large set of diseases with broad spectrum therapeutics. However, with many of the major disease categories covered effectively by existing treatments, combined with the fact that a) many treatments are reaching the end of their patent protection period, b) growing competition from generics, and c) increasing scrutiny from regulatory bodies have all led to a rapid shift in focus of research, as well as mergers and acquisition activity toward rare diseases. (While there isn’t a universally accepted definition of a rare disease, the US government defines a rare disease as one afflicting fewer than 200,000 Americans, while the European Union defines a rare disease as one afflicting fewer than 1 in 2,000 people.)

 

Innovation versus Cost

phamacutical supply chain graph #2

 

A report released by the Pharmaceutical Research and Manufacturers of America (PhRMA) in 2011 emphasized the extent of this shift away from broad spectrum drug research focused on diseases with large patient bodies to narrow spectrum drugs focused on rare diseases. According to the PhRMA report there were a record 460 medicines for rare diseases either in clinical trials or awaiting FDA review at the time the report was published.

To overcome the economic barriers associated with the discovery and development of diagnostic equipment, drugs and devices to treat rare disease, big Life Sciences companies have been pursuing collaborations, acquisitions, and joint ventures, often with companies in India and China.

This search for ‘long tail’ drugs will mean that Life Sciences must also deal with increasingly complex demand patterns. They have to simultaneously deal with predictable patterns for mid-life cycle products and highly unpredictable patterns for new introductions. They typically have to manage both low volume, high mix products that require quick response for clinical trials and high volume products that require ramped production and global delivery capabilities. phamacutical supply chain graph #3

5.       Shorter Patent Protection

An aging product portfolio, along with a future of shorter patent periods in general, with limited opportunities for patent extensions (as demonstrated by the recent challenge by the Indian government of patent extensions based upon reformulation), only serves to reinforce the critical requirement for supply chain efficiency and effectiveness, in order to capitalize fully on the opportunities while they exist.

These industry trends are having a significant impact on the way supply chains must operate. And unfortunately, there is growing evidence that existing technology architectures are not satisfying the capability needs for this new, complex world. In an upcoming blog post, I’ll be looking at seven supply chain processes (including jurisdictional control, expiry management, supply and capacity planning) that require an integrated approach to overcome these complexity drivers.

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Posted in Inventory management, Milesahead, Pharma and life sciences supply chain management, Sales and operations planning (S&OP), Supply chain management


On the road again! LogiPharma Europe – April 8-9, 2014

Published March 25th, 2014 by Alissa Hurley 0 Comments
_Trevor Miles

Trevor Miles, vice president of thought leadership and industry principle, life sciences

We’re excited to be participating in LogiPharma Europe 2014 in Basel, Switzerland!

This year’s conference is focused on Supply Chain as a Customer Centric Function.

Join us for a roundtable discussion on April 8th on how to leverage the cloud to achieve true innovation in supply chain management. And, on April 9th, Trevor Miles is leading a session entitled Continuous S&OP – Breaking the Mold. In this session, he will discuss how business and technology has changed tremendously in the thirty years since S&OP was first defined, enabling much more proficient and integrated S&OP processes. Trevor will describe how companies are breaking the traditional S&OP mold from both a process and technology perspective.

During the conference follow hashtag #LogiPharma  and stop by the Kinaxis booth #21 to meet with the team and learn more about how Kinaxis has helped life science companies adopt process improvements and technology targeted at removing business “silos,” improving collaboration, and achieving significant operations performance breakthroughs. Find out more about RapidResponse for life sciences at: http://kinax.is/pharm.

More about the conference:
LogiPharma is the ONLY VP-level, end-to-end supply chain event for life science professionals, focusing on strategic and tactical improvements for Europe & the rest of the world. It caters to professionals from across the spectrum of innovative pharma, generics, animal health as well as bio tech companies, tackling the most relevant, pressing challenges and opportunities present in the industry

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Posted in General News, Milesahead, Pharma and life sciences supply chain management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Biomanufacturing closely tied with supply chain

Published February 10th, 2014 by Nazli Erdogus 2 Comments

With regards to the continuous efforts in pharmaceutical industry, we certainly see a great improvement in the US, California and how much the 632% increase in employment between years 2006 – 2011 has brought substantial growth to the sector.

Some of the main reasons of this improvement between R&D to prescription phases are due to the investments for enhanced technologies used in R&D, effective manufacturing techniques, and certainly the efforts towards a more efficient supply chain management. The latter one, supply chain management actually goes hand in hand with manufacturing, even though we don`t get to hear a lot about its importance.

I greatly enjoy following new trends and hearing about recent developments in industries. I was in San Diego at the Biomanufacturing Summit last week and had great conversations with people from different pharmaceutical companies, had the opportunity to view the industry trends, hear about some pain points, and even discovered beer making process as part of a facility tour (you wonder how this is related to pharmaceuticals? Well, after all, beer manufacturing is just another type of fermentation!).

It`s always amazing to see how manufacturing follows a common path among different industries. At the conference, I kept seeing in the workshops the terms lean, agile, kaizen, 6S, Toyota Production System. As much as these terms can be more applicable towards a manufacturing environment, I really liked to see that the pharmaceutical companies are trying to apply the best practices both from each other and from different environments. This can be limited to the manufacturing technologies today, but will certainly extend to other areas like supply chain. Having said that, referring to my previous statement about manufacturing being hand in hand with supply chain, some of the information – mostly where pain points are today – I captured from the conference below proves how valid this is:

  • Cost and speed are still today`s challenge.
  • Speed generally becomes an issue from development to the marketing of the product.
  • Cost opportunity is very much volume driven, which is derived from an accurate estimate of demand forecast.
  • Forecast is never right so capacity never remains accurate.
  • Long lead times to build the product have a big impact on cost, so always need better CMOs.
  • New CMOs are in general willing to make investments to improve in order to secure market place but not the old ones.
  • Cost, scheduling, quality are three elements of the triangle leading to challenges.
  • Tradeoff between cost and quality is not a good mindset – today`s cost saving solution may become tomorrow`s compliance problem.
  • Commercial and technical life cycle management for pharmaceuticals is resource intensive to fix problems as you face them.
  • Continuous improvement is critical, cannot only rely on periodic improvements such as 6S/lean project based approaches.

So just from there we see that applying lean in manufacturing is not sufficient on its own. Some keynote speakers mentioned productivity measures varying according to the product. As an example, there is an increased yield on the drug substance side whereas on the drug side it`s much smaller. However, you can think about how you can match the type of cost where you need to deploy a lower cost of production (i.e. through selecting local vendors). Also, in terms of capacity problems, there was a really good example when I got to chat with a master planner. She talked about having two reactors with x and 2x capacity in their facility defined as constraints – you can imagine how big of an issue this can be if not communicated and/or planned properly at a supply planning phase of your S&OP cycle. Let us look at it at a more detailed level, you`ll likely need to change equipment as you are switching to a different reactor too. As much as it sounds simple, it`s a basic problem that many industries are facing today. That is exactly where a well maintained supply chain management comes into play, also creating room to reduce costs.

When we think of continuous improvement, a basic approach to it is simply comparing your plans from different times/people/departments without having to manually connect them to one another, always looking to find a better solution and do it in the fast pace as your business requires. This is where RapidResponse acts as the crème de la crème, creating the end to end visibility, the ability to compare multiple plans created in your single instance, and the speed to your entire supply chain like no other software can.

Simply mentioning the capabilities of RapidResponse that can make their lives easier and also create a cost effective management sounded ground breaking for most pharmaceutical companies, especially after talking about how our other pharmaceutical customers made a great use of it improving their supply chain practices. We are talking about over 15-20 manufacturing sites and around 500 different suppliers for some pharmaceutical companies; in such an environment it`s simply not sustainable to do any plan manually, no matter how lean you are. For some companies the challenge starts from the raw material, where there is poor procurement/warehouse management in place leading to a ripple effect that gets carried all the way to the distributor.

Key takeaways:

Biotechnology is booming despite a challenging economic environment and a lot of companies have been heavily investing through M&As and/or new product developments. Once the FDA approvals are there, those products will be on the market needing to be effectively and efficiently manufactured and distributed. Also some other important points to keep in mind:

  • Innovation, reach, and manufacturing technology are the three dimensions of this industry.
  • Iterations of improvement (continuous improvement) give a better result moving forward.
  • There is an increasing need for:
  • New capabilities in the industry to lower costs, and increase flexibility and speed
  • Adjusting production based on demand which comes with accurate forecast and respond to demand changes quickly
  • Faster capacity increase and being able to use same facility for multiple materials

So we see it`s an absolute must to be able to maneuver your actions in such a rapidly evolving environment, learn from previous and apply fixes to following plans. How?

Even though for most pharmaceutical companies the order of priority is compliance, supply and profit plan, they are recognizing that all these three can actually be improved through a better supply chain. There isn`t much room to play with R&D costs and your manufacturing is as lean as possible. What else can you do? You need a better managed supply chain. For pharmaceutical companies, high risk and high profit margin is associated with their business so they can make big investments, whereas for CMOs there is lower margin thus leaving them with not so much room for investment. However, the pharmaceutical companies do want the CMOs to make investments to improve the lead times. Maybe it`s time for more CMOs to make good use of a supply chain management software and create grounds to efficiently collaborate with their customer, the pharmaceutical companies, for a better performance of supplier consistency and reliability.

As a conclusion, external and internal factors are driving changes in biomanufacturing environments which demand new operational capabilities. Cost, speed and flexibility are the key differentiators in operations. In order to operate economically and compete globally, pharmaceutical companies are looking at possible ways using the right technology and assets for a proper segmentation and appropriate deployment meaning considerations of localizing, minimizing, and making variability friendly investments.

You can also check out the blog my colleague Trevor Miles wrote, “Chinese Hamster Ovaries, Medicines, Manufacturing, and Supply Chain”.

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Posted in Pharma and life sciences supply chain management