0 integrating a global supply chain: essential strategies pharma manufacturing cambridge,...
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Integrating a Global Supply Chain:Essential Strategies
Pharma ManufacturingCambridge, Massachusetts
June 23, 2004
Cheryl CappsVice President
Supply Chain Planning & Optimization
Bristol-Myers Squibb
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BMS Facts
27 Pharmaceutical plants
5 Chemical Plants
135 Markets Planned
150 + Contract Mfgs
100 + Distribution Centers
2 SAP instances, 24 BPCS instances, and 6 msc. ERP systems
6000+ SKU’s, 15000+ SRC’sPharmaceutical Plant Chemical Plant Inventory
BMS: A $20B Pharmaceutical and Related Healthcare Business
…significant supply chain complexity
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Our Vision Is Clear…
One Plant, One Team, One PlanSeamless Integration, Flawless Execution
… but what does it really mean?
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Conceptualizing an Integrated Supply Chain is like asking a group of people to conceptualize Heaven…
What does it look like? How do you get there?
While everyone agrees that it’s a nice place and we should go there, that’s where the agreement ends!
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What does Integration Mean to Us?
Every participant in the supply chain is working from a different plan
Little or no visibility beyond local unit
Disjointed metrics, inconsistent reporting
The same data has a different meaning at every site
High variability in non-CGMP processes (like planning)
One global supply chain plan
Daily, global visibility of planning data
Standard, global metric calculation and reporting
Consistent data definitions
Minimum standards for key processes
From To
Before you can optimize the supply chain, you must integrate it
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What Capabilities are required by “Integration”?
Complete visibility of— Inventories— Demand— Plant production plans and
constraints Simultaneous planning at
multiple levels— Market and plant at the same
time Organizational alignment
Consistent metrics that drive supply chain, not local performance
Consistent practices— Tightly defined business rules
for interactions between sites— Practices that ensure the
accuracy of critical data— The same data means the
same thing to everyone Global master data
Integration is the ability to create and execute
a single plan for the entire supply chain.
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Why do we fail?
The usual suspects:
Lack of senior management support Unrealistic objectives Lack of resources Poor project management IT focus/IT led Poor change management
But many companies get all of these things right and still fail to realize the desired benefits!
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Essential Strategies
Step 1: Develop a compelling case for change
Step 2: Create a vivid picture of the future
Step 3: Identify the gaps in capabilities between the “as is” and the “to be” state
Step 4: Build a road map
Step 5: Design the project
Step 6: Establish change management program
There are 6 essential strategies to integrating a supply chain
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Essential Strategies
Develop a compelling case for change— Easy to understand— Tailored to stakeholder group
* Conceptual * Emotional* Financial * Technical
— Integrated with other key business strategies
Assume that the detriments of the “as is” state are not widely understood.
Step 1:
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“As-Is” Scenario
Demand Data Supply Chain Issue
Supply Data
Non US Markets
Bulk Sites
TollingPartners
3rd PartyMfgs
Replenishment
Orders
Finishing Sites
Finishing Sites
Finishing Sites
Finishing Sites
Central Planning
US Market
Cannot balance supply and
demand
SAP Sites
In SAP Sites
In- Transit
Tolling
3rd Party Mfg
In US DC’s
In Non-US
DC’s
BPCS Sites
Central Planning
3rd Party Mfg
Tolling Partners
Distribution
MTO Market Orders
In BPCS Sites
Market Impact
•Unreliable delivery
•Long lead time
•Minimum order qtys.
•Excessive Inventory
•Resource Intensive
Multiple formats systems & schedulesManual, resource intensive,
inaccurate
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Essential Strategies
Create a vivid picture of the future— Right scope
Narrow enough to be manageable Broad enough to allow true integration
— Well defined Endpoint What does success look like?
— Tailored to stakeholder group Detail for the “Detailed”, Simple for the “Simple”
Assume that the benefits of the “to be” state are not inherently obvious
Step 2:
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The Future State Process – Level 1
Demand DataBalance Supply &
Demand
Supply Data
Global Forecast&
Net Requirements
Global Inventory&
Capacity Data
Statistical Tools
Markets
NetworkPlanning
MFGSites
Trade Sales
•One Format•One delivery system•Set calendar
•Full-picture•Real Time
APSSystem
S&OP
•One Plan•Collaborative Process•Data-based decision making•Assigned Accountability
Suggested Network Plan
Collaborative Planning
Shape Supply & Demand
Purchase OrdersNet Requirement Plan
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5.0 Shape Demand Plan
2.0 Determine Demand Requirements
5.2 Resolve Financial Impacts
3.0 Balance Supply/Demand
3.2 Load Inventories
1.0 Determine Supply Capabilities
4.0 Execute Supply Plan
4.2 Provide Raw Materials
Requirements
4.1 Create Production Schedule
4.3 Provide 3rd Party with Product
Requirements
2.3 Create Statistical Baseline
2.2 Load Demand History
2.6 Develop Sales Forecast
2.7 Simulate NPI Requirements
2.1 Collect Customer Data and Collaborative Input
3.3 Review Supply Chain Performance
2.5 Collect Promotion and Deal
Information
2.8 Approve Forecast
2.4 Collect Market Research / Analysis
“To Be” Operating Model
3.4 Update Market Segmentation / Service Level
Agreement
3.5 Update Inventory Targets
3.6 Run Planning Optimization
3.7 Perform “What If” on NPI
1.2 Determine WIP and Committed
Production
1.3 Determine Actual FG Inventory
1.5 Determine 3rd Party Supply
Capability
1.1 Determine Raw Material Supply
1.4 Determine Production Capacities
3.8 Prepare for S&OP Meeting
3.9 Conduct S&OP Meeting
4.5 Execute Production Schedule
5.1 Create/ Execute Demand
Plan
4.6 Perform Available To
Promise (ATP)
3.11Communicate Supply Side/ Demand Side
Impact
4.7 Deployment
3.12 Communicate Financial Plan
Impacts
4.4 Provide Tolling Partner with
Product Requirements
3.10 Adjust Supply Chain Tactical Plan
Process Design – Level 2
1.6 Determine Tolling Partner
Supply Capability
3.1 Consolidate Demand
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Inputs
1.4.1Determine production parameters based on
demonstrated performance
Planned MfgImprovement
Maintenance History
Manufacturing Performance
1.4.2Modify
production parameters
based on new capability
1.4.4Gain consensus
on production capability
parameters
1.4.3Estimate
Maintenance needs by unit
Preliminary FG Production
capability profile (by site, by unit, by time period)
1.4 Determine Production Capability
Example II Process Design - 1.1
Process Design – Level 3
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Essential Strategies
Identify the gaps in capabilities between the “as is” and the “to be” state.
— Seek input from a broad base of stakeholders
— Prioritize gaps based on degree of urgency and business value
— Group “related gaps”
Individual capability assessments and prioritization inputs provide the basis of the project plan
Step 3:
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Gap Analysis
Assessment of performance in relation to the To-Be Operating Model
Capability Assessment Capability PrioritizationPrioritization of each of the To-Be Operating Model components based on Degree of Urgency and Business Value
Cross-Functional Input
BusinessCapabilityRelease
#1
BusinessCapabilityRelease
#2
BusinessCapability
Release #12As-Is
To-Be Operational
Model+ +…++ =
- Current Initiatives / Activities
- Scope
- Scalability
Driving Factors and Considerations- Benefit vs. Cost
- “Low Hanging Fruit”
- Domestic vs. International Capabilities
- Site Integration Issues
- Process Dependencies
- Technology Dependencies
- Organizational Dependencies
(Global Perspective with “80/20 Rule”)
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Essential Strategies
Build a Road Map— Resist the urge to ‘eat the elephant in one bite’,
while insuring that the entire elephant will be eaten.
— Each “bite” should be large enough to deliver value but small enough to be completed in a 6 – 12 month time frame.
— At the end of each “bite” the supply chain should be in a “steady-state”.
…Achieve short term gains while insuring long term results
Step 4:
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Business Capability Release Plan
The BCR plan can be viewed as a simple building model...
BCR 11:APS Scheduling Optimization
BCR 5 Network Planning
BCR 9Supplier Integration
BCR 6APS
Demand Planning
BCR 7APS
Supply Planning
BCR 1Demand
Consolidation
BCR 2Tolling
Automation
BCR 3S&OP
Standardization
BCR 4Inventory Visibility
BCR 12 ClosedLoop S&OP Process
BC
R0
A -
Sit
e A
ccele
rati
on
BC
R0
B - M
an
ag
em
en
t Tools
BCR 10Customer Integration
Change Management & Learning
BC
R8
– M
ark
et
Rem
ed
iati
on
OptimizationPhase II
Extension
OptimizationPhase I
Integration
Foundation
BCR 4A Data Integration
… A solid framework of tools, processes, and data
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Essential Strategies
Design the Project— Build stakeholder ownership into the process
Plan for sustainability Minimize non-value add “we-they” activity Eliminate “hand-offs” where possible
— Integrate process technology and people If you can’t integrate multiple project elements, is it reasonable
to expect that you can integrate an entire supply chain?
— Standardize project methodology, terminology, required documents, and even presentation formats.
Use every opportunity to reduce variability
…Invest the time necessary to develop a robust project design
Step 5:
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Project Team Structure
BCR 0-BManagement Tools
BCR 0-ASite Acceleration
BCR 1Demand Consolidation
BCR 2Tolling Automation
BCR 3S&OP Standardization
BCR 4Inventory Visibility
•Re-design existing functional processes and organization to support BCR solutions
•Design, build, test and deploy identified business capabilities
Business Capability Releases
Functional Process Owners
Site Network Planning
Markets SourcingDistributionLogistics
Inventory & Metrics Mgmt
Database Maintenance
Team Leader
s
Change Mgmt &Learning
BCR 5
Network Plng.
BCR 8Market Integration
BCR 6APS Demand Plng
BCR 7APS Supply Plng
Finance
BCR 9Supplier Integration
BCR 10Customer Integration … Build stakeholder ownership into
the process
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The Project Office
Project Management
Process Integration
Technology Integration
Change Management
Project Administration Manages Consolidation
of Project Plans Reporting Measurement Resource allocation Remediation Insure adherence to
process
Develop overarching process solutions
Coordinate & guide teams
Ensures process integration among BCR’s
Manage evaluations & selection of technology solutions
Coordinate & guide teams
Ensure technology integration between BCR’s
Develop and implement CM strategy and work plan
Lead & facilitates CM activities
Directs design & implementation of training programs to ensure knowledge transfer and development
…People, process and technology integration required
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Standard Project Methodology
Change Management
Test/ Pilot DeployBuild CapabilityDesign
Mobilize
BCR Duration
(Based on 12 Months)
1 2 3 4 5 6 7 8 9 10 11 12
BCRTeam
Today: Week 6 of the design phase
Complete - Week 5
Scope
Assumptions
Business Requirements
Business scenario inventory
Process Flows level 1, 2, 3.
Complete - Week 6
Draft process flow level 4
Business Rules
Draft application architecture
First cut roll-out/ release plans
Business Tools/ Metrics Inventory
Business Resource requirements
Draft Risk Management Plan
Weeks 7 & 8
Integrated level 4 process flow
Final application architecture
Final roll-out/ release plans
Legal & Regulatory Element inventory
Final Risk Management plan
Build/ Test Element Inventory
Detailed Build/ Test plan
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Essential Strategies
Establish Change Management Program— Engage and gain commitment from Senior leadership
— Ensure employee understanding at all levels and promoting readiness and buy-in of key stakeholders
— Identify and develop skills and competencies required by SC Professionals; train sites and markets
— Facilitate the organizational transformation; clarify roles and accountabilities
— Establish programs to recognize/reward behaviors needed to sustain the model and promote the new culture
…Change Management is necessary to manage the journey and to facilitate transition to the future state.
Step 6:
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Change Management Processes
CM1: Sponsorship
CM2: Build Project Team
CM3: Communications & Stakeholder Management
CM4: Change Advocate network
CM5: Performance Support & Learning
CM6: Knowledge Transfer
CM7: Readiness Assessment
CM8: Organizational Transformation
Supply ChainOptimization
... eight key change management processes leveraged.
Transfo
rmatio
n to th
e End-State
Vision
BCR 11:APS Scheduling Optimization
BCR 5 Network Planning
BCR 9Supplier Integration
BCR 6APS
Demand Planning
BCR 7APS
Supply Planning
BCR 1Demand
Consolidation
BCR 2Tolling
Automation
BCR 3S&OP
Standardization
BCR 4Inventory Visibility
BCR 12 ClosedLoop S&OP Process
BC
R0A
- S
ite A
ccele
rati
on
BC
R0B
- Manag
em
ent T
ools
BCR 10Customer Integration
Change Management & Learning
BC
R8 –
Mark
et
Rem
ed
iati
on
BCR 4A Integration
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Lessons Learned…
Benefits are likely understated in the business case.
Process must always lead technology. Don’t let the “latest whiz-bang tool” distract you from your objective.
Insure that “process & technology” do not get too far ahead of “people”.
Do not underestimate the effort required to integrate and remediate data.
Continue to change business objectives to reflect capabilities delivered and planned.
Have a low tolerance for exceptions to global standards.
Link a balanced scorecard of metrics and process compliance to compensation
… It’s not easy, but it is achievable!