After

< 1 hour

On-time in full delivery performance

> 99.5%

BackgroundA major pharmaceutical company discovers, develops and makes medicines to treat a broad range of the world’s most common acute and chronic diseases.

The company has over 50 facilities supplying countries worldwide with finished goods, some of which are medically critical.

The company required a technology solution that would deliver robust, sustainable demand/capacity scenario planning capability to support network design and investment decision making over a 10-year time horizon. The company selected LLamasoft’s digital supply chain design and decision-making software.

Since then, the company has undertaken a variety of supply chain design projects, delivering millions of pounds worth of cost savings while driving dramatic service level improvements.

Safety stock optimizationUsing LLamasoft’s network and inventory optimization tools, the company has implemented a standardized process to ensure that it has the right levels of safety stock in the right location for every SKU, reducing the risk that a patient will not receive key medicines.

Prior to implementing LLamasoft, the manufacturer used an Excel-based safety stock calculation tool. This was a highly manual process, taking upwards of two weeks to produce results for 100-300 SKUs. The complexity and time needed to carry out safety stock reviews also meant that this process was not carried out at the periodic frequencies required.

Today, thanks to LLamasoft, the total end-to-end time for the safety stock optimization process is now less than an hour and has been adopted for all pharmaceutical SKUs. As a result, the company is achieving a sustained in-stock percentage of 99% and an on-time in full delivery performance greater than 99.5%.

© 2019 LLamasoft, Inc. All Rights Reserved.

C A SE S TUDY

Major pharmaceutical manufacturer saves millions with LLamasoft

Before

> Two weeks

Sustained in-stock percentage

99%

SAFETY STOCK CALCULATION

RESULTS

Rough cut capacity planningFollowing the launch of a new device, the manufacturer has brought a range of five new medicines to market. Finished products are manufactured at Tier 2 facilities in the UK and US.

The Tier 2 finished goods manufacturing process is a highly complex five-stage process, with multiple QA processes at each stage. Each functional area within the production process generates a capacity statement for the full 24-month S&OP period, detailing opening hours, scheduled downtime, changeovers and expected run rates. The support functions, i.e., QA and laboratories, also provide a view of available labor resources.

The manufacturer originally operated a manual capacity planning process, using a combination of ERP data and spreadsheets. Using this process, changing capacity or restricting the load at an identified bottleneck often pushed the problem to another functional area, requiring the exercise to be repeated until a feasible plan was identified. Due to the time taken to achieve this, the best they could hope for was to find one feasible solution in each monthly S&OP period, with no consideration for cost trade-offs, nor ability to optimize the plan.

In 2017, LLamasoft undertook a project to create a workflow to take the various current data sources and use these to build a ‘living’ baseline model of the end-to-end production process at one of the company’s manufacturing facilities. This automatically generates an optimized model which minimizes the cost of production across all functional areas within the constraints provided. This optimized baseline is then used to rapidly generate and analyze multiple scenarios to further refine the solution prior to implementation. The current record stands at 128!

Due to the success of the project, the model has subsequently been extended to incorporate the second facility.

Ongoing enhancements to the solution will also drive improvements in the onward transportation and distribution of finished products, allowing the company to balance the competing priorities of service, cost and cash.

LLamasoft builds a ‘living’ baseline model

of the end-to-end production process

It automatically generates an

optimized model

Minimizes the cost of production across all functional areas

Used to rapidly generate and analyze

multiple scenarios to further refine

the solution prior to implementation

Company’s inventory

carrying cost

LLamasoft’s optimization

tools

£400 million

reduction

Modeling regulatory complianceUnder the EU’s Falsified Medicines Directive (FMD), all pharmaceutical manufacturers were legally mandated to comply with new regulations, requiring every pack of medicine to be individually coded or serialized by February 9, 2019.

Using LLamasoft to easily visualize its capacity constraints, the manufacturer was able to demonstrate to regulators that it required additional time to build buffer stocks to maintain continuity of supply while implementing serialization, resulting in an extension to the deadline. Without this, the company faced losing up to three months of capacity, translating into £100 million in lost revenue.

Modeling Brexit scenariosBrexit may mean that products destined for EU markets which have been manufactured and tested in the UK need to be re-tested and certified in the EU. The company has extended the rough-cut capacity planning model to encompass a laboratory in mainland Europe to ensure that it has the capacity to accommodate this.

Raw materials production planningActive Pharmaceutical Ingredients (API) form the core of any medicine and the best way to plan production campaigns to meet market demand is a key challenge, especially considering the complexity of the manufacturing process such as module availability, changeover time, minimum batch sizes, the cost of the facilities involved and the technical resource required to run the process.

The company has worked with LLamasoft to demonstrate how the optimum production plan can be produced to ensure that demand is met, inventory is kept to a minimum and financial impacts of the plan are transparent.

The futureIt is anticipated that LLamasoft’s sophisticated optimization tools will play a fundamental role in helping the company reduce inventory carrying costs by £400 million.

The current optimization tools also have the capability to provide end-to-end supply chain optimizations for individual therapies, thus enabling the company to better understand how best to produce and get finished goods to market at the right time.

LLamasoft, Inc. 201 South Division Street, Suite 200 Ann Arbor, Michigan 48104, USA Phone: +1 866.598.9831 LLamasoft.com | Info@LLamasoft.com© 2019 LLamasoft, Inc. All rights reserved.

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