key concerns in the pharmaceutical and healthcare supply chain - d.quinn april 2013
DESCRIPTION
This is the output of a recent Achilles sponsored round-table on Supply Chain Risk Management at the ProcureCon Health 2013 event in Zurich - hope you find it interesting. Regards, Dan.TRANSCRIPT
© 2013 Achilles Group Limited 1
Total Supplier Management Services
Pharmaceutical & Healthcare Sector Solutions
Dan Quinn
ProcureCon Healthcare, Zurich, 19th March 2013
© 2013 Achilles Group Limited 3
Content
• Introduction
• The round table questionnaire
• The analysis/key findings
• Indirect analysis
• Direct analysis
• Combined analysis
• Suggested strategies and tactics
• An overview of Achilles (2 minute online video)
• Pharma & Healthcare Team Contact details and links to additional Achilles Resources
© 2013 Achilles Group Limited 4
Introduction
At the recent ProcureCon Healthcare event in Zurich senior level attendees at the Achilles round table on Supply Chain Risk Management were asked to complete a simple questionnaire indicating the greatest challenges and pain points they see in their own Procurement and Supply organisation’s, and perhaps most importantly, how well they believe their companies are managing these challenges.
The groups were divided into Direct and Indirect professionals and this document briefly summarises the key findings of these questionnaires.
Thank you for your input, we hope you find the analysis interesting, please don’t hesitate to contact us if you have any questions or would like to find out more about the Achilles solutions.
Dan Quinn, March 2013
Sector Development Director, Achilles
About the Author: Dan is a Director with Achilles and is currently focussed on developing new industry sectors, in particular Pharmaceutical & Healthcare, he is an MBA and experienced procurement professional with both direct and consulting experience across multiple sectors. Dan’s interests include linking Procurement/SCM to corporate strategy and the economic value added (or destroyed) in particular by supply chain and risk management activities. You can see Dan’s LinkedIn profile here.
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Instructions to complete the questionnaire...
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The Questionnaire...
1. Security 4%
2. Data Accuracy 15%
3. Evolving SC 11%
4. Mgt Control 16%
5. Regulations 9%
6. Supply Continuity 8%
7. Economics 7%
8. Cost Mgt 23%
9. Reputation 7%
1. Security
2. Data Accuracy
3. Evolving SC
4. Mgt Control
5. Regulations
6. Supply Continuity
7. Economics
8. Cost Mgt
9. Reputation
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The analysis....
There are notable differences between the Direct & Indirect functions, key differences include:
• Direct: greater focus on continuity of supply (highest total score) and the effects of changing industry economics
• Indirect: greater focus on supplier information accuracy, the evolving supply chain and management control
Unsurprisingly both have a very high focus on cost management.
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All ‘Concern’ scores versus ‘Effectiveness in managing’......
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Themes....
Analysis of the responses divides the issues into Four clear “zones”:
1. Under Control 2. Effective Risk Management 3. Tomorrow’s Problems 4. Today’s Problems
1. Under Control – is the lowest risk area, problems here have relatively low impact and are generally managed well.
2. Effective Risk Management – indicates where higher risks are acknowledged and generally being managed well.
3. Tomorrow’s Problems - indicates an area recognised as having potentially lower impact risks, but the ‘How well is your organisation managing this issue’ score implies a lower investment in time and resources, importantly all of these risks are dynamic and can change quickly, the under investment could indicate risks in this zone could grow in impact (effectively moving to the right on the chart) and threaten business economics/reputation.
4. Today’s Problems – reflects high impact risks that appear to be under invested in and have the greatest potential threat to the businesses.
1. 2.
3. 4.
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Direct results split out...
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Direct areas of concern....
The Direct function appears to consider their management of the key risks to be predominantly below the ‘minimum effective level’ required to mange the risk effectively (with Supply Continuity and Reputation being roughly at the minimum level).
Cost management is common to both functions which is a function of the similarly common concerns around industry economics, but in the Direct function the largest concern by far is Continuity of Supply (e.g. delay, disruption, natural disasters, supplier failure etc.), it is perhaps surprising that this is only scored at the ‘minimum effective level’ which may indicate sub-optimal investment in risk management. Whilst it is difficult to predict natural disasters, good supplier information management and supply chain mapping solutions can identify manufacturing clusters and make disaster planning and post disaster recovery quicker and more effective, thus reducing the economic impact significantly. Supplier failure can also be predicted with using supplier financial stability forecasting and modelling, thus identifying failure risks in key suppliers before they happen and threaten supply.
The regulatory environment was also highlighted with gaps in management effectiveness, this is clearly a complex and dynamic area, but again good supplier information management can be used to manage existing accreditation and compliance and drive better visibility across the organisation (for sourcing and risk management), but is also an effective tool to cascade/communicate new legislative/policy/codes of conduct changes down the supply chain and report on acceptance/compliance.
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Indirect results split out....
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Indirect areas of concern....
The Indirect function appears to consider their management of the key risks of Cost, Continuity, and Security to be generally well managed, with Reputation and (the high impact) Data Accuracy hitting the borderline of ‘Minimum Effective Level’ of how ell they consider the organisation at managing it.
The highest impact issues that the Direct teams feel could be managed better include: Data Accuracy – this is a common issue as typically supplier information management is the responsibility of an over burdened Category/Buying team, who have much higher value-adding priorities than the essentially administrative task of collating, validating and updating supplier information. In addition, even when the task is done well it becomes out of date very quickly and unreliable/unusable for important business decisions. Achilles provides a systemic supplier information solution that collates, validates and monitors supplier information dynamically , leaving the category teams to focus their time and energies in areas that deliver business value.
Management Control – is not a dissimilar issue, if we look to the old tenant ‘What gets measured, gets managed’ its weakness is that its almost impossible to measure (and thus manage) without visibility, Achilles provides supply chain visibility across sibling companies, geographies, business units, categories and even across sectors, and increasingly down supply chain tiers – with this visibility comes an increased sphere of influence and provides opportunities for volume aggregation, risk management and contract compliance. The Evolving Supply Chain was also highlighted as a risk, supplier information management can also be helpful in identifying, qualifying and risk assessing new suppliers when seeking new sources of supply in new markets, products, geographies etc.
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Suggested Strategies & Tactics...... Pro-Active Risk Management
• Systematic approach to risk management • Continual risk scanning for early warnings • Ensure information updated and accurate • Maintain visibility & control • Share best practice/process/systems • Potential to manage to wards Steady State or Monitor
zones
Monitor
• Early warning system - continual risk scanning & forecasting for increased severity / impact
• Leverage investment in higher risk management processes /systems
• Ensure up to date information/accuracy
• Maintain visibility & review periodically
• Manage higher potential impact issues towards steady state zone.
Steady State
• Continual risk scanning • Share best practice/
processes/ systems
Priority Action
• Quantify risk impact (economic & reputational) to the company
• Invest in a process for systemic information management, including financial health & business continuity plans (potentially include suppliers below tier 1 who represent hidden risk)
• Segment suppliers by risk profile and customise supplier qualification and contract management processes accordingly
• Drive improved enterprise wide visibility of good quality supplier information to allow effective management & decision making
• Formal annual high risk assessments/audits/reporting (including on-site) to ensure current compliance and data accuracy
• Map the supply chain to identify risk clusters & target/ incentivise category managers (and higher tier suppliers) to formally identify, manage & monitor risk in the supply chain
• Consider formal scenario planning techniques to identify significant impacts and subsequent business/reputation repercussions, then creatively plan to mitigate, eliminate, manage or transfer them.
• Manage performance to drive continual improvement
• Link to spend analysis/sourcing to unlock additional value
• Consider a pan-sector community approach to drive whole of industry cost/risk benefits and ‘collective immunity’.
© 2013 Achilles Group Limited 16
Achilles Overview.....
“Partnering with Achilles is a key element of ABB’s Global strategy, in simplifying and improving our supplier qualification process.” Nils Tengberg Head of Quality and Supply Base Management
“Shell values its relationships with
suppliers. With Achilles’ assistance we will maintain a
single source of supplier
information. This intelligence and insight into our
supply base will enable us to
continue to form and maintain
strong relationships with our suppliers.”
Jim Pearson, Shell CP Systems & Processes
Manager
Click the Achilles Logo to run the 2 minute Achilles Explainer Video
(Requires internet connection & sound)
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Why our customers use Achilles solutions…
Risk Management
Cost Reduction
Rationalisation of Supply Chain
Standardisation & Improvement
Regulatory Compliance
To raise industry standards
Better Decision Making
Supplier Monitoring
Supply Chain Audit
Supply Chain Visibility
Supply Chain Control (Internal & External)
Quality validated supplier information
Manage their internal supplier master file
…to better manage cost & risk
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Thank you.
Achilles.com/LinkedIn Twitter.com/Achillesltd Achilles.com/Facebook
www.achilles.com
Robert Brooks
M: +44 (0)7824 138323
Dan Quinn
M: +49 (0)7557 859235
Rudiger Fabian
M: +49 (0)1712345359