Presentation on theme: "Rethinking Global Network Design Oscar Perez Vice President – Delivery Solutions Pfizer Global Logistics & Supply."— Presentation transcript:
1Rethinking Global Network Design Oscar Perez Vice President – Delivery Solutions Pfizer Global Logistics & Supply
2Today’s Discussion Global Delivery Chain Global Logistics & Supply EvolutionMarket Logistics Network ModelWhat’s nextQ&AWyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.
3What Is Driving Our World? GLOBALIZATION: SUPPLY CHAIN,CUSTOMERS, SUPPLIERSCONVEYANCE INTEGRITY:ECONOMIC, POLITICAL, COMPLIANCE & SECURITYPFIZER STRATEGIES:CORPORATE, COMMERCIAL, PGM, ETC.INFORMATION TECHNOLOGYINTERNATIONAL TRADETRANSPORTATIONSUSTAINABILITYWyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.
4Purpose Mission Commitments Strategies Enduring Priorities Values This defines who we are and what we’re aboutWorking together for a healthier worldMissionThis explains how we will achieve our PurposeApplying innovative science to improve world healthDiscover, develop and ensure access to safe and effective medicinesPartner with key stakeholders and earn their trustBuild productive and enduring relationships with governm’ts & communitiesMake Pfizer a great place to workCreate long-term value for shareholdersOur Mission is based on these commitments to stakeholders. Wemust focus on creating value and earning trust for all our stakeholder groups.Refocus and optimize the patent-protected portfolioFind new opportunities for established productsGrow in emerging marketsInvest in complementary businessesInstill a culture of innovation and continuous improvementCommitmentsStrategiesThese build on the priorities and represent the best opportunities to invest in our future, create value with science and technology and deliver innovative health care.Maximize revenuesManage costsStrengthen our cultureMeet our commitments to stakeholdersEngage each otherThis is where the work begins. These represent the fundamentals for doing business successfully.Enduring PrioritiesThese underlie all we do, guiding how we behave and how we run our business.Customer FocusIntegrityRespect for PeopleTeamworkInnovationPerformanceCommunityLeadershipQualityPurposeBy executing on all these elements of Our Path Forward, we will lay the groundwork for a promising future for PfizerValuesPfizer Sponsor Training
5Organization Framework Commercial BusinessesPCOnc.EPEMAHSpec&VacConsNutriPGM Operating UnitsBusiness interface/partnershipSite operational leadershipPC/OncEPEMAHSpec/Bios/VacConsNutriPGMCustomer interfaceNetwork PerformanceLeadership / guidance on efficiency and effectiveness of operationsOperational ExcellenceContract ManufacturingPfizer Global EngineeringNetwork PerformanceOperationsRx Contract Mfg (CM)GlobalBiosCMConsCMNutriCMStrategy & Supply Network TransformationSo, where does GL&S fit within the PGM organizationYou have seen this chart from earlier presentationsIt accurately conveys the fact that we are an enabling function supporting the Operational Units and markets.Global Logistics & SupplyGlobal Manufacturing Services (GMS)QualityNetwork Enabling Functions(Finance / HR / IT / Procurement / EHS)Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.
6Our Path Forward Key impact on Global Logistics & Supply The new Business UnitsPrimary CareSupport for new product launches: Life-Cycle-Management and new innovative productsIncrease in Direct Sales and roll-out of DTP in EU; channel management (i.e. home delivery)Customer focus. Local solution but global knowledge transfer; High and diverse service level requirements.Established ProductsIncrease in Direct Sales to support top line growth at Point-of-Sale; broad portfolioSpeed to market critical for supply chain (especially for product (re-) launches)Efficient distribution: High cost sensitivity, larger shipments with reduced SLAsHigh volume increase and fluctuations; Potential acquisition of generics companies & productsSpecialty CareDevelopment and licensing of innovative products (cold chain, hospital products, home delivery)Acquisitions of small specialized companies (i.e. Encysive)More specialty products (biotherapeutics, human vaccines, special devices)Focus on service quality (special processes & channels)OncologyDevelopment or licensing of innovative products (cold chain, special devices, hospital products)Acquisitions of small specialized companiesMore specialty products (biotherapeutics, special devices); Focus on service quality (special processes & channels): “deliver the right drug at the right time for each patient”Emerging MarketsHigh growth (especially for inline and local products); specific and changing regulatory environments & customer requirements; Roll-out Market Logistics model (i.e.BRIC, Turkey / CEER / AFME) Supply reliability and safety, strong focus on network infrastructure, service quality; lead time; In-licensing of local brands or products for developing markets (global access)Animal HealthHigh volume of cost sensitive cold chain products (vaccines); increase (especially for inline and local products); New product development and acquisition (i.e. SP EU); New Channel models; Strong growth, channels and value propositions; specific PAH network required;
7DELIVERY CHAIN MANAGEMENT HOLISTIC PROCESS INTEGRATIONDelivery chain design & planningProductMarketNetworkPLANSupplier integration & coordinationALIGNTo-the-Market supply and delivery managementIn-the-Market supply and delivery management* EXECUTE *Delivery chain performance managementVALIDATEBusiness Process & Data ManagementCOMMUNICATEDifferentiate between management of supply structures (plants, contract manufacturers and suppliers) and the operational process to deliver their output.Manage the delivery process holistically, recognizing the interdependence of major elements: strategy & policy, planning, network design, operational execution, finance, performance management, compliance and information / process management.
8NETWORK DESIGN ELEMENTS Differentiate between management of supply structures and the operational process to deliver their output.Holistic management of the delivery process, recognizing the interdependence of major elements: strategy & policy, planning, network design, operational execution, finance, performance management, compliance and information / process management.Strong focus for accountability and results (supply assurance, asset management, aggressive cost management, compliance, talent management, etc.).Align with commercial and PGM operations and strategies.Capture & build upon Wyeth best practices, talent and business support processes.Ensure implementation of an integrated Information Technology systems strategy and platform integrating SAP and other systems across delivery chain constituents.As we were constructing the integrated organization we developed and were guided by a number of key design elements.Each of these elements are important in their own right and together they serve to underscore the philosophy and focus we will profess.I want to emphasize a couple:We manage the delivery process . Sites whether in house or outsourced support that process and exist for operational, financial and strategic reasons. This can change as needs change.We are about achieving defined goals! There is a difference between activity and results.We need to secure, nurture, challenge and select the best talent and equip them with strategically aligned systems and processes.Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.
9PERFORMANCE, VELOCITY, SECURITY, COMPLIANCE VALUE PROPOSITIONPERFORMANCE, VELOCITY, SECURITY, COMPLIANCEDelivery Chain Performance Management: Process, Talent, Asset, ExecutionDelivery Chain Services & OperationsGlobalStrategic TradeManagementComplianceStrategy & PolicyFormulationHolistic Delivery Chain ManagementEnable Initiatives (Commercial, PGM, etc.)Process Development & HarmonizationIntegration of StakeholdersSupply AssuranceOrganization & Talent ManagementTrade Management Policy ContributionAccountability & ResultsIf we were a stand alone business what would we offer that a company like Pfizer would be willing to buy?This is the value we offer to the organizationIt starts with a deep understanding of the company, its needs and its goals our unique understanding of these elements enable us to craft the appropriate strategies recognizing the internal and external drivers .Each of the components of this pyramid operating in harmony and focus enables us to deliver results and to stand accountable for supply assurance and the swift, secure, compliant and cost appropriate storage and transit of our goods.Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.
10Today’s Discussion Global Delivery Chain Global Logistics & Supply EvolutionMarket Logistics Network ModelWhat’s nextQ&AWyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.10
11Evolution of Global Logistics and Supply Warner LambertPharmaciaWyeth200020012003200620082009Expansion toASIA-PACRemaining LAAnd AfMEEstablishment of European Market Logistics20 MarketsEuropean Distribution StudyIntegration of Mexico and BrazilIntegration of Supply Chain and Global LogisticsExpansion of ML to Emerging Markets (Russia and Turkey)Integration US/ Canada Logistics and Supply Points into PGM
12Pfizer Logistics Network Global LogisticsTransitionDistributorNo AffiliateLogistics Center
13Global Logistics Provides Secure And Reliable Delivery Of Products Manage 3PLs and freight systemsDesign and optimize deployment routesPlants/CMsManage PFE warehousesComplianceClinics/patientsUse internal knowledge to optimize product movementWork to optimize time, eg, in-transit quarantineOutboundfreightInt’lInboundfreightWarehouseWholesalerInt’lplants/CMsSupplypointmovementInboundfreightCustomsimport/exportRetailersWork to speed time through customs3PLSales repDevelop and implement conveyance security strategyProduct securityDevelop and ensure conformity with policiesRespond to internal/external trends & optimize value (tax) through supply chain/logistics designStrategic alignment withPfizer businesses13
14Strategic Guidelines Leverage Pfizer volume Combine operations for the businessesNegotiate better ratesPursue opportunities for regional distributionEstablish regional hubs / integrated operations with LC’sOutsource for flexibilityRationalize logistics services provider baseStandardize towards activity based contractsImprove costsCapture synergy opportunities (Pharmacia)Improve operational efficiency and effectivenessEnhance Customer ServiceEstablish Service Level Agreements ( country / business )Ensure Alignment with Trade Policies
15Outsourcing Strategies Stabilization Phase ( )Strategic ObjectivesStabilize businessCapture immediate opportunitiesHarmonize agreementsActivity Based Costing where appropriatePfizer T& C respectedActivitiesExtend current relationships if they help meet strategic objectivesEngage in local RFP process as necessaryHarmonization Phase (2006 – 2009)Distribution Operations OutsourcedMove towards regional Logistics Service Providers (LSP’s)Capture additional operational and process efficienciesEngage in regional/pan European RFP processOptimize distribution network based on new business / trade strategiesLeverage global provider relationships
16Realigning Markets for the Network of the Future North EuropeSouth EuropeMid EuropeNordics / CEER / BeneluxNorth Europe / NordicsMid Europe / CEER20062009RegionalConsolidated MarketNon-Consolidated Market
17Change Management… Q & A Global Logistics does not know my market!… know logistics and its common, essential elements… normally transfer local staff and upgrade as possible… do not work in isolationIf we transfer responsibility we will lose the ability to control our customer relations and sales.… it’s a partnership not a separation… trade policy, developed by the market, determines objectivesThe conditions in my market are different / unique.… operational aspects of distribution (fulfillment, transport, compliance, returns, claims) are essentially the sameWhy jeopardize sales to effect a comparatively small savings.… sales are not in jeopardy; changes, if they occur, are carefully planned and executed… often, you are paying too much for services and managing performance selectively… local focus on logistics part-time with no professional support and guidance
18Questions and Concerns We have been working with our distribution agent for many years. They know us and we have a very good relationship.… understand and we evaluate possibilities for continued relationships under different terms… in many cases (particularly % of sale agreements) they are overcharging for services… it is precisely because of this that the nature of the relationship and services provided needs to be reviewedWe just negotiated a new contract so we cannot change in the near term.… existing contracts are reviewed and consequential actions are taken within the possibilities that exist at the timeThere are only a few logistics providers in our market and we have already secured the best.… perhaps, however, professional management elevates the services and the cost / performance ratio of even the best providers… look to leverage global advantage in alliances
19Today’s Discussion Global Delivery Chain Global Logistics & Supply EvolutionMarket Logistics Network ModelWhat’s nextQ&AWyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.19
20Overview of Methodology Phase I - Internal PlanningGuidelines and toolsPhase II – Stakeholders Awareness and Buy InCommunication and alignmentPhase III – Understanding the MarketBuilding a knowledge database (data, strategies, issues…)Phase IV - Assess, design, change, enhance…Analyzing, prioritizing and proposing solutionsPhase V – Financial aspectsFinancial impact prior and post integrationPhase VI – Detailed PlanningDevelop implementation PlanPhase VII – ImplementationMonitor progress, mitigate delays and measure resultsDetailedPlanningFinancialaspectsPeopleProcessesInfrastructureUnderstandingof marketAwareness& buy-inImplementationInternal
21Key Drivers Organizational Design Aspects to consider when deciding where to locate and how to staff and organize the teamMarket SizeNumber of Markets / Market reach / GeographyLocation of markets and accessibility / Travel time & frequencyCommercial Distribution ModelIn-house, outsourced or distributor modelScopeManagement of WPO, Consumer, Nutritionals, AH, Mktg Aids and DP (others?)Skills & competencies, Experience and potential of Market Logistics and Local TeamHigh performing vs. low performing teamExperienced or new colleagues (ML and local team)Process robustnessStrategic vs. Operational FocusMature vs. Emerging MarketActivity fluctuations and multiple initiativesDistribution NetworkSingle vs. Multiple LSP’s / LSP effectiveness and Service PerformanceCulture and Language
22Overview LSP Due Diligence Assessments Scope: identify a potential external supplier for warehousing and/or distribution of pharmaceutical productsAreas to be assessed::Warehouse operationsTransportationSOXBusiness Continuity Planning)QualityComputer System ValidationAsset ProtectionEHS (facility, environmental)Fire Protection
23Overview LSP Due Diligence Assessments Initial meeting with each potential supplier content: discuss content & timing of assessments, explain Pfizer quality agreement and general expectations (IT, security, logistics, etc)Carry out one overall assessment at each supplier’s main depot content: check if supplier would generally meet Pfizer expectations (quality, logistics, security); if outcome is negative, no further assessments requiredIf outcome is positive: carry out due diligence assessments at each depot (and at head quarter, if appropriate).Generate & communicate assessment reports and discuss outcome/gaps -If a supplier is chosen, assessment results & action plan need to be included in the contract
24Success Factors Be prepared to present a compelling case for change Prepare “Global” tools and solutionsAnticipate potential concerns specific to each market and prepare to offer effective answers and solutionsFocus on the people and organization aspects as much as on the operational aspectsUnderstand baseline for budget and budget assumptionsDon’t underestimate resistance, include change management in the plan…Commit to deliver some quick wins: Identify and solve 1-2 key problems that are important for the business early in the processConsistent and continuous measurement and communication of results is criticalEffective partner selection
25GL&S Expertise Innovative Distribution Models Direct to Pharmacy/Direct to PatientsPre-Wholesale & DistributorDefining & Optimizing Supply NetworksNetwork structuresTransportation network designService Performance & Metrics/KPIsService Level Agreements (SLAs)Benchmark service, costs, qualityCompliance & ValidationSite Audits & AssessmentsOutsourcing & ProcurementNegotiations/Activity based costing modelsHarmonized contract guidelinesInnovation & Technology TeamSite remediation & optimizationNew technologies & best practicesContinuous Improvement (Right First Time)Good Distribution Practices & Good Manufacturing Practices (GDP, GMP)
26Today’s Discussion Global Delivery Chain Global Logistics & Supply EvolutionMarket Logistics Network ModelWhat’s nextQ&AWyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.26
27Strategic DriversEffectively manage a more diverse and fragmented stakeholder landscapeProactively support the business (BU’s) revenue growth strategiesPresent “One Voice” to stakeholders and fully leverage our value both internal (PGM) and external (business)Drive development of holistic Delivery Chain processes and a well coordinated long-term organization and network strategyEnsure the seamless integration of suppliers and products into the GL&S delivery chain networkEnable coordination, information flow and knowledge transfer
28Working together for a healthier world Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.