Presentation on theme: "0 Integrating a Global Supply Chain: Essential Strategies Pharma Manufacturing Cambridge, Massachusetts June 23, 2004 Cheryl Capps Vice President Supply."— Presentation transcript:
0 Integrating a Global Supply Chain: Essential Strategies Pharma Manufacturing Cambridge, Massachusetts June 23, 2004 Cheryl Capps Vice President Supply Chain Planning & Optimization Bristol-Myers Squibb
1 BMS Facts u 27 Pharmaceutical plants u 5 Chemical Plants u 135 Markets Planned u 150 + Contract Mfgs u 100 + Distribution Centers u 2 SAP instances, 24 BPCS instances, and 6 msc. ERP systems u 6000+ SKU’s, 15000+ SRC’s Pharmaceutical PlantChemical PlantInventory BMS: A $20B Pharmaceutical and Related Healthcare Business …significant supply chain complexity
2 Our Vision Is Clear… One Plant, One Team, One Plan Seamless Integration, Flawless Execution … but what does it really mean?
3 Conceptualizing an Integrated Supply Chain is like asking a group of people to conceptualize Heaven… u What does it look like? u 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!
4 What does Integration Mean to Us? u Every participant in the supply chain is working from a different plan u Little or no visibility beyond local unit u Disjointed metrics, inconsistent reporting u The same data has a different meaning at every site u High variability in non-CGMP processes (like planning) u One global supply chain plan u Daily, global visibility of planning data u Standard, global metric calculation and reporting u Consistent data definitions u Minimum standards for key processes From To Before you can optimize the supply chain, you must integrate it
5 What Capabilities are required by “Integration”? u Complete visibility of — Inventories — Demand — Plant production plans and constraints u Simultaneous planning at multiple levels — Market and plant at the same time u Organizational alignment u Consistent metrics that drive supply chain, not local performance u 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 u Global master data Integration is the ability to create and execute a single plan for the entire supply chain.
6 Why do we fail? The usual suspects: u Lack of senior management support u Unrealistic objectives u Lack of resources u Poor project management u IT focus/IT led u Poor change management But many companies get all of these things right and still fail to realize the desired benefits!
7 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
8 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:
9 “As-Is” Scenario Demand Data Supply Chain Issue Supply Data Non US Markets Bulk Sites Tolling Partners 3rd Party Mfgs Replenishment Orders 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 & schedules Manual, resource intensive, inaccurate
10 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:
11 The Future State Process – Level 1 Demand Data Balance Supply & Demand Supply Data Global Forecast & Net Requirements Global Inventory & Capacity Data Statistical Tools Markets Network Planning MFG Sites Trade Sales One Format One delivery system Set calendar Full-picture Real Time APS System S&OP One Plan Collaborative Process Data-based decision making Assigned Accountability Suggested Network Plan Collaborative Planning Shape Supply & Demand Purchase Orders Net Requirement Plan
12 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 3 rd 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 3 rd 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
13 Inputs 1.4.1 Determine production parameters based on demonstrated performance Planned Mfg Improvement Maintenance History Manufacturing Performance 1.4.2 Modify production parameters based on new capability 1.4.4 Gain consensus on production capability parameters 1.4.3 Estimate 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
14 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:
Gap Analysis Assessment of performance in relation to the To-Be Operating Model Capability Assessment Capability Prioritization Prioritization of each of the To-Be Operating Model components based on Degree of Urgency and Business Value Cross-Functional Input Business Capability Release #1 Business Capability Release #2 Business Capability Release #12 As-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”)
16 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:
17 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 9 Supplier Integration BCR 6 APS Demand Planning BCR 7 APS Supply Planning BCR 1 Demand Consolidation BCR 2 Tolling Automation BCR 3 S&OP Standardization BCR 4 Inventory Visibility BCR 12 Closed Loop S&OP Process BCR0A - Site Acceleration BCR0B - Management Tools BCR 10 Customer Integration Change Management & Learning BCR8 – Market Remediation Optimization Phase II Extension Optimization Phase I Integration Foundation BCR 4A Data Integration … A solid framework of tools, processes, and data
18 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:
19 Project Team Structure BCR 0-B Management Tools BCR 0-A Site Acceleration BCR 1 Demand Consolidation BCR 2 Tolling Automation BCR 3 S&OP Standardization BCR 4 Inventory 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 MarketsSourcing Distribution Logistics Inventory & Metrics Mgmt Database Maintenance Team Leaders Change Mgmt & Learning BCR 5 Network Plng. BCR 8 Market Integration BCR 6 APS Demand Plng BCR 7 APS Supply Plng Finance BCR 9 Supplier Integration BCR 10 Customer Integration … Build stakeholder ownership into the process
20 The Project Office …People, process and technology integration required
21 Standard Project Methodology Change Management Test/ PilotDeployBuild Capability Design MobilizeMobilize BCR Duration (Based on 12 Months) 123456789101112 BCR Team 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
22 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:
24 Lessons Learned… u Benefits are likely understated in the business case. u Process must always lead technology. Don’t let the “latest whiz-bang tool” distract you from your objective. u Insure that “process & technology” do not get too far ahead of “people”. u Do not underestimate the effort required to integrate and remediate data. u Continue to change business objectives to reflect capabilities delivered and planned. u Have a low tolerance for exceptions to global standards. u Link a balanced scorecard of metrics and process compliance to compensation … It’s not easy, but it is achievable!