Management Program. Yingming Yue

Transcription

1 Implementation ti of Raw Material Risk Management Program Yingming Yue Associate Director, Supplier Management Oct 26, 2010

2 Agenda Nektar Therapeutics Overview Background of the Risk Management Program Tools, processes and methodologies Results and lessons learned

3 Nektar Therapeutics Biopharmaceutical company leveraging Advanced PEG/ Polymer Conjugate technology platform to develop novel therapeuticsti Headquartered in San Carlos, CA, USA with additional operations in Alabama and India Publicly-traded (NASDQ: NKTR) since employees, Market Cap $1.5B Strong heritage of partnership with top biopharmaceutical companies 3

4 Nektar: Proven Platform and Growing Pipeline Powerful and Proven Platform Technology Large and Small Molecules Vastly improves PK/PD properties of drugs Broad applicability to large and small molecules Enabled top-selling commercial drugs with $6 billion of current annual sales Robust and Diverse R&D Pipeline 9 clinical product candidates 6 preclinical programs 9 partnered products on market Dominant IP Portfolio Advanced polymer conjugation technology 60 US patents issued; 500 applications pending Strong Business Model and Financial Position Proprietary drug development with steady stream of new high-value product candidates Potential revenue of ~ $400 million by 2013 from partnered programs Strong cash position; no plans for financing 4

5 Background and Objectives Background Establishing good risk management practice for proprietary and partner programs is an important objective for supply chain organization Business review reveals a number of high-risk suppliers and raw materials Supply disruption from Acetonitrile and an important intermediate accelerated the kick-off of the raw material risk management program Commercial products were selected as pilot program Objectives Evaluate current level of operational risks associated with raw materials Implement tools and processes to monitor risks on a continuous basis Develop risk mitigation strategies for identified high risk, high impact parts, Ultimate objective is to ensure continuous supply and stable supply chain

6 Issues and Challenges Where to start when there are dozens of attributes to evaluate? How do I quantify risk and impact? How do I measure supplier risk? How do I compare one risk/impact attribute against the other? How do I balance risk mitigation strategy with resource requirements? 6

7 A four-step approach Define Collect Analyze Implement Define risk attributes Define impact attributes Develop scoring methodology Collect information from JDE and other internal sources (MSF, etc) Research public available information (D&B, 10K, etc) Score each attribute based on agreed-upon methodology Chart items based on risk impact attributes Identify high risk, high impact items Develop risk and impact profile Develop risk mitigation strategies Implement risk mitigation strategy List of raw material risk and impact attributes A short list of high risk high impact items Recommendations for risk reduction A systemic way to evaluate and monitor risk on an on-going basis

8 List of risk and impact attributes Supplier risk attributes D&B Paydex D&B Credit Rating Nektar $% of Business Employee Number Revenue Risk specific attributes Sole/single/multi sourced Safety profile Shelf life Supplier risk Commodity vs. customized Highest priority RM Items Risk Impact specific attributes Where used (product & process) Price Volume Demand Inventory (Weeks of Supply) Impact For Illustration Purpose Only

9 Risk and Impact Score Calculation Raw Material Risk Attributes Item Description XYZ Chemical Number Supplier Shelf life Safety Rating of Sources Other Attributes Impact Attributes Where-used Weeks of Supply Attribute Value 17 3 years Normalized Score Value Weight 30% 20% 20% 30% 0% 70% 30% Weighted score Composite Score Above average Risk Below average Risk Each raw material will have a composite risk and impact score based on pre-determined attribute weight The model allows users to adjust weight of each attribute as they see fit Information of additional attributes, such as On-time-delivery (OTD) and Quality performance, can be added to the model as they become availed For Illustration Purpose Only 9

10 Supplier Risk Score Template Supplier Snapshot Supplier Risk Scoring Template Supplier ABC Chemical Evaluation Criteria Weight Rating Subtotal D-U-N-S Number Company Type Address Line of Business Private Somewhere Research Sales (M) $3M 1 year Growth 13% Number of Employees 40 Founded 1999 Nektar Annual Spend with the supplier ($K) 800 Supplier since 2007 D&B - Paydex 64 D&B - Commercial Credit Score 80 D&B Paydex Number (80-100=1, 80-70=3, Below 70=5) D&B Commercial Credit Rating (Based on actual from D&B: 5 = 5, 4 = 4, 3 = 3, 2 = 2, 1 = 1) Nektar % of Business with Supplier (100%-26%=5, 25%-11%=3, 10%-1%=1) Age of company (0-2 yrs = 5, 2-5 yrs=3, 5+ yrs = 1) Supplier Company size (sales in $MM) (Small [<$1M] =5, Medium [$2M - $10M] =3, Large [>$10M]= 1) Employee Number (<3=5, 3-10= 4, =3, =2, >1000 = 1) Subtotal 30 >= 25 (20-24) <=19 For Illustration Purpose Only 10

11 Risk Mitigation Matrix Over dependent on Suppliers Inexperienced Internal Stafff internal Sole- or Single- Sourced Excessive Capacity Utilization Rapidly Increasing Demand Short Shelf Life iple Long lead time the p time of Low Inventory Levels nancial Consume Human Resources Risk/Impact Attributes Sub-optimal procedures Used in Mult Products Used Late in Process Long ramp u alternative Consume Fi Resources Risk Mitigation Levels Qualify & Purchase from Additional Suppliers Develop internal capabilities of internal staff Develop Alternative Manufacturing Processes X X X X X X X X X X X Add Inventory X X X Revise Material Requirements Improve Forecast/planning Process X X X X X Provide Training / Assistance X X X Increase Supplier Audit Frequency X Establish MSA/Supply Contract X X X Engage Supplier's Supplier X For Illustration Purpose Only 11

12 Risk-Impact Profile XYZ Chemical Risk/Impact Attributes Risk/Impact Profile Risk Mitigation Strategies Number of where-used (23) Explore alternative processes Weeks of Supply (3 WOS) Increase ordering frequency Add Inventory Supplier Risk Score (18 A) Shelf Life (4 years) Safety Rating (4) Number of sources (Dual Sources) Low Average High For Illustration Purpose Only

13 Results and Lesson Learned Results Risk Assessment of ~50 critical suppliers and ~200 starting materials, resulting in identification of ~15 high-risk, high impact raw materials and a comprehensive raw material risk-mitigation plan Implementation of a rigorous risk assessment process that based on facts and data, rather than subjective opinions Lessons Learned A repeatable process is the key to maintain momentum of risk management initiative and management attention Fully integrated supply chain processes and strategic supplier management are two key success factors to effectively mitigate supply risks Integrating Risk management program with corporate budgeting process (Inventory, 2 nd sourcing) will help ensure smooth execution 13