A holistic view of the global value added supply chain

Transcription

1 A holistic view of the global value added supply chain John Koelink BHC-PS-GSCM, Oct. 010

2 Agenda Bayer Concept of Pipeline Risk Mitigation at Bayer Outcome of first analysis Next steps Discussion page

3 Group Structure Holding company Group Management Board Bayer AG Corporate Center Business areas Service areas Bayer HealthCare Bayer Business Services Bayer CropScience Bayer Technology Services Bayer MaterialScience Currenta page 3

4 Bayer HealthCare Top Products Bayer Schering Pharma Animal Health Consumer Care Medical Care Specialty Medicine Betaferon / Betaseron Gadovist Kogenate Magnevist Nexavar Primovist Ultravist Xarelto Women s Healthcare & General Medicine Adalat AspirinCardio Avalox / Avelox Cipro / Ciprobay Glucobay Levitra Mirena Qlaira Yasmin / YAZ / Yasminelle Advantage product line Baycox Baytril Drontal product line Aleve Aspirin Bepanthen / Bepanthol Canesten One-A-Day Supradyn Breeze Contour page 4

5 BHC holistic approach to manage a global supply chain

6 Pipeline Transparency and Risk Assessment is a two step approach to optimize stock levels across all stages Objectives of Pipeline Transparency and Risk Assessment Pipeline 1 Transparency Objectives Monitor stocks of your supply chain Stocks (Norm vs. Actual) Raw Mat API Bulk FP Risk Assessment Optimize safety stocks across the pipeline Supply and demand risks Raw Mat API Bulk FP Quick wins in safety stock optimization Risks can be balanced across total pipeline Improvement potential of shaping a more balanced supply chain page 6

7 Starting Early material IM (Praster (DHon) Prast.) IM unit E IM unit B Final IM New Synth E API Bulk FP at Packagi ng FP Stock levels are assessed by measuring deltas between system settings, actual levels and to-be amounts Approach of Pipeline Transparency and Risk Assessment per SKU Pipeline 1 Transparency Actual Stock Planning parameters/ settings Raw Mat Actual vs. Norm stock levels per pipeline & stage Raw Mat API API Bulk Bulk FP FP Risk Assessment Alignment of targets A) Delta: Transparency B) Delta: Assessment Assessment of the network Lead times - production - quality - transport Order size Safety Stock - Risk mitigation scenarios - Safety stock location C) Delta: Improved Pipeline Monitoring Improvements in the network e.g. second supplier Implemented risk mitigation page 7

8 Within Pipeline Transparency the entire supply chain is translated into one unit of measure [UoM] Baseline of Pipeline Transparency Pipeline Visibility focuses on the primary material flow of a supply chain; secondary materials (packaging materials, excipients etc.) are not monitored All up- and downstream inventory levels are expressed in API equivalents: 1 Grams API (center point) Tablets Packs kg starting materials Grams intermediate External sales Conversion factors to API Conversion factors to API page 8

9 An example of transparency once translated into one UoM We will sell more boxes of product A with a lower price? 50,0 Sales Gadovist 44, ,0 34,3 400 to API 30,0 1,7 5,8 300 mio 0,0 17, , Volume (to API) Value (mio ) 100 0,0 Act 009 FC3 010 Bud 011 Bud 01 Bud page 9

10 Targets and actual stocks are captured for each inventory type using the E-RISK outcome as input! Inventory types 1 Work in Process In Transit Pending Inspection Stock Safety stock Cycle stock Aggregation Due to the extensive number of SKUs results are aggregated and monitored on three levels: Entire pipeline Stage Stage and location page 10

11 The assessment focuses on impacts not on probabilities 1 Risk Assessment principles Safety stock for demand uncertainty at each stage is generally the threshold Probabilities are ignored but catastrophic failures (major earthquake, loss of entire Supply Centre, etc.) are excluded and managed separately Safety stock will not mitigate two major events occurring at the same throughout the chain Analysis starts as close as possible to the market (sales affiliates) as safety stock in later stages of the supply chain can also be used for mitigation of risks in earlier stages Safety stocks are calculated on an aggregated level and can be adjusted on SKU level where appropriate page 11

12 1 Risks are assessed for each stage of the pipeline Risk Assessment Approach API Formulation Bulk Filling & packaging FP Three steps: 1a Identify demand uncertainty and highest risk for supply interruption by stage: Demand uncertainties are calculated by a stacked single echelon approach Potential supply uncertainties are evaluated during workshops 1b Uncertainties are expressed in months coverage Start downstream and cumulate demand risks: if highest risk by stage higher than cumulated risk delta to be added to cumulated safety stock Determine the level of uncertainties from the perspective of lean: (can be accomplished simultaneously with step 1) Lead time reduction and dual sourcing Lean experts to be involved in risk assessment workshops 3 Align results from 1 and to determine the optimal risk / safety stock level page 1

13 Generally, the assessment provides additional hints for potential improvements in the network Steps to optimize stock levels 1 Actual Stock Example: Saving Potentials Targets by Pipeline Transparency Assessment of the network In Months Coverage Raw Mat API -1 (-4%) Bulk FP Raw Mat -4 (-15%) API Bulk FP -3 (-14%) Improvements in the network 0 page 13 Further reduction potential by adapting lean methodologies: lead time reduction and dual sourcing

14 Value view of Product X (on target) page 14

15 UOM view (Overstock in our pipeline), but where? page 15

16 At the cheapest level of our supply chain Raw material page 16

17 Results will only be accomplished if approach is transferred into the organization Requirements to establish Pipeline Transparency and Risk Assessment 1 Allocate responsibilities for each pipeline Set up automated tool for monthly updates of stock levels 1 Pipeline A Pipeline Responsibility Action Plan Visibility Analysis Pipeline X SAP BW Pipeline B Pipeline C Pipeline Initial manual upload Visibility Database Monthly interface Pipeline Responsibility/ Manager Allocation of one person to each pipeline being responsible across all stages and regions Pipeline summary: Continuous comparison of determined targets vs. actual stocks at all stages page 17

18 The Goal of the Pipeline Controller Concept The Product pipeline controller takes care of a number of activities within the Global supply chain of one of BHC key products. This concerns orchestrating that the agreed activities to mitigate risk in the supply chain are being followed according agreed sequence and timelines. The person represents the product to the Marketing/Sales organisation and participates in projects for this specific product pipeline. In addition to the above mention tasks the person is responsible to challenge the mid term, 1 to 3 years (regional sales) and the long range forecast (Marketing). Organizational setting: Pipeline Controller remains in the current position and the current task but will extend his/her task. Contacts: PS (Quality, Purchasing, ) BU s Regulatory Affairs Department page 18

19 Main Tasks of the Pipeline Controller Monitor the product pipeline on monthly basis a b c Reviews that the pipeline(s) are in balance to the agreed inventory norms (trend watching). Reviews and challenges mid and long range sales forecasts for products Applies, maintains and improves the Supply Chain with the levers agreed upon Materials planning and supply chain management a b c Coordinates yearly safety stock update and timely, holistic implementation along the pipeline Supports the supply chain managers with analyses to prepare for decision making regarding potential bottle-necks in availability of materials. Prepares a long range requirements plan for actives of one or more product groups for the supply chain manager and Divisional supply Chain heads. Works out scenarios if necessary. Account management a Participates in preparation of supply agreements with external manufacturing partners, partly in support of international sites that take care of the account management. Projects a Initiates, manages and / or participates in logistics process improvement projects page 19