Supply Chain Transformation: Improving the Customer Experience for Competitiveness

Transcription

1 Driving Innovation and Technology in the Bio-pharma Supply Chain Supply Chain Transformation: Improving the Customer Experience for Competitiveness Kevin Pegels Vice President, Global Supply Chain Illumina

2 Customer-Centric Supply Chain Transformation Kevin Pegels VP Global SCM October 2017

3 Illumina Mission To improve human health by unlocking the power of human genome COMPANY AWARDS Fall, 1998 FOUNDED July 27, 2000 IPO TOP 10 MOST INNOVATIVE COMPANIES IN BIOTECH 2017 FAST COMPANY Francis desouza President and CEO San Diego, CA HEADQUARTERS 20 ~7,000 EMPLOYEES OFFICES GLOBALLY 10 BREAKTHROUGH TECHNOLOGIES 2016 MIT TECHNOLOGY REVIEW TOP 3 SMARTEST COMPANIES 2016 MIT TECHNOLOGY REVIEW TOP 10 INNOVATIONS 2015 THE SCIENTIST MAGAZINE FINANCIALS $2.40B 8% 2016 Revenue REVENUE GROWTH YOY 12 MOST DISRUPTIVE NAMES IN BUSINESS 2013 FORBES TOP 10 INNOVATIONS 2012 THE SCIENTIST MAGAZINE FASTEST GROWING TECH COMPANIES 2010 FORBES 3

4 Who We Serve Innovation drives expanding market opportunities Reproductive Health Oncology Population Sequencing Research Complex Disease Consumer Infectious Disease Forensics Agriculture Genetic Health BioPharm 4

5 Context: illumina supply chain as of Q months post SAP go-live Consumables customer service levels in low 70s and minimal supply chain collaboration with customers Sales force spending a lot of time dealing with customer delivery issues and supply chain is in complete fire fighting mode Inventory accuracy was poor Inventory levels rising faster than sales growth Global cold storage capacity limited Supply Chain is not considered an asset within the company 5

6 GSCM Vision % availability of life-changing products by decoding complexity & generating innovative Supply Chain solutions Implement best practice IT enabled processes in planning, logistics, and sourcing/procurement Enhanced collaboration with internal and external partners is one of the key levers of the supply chain strategy to drive efficiency and responsiveness Customer- Centricity Optimization of network structure and product flow are key enablers of illumina s rapid growth Complex product portfolio calls for a differentiated supply chain management approach to meet our customer expectations 6

7 Understanding Customer requirements is a critical first step 7 Criteria Customer Volume (Revenue) Clinical Non-Clinical General focus Responsive/Flexible Supply Chain Reliable/Accurate Supply Chain Fill Rate High 99% OTC is more important than OTR More likely to have Sch. Agreement Hold some SS Patient impact if receipt delayed beyond Promised Date Low 99% Might hold small SS, but most do not Patient impact if receipt delayed beyond Promised Date OTD Cycle Time High 2 days 3 days 95% Might hold SS 95% Some Customers might need higher service levels due to low inventory strategies Low (quicker than High-volume Clinical) (quicker than High-volume Non-Clinical) Special Services High Lot pre-qualification Lot sequestering Single-lot shipment Shelf-life > 3 months Bulk packaging Online order-tracking Unpacking & removal of boxes Supply Centers / consignment Low Single-lot shipment Shelf-life > 3 months Online order-tracking Packaging return process Single-lot shipment Bulk packaging Online order-tracking Unpacking & removal of boxes Supply Centers / consignment Real-time availability prior to ordering Ability to order kit-components Online order-tracking Packaging return process

8 Fixing key SCM foundational processes were a key driver of customer service level improvements Capacity & Attainment Demand Planning Inventory Target Mgmt Quality and Change Management Service Levels MPS & Production Planning 8 Management & Oversight SAP Stabilization and Inventory Control DRP and Deployment

9 GATP is a key enabler of illumina s customer experience strategy # Strategic Enablers Future State 1 Improved Customer Experience 2 Same-Day Shipment 3 Efficiency & Scalability 4 Data Integrity Real-time order promising Empowers customers by providing ability to evaluate alternate products, locations and routes Rules based order promising to maximize touchless fulfillment Spares incorporated into consistent planning and promising processes Ability to systematically promise and ship products on same day (no longer manual process) Ability to source complete deliveries from alternate products or locations, reducing cycle time to customer Reduce manual intervention from Planning & Customer Service teams Ability to access ATP data and alternative promising options seamlessly in one system Seamless integration between core SAP data and APO data Leverage standard SAP data and functionality Improved APO functionality & master data which can be leveraged by SAP ECC 9

10 Network Strategy is critical to customer experience Historically, illumina s DC network was located near our production facilities Completed network optimization design and currently in implementation mode Future network will be driven by volume growth, compliance, and customer requirements Russia +13,4% USA +5,2% Improve delivery reliability Quick delivery to clinical labs Grow China! Enable Dx Sales Brazil -4,2% Improve lead time Support shift to point-of-care usage 10

11 Customer Supply Chain Teams are being established in each global region Establishing cross-functional teams consisting of supply chain, sales, sales operations, and customer service Meeting with key customers on a regular frequency to discuss KPIs, order to delivery process, packaging, launches, demand projections, and special services Key benefits thus far: - Alignment on critical KPIs - Improved demand forecasts - Packaging improvement priorities - Customer complaint process improvements - Order to delivery improvement priorities, eg. master data 11

12 Product/Customer Segmentation is driving our tailored supply chain strategies Source Plan Make Deliver Product Segmentation Customer Segmentation Key Capabilities Products are segmented by volume and volatility Customer expectations are clearly identified, understood, and segmented in both the clinical and RUO markets Sourcing strategies, planning processes, manufacturing strategies, and order fulfillment processes are differentiated by product/customer segment We have clarity on the cost to serve of our various supply chain models 12

13 Packaging transformation is another focus area for supply chain Mission: To optimize customer experience and environmental impact by deploying more efficient & sustainable packaging and order fulfilment solutions Functions: Logistics & warehousing, Packaging Engineering, Supply Chain, Product Development Product packaging & labeling Product differentiation User instructions Kit contents Shelf visuals Functions: Packaging Engineering, Marketing, Supply chain Shipping containers & methods Sustainability/re-use Minimize dry ice Remove mylar bags Active or phase change containers Ground freight Ordering & pack out Order consolidation / bulk options Order confirmations & paperwork Pack out relative to size of order Having the right mix of containers Pack out based on duration of lanes & seasonality Bar coding readiness Functions: Customer service, Logistics & warehousing 13

14 Constant focus on engagement and capability building of our people is critical Skip level leadership team meetings Skip level 1:1 s Release of Career Guides and focusing on IDPs Areas of Focus Pushing down decision making closest to the issue Continuing to explain the why Increased team building Increased feedback, both positive and constructive 14

15 Daily backorder has improved dramatically since late 2015 Average Daily Backorder - Global ($M) 12.0 $9.0M 10.0 $7.2M Millions (USD) $2.1M $2.1M $2.4M $1.6M $1.6M 2.2M Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3' _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _37 Week 15

16 Customer service levels continue on an upward trend SOFT % Trend 100% 95% 90% 85% SOFT % 80% 75% 70% 65% 60% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar April May Jun Jul Aug Sep SOFT % Goal 16

17 Other key wins for illumina supply chain Inventory growth less than sales growth Scrap/COGS is on the decline Cost Savings driven by Supply Chain (leading company) - Logistics costs reduced by 15% in Material cost reduction at 4-5% Total Material cost each year Improved SCM readiness at launches Supply Chain complaints declined Net Promoter scores are increasing Engagement of SCM team in upper 80s Recognized by Sr. Leadership as value additive to business performance 17

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