Big Pharma Shares Supply Chain Best Practices

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Risk management takes center stage, and new mobile apps are being developed to help assess global risks in real time.

New technologies, strategic outsourcing, detailed analysis of manufacturing processes were some of the best practices discussed by supply chain experts from leading pharma companies at the Drug, Chemicals and Allied Trades Association’s (DCAT’s) annual meeting on March 16, 2016.

Michael Cissio, vice-president of commercial recombinant manufacturing at Baxalta; discussed the company’s supply chain network, which is based on standard operational excellence tools. He noted that the company performs detailed capacity planning to ensure adequate supplies, an approach that includes internal throughput capacity determination, assessments, and diagnostics for each site, as well as long-range supply and demand forecasting, to optimize operational planning.

The company depends on a diverse network, focused on plasma fractionation and purification and recombinant manufacturing at 11 sites in six countries, with some new facilities coming online in Austria and in Georgia.

Proper planning requires a balanced approach of qualitative and quantitative analysis of the manufacturing process, Cissio explained. Typically, this involves conducting detailed executive interviews and observing manufacturing processes, then using value stream mapping to assess the current state, develop baseline data on overall equipment effectiveness (OEE), determine current capacity, and optimize production scheduling practices.

Identifying and qualifying potential losses (planned, unplanned, and “other”) and performing root-cause analysis is an important part of the process, and drives subsequent definition of potential improvement solutions, tracking of best practices, and identification of cross-site improvement opportunities. Workshops are typically held on key topics.

Opportunities to increase productivity and reduce investment and time frames are then scored, based on how easy they will be to accomplish.

Baxalta has developed a site assessment diagnostic, that measures KPIs at each site against benchmarks to identify focus areas. The company is using a method developed by Deloitte analysts for analyzing material and operational and over head efficiencies, which allows facilities to optimize everything from the handling of bills of materials, to energy and raw material, the flow of materials through a facility, and safety stocks, Cissio said.

Throughput assessment helps answer the fundamental questions concerning operational efficiency, (i.e., cycle times, release cycle times and how quickly things can get done). It helps determine overall metrics based on cost and quality and what is driving them, Cission said.

Once demand forecasts are fully understood, Cissio says, facility managers can overlay network capacity with gains from operational excellence programs to identify gaps and investments required to fill them. They can then examine products, based on whether they are brand- and business-critical, noncritical or nonstrategic (i.e., candidates for outsourcing or pruning).

Bruce Smith, AstraZeneca’s associate director of biologics supply strategies sourcing and procurement, discussed his company’s supply management strategies. The company has about 25 products in Phase I, 25 in Phase II and 12 in Phase III, and has developed a strategy based on right first time to speed time to market and improve tech transfer, he said. 

“The idea is to provide launch capacity from internal sites to meet the volatility typical with new drug product launches and pipeline acceleration,” he said. The company runs its clinical facilities with enough spare capacity to be able to deal with any unexpected need to accelerate development or production, Smith said. It also locates clinical and launch facilities close to development labs to enable more robust technology transfer.

Recently, he noted, AstraZeneca has increased its use of contract manufacturing organizations (CMOs) to meet demand. The company uses external manufacturing for all non-platform products, until they reach a scale where internal cost-of-goods sold (COGS) reduction is needed, and manufactures in house in specialty areas where CMO capability is immature or doesn’t exist.


When selecting a CMO, the team uses specific evaluation criteria to establish a short list of requirements that are then used to inform the request for proposal. During site visits, a scorecard and draft summary report are developed, and an extended stakeholder team reviews the report and scorecard to rank potential partners.

Each site is scored against short-term product specific criteria, technical, quality, and schedule requirements, as well as against long-term portfolio-wide criteria such as cost, experience, and business operations.

J&J is strengthening its supplier risk assessment and management program, to monitor suppliers and assess multi-tier supplier risk, Chris Calabretta, J&J global procurement lead, biologics and vaccines, told attendees.

“We’re focusing on the three R’s: reliability (i.e., on-time reliability and quality), risk (i.e., the type of risk in the product and raw materials supply chains), and readiness, or assessing whether our suppliers are ready,” Calabretta said. The goal is to identify key risk indicators and assess the company’s exposure. 

The company has set up an enterprise business process and playbook, integrated across functions, that will utilize market intelligence to mitigate, communicate, and manage risk, Calabretta said

Technology will be a critical part of this strategic approach to supplier and shipper management. J&J is using Elementum, a mobile app that allows the company to monitor potential supplier events, in real time. Armed with this data, designated corporate centers of excellence can focus on specific issues, and issue real-time reports on specific supply chain risks.

Elementum, a spinoff of Singapore-based Flextronic International, was launched in 2012 and released its first commercial apps in 2014, using a cloud-based platform that allows manufacturers to manage specialized facets of supply chain, whether logistics, suppliers or manufacturing. The platform is designed to be deployed quickly and to offer a single view of the issue at hand.

A key part of this strategy is determining the voice of customer, Calabretta said, and knowing suppliers, their capabilities, their process capabilities, whether or how well they can make pharma-grade materials, how well they can characterize their materials, what percentage of spend pharma is for them, and details on business seasonality. One crucial step is determining how deep their knowledge if processes is-how well they know their suppliers and risk-and how well they can scale up to meet J&J’s volume needs.

An advanced sourcing team has been established to help the company understand more clearly what and how well suppliers are being used.

Optimizing the cold chain and overall shipment and equipment management are critical parts of this process, Calabretta says. So are intangibles. At they end, he says, a company must consider some broad questions when evaluating a potential supplier: are they the right fit, in terms of values and culture? Do they have a culture that focuses on managing risk? How well do they manage inventory?