Title: Rethinking Global Network Design Oscar Perez Vice President
1Rethinking Global Network Design Oscar
PerezVice President Delivery SolutionsPfizer
Global Logistics Supply
2Todays Discussion
- Global Delivery Chain
- Global Logistics Supply Evolution
- Market Logistics Network Model
- Whats next
- QA
3What Is Driving Our World?
Wyeth is now a part of Pfizer Inc. The merger of
local Wyeth and Pfizer entities may be pending in
various jurisdictions and is subject to
completion of various local legal and regulatory
obligations.
4(No Transcript)
5Organization Framework
PC
Onc.
EP
EM
Nutri
Cons
AH
Commercial Businesses
Spec
Vac
- PGM Operating Units
- Business interface/partnership
- Site operational leadership
PC/Onc
EP
Cons
EM
Nutri
AH
Spec/ Bios/ Vac
PGM Customer interface
- Network Performance
- Leadership / guidance on efficiency and
effectiveness of operations - Operational Excellence
- Contract Manufacturing
- Pfizer Global Engineering
Network Performance
Operations
Bios CM
Cons CM
Nutri CM
Strategy Supply Network Transformation
Global Logistics Supply
Global Manufacturing Services (GMS)
Quality
Network Enabling Functions (Finance / HR / IT /
Procurement / EHS)
6Our Path Forward
- Key impact on Global Logistics Supply
The new Business Units
Primary Care
- Support for new product launches
Life-Cycle-Management and new innovative products
- Increase in Direct Sales and roll-out of DTP in
EU channel management (i.e. home delivery) - Customer focus. Local solution but global
knowledge transfer High and diverse service
level requirements.
Established Products
- Increase in Direct Sales to support top line
growth at Point-of-Sale broad portfolio - Speed to market critical for supply chain
(especially for product (re-) launches) - Efficient distribution High cost sensitivity,
larger shipments with reduced SLAs - High volume increase and fluctuations Potential
acquisition of generics companies products
- Development and licensing of innovative products
(cold chain, hospital products, home delivery) - Acquisitions of small specialized companies
(i.e. Encysive) - More specialty products (biotherapeutics, human
vaccines, special devices) - Focus on service quality (special processes
channels)
Specialty Care
Oncology
- Development or licensing of innovative products
(cold chain, special devices, hospital products) - Acquisitions of small specialized companies
- More specialty products (biotherapeutics,
special devices) Focus on service quality
(special processes channels) deliver the
right drug at the right time for each patient
Emerging Markets
- High growth (especially for inline and local
products) specific and changing regulatory
environments customer requirements Roll-out
Market Logistics model (i.e.BRIC, Turkey / CEER
/ AFME) Supply reliability and safety, strong
focus on network infrastructure, service quality
lead time In-licensing of local brands or
products for developing markets (global access)
Animal Health
- High volume of cost sensitive cold chain
products (vaccines) increase (especially for
inline and local products) New product
development and acquisition (i.e. SP EU) New
Channel modelsStrong growth, channels and value
propositions specific PAH network required
7DELIVERY CHAIN MANAGEMENT
HOLISTIC PROCESS INTEGRATION
- Differentiate between management of supply
structures (plants, contract manufacturers and
suppliers) and the operational process to deliver
their output. - Manage the delivery process holistically,
recognizing the interdependence of major
elements strategy policy, planning, network
design, operational execution, finance,
performance management, compliance and
information / process management.
8NETWORK DESIGN ELEMENTS
- Differentiate between management of supply
structures and the operational process to deliver
their output. - Holistic management of the delivery process,
recognizing the interdependence of major
elements strategy policy, planning, network
design, operational execution, finance,
performance management, compliance and
information / process management. - Strong focus for accountability and results
(supply assurance, asset management, aggressive
cost management, compliance, talent management,
etc.). - Align with commercial and PGM operations and
strategies. - Capture build upon Wyeth best practices, talent
and business support processes. - Ensure implementation of an integrated
Information Technology systems strategy and
platform integrating SAP and other systems across
delivery chain constituents.
9VALUE PROPOSITION
- Holistic Delivery Chain Management
- Enable Initiatives (Commercial, PGM, etc.)
- Process Development Harmonization
- Integration of Stakeholders
- Supply Assurance
- Organization Talent Management
- Trade Management Policy Contribution
- Accountability Results
10Todays Discussion
- Global Delivery Chain
- Global Logistics Supply Evolution
- Market Logistics Network Model
- Whats next
- QA
Wyeth is now a part of Pfizer Inc. The merger of
local Wyeth and Pfizer entities may be pending in
various jurisdictions and is subject to
completion of various local legal and regulatory
obligations.
11Evolution of Global Logistics and Supply
Warner Lambert
Pharmacia
Wyeth
2000
2003
2006
2008
2009
2001
Expansion to ASIA-PAC Remaining LA And AfME
Establishment of European Market Logistics 20
Markets
European Distribution Study
Integration of Mexico and Brazil
Integration of Supply Chain and Global
Logistics Expansion of ML to Emerging Markets
(Russia and Turkey)
- Integration US/ Canada Logistics and Supply
Points into PGM
12Pfizer Logistics Network
Global Logistics
Transition
Distributor
No Affiliate
Logistics Center
13Global Logistics Provides Secure And Reliable
Delivery Of Products
Manage 3PLs and freight systems
Design and optimize deployment routes
Plants/ CMs
Manage PFE warehouses
Clinics/ patients
Compliance
Use internal knowledge to optimize product
movement
Work to optimize time, eg, in-transit quarantine
Outbound freight
Intl
Warehouse
Inbound freight
Wholesaler
Supply point movement
Inbound freight
Customs import/ export
Intl plants/ CMs
Retailers
Work to speed time through customs
3PL
Sales rep
Develop and implement conveyance security strategy
Product security
Develop and ensure conformity with policies
Respond to internal/ external trends optimize
value (tax) through supply chain/logistics design
Strategic alignment with Pfizer businesses
14Strategic Guidelines
- Leverage Pfizer volume
- Combine operations for the businesses
- Negotiate better rates
- Pursue opportunities for regional distribution
- Establish regional hubs / integrated operations
with LCs - Outsource for flexibility
- Rationalize logistics services provider base
- Standardize towards activity based contracts
- Improve costs
- Capture synergy opportunities (Pharmacia)
- Improve operational efficiency and effectiveness
- Enhance Customer Service
- Establish Service Level Agreements ( country /
business ) - Ensure Alignment with Trade Policies
15Outsourcing Strategies
- Stabilization Phase (2003 - 2005)
- Strategic Objectives
- Stabilize business
- Capture immediate opportunities
- Harmonize agreements
- Activity Based Costing where appropriate
- Pfizer T C respected
- Activities
- Extend current relationships if they help meet
strategic objectives - Engage in local RFP process as necessary
- Harmonization Phase (2006 2009)
- Strategic Objectives
- Distribution Operations Outsourced
- Move towards regional Logistics Service Providers
(LSPs) - Capture additional operational and process
efficiencies - Activities
- Engage in regional/pan European RFP process
- Optimize distribution network based on new
business / trade strategies
16Realigning Markets for the Network of the Future
17Change Management Q A
- Global Logistics does not know my market!
- know logistics and its common, essential
elements - normally transfer local staff and upgrade as
possible - do not work in isolation
- If we transfer responsibility we will lose the
ability to control our customer relations and
sales. - its a partnership not a separation
- trade policy, developed by the market,
determines objectives - The conditions in my market are different /
unique. - its a partnership not a separation
- operational aspects of distribution
(fulfillment, transport, compliance, returns,
claims) are essentially the same - Why jeopardize sales to effect a comparatively
small savings. - sales are not in jeopardy changes, if they
occur, are carefully planned and executed - often, you are paying too much for services
and managing performance selectively - local focus on logistics part-time with no
professional support and guidance
18Questions and Concerns
- We have been working with our distribution agent
for many years. They know us and we have a very
good relationship. - understand and we evaluate possibilities for
continued relationships under different terms - in many cases (particularly of sale
agreements) they are overcharging for services - it is precisely because of this that the nature
of the relationship and services provided needs
to be reviewed - We just negotiated a new contract so we cannot
change in the near term. - existing contracts are reviewed and
consequential actions are taken within the
possibilities that exist at the time - There are only a few logistics providers in our
market and we have already secured the best. - perhaps, however, professional management
elevates the services and the cost / performance
ratio of even the best providers - look to leverage global advantage in alliances
19Todays Discussion
- Global Delivery Chain
- Global Logistics Supply Evolution
- Market Logistics Network Model
- Whats next
- QA
Wyeth is now a part of Pfizer Inc. The merger of
local Wyeth and Pfizer entities may be pending in
various jurisdictions and is subject to
completion of various local legal and regulatory
obligations.
20Overview of Methodology
- Phase I - Internal Planning
- Guidelines and tools
- Phase II Stakeholders Awareness and Buy In
- Communication and alignment
- Phase III Understanding the Market
- Building a knowledge database (data, strategies,
issues) - Phase IV - Assess, design, change, enhance
- Analyzing, prioritizing and proposing solutions
- Phase V Financial aspects
- Financial impact prior and post integration
- Phase VI Detailed Planning
- Develop implementation Plan
- Phase VII Implementation
- Monitor progress, mitigate delays and measure
results
21Key DriversOrganizational Design
- Aspects to consider when deciding where to locate
and how to staff and organize the team - Market Size
- Number of Markets / Market reach / Geography
- Location of markets and accessibility / Travel
time frequency - Commercial Distribution Model
- In-house, outsourced or distributor model
- Scope
- Management of WPO, Consumer, Nutritionals, AH,
Mktg Aids and DP (others?) - Skills competencies, Experience and potential
of Market Logistics and Local Team - High performing vs. low performing team
- Experienced or new colleagues (ML and local team)
- Process robustness
- Strategic vs. Operational Focus
- Mature vs. Emerging Market
- Activity fluctuations and multiple initiatives
- Distribution Network
- Single vs. Multiple LSPs / LSP effectiveness and
Service Performance - Culture and Language
22Overview LSP Due Diligence Assessments
- Scope identify a potential external supplier for
warehousing and/or distribution of pharmaceutical
products - Areas to be assessed
- Warehouse operations
- Transportation
- SOX
- Business Continuity Planning)
- Quality
- Computer System Validation
- Asset Protection
- EHS (facility, environmental)
- Fire Protection
23Overview LSP Due Diligence Assessments
- Initial meeting with each potential
suppliercontent discuss content timing of
assessments, explain Pfizer quality agreement and
general expectations (IT, security, logistics,
etc) - Carry out one overall assessment at each
suppliers main depotcontent check if supplier
would generally meet Pfizer expectations
(quality, logistics, security) if outcome is
negative, no further assessments required - If outcome is positive carry out due diligence
assessments at each depot (and at head quarter,
if appropriate). - Generate communicate assessment reports and
discuss outcome/gaps - - If a supplier is chosen, assessment results
action plan need to be included in the contract
24Success Factors
- Be prepared to present a compelling case for
change - Prepare Global tools and solutions
- Anticipate potential concerns specific to each
market and prepare to offer effective answers
and solutions - Focus on the people and organization aspects as
much as on the operational aspects - Understand baseline for budget and budget
assumptions - Dont underestimate resistance, include change
management in the plan - Commit to deliver some quick wins Identify and
solve 1-2 key problems that are important for the
business early in the process - Consistent and continuous measurement and
communication of results is critical - Effective partner selection
25GLS Expertise
- Innovative Distribution Models
- Direct to Pharmacy/Direct to Patients
- Pre-Wholesale Distributor
- Defining Optimizing Supply Networks
- Network structures
- Transportation network design
- Service Performance Metrics/KPIs
- Service Level Agreements (SLAs)
- Benchmark service, costs, quality
- Compliance Validation
- Site Audits Assessments
- Outsourcing Procurement
- Negotiations/Activity based costing models
- Harmonized contract guidelines
- Innovation Technology Team
- Site remediation optimization
- New technologies best practices
- Continuous Improvement (Right First Time)
- Good Distribution Practices Good Manufacturing
Practices (GDP, GMP)
26Todays Discussion
- Global Delivery Chain
- Global Logistics Supply Evolution
- Market Logistics Network Model
- Whats next
- QA
Wyeth is now a part of Pfizer Inc. The merger of
local Wyeth and Pfizer entities may be pending in
various jurisdictions and is subject to
completion of various local legal and regulatory
obligations.
27Strategic Drivers
- Effectively manage a more diverse and fragmented
stakeholder landscape - Proactively support the business (BUs) revenue
growth strategies - Present One Voice to stakeholders and fully
leverage our value both internal (PGM) and
external (business) - Drive development of holistic Delivery Chain
processes and a well coordinated long-term
organization and network strategy - Ensure the seamless integration of suppliers and
products into the GLS delivery chain network - Enable coordination, information flow and
knowledge transfer
28Working together for a healthier world