Integrating a Global Supply Chain: Essential Strategies

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Integrating a Global Supply ChainEssential
Strategies

• Pharma Manufacturing
• Cambridge, Massachusetts
• June 23, 2004
• Cheryl CappsVice PresidentSupply Chain
  Planning OptimizationBristol-Myers Squibb

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BMS A 20B Pharmaceutical and Related Healthcare
Business

• BMS Facts
• 27 Pharmaceutical plants
• 5 Chemical Plants
• 135 Markets Planned
• 150 Contract Mfgs
• 100 Distribution Centers
• 2 SAP instances, 24 BPCS instances, and 6 msc.
  ERP systems
• 6000 SKUs, 15000 SRCs

Pharmaceutical Plant
Chemical Plant
Inventory
significant supply chain complexity
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Our Vision Is Clear
One Plant, One Team, One Plan
Seamless Integration, Flawless Execution
but what does it really mean?
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Conceptualizing an Integrated Supply Chain is
like asking a group of people to conceptualize
Heaven

• What does it look like?
• How do you get there?

While everyone agrees that its a nice place and
we should go there, thats where the agreement
ends!
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What does Integration Mean to Us?
From
To

• Every participant in the supply chain is working
  from a different plan
• Little or no visibility beyond local unit
• Disjointed metrics, inconsistent reporting
• The same data has a different meaning at every
  site
• High variability in non-CGMP processes (like
  planning)

• One global supply chain plan
• Daily, global visibility of planning data
• Standard, global metric calculation and reporting
• Consistent data definitions
• Minimum standards for key processes

Before you can optimize the supply chain, you
must integrate it
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What Capabilities are required by Integration?

• Complete visibility of
• Inventories
• Demand
• Plant production plans and constraints
• Simultaneous planning at multiple levels
• Market and plant at the same time
• Organizational alignment

• Consistent metrics that drive supply chain, not
  local performance
• Consistent practices
• Tightly defined business rules for interactions
  between sites
• Practices that ensure the accuracy of critical
  data
• The same data means the same thing to everyone
• Global master data

Integration is the ability to create and execute
a single plan for the entire supply chain.
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Why do we fail?

• The usual suspects
• Lack of senior management support
• Unrealistic objectives
• Lack of resources
• Poor project management
• IT focus/IT led
• Poor change management

But many companies get all of these things right
and still fail to realize the desired benefits!
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Essential Strategies

• Step 1 Develop a compelling case for change
• Step 2 Create a vivid picture of the future
• Step 3 Identify the gaps in capabilities
  between the as is and the to be state
• Step 4 Build a road map
• Step 5 Design the project
• Step 6 Establish change management program

There are 6 essential strategies to integrating a
supply chain
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Essential Strategies
Step 1

• Develop a compelling case for change
• Easy to understand
• Tailored to stakeholder group
• Conceptual Emotional
• Financial Technical
• Integrated with other key business strategies

Assume that the detriments of the as is state
are not widely understood.
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As-Is Scenario
Demand Data
Supply Data
Supply Chain Issue
Cannot balance supply and demand
In SAP Sites
SAP Sites
Non US Markets
Bulk Sites
Finishing Sites
In BPCS Sites
BPCS Sites
TollingPartners
Finishing Sites
In- Transit
Central Planning
Finishing Sites

• Market Impact
• Unreliable delivery
• Long lead time
• Minimum order qtys.
• Excessive Inventory
• Resource Intensive

3rd PartyMfgs
3rd Party Mfg
Tolling
Finishing Sites
3rd Party Mfg
Tolling Partners
Central Planning
MTO Market Orders
In US DCs
Distribution
ReplenishmentOrders
US Market
In Non-US DCs
Manual, resource intensive, inaccurate
Multiple formats systems schedules
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Essential Strategies
Step 2

• Create a vivid picture of the future
• Right scope
• Narrow enough to be manageable
• Broad enough to allow true integration
• Well defined Endpoint
• What does success look like?
• Tailored to stakeholder group
• Detail for the Detailed, Simple for the
  Simple

Assume that the benefits of the to be state are
not inherently obvious
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The Future State Process Level 1
Demand Data
Supply Data
Balance Supply Demand
Global InventoryCapacity Data
Global Forecast Net Requirements
Statistical Tools
APSSystem
Suggested Network Plan
Shape Supply Demand
Markets
NetworkPlanning
Trade Sales
SOP
Collaborative Planning
MFGSites
Purchase Orders
Net Requirement Plan

• One Format
• One delivery system
• Set calendar

• Full-picture
• Real Time

• One Plan
• Collaborative Process
• Data-based decision making
• Assigned Accountability

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Process Design Level 2
To Be Operating Model
2.0 Determine Demand Requirements
3.0 Balance Supply/Demand
1.0 Determine Supply Capabilities
1.1 Determine Raw Material Supply
1.4 Determine Production Capacities
2.7 Simulate NPI Requirements
2.1 Collect Customer Data and Collaborative Input
2.4 Collect Market Research / Analysis
3.7 Perform What If on NPI
3.1 Consolidate Demand
1.2 Determine WIP and Committed Production
1.5 Determine 3rd Party Supply Capability
2.2 Load Demand History
2.5 Collect Promotion and Deal Information
2.8 Approve Forecast
3.2 Load Inventories
3.8 Prepare for SOP Meeting
1.3 Determine Actual FG Inventory
1.6 Determine Tolling Partner Supply Capability
2.3 Create Statistical Baseline
2.6 Develop Sales Forecast
3.3 Review Supply Chain Performance
3.9 Conduct SOP Meeting
3.4 Update Market Segmentation / Service Level
Agreement
3.10 Adjust Supply Chain Tactical Plan
5.0 Shape Demand Plan
4.0 Execute Supply Plan
4.1 Create Production Schedule
5.1 Create/ Execute Demand Plan
4.7 Deployment
4.4 Provide Tolling Partner with Product
Requirements
3.5 Update Inventory Targets
3.11Communicate Supply Side/ Demand Side Impact
5.2 Resolve Financial Impacts
4.2 Provide Raw Materials Requirements
4.5 Execute Production Schedule
3.6 Run Planning Optimization
3.12 Communicate Financial Plan Impacts
4.3 Provide 3rd Party with Product Requirements
4.6 Perform Available To Promise (ATP)
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Process Design Level 3
Example II Process Design - 1.1
1.4 Determine Production Capability
Inputs
Planned Mfg Improvement
Maintenance History
Manufacturing Performance
1.4.1 Determine production parameters based on
demonstrated performance
1.4.2 Modify production parameters based on new
capability
1.4.4 Gain consensus on production capability
parameters
1.4.3 Estimate Maintenance needs by unit
Preliminary FG Production capability profile (by
site, by unit, by time period)
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Essential Strategies
Step 3

• Identify the gaps in capabilities between the as
  is and the to be state.
• Seek input from a broad base of stakeholders
• Prioritize gaps based on degree of urgency and
  business value
• Group related gaps

Individual capability assessments and
prioritization inputs provide the basis of the
project plan
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Gap Analysis
Cross-Functional Input
Capability Prioritization
Capability Assessment
Prioritization of each of the To-Be Operating
Model components based on Degree of Urgency and
Business Value

• Assessment of performance in relation to the
  To-Be Operating Model

(Global Perspective with 80/20 Rule)
Driving Factors and Considerations

• Current Initiatives / Activities
• Scope
• Scalability

• Benefit vs. Cost
• Low Hanging Fruit
• Domestic vs. International Capabilities

• Site Integration Issues
• Process Dependencies
• Technology Dependencies
• Organizational Dependencies

Business Capability Release 1
Business Capability Release2
Business Capability Release 12
As-Is
To-Be Operational Model




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Essential Strategies
Step 4

• Build a Road Map
• Resist the urge to eat the elephant in one
  bite, while insuring that the entire elephant
  will be eaten.
• Each bite should be large enough to deliver
  value but small enough to be completed in a 6
  12 month time frame.
• At the end of each bite the supply chain should
  be in a steady-state.

Achieve short term gains while insuring long
term results
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Business Capability Release Plan
The BCR plan can be viewed as a simple building
model...
BCR 12 Closed
Loop SOP Process
OptimizationPhase II
BCR 11APS Scheduling Optimization
BCR 10Customer Integration
BCR 9Supplier Integration
Extension
BCR 6APS Demand Planning
BCR 7APS Supply Planning
OptimizationPhase I
BCR0A - Site Acceleration
BCR8 Market Remediation
BCR0B - Management Tools
BCR 5 Network Planning
BCR 4A Data Integration
Integration
BCR 3SOPStandardization
BCR 4Inventory Visibility
BCR 1Demand Consolidation
BCR 2Tolling Automation
Foundation
Change Management Learning
A solid framework of tools, processes, and data
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Essential Strategies
Step 5

• Design the Project
• Build stakeholder ownership into the process
• Plan for sustainability
• Minimize non-value add we-they activity
• Eliminate hand-offs where possible
• Integrate process technology and people
• If you cant integrate multiple project elements,
  is it reasonable to expect that you can integrate
  an entire supply chain?
• Standardize project methodology, terminology,
  required documents, and even presentation
  formats.
• Use every opportunity to reduce variability

Invest the time necessary to develop a robust
project design
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Project Team Structure
Functional Process Owners
Business Capability Releases
Inventory Metrics Mgmt
Network Planning
DistributionLogistics
Database Maintenance
Site
Markets
Sourcing
Finance
BCR 0-A Site Acceleration
BCR 0-B Management Tools
Change Mgmt Learning
BCR 1 Demand Consolidation

• Design, build, test and deploy identified
  business capabilities

BCR 2 Tolling Automation
BCR 3 SOP Standardization
BCR 4 Inventory Visibility
BCR 5 Network Plng.
BCR 6 APS Demand Plng
BCR 7 APS Supply Plng
BCR 8 Market Integration

• Re-design existing functional processes and
  organization to support BCR solutions

BCR 9 Supplier Integration
Build stakeholder ownership into the process
BCR 10 Customer Integration
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The Project Office
People, process and technology integration
required
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Standard Project Methodology
(Based on 12 Months)
BCR Duration
1
2
3
4
5
6
7
8
9
10
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Mobilize
Change Management
BCRTeam
Test/ Pilot
Deploy
Build Capability
Design
Today Week 6 of the design phase
Weeks 7 8 Integrated level 4 process flow Final
application architecture Final roll-out/ release
plans Legal Regulatory Element inventory Final
Risk Management plan Build/ Test Element
Inventory Detailed Build/ Test plan
Complete - Week 5 Scope Assumptions Business
Requirements Business scenario inventory Process
Flows level 1, 2, 3.
Complete - Week 6 Draft process flow level
4 Business Rules Draft application
architecture First cut roll-out/ release
plans Business Tools/ Metrics Inventory Business
Resource requirements Draft Risk Management Plan
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Essential Strategies
Step 6

• Establish Change Management Program
• Engage and gain commitment from Senior leadership
• Ensure employee understanding at all levels and
  promoting readiness and buy-in of key
  stakeholders
• Identify and develop skills and competencies
  required by SC Professionals train sites and
  markets
• Facilitate the organizational transformation
  clarify roles and accountabilities
• Establish programs to recognize/reward behaviors
  needed to sustain the model and promote the new
  culture

Change Management is necessary to manage the
journey and to facilitate transition to the
future state.
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Change Management Processes
Supply ChainOptimization
CM8 Organizational Transformation
Transformation to the End-State Vision
CM7 Readiness Assessment
CM6 Knowledge Transfer
CM5 Performance Support Learning
CM4 Change Advocate network
CM3 Communications Stakeholder Management
CM2 Build Project Team
CM1 Sponsorship
... eight key change management processes
leveraged.
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Lessons Learned

• Benefits are likely understated in the business
  case.
• Process must always lead technology. Dont let
  the latest whiz-bang tool distract you from
  your objective.
• Insure that process technology do not get too
  far ahead of people.
• Do not underestimate the effort required to
  integrate and remediate data.
• Continue to change business objectives to reflect
  capabilities delivered and planned.
• Have a low tolerance for exceptions to global
  standards.
• Link a balanced scorecard of metrics and process
  compliance to compensation

Its not easy, but it is achievable!