Integrating a Global Supply Chain:
Essential Strategies
Pharma Manufacturing
Cambridge, Massachusetts
June 23, 2004
Cheryl Capps
Vice President
Supply Chain Planning & Optimization
Bristol-Myers Squibb
0
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+ SKU’s, 15000+ SRC’s
Pharmaceutical Plant
Chemical Plant
Inventory
…significant supply chain complexity
1
Our Vision Is Clear…
One Plant, One Team, One Plan
Seamless Integration, Flawless Execution
… but what does it really mean?
2
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 it’s a nice place and we
should go there, that’s where the agreement ends!
3
What does Integration Mean to Us?
From





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)
To

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
4
What Capabilities are required by “Integration”?

Complete visibility of
—
—
—


Consistent metrics that drive
supply chain, not local
performance
Consistent practices
—
Simultaneous planning at
multiple levels
—

Inventories
Demand
Plant production plans and
constraints

—
Market and plant at the same
time
—
Organizational alignment

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.
5
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!
6
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
Non US Markets
Bulk Sites
Tolling
Partners
3rd Party
Mfgs
Cannot balance
supply and demand
Finishing Sites
•Long lead time
•Minimum order qtys.
MTO Market
Orders
Replenishment
Orders
Central
Planning
US Market
Multiple formats systems & schedules
In SAP
Sites
In BPCS
Sites
Central
Planning
InTransit
3rd Party
Mfg
Tolling
Tolling
Partners
3rd
Party
Mfg
Distribution
In US
DC’s
Market Impact
•Unreliable delivery
Finishing Sites
SAP Sites
BPCS
Sites
Finishing Sites
Finishing Sites
Supply Data
Supply Chain Issue
•Excessive Inventory
•Resource Intensive
In NonUS DC’s
Manual, resource intensive,
inaccurate
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Essential Strategies
Step 2:
Create a vivid picture of the future
—
Right scope


—
Well defined Endpoint

—
Narrow enough to be manageable
Broad enough to allow true integration
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
Global Forecast
&
Net Requirements
Balance Supply & Demand
Statistical
Tools
APS
System
Supply Data
Global Inventory
&
Capacity Data
Suggested Network Plan
Shape Supply & Demand
Markets
Network
Planning
S&OP
Trade
Sales
Collaborative Planning
MFG
Sites
Net Requirement Plan
•One Format
•One delivery system
•Set calendar
Purchase Orders
•One Plan
•Collaborative Process
•Data-based decision making
•Assigned Accountability
•Full-picture
•Real Time
11
Process Design – Level 2
“To Be” Operating Model
1.0 Determine Supply Capabilities
3.0 Balance Supply/Demand
2.0 Determine Demand Requirements
1.1 Determine Raw
Material Supply
1.4 Determine
Production
Capacities
3.1 Consolidate
Demand
3.7 Perform “What
If” on NPI
2.1 Collect
Customer Data and
Collaborative Input
2.4 Collect Market
Research /
Analysis
2.7 Simulate NPI
Requirements
1.2 Determine WIP
and Committed
Production
1.5 Determine 3rd
Party Supply
Capability
3.2 Load
Inventories
3.8 Prepare for
S&OP Meeting
2.2 Load Demand
History
2.5 Collect
Promotion and
Deal Information
2.8 Approve
Forecast
1.3 Determine
Actual FG
Inventory
1.6 Determine
Tolling Partner
Supply Capability
3.3 Review Supply
Chain Performance
3.9 Conduct S&OP
Meeting
2.3 Create
Statistical Baseline
2.6 Develop Sales
Forecast
3.4 Update Market
Segmentation /
Service Level
Agreement
3.10 Adjust Supply
Chain Tactical Plan
3.5 Update
Inventory Targets
3.11Communicate
Supply Side/
Demand Side
Impact
3.6 Run Planning
Optimization
3.12 Communicate
Financial Plan
Impacts
4.0 Execute Supply Plan
4.1 Create
Production
Schedule
4.4 Provide Tolling
Partner with
Product
Requirements
4.2 Provide Raw
Materials
Requirements
4.5 Execute
Production
Schedule
4.3 Provide 3rd
Party with Product
Requirements
4.6 Perform
Available To
Promise (ATP)
4.7 Deployment
5.0 Shape Demand Plan
5.1 Create/
Execute Demand
Plan
5.2 Resolve
Financial Impacts
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Process Design – Level 3
Example II Process Design - 1.1
1.4 Determine Production Capability
Inputs
Manufacturing
Performance
Planned Mfg
Improvement
Maintenance
History
1.4.1
Determine
production
parameters
based on
demonstrated
performance
1.4.2
Modify
production
parameters
based on new
capability
1.4.3
Estimate
Maintenance
needs by unit
1.4.4
Gain consensus
on production
capability
parameters
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 Assessment
Assessment of performance in
relation to the To-Be Operating
Model
(Global Perspective with
“80/20 Rule”)
Capability Prioritization
Prioritization of each of the To-Be
Operating Model components
based on Degree of Urgency and
Business Value
Driving Factors and Considerations
- Benefit vs. Cost
- Site Integration Issues
- “Low Hanging Fruit”
- Process Dependencies
- Domestic vs.
International
Capabilities
As-Is
+
Business
Capability
Release
#1
- Current Initiatives /
Activities
- Technology Dependencies
- Scalability
- Organizational
Dependencies
+
Business
Capability
Release
#2
- Scope
+…+
Business
Capability
Release #12
=
To-Be
Operational
Model
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 11:
APS Scheduling Optimization
BCR 9
Supplier Integration
BCR 10
Customer Integration
BCR 7
APS
Supply Planning
BCR 6
APS
Demand Planning
BCR 4A Data Integration
BCR 1
Demand
Consolidation
BCR 2
Tolling
Automation
BCR 5
Network Planning
BCR 3
S&OP
Standardization
Change Management & Learning
BCR 4
Inventory
Visibility
BCR0B - Management Tools
BCR8 – Market Remediation
BCR0A - Site Acceleration
Optimization
Phase II
Extension
Optimization
Phase I
Integration
Foundation
… 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



—
Integrate process technology and people

—
Plan for sustainability
Minimize non-value add “we-they” activity
Eliminate “hand-offs” where possible
If you can’t 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
Team
Leaders
Functional Process Owners
Business Capability
Releases
Site
Network Markets SourcingDistribution
Logistics
Planning
Inventory &
Database
Metrics
Finance
Maintenance
Mgmt
BCR 0-A
Site Acceleration
BCR 0-B
Management Tools
BCR 1
Demand Consolidation
BCR 2
Tolling Automation
BCR 3
S&OP Standardization
Change
Mgmt &
Learning
• Design, build, test
and deploy
identified business
capabilities
BCR 4
Inventory Visibility
BCR 5
Network Plng.
BCR 6
APS Demand Plng
BCR 7
APS Supply Plng
BCR 8
Market Integration
BCR 9
Supplier Integration
BCR 10
Customer Integration
• Re-design existing functional
processes and organization to
support BCR solutions
… Build stakeholder ownership into the
process
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The Project Office
Project
Management
 Project Administration
 Manages Consolidation
of Project Plans
 Reporting
 Measurement
 Resource allocation
 Remediation
 Insure adherence to
process
Process
Integration
 Develop overarching
process solutions
 Coordinate & guide
teams
 Ensures process
integration among
BCR’s
Technology
Integration
Change
Management
 Manage evaluations &  Develop and
selection of
implement CM
technology solutions
strategy and work
 Coordinate & guide
plan
teams
 Lead & facilitates CM
 Ensure technology
activities
integration between
 Directs design &
BCR’s
implementation of
training programs to
ensure knowledge
transfer and
development
…People, process and technology integration required
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Standard Project Methodology
(Based on 12 Months)
BCR
Duration
BCR
Team
M
o
b
i
l
i
z
e
1
2
3
4
5
6
7
8
9
10
11
12
Change Management
Design
Build Capability
Test/ Pilot
Deploy
Today: Week 6 of the design phase
Complete - Week 5
Complete - Week 6
Weeks 7 & 8
Scope
Draft process flow level 4
Integrated level 4 process flow
Assumptions
Business Rules
Final application architecture
Business Requirements
Draft application architecture
Final roll-out/ release plans
Business scenario inventory
First cut roll-out/ release plans
Process Flows level 1, 2, 3.
Business Tools/ Metrics Inventory
Legal & Regulatory Element
inventory
Business Resource requirements
Draft Risk Management Plan
Final Risk Management plan
Build/ Test Element Inventory
Detailed Build/ Test plan
21
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
BCR 11:
APS Scheduling Optimization
BCR8 – Market Remediation
BCR0A - Site Acceleration
BCR 4A Integration
BCR 1
Demand
Consolidation
CM8:
CM7:
CM6:
CM5:
CM4:
CM3:
CM2:
CM1:
BCR 7
APS
Supply Planning
BCR 6
APS
Demand Planning
BCR 2
Tolling
Automation
BCR 5
Network Planning
BCR 3
S&OP
Standardization
BCR 4
Inventory
Visibility
BCR0B - Management Tools
BCR 10
BCR 9
Supplier Integration Customer Integration
Supply Chain
Optimization
Change Management & Learning
Organizational
Transformation
Readiness Assessment
Knowledge Transfer
Performance Support & Learning
Change Advocate network
Communications & Stakeholder Management
Build Project Team
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. Don’t 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
… It’s not easy, but it is achievable!
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