Rethinking Global Network
Design
Oscar Perez
Vice President – Delivery Solutions
Pfizer Global Logistics & Supply
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.
Today’s Discussion
• Global Delivery Chain
• Global Logistics & Supply Evolution
• Market Logistics Network Model
• What’s next
• Q&A
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.
What Is Driving Our World?
GLOBALIZATION: SUPPLY CHAIN,
CUSTOMERS, SUPPLIERS
CONVEYANCE INTEGRITY:
ECONOMIC, POLITICAL,
COMPLIANCE & SECURITY
INFORMATION
TECHNOLOGY
INTERNATIONAL TRADE
PFIZER STRATEGIES:
CORPORATE, COMMERCIAL,
PGM, ETC.
TRANSPORTATION
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.
SUSTAINABILITY
Working together for a healthier world
Purpose This defines who we are and what we’re about
Applying innovative science to improve world health
Mission
• Discover, develop and ensure access to safe and effective medicines
• Partner with key stakeholders and earn their trust
• Build productive and enduring relationships with governm’ts &
communities
• Make Pfizer a great place to work
• Create long-term value for shareholders
Commitments
•
•
•
•
•
Refocus and optimize the patent-protected portfolio
Find new opportunities for established products
Grow in emerging markets
Invest in complementary businesses
Instill a culture of innovation and continuous improvement
Strategies
•
•
•
•
•
Maximize revenues
Manage costs
Strengthen our culture
Meet our commitments to stakeholders
Engage each other
• Customer Focus
• Integrity
• Respect for
People
• Teamwork
• Innovation
•
•
•
•
Performance
Community
Leadership
Quality
Enduring Priorities
Values
This explains how we will achieve our Purpose
Our Mission is based on these commitments to stakeholders.
must focus on creating value and earning trust for all our
We
stakeholder groups.
These build on the priorities and represent the best
opportunities
to invest in our future, create value with science and
technology and deliver innovative health care.
This is where the work begins. These represent the
fundamentals for doing business successfully.
These underlie all we do, guiding how we
behave and how we run our business.
By executing on all these elements of Our Path Forward, we will lay the groundwork for a promising future for Pfizer
Organization Framework
Commercial
Businesses
PC
Onc.
EP
EM
AH
S
p
e
c
&
V
a
c
Cons
Nutri
PGM Operating Units
PGM
Customer
interface
PC/Onc
EP
EM
AH
Spec/
Bios/
Vac
•
Cons
Nutri
•
Business interface/partnership
Site operational leadership
Network Performance
•
Operations
Global
Bios
CM
Rx Contract Mfg (CM)
Cons
CM
Nutri
CM
Network Performance
•
•
•
Leadership / guidance on efficiency
and effectiveness of operations
Operational Excellence
Contract Manufacturing
Pfizer Global Engineering
Strategy & Supply Network Transformation
Global Logistics & Supply
Global Manufacturing Services (GMS)
Quality
Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer
Network
Enabling
Functions
entities
may be pending
in various jurisdictions and is subject to
completion
of
various
local
legal
and regulatory obligations.
(Finance / HR / IT / Procurement
/ EHS)
Our Path Forward
The new Business Units
Key impact on Global Logistics & Supply
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
Specialty Care
• 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)
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 models;
Strong growth, channels and value propositions; specific PAH network required;
DELIVERY CHAIN MANAGEMENT
HOLISTIC PROCESS INTEGRATION
PLAN
ALIGN
• Delivery
chain
design &
planning
Supplier
integration &
coordination
• Product
• Market
*----------EXECUTE------------*
To-the-Market
supply and
delivery
management
In-the-Market
supply and
delivery
management
VALIDATE COMMUNICATE
Delivery chain
performance
management
Business
Process &
Data
Management
• Network
•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.
NETWORK 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.
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.
VALUE PROPOSITION
• Holistic Delivery Chain Management
Strategy & Policy
Formulation
• Enable Initiatives (Commercial, PGM, etc.)
• Process Development & Harmonization
Global
Strategic Trade
Management
Compliance
• Integration of Stakeholders
• Supply Assurance
Delivery Chain Services & Operations
• Organization & Talent Management
• Trade Management Policy Contribution
Delivery Chain Performance Management: Process, Talent, Asset, Execution
• Accountability & Results
PERFORMANCE, VELOCITY, SECURITY, COMPLIANCE
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.
Today’s Discussion
• Global Delivery Chain
• Global Logistics & Supply Evolution
• Market Logistics Network Model
• What’s next
• Q&A
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.
Evolution of Global Logistics and Supply
2000
Warner
Lambert
Pharmacia
2001
2003
European
Distribution
Study
•Integration US/ Canada
Logistics and Supply
Points into PGM
Establishment of
European Market
Logistics
20 Markets
Wyeth
2006
Integration
of Mexico
and Brazil
2008
2009
Expansion to
ASIA-PAC
Remaining LA
And AfME
Integration of Supply
Chain and Global Logistics
Expansion of ML to
Emerging Markets (Russia
and Turkey)
Pfizer Logistics Network
Global Logistics
Distributor
Logistics Center
Transition
No Affiliate
Global Logistics Provides Secure And Reliable
Delivery Of Products
Plants/
CMs
Use internal
knowledge to
optimize product
movement
Work to
optimize time,
eg, in-transit
quarantine
Manage
3PLs and
freight
systems
Inbound
freight
Manage PFE
warehouses
Warehouse
Design and
optimize
deployment
routes
Outbound
freight
Clinics/
patients
Int’l
Wholesaler
Int’l
plants/
CMs
Supply
point
movement
Inbound
freight
Customs
import/
export
Retailers
Work to
speed time
through
customs
3PL
Sales rep
Develop and implement
conveyance security strategy
Product security
Develop and ensure
conformity with policies
Compliance
Strategic alignment with
Pfizer businesses
Respond to internal/
external trends & optimize value (tax)
through supply chain/logistics design
Strategic Guidelines
• Leverage Pfizer volume
– Combine operations for the businesses
– Negotiate better rates
• Pursue opportunities for regional distribution
– Establish regional hubs / integrated operations with LC’s
• 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
Outsourcing 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 (LSP’s)
• Capture additional operational and process efficiencies
• Activities
• Engage in regional/pan European RFP process
• Optimize distribution network based on new business / trade strategies
• Leverage global provider relationships
Realigning Markets for the
Network of the Future
Nordics / CEER / Benelux
North Europe
North Europe / Nordics
South Europe
Mid Europe / CEER
South Europe
Mid Europe
Regional
Consolidated Market
Non-Consolidated Market
Change 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.
… it’s a partnership not a separation
… trade policy, developed by the market, determines objectives
• The conditions in my market are different / unique.
… it’s 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
Questions 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
Today’s Discussion
• Global Delivery Chain
• Global Logistics & Supply Evolution
• Market Logistics Network Model
• What’s next
• Q&A
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.
Overview 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…
Internal
Planning
– Analyzing, prioritizing and proposing solutions
•
Phase V – Financial aspects
Awareness
& buy-in
Understanding
of market
Implementation
– Financial impact prior and post integration
•
Phase VI – Detailed Planning
Detailed
Planning
Infrastructure
– Develop implementation Plan
•
Financial
aspects
Phase VII – Implementation
– Monitor progress, mitigate delays and measure results
Processes
People
Key Drivers
Organizational 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 LSP’s / LSP effectiveness and Service Performance
– Culture and Language
Overview 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
Overview LSP Due Diligence Assessments
1. Initial meeting with each potential supplier
content: discuss content & timing of assessments, explain Pfizer quality
agreement and general expectations (IT, security, logistics, etc)
2. Carry out one overall assessment at each supplier’s main depot
content: check if supplier would generally meet Pfizer expectations (quality,
logistics, security); if outcome is negative, no further assessments required
3. If outcome is positive: carry out due diligence assessments at each
depot (and at head quarter, if appropriate).
4. Generate & communicate assessment reports and discuss
outcome/gaps
5. If a supplier is chosen, assessment results & action plan need to be
included in the contract
Success 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
• Don’t 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
GL&S Expertise
•
Innovative Distribution Models
– Direct to Pharmacy/Direct to Patients
– Pre-Wholesale & Distributor
•
•
•
•
Outsourcing & Procurement
– Negotiations/Activity based
costing models
– Harmonized contract guidelines
Defining & Optimizing Supply Networks
– Network structures
– Transportation network design
•
Innovation & Technology Team
– Site remediation & optimization
– New technologies & best practices
Service Performance & Metrics/KPIs
– Service Level Agreements (SLAs)
– Benchmark service, costs, quality
•
Continuous Improvement (Right First
Time)
•
Good Distribution Practices & Good
Manufacturing Practices (GDP, GMP)
Compliance & Validation
– Site Audits & Assessments
Today’s Discussion
• Global Delivery Chain
• Global Logistics & Supply Evolution
• Market Logistics Network Model
• What’s next
• Q&A
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.
Strategic Drivers
A.
B.
C.
D.
E.
F.
Effectively manage a more diverse and fragmented
stakeholder landscape
Proactively support the business (BU’s) 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 GL&S delivery chain network
Enable coordination, information flow and knowledge
transfer
Working
together for
a healthier
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.