James Shaw & Jon Chapman, AstraZeneca on 'Assessing the Benefits and Risks of using Seafreight'

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James Shaw & Jon Chapman, AstraZeneca speak on 'Assessing the Benefits and Risks of using Seafreight' at the 7th European 3PL Summit in Brussels, November 25th 2009.

To download all of the slides from the conference for free visit www.3PLsummit.com/eu_2009ppts

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James Shaw & Jon Chapman, AstraZeneca on 'Assessing the Benefits and Risks of using Seafreight'

  1. 1. Assessing the Benefits and Risks of using Seafreight “Temperature Controlled Pharmaceutical Distribution” November 2009 James Shaw Global Logistics Jon Chapman Global Logistics
  2. 2. Content AstraZeneca an overview Reasons for using Seafreight Reefer Overview Benefits and Risks of using reefers Pitfalls when changing to sea freight. How do we secure a successful operation Conclusions 2 AstraZeneca Freight & Logistics 25th Nov, 2009
  3. 3. Top 10 pharmaceutical companies Sales, $m Pfizer 42 232 GlaxoSmithKline 35 361 Novartis 34 393 Sanofi-Aventis 33 965 AstraZeneca 31 601 Roche 29 541 Johnson & Johnson 28 894 Merck & Co 25 636 Abbott 19 004 Lilly 18 741 Source: IMS Health, MIDAS Quantum, 51 countries MAT/Qtr4 2008. 3 AstraZeneca Freight & Logistics 25th Nov, 2009
  4. 4. Five important AstraZeneca medicines Seroquel Depot and Symbicort combines Seroquel has helped maintenance therapy and more than 25 million fast immediate treatment in patients with schizoph- a single inhaler, approved renia and bipolar disease. against asthma and chronic obstructive pulmonary disease (COPD). 14.5 million patients with elevated cholesterol has been treated with Nexium – reflux patients in Crestor. over 100 countries have gained a better quality of life thanks to the most Further treatment with effective gastric acid Arimidex prevents one inhibiton on the market. in four recurrences compared with tamoxifen. 4 AstraZeneca Freight & Logistics 25th Nov, 2009
  5. 5. 19 manufacturing units in 16 countries The largest plants are in: Sweden Snäckviken and Gärtuna UK Avlon and Macclesfield US Newark and Westborough Australia North Ryde France Dunkirk and Reims Germany Wedel Japan Maihara Puerto Rico Canovanas China Wuxi 5 AstraZeneca Freight & Logistics 25th Nov, 2009
  6. 6. Reasons for using Seafreight 6 AstraZeneca Freight & Logistics 25th Nov, 2009
  7. 7. Pharma Patent Expirations So what? We will be asked to do more with less & to challenge the current status quo. 7 AstraZeneca Freight & Logistics 25th Nov, 2009
  8. 8. Our strategy For sustainable, industry-leading growth “Making the most meaningful difference to patient health through great medicines” Responsible Valued Customer centric Lean and agile leaders who make medicines mindset organisation every interaction counts Reshape the Change our Strengthen the Grow the business behaviour and pipeline business our culture Products Patient Needs Performance People OUR VALUES 8 AstraZeneca Freight & Logistics 25th Nov, 2009
  9. 9. Logistics developments within different Industries 9 AstraZeneca Freight & Logistics 25th Nov, 2009 9
  10. 10. Evolution of AZ Logistics Business Model Strategy Astra Tactic Astra Zeneca Planning Zeneca 3PL/contract logistics Coordi- nation Freight Execution Forwarding Warehousing Freight Forwarding Warehousing Value Add Past Future 10 AstraZeneca Freight & Logistics 25th Nov, 2009
  11. 11. AZ drivers for change of transport mode Global Lean Agenda – reducing waste. “Would the customer be prepared to pay for airfreight?” Increasing cost of air distribution eg security and fuel surcharges, capacity constraints in downturn Environmental impact of air distribution – CO2 emissions Product security/ Temperature sustainability Product lifecycle – From growth to maturity for some products. “Higher volume – Lower value” SHOULD NOT TO BE SEEN AS THE ONLY SOLUTION 11 AstraZeneca Freight & Logistics 25th Nov, 2009
  12. 12. Why Seafreight? Cost Savings of up to 75%, compared against airfreight. This cost saving will outweigh the opportunity cost of inventory on the water. Estimated reduction in CO2 emissions of 98% Full temperature control. Reduction in handling and as a result risk of transport damage. Increased product security, as distributed in sealed tamper evident container. Reduction in pallet usage and materials to protect airfreight pallets The testing time and QA release could be absorbed within the transit period (Sterility Testing Leadtime - 15 days). 12 AstraZeneca Freight & Logistics 25th Nov, 2009
  13. 13. What is a Reefer? – Reefer is the generic name for a temperature controlled container. – The containers, which are insulated, are specially designed to circulate temperature controlled air. – Reefers can maintain cargo temperature in differing ambient temperatures. – Reefer is not only a refrigerator. Reefer can both remove and provide heat. 13 AstraZeneca Freight & Logistics 25th Nov, 2009
  14. 14. Facts on the Reefer Market Approx. 0.5% of the global container supply are Reefers. Multiple shipping lines need to be contracted in order to secure a reliable supply of equipment. Less shipping lines operate a reefer service – Supply to remote destinations could be problematic ! Less loading volume than standard containers. High value restrictions imposed by many carriers – all AZ products move under cost of manufacture. Harbour maintenance taxes in the USA need to be considered in any sea movement. 14 AstraZeneca Freight & Logistics 25th Nov, 2009
  15. 15. Benefits of using Seafreight / Reefers Complete unit shipped from supplier to customer (sealed). No transhipments No handling Reduction in transit damage Unit dedicated to AZ Pharma cargo. Reefer temperature set to match cargo specification. Opportunity to allocate stock in transit. Reefer unit logs temperature during the voyage and thus offers a tool for follow up and quality control – used in line with AZ Temperature tools. 15 AstraZeneca Freight & Logistics 25th Nov, 2009
  16. 16. Considerations when using Sea-freight Increased transit time Less frequent departures Loss of contact with product for ‘long periods’ Increased inventory Better planning and Ersätt med bild på is planning in advance Advanced notice of container i flygmotor needed imminent arrival allows Pre planning and link into European LTL booking as long as 20 road network (Antwerp days before Hub) 16 AstraZeneca Freight & Logistics 25th Nov, 2009
  17. 17. Challenges when changing to sea freight QUALITY Lack of Gensets Unclear Responsibility SOPs Equipment pre-trip inspection FINANCIAL Understanding of total supply chain Robust Total Cost Ownership Analysis Internal acceptance and agreement Cargo value and volume shipped as one ‘unit’ Common understanding amongst all parties 17 AstraZeneca Freight & Logistics 25th Nov, 2009
  18. 18. How do we secure a successful operation? 18 AstraZeneca Freight & Logistics 25th Nov, 2009
  19. 19. Important stuff… 3 PARTIES! Working Together Carriers Astra 3PL Ports Zeneca Haulier Communication D2D Supply chain Commitment & trust Clear demands Pharma compliance 3rd-party relations Resources Performance Mgmt Clear ownership 3-Party relations Process driven Win-win focus Clear Ownership 19 19 19 AstraZeneca Freight & Logistics 25th Nov, 2009
  20. 20. Operation in Practice Operating routines and SOPs adjusted to meet specific demands of sea-freight Freight Monitoring – web based track and trace information – shared with all parties involved. Joint and agreed KPI's used for evaluation and continuous improvements Regular reviews at all levels to follow up, evaluate and develop ways of working. Gainshare rewards to Incentivise providers. 20 AstraZeneca Freight & Logistics 25th Nov, 2009
  21. 21. Logistics Chain overview SOP’s / GDP SOP’s / GDP GEODIS WILSON SOP’s / GDP Supply Chain Traceability DELIVERS AN END SOP’s / GDP TO END SOLUION 21 AstraZeneca Freight & Logistics 25th Nov, 2009 21
  22. 22. Conclusions Benefits of Sea-freight Cost Savings C02 reduction, Increased security and quality. Understand the impact of increased lead time. Understand your supply chain – “Buy your lead time” eg ship ahead of clearance. Secure understanding and commitment from internal business stakeholders. Proper preparation at all levels is key. Things do go wrong – risk mitigation plan. 22 AstraZeneca Freight & Logistics 25th Nov, 2009
  23. 23. QUESTIONS? AstraZeneca Freight & Logistics 25th Nov, 2009
  24. 24. THANK YOU! James.shaw@astrazeneca.com Jon.chapman@astrazeneca.com 24 AstraZeneca Freight & Logistics 25th Nov, 2009

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