Lodestone Gaining More From Your Erp

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Lodestone Gaining More From Your Erp

  1. 1. Gaining more from your ERP Turning technology benefits into real business benefits Michael Schmidt, 02-Mar-2009
  2. 2. Lodestone at a Glance Passion for Excellence. Commitment to Delivery. UK Germany Canada Belgium Poland Romania Portugal Switzerland USA Headquarters Thailand Singapore Over 500 employed Consultants globally Founded in August 2005, HQ in Switzerland Australia USD 145 mn Revenue in 2008 Built and led by former quot;Big 5 Partnersquot; with 15+ years in Management Consulting Michael Schmidt // IQPC Smart Labs 2009 Page 2
  3. 3. Your Industry, Our Expertise: Life Sciences Lodestone has vast expertise in designing and implementing business solutions in the life science industry • Global SAP enabled business transformation programs for numerous Life Science multinationals • Global quality process harmonization and LIMS implementations • LIMS Strategies and tool evaluations • Clinical trial management (clinical supply and accounting) solutions supported by SAP • Integrated Information Management and Validation using LIMS, Electronic Batch Management and Recording • Integrated global master data and PLM solutions across the value chain • Global integrated reporting solutions enabling global management dashboards, regional data transparency and full product cost analysis Michael Schmidt // IQPC Smart Labs 2009 Page 3
  4. 4. Gaining more from your ERP Content of this presentation Our understanding of the situation Key business drivers A typical process and system landscape Laboratories and LIMS – black boxes in the supply chain Our solution proposal How to achieve full supply chain integration Opportunities and benefits - case studies Conclusions Michael Schmidt // IQPC Smart Labs 2009 Page 4
  5. 5. Gaining more from your ERP Content of this presentation Our understanding of the situation Key business drivers A typical process and system landscape Laboratories and LIMS – black boxes in the supply chain Our solution proposal How to achieve full supply chain integration Opportunities and benefits - case studies Conclusions Michael Schmidt // IQPC Smart Labs 2009 Page 5
  6. 6. Gaining more from your ERP Key business drivers – many quality topics on the CxO agenda “State-of-the-art” LIMS solutions have become a commodity and almost all major Pharmaceutical companies have implemented new systems and collected a lot of operational experience Even though a modern LIMS might be in place, there are significant challenges ahead which require quality organizations to continue to think out of the box – in addition to their daily business Quality Risk Anti-counterfeiting 21st Century Regulations Quality by Design Management strategies Quality Management Real-time Supply Chain ePedigree Processes Lean Lab batch release Integration Track & Trace Process Analytical Higher Paperless Electronic Lab Technologies Technologies Automation Laboratories Notebooks (ELN) Michael Schmidt // IQPC Smart Labs 2009 Page 6
  7. 7. Gaining more from your ERP Our understanding of the situation The integration of laboratories with the supply chain has already top priority for leading-edge companies in process industries because it enables them to cut costs and increase productivity In future, the demand to embed laboratories in the internal and external supply chain processes will fundamentally increase: Quality testing will move out of the laboratories, and regulatory acceptance of PAT will require deep, seamless integration between laboratories and the company’s supply chain ~10 years from now many drugs will be manufactured continuously and most quality control will be completed on-line in a non-destructive manner, allowing more efficient in-process quality control and real-time release of products on PAT-validated production lines Michael Schmidt // IQPC Smart Labs 2009 Page 7
  8. 8. Gaining more from your ERP Content of this presentation Our understanding of the situation Key business drivers A typical process and system landscape Laboratories and LIMS – black boxes in the supply chain Our solution proposal How to achieve full supply chain integration Opportunities and benefits - case studies Conclusions Michael Schmidt // IQPC Smart Labs 2009 Page 8
  9. 9. Gaining more from your ERP The complex view Manufacturing Local market Distribution Suppliers Business model Capacity Planning Demand Creation Process Vendor Managed Inventory Market Development Distribution M M Aggregate Requirement Demand Planning R Forecasting Promotional P Procurement Inventory Supplier Demand Planning Process P Management S Planning Planning Identification Processes Category Management Continuous Replenishment Order Confirmation Raw Material Finished Goods Receive Shop Floor Inventory Build Inventory Allocation Order Transmission Demand Id. Inventory Control Inventory Deployment Materials Mgt. Control Process Trans. Planning Order Management Load Building Process Pick/Pack Ship Collect Deductions Invoice Organizations BI WHC MES Enterprise Resource Systems Planning (ERP) APS LIMS S&M PIM Michael Schmidt // IQPC Smart Labs 2009 Page 9
  10. 10. Gaining more from your ERP Simplified view: Process landscape with ERP, MES and LIMS ERP Procure-to-Pay Produce-to-Ship Order-to-Cash Master Data mgt MES Supply Chain Collaboration, Planning & Execution LIMS Detailed scheduling & Sample Product OOS / OOE / OOT Environmental Local Management release investigations monitoring Production Local Quality Control Operations Execution Michael Schmidt // IQPC Smart Labs 2009 Page 10
  11. 11. Gaining more from your ERP Simplified view: System landscape with ERP, MES and LIMS ERP Procure-to-Pay Produce-to-Ship Order-to-Cash Master Data mgt MES LIMS ELN ELN Multivariate Data Analysis Tools Chromatography Complex Simple Statistical Data Data Systems Analytical Systems Laboratory Devices Evaluation Tools HPLC, IC, ICP, IR, NIR, Gauges, Scales, AAS, … Titrators,… Michael Schmidt // IQPC Smart Labs 2009 Page 11
  12. 12. Gaining more from your ERP Content of this presentation Our understanding of the situation Key business drivers A typical process and system landscape Laboratories and LIMS – black boxes in the supply chain Our solution proposal How to achieve full supply chain integration Opportunities and benefits - case studies Conclusions Michael Schmidt // IQPC Smart Labs 2009 Page 12
  13. 13. Gaining more from your ERP The reality: How LIMS integrates with a company’s supply chain …with Laboratory …with MES & …with ERP & Equipment & workflow Production Shop-floor Supply Chain “Traditional” LIMS territory with Fairly good integration with Integration of LIMS and ERP advanced process integration in Manufacturing Execution is reduced to bi-directional, the laboratory shop floor Systems (MES) and production technical interfaces Seamless integration and high Opportunities to increase the LIMS are perceived as black automation of labs is an option, level of process and system boxes due to inadequate but still wishful thinking in many integration are there, but not alignment with key supply companies used chain operations Operational integration within the supply chain requires more than “just” a state-of-the-art ERP, MES and LIMS landscape low high low high low high Level of LIMS’ integration with the supply chain Michael Schmidt // IQPC Smart Labs 2009 Page 13
  14. 14. Gaining more from your ERP LIMS not fully integrated with the supply chain – what is the issue ? Lack of innovation ERP & When a new LIMS is put in place, the scope is Supply Chain kept tight and focused on daily QC operations LIMS promotes a reactive environment into LIMS are left out when daily operations instead of a proactive one a new ERP system is implemented, due to cost & risk Lack of knowledge Sometimes the ERP-knowledge of LIMS MES & vendors is not too good – and vice versa Production Shop-floor Very basic integration only to Missed opportunities satisfy the immediate needs Potential synergies with key supply chain from MES functions remain undiscovered, and seamless operational integration is not achieved Laboratory Equipment & workflow Political drivers Traditional LIMS territory is not discussed with Strong options to run specific anyone outside of the quality department processes in ERP or MES are not discussed Michael Schmidt // IQPC Smart Labs 2009 Page 14
  15. 15. Gaining more from your ERP Content of this presentation Our understanding of the situation Key business drivers A typical process and system landscape Laboratories and LIMS – black boxes in the supply chain Our solution proposal How to achieve full supply chain integration Opportunities and benefits – case studies Conclusions Michael Schmidt // IQPC Smart Labs 2009 Page 15
  16. 16. Gaining more from your ERP A high-level comparison of process & system standardization in a company LIMS & MES & ERP & Laboratories Production Shop-floor Supply Chain LIMS systems are in most MES systems are only in few ERP are highly standardized cases not standardized across cases standardized, but process with globally agreed, common the different production sites standardization is very high process design The basic business processes Pro-active management of best Globally defined business rules are similar, but LIMS are used manufacturing processes and are mandatory for all partners discriminative due to local, knowledge along the supply chain historically grown specifics Process standardization is a key prerequisite to achieve operational integrity within global supply chains low high low high low high Level of LIMS’ integration with the supply chain Michael Schmidt // IQPC Smart Labs 2009 Page 16
  17. 17. Gaining more from your ERP How to achieve full supply chain integration Global supply chain processes Supply chains of bigger Pharmaceutical companies are characterized by pre- Identification of critical defined global business rules that are supply chain functions mandatory for all partners Local manufacturing sites have site specific operations to cover, but all partners have common integration points with the global supply chain Simplification & For these common integration points, standardized business processes must Standardization be defined to achieve operational integration with the supply chain Local quality operations Local quality departments become standardized units with a high ability to connect to flexible and fast changing Template for key supply chains - internal best practices business processes can be shared between sites Michael Schmidt // IQPC Smart Labs 2009 Page 17
  18. 18. Gaining more from your ERP How to achieve full supply chain integration Example: How to design integrated business processes in an existing ERP – MES – LIMS environment ERP MES LIMS Other Design integrated business processes Michael Schmidt // IQPC Smart Labs 2009 Page 18
  19. 19. Gaining more from your ERP The approach: how to achieve supply chain integration in practice Our experience shows that around 20 key business processes managed in the ERP- MES-LIMS triangle provide huge potential for improved supply chain integration A typical project looks as follows: Insight Design Execute Achieve • Conceptually design & • Turn technology • Review the „Top 20“ • Run a proof-of-concept verify the to-be business benefits into real integration points in your in a prototype system process model business benefits ERP-MES-LIMS triangle • Institutionalize the change and leverage the business benefit X ERP ERP • Retire the old data, LIMS MES LIMS MES X processes or systems X no longer required • Share the new design • Drive business change • Perform a fit/gap • Perform an impact as best practice with management, review assessment and build assessment on existing other affiliates impact on SOP’s and the case for change organization, systems & training needs data M-1 M-2 M-3 M-4 Michael Schmidt // IQPC Smart Labs 2009 Page 19
  20. 20. Gaining more from your ERP Content of this presentation Our understanding of the situation Key business drivers A typical process and system landscape Laboratories and LIMS – black boxes in the supply chain Our solution proposal How to achieve full supply chain integration Opportunities and benefits – case studies Conclusions Michael Schmidt // IQPC Smart Labs 2009 Page 20
  21. 21. Genuine example from a multinational Pharma company Quality control of intercompany replenished goods Situation after Situation before • Full analytical testing against internal • Test requirements reduced to identity specifications for each physical delivery testing per delivery • Manual adoption of quality data from • Automatic transfer of quality data from sending sites in own system the sending site to the receiving site The process was never challenged during The process was challenged and re- the LIMS implementation and the system designed, a global SOP was defined to was designed to continue to support this control test requirements for inter- process unchanged company materials in the receiving sites • High workload due to amount of batches, • Elimination of the bottleneck and physical samples and analytical tests reduction of QC operations in the raw • Critical bottleneck in the raw materials materials lab (>30%) lab caused by high delivery frequencies • >20% of LIMS master data retired as no • Many errors in quality data caused by longer needed manual adoption from certificates • No data entry errors due to automation of the process Michael Schmidt // IQPC Smart Labs 2009 Page 21
  22. 22. Genuine example from a multinational Pharma company Manufacturing lead times vs. quality operations lead times Situation after Situation before • Average quality control duration per • LIMS capacity planning build upon ERP material test migrated into the new LIMS supply chain planning dates without verification or reality check • ERP defined as the leading system for • LIMS/MES/ERP planning not aligned the calculation of lab due dates After the implementation of an ERP-MES- • Average QC times revised and adapted LIMS planning model, the „old“ quality • Process to monitor planned vs. actual control lead times had a negative impact time needed defined and process owner on the material availability planning nominated • Extended production lead times with • Central manufacturing planning cockpit negative impact on the supply chain implemented with defined roles & responsibilities • Planning of quality control operations • LIMS bottlenecks visible in the not synchronized with manufacturing production planning process planning and execution: bottlenecks in • Lead time per product reduced by 3 LIMS not visible in production planning calendar days in average Michael Schmidt // IQPC Smart Labs 2009 Page 22
  23. 23. Genuine example from a multinational Pharma company Monitoring of internal quality control cost Situation after Situation before • Planned costs for QC activities are in • Actual time is recorded either on order, ERP and used for product costing operation or test level • Actual costs are not available as actual • The monitoring of planned vs. actual is effort is not recorded by lab analysts performed by a dedicated function As the actual time required for lab A revised cost structure for laboratory operations is not recorded over a longer cost is defined and used as a basis for period of time, the verification of planned product costing, invoice creation and the vs. actual is not possible preparation of new offers and contracts • No transparency on actual laboratory • Higher accuracy and reliability of actual costs on product / order / test level cost to support operational and strategic decision making (e.g. outsourcing) • Wrong figures used for product costing, invoicing of lab services for external • Revision of existing offers and contracts customers and related profits Michael Schmidt // IQPC Smart Labs 2009 Page 23
  24. 24. Genuine example from a multinational Pharma company Monitoring of external quality control cost Situation after Situation before • Standard cost for 3rd party service labs • Cost for external test and operations are not in ERP but only available on paper maintained in ERP • Services are purchased by the labs, not • „Big picture“ allows better negotiations via the operational purchasing department with external service partners Forecasting of projected cost for external External lab operations are visible in ERP services in course of yearly budget (prospectively and retrospectively) and the discussions is not possible purchase of services is shifted to the purchasing department • No transparency on actual external • Projection of external laboratory cost laboratory costs possible based upon the ERP planning • No consolidated view on external figures purchased lab services • Strategic decisions are fully supported • No standardized approach to decide if by actual figures (outsourcing of tests, specific tests should be done internal or investments in people, equipment, new external lab facilities) Michael Schmidt // IQPC Smart Labs 2009 Page 24
  25. 25. Genuine example from a multinational Pharma company Creation and distribution of quality certificates across the supply chain Situation after Situation before • Creation and distribution of certificates • Certificate distribution fully integrated in not synchronized with the supply chain the delivery process • Goods arrive at the final destination, but • Automatic distribution of certificates and not the certificate retrieval from everywhere • Manual distribution of certificates by mail The approach to have customer-specific or fax = standard procedure certificate templates was challenged and • Manual, customer-specific certificate assessed with QA and regulatory creation (more than 400 templates) compliance experts • High workload and FTE requirements to • Reduction of certificate templates from create and distribute certificates > 400 to a single one • Delays in physical deliveries caused by • Automated process ensure that missing quality certificates certificates are available when goods are physically shipped to the final destination Michael Schmidt // IQPC Smart Labs 2009 Page 25
  26. 26. Gaining more from your ERP Content of this presentation Our understanding of the situation Key business drivers A typical process and system landscape Laboratories and LIMS – black boxes in the supply chain Our solution proposal How to achieve full supply chain integration Opportunities and benefits – case studies Conclusions Michael Schmidt // IQPC Smart Labs 2009 Page 26
  27. 27. Gaining more from your ERP Key conclusions Operational integration of quality control operations with the supply chain requires more than just a state-of-the-art LIMS Process standardization is a key prerequisite to achieve operational integrity within global supply chains Quality departments must develop good expertise in complex supply chain processes LIMS implementation projects should be positioned as Business Excellence Projects, not as pure IT exercises Projects Leverage learnings from other industries and compare yourselves with leading edge companies Michael Schmidt // IQPC Smart Labs 2009 Page 27
  28. 28. Contact us Michael Schmidt Director Lodestone Management Consultants AG | Obstgartenstrasse 27, Kloten | CH-8058 Zürich Phone: +41 44 434 11 00 | Fax: +41 44 434 11 01 michael.schmidt@lodestonemc.com Michael Schmidt // IQPC Smart Labs 2009 Page 28
  29. 29. Thank you ! Turning technology benefits into real business benefits

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