Near Term Planning.ppt


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Near Term Planning.ppt

  1. 1. Near Term Planning and Biopharmaceuticals: Issues and Challenges Prasad V Saraph 17 FEB 2005
  2. 2. Outline <ul><li>Near Term Planning Paradigm </li></ul><ul><li>Definitions and Terminology </li></ul><ul><li>Special Issues and Characteristics </li></ul><ul><li>Summary </li></ul>
  3. 3. Near Term Planning Paradigm <ul><li>Mission Statement </li></ul><ul><li>Provide right product in right quantity and right flavor at right time to meet internal and external customer expectations </li></ul><ul><li>Scope </li></ul><ul><li>Raw materials through multiple intermediate products to finished goods </li></ul><ul><li>Goals </li></ul><ul><ul><li>Supply reliability </li></ul></ul><ul><ul><li>Effective inventory management </li></ul></ul><ul><ul><li>Process re-engineering </li></ul></ul><ul><ul><li>Flexibility and automation of information handling </li></ul></ul>
  4. 4. Supply Reliability: Driven internally or externally? <ul><li>Internal Process Predictability </li></ul><ul><ul><li>Process results are variable, rejections of large batches are possible </li></ul></ul><ul><ul><li>Cycle times for QA are variable, long delays are possible </li></ul></ul><ul><li>External Market Influence </li></ul><ul><ul><li>Demand and Pricing variability </li></ul></ul><ul><ul><li>Life Cycle Management pressures </li></ul></ul>How do we improve supply reliability?
  5. 5. Inventory Management: Same standards as other industries? <ul><li>Process batches need sufficient and unambiguous identification to ascertain in what markets they may be sold </li></ul><ul><li>The complexity of the product structure can quickly get out of hand. Scheduling and routing batches so as to best match global demands is non-trivial and dynamic </li></ul><ul><li>Lower process predictability as compared to other industries, due to usage of living organisms, may necessitate inventory as a business buffer </li></ul><ul><li>Complex regulatory approval processes may create restricted inventory across the supply chain </li></ul><ul><li>Significantly long and variable quality cycle times may necessitate higher inventory to buffer against shortages downstream </li></ul>How do we measure the appropriateness of inventory? What inventory strategy is suitable?
  6. 6. Process Reengineering: Impact on near term planning <ul><li>The business growth has outstripped the growth of disciplined and efficient management systems </li></ul><ul><ul><li>Significant potential for changes and improvements </li></ul></ul><ul><li>Changes can be time consuming and complex </li></ul><ul><ul><li>Changes requiring regulatory submissions, e.g., raw materials/cell lines, manufacturing/testing/storage processes, equipment/facilities, label claims, delivery devices and dosage strengths </li></ul></ul><ul><ul><li>Changes around business processes might be constrained by regulatory requirements </li></ul></ul><ul><ul><ul><li>For example, data integrity requirements, SOX (Sarbanes-Oxley Compliance) requirements, Agency commitments around past observations </li></ul></ul></ul><ul><li>Each change can add to planning complexity in the near term </li></ul><ul><ul><li>Restrictions on material usage and processing </li></ul></ul><ul><ul><li>Exploding requirements to track individual material types arising out of changes </li></ul></ul><ul><ul><li>Uncertainty of regulatory approvals (nature and timing) </li></ul></ul>What are the key features of near term planning solutions that would help manage the process reengineering effectively?
  7. 7. Information Handling: Need for Automation and Flexibility <ul><li>Need for industry focused IT solutions: Existing standard IT solutions may not have appropriate data structures, processes and performance measures </li></ul><ul><ul><li>Simpler (linear, unidirectional and few stages) supply chains in Biopharmaceuticals are deceiving to the eye due to internal complexity and uncertainty </li></ul></ul><ul><ul><li>Potential to focus on ‘wrong’ planning issues while using standard IT systems </li></ul></ul><ul><li>Need for Automation: too much manual transfer of data </li></ul><ul><ul><li>Planning and scheduling efforts need automated data input and automated data quality management (error checks for consistency and completeness) </li></ul></ul><ul><li>Need for Flexibility: ability to change and expand IT systems at the speed of changes in business </li></ul><ul><ul><li>Open and flexible IT architecture </li></ul></ul><ul><ul><li>Efficient change control processes compliant with CFR Part 11 </li></ul></ul>What are the key expectations of effective IT Solutions for Biopharmaceuticals?
  8. 8. Definitions and Terminology <ul><li>Not standardized in the industry, not even standardized within a company </li></ul><ul><li>Process stages (expression, purification, filling, lyophilization, packaging ) </li></ul><ul><ul><li>Process steps within each stage </li></ul></ul><ul><li>External stakeholders in supply chain </li></ul><ul><ul><li>Patient groups, Key Opinion Leaders, regulators (FDA, SEC, OSHA, Export Control), health intermediaries (Formularies, Insurers, Hospitals) </li></ul></ul><ul><li>Internal stakeholders in supply chain </li></ul><ul><ul><li>Quality Assurance, Marketing and Sales, Quality Control, Manufacturing, Engineering, Regulatory Affairs, Project Management, Financial Controlling, Information Technology, R&D (Clinical and Process Sciences), HESS (Health, Environment, Safety and Security) </li></ul></ul>
  9. 9. Special Issues and Characteristics <ul><li>Regulatory-induced complexity </li></ul><ul><ul><li>Each change in materials, process or facilities requires regulatory submissions across multiple countries or jurisdictions </li></ul></ul><ul><ul><li>Approvals are granted at different times, sometimes approval specs from different regulators have different parameter ranges </li></ul></ul><ul><ul><li>Causes explosion in product-process structure for planning production </li></ul></ul><ul><li>Process variability </li></ul><ul><ul><li>Biological nature of process stages makes predictability and reliability difficult </li></ul></ul><ul><ul><li>QA/QC times for a process stage are significantly longer and significantly more variable than manufacturing times </li></ul></ul>
  10. 10. Special Issues and Characteristics <ul><li>Inventory valuation </li></ul><ul><ul><li>As batches move through process stages, they may be assigned the accumulated cost </li></ul></ul><ul><ul><li>But actually they have no market value until they are proven to meet all approval specs of a region with demand for it </li></ul></ul><ul><li>Fixed cost nature of business </li></ul><ul><ul><li>Raw materials account for perhaps only 25% of costs. The rest is facilities and the staff to run them and manage them </li></ul></ul><ul><ul><li>Skilled manpower and need for experience restricts the variable staffing </li></ul></ul><ul><ul><li>The facilities need to stay open in order to retain their licenses. The costs of re-licensing far exceed the costs of staying open during periods of low demand </li></ul></ul>
  11. 11. Planning and Scheduling Cycle Material Availability Resource Status Capacity Assumptions Shutdown Plans Projects Plans Plant Inventory Status Sales Forecasts Regional Inventory Status FORECAST PLAN EXECUTE/CONTROL REPORT QUARTERLY MONTHLY WEEKLY 3-year rolling demand, production, inventory and financials plan Marketing/Sales Initiatives Supply Capability Updates 13 week rolling demand, production, inventory and financials plan Aggregate Demand Weekly Production Plan Daily Production Starts Daily Production Reports DAILY Shift Reports, Logs Weekly Production Reports Monthly Supply Chain Reports Quarterly Supply Chain Review Output Inputs Report Legend Target Setting and Adjustments Monthly Demand Planning Monthly Production Planning Weekly Mfg Scheduling Shift Huddles
  12. 12. Conclusions – The Grand Challenges for Near-term Planning <ul><li>Internal supply chain complexity management </li></ul><ul><ul><li>Controlling growth of complexity </li></ul></ul><ul><ul><li>Efficiently coping with the complexity that must exist </li></ul></ul><ul><li>Coping with the non-robust processes </li></ul><ul><ul><li>Planning with uncertainty and unusually high variability </li></ul></ul><ul><ul><li>Ability to react quickly to the unfolding reality </li></ul></ul><ul><li>Demand planning and inventory planning in this environment </li></ul><ul><ul><li>Characterizing the demand and isolating variability and uncertainty </li></ul></ul><ul><ul><li>Setting the appropriate inventory policy (how much and where?) </li></ul></ul><ul><ul><li>Supply chain configuration (Push-Pull interface) </li></ul></ul>
  13. 13. Discussion <ul><li>Thank you for your attention. </li></ul><ul><li>Questions? Comments? Ideas? </li></ul>