Best Practices in Crisis Management and Business Continuity for BioPharma Manufacturing and Supply Chain Operations


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Today’s pharma and medical device industries operate in a truly global market environment.

Now, in the wake of major devastating events (such as the earthquake, tsunami, and partial nuclear meltdown in Japan last year), leading healthcare organizations have moved quickly to ensure their global supply chains and manufacturing operations are capable of sustaining sudden – and potentially ruinous – disruptions and disasters.

This new Best Practices, LLC report examines how world-class companies optimize their Business Continuity and Crisis Management groups and how their response plans fare when faced with major disasters or operating disruptions.

This report is designed to help companies develop an evidence-based understanding of how other companies plan, prevent, prepare and respond to threats to their supply chains and operations – both to keep employees safe and ensure continued production and long-term viability.

The study includes two segments: a Large Healthcare Company segment and a Small Healthcare Company and Clinic segment.

Business Continuity Group Structure & Leadership
Assessing Risks & Prioritizing Response
Securing Your Supply Chain to Safeguard Customers and the Company
Working with Sole-Source or Strategic Suppliers
Performance Metrics
Creating a Business Resiliency Framework: The Next Generation
Developing a Prevention Mind-set and Fast Response
Using Backups & Redundancy Management
Communication During a Crisis

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Best Practices in Crisis Management and Business Continuity for BioPharma Manufacturing and Supply Chain Operations

  1. 1. Best Practices in Crisis Management & Business Continuity for BioPharma Manufacturing and Supply Chain Operations Best Practices, LLC Strategic Benchmarking Research REPORT SUMMARY 0
  2. 2. TABLE OF CONTENTSI. Universe of Learning, p. 4-7  Participating Companies, p. 5  Participating Companies by Segment, p. 6  Job Titles of Participants, p.7II. Key Insights and Findings, p.8-19III. Structure and Leadership, p. 20-27IV. Emergency Response: Building Capabilities To Respond Quickly & Effectively Throughout Your “Ecosystem,” p. 28-38V. Assessing Risks & Prioritizing Response , p. 39-50VI. Assembling The Tools and Techniques to Build an Integrated Business Continuity Plan, p. 51-60VII. Developing A Prevention Mindset and Fast Response, p. 61-66VIII. Using Backups & Redundancy Management, p. 67-72IX. Importance of Communication During Crisis, p. 73-79 1
  3. 3. TABLE OF CONTENTSXI. Securing Your Supply Chain To Safeguard Customers and the Company, p. 80-86XII. Working With Sole-Source or Strategic Suppliers, p. 87- 94XIII. Performance Metrics, p. 95-97XIV. Creating A Business Resiliency Framework: The Next Generation, p. 98-103XV. Current Trends and Future Directions For Contingency Planning, p. 104-106XVI. Lessons Learned: Key Opportunities To Support Continuous Business Continuity Improvement, p. 107- 110XVII.About Best Practices, LLC, p. 111 2
  4. 4. List of Participating CompaniesIn total, 33 Business Continuity (BC) leaders from 29 national and global health care organizationsparticipated in this research. All study participants answered all or relevant parts of a comprehensive BCperformance benchmark assessment. In addition, selected executives provided qualitative insightsthrough deep-dive interviews and “lessons learned” observations. 3
  5. 5. Job Titles and Functions of Study ParticipantsThis research accessed Business Continuity leaders across the enterprise. More than54% of benchmark partners hold roles at the Director or Vice President levels.Interestingly, nine out of 10 BC managers seem to hold generalist responsibilities, withBusiness Continuity being just one of their job responsibilities. •SVP Global Operations Business Continuity and Emergency Management Leadership- Skill Sets •VP Product Supply and Facility •Head of Engineering, Facilities & EH&S •Executive Director Managers , •Director, Global Commercial Development 46% •Director of Operations (2) •Director, Supply Chain (3) •Director Material Management (2) •Deputy Director of Pharmacy •Director of SC & CS Excellence Directors or •Associate Director - Business Improvement - Center Of Expertise Above, 54% Manufacturing Bulk •Associate Director, EHS & Business Continuity •Associate Director, Compliance & Risk Management •Associate Director, Global Artwork Management •Distribution Manager •Team lead •Project Manager (2) •Sr. Manufacturing Manager •Project Manager- Manufacturing •Global HSE Consultant - BCP •Business Process Owner (2) •Manager, Supply Chain •Automation Specialist •Manager, US Distribution •Pack. Operator •Logistics Manager •Energy Engineer •Distribution Manager 4
  6. 6. Framework for Study Insights, Best Practices, & PitfallsThe performance benchmark and field research have harvested scores of insights andobservations. They have been organized into the following executive summary frameworkfor discussion and planning purposes. 8. Business Resilience Is 1. BCP Is A Young Function Next Frontier of BCP 7. Secure The Value Chain: 2. Balance Centralization & Supply, Develop, Distribute Insights, Fast Field Response Best Practices, 6. Cultivate A Pitfalls 3. Train & Drill For Prevention Mindset Fast Emergency & Capabilities Response 4. Planning Paradox: 5. Develop Risk Assessment Capabilities For the Enterprise Plans Are Useless; Planning Is Priceless 5
  7. 7. SAMPLE KEY INSIGHTS:“Train & Drill for Fast Emergency Response”  Emergency Response Training Is Essential for Fast Response – But Training Occurs Sporadically:  More than 60% of companies conduct emergency response training only once or twice a year – or not at all.  Training frequency goes hand and hand with response effectiveness. This seems an Achilles’ heel for many companies.  Less than 1/3 of companies train monthly or quarterly.  Business Continuity Mastery Comes through Practice Drilling:  Frequent training drills are one proven way to prepare for “high-impact, low-frequency events.” Conduct regular practice drills to prepare the organization for the unlikely.  The act of training ultimately becomes more important than the type of crisis for which one prepares. 6
  8. 8. SAMPLE DATA SLIDE:“Majority of Companies Give Themselves Mediocre Scores for Fast EmergencyResponse”General response time assessments are poor when companies are asked to gradethemselves. More than half of all companies score themselves as “mediocre” for fire,evacuation, return-to-production, and communication response times. Q29 Based on practice drills and/or actual emergency events, what is your current level of performance for the following response types? Exemplary response time (performance exceeds response time goals) Mediocre response time (performance meets response time goals) Fire response 47% 40% Evacuation response (of employees, 47% 40% contractors, vendors, customers) Return-to-full-production response 47% 47% Communication response (internal, external) 27% 47%(N=15) 7
  9. 9. SAMPLE DATA SLIDE:“Emergency Response Training Occurs Only Sporadically”More than 60% of all participants reported conducting emergency response training once or twice a year –or not at all. Training frequency often goes hand and hand with response effectiveness. It appears thismay be an Achilles’ heel for many companies. In contrast, less than 1/3 of companies train monthly orquarterly. Q7 How frequently do you conduct emergency response training - as contrasted with actual drills - throughout for your key operations groups? 4% Monthly Data Trends Quarterly 24% 2/3 of partici- pants from LHC 36% Annually conduct emergency 16% Semi-annually response training less than 2 times a year, or not at Other 4% all. The number jumps to 80% We do not conduct any 16% when looking at training exercises SHC. 0% 20% 40% (N=25) 8
  10. 10. SAMPLE DATA SLIDE:“Fire Drills Most Frequently Rehearsed Emergency Response”Aside from fire drills, most emergency responses are practiced once or twice each year – ornot at all. Hazardous waste, safety and accident response drills are the most frequentlypracticed drills after fire. Q9 Please indicate how frequently you conduct the following emergency response drills for ensuring successful emergency management and business continuity (N=21) 9
  11. 11. SAMPLE DATA SLIDE:“Single Sourcing Is Capital-Efficient but High-Risk” Almost one third of benchmark organizations single-source more than 60% of their critical supplies or raw materials. This procurement approach enables companies to negotiate low supply prices – but it places significant risk on the overall enterprise in the event of supply disruption. Q45 What percentage of your critical supplies, parts and raw materials are single-sourced?Sourcing At Given Levels% of Companies Sole- % of Supplies Sole-Sourced (N=14) 10
  12. 12. SAMPLE BEST PRACTICE: “Risk Rank Vendors to SpotlightSupply Chain Weak Links”A supply chain is only as strong as its weakest links. One business continuity bestpractice is to risk rank all vendors to spotlight supply chain weaknesses thatotherwise may not be obvious. BUSINESS CONTINUITY Lessons Learned Observation INSIGHT: • Risk rank your suppliers. “We have several parallel paths, one of •Assess supply history for which is vendor management … which I past disruptions. call the Achilles’ heel of our business • Are they a sole-source continuity our reliance on IT and our supplier? suppliers. So we’re working with strategic • Do they provide a strategic sourcing to risk-rank our suppliers . . . and part or material? based on that we’re going to look at what • Do they possess patents or proprietary processes? are our options? Do we get another vendor in place? If they’re our single-source, do we stockpile additional material, and if so, where -- our warehouse? Their warehouse? -- Business Continuity Director 11
  13. 13. SAMPLE INSIGHT:“Geographic Risk Is Key Dimension of Facility/Vendor Rankings” All locations have some level of risk associated with their geography and frequency of storms, brownouts, or other natural disasters. Savvy business continuity groups assess geographic risk for every facility and major supplier. Lessons Learned Observation BUSINESS CONTINUITY INSIGHT: “Location is part of risk analysis. For example, we’re required by law to test (our medicines) on animals prior to • Physical location is a part providing the drugs to the human population. Some of the of risk ranking for vendors areas or farms where we get these animals are in locations and your own facilities. that are very desirable. If you look into the future, say five • Natural disasters common years, then there’s a good chance that that farm will be sold to a geography create risk to a developer which would obviously impact our supply. for your supply chain. That is part of the risk ranking. So that led to us looking to • Avoid sole-source find an alternate supplier because we’re foreseeing (the suppliers in locations with farm supplier) in the next three, four, five years going away. special natural risks. “Another example is we have some sole-suppliers in the L.A. basin, which based on the threats of brownout, blackout, wildfires and earthquakes, we’re not good with those as sole suppliers.. . .Because of all the natural disasters of the world, the physical location of the facilities is a part of that risk ranking.” -- Associate Director of EHS & Business Continuity 12
  14. 14. SAMPLE DATA SLIDE:“IT Integration Empowers Overall Business Continuity”The majority of participating companies reported having IT fully or partially involved in theirBusiness Continuity planning. Nearly 20% of companies evidence some vulnerability from non-integrated siloes. Also, general lack of preparation to prevent cyber threats suggest additionalimprovement opportunities across the IT frontier. Q20 To what extent is your IT group a part of your business continuity planning? Completely siloed and segregated from business Fully integrated continuity plan 18% into business continuity plan 29% 53% Integrated when and where necessary (or likely to be involved) (N=17) 13
  15. 15. SAMPLE DATA SLIDE:“Capital Funding a Key Barometer of the Importance Placed on Business Continuity” Nearly 90% of companies dedicate less than 10% of their overall capital expense plan budget on business continuity programs to sustain the enterprise. On average, study participants dedicate 4.6 percent of their capital expense plan for Business Continuity. Q6 What percentage of your capital expense plan spend is devoted to business continuity projects and investments? Data Trends More than 3/4 of participants from Large and Small Healthcare companies reported dedicating less than 10% of their capital expense plan to business continuity projects and investments (N=20) 14
  16. 16. SAMPLE DATA SLIDE:“New Technologies Offer Promise for Managing Risk”A plethora of cutting edge technologies and trends are proving critical to improvingbusiness reliability, including risk management systems and improved bandwidth.Companies in the LHC segment are highly active in using each of these technologies. Q34 Please rate the current or predicted level of impact each of the following new technologies will have in helping to improve reliability: (not used)(N=14) 15
  17. 17. Learn More About Our Company Our company is an internationally recognized thought leader in the field of best practice benchmarking®. We conduct research and consulting based on the simple yet profound principle that organizations can chart a course to superior economic performance by leveraging the best business practices, operating tactics and winning strategies of world-class companies. Best Practices, LLC 6350 Quadrangle Drive, Suite 200, Chapel Hill, NC 27517 919-403-0251 16