10th— 11th - February 2015 – Radisson Blu, Heathrow Airport, Hayes, London, UK Annual BIOINNOVATION | Seamless, Integrated & Innovative BioManufacturing http://www.bioinnovation.gb.com/ Annual PIMS | 2015 |Pharmaceutical Innovation, Operational Excellence & Manufacturing Strategies Summit http://www.pims.gb.com/ 16th & 17th September 2015 | Boston Marriott Cambridge, MA | USA Annual ManuBIO | 2015 Flexible, Integrated & Innovative Biological Manufacturing Excellence USA http://www.manubio.com/ VIDEO WATCH

1. CASE STUDY
Drug Substance
Campaign Optimization
GOAL
To unde rsta nd the impact of changeovers and
hold ing costs on invento ry management for drug
su bsta nce product ion.
• Analysis for a manufacturer producing 2 years supply of material in long
campaigns, generating large amounts of excess inventory.
• Project looking at the timing and length of campaigns to optimize
production and minimize cost.
• Working in conjunction with Finance and planners, Bio-G evaluated
different methods for optimizing inventory quantities.
• The strategy suggested by Bio-G decreased inventory while maintaining
same service levels to customers.
• Savings of $5MM a year in direct operational costs, with no investment.
high level
summary
The traditional paradigm for operating large scale bulk manufacturing plants
is to maximize their throughput, a strategy that involves long campaigns
with very few changeovers. Plants have been traditionally rewarded for
this strategy since each additional gram of material lowers the per-unit
production cost.
THE BRI EF
Long campaigns
result in high inventory
Short campaigns
result in less inventory
Higher average inventory
with longer campaigns
Average inventory
(long campaigns)
Average inventory
(short campaigns)
TIME
INVENTORY
LEVEL
However, supply chain planners have begun to realize that such a
paradigm generates a large amount of excess inventory that must
be stored for months or years before it is shipped to patients. Single
campaigns can produce up to 1-2 years of inventory that must be stored,
using not just premium warehouse space but tying up valuable capital.
In worst cases, a classic ‘bullwhip effect’ arises where bulk manufacturing
is highly unresponsive to actual customer demand, creating either large
gluts of supply or supply shortfalls. The key challenge for manufacturers
is therefore to trade off campaign lengths with overall plant capacity
to minimize not just production cost, but holding costs throughout the
supply chain network.
INVENTORY LEVELS OVER TIME
FOR TWO CAMPAIGN STRATEGIES
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2. EOQ MODEL: OPTIMAL TRADE-OFF OF
HOLDING COSTS & CAMPAIGN LENGTH
How We Did It
“Intuitive findings are
important when you’re
trying to drive such a
large-scale change.”
Rick Johnston, Principal
OPTIMAL CAMPAIGN
LENGTH (weeks)
50
45
40
35
30
25
20
15
10
5
0
14
0
2
4
6
8
10
12
1
2
3
HOLDING COST
($ / g / year)
CHANGEOVER
COST ($MM)
Results Bio-G’s recommendations were to dramatically increase the number of
MORE INFORMATION
BIOPRODUCTION GROUP
CONTACT@BIO-G.COM
www.bio-g.com
Bioproduction Group’s methodology was to establish a strategy based on a
variant of the classic ‘Economic Production Quantity’ (EOQ) model, adapted
for the biopharmaceutical manufacturing environment. “EOQ-style modeling
was simple, understandable and produced great results”, comments Principal
Rick Johnston. “Intuitive findings are important when you’re trying to drive
such a large-scale change.”
Working with finance planners, the Bio-G team suggested a strategy for each
product that balanced raw materials, insurance and other real costs against
the loss of plant capacity resulting from more changeovers. The result was
a simulation model that incorporated detailed costing and time aspects, to
show cash inflows and outflows over time.
Not content with a deterministic solution, the team used simulation modeling
to show that the risks to the business were the same as, or lower than, the
existing strategy.
campaigns, halving the campaign length for many products. The resulting
strategy minimized inventory on-hand, resulting the manufacturer meeting
lean targets in terms of raw materials and drug substance.
More importantly, the output of the simulations showed that these lower
inventory targets could be met without increasing the risk to the business,
and in many cases decreased the overall risk of stockout. The value shown
was $5MM a year in direct costs saved, with no capital outlay required.
© Bioproduction Group. All Rights Reserved. 2