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Today’s Discussion

Rethinking Global Network Design Oscar Perez Vice President – Delivery Solutions Pfizer Global Logistics & Supply. Today’s Discussion. Global Delivery Chain Global Logistics & Supply Evolution Market Logistics Network Model What’s next Q&A. What Is Driving Our World?.

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Today’s Discussion

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  1. Rethinking Global Network Design Oscar PerezVice President – Delivery SolutionsPfizer Global Logistics & Supply

  2. Today’s Discussion • Global Delivery Chain • Global Logistics & Supply Evolution • Market Logistics Network Model • What’s next • Q&A Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.

  3. What Is Driving Our World? CONVEYANCE INTEGRITY: ECONOMIC, POLITICAL, COMPLIANCE & SECURITY GLOBALIZATION: SUPPLY CHAIN, CUSTOMERS, SUPPLIERS INFORMATION TECHNOLOGY INTERNATIONAL TRADE PFIZER STRATEGIES: CORPORATE, COMMERCIAL, PGM, ETC. TRANSPORTATION SUSTAINABILITY Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.

  4. Purpose Working together for a healthier world This defines who we are and what we’re about Mission Applying innovative science to improve world health This explains how we will achieve our Purpose • Discover, develop and ensure access to safe and effective medicines • Partner with key stakeholders and earn their trust • Build productive and enduring relationships with governm’ts & communities • Make Pfizer a great place to work • Create long-term value for shareholders Our Mission is based on these commitments to stakeholders. We Commitments must focus on creating value and earning trust for all our stakeholder groups. • Refocus and optimize the patent-protected portfolio • Find new opportunities for established products • Grow in emerging markets • Invest in complementary businesses • Instill a culture of innovation and continuous improvement These build on the priorities and represent the best opportunities to invest in our future, create value with science and technology and deliver innovative health care. Strategies • Maximize revenues • Manage costs • Strengthen our culture • Meet our commitments to stakeholders • Engage each other This is where the work begins. These represent the fundamentals for doing business successfully. Enduring Priorities • Customer Focus • Integrity • Respect for People • Teamwork • Innovation • Performance • Community • Leadership • Quality Values These underlie all we do, guiding how we behave and how we run our business. By executing on all these elements of Our Path Forward, we will lay the groundwork for a promising future for Pfizer

  5. Organization Framework Rx Contract Mfg (CM) Global PC Onc. EP EM AH Cons Nutri Commercial Businesses Spec &Vac • PGM Operating Units • Business interface/partnership • Site operational leadership PC/Onc EP EM AH Spec/ Bios/ Vac Cons Nutri PGM Customer interface • Network Performance • Leadership / guidance on efficiency and effectiveness of operations • Operational Excellence • Contract Manufacturing • Pfizer Global Engineering Network Performance Operations Bios CM Cons CM Nutri CM Strategy & Supply Network Transformation Global Logistics & Supply Global Manufacturing Services (GMS) Quality Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations. Network Enabling Functions (Finance / HR / IT / Procurement / EHS)

  6. Our Path Forward Key impact on Global Logistics & Supply The new Business Units Primary Care • Support fornew product launches: Life-Cycle-Management and new innovative products • Increase in Direct Sales and roll-out of DTP in EU; channel management (i.e. home delivery) • Customer focus.Local solution but global knowledge transfer; High and diverse service levelrequirements. Established Products • Increase in Direct Sales to support top line growth at Point-of-Sale; broad portfolio • Speed to market critical for supply chain (especially forproduct (re-) launches) • Efficient distribution: High cost sensitivity, larger shipments with reduced SLAs • High volume increase and fluctuations; Potential acquisition of generics companies & products • Development and licensing of innovative products (cold chain, hospital products, home delivery) • Acquisitions of small specialized companies (i.e. Encysive) • More specialty products (biotherapeutics, human vaccines, special devices) • Focus on service quality (special processes & channels) Specialty Care Oncology • Development or licensing of innovative products (cold chain, special devices, hospital products) • Acquisitions of small specialized companies • Morespecialty products (biotherapeutics, special devices); Focus on service quality (specialprocesses & channels):“deliver the right drug at the right time for each patient” Emerging Markets • High growth(especially for inline and local products); specific and changing regulatoryenvironments & customer requirements; Roll-out Market Logistics model (i.e.BRIC, Turkey / CEER / AFME) Supply reliability and safety, strong focus on network infrastructure, service quality; lead time; In-licensing of local brands or products for developing markets (global access) • Highvolume of cost sensitive cold chain products (vaccines); increase (especially for inline and local products); New product development and acquisition (i.e. SP EU); New Channel models;Strong growth, channels and value propositions; specific PAH network required; Animal Health

  7. ALIGN PLAN *----------EXECUTE------------* VALIDATE COMMUNICATE • Delivery chain design & planning • Product • Market • Network To-the-Market supply and delivery management In-the-Market supply and delivery management Delivery chain performance management Business Process & Data Management Supplier integration & coordination DELIVERY CHAIN MANAGEMENT HOLISTIC PROCESS INTEGRATION • Differentiate between management of supply structures (plants, contract manufacturers and suppliers) and the operational process to deliver their output. • Manage the delivery process holistically, recognizing the interdependence of major elements: strategy & policy, planning, network design, operational execution, finance, performance management, compliance and information / process management.

  8. NETWORK DESIGN ELEMENTS • Differentiate between management of supply structures and the operational process to deliver their output. • Holistic management of the delivery process, recognizing the interdependence of major elements: strategy & policy, planning, network design, operational execution, finance, performance management, compliance and information / process management. • Strong focus for accountability and results (supply assurance, asset management, aggressive cost management, compliance, talent management, etc.). • Align with commercial and PGM operations and strategies. • Capture & build upon Wyeth best practices, talent and business support processes. • Ensure implementation of an integrated Information Technology systems strategy and platform integrating SAP and other systems across delivery chain constituents. Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.

  9. Strategy & Policy Formulation Global Strategic Trade Compliance Management Delivery Chain Services & Operations Delivery Chain Performance Management: Process, Talent, Asset, Execution PERFORMANCE, VELOCITY, SECURITY, COMPLIANCE VALUE PROPOSITION • Holistic Delivery Chain Management • Enable Initiatives (Commercial, PGM, etc.) • Process Development & Harmonization • Integration of Stakeholders • Supply Assurance • Organization & Talent Management • Trade Management Policy Contribution • Accountability & Results Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.

  10. Today’s Discussion Global Delivery Chain Global Logistics & Supply Evolution Market Logistics Network Model What’s next Q&A Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.

  11. Evolution of Global Logistics and Supply Warner Lambert Pharmacia Wyeth 2000 2001 2003 2006 2008 2009 Expansion to ASIA-PAC Remaining LA And AfME Establishment of European Market Logistics 20 Markets European Distribution Study Integration of Mexico and Brazil Integration of Supply Chain and Global Logistics Expansion of ML to Emerging Markets (Russia and Turkey) • Integration US/ Canada Logistics and Supply Points into PGM

  12. Pfizer Logistics Network Global Logistics Transition Distributor No Affiliate Logistics Center

  13. Global Logistics Provides Secure And Reliable Delivery Of Products Manage 3PLs and freight systems Design and optimize deployment routes Plants/ CMs Manage PFE warehouses Clinics/ patients Compliance Use internal knowledge to optimize product movement Work to optimize time, eg, in-transit quarantine Outbound freight Int’l Inbound freight Warehouse Wholesaler Supply point movement Inbound freight Customs import/ export Int’l plants/ CMs Retailers Work to speed time through customs 3PL Sales rep Develop and implement conveyance security strategy Product security Develop and ensure conformity with policies Respond to internal/ external trends & optimize value (tax) through supply chain/logistics design Strategic alignment with Pfizer businesses

  14. Strategic Guidelines • Leverage Pfizer volume • Combine operations for the businesses • Negotiate better rates • Pursue opportunities for regional distribution • Establish regional hubs / integrated operations with LC’s • Outsource for flexibility • Rationalize logistics services provider base • Standardize towards activity based contracts • Improve costs • Capture synergy opportunities (Pharmacia) • Improve operational efficiency and effectiveness • Enhance Customer Service • Establish Service Level Agreements ( country / business ) • Ensure Alignment with Trade Policies

  15. Outsourcing Strategies • Stabilization Phase (2003 - 2005) • Strategic Objectives • Stabilize business • Capture immediate opportunities • Harmonize agreements • Activity Based Costing where appropriate • Pfizer T& C respected • Activities • Extend current relationships if they help meet strategic objectives • Engage in local RFP process as necessary • Harmonization Phase (2006 – 2009) • Strategic Objectives • Distribution Operations Outsourced • Move towards regional Logistics Service Providers (LSP’s) • Capture additional operational and process efficiencies • Activities • Engage in regional/pan European RFP process • Optimize distribution network based on new business / trade strategies • Leverage global provider relationships

  16. 2009 2006 Nordics / CEER / Benelux North Europe / Nordics North Europe South Europe South Europe Mid Europe / CEER Mid Europe Regional Consolidated Market Non-Consolidated Market Realigning Markets for the Network of the Future

  17. Change Management… Q & A • Global Logistics does not know my market! … know logistics and its common, essential elements … normally transfer local staff and upgrade as possible … do not work in isolation • If we transfer responsibility we will lose the ability to control our customer relations and sales. … it’s a partnership not a separation … trade policy, developed by the market, determines objectives • The conditions in my market are different / unique. … it’s a partnership not a separation … operational aspects of distribution (fulfillment, transport, compliance, returns, claims) are essentially the same • Why jeopardize sales to effect a comparatively small savings. … sales are not in jeopardy; changes, if they occur, are carefully planned and executed … often, you are paying too much for services and managing performance selectively … local focus on logistics part-time with no professional support and guidance

  18. Questions and Concerns • We have been working with our distribution agent for many years. They know us and we have a very good relationship. … understand and we evaluate possibilities for continued relationships under different terms … in many cases (particularly % of sale agreements) they are overcharging for services … it is precisely because of this that the nature of the relationship and services provided needs to be reviewed • We just negotiated a new contract so we cannot change in the near term. … existing contracts are reviewed and consequential actions are taken within the possibilities that exist at the time • There are only a few logistics providers in our market and we have already secured the best. … perhaps, however, professional management elevates the services and the cost / performance ratio of even the best providers … look to leverage global advantage in alliances

  19. Today’s Discussion Global Delivery Chain Global Logistics & Supply Evolution Market Logistics Network Model What’s next Q&A Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.

  20. Awareness & buy-in Internal Planning Understanding of market Implementation Infrastructure Detailed Planning Processes Financial aspects People Overview of Methodology • Phase I - Internal Planning • Guidelines and tools • Phase II – Stakeholders Awareness and Buy In • Communication and alignment • Phase III – Understanding the Market • Building a knowledge database (data, strategies, issues…) • Phase IV - Assess, design, change, enhance… • Analyzing, prioritizing and proposing solutions • Phase V – Financial aspects • Financial impact prior and post integration • Phase VI – Detailed Planning • Develop implementation Plan • Phase VII – Implementation • Monitor progress, mitigate delays and measure results

  21. Key DriversOrganizational Design • Aspects to consider when deciding where to locate and how to staff and organize the team • Market Size • Number of Markets / Market reach / Geography • Location of markets and accessibility / Travel time & frequency • Commercial Distribution Model • In-house, outsourced or distributor model • Scope • Management of WPO, Consumer, Nutritionals, AH, Mktg Aids and DP (others?) • Skills & competencies, Experience and potential of Market Logistics and Local Team • High performing vs. low performing team • Experienced or new colleagues (ML and local team) • Process robustness • Strategic vs. Operational Focus • Mature vs. Emerging Market • Activity fluctuations and multiple initiatives • Distribution Network • Single vs. Multiple LSP’s / LSP effectiveness and Service Performance • Culture and Language

  22. Overview LSP Due Diligence Assessments • Scope: identify a potential external supplier for warehousing and/or distribution of pharmaceutical products • Areas to be assessed:: • Warehouse operations • Transportation • SOX • Business Continuity Planning) • Quality • Computer System Validation • Asset Protection • EHS (facility, environmental) • Fire Protection

  23. Overview LSP Due Diligence Assessments • Initial meeting with each potential suppliercontent: discuss content & timing of assessments, explain Pfizer quality agreement and general expectations (IT, security, logistics, etc) • Carry out one overall assessment at each supplier’s main depotcontent: check if supplier would generally meet Pfizer expectations (quality, logistics, security); if outcome is negative, no further assessments required • If outcome is positive: carry out due diligence assessments at each depot (and at head quarter, if appropriate). • Generate & communicate assessment reports and discuss outcome/gaps- • If a supplier is chosen, assessment results & action plan need to be included in the contract

  24. Success Factors • Be prepared to present a compelling case for change • Prepare “Global” tools and solutions • Anticipate potential concerns specific to each market and prepare to offer effective answers and solutions • Focus on the people and organization aspects as much as on the operational aspects • Understand baseline for budget and budget assumptions • Don’t underestimate resistance, include change management in the plan… • Commit to deliver some quick wins: Identify and solve 1-2 key problems that are important for the business early in the process • Consistent and continuous measurement and communication of results is critical • Effective partner selection

  25. Innovative Distribution Models Direct to Pharmacy/Direct to Patients Pre-Wholesale & Distributor Defining & Optimizing Supply Networks Network structures Transportation network design Service Performance & Metrics/KPIs Service Level Agreements (SLAs) Benchmark service, costs, quality Compliance & Validation Site Audits & Assessments Outsourcing & Procurement Negotiations/Activity based costing models Harmonized contract guidelines Innovation & Technology Team Site remediation & optimization New technologies & best practices Continuous Improvement (Right First Time) Good Distribution Practices & Good Manufacturing Practices (GDP, GMP) GL&S Expertise

  26. Today’s Discussion Global Delivery Chain Global Logistics & Supply Evolution Market Logistics Network Model What’s next Q&A Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.

  27. Strategic Drivers • Effectively manage a more diverse and fragmented stakeholder landscape • Proactively support the business (BU’s) revenue growth strategies • Present “One Voice” to stakeholders and fully leverage our value both internal (PGM) and external (business) • Drive development of holistic Delivery Chain processes and a well coordinated long-term organization and network strategy • Ensure the seamless integration of suppliers and products into the GL&S delivery chain network • Enable coordination, information flow and knowledge transfer

  28. Working together for a healthier world Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer entities may be pending in various jurisdictions and is subject to completion of various local legal and regulatory obligations.

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