Transcript Session-4-Perez - Health & Personal Care Logistics Conference
Rethinking Global Network Design
Oscar Perez Vice President – Delivery Solutions Pfizer Global Logistics & Supply
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.
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.
What Is Driving Our World?
CONVEYANCE INTEGRITY: ECONOMIC, POLITICAL, COMPLIANCE & SECURITY GLOBALIZATION: SUPPLY CHAIN, CUSTOMERS, SUPPLIERS INTERNATIONAL TRADE TRANSPORTATION INFORMATION TECHNOLOGY PFIZER STRATEGIES: CORPORATE, COMMERCIAL, PGM, ETC.
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.
SUSTAINABILITY
Working together for a healthier world
Purpose This defines who we are and what we’re about
Applying innovative science to improve world health
Mission 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 • 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 • Maximize revenues • Manage costs • Strengthen our culture • Meet our commitments to stakeholders • Engage each other • Customer Focus • Integrity • Respect for
People
• Teamwork • Innovation • Performance • Community • Leadership • Quality Commitments Strategies Enduring Priorities Values Our Mission is based on these commitments to stakeholders. Wemust focus on creating value and earning trust for all our stakeholder groups.
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.
This is where the work begins. These represent the fundamentals for doing business successfully.
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
Organization Framework
Commercial Businesses PGM Customer interface Operations Global PC Onc. PC/Onc EP EP EM EM AH S p e c & V a c Cons Nutri AH Spec/ Bios/ Vac Cons Nutri Rx Contract Mfg (CM) Bios CM Network Performance Cons CM Nutri CM Strategy & Supply Network Transformation
PGM Operating Units
• •
Business interface/partnership Site operational leadership
Network Performance
• • • •
Leadership / guidance on efficiency and effectiveness of operations Operational Excellence Contract Manufacturing Pfizer Global Engineering Global Logistics & Supply Global Manufacturing Services (GMS) Quality
Wyeth is now a part of Pfizer Inc. The merger of local Wyeth and Pfizer
Network Enabling Functions (Finance / HR / IT / Procurement / EHS)
Our Path Forward
The new Business Units
Primary Care
Key impact on Global Logistics & Supply
• Support for new 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 level requirements
.
Established Products Specialty Care Oncology
• • • Increase in Direct Sales to support top line growth at Point-of-Sale
; broad portfolio
•
Speed to market critical for supply chain
(especially for product (re-) launches
) Efficient distribution High volume
:
High cost sensitivity,
larger shipments with reduced SLAs 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) • Development or licensing of innovative products (cold chain, special devices, hospital products) • Acquisitions of small specialized companies • More specialty products (biotherapeutics, special devices);
Focus on service quality (special processes & 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 regulatory environments & 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
)
Animal Health
•
High volume 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;
DELIVERY CHAIN MANAGEMENT
HOLISTIC PROCESS INTEGRATION ALIGN *----------EXECUTE------------* VALIDATE COMMUNICATE PLAN
•
Delivery chain design & planning
•
Product
•
Market
•
Network Supplier integration & coordination To-the-Market supply and delivery management In-the-Market supply and delivery management Delivery chain performance management Business Process & Data Management
•
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.
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.
VALUE PROPOSITION
Strategy & Policy Formulation Global Strategic Trade Management Compliance Delivery Chain Services & Operations Delivery Chain Performance Management: Process, Talent, Asset, Execution
•
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 PERFORMANCE, VELOCITY, SECURITY, COMPLIANCE
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.
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.
Evolution of Global Logistics and Supply
2000
Warner Lambert
2001
Pharmacia
2003 2006 2008
Wyeth
2009 European Distribution Study Establishment of European Market Logistics 20 Markets •Integration US/ Canada Logistics and Supply Points into PGM Integration of Mexico and Brazil Expansion to ASIA-PAC Remaining LA And AfME Integration of Supply Chain and Global Logistics Expansion of ML to Emerging Markets (Russia and Turkey)
Pfizer Logistics Network
Global Logistics Distributor Logistics Center Transition No Affiliate
Use internal knowledge to optimize product movement
Global Logistics Provides Secure And Reliable Delivery Of Products
Plants/ CMs
Manage 3PLs and freight systems Manage PFE warehouses Design and optimize deployment routes
Clinics/ patients
Work to optimize time, eg, in-transit quarantine
Inbound freight Warehouse Outbound freight Int’l Wholesaler Int’l plants/ CMs Supply point movement Inbound freight Customs import/ export Retailers
Work to speed time through customs
3PL Sales rep Compliance Strategic alignment with Pfizer businesses Product security
Develop and implement conveyance security strategy Develop and ensure conformity with policies Respond to internal/ external trends & optimize value (tax) through supply chain/logistics design
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
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
Realigning Markets for the Network of the Future
Nordics / CEER / Benelux North Europe South Europe Mid Europe North Europe / Nordics South Europe Mid Europe / CEER Regional Consolidated Market Non-Consolidated Market
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
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
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.
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
Implementation Phase V – Financial aspects
– Financial impact prior and post integration
Internal Planning Detailed Planning Phase VI – Detailed Planning
– Develop implementation Plan
Financial aspects Phase VII – Implementation
– Monitor progress, mitigate delays and measure results
People Awareness & buy-in Understanding of market Infrastructure Processes
Key Drivers Organizational 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
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
Overview LSP Due Diligence Assessments
1. Initial meeting with each potential supplier content: discuss content & timing of assessments, explain Pfizer quality agreement and general expectations (IT, security, logistics, etc)
2. Carry out one overall assessment at each supplier’s main depot
content: check if supplier would generally meet Pfizer expectations (quality, logistics, security); if outcome is negative, no further assessments required 3. If outcome is positive: carry out due diligence assessments at each depot (and at head quarter, if appropriate).
4. Generate & communicate assessment reports and discuss outcome/gaps
5. If a supplier is chosen, assessment results & action plan need to be
included in the contract
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
GL&S Expertise
•
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)
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.
Strategic Drivers
A.
B.
C.
D.
E.
F.
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
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.