Multiple Partners, One Supply Chain

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Cloud computing has made it easier for pharma companies and their contract partners to gain visibility into their combined supply chains.

Today’s pharmaceutical supply chain has become more complex than ever, especially since drug manufacturers began to transfer more of their key operations to contract manufacturing and contract development and manufacturing organizations (CMOs and CDMOs).

Information used by pharmaceutical companies is already notoriously siloed. Now, these companies must also contend with the fallout from mergers, plant closures, and staff cuts: different legacy systems and disparate corporate cultures. These factors, plus the increasing complexity of drug manufacturing, can make communication and collaboration with contract partners much more challenging. The level of difficulty increases when the partner is based in another region or several facilities are involved.

In the past, the idea of sharing inventory and manufacturing data with a contract partner would have involved a complicated IT project and the use of middleware. Today, the rise of cloud computing and software as a service (SaaS)-and pharma’s increasing comfort with the technology--has made it much easier to share information from disparate databases, involving different forms of data.

Collaboration on the cloud
A small, but growing number of pharmaceutical manufacturers and their contract partners are building dashboards that provide information from both companies to give both partners insight into their combined supply chain.

Recently, Shire Pharmaceuticals and Patheon worked with Invistics, Inc., an IT company in Norcross, GA, to build a dashboard to give insight into the combined supply chain. Shire had contracted with Patheon and its facility in Greenville, NC, to manufacture various pharmaceutical products.

Like many sponsors and CMOs in pharma today, the partners faced a number of challenges, among them the “high mix” and large numbers of different products being made at each facility. Not only was demand highly variable, they had limited visibility on order status, excess inventory across the extended supply chain, bottlenecks, and scheduling delays.

Both companies have well-established lean manufacturing and operational excellence programs. Working with Invistics, the companies decided to move from a “push” to a “pull” approach to production and inventories, with demand dictating output. They also wanted to see a single view of their combined supply chain, from API manufacturing to finished drug distribution.

During the design stage, they used Invistics software to calculate the potential ROI from switching to a pull system and value-stream mapping to show what a combined supply chain would look like, with like products requiring similar production equipment organized into separate flowpaths.

Pilot flowpaths were designed to connect Shire’s API purchasing departments with Patheon’s manufacturing and packaging operations, and then back to Shire’s finished-goods distribution center. Whenever inventory levels or API levels dropped below a set point, a signal would be sent to step up production, or API procurement and shipment, so that the three facilities could work in synch.

The partners then moved to the pilot stage, calculating inventory levels, and establishing processes for replenishing them and permitting mutual visibility. The team right-sized inventory levels for APIs by considering inventory, customer service, and changeover costs. They also tested expected service levels versus inventory dollars, and ran “what if” scenarios to see what impact changes, such as increasing the number of changeovers, would have on their equipment.

A software module was then used to show flow and potential bottlenecks, providing alerts whenever flow (cycle time) was slower than the set goal. When cycle times for product testing slowed down too much, for instance, the partners could respond by adding more testing equipment.

The team used Invistics’ Pull Manager software to show customer needs and inventory positions. The pull-system was then incorporated into the partners’ combined inventory management and planning process.

Figure 1: Average cycle times (in days) for Product A were cut by 40% within one year.

During scaleup, the team used Invistics’ Lean Insights software to measure supply chain key performance indicators, such as cycle time and stock levels, analyzing data from different systems (from both partners), and showing results, to encourage operators to work more efficiently. Overall, the project reduced cycle times by 40%, resulting in millions of dollars in savings and more consistent inventory levels (Figures 1 and 2).

Figure 2: Total cycle times (in days) for Product B were cut by 60% within one year.

A single supply-chain view
Invistics’ CEO, Tom Knight; vice- president of consulting services, Charlie Agulla; and project leader Sapon Agrawal describe approaches to drug owner/contractor data visibility projects with Pharmaceutical Technology.

PharmTech: Why are more companies working to increase cycle time and move to the pull model?

Knight: Most of the companies we work with are looking to improve their reliability, their speed or time to market. They want to get better at product launch, or to become more responsive to getting products to patients reliably.

We constantly hear the term ‘network reliability.’ For us, that means that the company can deliver consistently, quickly, and with low variability in cycle time. So if the plant makes a drug, I know that it will make it in four weeks with very little variability, not eight weeks with a lot of variability.

Agulla: We hear, again and again, from pharma companies and CMOs that they are often in the dark about what each other are doing. Improving visibility into each of their supply networks is key to building one single supply network.

Without the right approach, the wrong decisions cause excess inventory and slowdown. Projects boil down to providing visibility to each other’s needs and streamlining.

Agrawal: Visibility problems only get larger when you are dealing with more than one facility. Partnerships must have end-to-end visibility, from raw materials to finished goods, and outside the four walls as well.

PharmTech: How do mergers affect projects like this?

Knight: With consolidations and mergers, more companies are a collection of different plants that might be running different systems. Their supply chains might not have one, but multiple systems that control the whole enterprise. It could take years to try and harmonize all that.

They need the integration, the consolidation of data, to provide the kind of visibility of current health and status of the supply chain. Once we consolidate the data from these multiple systems, either within one large company or multiple companies, it’s amazing how easy it can be to unlock value. You can, for instance, analyze appropriate inventory levels between the companies that are running these different systems, or between different units in one company, such as API manufacturing, drug product manufacturing, and packaging.

Performance and partnersPharmTech: How do you decide the key performance indicators and the role of each partner?
Knight: Our role is usually to facilitate partners’ desire for improvement, and to help them articulate mutually beneficial goals, so that both the CMO and the pharma company see the advantage of getting this increased visibility and inventory rightsizing.

Over two days, we list objectives and how we would measure the success of the collaboration. We also design how the end-to-end supply chain would work and how the business process would work (e.g., deciding appropriate inventory levels between the partners or the mechanisms for communicating orders with appropriate lead times).

We do this during a workshop with all stakeholders together from both companies. These groups must include quality, manufacturing, logistics, packaging, supply chain, and customer service. Once they are all in the room, we can lay out the business process.

Agulla:When we start these early sessions, we are not waving software around, we’re coming in as consulting partner. We evaluate the systems they have in place and their collective goals. We listen. Sometimes they already have tools to support what they want to do, and can follow up themselves. Our software comes into play only when there are gaps in the tools, people and roles, and processes required to reach the end goal.

Data and securityPharmTech: What specific data did you require from each partner?

Agulla:We need information on inventory levels, order levels, and goods movement levels, all of which can be extracted from their enterprise resource planning (ERP) systems. We also extract data from laboratory information management systems (LIMS) and corrective action and preventative action (CAPA) systems, which is critical. Sometimes the quality control release times can take longer than manufacturing.

Agrawal: We can also determine how frequently to send that data. Some customers want it hourly, others daily or weekly, depending on the project.

PharmTech: Are there security concerns?

Agulla:Twelve years ago people were less comfortable about extracting and shipping data out to the cloud. Now that this has been commonplace.

PharmTech: What IT innovations have made this possible?

Agulla:What used to be required was an innovative tool, middleware and some kind of data orchestration. The change has not been so much a specific innovation in technology as increased customer acceptance of sending data one way, read-only, over the Internet. Customers routinely use Microsoft 365 and Dropbox, and are getting more comfortable about sending sensitive data beyond their four walls. They typically have appropriate security measures in place. It has become a matter of simply sending us their files.

Avoiding culture clashPharmTech: In projects like these, do you ever run into culture clash between the two parties?

Knight: Generally, it is helpful for us to be an objective third party because the CMO and branded customers may or may not have aligned interests. We can lay out mutually beneficial approaches and ‘win-wins.’ If a pharma company gains more consistent ordering, for example, it benefits the CMO. It helps to have an outside partner get both parties to articulate these points.

Article DetailsPharmaceutical Technology Outsourcing Resources Supplement
Vol. 39, No. 17
Pages: s40–s43

Citation: When referring to this article, please cite it as A. Shanley, " Multiple Partners, One Supply Chain," Pharmaceutical Technology Outsourcing Resources Supplement 39 (17) 2015.