Near Term Planning and Biopharmaceuticals: Issues and Challenges

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Near Term Planning and Biopharmaceuticals Issues
and Challenges

• Prasad V Saraph
• 17 FEB 2005

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Outline

• Near Term Planning Paradigm
• Definitions and Terminology
• Special Issues and Characteristics
• Summary

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Near Term Planning Paradigm

• Mission Statement
• Provide right product in right quantity and
  right flavor at right time to meet internal and
  external customer expectations
• Scope
• Raw materials through multiple intermediate
  products to finished goods
• Goals
• Supply reliability
• Effective inventory management
• Process re-engineering
• Flexibility and automation of information
  handling

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Supply Reliability Driven internally or
externally?

• Internal Process Predictability
• Process results are variable, rejections of large
  batches are possible
• Cycle times for QA are variable, long delays are
  possible
• External Market Influence
• Demand and Pricing variability
• Life Cycle Management pressures

How do we improve supply reliability?
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Inventory Management Same standards as other
industries?

• Process batches need sufficient and unambiguous
  identification to ascertain in what markets they
  may be sold
• The complexity of the product structure can
  quickly get out of hand. Scheduling and routing
  batches so as to best match global demands is
  non-trivial and dynamic
• Lower process predictability as compared to other
  industries, due to usage of living organisms, may
  necessitate inventory as a business buffer
• Complex regulatory approval processes may create
  restricted inventory across the supply chain
• Significantly long and variable quality cycle
  times may necessitate higher inventory to buffer
  against shortages downstream

How do we measure the appropriateness of
inventory? What inventory strategy is suitable?
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Process Reengineering Impact on near term
planning

• The business growth has outstripped the growth of
  disciplined and efficient management systems
• Significant potential for changes and
  improvements
• Changes can be time consuming and complex
• Changes requiring regulatory submissions, e.g.,
  raw materials/cell lines, manufacturing/testing/st
  orage processes, equipment/facilities, label
  claims, delivery devices and dosage strengths
• Changes around business processes might be
  constrained by regulatory requirements
• For example, data integrity requirements, SOX
  (Sarbanes-Oxley Compliance) requirements, Agency
  commitments around past observations
• Each change can add to planning complexity in the
  near term
• Restrictions on material usage and processing
• Exploding requirements to track individual
  material types arising out of changes
• Uncertainty of regulatory approvals (nature and
  timing)

What are the key features of near term planning
solutions that would help manage the process
reengineering effectively?
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Information Handling Need for Automation and
Flexibility

• Need for industry focused IT solutions Existing
  standard IT solutions may not have appropriate
  data structures, processes and performance
  measures
• Simpler (linear, unidirectional and few stages)
  supply chains in Biopharmaceuticals are deceiving
  to the eye due to internal complexity and
  uncertainty
• Potential to focus on wrong planning issues
  while using standard IT systems
• Need for Automation too much manual transfer of
  data
• Planning and scheduling efforts need automated
  data input and automated data quality management
  (error checks for consistency and completeness)
• Need for Flexibility ability to change and
  expand IT systems at the speed of changes in
  business
• Open and flexible IT architecture
• Efficient change control processes compliant with
  CFR Part 11

What are the key expectations of effective IT
Solutions for Biopharmaceuticals?
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Definitions and Terminology

• Not standardized in the industry, not even
  standardized within a company
• Process stages (expression, purification,
  filling, lyophilization, packaging )
• Process steps within each stage
• External stakeholders in supply chain
• Patient groups, Key Opinion Leaders, regulators
  (FDA, SEC, OSHA, Export Control), health
  intermediaries (Formularies, Insurers, Hospitals)
• Internal stakeholders in supply chain
• Quality Assurance, Marketing and Sales, Quality
  Control, Manufacturing, Engineering, Regulatory
  Affairs, Project Management, Financial
  Controlling, Information Technology, RD
  (Clinical and Process Sciences), HESS (Health,
  Environment, Safety and Security)

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Special Issues and Characteristics

• Regulatory-induced complexity
• Each change in materials, process or facilities
  requires regulatory submissions across multiple
  countries or jurisdictions
• Approvals are granted at different times,
  sometimes approval specs from different
  regulators have different parameter ranges
• Causes explosion in product-process structure for
  planning production
• Process variability
• Biological nature of process stages makes
  predictability and reliability difficult
• QA/QC times for a process stage are significantly
  longer and significantly more variable than
  manufacturing times

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Special Issues and Characteristics

• Inventory valuation
• As batches move through process stages, they may
  be assigned the accumulated cost
• But actually they have no market value until they
  are proven to meet all approval specs of a region
  with demand for it
• Fixed cost nature of business
• Raw materials account for perhaps only 25 of
  costs. The rest is facilities and the staff to
  run them and manage them
• Skilled manpower and need for experience
  restricts the variable staffing
• The facilities need to stay open in order to
  retain their licenses. The costs of re-licensing
  far exceed the costs of staying open during
  periods of low demand

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Planning and Scheduling Cycle
FORECAST
PLAN
EXECUTE/CONTROL
REPORT
3-year rolling demand, production, inventory and
financials plan
Supply Capability Updates
Quarterly Supply Chain Review
QUARTERLY
Marketing/Sales Initiatives
13 week rolling demand, production, inventory and
financials plan
Regional Inventory Status
Projects Plans
Capacity Assumptions
Shutdown Plans
Sales Forecasts
MONTHLY
Aggregate Demand
Monthly Supply Chain Reports
Weekly Production Plan
Plant Inventory Status
Resource Status
Weekly Production Reports
WEEKLY
Daily Production Starts
Material Availability
Legend
Output
Daily Production Reports
Shift Reports, Logs
DAILY
Report
Inputs
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Conclusions The Grand Challenges for Near-term
Planning

• Internal supply chain complexity management
• Controlling growth of complexity
• Efficiently coping with the complexity that must
  exist
• Coping with the non-robust processes
• Planning with uncertainty and unusually high
  variability
• Ability to react quickly to the unfolding reality
• Demand planning and inventory planning in this
  environment
• Characterizing the demand and isolating
  variability and uncertainty
• Setting the appropriate inventory policy (how
  much and where?)
• Supply chain configuration (Push-Pull interface)

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Discussion

• Thank you for your attention.
• Questions? Comments? Ideas?