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Rethinking Global Network Design Oscar Perez Vice President

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Pfizer Global Logistics & Supply ... financial and strategic reasons. This can change as needs change. We are about achieving defined goals! – PowerPoint PPT presentation

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Title: Rethinking Global Network Design Oscar Perez Vice President


1
Rethinking Global Network Design Oscar
Perez Vice President Delivery Solutions Pfizer
Global Logistics Supply
2
Todays Discussion
  • Global Delivery Chain
  • Global Logistics Supply Evolution
  • Market Logistics Network Model
  • Whats next
  • QA

3
What Is Driving Our 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.
4
(No Transcript)
5
Organization Framework
PC
Onc.
EP
EM
Nutri
Cons
AH
Commercial Businesses
Spec
Vac
  • PGM Operating Units
  • Business interface/partnership
  • Site operational leadership

PC/Onc
EP
Cons
EM
Nutri
AH
Spec/ Bios/ Vac
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
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 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
  • 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 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
  • 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

7
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.

9
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

10
Todays Discussion
  • Global Delivery Chain
  • Global Logistics Supply Evolution
  • Market Logistics Network Model
  • Whats next
  • QA

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
2003
2006
2008
2009
2001
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
Intl
Warehouse
Inbound freight
Wholesaler
Supply point movement
Inbound freight
Customs import/ export
Intl 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 LCs
  • 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
    (LSPs)
  • Capture additional operational and process
    efficiencies
  • Activities
  • Engage in regional/pan European RFP process
  • Optimize distribution network based on new
    business / trade strategies

16
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.
  • its a partnership not a separation
  • trade policy, developed by the market,
    determines objectives
  • The conditions in my market are different /
    unique.
  • its 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
Todays Discussion
  • Global Delivery Chain
  • Global Logistics Supply Evolution
  • Market Logistics Network Model
  • Whats next
  • QA

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
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 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 LSPs / 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
  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
    suppliers 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

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
  • Dont 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
GLS 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)

26
Todays Discussion
  • Global Delivery Chain
  • Global Logistics Supply Evolution
  • Market Logistics Network Model
  • Whats next
  • QA

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
  1. Effectively manage a more diverse and fragmented
    stakeholder landscape
  2. Proactively support the business (BUs) revenue
    growth strategies
  3. Present One Voice to stakeholders and fully
    leverage our value both internal (PGM) and
    external (business)
  4. Drive development of holistic Delivery Chain
    processes and a well coordinated long-term
    organization and network strategy
  5. Ensure the seamless integration of suppliers and
    products into the GLS delivery chain network
  6. Enable coordination, information flow and
    knowledge transfer

28
Working together for a healthier world
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