Chapter 10Supply Chain Strategy

Liyan DizonMarose Monedero

Martin ReyesMacky Villagarcia

January 29, 2011

Topic Outline

What is Supply Chain Design Strategy Outsourcing Global Sourcing Purchasing-system design matrix Mass Customization

Supply Chain defined…

is a total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer

describes how organizations (suppliers, manufacturers, distributors, and customers) are linked together

Its importance…

An effective supply chain operations lead to a company’s significant competitive advantage!

Supply Chain Pfizer Philippines

Company Background - Pfizer

Recently acquired Wyeth last October 2009 The world's largest and most talented biomedical

research organization that combines a portfolio of leading prescription medicines, vaccines and animal health business

Major Divisions: Pharma/Vaccines Consumer Nutrition Animal Health

Employs about 2,000 employees to date

Company Background - Pfizer

Mission: To achieve and sustain our place as the world's premiere research-based health care company. Our continuing success as a business will benefit patients and our customers, our shareholders, our families, and the communities in which we operate around the world.

Vision: To strengthen our #1 leadership position among research-based pharmaceutical companies. We will be the most valued partner of key stakeholders in shaping the healthcare environment to improve access to quality healthcare products and programs for better health outcomes. 

Pfizer’s Popular Products

Lipitor Norvasc Zithromax Ponstan Prevnar (vaccine)

Some info…

Prevnar 13®, indicated for children 6 weeks through 5 years of age, helps protect against 13 strains of pneumococcal bacteria. Prevnar 13® can help protect your child against pneumococcal bacteria that may cause invasive disease today.

Prevnar’s Supply Chain

Ensures the availability of products and physicians' samples at optimized levels of inventory and cost.

Utilizes strategies for sourcing and ordering of materials or finished goods, in-bound and out-bound transportations, maintaining the right amount of inventory vis-à-vis demand, warehousing, and managing returned goods.

Zuellig Pharma – Exclusive Distributor

Supply Chain for Prevnar

Wyeth Havant

U.K.

Pfizer Philippine

s

Head office

GB Distributor Warehouse

(Zuelling Pharma)

Doctors

Fieldforce

CustomsDirect Delivery

Vaccine Distribution

Guideline: All vaccines should be distributed through a strictly controlled “cold chain”

Vaccine must remain in a cool and controlled environment from the point of manufacture to the point of use

Controlled environment is provided by: Fixed cold rooms or refrigerators Mobile units such as insulated containers

Supply Chain Design Strategy Forward Buying – buying a year’s supply; stocking up

Bullwhip Effect– demand order variability in the supply chain is amplified as they moved up the supply chain

Effects of strategies:*Lack of synchronization among supply chain

members*Inventory patterns do not match the demand

*Inventory accumulates at various stages

Bullwhip Effect

1. Functional products

2. Innovative Products

- products that satisfy basic needs, which do not change much over time

- stable, predictable demand and long life cycles

- product stability invites competition, hence low profit margins

- have a life cycle of just a few months

- products can be easily imitated

- companies are forced to introduce a steady stream of newer innovations

Aspects of a product’s demands

Hau Lee’s Concept

Align supply chain with the uncertainties revolving around the supply process side

A stable supply process has mature technologies and an evolving supply process has rapidly changing technologies

Types of Supply Chain Efficient Supply Chain Risk-Hedging Supply Chain Responsive Supply Chain Agile Supply Chain

Efficient Supply Chain- strategies aimed at creating the highest cost efficiency

Risk-hedging supply chains- strategies aimed at pooling and sharing resources in a supply chain so that the risks in supply disruptions can be sharedResponsive supply chains- strategies aimed at being flexible to the changing needs of customers

Agile supply chains- Combine strengths of “hedged” and “responsive” supply chains

Types of supply chain

Hau Lee’s SC Uncertainty Framework

Outsourcing

Act of moving some of a firm’s internal activities & decision responsibility to outside providers Activities, people, facilities,

equipment, technology, & other assets

Allows a firm to focus on activities that represents its core competencies

Outsourcing vs. Offshoring

Organizationally Driven

Improvement-Driven Financially Driven Revenue-Driven Cost-Driven Employee-Driven

Reasons to Outsource & the Benefits

How would you know if you will outsource an activity?

Required coordination How difficult it is to ensure that the activity

will integrate well w/ the overall process Strategic Control

Degree of loss that would be incurred if the relationship with the partner is severed

Intellectual Property Potential loss of intellectual property

through the partnership

Global Sourcing

Sourcing from the global market for goods and services across geopolitical boundaries

“borderless manufacturing”

Benefits, Costs and Risks

http://www.youtube.com/watch?v=npJGgQunCLg

Li & Fung Group

http://www.youtube.com/watch?v=UzwmlbAS8dg

Purchasing design system

Mass Customization

Chapter 10Supply Chain Strategy

Liyan DizonMarose Monedero

Martin ReyesMacky Villagarcia

January 29, 2011