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Assessing the Benefits and Risks of using Seafreight
“Temperature Controlled Pharmaceutical Distribution” November 2009
James Shaw Global Logistics
Jon Chapman Global Logistics
Content�AstraZeneca an overview
�Reasons for using Seafreight
�Reefer Overview
�Benefits and Risks of using reefers
�Pitfalls when changing to sea freight.
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�How do we secure a successful operation
�Conclusions
Top 10 pharmaceutical companies
Sales, $m
31 601
33 965
34 393
35 361
42 232
AstraZeneca
Sanofi-Aventis
Novartis
GlaxoSmithKline
Pfizer
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Source: IMS Health, MIDAS Quantum, 51 countries MAT/Qtr4 2008.
18 741
19 004
25 636
28 894
29 541
31 601
Lilly
Abbott
Merck & Co
Johnson & Johnson
Roche
AstraZeneca
Five important AstraZeneca medicines
14.5 million patientswith elevated cholesterol
Seroquel Depot and Seroquel has helped more than 25 million patients with schizoph-renia and bipolar disease.
Symbicort combines maintenance therapy and fast immediate treatment in a single inhaler, approved against asthma and chronic obstructive pulmonary disease (COPD).
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Further treatment with Arimidex prevents one in four recurrences compared with tamoxifen.
with elevated cholesterol has been treated with Crestor.
Nexium – reflux patients in over 100 countries have gained a better quality of life thanks to the most effective gastric acid inhibiton on the market.
19 manufacturing units in 16 countries
The largest plants are in:
Sweden Snäckviken and Gärtuna
UK Avlon and Macclesfield
US Newark and Westborough
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US Newark and Westborough
Australia North Ryde
France Dunkirk and Reims
Germany Wedel
Japan Maihara
Puerto Rico Canovanas
China Wuxi
Reasons for using Seafreight
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Pharma Patent Expirations
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So what? We will be asked to do more with less & to challenge the current status quo.
Our strategyFor sustainable, industry-leading growth
“Making themost meaningful difference to patient health
through great medicines”
Valued medicines
Lean and agileorganisation
Customer centricmindset
Responsible leaders who make every interaction
counts
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OUR VALUES
Products
Strengthen thepipeline
Performance
Reshape thebusiness
Patient Needs
Grow the business
People
Change our behaviour and
our culture
Logistics developments within different Industries
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Evolution of AZ Logistics Business Model
Strategy
Tactic
Planning
Astra Zeneca
Astra Zeneca
3PL/contract logistics
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Coordi-nation
Execution
Past Future
Freight Forwarding Warehousing
3PL/contract logistics
Freight Forwarding Warehousing Value Add
AZ drivers for change of transport mode
�Global Lean Agenda – reducing waste.
“Would the customer be prepared to pay for airfreight?”
� Increasing cost of air distribution eg security and fuel surcharges, capacity constraints in downturn
�Environmental impact of air distribution – CO2 emissions
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�Product security/ Temperature sustainability
�Product lifecycle – From growth to maturity for some products.
“Higher volume – Lower value”
SHOULD NOT TO BE SEEN AS THE ONLY SOLUTION
Why Seafreight?
�Cost Savings of up to 75%, compared against airfreight. This cost saving will outweigh the opportunity cost of inventory on the water.
�Estimated reduction in CO2 emissions of 98% Full temperature control.
�Reduction in handling and as a result risk of transport damage.
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� Increased product security, as distributed in sealed tamper evident container.
�Reduction in pallet usage and materials to protect airfreight pallets
�The testing time and QA release could be absorbed within the transit period (Sterility Testing Leadtime - 15 days).
What is a Reefer?– Reefer is the generic name for a temperature controlled
container.
– The containers, which are insulated, are specially designed to circulate temperature controlled air.
– Reefers can maintain cargo temperature in differing ambient temperatures.
– Reefer is not only a refrigerator. Reefer can both remove and
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– Reefer is not only a refrigerator. Reefer can both remove and provide heat.
Facts on the Reefer Market
�Approx. 0.5% of the global container supply are Reefers.
�Multiple shipping lines need to be contracted in order to secure a reliable supply of equipment.
�Less shipping lines operate a reefer service – Supply to remote destinations could be problematic !
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�Less loading volume than standard containers.
�High value restrictions imposed by many carriers – all AZ products move under cost of manufacture.
� Harbour maintenance taxes in the USA need to be considered in any sea movement.
Benefits of using Seafreight / Reefers
�Complete unit shipped from supplier to customer (sealed).
�No transhipments
�No handling
�Reduction in transit damage
�Unit dedicated to AZ Pharma cargo.
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�Unit dedicated to AZ Pharma cargo.
�Reefer temperature set to match cargo specification.
�Opportunity to allocate stock in transit.
�Reefer unit logs temperature during the voyage and thus offers a tool for follow up and quality control – used in line with AZ Temperature tools.
Considerations when using Sea-freight
�Increased transit time
�Less frequent departures
�Loss of contact with product for ‘long periods’
�Increased inventory
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Ersätt med bild på container i flygmotor
�Better planning and planning in advance is needed
�Pre planning and booking as long as 20 days before
�Advanced notice of imminent arrival allows link into European LTL road network (Antwerp Hub)
Challenges when changing to sea freight
� QUALITY
�Lack of Gensets
�Unclear Responsibility
�SOPs
�Equipment pre-trip inspection
� FINANCIAL
�Understanding of total supply chain
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�Understanding of total supply chain
� Robust Total Cost Ownership Analysis
� Internal acceptance and agreement
�Cargo value and volume shipped as one ‘unit’
�Common understanding amongst all parties
How do we secure a successful operation?
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Important stuff…
3PLCarriersPortsHaulier
Astra Zeneca
Communication
3 PARTIES! Working Together
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Communication
19
�D2D Supply chain
�Pharma compliance
�Performance Mgmt
�Process driven
�Commitment & trust
�3rd-party relations
�Clear ownership
�Win-win focus
�Clear demands
�Resources
�3-Party relations
�Clear Ownership
Operation in Practice
�Operating routines and SOPs adjusted to meet specific demands of sea-freight
�Freight Monitoring – web based track and trace information – shared with all parties involved.
�
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�Joint and agreed KPI's used for evaluation and continuous improvements
�Regular reviews at all levels to follow up, evaluate and develop ways of working.
�Gainshare rewards to Incentivise providers.
Logistics Chain overview
SOP’s / GDPSOP’s / GDP
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GEODIS WILSON DELIVERS AN END TO END SOLUION
SOP’s / GDPSOP’s / GDP
21
Supply Chain Traceability
Conclusions
�Benefits of Sea-freight
� Cost Savings
� C02 reduction,
� Increased security and quality.
� Understand the impact of increased lead time.
� Understand your supply chain – “Buy your lead time”
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� Understand your supply chain – “Buy your lead time” eg ship ahead of clearance.
� Secure understanding and commitment from internal business stakeholders.
� Proper preparation at all levels is key.
� Things do go wrong – risk mitigation plan.
QUESTIONS?
AstraZeneca Freight & Logistics 25th Nov, 2009