Evren Ozkaya, Ph.D.www.supplychainwizard.com © 20151
CONFIDENTIAL – any use of this material without written permission of Supply Chain Wizard, LLC is strictly prohibited
Evren Ozkaya, Ph.D.Founder and CEO,
Supply Chain Wizard, LLC
Ensuring Cost-effective Supplier Compliance
CMO Serialization Programs
Nov 4, 2015Denmark
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
Evren Ozkaya, Ph.D.
Sandoz Inc. (a Novartis Company)Director of Global Track & Trace ProgramDirector of Strategic Planning
McKinsey & CompanySenior Management Consultant
Intel CorporationSupply Chain Modeling Engineer
Georgia Institute of TechnologyPh.D. in Supply Chain and LogisticsM.S. in Industrial Engineering
Bilkent UniversityB.S. in Industrial Engineering
Introduction
Supply Chain Wizard, LLCFounder and CEO
Other experience:Education:
Logistics consulting
Manufacturing
Sales & Marketing
IT & Purchasing
2
Consulting Services:
Serialization (Track & Trace)1. Program Setup & Strategic Planning2. Project Management & Execution3. ROI & Sustainability
Supply Chain Strategy & Optimization1. Supply Chain Strategy Design2. End-to-end Process Optimization3. Process automation & analytics
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
Introduction: Supply Chain Wizard Core expertise in Pharma Serialization (Track & Trace), Supply Chain & PMO
3
• Former Global Serialization Leads• Projects in US, EU and Asia• End-to-end program execution• Line level integration & validation
• Former Pharma SC executives• End-to-end SC projects in Pharma• High impact projects in Mfg-Retail
collaboration and reverse logistics
• Global & regional PMO expertise• Led PMO office for multiple Pharma
serialization projects globally• Designed & deployed strategy & PMO
tools for Serialization projects
Serialization (Track & Trace)
Pharma Supply Chain Management
Strategic Planning & Program Management
1 2 3
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
SCW is serving world’s leading organizations
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• T&T Strategic Plan
• Supply Chain Org. Design
• CMO Serialization Strategy
• T&T Regulatory Database
• CMO Serialization Program
• CMO IT Connectivity
• T&T IT Vendor Selection
• T&T Lot Level Traceability
• T&T Pilot Line Project
• T&T India Project
• HDMA New Product Form
Select Clients & Projects – covering strategy, execution & full implementation
• T&T Roll-out • T&T Dashboard
• Sales & Operations Planning Process Design
• T&T Packaging Efficiency
• T&T European Hub for Serialization &
Aggregation
Our consultants and/or experts supported Serialization Projects for:• 3 of the top 5 US Generic Companies• 4 of the top 10 Global Pharma Companies
Top 5 US Generic Mfg.
Top 3 GlobalGeneric Mfg.
Top 3 TurkishPharma 3PL
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
SCW tools & services support end-to-end project life cycle of Pharmaceutical Serialization (Track & Trace) Programs
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Strategy Execution
Regulations Database
• Active/Final/Draft legislations• Regulatory requirements• Technical requirements
1
Serialization Survey Tool
• Serialization readiness• Program stage by legislation• Serialization challenges
2
Serialization Wizard Tool
• Strategy workshops• Instant T&T Program design• Budget & roll-out planning
3
Serialization Mgt. Dashboard
• CMO/Site risk assessment• Client business value at risk• Risk monitoring & reporting
CMO Serialization Portal
• Interactive CMO portal• CMO/Client req’t exchange• CMO progress benchmarks
4
5
Serialization Program Mgt.
• CMO/Site T&T Strategy • PMO & Execution• CMO/Site guidance
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Pharmaceutical Serialization (Track & Trace) Programs
Seri
aliz
atio
n E
xper
tise In
du
stry Experien
ce
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
Agenda
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Track & Trace: CMO/Supplier Serialization
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
End-to-end view on T&T Risk Management:Selected core initiatives to protect down-side & capture up-side/opt’y
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Internal /Site Network
External Network
Protect down-side Risk Capture up-side Opt’y
• Internal T&T Program
• Process/Data standards
• Customer T&T Req’s
• Contract Pkg. / VAS
• Inter-co. SC visibility
• Data driven SC insights
• External T&T Program
• Cost Containment
• IT Connectivity
• External SC visibility
• Supplier Collaboration
• E2E SC Optimization
1
2
3
4Up-sideDown-side Business Value
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
How to structure CMO Serialization Support Program
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Objectives
Baseline / Risk Assessment
Strategy / Resources / Vendor Selection
Budget & Financial Plan
Client side CMO side
• Ensure CMO compliance• Minimize value at risk
• Achieve compliance• Fulfill Client requirements
• CMO network baseline• CMO compliance risk
• IT, SC, Commercial Baseline• Regulatory / Client gaps
• CMO Support Strategy• CMO Taskforce Team• Consulting partner
• Serialization Strategy• Implementation Team• HW / SW / Consulting
• Cost of CMO Support• Unit cost increase• Capex investments
• Cost of compliance• Unit-cost negotiations• Capex negotiations
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
CMO Compliance typically falls under Supply Chain workstream and has a high impact on the business
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DecisionsBaselineObjectives1 2 3
Serialization Program – Strategic Planning Phase
• Ensure compliance for all CMOs & CPOs
• Minimize support/help• Minimize value at risk
• # of CMOs• # of CMO sites• # of CMO lines
• CMO network design• Make vs. Buy• CMO funding strategy• CMO monitoring & support
CMO / CPO
DC / Logistics
Cust. Service
• Minimize disruption • # of Distribution Centers• # of headcount• X packs/day throughput
• IT solution vendor• Hardware solution vendor• Key process changes
• Protect service levels • X% pack fill rate / service • Data exchange / EDI• Pilot customer selection
Supply Chain
Planning• Minimize supply shortage • Inventory levels
• Back-order levels• Transition plan• Pilot SKU selection
Impact
H
H
M
L
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
Assessing risk of CMO non-compliance & business impact requires a careful analysis & consideration of multiple factors
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Client side CMO side
Risk Dimension
CMO
Serialization
Risk
Score
Likelihood
of CMO non-
compliance
Business
impact
of CMO non-
compliance
Time
Categories of Risk
Scope
Resources
A
B
C
Financial
Strategic
D
E
x%
x%
x%
y%
y%
100%
100%
Risk Assessment Methodology Risk Assessment Output
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
CMO Support Strategy should build on insights received from own CMO network and requires a custom approach
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Client side CMO side
Risk Heatmap by Market
Challenge 1
Challenge 2
Challenge 3
Challenge 4
Challenge 5
Challenge 6
Challenge 7
Challenge 8
Top CMO Challenges
CMO Program Stage by Market CMO Revenue at Risk
Sample outputs - Disguised
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
Serialization Management Dashboard provides full visibility & risk assessment on CMO/Site Serialization Compliance
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Risk Heatmap by Market
CMO Risk Assessment Matrix CMO Revenue at Risk
Sample outputs - Disguised
CMO Network Scenario Planning
Add’l Benefits:
• CMO Communication management
• CMO Action Tracker• Risk profile by CMO• CMO Benchmarks• CMO level user access• Report exports PDF• Data exports XLS• Data input screens• Admin modules
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
Possible CMO Support Resource Plan & Budget Framework that could be leveraged to estimate full program budget
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Client side CMO side
CMO Segment # CMOs TotalRevenues
Client Resources Needed[CMO Task Force]
CMO SupportCost Estimates[OpEx/CapEx]
Strategic x $M # FTEs $
High Risk
Med Risk
Low Risk
.
.
.
.
.
.
.
.
.
.
.
.
Non-Strategic x $M # FTEs $
High Risk
Med Risk
Low Risk
.
.
.
.
.
.
.
.
.
.
.
.
Total – xxx $M # FTEs Program Budget $
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
5 Types of Risk Responses
Avoid
WITHOUT a CMO Program WITH a CMO ProgramWhat it means for CMO Serialization
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Benefits of a Global CMO Serialization Support program include avoiding, transferring, reducing & planning for risks
Reduce
Transfer
Contingency
Accept
• Avoid surprises w/ CMO non-compliance• Avoid critical issues surfacing too late
• Transfer risk between CMOs• Transfer/in-source products
• Reduce likelihood of non-compliance• Reduce impact of non-compliance• Reduce scope by prioritizing CMOs
• Accept calculated risks• Accept possible business down-side• Accept when mitigation cost is too high
• Plan contingencies for failures• Plan for redundant capacities• Plan for business continuity
Mitigation Levers
Value at
Risk
Identify
Measure
Plan
Mitigate
Report
CMO Program
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 201515
Example of how CMO Program could add value: AVOID
5 Types of Risk Responses
Avoid
What it means for CMO Serialization
Reduce
Transfer
Contingency
Accept
• Avoid surprises w/ CMO non-compliance• Avoid critical issues surfacing too late
• Transfer risk between CMOs• Transfer/in-source products
• Reduce likelihood of non-compliance• Reduce impact of non-compliance• Reduce scope by prioritizing CMOs
• Accept calculated risks• Accept possible business down-side• Accept when mitigation cost is too high
• Plan contingencies for failures• Plan for redundant capacities• Plan for business continuity
Value at
Risk
Situation:
• A CMO realized it is too late for US Market compliance• Assessing high costs, CMO decides to pull out of the
market, impacting Client’s business in US
CMO Program Actions:
• Continuously monitor compliance readiness by market• Predict high risk CMOs by market situation & deadlines• Propose strategies to avoid surprises (e.g., tech transfer)
CMO Program Benefits:
• Eliminate the loss of revenue and market share• Proactive & strategic planning of risks
Case #1: CMO pulling out of Market
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
5 Types of Risk Responses
Avoid
What it means for CMO Serialization
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Example of how CMO Program could add value: TRANSFER
Reduce
Transfer
Contingency
Accept
• Avoid surprises w/ CMO non-compliance• Avoid critical issues surfacing too late
• Transfer risk between CMOs• Transfer/in-source products
• Reduce likelihood of non-compliance• Reduce impact of non-compliance• Reduce scope by prioritizing CMOs
• Accept calculated risks• Accept possible business down-side• Accept when mitigation cost is too high
• Plan contingencies for failures• Plan for redundant capacities• Plan for business continuity
Value at
Risk
Situation:
• A new product will be launched via one of 2 CMOs• Possibly to be sold in multiple markets soon• One of the CMOs is behind their compliance efforts
CMO Program Actions:
• Highlight the risk profiles of CMO candidates by market• Factor in the compliance issues of CMOs in key markets• Recommend best candidate CMOs for product launches
CMO Program Benefits:
• Minimize the risk impact of new product launch• Transfer the risk from high risk to low risk CMOs• Contain cost increases in new markets due to compliance
Case #2: New Product Launch at CMO
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
5 Types of Risk Responses
Avoid
What it means for CMO Serialization
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Example of how CMO Program could add value: REDUCE
Reduce
Transfer
Contingency
Accept
• Avoid surprises w/ CMO non-compliance• Avoid critical issues surfacing too late
• Transfer risk between CMOs• Transfer/in-source products
• Reduce likelihood of non-compliance• Reduce impact of non-compliance• Reduce scope by prioritizing CMOs
• Accept calculated risks• Accept possible business down-side• Accept when mitigation cost is too high
• Plan contingencies for failures• Plan for redundant capacities• Plan for business continuity
Value at
Risk
Situation:
• A CMO is asking for a significant unit-price increase• Justification is the increase in Serialization investment
CMO Program Actions:
• Identify possible cost increase requests early• Evaluate the validity of request via bottom-up analysis• Identify alternative solutions before it is too late• Estimate realistic justifiable unit cost increase
CMO Program Benefits:
• Reduce the impact of full cost increase • Have options available for negotiations (not otherwise
possible in the last minute)
Case #3: CMO Unit-cost Increase
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 201518
Example of how CMO Program could add value: ACCEPT
5 Types of Risk Responses
Avoid
What it means for CMO Serialization
Reduce
Transfer
Contingency
Accept
• Avoid surprises w/ CMO non-compliance• Avoid critical issues surfacing too late
• Transfer risk between CMOs• Transfer/in-source products
• Reduce likelihood of non-compliance• Reduce impact of non-compliance• Reduce scope by prioritizing CMOs
• Accept calculated risks• Accept possible business down-side• Accept when mitigation cost is too high
• Plan contingencies for failures• Plan for redundant capacities• Plan for business continuity
Value at
Risk
Situation:
• A CMO is asking Client to invest in serialization equipment• Otherwise, CMO is warning that Client products may not
be compliant on time
CMO Program Actions:
• Assess the risk profile of the CMO• Understand mitigation scenarios & related costs• Find investment cost is too high vs. value at risk• Accept the risk & do not invest
CMO Program Benefits:
• Consciously avoid unjustified investment • Accept “possible” down-side risk, which is lower than
“absolute” cost of investment
Case #4: CMO requesting investment
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
5 Types of Risk Responses
Avoid
What it means for CMO Serialization
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Example of how CMO Program could add value: PLAN
Reduce
Transfer
Contingency
Accept
• Avoid surprises w/ CMO non-compliance• Avoid critical issues surfacing too late
• Transfer risk between CMOs• Transfer/in-source products
• Reduce likelihood of non-compliance• Reduce impact of non-compliance• Reduce scope by prioritizing CMOs
• Accept calculated risks• Accept possible business down-side• Accept when mitigation cost is too high
• Plan contingencies for failures• Plan for redundant capacities• Plan for business continuity
Value at
Risk
Situation:
• Multiple CMO’s are delayed with their IT integration• Serial number exchanges & validation cannot be on time
CMO Program Actions:
• Identify 3rd Party Service Providers & reserve capacity• Route non-compliant products through these 3PL or CPOs• Ensure contingent systems are validated in advance
CMO Program Benefits:
• Avoid potential business disruption• Provide additional time to CMO partners until compliance
Case #5: Delayed CMO integration
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
Serialization Wizard tool could be used to kick-start CMO Track & Trace Programs fast & effectively using best practices
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For more info, please visit: www.serializationwizard.com
“I wish Serialization Wizard existed when I first started to work on global serialization program. It's ability to organize a multitude of cost factors for a number of locations would have simplified my data collection and analysis tremendously. Serialization Wizard also encourages the program manager to think about and include one time and recurring costs that might otherwise be overlooked andexcluded from the program plans.”
- Former Head of Global Serialization Program, Global Pharma and Device Company
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
On the CMO side, there are 8 key areas of decisions that can make CMO T&T program a success
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Communication
Right People
Strategic Planning
Vendor Selection
1
2
4
5
CMO T&T Success
During T&T Program
Before T&T Program
After T&T Program
Cost containment7
SC Collaboration8
Standardization6
Benchmarks3
Right strategic decisions
Communicate with your customers proactively
Select an experienced PM/team to lead the program
Leverage industry learnings & benchmarks
Invest time to do an up-front strategic planning
Utilize a structured approach to select best vendor
Use a pilot project to standardize almost everything
Understand & plan for OEE losses, operational costs
Join collaboration & ROI initiatives w/ customers
Result: Stay as a long term strategic trading partner & capture more market share
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 2015
While on the flip side, wrong decisions or practices can lead to a CMO T&T program failure
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Communication
Right People
Strategic Planning
Vendor Selection
1
2
4
5
CMO T&T Failure
During T&T Program
Before T&T Program
After T&T Program
Cost containment7
SC Collaboration8
Standardization6
Benchmarks3
Wrong “strategic” decisions
Ignore your customers’ surveys & communications
Assign project to someone as a “stretch assignment”
Use irrelevant industry benchmarks (i.e. rumors)
Jump right into execution, skipping strategic plans
Select the vendors that your customers are using
Skip the pilot and a standard implementation guide
Do not plan or budget for the operational costs
See your company as a “supplier” instead of “partner”
Result: Be eliminated from your partner networks & lose market share
After T&T Program
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 201523
Invite your CMOs to 2nd CMO Serialization Roundtable
Client side CMO side
Evren Ozkaya, Ph.D.www.supplychainwizard.com © 201524
?Evren Ozkaya, [email protected]+1-404-457-2950
Questions, comments:
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