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Life ScienceS

excellence in Supply chain and Production


Gaining Competitive Advantage in the Life Sciences Industry

In collaboration with

Today, most companies in the pharmaceutical and biotech industries are operating on a global scale in increasingly regulated, complex, and competitive marketplaces.
These companies are embedded in wide networks of sub-companies, suppliers, third-party manufacturers, and distributors. As a result, while making decisions to minimize risks, it is often difficult to select the best options or to gain a competitive advantage for their networks.
increasing Relevance for the Life Sciences industry For a long time, supply chain and, in particular, production costs have not been the primary concern in gaining a competitive advantage in the life sciences industries. However, these areas bear significant potential for a cost and capital optimization, resulting in an increasing competitiveness.

Definition of a clear supply chain and production strategy incl. the corresponding governance Design of the network organization Optimizing asset/ capacity utilization Managing the product/ process complexity A plan-do-review process across these four dimensions is the cornerstone for supply chain and production excellence. Mastery of merely one of these four dimensions will not yield the full potential. Next to quality and timeliness, the major improvement levers of supply chain and production excellence are to - increase production - maximize the output - reduce investments needed - increase cost efficiency

To yield the potential hidden in supply chain and production, companies need to follow a holistic approach consisting of four dimensions:

Plan-do-review process across four key dimensions to yield the potential hidden in supply chain and production
Defining a clear strategy & governance
Developing a clear supply chain strategy in line with the overall company vision Setting up an appropriate governance structure enabling and empowering the employees keeping decision making lean and fast managing and steering the right events by defining the right KPIs and setting up a lean KPI process Ensuring change management capabilities Ensuring transparent communication

Redesigning the network organization


Designing a global production network and organization consisting of regional supply centers, aiming for supply close to the customer to gain flexibility and reduce logistics cost (hubs for white labeled products) leverage on size effect: optimize ROCE Global standardization of processes and alignment of the organization Ensuring transparency along the end-to-end processes

PLAN

Managing product/ process complexity


Sophisticated production planning and optimized capacity utilization to increase product margins Redesigning the production process by shifting diversification to end of value chain, thereby reducing the complexity and capital employed Standardization

DO
w vie Re

Optimizing asset/capacity utilization


Developing an appropriate site concept Applying a holistic and dynamic approach to optimize the entire production rather than single parameters Identifying and leveraging unused capacities Optimizing maintenance to reduce downtimes

Capgemini Consulting / ORTEC brightrivers 2009

2 excellence in Supply chain and Production

- optimize profitability - minimize fix costs - increase customer satisfaction Therefore, tools and methodologies are required that help to achieve excellence along all four dimensions. Capgemini has enriched its own capabilities and methods by forming alliances with functional and sector specialists to address the increasing complexity in biopharmaceutical production and supply chain. Optimizing the production and supply chain of active ingredients or biopharmaceuticals comes with high complexity. Dynamic simulation tools such as ORTEC brightrivers D3GO are useful in identifying the best solution.
Outstanding Holistic Approach At the core of the approach is the ability to abstract a model of the real-life problem that is intuitive to use, yet sufficiently realistic to support robust decision making. These models offer insights and help to quantify the risks and benefits associated with solutions to complex manufacturing and supply chain problems.

Given the high complexity of the production and logistic processes in the life sciences industry, Capgemini applies a best-of-breed approach
Capgemini toolbox (examples) Static network design Dynamic simulation Material flow analysis Lean, Six Sigma methods Short-term and long-term material / information flow planning Core competency / demand analysis Target images Business process modeling Roles and responsibilities matrix Transition planning Day-in-life-observation Business case, benefits tracking Capability development Change management Supply chain dimensions and Capgemini partners / IT Tools Defining a clear strategy & governance Redesigning the network organization Supply chain planning, optimization, and design software, e.g.: Supply Chain Designer (SCD) Brightrivers CAPS Logistics LogicTools: LogicNet, LogicNetPlus, Logic Chain i2 Technologies: Supply Chain Strategist SAP: SAP SCM (Special expertise partner SCM)

Managing product / process complexity

Optimizing asset / capacity utilization

Capgemini

Area of partnerships Capgemini Consulting / ORTEC brightrivers 2009

rules impacting the behavior of the system, the holistic approach and its simulation models allow to understand the dynamic complexity of the manufacturing system, compromise trade-offs, and identify the optimal

solution delivering the defined objective. This objective may be to have the plant operate at its maximum capacity, to optimize cost efficiency, or to dramatically reduce inventory the solution will never be the same.

The holistic modeling approach helps to quantify benefits and risks associated with solutions to complex manufacturing and supply chain problems
Problem structuring
Confirm a joint understanding of the problem Agree on the key assumptions Define the modeling approach and techniques Identify the data requirements

Data analysis
Investigate the data quality and completeness Analyze the data to identify patterns, trends, and inter-relationships Deliver quick wins by identifying as yet unknown facts

To successfully address the major industrial challenges of pharmaceutical and biotechnology companies means considering not only the detailed level but the dynamic complexity of the entire manufacturing system. In that sense, the holistic approach is complementary to the Six Sigma approach that enables the continuous improvement of processes and the organization. By describing all processes in a model, all constraints and their inter-relations, and all GMP

Scenario analysis
Assess the impact of alternative business scenarios Use a sensitivity analysis to understand the robustness of the solution under different assumptions Communicate complex findings and recommendations comprehensibly

Validation
Confirm that the system to be modeled is agreed with all stakeholders Clearly define the scope, process flows, and data uncertainties Develop a high-level model

Capgemini Consulting / ORTEC brightrivers 2009

In the end, only the market can define what the optimal objective is and when change is due. As a result, the design of the manufacturing system must be sufficiently flexible, enabling management, equipped with the right tools, to predict and adequately respond to any market swings.
Life Sciences Manufacturing challenges Strategic, tactical, and operational challenges differ but interfere with each other. Once the entire supply chain and manufacturing network has been configured, it has to be operated in an optimal way. However, local constraints frequently hamper the initial plan, meaning the supply chain cannot be operated as it has been designed. Each node of the network, each production facility, must be optimized locally in line with

different and specific local constraints. In an iterative process, the global manufacturing network and the different production facilities then have to be optimized coherently. Considering the production of active pharmaceutical ingredients, major challenges drive the strategic optimization process, for instance: - What is the optimal investment deployment strategy? - What is the best compromise between nominal and spare capacity? - How to optimize asset utilization according to forecast uncertainty? - How to compromise strategic trade-offs (capital; capacity; cost; inventory; margin; etc.)? In galenic pharmaceutical production, the challenges are similar but also more tactical:

Optimization of supply chain network and plant operations in an iterative process


Supply chain network
(Model of production and distribution sites)

Plant A

Manufacturing A

Packaging A

Warehouse A

Europe
Manufacturing B Packaging B Warehouse B

Iterative process
Manufacturing Packaging Warehouse

Americas

Warehouse A Packaging A Manufacturing A Plant operations


(Detailed model of production, packaging and warehouse steps per site) Production I Step 1a Production I Step 1b Production I Step 2

Production II Step 1

Production II Step 2

Production III Step 2

Production III Step 3 Capgemini Consulting / ORTEC brightrivers 2009

4 excellence in Supply chain and Production

- How to synchronize manufacturing and packaging to minimize bulk inventory? - What is the best production orchestration that minimizes working capital while maximizing customer service levels? - What is the optimal product/ volume allocation on sites and the optimal resource allocation? - How to compromise tactical tradeoffs (flexibility; cost; service level; lead time; time-to-market; etc.)? These challenges demand adaptability, as they change along with the market. Thus, management requires a predictable and flexible manufacturing system to be able to consider likely scenarios and outcomes. What would be the impact on the production program? How to react if this or that happens? What would be the consequences from a financial, organizational, and technical perspective? The holistic modeling approach delivers the best answers to these questions and, above all, develops quantified recommendations that significantly support decision making.
Methodology & Software Used The holistic approach combines both constraint analysis methodology and system thinking. The principle is to describe in the model all processes, available resources, equipment, process routes, and all technical constraints, GMP rules, and other regulatory and miscellaneous constraints. The model is validated by simulating historical data with the model representing the as-is configuration of the plant. Once the differences between historical and model KPIs are less than 5%, the

model is considered valid for further scenarios. Then, all possible to-be alternatives are also described in the model with OR conditions as well as related costs and constraints. Two types of scenarios are computed: (1) Customer inspired scenarios this forces the model to follow a specific strategy, as it has been designed by the customer, and is used to quantify the impact that such a strategy would have on the global behavior of the network. (2) Optimized scenarios this allows the model to make hundreds or thousands of iterations and find the best solution according to a predefined objective function that considers three optimization criteria (throughput, cost, on-time delivery). A different weighting of the objective function generates different optimal solutions: one could have the plant operate at maximum capacity, another could maximize cost reduction, and yet another optimize service levels, etc. The software used, called D3GO, is a proprietary software of ORTEC brightrivers. It consists of a modeling tool which is totally object oriented and does not require any programming language. The model is a logical diagram associated to a data base. The engine combines dynamic simulation and non-linear optimization techniques. It uses a genetic algorithm that allows identifying the optimal solution based on multiple criteria.

case Study: Balancing the Trade-offs Between Supply network Design and Manufacturing Operations A multinational pharmaceutical company asked us to redesign their supply chain network in order to drastically reduce fixed costs, and subsequently, to redefine the production management practices to minimize operational costs. First, we modeled the entire supply chain (all manufacturing facilities and transportations) and ran initial simulation and optimization scenarios considering different alternatives for the network design and strategy. The optimal scenario suggested by the model computations allowed a reduction of fixed costs by 20% (this figure compared to the best customer inspired scenario allowing a reduction of only 11%). We then built a detailed model for each manufacturing and packaging site and conducted many scenario computations using the output of the global network model. These scenarios allowed us to analyze and balance trade-offs (flexibility, cost, inventory, lead time, service level) in greater detail and to identify production management practices that minimized the operational costs and working capital. As a result, the total saving generated by the best scenario amounted to 29% ($19m p.a.). Finally, some iterations and sensitivity analyses allowed us to achieve full coherence between the global and local models and to find an optimal solution that considered all specific local site constraints.

6 excellence in Supply chain and Production

About ORTec brightrivers ORTEC brightrivers, a company specialized in the application of analytical techniques to solve complex manufacturing problems, has a track record of numerous successful projects with the most prestigious pharmaceutical companies in the world. The partnership between Capgemini Consulting, a leader in Business Transformation, and ORTEC brightrivers provides unique problem solving abilities for biopharmaceutical manufacturing. Our combined capacity creates solutions for highly complex manufacturing and supply chain situations with numerous, mutually interfering constraints. We successfully address these issues through a holistic modeling approach and the use of stateof-the-art software combining simulation and optimization techniques.

About capgemini Life Sciences Capgeminis Life Sciences Practice is a leading global provider of management consulting, technology and outsourcing services to the pharmaceutical, biotechnology, and medical device industries. Established in 1993, the global team includes 200 strategy and transformation experts who concentrate on these industries, plus an affiliated network of 2,500 practitioners with relevant experience. Recognised as a thought leader in this sector, Capgemini brings an insiders perspective to the challenges facing life sciences companies. It employs deep industry understanding to provide integrated global solutions for top-tier clients. About capgemini consulting Capgemini Consulting is the strategy and transformation consulting division of the Capgemini Group, with a team of over 4,000 consultants worldwide. Leveraging its deep sector and business expertise, Capgemini Consulting advises and supports organizations in transforming their business, from strategy through to execution. Working side by side with its clients, Capgemini Consulting crafts innovative strategies and transformation roadmaps to deliver sustainable performance improvement.
www.capgemini.com/consulting

About capgemini
Capgemini, one of the world's foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working, the Collaborative Business Experience. The Group relies on its global delivery model called Rightshore, which aims to get the right balance of the best talent from multiple locations, working as one team to create and deliver the optimum solution for clients. Present in more than 30 countries, Capgemini reported 2008 global revenues of EUR 8.7 billion and employs over 90,000 people worldwide. More information is available at www.capgemini.com
Gnther illert Life Sciences Central Europe guenther.illert@capgemini.com +49 162 2343 600 Dr. Jochen Kohler Strategic Consulting jochen.kohler@capgemini.com +49 162 2343 642 Sebastian von Strachwitz Life Sciences Central Europe sebastian.von.strachwitz@capgemini.com +49 172 8504 945 Tim Dulley Life Sciences UK timothy.dulley@capgemini.com +44 7801 055488 Jean-Marc neimetz Life Sciences US jeanmarc.neimetz@capgemini.com +1 917 497 8656

For more information please visit:


www.brightrivers.com
Jean Gayral ORTEC brightrivers SA jgayral@ortec.com +41 792132 916

For more information please visit:

capgemini Deutschland GmbH Kurfrstendamm 21 D-10719 Berlin T +49 30 88 703-0 f +49 30 88 703-111 www.de.capgemini.com

Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group

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