Millipore Supply Chain change in a crisis context

Transcription

1 Millipore Supply Chain change in a crisis context March 11th 2010 Fabrice Schneider, Supply Chain Manager Labwater

2 Introduction ww financial crisis Millipore Supply Chain deep mutation Hard to say how much the crisis context influenced our choices No doubt it acted as a major catalystfor the change,as initiatives we have lead seemed the best answersfor it How we tried to use a constraint as an opportunity : 1. Millipore presentation 2. Planning organization 3. S&OP model 4. Working Capital initiatives 5. Case study : 2 crisismanagement with conflicting impacts (financial / H1N1) 6. Some results

3 1. Millipore presentation US based company, Billerica, MA Founded ,080 employees Over 20,000 products Focused on life science research and biopharmaceuticals 2008 sales $1.6 billion

4 1. Millipore presentation Millipore s mission is to advance Life Science together with customers through the research, development and production of drugs that help people to live longer, healthier lives. By 2010, Millipore will be recognized as the leading global products and services company in the Life Science community. We will be a strategic partner, working to advance Life Science together with our customers.

5 1. Millipore presentation Bioscience Division ~43% of Revenue Research Analytical - Clinical Bioprocess Division ~57% of Revenue Biotech Pharmaceutical - Beverage Life Sciences Upstream Bioprocessing Lab Filtration Drug Discovery & Development Downstream Bioprocessing Lab Water Process Monitoring

6 1. Millipore presentation Process Monitoring Tools (PMT) Steritest EZ, Steritest specific units, Milliflex filtration devices, Milliflex and MAirT pre-filled media cassettes, Microfil and Microfil-V, MicropreSure, EZ-Pak, S-Pak, swabs and samplers Process Products Sterilizing Grade Filters, Durapore Cartridges, Millidisk Cartridges, Millipak Capsules, Aervent 50

7 1. Millipore presentation Custom Made Process Systems Engineered Solutions Filtration Systems Chromatography Systems CIP Skids Buffer preparation After Sales Services We have an installed base of nearly 3,000 process systems worldwide Photo courtesy of Novartis Pharma S.A.S. Novartis

8 1. Millipore presentation Water Purification Systems Milli-Q Integral system Milli-Q Advantage system Elix system Direct-Q 3 system RiOs, RiOs-DI systems

9 2. Planning organization From one team per division to one single cross-divisional team Demand management, Finished goods planning, Raw material procurement united in mutual management teams Performance measurement aligned : metricsformalized, scorecard shared and communicated APICS accepted as the core reference => Ready for the change

10 3. S&OP model Uncertainty of demand in the crisis context created pressure on stakeholders of the process : Sales and Marketing implication reinforced : depending on the organization maturity, pressure to synchronize supply and demand could lead to Cultural sharing, S&OP process explanation and implementation Strengthen S&OP process robustness (frequency, accuracy ) Improve key steps (ex : New product introduction meetings) Operations management aligned : performance no more measured on plant budget absorption but on leverage, facilitating agreement to adapt supply plan to demand (seems obvious, but ) S&OP Process formalized through the Corp as the backbone process

11 3. S&OP model => Cultural change towards commitment and synchronization R&D Sales Plan Procrmt Plan Sales Marketing Suppliers Demand/SupplyMngmnt Plant Launch Plan Customer Service Distribution Prodct Plan Customer

12 4. Working capital initiatives (WCI) A. What is Working Capital? A measure that evaluates an organization s ability to generate and utilize cash. Working Capital is a component of Cash Flow, improved performance allows Millipore: Increase investments Fund Innovation: R&D programs and Alliances Accelerate debt payments

13 4. Working capital initiatives (WCI) B. 4 WCI initiatives in 1 Inventory Management Accounts Receivable Accounts Payable To improve Millipore s working capital performance relative to the established baseline (Q2-2008) and peer group through sustainable performance. CapEx

14 4. Working capital initiatives (WCI) C. Inventory Management initiatives Product Life Cycle Management Item Status EOQ ELS Lead Time Safety Stock Shelf Life The right product portfolio The right production status philosophy The right quantities to satisfy RM, demand & optimized mfg lot size The right planning and timing The right investment to mitigate supply / demand variability The right monitoring of time-based inventory to minimize E&O Managing Customer Expectations within the Supply Chain Sustained Product Life Cycle Management provides the focus and foundation for effective Inventory Management 14

15 4. Working capital initiatives (WCI) D. Focus on SS FG initiative : Business rules SAFETY STOCK for Finished Goods -This process will ensure the appropriate level of inventory is allocated as safety stock in order to absorb demand and supply variability. Business Rules: 1. Safety Stock Calculations by SKU and by DC will be run quarterly (minimally), interim changes may be applied based on approval by Planning Manager. 2. The Safety Stock field in Oracle is to be used exclusively for a safety stock value based upon standard calculations/approach as described in the Management procedure. 3. Safety Stock Value for all MTO/PEND/OBS/SUPRESS items shall be set to zero, 4. Safety Stock for "critical items" are assigned a "forced value validated by Planning Manager. 5. Safety Stock for "erratic" items (non-normal demand distributions) are determined through another standard calculation. 6. All other items Safety Stock are determined through a standard calculation using formula Safety Stock = z * (Avg Lead Time) * σdemand2 + (Avg Demand)2 * σlead Time2 where z = Service Factor, σdemand = standard deviation of demand, σlead Time = standard deviation of lead time 7. SS update calendar must be synchronized within S&OP process

16 4. Working capital initiatives (WCI) D. Focus on SS FG initiative : Roles and responsabilities Activities Director Supply Chain Planning Supply Chain Manager Planner Planning Manager VP/Director Global Ops. Plant Manager Product Operations Finance Customer Service Sales / Marketing Determines and supplies Inventory and availability (i.e. OTCS) targets by SBU and Plant to the Planning Managers A/R Define inventory / OTCS targets A/R C C C C C Roll down targets per SBU/plant A/R C C C C Define strategy : segments / targets per segment C A/R C Define calculation parameters / business rules A R Gather information, Define exceptions, Launch calculation C A/R C C C Utilize Safety Stock Determination Tool Review proposal / adjusts proposal A/R R C Estimate impact on inventory A/R C Impact acceptable? C A/R R C Aggregate the results A/R Estimate impact on OTCS/inventory A/R C Meets the targets? I A/R C A/R Recommended Changes Approved R R A/R Upload (ORACLE) A R S&OP meeting C A R C R

17 5. Case Study 2 crisis conflictingimpacts management (financial / H1N1) How we have adapt our Supply Chain to the financial crisis How we have respond to H1N1 demand What we got from the Sales organisation A forecast with 3 Scenarios for each product line Low 80 Medium 100 High 130 These scenarios has gone trough the S&OP process to identify Supply/ Demand mismatch (mainlyfor the high scenario) Workload issue (high or low) / organisation impact Inventory management The decisions have been taken differently based on the product type Expandables Investment products

18 5. Case Study Investment product strategy Investment products have been more affected by the financial crisis Less budget on customer side Cancelled / postponed projects Based on the sales forecast Low 80 Medium 100 High 130 For IP, Millipore is impacted on the Engineering side (as the material is procured only based on a customer order) Wehave decided to takethe low scenario in order to adapt our structure Limit the risk in terms of workload If the medium or/ high scenario happened we have decided to use subcontracting

19 5. Case Study Expendable product strategy Expendables products have been affected by the financial crisis and H1N1 impact Inventory management on customer side Additionnal requirementsfor H1N1 vaccines Based on the sales forecast Low Medium High 130 Medium Scenario has been taken if : No capacity issue Flexible production Limited impact of H1N1 on the product High Scenario has been taken if : Capacity constraint High impact of H1N1

20 6. Some results Customer satisfaction : On Time Customer Shipment metric (number of Order Lines shipped on time divided by the total of Order Lines) OTCS (%) Q108 Q208 Q308 Q408 Q109 Q209 Q309 oct-09 nov-09 dec 09 Target Labwater PMT Working capital impact : ex : ww Inventory reduction -5%

21 Thank you Any questions?

22 Contacts Fabrice Schneider