MISHRA: The post-COVID-19 world is a very challenging time for supply chain leaders in life sciences. You have had an extraordinary experience systematizing biopharma businesses. How can process redesign principles be leveraged to improve effectiveness and efficiency of the supply chain?
CLARKE: In life sciences, business processes are complex with excessive controls. R&D often favors structured processes and works in siloes. In process redesign, the first step you must follow is to map out the current state process and then challenge everything. Here are some examples:
· Consignment Inventory: Why not ask suppliers whether inventory can be stored at their site? Normally, it is issuance of a PO first and shipment second, whereas under the consignment model these steps are switched. This virtually eliminates supplier lead times and reduces inventory for the buying organization.
· Reserve Capacity: How about giving your suppliers usage forecasts and blanket purchase orders? Now, they become aware of your demand much earlier so they can be better prepared. In return, you ask them to reserve capacity and purchase raw materials in advance. Your lead time is much shorter, and since they can now in turn make firm commitments with their suppliers, you should expect your supplier to lower their costs.
· Risk Reduction: Sit down with your Team and look at the process map and for each step ask them what could possibly go wrong, how likely is it to occur, if it did how severe would be the effect, and how easy will it be to detect the problem? Based on these results, you will quickly identify your largest risks.
· Supplier Differentiation: Instead of treating all suppliers the same, redesign the supplier quality process to differentiate suppliers by risk profile. For those with the most risk, conduct periodic audits, regular business reviews, whereas giving far less attention to those with low risk. This quickly transformed the supplier quality program from “under-performing” to “effective”, with much fewer defects and better on-time delivery.
I have developed a list of 100+ supply chain-related examples of how these redesign principles can be used to transform your performance.
MISHRA: From an operational perspective of efficiency, quality and service, what tools can be used to address the challenges?
CLARKE: Generally, we react badly when things go wrong, and our project efforts are not focused on actual problems. The approach that “every defect is a treasure”, and only make improvements when specific data supports the initiative. The overall philosophy is completely contradictory to standard approaches to management. One reason that this approach is so much more effective, is that if you take the time to look at the data, you’ll often find that what you THOUGHT was causing the problem, was NOT the cause at all. Very often there are one or two gaps in the process, which are causing most of the issues. How do you find these gaps? It’s straightforward! First gather “defect data”, just like you would if you were analyzing the quality errors in a manufacturing process. In this case, though, the defects are being created by the broken supply chain business process.
For example, if your customers are suffering from your inability to deliver on-time, what “defect data” would you analyze? Correct, you should look at your late shipments over a period and ask the team to discuss and determine what caused each delay. You only need to do this for about 30 late shipments, and patterns will emerge, and you will soon be on your way to understanding your chronic issues. Then, and only then should you select and prioritize projects. As
