Douglas Pharmaceuticals Limited - Supply Chain Council
Douglas Pharmaceuticals Limited - Supply Chain Council
Douglas Pharmaceuticals Limited - Supply Chain Council
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<strong>Douglas</strong> <strong>Pharmaceuticals</strong> <strong>Limited</strong><br />
SCOR Implementation Case Study in ANZ<br />
Author: Mr. Rod de Spong, <strong>Douglas</strong> <strong>Pharmaceuticals</strong><br />
Presented by:<br />
Dr Ravi Seethamraju, The University of Sydney Business School<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 1 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
About <strong>Douglas</strong><br />
Corporate Overview<br />
• Company founded in 1967<br />
• Originally marketer and distributor of<br />
Ethical & OTC medicines in New Zealand.<br />
• Revenues from generic pharmaceutical<br />
development now represent 66% of total<br />
120<br />
100<br />
business<br />
• Niche focus<br />
80<br />
• Customer service traditionally a<br />
60<br />
competitive strength<br />
40<br />
• Company is privately owned<br />
140<br />
20<br />
Chart 1: Growth In Revenue 1967 – 2010 (NZ$m’s)<br />
0<br />
1967<br />
1970<br />
1975<br />
1980<br />
1985<br />
1990<br />
1995<br />
2000<br />
2001<br />
2002<br />
2003<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 2 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
About <strong>Douglas</strong><br />
Core Business Segments<br />
Export Out-licensing Model<br />
API Sourcing<br />
Product<br />
Formulation<br />
Bio-equivalence<br />
Product<br />
Registration<br />
Product<br />
Licensing<br />
Sales<br />
Manufacturing<br />
Warehousing &<br />
Distribution<br />
Export - Low volume, high value<br />
Domestic In-licensing Model<br />
Product<br />
In-licensing<br />
Product<br />
Registration<br />
Marketing<br />
Sales<br />
Warehousing<br />
& Distribution<br />
Domestic - High volume, low value<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 3 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
About <strong>Douglas</strong><br />
Key Stats<br />
2010<br />
Consolidated<br />
Revenues<br />
$144M<br />
Products Under<br />
Development<br />
23<br />
Own Formulations 27<br />
Active Export<br />
Customers<br />
Production<br />
-Tablets<br />
- Liquid<br />
- Creams<br />
65<br />
455M tablets<br />
269,000 liters<br />
31,000 kgs<br />
Key<br />
Existing markets<br />
Employees 450<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 4 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
What Accelerated Our Interest In <strong>Supply</strong> <strong>Chain</strong> Improvement<br />
We Experienced Rapid Growth<br />
Activity Driver 2003 2007 Increase<br />
New Product Developments (p.a.) 1 4 300%<br />
Export Market Registrations 114 283 148%<br />
New Product Introductions & Modifications<br />
(p.a.)<br />
Production Volumes<br />
(tablets t millions)<br />
28 75 168%<br />
210 468 122%<br />
Employees 256 412 61%<br />
cGMP Related SOP’s 260 520 123%<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 5 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
What Accelerated Our Interest In <strong>Supply</strong> <strong>Chain</strong> Improvement<br />
Mid 2007 We Experienced A Burning Platform<br />
• Customer DIFOT (Export) Down to 20%<br />
• Product Lead Times Up to 8 months<br />
• New Product Introduction Lead Times Up to 9 months<br />
• Stock Turns Down to 2.1x<br />
• YTD Sales Down 30%<br />
• Available Spare Capacity Unknown<br />
• Customer complaints impact new licensing opportunities and future<br />
earnings growth<br />
• Converted to new ERP in August 2006<br />
• Potential t impact on 2007/8 earnings and shareholder value goals<br />
– EBIT ‐ Earnings Before Interest and Taxes (15.9%)<br />
– Enterprise Value ($25.2M)<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 6 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
How We Initiated SCOR and SCE Project<br />
• “Turning i point”– DIY not always best<br />
• Board mandated review at its April 2007 meeting<br />
• Process established s ed to evaluate eauateoptionso • Consultant selected<br />
• Basis for SCOR and SCE selection:<br />
– Strong fact/data based approach<br />
– Emphasized focus on processes and not people<br />
– Embodied quick wins<br />
– Capable of being embedded from process and reporting perspective<br />
– Provided basis for ongoing benchmarking, “common language” and<br />
ongoing performance improvement<br />
– Knowledge ld transfer<br />
– SCE was able to be split into phases (1 and 2)<br />
• 17 week SCE programme ‐ May and September 2007<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 7 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team<br />
7 AMR 2009 ‐ SCC & SCOR Executive
What Accelerated Our <strong>Supply</strong> <strong>Chain</strong> Improvements<br />
SCOR and SCE Presented Integrated Approach<br />
Product Management<br />
Supplier proc cesses<br />
Product Design<br />
Sales & Support<br />
Custom mer processes s<br />
<strong>Supply</strong> <strong>Chain</strong><br />
Plan<br />
Plan<br />
Plan<br />
Plan<br />
Plan<br />
Deliver<br />
Source<br />
Make<br />
Source Make Deliver Source Make Deliver<br />
Source<br />
Suppliers’<br />
Supplier<br />
Supplier<br />
Internal or External<br />
Return<br />
Customer<br />
Internal or External<br />
Customer’s<br />
Customer<br />
<strong>Supply</strong> <strong>Chain</strong> Operations Reference Model<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 8 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
What Accelerated Our <strong>Supply</strong> <strong>Chain</strong> Improvements<br />
SCOR & SCE Identified Numerous Improvement Opportunities<br />
Completed Projects<br />
Current Projects Underway<br />
Planning Processes<br />
Demand<br />
Forecasting<br />
Schedule<br />
Stability<br />
RCCP<br />
Incl.<br />
QC<br />
QA<br />
Structure<br />
Product<br />
Lifecycle<br />
Management<br />
Export &<br />
Domestic<br />
Mkt/Product<br />
Strategies<br />
S&OP<br />
Process<br />
Manuf.<br />
Strategy<br />
Initiation<br />
Planned<br />
Cost of <strong>Supply</strong><br />
Total Cost<br />
Of <strong>Supply</strong><br />
Production<br />
Variances<br />
Spend<br />
Analysis<br />
Invoice<br />
With Goods<br />
Reduced RM<br />
Testing<br />
Electronic<br />
SOPs<br />
Lab<br />
Automation<br />
(NIR)<br />
GC Split<br />
Method<br />
Reduced<br />
Sampling<br />
Plant<br />
Optimisation<br />
Validation<br />
Documentation<br />
Setup for<br />
deployment of<br />
LEAN<br />
Inventory<br />
Management<br />
New Mfg<br />
Technology<br />
Commercial<br />
Batch Size<br />
vs. Sales<br />
Business Rules and Performance Enablers<br />
W/house<br />
Repositioning<br />
SCOR KPI<br />
Reporting<br />
Internal<br />
Comms.<br />
Product<br />
Pricing<br />
Methodology<br />
Pick<br />
Strategy<br />
Customer<br />
Order<br />
Integration<br />
IT/IS<br />
Services<br />
HRIS<br />
Domestic<br />
DIFOT<br />
Sales<br />
Reporting<br />
SAP Change<br />
& Support<br />
Management<br />
Employee<br />
Development<br />
Master<br />
Data<br />
Central<br />
Data<br />
Storage<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 9 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team<br />
CRM
What Accelerated Our <strong>Supply</strong> <strong>Chain</strong> Improvements<br />
Implementation Has Driven Substantial Gains<br />
Operational 30/06/07 31/03/10<br />
Forecast Accuracy N/M* 84%<br />
Vendor DIFOT 47% 91%<br />
25<br />
Growth In Residual Trading Cash (April 2007 – March 2009)<br />
Schedule<br />
Adherence<br />
55% 83%<br />
20<br />
Export Order Cycle<br />
132 days 81 days<br />
Time<br />
Customer DIFOT 57% 95%<br />
NZ$ Millions<br />
15<br />
10<br />
Financial 31/03/07 31/03/10<br />
5<br />
Sales per<br />
employee<br />
$300,000 $366,000<br />
COGS % 48% 46%<br />
0<br />
Ap pr-07<br />
n-07<br />
Ju<br />
g-07<br />
Au<br />
Oc ct-07<br />
De ec-07<br />
b-08<br />
Fe<br />
Ap pr-08<br />
n-08<br />
Ju<br />
g-08<br />
Au<br />
Oc ct-08<br />
De ec-08<br />
b-09<br />
Fe<br />
Inventory Days of<br />
<strong>Supply</strong><br />
173 124<br />
Cash to Cash<br />
210 166<br />
Cycle (days)<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 10 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
What Accelerated Our <strong>Supply</strong> <strong>Chain</strong> Improvements<br />
Intangible Gains<br />
• Clear improvement roadmap<br />
• Strategic focus now on products and markets<br />
• Projects more robustly managed<br />
• Catalyst for staff up‐skilling<br />
–Project management disciplines<br />
–Plan, Source, Make, Return and Enable technical<br />
disciplinesi • Catalyst for better utilisation of SAP<br />
• Greater awareness of “hand‐off” points<br />
• Break down of departmental silos<br />
• SCOR measures basis of KPI’s<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 11 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
What Accelerated Our <strong>Supply</strong> <strong>Chain</strong> Improvements<br />
Critical Success Factors<br />
• Burning platform was widely communicated<br />
• Formal commitment to meaningful change<br />
• “No redundancies” d ”Policy<br />
• Engaged and incentivized Middle Management<br />
• Independent Director chaired Steering Committee<br />
• Commitment to SME input and backfill where necessary<br />
• SCOR and SCE frameworks<br />
– CHIP Analysis<br />
– Disconnect Analysis<br />
– RASCI Development<br />
– Quick wins<br />
• Follow up communication<br />
– Staff, Management, Board, Shareholder<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 12 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
What Accelerated Our <strong>Supply</strong> <strong>Chain</strong> Improvements<br />
We Plan A Period of Further Rapid Growth<br />
2015 Growth Plan<br />
Enhance<br />
Product<br />
Specialisations<br />
Increase Speed<br />
To Market<br />
Expand<br />
International<br />
Markets<br />
Reduce<br />
Cost of<br />
Production<br />
Maximise<br />
Quality &<br />
Service<br />
Outcomes<br />
Number of<br />
Exportable<br />
Products<br />
Investment<br />
Requirement<br />
Targeted<br />
EV Uplift<br />
5-year Targets 100% Increase ~NZ$60m ~NZ$200m - $250m<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 13 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
Thank You!<br />
Dr Ravi Seethamraju<br />
Ravi.seethamraju@sydney.edu.au<br />
edu au<br />
For more info, please contact:<br />
Mr. Rod de Spong<br />
<strong>Douglas</strong> <strong>Pharmaceuticals</strong><br />
Email: RoddS@douglas.co.nz<br />
© 2011 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | 2011 Global Users Meeting | 14 | 7 February 2011 Rod de Spong & Ravi Seethamraju ANZ Leadership team
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