integratingpharmalogistics - .globalteam-up.global/team-up prospectus 2016 lo-res.pdf ·...

Where life-sciences and logistics come together

INTEGRATING PHARMA LOGISTICSAn industry-driven programme to bring real collaborative working to the

pharmaceutical logistics sector

PROSPECTUSOctober 2016


TEAM-UP PROSPECTUS October 2016Doc Ref: ECH4-1016 Rev 2 of 17

CONTENTS

3. Introduction

4. Executive Overview

5. Background

6. The Need for TEAM-UP

7. Integrated Supply Network vs Traditional Supply Chain

8. The TEAM-UP Mission

9. The Goals of TEAM-UP

10. What TEAM-UP is

11. The Potential for TEAM-UP

13. TEAM-UP Accreditation

14. Promoting Value-Based Competition

15. Shippers Hold the Key

16. Summary and Next Steps

VISION

CULTURE PROCESS

The TEAM-UP Philosophy

Page



INTRODUCTIONTEAM-UP has been conceived as a hands-on resource to enable pharma andbio-pharma companies to work with their logistics providers to translate integrationideals and collaborative intent into tangible outcomes. Through a system ofadhering to universal principles and following established methodologies, outcomescan be achieved that are not only win-win for the parties directly involved but cancontribute to a greatly enhanced experience for pharma customers and patients.

Alan [email protected]

Nathan de [email protected]

Prospectus Authors



EXECUTIVE OVERVIEW

TEAM-UP is being established by a cross-section of sector visionaries with the aim ofmeeting the supply chain challenges posed by today's rapidly changing market conditions.It operates as a shipper-driven, single-focus 'best practice' group specifically promotingstrategic partnering between all players in the pharma-logistics process.

A common integration framework, an accreditation scheme, a TEAM-UP Charter andintegration demo pilots will all feature in the programme which promises potentiallygame-changing commercial benefits to its participant shippers, logistics providers andsuppliers. With its emphasis on collaboration and integration it seeks to drive the practiceof genuine co-operative teamwork throughout the pharma-logistics sector and in doingso enable a collective response to the challenges being faced today. Substantial efficiencyimprovements, a more equitable and less contentious operating environment and morecustomer-focused, win-win outcomes are just some of the expected benefits.

At the heart of the TEAM-UP philosophy are the beliefs that the entire value chain musthave common goals, that pharma shippers must embrace the entire end-to-endvalue-chain, that a team-work approach can bring mutual benefits and that contributingnetwork participants can share in the rewards of improved efficiency and reduced risk.

There is no “one size fits all” approach to pharma-logistics due to the differing levels ofcomplexity and dynamics that exist within clients’ businesses and the global dispersionof the players involved. What is clear is that structured collaboration offers the bestfoundation on which to meet the challenges being faced in today’s rapidly changing,increasingly regulated, more globalised environment. Within this disciplined environmentenlightened shippers will be able to devise customised partnering solutions with accessto the TEAM-UP principles, guidance and accredited suppliers.

TEAM-UP will not only identify and explain the general principles and protocols ofcollaborative working, it will provide flexible guidance on how these principles can beinterpreted and applied in a pharma-logistics context. However, TEAM-UP does not intendto be over-prescriptive in its approach to supply chain reform. Rather than submit toexcessive codification of the integration process, its main emphasis is on creating andmaintaining a global collaboration community within which properly integrated pharma-logistics networks can flourish. This in itself is a big task that involves creating a betterunderstanding amongst stakeholders as to how integration works in practice and thebenefits it delivers.



BACKGROUNDThe TEAM-UP programme came out of an exploratory roundtable that took place at

Brussels Airport on 6th June 2016 which itself stemmed from a number of informal

cross-party discussions that took place at the LogiPharma 2016 Conference in Montreux.

The idea behind the roundtable in Brussels was to bring a senior representative from each

of the main pharma-logistics stakeholders around a table to explore the potential for

genuine end-to-end collaboration. The Brussels event was purposely kept as free-form

as possible and all participants signed a Confidentiality Agreement in advance so that

they could express their views candidly.



THE NEED FOR TEAM-UPSupply chain experts and pharma shippers are increasingly emphatic in their calls for

dramatic increases in productivity and huge reductions in cost. Hardly surprising in a

$1trillion industry which is currently spending close to $10bn per annum on cold-chain

logistics alone.

The pharma manufacturing process, for example, is generally under continuous efficiency

review and, as a result, most of the 'low-hanging' productivity gains are quickly picked

up. In contrast, pharma-logistics operations tend to be relatively comatose, often escaping

root and branch analysis by pharma producers on account of their ‘non-core business’

status and the anticipated cost and disruption of change.

But it is becoming increasingly difficult to reconcile growing demands for reduced costs

with those for improved performance. Logistics companies are having to negotiate an

ever more intricate labyrinth of regulations, performance standards and shipping routes

while maintaining the profitability necessary for innovation, business development and

shareholder return.

These logistics challenges are particularly acute in developing regions where there can

be additional risks associated with infrastructure limitations, tax, duty and regulatory

complications, poor market data, ramp and handling inefficiencies, language barriers and

a lack of trained manpower.

It all makes for a conundrum that will only be resolved through a fundamentally new

approach to pharma-logistics; one which reduces risk and increases efficiency.

The sector needs to be decisively pursuing a more integrated approach to pharma-

logistics. Integrated working will create a cultural environment and a functional platform

from which practically all commercial challenges, technical, operational, commercial,

regulatory, can be addressed more effectively.

PoorPoorSupply drivenPoorCost-centreRisk-transferNoNot structuredHighNoYesNoNo

ExcellentExcellentDemand drivenGoodValue-generatingRisk-sharingYesYesLowYesNoYesYes

End-to-end supply-chain visibilityInformation transparencyLogistics strategyCommercial agilityLogistics function statusCorporate cultureEarly involvementContinuous improvementInventory levelsFormal risk/change-management approachFragmented logistics capabilityFormal Collaboration AgreementPerformance-based network management

IntegratedNetwork

TraditionalSupply Chain

Integrated Supply Network vs Traditional Supply Chain

Integrated, demand-driven, supply chains are much more efficient than theirtraditional, linear, counterparts.





The TEAM-UP mission is to:

Push both the spirit and practice of supply chaincollaboration amongst all stakeholders in the pharma andbio-pharma logistics sectors and engender a culture ofgenuine trust and mutuality.

Provide leadership for a decisive reform of pharma-logisticsand contribute to greater supply chain integration for betterperformance and improved patient safety.

Drive continuous and sustainable improvement in thecollaborative performance of all TEAM-UP participants.

TEAM-UP MISSION



THE GOALS OF TEAM-UP:

In accordance with its overall Mission, TEAM-UP has established the following

goals:

A. Realigning the corporate culture of pharma-logistics to bettersupport integrated working.

B. Sharing collaborative best practice and providing the industrywith practical advice and tools in order to standardise part-nering methodologies and facilitate the assembly of inte-grated supply networks.

C. Providing shippers and logistics providers with a recognisedaccreditation status for exemplary collaborative working andto promote these credentials to all sector stakeholders.

D. Strengthening the business case for integrated supplynetworks by building an evidence-base from pilot programmesand other evaluations.



TEAM-UP IS NOT RE-INVENTING WHEELSTEAM-UP offers a hands-on approach tointegrated working with a focus on identifying,classifying, generalising, codifying andpromulgating existing supply chain best-practiceand behavioural methods. Other, more theoretical,models are not being systematically replicatedbecause:

a. they are usually dedicated solutions that arenot readily transferable.

b. they tend to be kept as low-key as possible bythe instigators for commercial reasons.

c. the logistic industry’s traditional insularity andcompartmentalisation does not automaticallyencourage knowledge sharing.

TEAM-UP IS SOLUTIONS DRIVENThe TEAM-UP initiative is unashamedly predis-posed towards producing practical supply chainsolutions that are relevant and accessible to largesections of the industry.

TEAM-UP IS RELEVANT TO ALL PARTIESThe eminently pragmatic outputs from TEAM-UPare highly relevant to all links in the supply chain.Most importantly, TEAM-UP aims to develop anddisseminate win-win outputs that are of realcommercial significance to all supply-chain parties.

TEAM-UP IS SUITABLE FOR SMEsThe difficulties in achieving ‘buy-in’ to theprinciples of integration from small and medium-sized enterprises (SME) has bedeviled the reformmovement from its inception. The involvement ofSMEs, however, is completely fundamental to theTEAM-UP programme and many of its benefitsare of direct value to this group.

TEAM-UP IS AIMED AT PRODUCING FAST &VISIBLE RESULTSThe ‘building block’ nature of the TEAM-UPapproach means that implementation of integratedworking can be undertaken systematically andincrementally with substantial benefits in terms ofearly results and continuous feedback.

TEAM-UP IS A GLOBAL COMMUNITYThe TEAM-UP approach is of universal validityand has no geographical barriers.

TEAM-UP IS A UNIQUE INITIATIVEIt is readily apparent that the universal approachand pragmatic philosophy of the TEAM-UPcampaign does not exist in pharma-logistics at thismoment. Although there are a number ofproprietary collaborative projects in existence,TEAM-UP is the only sector-wide initiative withthe integration of pharma-logistics as its primeobjective.

TEAM-UP IS 100% FOCUSED ONPHARMA-LOGISTICSThe pharma TEAM-UP programme is dedicatedto remodelling and reforming the pharma-logisticsprocess. It has a single-focus remit; one that isnot diluted by competing motives, conflictinggoals or commercial bias. Its very specific'integration' philosophy and approach can't get getlost in the 'noise' of alternative agendas.

TEAM-UP IS COMPLETELY TRANSPARENTAND NON-DIVISIVEThere is no 'hidden agenda' behind TEAM-UP. Itis not a corporate 'front' or 'another pharmaceuti-cal marketing campaign'. TEAM-UP is a hands-on, industry-driven, initiative tasked with drivinggrass roots reform of the pharma-logistics pro-cess. Ultimately it has the best interests of theconsumer / patient as its goal.

TEAM-UP IS SHIPPER SUPPORTEDThe TEAM-UP initiative involves the entire phar-ma-logistics supply chain including pharma ship-pers. End-to-end engagement is fundamental tothe TEAM–UP concept of integrated working andis dependent on the support and endorsement ofshippers and other stakeholders.

TEAM-UP IS INDEPENDENTTEAM-UP operates independently of any existingbodies and movements and is not associated withany vested interest groups or particular segmentsof the supply chain. This makes it relevant to theentire pharma-logistics sector including all modesof transport.

TEAM-UP IS OUTWARD LOOKINGTEAM-UP is outward looking and brings freshthinking and contemporary supply chain best prac-tice from other industries.



THE POTENTIAL FOR TEAM-UPMarket expectations of service and quality are continuously advancing. The health product

consumer of today seeks and expects more service, more safety, more value and more

customisation. For this to happen requires

enormous, and continuous, efficiency

improvements on the part of the

manufacturer. However, productivity

dividends are, like many things, subject

to the law of diminishing returns.

Supply network optimisation offers a clear

route to meeting the escalating

requirements of the market whilst, at the

same time, securing the long-term profitability and market respect of the participating

organisations. Amongst the industry’s more savvy organisations the efficiency battle-

ground is moving from the factory to the supply chain with it huge potential for efficiency

gains, cost savings and competitive advantage.

Research by Accenture¹ has shown that,

by implementing global strategies to

optimize freight-related spend, shippers

can lower transportation costs by up to 25

percent. Similar levels of savings have

been recorded in other studies of pharma-

logistics rationalisation.²

The bottom line is that major pharma

shippers, especially those with

transcontinental manufacturing and marketing interests, have it within their grasp to

extract huge ‘orders-of-magnitude’ value improvements if they are prepared support

collaborative delivery models that go right down to the industry’s grass roots.

1. Kammerer W. and Seeley J. How Excellence in Logistics Can Change the Fortunes of Pharmaceutical and Medical Device Companies Accenture 2013

2. Knut Alicke, Raoul Dubeauclard, Martin Lösch and Michael Schmeink, "Want Better Logistics? Make a Clean Start" McKinsey & Company 2011



ALL PARTIES BENEFIT

However supply chain integration is only possible when all the key pharm-logistics players

are involved from the outset and jointly strive towards common goals. This will happen

if all the network participants are incentivised to improve performance. In other words,

sustainable integration is contingent on the existence of a rewards structure that

apportions the pecuniary benefits of integrated working amongst the contributing parties.

One the great attractions of ‘true’ supply chain integration is that there need be no losers.

It is entirely feasible for the entire value chain to commercially benefit from partnering

while simultaneously delivering better value and service to the client.

GET THE TEAM-UP BOOST

It is important to understand that TEAM-UP complements and enhances other supply

chain approaches (lean, agile, JIT, TQM, segmentation etc.); it does not replace them.

Whilst the adoption of a TEAM-UP approach will almost certainly involve considerable

challenges and changes to established working practices and responsibilities, TEAM-UP

does not, in itself, constitute a form of organisational structure. TEAM-UP is more of a

behavioural ideology rather than a formal

management system.

By applying TEAM-UP principles and

methodologies to their established

processes and operations, pharma

shippers can harness

the full potential of

their supply chains

to better manage

resources, drive

efficiency and

foster innovation.



TEAM-UP ACCREDITATIONTEAM-UP offers corporate accreditation

that provides proof and recognition that a

pharma shipper or a pharma logistics

provider fully understands the principles

of collaborative working, that it is

committed to genuine supply chain

integration and that it is pursuing a formal

programme of continuous improvement.

Based on a TEAM-UP Charter which defines the terms of reference, TEAM-UP

accreditation is a formal recognition of outstanding collaborative direction and adherence

to established cultural and behavioural standards. Accreditation is available to both

shippers and suppliers and is based around a system of KPI benchmarking and periodic

Peer Reviews. This is a well-grounded appraisal process which has been proven elsewhere

to be fair, consistent and of inherent value to the participants.

For both shippers and suppliers the pursuit of integrated relationships and the

identification of collaborative partners can be a difficult, costly, frustrating and long-

winded process. This is partly because there are no standardised performance measures

or recognised performance criteria than can indicate an organisation’s commitment, ability

and capacity for integrated working. TEAM-UP Accreditation makes the finding, selection

and engagement of quality, partnering-proficient buyers and suppliers easier, faster and

more predictable .

TEAM-UP Accreditation confirms to a supplier

that a particular shipper subscribes to

collaborative best practice and that the

shipper recognises the merit of using

TEAM-UP Accredited partners. On

the other hand, a shipper can use

TEAM-UP credentials as a necessary, or

preferred, pre-qualification condition

when selecting and short-listing

suppliers.

PROMOTING VALUE-BASED COMPETITION

With TEAM-UP integrated supply networks competitiveness will remain the dominant

partner-selection criterion but it will be measured in a different way and from a different

starting point.

TEAM-UP accreditation will measure suppliers for their collaborative propensity, their

ability to work as an integral team member and their comprehensive alignment with the

philosophy of win-win partnering. These 'behavioural' attributes are in addition to normal

evaluation measures. TEAM-UP suppliers will still have to meet all the technical

specifications, quality standards and commercial requirements of the customer. However,

the assessment of TEAM-UP suppliers will also include the quality, cultural and value

criteria that are embraced in the TEAM-UP Charter and measured in the TEAM-UP

Accreditation process.

Doc Ref: ECH4-1016 Rev 2 TEAM-UP PROSPECTUS October 2016Doc Ref: ECH4-1016 Rev 2 of 17 PROSPECTUS October 2016




SHIPPERS HOLD THE KEYAlthough it actively involves the entire supply chain, the

TEAM-UP initiative is heavily dependent on the support

and direction of the pharma-shipper community. The

reality is that pharma-logistics reform is not going to

happen without the forceful leadership of enlightened

clients. Only far-sighted pharma manufacturers harbour

the vision, the objectivity and the clout to overcome the

fear, inbred inertia and vested interests that prevent

other supply chain players from driving real change.

The shipper and its logistics partners are completely interdependent. Logistics is not a

core business for pharma companies. The core business of the pharma shipper is generally

one of translating the healthcare needs of the market into life-enhancing, life prolonging

and life-saving safe medicines; ones that are effective, affordable and sustainable. And

although logistics may be a relatively insignificant part of a producer’s costs, ultimately

a pharma manufacturer has the legal and moral responsibility for the safe storage and

transportation of its products. Both parties need each other and it makes sense to

work together as closely as possible to satisfy the needs of the market for pharma

products.

This makes it paramount for the pharma shipper to use its

expertise, its coercive influence and its buying power to promote,

facilitate and enable supply chain integration. By prudently

using its unique customer status to exercise sound

leadership over its supply chain partners the shipper

can open the doors to better distribution, better

cost control, better compliancy, better safety,

better visibility and better risk control.

Client-led integration does not mean that a shipper cannot relinquish themanagement of its logistics supply chain to a 3PL or 4PL. In fact, the creation ofa competent integrated network can provide shippers with an ideal foundation forthe transfer of authority without relinquishing high-level oversight and input.



SUMMARY AND NEXT STEPSIt is clear that there is a need to focus on a more integrated approach to pharma-logistics

as its complexity increases, as it becomes more global in nature and as its fortunes mutate

in the face of dynamic market conditions. That is not to say that there is no good

collaboration going on in pharma-logistics. Of course there is. But fully-integrated

approaches are still practically non-existent and what integration there is tends to be

proprietary in nature, asymmetric in execution, limited in scope and often not much more

than lip-service in reality.

Shippers are dependent on the knowledge and performance of their logistics partners to

maintain the integrity of their sensitive, high-value products. By working in a TEAM-UP

climate of collaboration and transparency both shippers and suppliers can open the door

to better business, more constructive relationships, clear market differentiation and real

competitive advantage.

TEAM-UP is a membership-based organisation open to pharma shippers and all

organisations active in the pharm-logistics supply chain. Top-flight organisations are

invited to come on board and actively participate.

CONTACT

[email protected]



TEAM-UP

Slipway House 32 . Burrell’s Wharf Square . London E14 3TD

Tel: +44 (0)207 096 9119 . E-mail: [email protected]

TEAM-UP - separating the BEST from the REST!

TEAM-UP!Supply chain integration is a topic that is high on the agenda of thosepharma companies that are seeking to improve efficiency, reduce costsand maintain quality through a more transparent and inclusive approachto their relationships with logistics suppliers. The various upstream anddownstream players in the pharma-logistics chain similarly see majoradvantages in working more closely with customers and suppliers.Win-win outcomes are certainly possible but they require commitment,cultural change and a lot of effort on both sides.

Other industries when facing similar challenges in the past have taken a long, hard, look at their waysof doing business, sometimes from positions of considerable financial distress. Invariably, one of the keyoutcomes of such mass corporate introspection has been the emergence of cleaner, leaner, moreinclusive supply configurations based around win-win relationships. There is nothing so peculiar aboutpharma-logistics that it cannot pursue a similar agenda. And with many other industries now a long wayalong the integration path, the good news for pharma is that all the risky, pain-staking, time-consumingtrail-breaking has already been done.

TEAM-UP is being established to bring the entire end-to-end pharma-logistics supply chain up-to-datewith respect to collaborative working by bringing the entire end-to-end spectrum around the one tableto meet common goals and add value within a symbiotic environment of real collaboration, transparencyand mutual trust.

Although this has never been properly attempted before in the pharma space, at we areadopting and adapting the integration best-practice systems and models that have been successfullyimplemented in equally complex supply chain scenarios elsewhere. The barriers to success are nottechnological or lack of viability or absence of need. The barriers are structural, cultural andpsychological. These are the gaps that the programme will fill by creating a collaborative

environment that is inclusive (i.e. end-to-end), democratic, fair, rewarding, rational,sustainable and workable.

Let’s do it!

© PartnerSave Ltd 2016

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