james shaw & jon chapman, astrazeneca on 'assessing the benefits and risks of using...
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James Shaw & Jon Chapman, AstraZeneca speak on 'Assessing the Benefits and Risks of using Seafreight' at the 7th European 3PL Summit in Brussels, November 25th 2009. To download all of the slides from the conference for free visit www.3PLsummit.com/eu_2009pptsTRANSCRIPT
Assessing the Benefits and Risks of using Seafreight
“Temperature Controlled Pharmaceutical Distribution” November 2009
James Shaw Global Logistics
Jon Chapman Global Logistics
Content�AstraZeneca an overview
�Reasons for using Seafreight
�Reefer Overview
�Benefits and Risks of using reefers
�Pitfalls when changing to sea freight.
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�How do we secure a successful operation
�Conclusions
Top 10 pharmaceutical companies
Sales, $m
31 601
33 965
34 393
35 361
42 232
AstraZeneca
Sanofi-Aventis
Novartis
GlaxoSmithKline
Pfizer
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Source: IMS Health, MIDAS Quantum, 51 countries MAT/Qtr4 2008.
18 741
19 004
25 636
28 894
29 541
31 601
Lilly
Abbott
Merck & Co
Johnson & Johnson
Roche
AstraZeneca
Five important AstraZeneca medicines
14.5 million patientswith elevated cholesterol
Seroquel Depot and Seroquel has helped more than 25 million patients with schizoph-renia and bipolar disease.
Symbicort combines maintenance therapy and fast immediate treatment in a single inhaler, approved against asthma and chronic obstructive pulmonary disease (COPD).
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Further treatment with Arimidex prevents one in four recurrences compared with tamoxifen.
with elevated cholesterol has been treated with Crestor.
Nexium – reflux patients in over 100 countries have gained a better quality of life thanks to the most effective gastric acid inhibiton on the market.
19 manufacturing units in 16 countries
The largest plants are in:
Sweden Snäckviken and Gärtuna
UK Avlon and Macclesfield
US Newark and Westborough
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US Newark and Westborough
Australia North Ryde
France Dunkirk and Reims
Germany Wedel
Japan Maihara
Puerto Rico Canovanas
China Wuxi
Reasons for using Seafreight
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Pharma Patent Expirations
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So what? We will be asked to do more with less & to challenge the current status quo.
Our strategyFor sustainable, industry-leading growth
“Making themost meaningful difference to patient health
through great medicines”
Valued medicines
Lean and agileorganisation
Customer centricmindset
Responsible leaders who make every interaction
counts
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OUR VALUES
Products
Strengthen thepipeline
Performance
Reshape thebusiness
Patient Needs
Grow the business
People
Change our behaviour and
our culture
Logistics developments within different Industries
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9
Evolution of AZ Logistics Business Model
Strategy
Tactic
Planning
Astra Zeneca
Astra Zeneca
3PL/contract logistics
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Coordi-nation
Execution
Past Future
Freight Forwarding Warehousing
3PL/contract logistics
Freight Forwarding Warehousing Value Add
AZ drivers for change of transport mode
�Global Lean Agenda – reducing waste.
“Would the customer be prepared to pay for airfreight?”
� Increasing cost of air distribution eg security and fuel surcharges, capacity constraints in downturn
�Environmental impact of air distribution – CO2 emissions
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�Product security/ Temperature sustainability
�Product lifecycle – From growth to maturity for some products.
“Higher volume – Lower value”
SHOULD NOT TO BE SEEN AS THE ONLY SOLUTION
Why Seafreight?
�Cost Savings of up to 75%, compared against airfreight. This cost saving will outweigh the opportunity cost of inventory on the water.
�Estimated reduction in CO2 emissions of 98% Full temperature control.
�Reduction in handling and as a result risk of transport damage.
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� Increased product security, as distributed in sealed tamper evident container.
�Reduction in pallet usage and materials to protect airfreight pallets
�The testing time and QA release could be absorbed within the transit period (Sterility Testing Leadtime - 15 days).
What is a Reefer?– Reefer is the generic name for a temperature controlled
container.
– The containers, which are insulated, are specially designed to circulate temperature controlled air.
– Reefers can maintain cargo temperature in differing ambient temperatures.
– Reefer is not only a refrigerator. Reefer can both remove and
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– Reefer is not only a refrigerator. Reefer can both remove and provide heat.
Facts on the Reefer Market
�Approx. 0.5% of the global container supply are Reefers.
�Multiple shipping lines need to be contracted in order to secure a reliable supply of equipment.
�Less shipping lines operate a reefer service – Supply to remote destinations could be problematic !
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�Less loading volume than standard containers.
�High value restrictions imposed by many carriers – all AZ products move under cost of manufacture.
� Harbour maintenance taxes in the USA need to be considered in any sea movement.
Benefits of using Seafreight / Reefers
�Complete unit shipped from supplier to customer (sealed).
�No transhipments
�No handling
�Reduction in transit damage
�Unit dedicated to AZ Pharma cargo.
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�Unit dedicated to AZ Pharma cargo.
�Reefer temperature set to match cargo specification.
�Opportunity to allocate stock in transit.
�Reefer unit logs temperature during the voyage and thus offers a tool for follow up and quality control – used in line with AZ Temperature tools.
Considerations when using Sea-freight
�Increased transit time
�Less frequent departures
�Loss of contact with product for ‘long periods’
�Increased inventory
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Ersätt med bild på container i flygmotor
�Better planning and planning in advance is needed
�Pre planning and booking as long as 20 days before
�Advanced notice of imminent arrival allows link into European LTL road network (Antwerp Hub)
Challenges when changing to sea freight
� QUALITY
�Lack of Gensets
�Unclear Responsibility
�SOPs
�Equipment pre-trip inspection
� FINANCIAL
�Understanding of total supply chain
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�Understanding of total supply chain
� Robust Total Cost Ownership Analysis
� Internal acceptance and agreement
�Cargo value and volume shipped as one ‘unit’
�Common understanding amongst all parties
How do we secure a successful operation?
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Important stuff…
3PLCarriersPortsHaulier
Astra Zeneca
Communication
3 PARTIES! Working Together
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Communication
19
�D2D Supply chain
�Pharma compliance
�Performance Mgmt
�Process driven
�Commitment & trust
�3rd-party relations
�Clear ownership
�Win-win focus
�Clear demands
�Resources
�3-Party relations
�Clear Ownership
Operation in Practice
�Operating routines and SOPs adjusted to meet specific demands of sea-freight
�Freight Monitoring – web based track and trace information – shared with all parties involved.
�
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�Joint and agreed KPI's used for evaluation and continuous improvements
�Regular reviews at all levels to follow up, evaluate and develop ways of working.
�Gainshare rewards to Incentivise providers.
Logistics Chain overview
SOP’s / GDPSOP’s / GDP
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GEODIS WILSON DELIVERS AN END TO END SOLUION
SOP’s / GDPSOP’s / GDP
21
Supply Chain Traceability
Conclusions
�Benefits of Sea-freight
� Cost Savings
� C02 reduction,
� Increased security and quality.
� Understand the impact of increased lead time.
� Understand your supply chain – “Buy your lead time”
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� Understand your supply chain – “Buy your lead time” eg ship ahead of clearance.
� Secure understanding and commitment from internal business stakeholders.
� Proper preparation at all levels is key.
� Things do go wrong – risk mitigation plan.
QUESTIONS?
AstraZeneca Freight & Logistics 25th Nov, 2009