the role of advanced planning systems (aps) in our · pdf filethe role of advanced planning...

The Role of Advanced Planning Systems (APS)

in our Medical Device Supply Chain Strategy

Tony Balliro

Director, Supply Chain Management – CR Bard

Bryant University

Supply Chain Management Summit

August 22, 2013

http://www.scmsummit.com/

Tony Balliro Tony Balliro is the Director of Supply Chain

Management for two operating divisions at

CR Bard, a global developer, manufacturer

and distributor of less-invasive medical

devices. He has spent the majority of his

career in medical device supply chain

management. He is currently responsible for

directing all aspects of Supply Chain

Management, including Sales & Operations

Planning, Demand Forecasting, Supply

Planning, New Product Launch, Inventory

Management, and overall Supply Chain

oversight to meet or exceed customer service

or financial targets.

Title: Director of Supply Chain

Management

Company

: C.R. Bard

Email: [email protected]

The Role of Advanced Planning Systems (APS)

in our Medical Device Supply Chain Strategy

Tony Balliro

Director, Supply Chain Management – CR Bard

Bryant University

Supply Chain Management Summit

August 22, 2013

http://www.scmsummit.com/

Leading Multinational Developer, Manufacturer, and Marketer

of

Innovative, Life-Enhancing Medical Technologies

Company Overview

2012 Results

Growing Complexity and the Case for Change

Solution Options and the Path Forward

Functional Realignment

What is APS?

Current & Future State Information Flow

Constraint-based Planning using APS

Q & A

Agenda

Founded in 1907 by Charles R. Bard

A publicly traded company since 1963

$2.9 Billion Corporation today and growing

Approximately 12,000 employees worldwide

Headquartered in Murray Hill, NJ

5 U.S. Divisions headquartered in Covington, GA; Warwick, RI; Salt Lake City, UT; Tempe, AZ; Lowell, MA

Major International Locations throughout Europe and Mexico, in Canada, Japan, Malaysia, and Australia

Approximately 109 locations worldwide

Among the top 10 manufacturers of medical devices in U.S.

C. R. Bard Overview

Urology

• Bard Medical Division

Key Disease Management Areas by Division

Key Disease Management Areas by Division Urology


Vascular

• Bard Peripheral Vascular, Inc.

• Bard Electrophysiology Division

Urology


Vascular



Oncology

• Bard Access Systems, Inc.


• Bard Biopsy Systems (A business unit of Bard Peripheral Vascular, Inc.)


Urology


Vascular



Oncology

• Bard Access Systems, Inc.


• Bard Biopsy Systems (A business unit of Bard Peripheral Vascular, Inc.)

Surgical Specialties

• Davol Inc.


Davol Inc., Warwick, RI

• Soft Tissue Repair

• Performance Irrigation

• Hemostasis

• Endoscopic Suturing

• Surgical Fixation

• Laparoscopic Irrigation

• Orthopaedic Pulsed Lavage and Autotransfusion

• Surgical Sealants


Net Sales $2,958.1 $2,896.4 2 3

Net Income $530.1 $328.0 62 -1

EPS – diluted $6.16 $3.69 67 3

Reported % 2012 2011

Adjusted*

%

* Net Sales growth adjusted for FX impact

* Net Income and EPS growth adjusted for items that affect comparability and reconciled on Bard’s website

Full Year 2012 Results ($ Millions, Except EPS)

Full Year 2012 Product Group Sales ($ Millions)

2012

2011

Reported

%

Adjusted*

%

Vascular $845.0 $ 842.4 -- 3

Urology 757.8 734.8 3 4

Oncology 812.4 779.5 4 5

Surgery 455.1 450.0 1 2

Other 87.8 89.7 -2 -2

Total Net Sales $2,958.1 $ 2,896.4 2 3

* Product Group sales adjusted for FX impact

Growing Complexity and The Case for Change

Growing Complexity

The frail systems infrastructure will be pushed to a breaking point by the pressure of Bard’s increasing business demands

• Deals Adds manufacturing locations, relationships and ERP platforms

• Emerging Markets High “tenders” with volatile demand

• New DC for Direct Sales Longer lead times, more inventory & relationships (5x)

• Kitting and Custom Packs High customer demands with little advance notice

• Increase regulatory pressure Massive SKU proliferation (~15,000 today)

• Drug/Device and Biologics Short shelf life, often temperature controlled

What bad things happen?

• 2X increase in customer backorder (as demonstrated in 2007-2008)

• FG and WIP expiry will increase $5 – 10 million

• Overtime increase $2 – 3 million

• Inventory volatility increase 5-10%

• SCM headcount increase 8-12% each year (currently 80+)

ERP Platform by Location

Nogales Juarez

BMD Moncks

Puerto Rico

Reynosa

JDE EU

JDE US

MFG Pro 1

MFG Pro 2

MFG Pro 3

MFG Pro 4

MFG Pro 5

BAS

BPV

Davol

BEP

Angiomed

Malaysia

Crawley

JDE China China

Glens Falls

ERP – Current State Relationships

Division Plant Process Visibility

MFG Pro (A) MFG Pro (A) PO Based Semi-Automated

JDE (A) JDE (A) MRP Based Semi-Automated

MFG Pro (A) MFG Pro (B) PO Based Mostly Manual

JDE (A) MFG Pro (multiple) PO Based Manual

MFG (Pro) JDE (multiple) PO Based/XLS Manual

JDE/MFG EM Supplier Paper/XLS Manual

JDE/MFG Pilot XLS Manual

JDE/MFG Legacy (SenoRX) XLS Manual

Supply Chain Process – Current State

Customers Bard OUS Region Bard US Division Manufacturing

JDE 3

JDE 2 JDE 1

MFG 1

Today, each Region or Division is responsible for its own demand and supply planning. Complexity increases when some OUS Regions place supply requirements on the US-based Divisions, while others order directly from Manufacturing sites. In other words, everyone owns everything amongst several ERP/Planning instances.

Supply chain is slow to react due to number of hand-offs and manual workflows. Inefficiency and confusion contribute to higher inventories more resources to maintain strong service

MX Plant Transactions – 600,000+ annually

APS

Solution Options

Three pathways forward 1.Continue using current ERP and manual planning processes

• Extreme risk of failure • Tremendous risk to Bard’s growth plans • Not cost effective long term due to added headcount and one-off ERP

modifications

2.Globalize a single ERP platform • Long and expensive implementation (2+ years / $40+ million) • Requires massive change management • Large scale business disruption without added intelligence of APS

3.Continue using current ERP and Implement APS • Minimal risk due to experience and outside expertise • Less invasive and more cost effective • Automates non value added manual processes

Path Forward

Continue using current ERP and Implement APS • Minimal risk due to experience and outside expertise • Less invasive and more cost effective • Automates non value added manual processes • Enables global transparency and increases responsiveness

Realign Functional Responsibilities and Revamp Business Processes

• Demand Planning • Supply Planning

Implementing APS will substantially reduce the number of manual processes while adding a layer of intelligence which further enables Bard’s growth

Realigning responsibilities will drive functional excellence and ensure best practice

Functional Responsibility Realignment

SIOP

Internal Management

Budget Consolidation

Inventory Management

Metrics and Scorecards

Supply Demand

Demand Forecasting

New Product Planning

FG Inventory Target

Customer Service

Recovery Planning/Exe

Consignment Inventory

Process Improvement

SKU Rationalization

Capacity (RCCP)

Master Planning (MRP)

DRP (Future)

Order Management

Inventory Reporting

Parameter/System Maint

What is APS?

Function

• Transparency across all regions

• Global demand is aggregated

• Everyone on the same plan

• Manufacturing receives a single plan

• All data represented in the same way

• All planning processes are the same

• Decisions and tradeoffs are global

Advanced planning and scheduling (APS) is a software which allows more than a dozen different ERP systems to function, and think as a single system, with the additional capability to model manufacturing capacity constraints.

Think

• Plans and recommendations are global

• Demand, inventory and production planned simultaneously not sequentially

• Capacity is modeled so plans are either feasible or alerts are known instantly

• Inventory health is modeled months in advance

• Simulation and what-if analysis capability

APS is capable of rapid and frequent re-planning. Global supply and demand are modeled every week, reacting to changes within weeks, rather than months as seen today

APS vs ERP

APS and ERP are two very different tools. ERP executes the local operational and financial transactions and provides reporting. APS makes globally optimized, constrained decisions across multiple systems.

The brain: APS • Flexible decision support • Constrained logic • Global, simultaneous planning • Flexible, what-if modeling capability • Automates PO execution • Exception management via alerts

The body: ERP • Executes the decisions • Performs the transactions • Unconstrained - does what it is told • Rigid and can be difficult to change • Local, restricted visibility • Maintains the data for reporting

• Operations • Quality • Finance

Scenario Example

Today

• 2-4 weeks will pass before the sales pattern is acknowledged

• Purchase orders are sent from China to LAPAC SCM

• 2-3 weeks will pass before the LAPAC orders are due to Davol SCM

• 2-3 weeks will pass before Davol Orders are sent to BPR in consolidation

• 3-6 weeks until the shop floor orders are changed

• Only at this time do we see the capacity or component shortage resulting in 3-5 phone calls or meetings

• Off line (spreadsheet) analysis which takes 2-7 days will be used to allocate production and inventory resulting in BO and expedite

• More wasteful time spent on the phone diagnosing spreadsheets to document the root cause of variance and BO for executive review (RGL).

Dealer demand in China increases the sales for Davol Mesh by 15% each week. China is on a monthly planning cycle with Davol for product produced in Puerto Rico

With APS

• Increased sales rate is picked up daily triggering a demand alert

• Global weekly re-plan aggregates China demand will LAPAC, US, EU and ROW simultaneously

• Revised global plan is sent to BPR considering global inventory pool and current capacity

• If projected inventory health or capacity limits are violated, an automated alert is sent to SCM, BPR and China

• Decision to leverage existing inventory and then overtime to increase capacity in short term is made within 7-10 days of original signal and entire globe is re-planned for Mesh

• APS system isolates, and reports the alert as a spike in China demand = ‘X’ units/dollars resulting in ‘Y’ hours of overtime

APS eliminates most of the latent planning cycle time dramatically increasing responsiveness while driving down wasteful activities at all levels

Flow of Information – Current State Nogales Facility Example

25 Touch Points

Flow of Information – Future State Nogales Facility Example

APS

14 Touch Points

Constraint-Based Planning Logic in APS

Time Today X

Frozen Period

Total Capacity

Standard Capacity

No order changes will be recommended within the frozen period

Planned orders will not be pushed out unless they violate total capacity

Constraint-Based Planning in APS

Time Today X

Frozen Period

Total Capacity

Standard Capacity

No order changes will be recommended within the frozen period

Planned orders will not be pushed out unless they violate total capacity

Planned orders above total capacity will be pulled in until all standard capacity is filled

Appendix

Quality

Integrity

Service

Innovation

The BARD Focus on Patients

Springs from a History of

Values Core to Our Culture

Our Guiding

Principles

Passion for our work

Be indispensable to our customers

Foster creative thinking

Highest ethical behavior

Demonstrate ownership and pride

Leadership by example

Play to win

Advancing Key Areas of

Medicine

Urology

Vascular

Oncology


Bard Medical Division, Covington, GA

• Foley Catheters & Catheter Accessories

• Urinary Collection Products

• Urological Monitoring Systems

• Catheter Stabilization Devices

• Ventilator Associated Pneumonia

Prevention Devices

• Stool Management Systems

• Endourological Specialties

• Urinary Incontinence Products

• Pelvic Floor Support Devices

Urology

Vascular Bard Peripheral Vascular, Inc., Tempe, AZ

• Vascular Grafts

• Angioplasty Catheters

• Stents

• Vena Cava Filters

• Stent Grafts

• Chronic Total Occlusion Crossing Devices

Bard Peripheral Vascular, Inc., Tempe, AZ

• Vascular Grafts

• Angioplasty Catheters

• Stents

• Vena Cava Filters

• Stent Grafts

• Chronic Total Occlusion Crossing Devices

Bard Electrophysiology Division, Lowell, MA

• Ablation Catheters

• Diagnostic Catheters

• Introducers & Transseptal Products

• Steerable Catheters

• Temporary Pacing Electrodes

• Lab Systems

Vascular

Oncology Bard Access Systems, Inc., Salt Lake City, UT

• Implanted Ports

• Dialysis Catheters

• PICC Lines

• Long-Term Catheters

• Portable Ultrasound Venous Access

• Enteral Feeding Devices

• Central Venous Catheters

• Midlines

Oncology Bard Access Systems, Inc., Salt Lake City, UT

• Implanted Ports


• PICC Lines





• Midlines


• Prostate Cancer – Brachytherapy Products

Bard Access Systems, Inc., Salt Lake City, UT

• Implanted Ports


• PICC Lines





• Midlines


• Prostate Cancer – Brachytherapy Products

Bard Biopsy Systems (A business unit of Bard Peripheral Vascular, Inc. Tempe, AZ)

• Core Needle Biopsy

• Vacuum Biopsy

Oncology

Supply Chain Process – Current State

Customers Bard OUS Region Bard US Division Manufacturing

JDE 3

JDE 2 JDE 1

MFG 1

Supply chain is slow to react due to number of hand-offs and manual workflows. Inefficiency and confusion contribute to higher inventories more resources to maintain strong service

Order Order 1wk 30-90 days 30-60 days

Order Shop Order

30 days

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