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Supply Chain Summit
Risk Management
Risk: Panel Members
Natalie Lotier – Bristol-Myers Squibb
VP, Global Product Strategy
Global Manufacturing & Supply
David Dobrzykowski PhD, Rutgers University
Supply Chain Management & Marketing Science
Elizabeth Dubinsky – E I DuPont
Capability & Risk Management Consultant
Mark Holder – AstraZeneca
Executive Director – North American Regional Supply
Global Supply Chain Trends
• Longer
• More complex / more partners
• More dynamic
• Greater demands on IT
• Greater need for flexibility
• Greater customer demands
• Shorter product life cycles
Greater Risk
Managing Risk
Risk Management – Before the Event
- Avoid
- Transfer
- Accept
- Mitigate
Managing Risk
Risk Management - During or after the event
- Awareness
- Contingency planning
- Resilience
Incorporating Supply Chain Disruption and Risk
Management into the SCM Curriculum
Dr. David Dobrzykowski
Department of Supply Chain Management
& Marketing Sciences
September 9, 2014
SCM at Rutgers
Rutgers Supply Chain Management Program:
Full time SCM-MBAs: 62
Undergraduate SCM majors: 600+
SCM Ph.D. students: 18
Full time SCMMS faculty members: 25
Gartner SCM Program Ranking: #3 in US (2011)
U.S. News & World (SCM/Logistics)#13 (2014)
Supply Chain World (U.K.) Ranking: #13 (2014)
Number of corporate partners (2014) 129
Why is disruption and risk
management important?
Evonik Fire: http://www.thedetroitbureau.com/2012/04/resin-plant-fire-latest-disaster-to-threaten-global-auto-industry
Evonik Video:
http://www.bing.com/videos/search?q=Evonik+Resin+Plant+explosion+photo&FORM=VIRE1#view=detail&mid=50F7
F247EE2D2B1CC84F50F7F247EE2D2B1CC84F
Resin (PA-12) anyone? Resin (PA-12) no one?
Source: Douglas M. Lambert, Editor, Supply Chain Management: Processes, Partnerships, Performance, Fourth Edition, Ponte Vedra Beach , FL: Supply Chain Management Institute, 2014, p. 264.
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Tier 1 Customers
Tier 2 Customers
Tier 3 to End Customers
Tier 2 Suppliers
Tier 1 Suppliers
Tier 3 to Initial Suppliers
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Members of the Focal Company’s Supply Chain
Focal Company
Non-members of the Focal Company’s Supply Chain
Managed Process Links
Not-Managed Process Links
Non-Member Process Links
Monitored Process Links
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Is your supply chain truly a
network?
Source: Douglas M. Lambert, Editor, Supply Chain Management: Processes, Partnerships, Performance, Fourth Edition, Ponte Vedra Beach , FL: Supply Chain Management Institute, 2014, p. 264.
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Tier 1 Customers
Tier 2 Customers
Tier 3 to End Customers
Tier 2 Suppliers
Tier 1 Suppliers
Tier 3 to Initial Suppliers
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Members of the Focal Company’s Supply Chain
Focal Company
Non-members of the Focal Company’s Supply Chain
Managed Process Links
Not-Managed Process Links
Non-Member Process Links
Monitored Process Links
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Or is your supply chain a diamond?
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Online Master of Science in Supply Chain Management
So, we embed content on Risk &
Disruption into the curriculum!
• Operations Analysis (580)
• Supply Chain Management Strategies (607)
• Global Supply Management (608)
• Supply Chain Sustainability (672)
• Lean Six Sigma (676)
• Global Logistics Management (679)
• Complex Project Management (661)
• Supply Chain Risk and Disruption Management (699)
• Supply Chain Finance (640)
• Supply Chain Governance (# TBD)
• Supply Chain Intelligence (663)
• B2B Marketing (606)
• Supply Chain Leaders Series
Stages of Disruption
Preparation
Response
Recovery
Mitigation
A bit about the Disruption and Risk
Management course…
A bit about the Disruption and Risk
Management course…
- Science of failures-disruptions in industrial systems
- What makes risks become crises, catastrophes or disasters?
- Vulnerability and threat assessment across firms –A business impact analysis
approach
- Basics of contingency planning – Who owns it and what is supply
management’s role?
- Business continuity planning best practices – The enterprise-wide readiness
- Business continuity; is it for you? Standards, regulations & professional
certifications
- Basics of crisis management in a supply chain
- Response and Recovery in supply chains – The day after
Key topics
THANK YOU and Go Scarlet Knights!
Interested? For more information,
please contact…
Lei Lei, Ph.D., Department Chair O: (973) 353-5185
Email: [email protected]
David Dobrzykowski, Ph.D., Asst. Professor O: (973) 353-5186
Email: [email protected]
Arash Azadegan, Ph.D., Asst. Professor O: (973) 353-1696
Email: [email protected]
Department of Supply Chain Management and Marketing Science
Rutgers Business School, Rutgers University
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A Product Lens on Business Continuity
Suppliers
Starting Materials
Drug Substance
Small molecule API
or Biologics
Finishing
Drug Product
Packaging
Distribution
Supply Chain Summit
September 9, 2014
Natalie Lotier
VP, Global Product Strategy – Global Manufacturing & Supply
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Working to Meet the Critical Needs of Patients
Oncology Immuno-oncology Cardiovascular Virology Immunology
Our Key Products
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People & Process are critical foundations to enable a sustainable capability for business continuity planning
Ensure the accountability is integrated into established roles in your organization
Build robust processes which are integrated into the organization’s priorities & governance
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Accountability of Business Continuity is integrated into PRODUCT LEADERSHIP ROLES
Strategic Product Leaders are accountable for
key brands across the Life Cycle
Product Strategy Objectives
Network Strategy
Supplier Strategy
Manufacturing Strategy
Distribution Strategy
Business Continuity and Risk Management Plan
Demand Strategy
Partner/Alliance Strategy
Inventory strategy
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Build robust processes which are integrated into the organization’s priorities & governance BCM Framework..Product Level Risk Assessment
* For illustration purposes only
Supplier Mfg Pkg Dist Identify
critical points
of failure at
‘BRAND’
level
Risk
mitigation
plan &
Continuity
plan
Framework to provide systematic, comprehensive – data Roll up & Drill down abilities
…..enabling decision support for Plan, Actions and ROI
Continuity Plan
Accept Risk
Reduce Risk
Avoid Risk
Risk Mitigation Approach
Hedge Risk
Supplier
3PL
TPM
Site
FMEA Scores
Feeder
Risks
prioritization &
identification
of residual
risk
BCM
Guiding
Principles
FMEA Key Indicators
• Severity
• Probability
• Detectability
Product Risk currently Covered Risk remaining to be covered inventory contingency
Product A
Dual source DS
Single source DP with
increased inventory
2nd DS source global filings
Backup source for
DP/Packaging
Increased FG
inventory
Bright stock inventory
being added
Product B Dual source DS
No backup for DP
Alternate packaging site not
filed in all markets
Node Site Product Rating (No
Mitigation)
BCP
(y/n)
Risk Description Business
Impact
Prevention / Mitigation (Short
Term)
Prevention / Mitigation
(Long Term)
Residual
RPN
Mitigation Status
45 y Supply failure FG inventory at market
DP bright stock at Pkg Site
Qualify alternate line globally 45 Active
405 y Supply failure for
new product
launch
No in-market or bright stock inventory
Potential 2 DP lot strategy for initial
launch supplies
Backup for filling 25 Active
81 y Supply failure DS safety stock
DP and FG safety stock
Dual source
Dual source - surge capacity 225 On-hold.
Supply failure for
new product
launch
Dual source Increase DS (or DP, FG)
safety stock
9 On-hold.
component
A
HIGH y component supply
failure
Supply Failures Negotiate … with supplier. Need
regulatory impact assessment and
quality input.
Raw
Material B
HIGH y raw material supply
failure
Supply Failures Engage supplier in mitigational
activities. Single Source, Single
Facility
Active Discussions
Drug substance
production and
release
Drug
Product
Site D IV Filling and QC
Release
Suppliers
Drug
Substance
Site B
Site C
All
Integrated PRODUCT Risk Register
Residual Risk
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Manufacturing Site Risk Assessments provides input to evaluate likelihood & impact of risk events
Business Continuity risks are defined as the low likelihood, high risk areas for manufacturing sites and evaluated in site Business Continuity Plans
Supplier
3PL
TPM
Site
FMEA
Scores
EXAMPLE Risk List
Likelihood Impact
High (> 70%) At 1X per year.
Medium (31% - 70%): Unlikely,Possible
Low (< 31%).Highly unlikely.
High: Not usable for extended period
Medium: Damaged, but usable shortly
Low: Sufficient mitigating controls,
Acts of Nature
Storm (wind, flooding, falling trees) High Medium Earthquake Low High Fire Low Low Extreme Temperatures Low Low Volcanic Eruption Low High Tsunami Low High Human Interference
Terrorism Low High Theft Medium Low Cybercrime Low High Counterfeiting Medium Medium Tampering Low High Supply Failures
Prolonged utility (Electric, Gas,,,) disruption Low Low Essential equipment defects Low High Network Collapse Low High
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Supplier Risk Assessments are critical to
the Product Risk Registers
Supply Risk = Supply Impact and Supplier Rating
Supply
Impact
Supplier
Risk
Supply Impact (60%):
Supplier Rating (40%):
Supplier
3PL
TPM
Site
FMEA
Scores
Financial Rating
Supplier Prespective
Geopolitical Risk
Supply Chain/ Global Availability Risk
Quality Rating
Service/RTP
Type of Material/ Service
Sourcing Situation
Time to change
Cost to change
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In Summary, Business Continuity Planning is an Integrated Process
Create/ Refresh Brand Supply
Strategy
Update Business Continuity Chapter
Develop Integrated Brand
Risk Register
Escalate Highest Risks &
Remediation Recommendation
s
Monitor Execution
& Residual
Risks
BCM Guiding
Principles
Internal
Mfg Sites
TPMs Suppliers
Annual or as-needed
Update
Cross-functional Product Teams
Supply Chain Summit
September 9, 2014
Elizabeth Dubinsky, CSCP
DuPont Risk & Capability Consultant
Risk Management in Contract
Manufacturing
Our mission is to support business improvement through:
• Entire contract lifecycle • Applied globally
Tools
• Risk assessments • Audit protocols • IT systems
• Learning programs for capability building
• Networks for communication and collaboration
Standards Education
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DuPont Contract Manufacturing Center of Competency
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Standards
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Tools - Verifying Standards Compliance
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Tools - Risk Self-Assessments
ILLUSTRATIVE
Tools - Criticality vs. Risk Segmentation
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Supplier Name Category Total Spend Tier Risk Priority
Orange Company - EMEA Repackaging 20,000 4 4
Green Company - NA Grinding 50,000,000 1 1
Blue Company - LA Slitting 400,000 4 4
Yellow Company - AP Coating 80,000,000 1 2 Tier 1 8 50.00%
Purple Company - AP Compounding 6,000,000 3 3 Tier 2 1 6.25%
Red Company - EMEA Blending 7,000,000 3 3 Tier 3 4 25.00%
Pink Company - LA Sewing 40,000 2 1 Tier 4 3 18.75%
White Company - NA Molding 30,000,000 1 2 Total 16
Black Company - EMEA Printing 90,000,000 3 2
Gray Company - NA Embossing 7,770,000 3 3
Gold Company - LA Packaging 4,000,000 1 2
Silver Company - NA Chemical Processing 2,000,000 1 1 Priority 1 5 31.25%
Magenta Company - AP Creping 55,500,000 1 1 Priority 2 5 31.25%
Stripe Company - EMEA Cutting 140,000 4 4 Priority 3 3 18.75%
Poka Dot Company - NA Stamping 20,000,000 1 2 Priority 4 3 18.75%
Star Company - LA Physical Processing 6,600,000 1 1 Total 16
# of Suppliers
Segmentation Results
# of Suppliers
Overall Tier Results
Overall Priority Results
Source: CEB Procurement Leadership Council © 2014 CEB. All rights reserved.
Tools - Holistic Risk Management Model
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Education - Building Capability
The DuPont Oval Logo, DuPont™, The miracles of science™ and all products denoted with ™ or ® are registered trademarks or trademarks of E. I. du Pont de Nemours and Company or its affiliates.
Managing Risk
Mark Holder CSCP, MBA Executive Director Regional Supply North America
Supply Chain Risk Management
Example
Supply Chain Summit
September 9, 2014
