Optimizing Our Supply Chain to Serve Customers Better
By Meir Shimon, Director, Teva api Global Supply Chain, Head of Network Optimization
In the fast-paced API industry, the journey from raw materials to high-quality API products is complex, and it takes a well-managed supply chain to meet customer demand worldwide. To be an industry-leading API manufacturer, you must be able to operate efficiently, fill orders quickly, and keep costs in line without sacrificing product quality.
This is how we optimized our supply chain processes to better serve our customers
Supply chain optimization helps make that possible. At Teva api, our Global Supply Chain Network Optimization Group focuses on maximizing supply chain operations, by implementing processes, tools and decisions – some of them long term – that will enhance performance. We strive to improve the customer experience and increase our flexibility and responsiveness to changing market conditions.
Optimization puts customer needs first
Every link in the supply chain functions at its best with optimization while thinking about our customer's needs. Most are not aware of the behind-the-scenes work being accomplished by the Network Optimization Group, but every project we undertake focuses on delivering high-quality products faster and more efficiently than ever before.
Dozens of factors can impact supply chain operations: raw material sourcing, inventory and forecast fluctuations, changes in a customer’s needs, capacity and quality issues, operational performance, mergers and acquisitions, expansion into new markets, and more. When change occurs, supply chains that are optimized are able to adjust quickly and seamlessly, and continue delivering high-quality products that meet customers’ needs.
Our Network Optimization Group ensures Teva api’s global supply chain teams are working with the proper tools and systems and effectively using KPIs. At both global and product-specific levels, we can analyze operational, supply chain and process-related data, and set different priorities in the global network to achieve optimal performance.
The Group’s efforts focus on six key areas:
- Global inventory management
- Global capacity management
- System and performance management
- Long-term launch readiness
- Supply chain strategy and product strategy
- Site allocations and cost reduction activities
When determining the best locations to produce new products in our network, many aspects come into play like the IP landscape, available technologies, cost, and investments in new equipment, processes and technologies. In everything we do, we challenge the status quo to optimize our global network and find the solution that works best for Teva api and our customers.
Powerful tools drive optimization
Teva api's Network Optimization Group has the ability to zero in on specific stages in the supply chain to evaluate whether they are operating at peak performance. Two powerful tools that identify areas of improvement are capacity routing and cycle time.
Capacity routing highlights the capacity load in each production line globally and for all production lines at each site. By inputting the supply chain forecast, we can create a capacity map. This enables supply chain leaders to oversee capacity loads across the year and prepare in advance to meet demand. Cycle time is total production time from start to finish. In the API industry, production is a very long process – sometimes it can take months. Teva api has the ability to see how much time it takes to complete each step.
Reducing cycle time reduces lead time, which allows our customers the possibility to get a jump on their competitors by going to market earlier. By increasing efficiency, reducing costs and delivering orders faster, customer satisfaction will be higher and our productivity will increase.
The Network Optimization Group collaborates with site managers and Teva api’s Operational Excellence (OpEx) teams to analyze a specific product or production stage and challenge its duration, yield and other parameters. Our group gives local managers tools and reports and helps with the planning process; the OpEx team guides implementation. For example, if it takes 10 days to complete a step, we work together to see if there’s a way to do it in a week. If the product is being produced in multiple sites, we work with the local teams to benchmark between production lines and stages to optimize performance and to minimize the waiting time between stages.
This industry-leading approach is unique – Teva apis among a handful of API manufacturers with the ability to leverage this type of analysis to optimize their supply chain. Here are some examples of significant improvements Teva api made through supply chain optimization that gave our customers a competitive edge:
Example: Reducing cycle time by challenging the planning process and by optimizing campaign size
The team identified three long-lead time APIs being manufactured at Teva Tech in Israel. Working together with the local supply chain team and Teva api OpEx, we set out to shorten the total cycle time, first by analyzing our cycle time reports then pinpointing the bottlenecks. By challenging our planning process, we understood where improvements could be made, then came up with a solution. The results were dramatic – production output nearly doubled and cycle time dropped from 130 days to 72 days, a 45 percent decrease.
In another case, our objective was to create ideal campaign size for product in a specific production run. For example, if the yearly demand for a particular API is 2,000 kgs., we determined whether running one campaign of 2,000 kgs. or two campaigns of 1,000 kgs. each would enable us to better meet the customer’s needs. By evaluating campaign size, we were able to reduce cycle time from 113 days to 85 days, a 25 percent drop.
Still, this is just the beginning of our journey to shorten lead times. We have a long way to go.
Example: Inventory management improvements to better support customer changing needs
As mentioned one of our focuses is inventory management which impacts efficiency and ability to react faster. When trying to optimize inventories there are few golden rules which are high recommended to implement:
Conduct inventory periodic reviews
2. Analyze inventory usage lead times and cycle times
3. Optimize safety stock implementation and management
4. Use classification approach (ABC, for example)
5. Improve your cycle counting
6. Incorporate and challenge your suppliers’ lead times
7. Review and confirm order quantities
8. Improve forecast accuracy
9. Reduce your aging inventory
10. Improve your inventory controls and planning systems
Over the last year, the Network Optimization Group led an ambitious project to streamline Teva api’s inventory management and to implement some of the well-known best practices. The result was remarkable. We organized local and global inventory councils, instituted new aging inventory controls, introduced inventory reduction plans, implemented material requirements planning (MRP), and more. We gave all Teva api sites the proper tools, reports and ownership at the local level. In just over nine months, we achieved a 47 percent reduction in non-FEFO (First to Expire First Out) transactions and a 10 percent drop in aging inventory, which means customers are receiving newer batches with better shelf life. Those improvements and the other actions we are taking in parallel, such as collaborating with all the other functions, should enable us to deliver faster and better service to our customers.
Continuous improvement enhances optimization and benefits customers
What’s next for the Network Optimization Group? One of our immediate missions is to successfully integrate our systems and processes with the new Actavis API sites that recently joined Teva api. We are currently implementing a new safety stock model aligned with sales and expanding our collaboration with local OpEx teams. This is just one example out of many other activities that we are doing which will better support our customer's needs. Going forward we plan to introduce additional best practices throughout our network and are looking for new initiatives that will make a game-changing difference in our global operations and for our customers.
Teva api strives for continuous improvement in everything we do so our customers can go to market on time, confident they can deliver an adequate supply of safe pharmaceutical products to their customers around the world.
Meir Shimon is a Director and Head of Global Supply Chain Network Optimization for Teva api. With more than 16 years of experience in various Supply Chain, Operations and OpEx positions, Meir is located in Israel and works with Teva api business units, global functions, and local teams across the globe.
To learn more about how Teva api’s supply chain optimization can give you a competitive advantage, please contact us