References: Supply Chain Saves the World. Boston, MA: AMR Research (2006); Designing and Managing the Supply Chain – Concepts, Strategies and Case Studies; D. Simchi-Levi, P Kaminski and E. Simchi-Levi; 3rd Edition; McGraw Hill Supply Chain Saves the World Supplying Health SCM-655: Global Supply Operations Strategy 1.System Check 2.Administrative Stuff 3.Key Concepts 4.Question & Answer

Today’s Journey Fixing Healthcare to Fix Health Pandemic: Readiness Low & Risk High Healthcare V09-00

Supply Chain Opportunities Productivity gains in other supply chain intensive industries have shown the potential for healthcare to make huge strides in the wider provision of greater supplies and greater cost efficiency. V09-01

Supply Chain Challenges Health Care suppliers are learning to accelerate product development while operating under massive and growing regulatory burdens and finding ways to streamline inventory management and replacement without negatively impacting patient safety. V09-02

Key “Opportunities” Facing Health Care Poor operational performance Increased compliance regulations Increased competition Expiring patents Reduced pipeline on new products V09-03

Pharmaceutical & Life Sciences Landscape Operational Excellence Business Environment V09-04 Critical Business Strategies Technology and Applications Profitable Growth & Scale Leverage Value from IT Cost Sustain Growth and Margins New Products Global Markets Regulatory Compliance Business Integration Supply Chain Mgmt. Demand & Revenue Mgmt. ERP & Master Data Mgmt. Logistics Management Product Life Cycle Mgmt. Sourcing & Procurement Business intelligence Production Operations Strategic Technology Human Resource Mgmt.

Heath Care Business Challenges AreaHealth Care Challenge Sustaining Growth & Margins Health care cost pressure – impacts margins Supply chain inefficiency, high inventory, cycle time waste New Products Strong pressure to grow market with new products Portfolio of expiring patents Increased regulation / testing increases development time & cost Global Markets Opportunities for new markets & low cost manufacturing Risk loss of intellectual property Regulatory Compliance New complex regulations Multi-national differences in requirements and approach Added development time, risk and cost Continued Business Integration Mergers and acquisitions create large organizational change V09-05

Heath Care Business Response AreaHealth Care Business Response Sustaining Growth & Margins Move to Demand-Driven business models Focus on consumer-centered pipeline of safe products New Products Companies prune ranges Use probability theory for selection of development projects Focus R&D activities where geographically advantageous Use cross-functional product development teams (R&D, Mfg, etc) Global Markets Establish development centers in attractive regions Minimize true R&D in developing markets to protect IP Optimize supply chain cost to compete in emerging markets Regulatory Compliance Focus on operational excellence across all functions Merge quality management and execution IP architecture Benchmark other industries, implement demand driven approach Continued Business Integration Embrace excellence in change management processes V09-06

Heath Care Business Initiatives AreaHealth Care Business Response Demand Driven Transformation Implement six sigma, lean, process control, performance management and outsourcing projects methodology Right First Time Use demand driven approach to ensure right product, right place, right time Implement continuous improvement initiatives for processes Compliance Architecture Build quality in compliance into business processes and culture Change traditional metrics to drive continuous improvement Change from quality control to quality assurance focus Demand Driven Supply Pay attention to downstream inventory movements and data Use pull distribution strategy to satisfy customer demand Improve demand intelligence Implement postponement strategies (i.e. for packaging) Risk Management Develop new technologies for product development / manufacture Develop alternate sources of supply V09-08