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ACKNOWLEDGMENTS
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For the collaboration chapter, we thank Steve Palagyi, Gordon Stewart, and Tony Paolini. For the chapter on performance measurement, we thank Gary Galensky, Robert Chwalik, and Rick Hoole for research on examples given in the chapter. For the chapter on the roadmap to change, we are grateful to Didier Givert, Craig Divino, Craig Kerr, Jakub Wawszczak, Harald Geimer, and Brad Householder for their contributions to our thinking.
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One of PRTM s great strengths is its benchmarking capability. We have been benchmarking performance in the high-tech sector since the mid1980s and have expanded into other sectors such as consumer products in the last few years. We couldn t have fulfilled on our promise of results and fact-based consulting without the ongoing support of our benchmarking subsidiary, the Performance Measurement Group, LLC, led by Michelle Roloff. She paid particular attention to the chapters on process and measurement, contributing significantly to their content. We wouldn t have all the data and analysis in this book either without the expertise of Julie Cesati, PMG s senior analyst for supply chain studies, with early support from PRTM business analyst Neil Kansari. A book of this scope would not have been possible without the years of cumulative experience available at PRTM. Our over 600 engagements in supply chain work with clients have helped us understand what s state of the art, what s emerging, and what the next generation of supply chain practices is likely to promise in technology and process enablement. We thank all the companies with whom it has been our privilege to work.
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Eli Lilly Profile: Supporting Product Lifecycles with Supply Chain Management
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Pharmaceutical companies must do two things well: Invent new products, and create and supply demand for them in the marketplace. And when a new product makes it through the complexities of development an extraordinary long shot the number one rule is to never run out. This is where the supply chain comes in.
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Eli Lilly is one of the world s leading pharmaceutical companies. With $11 billion in revenues, it markets its products in 159 countries and has 43,000 employees. The Indianapolis-based company creates pharmaceutical products that treat a broad range of ailments, including depression, schizophrenia, cancer, and osteoporosis. Lilly is committed to product innovation, spending about 19 percent of its annual revenue, or $2 billion, on research and development every year. The high risk and enormous expense of inventing, developing, and testing pharmaceutical products mean that companies in the industry often depend on just one or two flagship products for the bulk of their income. When the patent for those products expires, the financial consequences can be profound. Lilly suffered a potentially devastating setback when a judge unexpectedly ruled in 2000 that the company s patent on Prozac, a classic blockbuster that made up over 20 percent of sales, would Lilly spends about 19 expire in 2001 three years earlier than expected. Within six months, generic com- percent of its annual petitors had siphoned off more than half of revenue on R&D. Prozac s sales.
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Strategic Supply Chain Management
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In anticipation of this possibility, Lilly turbocharged its R&D efforts during the late 1990s. Today, the company has what is widely acknowledged as the industry s strongest pipeline, with products in every stage of development from early-stage molecules through late-stage clinical trials. Lilly s ambitious plans for the future include launching two to four new products per year over the next several years and doubling sales revenue. To deal with this growth and to accommodate new manufacturing technologies, the pharmaceutical giant will nearly double the number of manufacturing locations in its supply chain. And more third-party manufacturing operations will be incorporated into the mix. Its registration strategy will have multiple manufacturing locations supplying each marketplace to enhance flexibility and reliability and manage capital investment. Explains Ken Thomas, director of manufacturing strategy and supply chain To deal with its projects, With three times as many products, twice as many manufacturing sites, and growth, Lilly is far greater sourcing complexity, the real supply chain challenge for us is just managing doubling its the unbelievable complexity of the business.
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