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Bancel led an effort over the past few years to look at the full contribution of supply chain management to business success. As he describes it, this meant focusing on supply chain design first and operations second. By designing the supply chain during development, and not afterward, the company could support regulatory requirements. It could balance the risk of clinical failure with speed to market and enable a robust and responsive supply after launch. Another major concern was supply chain optimization. Lilly determined to maximize the value of manufacturing by selecting the best product mix for its networks. It determined to explore contract manufacturing whenever it could enhance revenue. Lilly s supply chain management efforts start well before the launch of a new product, about four years before supply chain design is begun, according to Bancel. About one year before Lilly submits a new product
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to the Food and Drug Administration (FDA) for approval, a global launch leader is assigned to the case. The launch leader s job is to maximize longterm margins during the very critical early days of the launch by determining the global sequence of the release and creating an integrated launch plan for all aspects of the launch including product flow, label approval, and sales-force training. During the same period of time, the supply chain management team starts planning for the new product, answering such questions as when and where to make the new product and how to get it to wholesalers and retailers all with an eye toward the long-term success of the new product while optimizing manufacturing and distribution. The launch leader integrates the manufacturing and supply chain plans and aligns them with plans from the marketing, sales, clinical, and regulatory departments. Despite these measures, there s always uncertainty around a new product launch. Lilly always prepares to accommodate the upside forecast, but when a drug is much more popular than expected, finding extra manufacturing capacity or making other arrangements can take some creativity. For instance, when demand in Europe for Cialis a treatment for erectile dysfunction exceeded Lilly s upside forecast, the company delayed introducing the drug in some countries to ensure that initial supplies were adequate where launch had already been initiated.
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Lilly has a corporate group that provides global supply chain management across the company. The group works with local sites to help optimize global capacity and inventory allocation by determining what product will be made where and for which markets. This often means making short-term sourcing changes within a framework provided by the Strategic Facilities Planning Team, which, in turn, makes long-term sourcing and capacity decisions. Since it takes somewhere between two and five years to bring on new capacity, Lilly must make the best use of the capacity it has at any given time. Because of its standardized manufacturing processes, Lilly can optimize capacity by shifting work among plants. If the Spanish plant is making a particular product at 90 percent capacity, whereas the Indianapolis and U.K. factories are only at 60 percent, the company can distribute part of that work to other plants in the manufacturing network. Taking work away from plants can be a concern for plant managers because they are judged in part on their production levels. However, ongoing efforts by the corporate supply chain management group are helping
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people to realize that such production shifts are for the greater good of the company. We bring our manufacturing management together monthly to review and approve how some moves can benefit the organization as a whole, even though they may cause a temporary adverse variance in a single plant, explains Jon Rucker, director of supply chain. It s a consensusdriven exercise. All the plants are involved in optimizing global capacity in the two- to five-year horizon.
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