Amgen Looks To Air And Auto For Advice
By Louis Garguilo, Chief Editor, Outsourced Pharma
There are roughly 38,000 components that go into building a commercial airplane, says Rodney MacLea, a veteran supply-chain executive at Amgen. In the automotive industry, it’s about 13,000 components to build a car.
“That requires just a little bit of coordination,” says MacLea, “and the numbers are a bit larger than what we use for our manufacturing processes in the pharmaceutical industry.”
Humor sure helps to make a point. If companies in the aero and auto industries effectively and efficiently manage much larger supply chains, why can’t biopharma learn to improve its performance? MacLea and Amgen set out to find out.
Out-of-Industry Experience
Amgen’s been at its cross-industry investigation for some time. In fact – and this isn’t the first time we’ve heard pharma express this – a driving catalyst for improving supply-chain efficiency and risk mitigation was the devastating tsunami that struck northeast of Tokyo in 2011. MacLea estimates Amgen spent hundreds of man hours, with dozens of staff working round-the-clock, to fully comprehend and then mitigate the immediate and potential impacts of that event on its operations.
Now MacLea, whose official title is director, supply chain, and who is a key member of Amgen’s raw materials and device organization, shares with the biopharma industry what the company has learned since. The timing couldn’t be better. MacLea counts 500 events around the globe in 2015 (e.g., earthquakes; factory fires or explosions; cyber attacks; geopolitical instability or acts of terrorism; environmental hazards) that impacted the pharmaceutical industry in some way.
Amgen’s research focused on such industries as aerospace and automobile, as well as telecommunications, high-tech electronics, and advanced instrumentation. (Prior to joining Amgen, MacLea was a supply-chain professional in the telecommunications and high-tech electronics industry for over 20 years). The company doesn’t subscribe to the argument that the pharma industry is under a higher regulatory burden than others, so comparisons are less applicable. MacLea reminds us, for example, that the aero industry is one of the most highly scrutinized and safety-driven in the world; any quality issues there become front-page news.
“We’re looking at highly regulated industries with more mature supply chains,” explains MacLea. “How do they manage their materials, larger networks of suppliers, and the various risks to supply?” He jokes that he was ready to “blatantly steal best practices equally from other industries.”
However, in what itself is a telling indicator of the state of supply-chain management in these other industries, no nefarious behavior was necessary. Industry leaders in other verticals are secure in their supply-chain operations and supplier relationships, and were open to providing Amgen with real data and hands-on advice.
As a result, Amgen identified five key areas of importance: Partnership; Source Visibility; Monitoring/Mitigation; Performance; and Leveraging Technology. This initial article will take a closer look at the first (Partnership).
Before moving ahead, though, let’s note the truly advanced level of reliability, safety, and availability of drugs today, thanks to years of efforts by biopharma in managing supply chains – and to efforts by drug regulatory agencies. Nothing in this article paints biopharma as less advanced than any other industry. What’s important here is the lack of satisfaction with the status quo, and a continuous pursuit of improvements ... both from within and without.
Supplier Relationship Excellence (SRE)
The preeminent question for industries producing high-quality goods with vast networks of suppliers is: How do companies effectively deal with their suppliers?
Amgen found the overriding answer provided by non-biopharma companies is to drive long-term strategic benefits for both sides. Within this framing, MacLea mentions these key, and mutual, activities and goals:
- Ensure quality and reliability of supply
- Leverage each other’s strengths
- Deep knowledge of capabilities
- Develop best practices
- Create competitive advantage(s) in our industries
Not new to our biopharma industry – although at times feigned as much as practiced – is that this list hinges on a higher level of strategic partnership with all members of the supply chain. Amgen, for example, rolls all this up into its Supplier Relationship Excellence (SRE) program. MacLea says, “One of the big adjustments we made was to take the time to truly understand all our suppliers, including not only their processes, but also their process capabilities.”
According to MacLea, it’s important to have the correct perspective on what biopharma is actually paying suppliers for. He suggests the industry stop focusing on the idea sponsors are just paying to ensure quality. “You’re not,” he says emphatically. “You’re paying for consistency. You want the same product delivered reliably every time. We kept coming back to consistency as the one area we’ve struggled with. A raw material works one way today, but then the next batch tomorrow doesn’t quite perform the same. We want to know why. How can we control that? That’s a big piece of working together with your supplier.”
Uncovering these data gems depends on the ability to add and extract value from both sides, and says MacLea, “Total cost of ownership comes up a lot here.” One of his suggestions in this regard may put a scare in procurement or sourcing professionals: “We might want to pay our suppliers more for more consistency.”
A Relationship In Process
An example of MacLea’s thinking is where together a CMO and sponsor come to understand that to produce a more valuable biologic product, there’s the need – and a way to address it – for increasing titers in the production of a biologic. This, says MacLea, might cost the sponsor “pennies more per part to produce,” but increases revenues overall. “Does it make sense to implement that, and also to share some of that with your suppliers?” he asks. “The idea of an SRE approach, and concept of total cost of ownership, plays into this.” He adds: “Our supplier-relationship framework is designed to effectively pursue this operational excellence for all parties.”
This concept of bilateral operational excellence first requires, says MacLea, “getting over that little hurdle of trust.” Part of that trust-building effort starts with a more open sharing of data. For Amgen and its suppliers, this openness is starting to pay off. “We’re able to essentially run multi-varied analyses against all this two-way data to understand process dependencies for improving outcomes,” explains MacLea.
To be clear, the focus isn’t on data generated from inspections or post-processes, but more on what happens in time on suppliers’ lines. “Imagine identifying that the temperature of a segment of processing actually increases titers, and the production of more product for every batch,” says MacLea. “That’s real money. It goes back to maybe paying my supplier extra to implement improved controls for that parameter, systematically providing me with the in-process data to monitor more of their processes, and in the end, continue in our pursuit of operational excellence.”
“Like your favorite lager, or fries!” says MacLea, jovially introducing a few other industries for our comparison purposes. “There’s that achievement of consistency in product and output no matter where in the world you produce your product. You know exactly how your process will perform every single time.”
MacLea is obviously pleased with his opportunity to study the production of planes, autos – and lager and fries – for the betterment of the biopharma industry. He’ll provide more insights from what Amgen has learned in our next article.
----------------------------------
This article is based on a presentation given by Rodney A. MacLea, Director, Supply Chain, Amgen, as a part of the DCAT Week ’16 event at Waldorf Astoria in New York City, on March 19th.