medical device supply chain councilmedical device supply chain council larry p. smith, vp global...
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Medical Device Supply Chain Council
Larry P. Smith, VP Global Supply ChainJune 4, 2014Chicago -- Spring Meeting
Agenda• BD Overview• Emerging Markets Overview and Challenges• Network Design and Optimization• Conclusions• Q & A
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Who is BD?• FORTUNE 500 company (#332)
• Locations in more than 50 countries
• Nearly 30,000 associates worldwide
• Serves healthcare institutions, life science researchers, clinical laboratories and the general public
• Sells a broad range of medical supplies and services, devices, laboratory equipment and diagnostic products
FY 2013 Revenues: $8.054B
BD Biosciences$1.1B
BD Medical$4.3B
BD Diagnostics$2.7B
By Segment: By Geography:
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BD SafetyGlide™Injection Needle BD Nexiva™ Closed IV
Catheter System
BD PosiFlush™Heparin-filled Flush Syringe
BD Soluvia™ Prefillable Microinjection System
Enabling safer, simpler and more effective parenteral drug delivery
BD Emerald™ Syringe
BD Sterifill Advance™ Plastic Prefillable Syringe
Insert BD Simplist here
BD Simplist™ line of ready-to-administer prefilled injectables
Improving clinical outcomes through new, accurate and faster diagnostics
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BD Viper™ System with XTR Technology
BD MAX™ SystemBD FocalPoint ™ GS
Imaging System
BD Kiestra™ Total Lab Automation
BD Veritor™ System
BD BACTEC™ FX
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Providing tools and technologies to the research community that facilitate basic science, drug discovery and cell therapy
BD FACSVerse™ Analyzer
BD™ LSR II
BD FACSCanto II™ Flow Cytometer
BD Accuri® C6 Flow Cytometer
BD FACSCount™ SystemBD LSR Fortessa™ Cell Analyzer
Research Technologies Clinical Technologies
BD FACS Jazz™
BD FACSCalibur™
BD FACS™ Lyse Wash Assistant
Enhancing disease management in diabetes, women’s health and cancer, and infection control
8BD Viper™ System with XTR Technology BD BACTEC™ FX
Women’s Health and Cancer Infection Control and Patient Safety
BD PosiFlush™Heparin-filledFlush Syringe
BD SurePath™PAP Collection System
Diabetes Care
BD Ultra-Fine™ Nano 4mm Pen Needles with PentaPoint™ Comfort
BD AutoShield™ Pen Needle
Agenda• BD Overview• Emerging Markets Overview and Challenges• Building your Emerging Market Network• Conclusions• Q & A
Emerging Market Challenges• Currency Fluctuations / Stability• Economic Stability• Political / Regulatory / Trade Compliance Environment• FCPA Issues• Ability to leverage trade agreements • Labor Availability & Skills• Language / Culture• Technology Maturity / Infrastructure• Intellectual Property Risks / Protection• Physical Infrastructure (Roads, facilities, transportation
equipment, etc.)• Lead Time and Cost to Serve• Supply Risk / Demand Risk / Pricing Risk
Emerging Markets - China
• Challenges:– IP Risk– Availability (and turnover) of qualified employees– Level of local competition– Supply chain infrastructure– Availability of qualified local partners (JV, 3PL, Distributors)– Limited internal knowledge of market– Regulatory requirements– Escalating employee compensation– FCPA – Aging population
Emerging Markets - India• Challenges
– Availability of qualified SC partners– New labeling requirements– IP risk– Availability (and turnover) of qualified Talent– Local competition– Regulatory/Reimbursement uncertainty– Supply chain infrastructure– Limited knowledge of market– FCPA
DC’s ( CFA)
FACTORY
LUCKNOW
HYDERABAD
BAWAL
MUMBAI
DELHI
CHENNAI
CALCUTTA
BANGALORE
COCHIN
RANCHIAHMEDABAD
INDORE
PANCHKULA
ZIRAKHPUR
CHANDIGARH
JAIPUR
CUTTACK
India SCM Network
Proposed reductions 16 to 4 DC
DIFCO
CHENNAI
PATNA
BD India Network
Emerging Markets - Brazil• Challenges
– Regulatory/ANVISA– Labeling requirements– Availability (and turnover) of qualified talent– Complexity of importation process
• High import tariffs• Difficult customs system
– Local and Chinese competition– IP risk– Employee Safety– Port slowdowns and strikes
Port Ranking - The Economic Forum
Face to this, Brazil is one of the last Countries in a list of Port Quality
Grade 1= inefficient; Grade 7= efficient
Brazilian Ports
Ethiopia 30 daysBrazil 10 daysChina 7 days
United States 5 daysChile 3 daysSweden 2 days
Brazilian Ports are not efficient...Days to remove container from port
and are not productive...
SANTOS ROTTERDAMBiggest in Latin America Biggest in Europe
HANDLING 76MM ton per year 378MM ton per yearSTEVEDORE (LABOR) 4 605 5 441PRODUCTIVITY 16 500 ton per stevedore 69 500 ton per stevedore
Brazilian Railroad coverage and availability
Train average speed in Brazil is among the lowest in the world.
FRANCE
UNITED STATES
RUSSIA
BRAZIL
300 Km/h
64 Km/h
46 Km/h
25 Km/h
Emerging Markets - Russia
• Challenges– Unstable economy – Availability of qualified SC partners– Security concerns– Ease of access to the market– Political challenges – Large Geography– Geopolitical disruptions– FCPA adherence
Mexico
• Companies are now considering Mexico as “the little darling of emerging markets” and an exciting growth story – Forbes Magazine
• Mexico the “China of the Americas” – Siemens Mesoamerica CEO Louise Goeser
• “China’s Export Pain May Be Mexico’s Gain” – Wall Street Journal
Mexico vs China
China MexicoShrinking working pool – 1 child policy Low cost but highly skilled labor
UN - # of Women ages 15-24 will fall from 106MM – 92MM in 2015
Good industrial real estate capacity and available land
Demands for higher pay & labor costsCost of manufacturing increasing by 15-20%/yearShipping lead time to the US - 15-20 daysFTA’s – 20 nations
48-72 hours lead time to the USDrug Cartels – More Isolated Regional IssuesMild inflationFTA’s – 43 nations
Agenda• BD Overview• Emerging Markets Overview and Challenges• Building your Emerging Market Network• Conclusions• Q & A
Modeling Optimization Simulation
Supply Chain Network Optimization
Supply chain network optimization is the practice of locating andrationalizing the facilities within the supply chain, determining thecapacity of these facilities, determining how to source demandthrough the network and selecting modes of transportation in amanner that provides the required level of customer service atthe lowest cost.
Objective:
Network Design• Understand your Co/Business Strategy• Understand your Regional GTM Strategy • Align Your SC Strategy• Model the “Base Case”• Simulate Multiple Scenarios to Develop Optimal
Solution• Balance Inventory Levels, Service Levels,
Transportation and DC Costs• Select the Best Match to Your Strategy• Execute the Optimized Network
ManagementBusinessReview
ManagingNewActivities
ManagingSupply
ManagingDemand
Integrated Reconciliation
Sales & Operations Planning -Key to Planning
Agenda• BD Overview• Emerging Markets Overview and Challenges• Network Design and Optimization• Conclusions• Q & A
Conclusions
• Emerging markets generate more top line growth versus slower growing mature markets
• China, Brazil, and India are still considered the top growing emerging markets over the next 5 years
• Level of risks and challenges still exist and can vary in different emerging markets
• Near-shoring of Manufacturing to Mexico and the USA is increasing• If you don’t have an emerging market supply chain network strategy,
you greatly increase the likelihood of having a supply chain that cannot support desired financial opportunities and is not flexible and resilient
• Embrace the challenges and the opportunities !