James Shaw & Jon Chapman, AstraZeneca on 'Assessing the Benefits and Risks of using Seafreight

Assessing the Benefits and Risks of using Seafreight

“Temperature Controlled Pharmaceutical Distribution” November 2009

James Shaw Global Logistics

Jon Chapman Global Logistics

Content�AstraZeneca an overview

�Reasons for using Seafreight

�Reefer Overview

�Benefits and Risks of using reefers

�Pitfalls when changing to sea freight.

2 AstraZeneca Freight & Logistics 25th Nov, 2009

�How do we secure a successful operation

�Conclusions

Top 10 pharmaceutical companies

Sales, $m

31 601

33 965

34 393

35 361

42 232

AstraZeneca

Sanofi-Aventis

Novartis

GlaxoSmithKline

Pfizer


Source: IMS Health, MIDAS Quantum, 51 countries MAT/Qtr4 2008.

18 741

19 004

25 636

28 894

29 541

31 601

Lilly

Abbott

Merck & Co

Johnson & Johnson

Roche

AstraZeneca

Five important AstraZeneca medicines

14.5 million patientswith elevated cholesterol

Seroquel Depot and Seroquel has helped more than 25 million patients with schizoph-renia and bipolar disease.

Symbicort combines maintenance therapy and fast immediate treatment in a single inhaler, approved against asthma and chronic obstructive pulmonary disease (COPD).


Further treatment with Arimidex prevents one in four recurrences compared with tamoxifen.

with elevated cholesterol has been treated with Crestor.

Nexium – reflux patients in over 100 countries have gained a better quality of life thanks to the most effective gastric acid inhibiton on the market.

19 manufacturing units in 16 countries

The largest plants are in:

Sweden Snäckviken and Gärtuna

UK Avlon and Macclesfield

US Newark and Westborough


US Newark and Westborough

Australia North Ryde

France Dunkirk and Reims

Germany Wedel

Japan Maihara

Puerto Rico Canovanas

China Wuxi

Reasons for using Seafreight


Pharma Patent Expirations


So what? We will be asked to do more with less & to challenge the current status quo.

Our strategyFor sustainable, industry-leading growth

“Making themost meaningful difference to patient health

through great medicines”

Valued medicines

Lean and agileorganisation

Customer centricmindset

Responsible leaders who make every interaction

counts


OUR VALUES

Products

Strengthen thepipeline

Performance

Reshape thebusiness

Patient Needs

Grow the business

People

Change our behaviour and

our culture

Logistics developments within different Industries


9

Evolution of AZ Logistics Business Model

Strategy

Tactic

Planning

Astra Zeneca

Astra Zeneca

3PL/contract logistics


Coordi-nation

Execution

Past Future

Freight Forwarding Warehousing

3PL/contract logistics

Freight Forwarding Warehousing Value Add

AZ drivers for change of transport mode

�Global Lean Agenda – reducing waste.

“Would the customer be prepared to pay for airfreight?”

� Increasing cost of air distribution eg security and fuel surcharges, capacity constraints in downturn

�Environmental impact of air distribution – CO2 emissions


�Product security/ Temperature sustainability

�Product lifecycle – From growth to maturity for some products.

“Higher volume – Lower value”

SHOULD NOT TO BE SEEN AS THE ONLY SOLUTION

Why Seafreight?

�Cost Savings of up to 75%, compared against airfreight. This cost saving will outweigh the opportunity cost of inventory on the water.

�Estimated reduction in CO2 emissions of 98% Full temperature control.

�Reduction in handling and as a result risk of transport damage.


� Increased product security, as distributed in sealed tamper evident container.

�Reduction in pallet usage and materials to protect airfreight pallets

�The testing time and QA release could be absorbed within the transit period (Sterility Testing Leadtime - 15 days).

What is a Reefer?– Reefer is the generic name for a temperature controlled

container.

– The containers, which are insulated, are specially designed to circulate temperature controlled air.

– Reefers can maintain cargo temperature in differing ambient temperatures.

– Reefer is not only a refrigerator. Reefer can both remove and


– Reefer is not only a refrigerator. Reefer can both remove and provide heat.

Facts on the Reefer Market

�Approx. 0.5% of the global container supply are Reefers.

�Multiple shipping lines need to be contracted in order to secure a reliable supply of equipment.

�Less shipping lines operate a reefer service – Supply to remote destinations could be problematic !


�Less loading volume than standard containers.

�High value restrictions imposed by many carriers – all AZ products move under cost of manufacture.

� Harbour maintenance taxes in the USA need to be considered in any sea movement.

Benefits of using Seafreight / Reefers

�Complete unit shipped from supplier to customer (sealed).

�No transhipments

�No handling

�Reduction in transit damage

�Unit dedicated to AZ Pharma cargo.


�Unit dedicated to AZ Pharma cargo.

�Reefer temperature set to match cargo specification.

�Opportunity to allocate stock in transit.

�Reefer unit logs temperature during the voyage and thus offers a tool for follow up and quality control – used in line with AZ Temperature tools.

Considerations when using Sea-freight

�Increased transit time

�Less frequent departures

�Loss of contact with product for ‘long periods’

�Increased inventory


Ersätt med bild på container i flygmotor

�Better planning and planning in advance is needed

�Pre planning and booking as long as 20 days before

�Advanced notice of imminent arrival allows link into European LTL road network (Antwerp Hub)

Challenges when changing to sea freight

� QUALITY

�Lack of Gensets

�Unclear Responsibility

�SOPs

�Equipment pre-trip inspection

� FINANCIAL

�Understanding of total supply chain


�Understanding of total supply chain

� Robust Total Cost Ownership Analysis

� Internal acceptance and agreement

�Cargo value and volume shipped as one ‘unit’

�Common understanding amongst all parties

How do we secure a successful operation?


Important stuff…

3PLCarriersPortsHaulier

Astra Zeneca

Communication

3 PARTIES! Working Together

19 AstraZeneca Freight & Logistics 25th Nov, 2009 19

Communication

19

�D2D Supply chain

�Pharma compliance

�Performance Mgmt

�Process driven

�Commitment & trust

�3rd-party relations

�Clear ownership

�Win-win focus

�Clear demands

�Resources

�3-Party relations

�Clear Ownership

Operation in Practice

�Operating routines and SOPs adjusted to meet specific demands of sea-freight

�Freight Monitoring – web based track and trace information – shared with all parties involved.

�


�Joint and agreed KPI's used for evaluation and continuous improvements

�Regular reviews at all levels to follow up, evaluate and develop ways of working.

�Gainshare rewards to Incentivise providers.

Logistics Chain overview

SOP’s / GDPSOP’s / GDP


GEODIS WILSON DELIVERS AN END TO END SOLUION

SOP’s / GDPSOP’s / GDP

21

Supply Chain Traceability

Conclusions

�Benefits of Sea-freight

� Cost Savings

� C02 reduction,

� Increased security and quality.

� Understand the impact of increased lead time.

� Understand your supply chain – “Buy your lead time”


� Understand your supply chain – “Buy your lead time” eg ship ahead of clearance.

� Secure understanding and commitment from internal business stakeholders.

� Proper preparation at all levels is key.

� Things do go wrong – risk mitigation plan.

QUESTIONS?

AstraZeneca Freight & Logistics 25th Nov, 2009

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THANK YOU!


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