This article was published in the September/October 2016 edition of Pharmaceutical Engineering® Magazine.

The transformation of Bristol-Myers Squibb (BMS) from a large, diversified pharma company to a focused, specialty biopharma company has been widely recognized as a remarkable business success story. The transformation started in 2007 and was guided by the vision to create a company that would represent the best of both pharma and biotech. The company pursued a three-pronged strategy defined by innovation, integration, and improvement. With the patient as the focus, innovation efforts centered on select therapeutic areas targeting serious disease and unmet medical need. The company’s “String of Pearls” business development strategy largely defined its approach to selective integration. And a comprehensive continuous-improvement program drove efficiency and effectiveness across the entire company. BMS divested businesses, rationalized the portfolio, consolidated the manufacturing footprint, and much more. By practically all measures, the transformation has elevated it to a position of industry leadership, but the company is not complacent. It continues to be bold and evolve with an eye on the future.Lou Schmukler, Global Manufacturing and Supply President for Bristol-Myers Squibb, Cover Story Pharmaceutical Engineering Magazine

BMS’s Global Manufacturing and Supply (GMS) organization played a key role in the company’s transformation. Pharmaceutical Engineering met with GMS President Lou Schmukler, who shared some views on a number of key supply chain topics. Schmukler started on the shop floor more than 35 years ago and has broad experience across various sectors of the industry.

Reducing variability is synonymous with improving and attaining high quality.

Pharmaceutical Engineering® Magazine (PE): What is your philosophy with respect to supply chain strategy for the industry?

Lou Schmukler (LS): It depends, and by that I mean that the supply chain strategy should be fully aligned with the business strategy for the enterprise. The best supply chain strategy, and the corresponding required capabilities and performance targets, should be primarily driven by the enterprise’s business model and objectives. For example, the optimal supply chain strategy for a specialty-care biopharmaceutical company may be quite different from that for a generics pharmaceutical company. That said, there are certainly key emphasis areas that are universally important.

I like to refer to these universal areas as “non-negotiables expectations” or “table stakes.” These should be foundational to any supply chain and the target should be excellence. These areas include such things as product quality, GMP compliance, safety, environmental sustainability, people development, and organizational culture. I believe that no supply chain organization can aspire to world-class status without first having these core elements well established.

Once this strong foundation is in place, the supply chain organization can focus on the next level of strategy, which encompasses making a series of important strategic decisions that will serve, in large part, to define the future strategic framework and operating model for the supply chain. By working closely with R&D and commercial partners, the supply chain organization can make the best strategic choices so that finite resources are best allocated toward those areas that support the overarching company priorities and create a superior competitive advantage. This effort can lead to what’s sometimes referred to as a “segmentation” strategy to supply chain management. The approach entails having different operating principles, investment plans, and metrics across the business from both the portfolio and geographical perspectives, based on unique business needs. An example of this is where two different planning models may be utilized, such as make-to-order vs. make-to-stock.

The third level of supply chain strategy builds on the first two. This is where specific priority programs and projects are identified to really maximize the supply chain value proposition for the company and its customers and patients. You could consider these the “game changers” because they unlock tremendous value. These plans usually involve substantial cross-enterprise collaboration and thinking differently about the business. To be a little more specific, for us at BMS Global Manufacturing and Supply, these efforts are mainly associated with the acceleration of bringing new transformational medicines to patients and enhancing the customer-patient focus and experience. An example of this would be a project to re-engineer the new product-launch process such that the time from approval to patient is measured in hours vs. days.

PE: Are there some key elements you have developed or learned through experience?

LS: First, strategy is about choices and tradeoffs. Deciding what you are not going to do is often more important than deciding what you are going to do. I believe this is where some organizations struggle. Without making necessary difficult decisions, prioritization suffers and the resulting dilution effect on focus is not a recipe for success. Said another way, when everything is a priority then nothing really is.

The second point is the importance of having a robust strategic planning process. At BMS Global Manufacturing and Supply we utilize Hoshin Kanri, which is a method for ensuring that the strategic goals of the organization drive progress and action at every level within the organization. It eliminates the waste that can come from inconsistent direction and poor communication, and it strives to get every employee pulling in the same direction at the same time. It achieves this by aligning strategic goals with plans of middle management and the work performed by all employees. Achieving this level of alignment within a large organization is not easy but is absolutely key. Vision and strategy without execution is just hallucination. Hoshin Kanri coupled with strong program management discipline ensures effective execution.

Small-Scale Single-Use Biologics Facility - Pharmaceutical Engineering MagazineLastly, the ultimate measure of a good supply chain strategy is if it provides the right roadmap that supports the company objectives both near and long term and drives superior competitive performance. By definition, it is an iterative process always involving the cost-benefit analysis and respective tradeoffs of the various operational components.

Image:  The company’s new multi-host, multi-product, small-scale single-use biologics facility in Bothell, Washington.

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References

  • Thomas Ebel, Ulf Schrader, and Ketan Shah (2014). McKinsey & Company, Finding opportunity in uncertainty: A new paradigm for pharmaceutical supply chains.
  • Eric Langer (editor), (2015). BioPlan Associates, Inc., 12th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production: A Study of Biotherapeutic Developers and Contract Manufacturing Organizations.
  • Roselinde Torres, Martin Reeves, and Claire Love (2010; updated 2014). Adaptive Leadership. BCG Perspectives.
  • Roselinde Torres, Nneka Rimmer (2011). The Five Traits of Highly Adaptive Leadership Teams. BCG Perspectives.
  • Joseph Defeo, and J. M. Juran (2010). Juran’s Quality Handbook: The Complete Guide to Performance Excellence

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