In the picture at the left, a worker in a “manufacturing plant” in China is processing pig intestines to produce raw material used in the widely used blood thinning drug, heparin. Can you imagine the quality systems being employed in this factory? (more on this in a moment.)
In the process excellence space, we often teach the idea of Systems Thinking – which challenges us to think more broadly about the interconnectedness of things that often seem, on the surface, to be unrelated. The failure to see the interconnections greatly increases the likelihood that we miss root causes of problems or fail to address all of the factors that can make a difference – thus nullifying our efforts. I find this is a difficult concept for many people to get, and I think it is helpful to show good case examples when we find them.
At this month’s Global Outsourcing Conference at Xavier, I heard one of the best examples of a systems approach that I had experienced in a while – aimed at addressing the global security threats to the supply chain at the pharmaceutical giant, Pfizer. The presentation, “Supply Chain Security”, was given by Mr. Brian Johnson, Senior Director of Supply Chain Security. (by the way, given the fact that Pfizer even has a person with that title is an important indicator that Pfizer’s senior management sees this as an important strategic issue – a precursor of being able to do meaningful things to address problems.)
The Threat to Global Pharma Supply Chain Security
At the conference, we learned some pretty startling facts and developments that cause drug supply chain security to be an item of growing concern.
- 50% of medicines sold online from un-certified sites are fake (World Health Organization)
- Counterfeit drugs have become a $200-billion-a-year industry (Reuters)
- Fake anti-malaria drugs kill an estimated 100,000 Africans a year (World Trade Organization)
- Cargo theft is on the rise globally, with a 350% increase from 2007 to 2009 in the US alone (CBS News)
- Some unscrupulous overseas suppliers create both SHOW and SHADOW plants. One is “for show” where they invite FDA and company inspectors to visit, showcasing pristine equipment and facilities, spotless floors, and friendly cooperative staff. However, the bulk of production is done in a ‘shadow’ factory – often filthy, uncontrolled, and without proper manufacturing procedures. (FDA)
- Some greedy criminals were caught substituting di-ethylene glycol (anti freeze) as a cheaper ingredient to be used in the production of cough syrup – a lethal concoction (FDA)
I finished the week wondering if I would ever feel comfortable taking a pill again.
What Pfizer Did
If you look at Johnson’s presentation, he demonstrates many important Systems Thinking ideas.
1. Understanding the problem and drivers. They began with a candid definition of the problem, identifying the main issues which in this case were Counterfeiting, Cargo Theft and Diversion, and finally Economically Motivated Adulteration. When we define the issue or problem clearly, it helps us better ask the right questions to help us analyze and solve that problem. I sometimes see that the problem is defined too generally (like “improve quality”), which can be interpreted very differently by all participants. Everyone is trying to understand a problem that is slightly different, and that can lead to ill-focused strategy creation.
Notice also that Pfizer thought about the global industry drivers that are exacerbating the problem. In their case, there were four main ones, including increasing globalization (making the supply chain more complex), the expiration of blockbuster patents, like Lipitor (which creates cost-reduction pressure on pharma companies leading to more outsourcing, manufacturing and subcontracting overseas), etc. These insights also helped the project team better focus and ask more relevant questions.
2. Mapping the Current Environment. How the problem connects to and impacts their organization was the next question Pfizer tried to assess. You can see in the slide deck, that they identified over 100 different distinct processes, across 15 different company operating units that all were related to the security of their overall supply chain. They looked at the complete process flow from raw materials through supplier selection, through manufacturing, then through distribution and warehousing to the market and ultimate consumer. If you look at it this way, it should be evident that no single operating unit by itself can ever solve this problem. It absolutely requires an integrated and aligned effort.
3. Developing a Solution (Strategy). Pfizer’s solution took all of the processes into consideration, defining action steps that involved all of the related organizations, always based on priorities predicated on how each step addressed their understanding of the problem.
4. Creating an Infrastructure to Sustain It. Creating action steps alone is seldom sufficient. Pfizer, to help sustain the effort, created an SCS (Supply Chain Security) Office reporting to a Senior Vice President, along with a matrix structure to help promote coordination and communication. This is a key piece to assuring implementation success.