1. ®
Clinical Operations Planning
Building a Critical Platform for the Clinical Trial Supply Chain
ExL Pharma’s 3rd Clinical Supply Forecasting Summit
April 6, 2009
Wayne McDonnell – Research Director,
Healthcare & Life Sciences

2. What is this critical platform?
• In Commercial Operations…
• Sales & Operations Planning is the cross-functional process
that translates market opportunity into an optimal, actionable
operating plan.
• Leaders use this process as a platform on which they build
capabilities to trade-off opportunities and risks, allocate
resources according to business priorities, and capture value
creating business opportunities.
• In Clinical Operations…
• This platform is a MUST for companies that need to align
clinical supply and demand, decrease new product
development time, decrease costs, etc.
• Leading life sciences companies are employing “S&OP-like”
processes for clinical trials…is your company?
®

3. The Need for a Common Definition
Goal: Make the financial budget. Tops-down Focus.
Desires control and wants predictability of operations.
Forecast definition: The budget
Finance
Goal: Goal: Factory
Maximize optimization,
enrollment & improve costs
treatment, Clinical and minimize
wants Clinical demand
Trial Demand-side Supply-side Supply
guaranteed uncertainty
product Operations Operations
availability Forecast
definition:
Forecast Supply Manufacturing
definition: Chain Plan
Enrollment
Forecast
Goal: A feasible plan. Bottoms-up focus.
Wants to minimize risk and disruption
Forecast definition: The demand plan
®

4. The Core Elements of the Demand Driven Value Chain
Business &
Customers and Consumers
Risk Tradeoffs
Demand Visibility Supply Visibility
Suppliers
The Downstream Data Architecture Model
Operations Innovation Business Commercial
Reliable,
& Implications (Planning)
Profitable
Product Supply &
Tradeoffs (Finance & Tax )
Demand
Customer
Segmentation Demand
Opportunity
Downstream Data/ Application Stack
Model
Sensed
Supply
Supply Demand
Capability
Demand
Capability Translation 3rd Party
ERP
MES
“Turntable”
Innovation
Shaping
Translations
Distributor
Forecast
Response from
Demand
Management Supply Based
Inv
Reliable
Reliable Visibility
Flexible
Flexible Agility
Agility
&
Insights
Responsive
Responsive by
Compliant
by
Compliant
Design
Design Repository
“Profitable
“Profitable
Master Data
Perfect Order”
Perfect Order” Common Process Platforms
Analytics & Processes (eg S&OP)
on Demand
Demand
Translation
Visibility and collaboration are key, but
risk/opportunity tradeoffs are inherent
®

5. Maturity of S&OP Processes in Life Sciences
I II III IV
Stage Reacting Anticipating Collaborating Orchestrating
Balance: S&OP OP
OP
OP OP
S
S S
S
Goal Alignment Development of an Demand and supply Profitability Demand sensing,
operational plan matching shaping and a profitable
demand-response
41% 32% 27% 0%
Metrics -Manufacturing costs -Total supply chain -Company profitability -Network inventory
measured -Asset utilization costs -Cost to serve -New product launch
-Customer order line -Perfect order as -Perfect order at receipt success
fill rates shipped from your by the customer -Program profitability of
dock -Customer scorecard marketing and sales
-Days of inventory on improvements tactics
hand -Market Share
18% 36% 27% 18%
Process level Focus on Focus on the The constrained plan is There is balance
manufacturing load development of a visible and used to take between the input on
leveling feasible plan customer orders operations and sales
team
14% 41% 27% 18%
®

6. S&OP process definition changes
1990s Early 2000 Demand Driven Leaders
1. Develop a demand 1. Collect sales input 1. Collect sales and market input
forecast 2. Develop a forecast 2. Develop a demand plan
2. Balance demand with 3. Shape demand 3. Demand consensus refinement
supply consensus refinement 4. Shape demand based on what-if
3. Consensus meeting 4. Develop a constrained analysis on demand for supply
4. Publish the plan supply plan 5. Develop a constrained plan by
5. Review and gain supply
agreement through a 6. What-if analysis by supply to
Consensus meeting determine trade-offs on the
6. Publish the plan measurements and identify
demand-shaping opportunities
7. Review and gain agreement through
a consensus meeting
8. Publish the constrained plan
9. Measure and communicate the plan
®

7. Bottom Line
• S&OP is…
A Process to Translate Business Strategy to Execution…
…and Projected Demand to Supply
Cross-functional, Continuous, Forward Looking
Punctuated By Executive Review
• Those Who Win
Commit to Process, Metrics Discipline – build in incentives
Invest in Clean Data
Create a Culture of Safe Harbor For “The Truth”
Make it Action-Oriented
Start Simple
• Those Who Fail
Lack Executive Commitment
Game the System
Under-invest in Data Integrity
®

8. ®
S&OP Best in Class –
What does good look
like?

9. What Good Looks Like
• Executive sponsored planning and review cycle
• Focused on driving achievement of business plan
• Goal clarity (profitability? market share? cash to cash?)
• Time horizon: 1-18 months (rolling). Horizon depends on
• Budget cycle
• Lead time of long lead time supply commitments (e.g., capacity contracts)
• Calendar…most often monthly, but varies based on demand cycle
• Monthly review
• Forecasting and tactical planning
• Metrics: Profitability, customer service, inventory, forecasting, and revenue
• Quarterly or semiannual review – Long-term integrated planning
• Network design and flow manufacturing
• Product rationalization
• Customer rationalization
• Supported by continuous tactical “pre-S&OP” activities
®

10. Planning Cycle
Measure and communicate
the plan Measure and communicate
the plan
Publish the constrained plan
Publish the constrained plan
Executive plan review
Executive plan review
What if by supply for Trade-offs
What if by supply for Trade-offs
Constrained plan by Supply
Constrained plan by Supply
Demand consensus refinement
Demand consensus refinement
What if for Demand
What if for Demand
Develop a demand plan
Develop a demand plan
Collect enrollment forecast
Collect enrollment forecast
Week 1 Week 2 Week 3 Week 4 Week A Week B Week C Week D
®

11. Integrated Business Planning Flow
(Med Devices Client)
Strategic Business Planning
3 Year
Annually SOF
Annual
Budget
Process
Quarterly Quarterly Budget
Reforecast
Tactical Planning Product Family Level
Product Line
Monthly
Exceptions
Portfolio New Activities Based Risk/Opportunity
Review Review Proposals
MANAGEMENT
Demand Demand Financial BUSINESS
Inter- Consensus Review Reconciliation REVIEW
on
cil iati
Regional ec on
Calls te dR Strategy Map and
Supply Supply gra
Inte Aligned KPIs
Consensus Review
®

12. ®
Clinical Operations Planning
The Clinical Transformation

13. Workshop Time!
Assess Clinical Trial Scenario
• Review clinical trial case example
• What does the hierarchy of clinical trial supply chain metrics tell you about the example?
Define a Clinical Operations Planning Process
• Define stakeholders
• Define process stages
• Define participants, by stage of the process
• Define roles and responsibilities
• Define key expectations and metrics
• Define key reports, outputs, etc.
• Propose meeting and process frequencies, meeting agendas, etc.
• Identify key systems, tools, etc.
Propose a Solution for this Case Example
• How would you use Clinical Operations Planning in this case?
Propose Next Steps for your Company
• Make it real!
• What if you were responsible for implementing COP in your company?
• What’s in place today that would facilitate COP?
• What would be the hurdles and challenges?
®

14. Groups
• Project Manager
• Program Manager
• Forecasting & Planning
• Clinical Supplies
• Logistics
®

15. Report Back
Process Overview
• Briefly describe process
• Participants, meeting frequencies, key metrics, systems & tools
Identify Current Barriers
• Organizational
• Business Process
• Technology
Identify Opportunities
• What would be the biggest benefit to your company?
®

16. Using the Hierarchy – Example #1
(Strong) CT
Demand
Forecast Assess
CT Perfect CT SCM
Order Cost
(Weak) New Product Time-to-Market
Concept to Prototype to first
First Diagnose
production
Prototype production
to launch
Supplier Supplier Return Return
Quality On-Time Cost %
Production
Inventory
Order Perfect
Correct
Cost Plant RM + WIP
Schedule Cycle Order
Detail Utilization + FG
Variance Time Detail
®

17. Example #1
• CT Forecast Accuracy is poor; however, Clinical Operations is
getting kits to the right place at the right time by holding too
much inventory
• Operations is not happy; their schedule variance is high and
utilization is low
• Returns and inventory losses are high
®

18. Using the Hierarchy – Example #2
(Strong) CT
Demand
Forecast Assess
CT Perfect CT SCM
Order Cost
(Weak) New Product Time-to-Market
Concept to Prototype to first
First Diagnose
production
Prototype production
to launch
Supplier Supplier Return Return
Quality On-Time Cost %
Production
Inventory
Order Perfect
Correct
Cost Plant RM + WIP
Schedule Cycle Order
Detail Utilization + FG
Variance Time Detail
®

19. Example #2
• CT Forecast Accuracy is poor; however, Clinical Operations is
getting kits to the right place at the right time by holding too
much inventory
• Operations is not happy; there are a lot of supplier issues
• Clinical Operations is not happy either; order cycle times are
lengthy
• If changes are not made soon, Finance grown concerned with
blown financial budgets
®

20. Using the Hierarchy – Example #3
(Strong) CT
Demand
Forecast Assess
CT Perfect CT SCM
Order Cost
(Weak) New Product Time-to-Market
Concept to Prototype to first
First Diagnose
production
Prototype production
to launch
Supplier Supplier Return Return
Quality On-Time Cost %
Production
Inventory
Order Perfect
Correct
Cost Plant RM + WIP
Schedule Cycle Order
Detail Utilization + FG
Variance Time Detail
®

21. Example #3
• A classic example of thinking all is well…except that costs are
too high and development timelines are too long.
• Who or where is the culprit? Initially this company thinks the
issues are all with their suppliers…
• However, if this company cannot meet target timelines or
budgets, how long can they sustain business as usual?
®

22. Using the Hierarchy – Example #4
(Strong) CT
Demand
Forecast Assess
CT Perfect CT SCM
Order Cost
(Weak) New Product Time-to-Market
Concept to Prototype to first
First Diagnose
production
Prototype production
to launch
Supplier Supplier Return Return
Quality On-Time Cost %
Production
Inventory
Order Perfect
Correct
Cost Plant RM + WIP
Schedule Cycle Order
Detail Utilization + FG
Variance Time Detail
®

23. Example #4
• Clinical trials run by accountants…all costs look good, but the
clinical sites are not happy
• Supplier issues are creating issues with perfect order and
inventory
• Time to market metrics seem OK, but does this company know
what good looks like?
®

24. Using the Hierarchy
(Strong) CT
Demand
Forecast Assess
CT Perfect CT SCM
Order Cost
(Weak) New Product Time-to-Market
Concept to Prototype to first
First Diagnose
production
Prototype production
to launch
Supplier Supplier Return Return
Quality On-Time Cost %
Production
Inventory
Order Perfect
Correct
Cost Plant RM + WIP
Schedule Cycle Order
Detail Utilization + FG
Variance Time Detail
®

25. ®
CPG Industry Example

26. S&OP Process Background
• Industry: Consumer Products
• Business Model: Make to Stock, Make to Order
• Geographic scope: Support all Global Needs (NA, Europe, Asia)
• Timing: Monthly
• Benefits:
• Each business unit becoming more aligned with business plan
• Increased visibility to state of business on a rolling 18 month
calendar
• Opportunities:
• S&OP technology. S&OP is still mostly Microsoft Excel Based
• Using many systems (SAP, DP, WMCS, Epic) for certain pieces of
information; would like one system to track all information
®

27. S&OP Pre-work
• Gathering Sales & Marketing Input
• Information is gathered during S&OP Demand Planning Meeting on
upcoming promotions and new product introduction from marketing.
• [Note: How would this translate into Clinical Operations?]
• Development of Demand Plan
• Gather sales field input and then running statistical forecast based
on history
• Development of Constrained Supply Plan
• Manufacturing: Run both Operational Forecast (Next Month) vs.
finished goods inventory and raw material banks on critical
components. Run Statistical Forecast (3-6 months out) vs. raw
material critical components.
• Contract Manufacturing: Run Operational Forecast vs. In-house
Inventory and supply lines. Run Statistical forecast vs. contract
manufacturing production plans.
• Procurement: Actual usage of material vs. Planned usage of material
– associated variances
• What if? Activities
• Currently not mature enough yet to determine.
®

28. S&OP Consensus Meetings Structure
• S&OP Demand Planning Meeting
• Business Unit Involvement: Planning, Sales, Marketing, Finance, Logistics
• Discussion Points
• Product Category Trends (Upcoming Forecast)
• Upcoming Promotions
• Forecast Accuracy
• Reconciliation of Back-orders by product category
• S&OP Supply/Capacity Meeting
• Business Unit Involvement: Planning, Operations, Procurement, Logistics
• Discussion Points
• Production volume increases/decreases
• Supply and Manufacturing Constraints
• Excess Finished Goods (Slow Moving Inventory)
• Excess Raw components
®

29. S&OP Consensus Meetings Structure
• Pre-S&OP Meeting
• Business Unit Involvement: Planning, Sales, Marketing, Engineering,
Operations, Finance, Logistics
• Discussion Points
• New Product Introduction and timing
• Resolving and Capacity or Supply Issues by changing demand
• Development of Executive S&OP Agenda with Top 5 concerns
• Executive S&OP Meeting
• Business Unit Involvement: Executive Leadership Staff
• Discussion Points
• Review YTD performance
• Final approval of changing demand (according to Pre-S&OP)
• Review New Product Introduction and Timelines
• Final Decision of Top 5 Concerns and delegate associated leads.
®

30. S&OP Post-work
• Metrics that Drive S&OP
• Product Availability
• Inventory vs. Planned Inventory (DOS, related financials)
• Trade Partner Scorecards
• On-time Shipping
• Perfect Order Ship
• Shipment Compliance
• Forecast Accuracy
• New Product Introduction
• Timing
• Potential Failure Modes
• Incentives for S&OP Excellence
• Business unit performance ratings
®