Ian Elliot is senior director, global supply chain reliability, at Janssen Pharmaceuticals, Inc.

Ian Elliot

The world of pharmaceutical production is changing rapidly, as therapies and global supply chains become more complex. Manufacturers must not only speed product delivery but ensure quality, safety, and efficacy. Success demands consistent discipline and rigor from supply chain and manufacturing operations, as well as programs and procedures that mitigate risk and variability.

	This article discusses efforts that have been underway at Janssen Pharmaceuticals for the past few years to help achieve these goals. Corporate leaders wished to create a program with a transparent structure that would allow employees in different functions throughout the company to measure performance against internal benchmarks, but with a clear focus on patients and healthcare providers.

	Inspiration for this program came from the Toyota Production System principle, 
	

. Grounded in pure, fundamental data analytics, this concept is roughly translated as “gathering all the information that is required to make fast, sound decisions that enable robust and sustainable improvements.” 

	In 2011, Janssen Supply Chain (JSC) used obeya to create and implement global, cross-functional reliability rooms (RRs). These centers are designed to analyze data and provide insights for production forecasts, identify planning and risk metrics, and predict trends and areas of improvement across all of the company’s supply chain functions and manufacturing sites. 

	So far, Janssen has set up more than 20 reliability rooms across its global supply chain facilities, each with its own set of performance goals. Teams at each facility track goals on a weekly basis to discern new and emerging issues. This approach allows the team to get ahead of and mitigate any supply chain problems in the making. 

	Once a problem has been identified and addressed, teams collaborate to discover the root cause of the supply disruption and to locate any patterns that might be behind it, sharing these insights to drive action with respective business process owners. 

	This process of continual improvement and internal readjustment allows for consistent and sustainable improvement across the supply chain. It ensures that employees from different functions, each with different perspectives, review performance and escalate issues or near-misses to identify their root causes and identify any risks that might be embedded in future plans. 

	In the six years since they were first rolled out, RRs have become essential for monitoring the vital signs of the supply chain. They also serve as a forum in which teams can meet and discuss plans for procurement, production, quality, logistics, and engineering. This approach ensures that one plan, executed by one team, delivers against a set of shared priorities. 

	A central group is charged with discovering systemic issues that affect the supply chain and working with partners at various sites to find robust, sustainable preventative and corrective actions. At the same time, the central RR identifies best practices that can be shared with the company’s supply-chain partners.

	A core tenet of the RRs is risk identification and assessment, which are achieved through a stratification of metrics and other factors based around supply balancing. In this approach, supply-chain-performance metrics are monitored against some thresholds for which performance has been correlated to impact. Thresholds then indicate whether or not the problem is under control.

	For example, there is a statistical correlation between certain metrics that are associated with stock outs in specific markets, which are fed by certain sites. Knowing these correlations allows targets to be set so that any supply disruptions can be avoided.

	Similarly, data have been correlated on the types of product-quality issues and their impact on the supply chain. These correlations, and thresholds, are then used to guide inventory stocking and business continuity planning.

	Demand and planning can be used to track risk. The RRs, for example, engage in monthly demand reviews to measure and monitor mean-absolute-percent error and bias to forecast.

	The company has also introduced a bias-tracking signal that effectively measures and identifies patterns in under- and over-forecasting. Using this signal helps to ensure that the assumptions that are made in business forecasts are regularly and thoroughly reviewed. This review is essential to minimizing variability.

	The supply-chain function is utilizing advanced analytical techniques to determine the optimum algorithm for each product and market. For example, for planning, teams typically look at the demand/supply balancing during a 13-week period. When and where gaps in supply or atypical reductions in inventory show up, the RRs raise and review a short-term exception management (STEM) action to address the problem.

	Individuals from different functions within the company jointly decide on the best course of action, and results are monitored weekly. In addition, the RRs keep a log of every potential supply interruption, early warning indicator, and critical stock out, tracking each issue and its resolution. So far, data have shown that, if a [potential] supply interruption can be detected more than eight weeks before it happens, the company will be more than 80% successful in mitigating its impact. 

	Assessment tools also provide a holistic picture of contract partner and supplier risk and performance. The granularity of tracking will depend on the company’s level of dependency on the individual partner. Generally, the RRs track data on suppliers’ quality, delivery, cost and risk profile, technology usage, innovation, audit results, and strategic alignment. In some cases, their internal performance is monitored in terms of capacity utilization, schedule attainment, raw material and work-in-progress levels, as well as audit status. 

	These data provide transparency and a window into their internal performance, giving early warning signs of possible trouble. Data sharing takes place within a framework of partnership that encourages periodic business reviews and a spirit of mutual improvement.

	Currently, RR’s collect data from various sources, including: 

		Business data warehouses that store information on commercial performance

		Online portals, laboratory information systems, and enterprise resource planning systems that store product quality data

		Procurement systems that provide supplier performance data.

	These data are then interfaced into an enterprise data warehouse (EDW), using business filters and calculations to derive performance data. The EDW is built on a Teradata platform, and staged data are visualized and analyzed using a number of different software programs, including products from Spotfire, Tableau, Qlikview, and Qliksense.

	During the initial planning stages of the Janssen RRs, there were concerns about gathering the data, making them visible, and ensuring attendance from the stakeholders at each site amid busy schedules and eminent deadlines. Gradually, as the teams adopted the approach and started to see and feel the benefits, each team adapted the approach to make it work best for them. Each room has a standard configuration and standard data, but the sites have the freedom to incorporate extra information to optimize their effectiveness and efficiency.

	Because the company is global in outlook, training for the RRs tends to be built around a central communication or training plan, utilizing short video clips that explain system utilization.

	This basic structure is then reinforced with traditional presentations, both self-study modules and interactive. This standard is maintained by a central team and then made accessible via internal networks. Training is also augmented based on local or regional practice to accommodate local needs.

	Since their inception, RRs have had a measurable impact in preventing supply chain disruptions by allowing the company and employees to visualize any constraints, understand the business from an end-to-end perspective, and drive a more predictive mindset. The RRs solve challenges and problems every day, ranging from missed deliveries from suppliers to accommodating changes in demand to equipment improvements. 

	One of the issues monitored has been availability and correctness of narcotics licenses that permit sales of some products in regulated countries. Through data collection and analysis, key themes were identified related to timeliness, certain countries’ response rates, and the quality of documents.

	A cross-functional team from quality, customer logistics, global planning, and affiliate services, facilitated by the global reliability team, has put in place a revised process, simplified procedures, developed personnel training, and installed performance monitoring on the process. As a result, the company have seen a 35% reduction in issues, meaning more “right-first-time” deliveries from affiliates and less risk of stock outs.

	Janssen has seen a number of additional improvements and successes from the RRs. Since 2015, the company has delivered a 100% “launch on time” success rate for new products. This is based on a supply chain that can deliver these new products to customers following regulatory approvals and in the committed timeframe.

	As RRs develop, they remain centered around four key principles:

		Commitment and connection to the customer. Think about partners in order to make the best decisions and compromises to support them.

		Ability to see and articulate priorities for the business and the commitments that have been made. 

		Performance, and the use of a standard for tracking performance, not only in reliability, but in safety, quality, cost, and impact on customers. 

		Progress, looking at progress versus larger goals to ensure that the organization is on track to meet business goals, deliver on the sites’ missions, and launch new products.  

	Along the way, Janssen has had to revise its original approach. In 2016, for example, the company made functional groups more accountable for reliability so that the supply-chain function could take more of a supportive role. 

	This has helped the functional teams remain the drivers of the various parts and has meant the solutions have greater internal buy-in, while also supporting broader-based improvement.

	The company has also updated the RRs’ daily performance management to standardize them around the Johnson & Johnson production system and values (1), which brings a single standard to all sites. This is being rolled out across the company’s network, increasing the rigor in root cause analysis and execution.

	Looking to the future, performance metrics will need to blend both site and supply chain performance. Those metrics, observations, and staff can then be used to identify and eliminate any waste in the system and make sure everything possible is being done to keep products continually affordable.  

	In the future, the RRs will become increasingly connected and data will need to be collected faster. At this point, RRs are proving to be a key process and capability to help ensure that the organization can predict and visualize issues, rather than simply react to them.

The Johnson & Johnson Strategic Framework


	Volume 41, Number 12
	December 2017
	Pages: 50-53

	When referring to this article, please cite it as I. Elliot, “Reliability Rooms and the Move to Proactive Supply Chain Management," 

	Ian Elliot is senior director, global supply chain reliability, at Janssen Pharmaceuticals, Inc.

Articles

Cross-functional reliability rooms identify risk and planning metrics, provide insights for production forecasts, and predict trends and areas for improvement.