Case study: creating a blueprint for pharmaceutical distribution

May 01, 2009
By PharmTech Editors



Prior to the appointment of NYK, AZ's manufacturing plants had operated independently and been responsible for managing their own transportation. As such, the union with NYK represented a radical departure from the pharma company's previous transportation model. The project also encouraged AZ's supply chain to move from a push system to a pull system through the introduction of lean manufacturing and supply chain principles.

Key objectives for NYK

  • Secure competitive pricing rates.
  • Establish common quality and security standards across Europe.
  • Exploit opportunities to co-load product from multiple AZ plants.
  • Exploit opportunities to co-load product with other pharmaceutical manufacturers within NYK's established panEuropean pharmaceutical network.
  • Develop long-term cost reduction and continuous improvement culture.
  • Achieve environmental benefits as a result of decreased air and road transport.

Implementation

Not underestimating the challenges of implementing such a major change, the companies worked closely together to ensure a seamless transition to the new systems. Product integrity was the first priority. The early development of service level agreements and standard operating procedures both between AZ and NYK, and, perhaps more importantly, NYK and its subcontractors, ensured that quality was builtin from the beginning.

To minimize risk elements, a phased implementation plan was produced to allow sites to:

  • Be managed on an individual basis.
  • Have training and operational issues addressed.
  • Have hauliers audited.
  • Have common standards achieved.
  • Have processes designed and tested.

Environmental considerations

Until recently, quality and load integrity were the principal considerations when selecting logistics partners and, because of this, major pharmaceutical customers tended to demand dedicated vehicle solutions, which can create attendant inefficiencies. Whilst quality and integrity remain primary considerations, two further issues are also gaining importance: cost and the environment. As a consequence, pharmaceutical manufacturers are showing increasing willingness to share resources to improve asset utilization (particularly through better vehicle fill) and to reduce costs.

Co-loading

NYK operates a central 'control tower' that provides a 'helicopter' view across Europe, allowing centralized planning of the panEuropean transportation operation to maximize vehicle utilization, reduce costs and deliver environmental benefits. Through its network of European subcontractors and partners, NYK was able to provide AZ with a robust, consistent pan-European transport network with a single point of contact and also provided opportunities for AZ to consolidate volumes with volumes from other pharmaceutical manufacturing customers. Whilst shared-user networks are well established and widely used in other sectors, the sharing of vehicles by pharmaceutical manufacturers is unprecedented.

Plans from AZ's sites are received a week in advance, which enables NYK's planning team to identify load consolidations, triangular routes and roundtrip opportunities across all sites. NYK then contacts the sites to discuss potential changes that will enable maximum load consolidation and produces agreed plans, which are circulated to all sites.