Change sometimes requires a little prodding. As supplier quality issues have dominated drug industry headlines of late, and as lawmakers, regulators and consumer advocacy groups have demanded absolute drug safety, pharmaceutical manufacturers have implemented new programs to shore up their supply chain oversight and control.
For Wyeth Consumer Healthcare—maker of products like Advil, Robitussin, Centrum, Caltrate, and Chapstick, it’s a case of “been there, done that.” WCH recognized a few years ago that unpredictable supplier quality issues were one of the biggest challenges and business threats it faced, and that its supplier oversight was not the best it could be.
Guayama’s Guardians of Excellence: Gisela Maldonado, Director, Materials Management; Migdalia Cruz-Lebron, Supply Base Manager; Ishua Oronez, Associate Director, Procurement
WCH relies upon, a large network of suppliers to assure continuous supply of thousands of high quality raw and packaging materials. When the network is out of synch, as it was in 2006, customer service suffers. “We were getting, shall we say, ‘fan mail’ from retailers” about late or inadequate supplies, says Nancy Secours, Senior Director of Supply Chain Operations Integration for WCH. “Supplying product to the consumer healthcare business is complex. Our customers and patients have a choice and we recognized that we needed to gain their confidence in our ability to supply products without interruption, and without any surprises.”
The problems lay both with Wyeth and its suppliers. There were fragmented supply strategies across different Wyeth sites, and far different practices among supply chain partners.
In response, a team comprisfed of supply professionals from Wyeth’s five multinational manufacturing sites—Pearl River, N.Y.; Richmond, Va.; Montreal; Guayama, Puerto Rico; Aprilia, Italy—and Global Strategic Sourcing was brought together to sort out the problems. Using elements of Six Sigma (particularly DMAIC analysis), the group identified areas of concern, and began the process of instituting change. “We wanted to make sure we had ownership in the program from each of the sites, and that by using recognized analytical tools and approaches, we would sustain results,” says Joe Vitanza, SQE Co-Champion and the Managing Director of Consumer Health Manufacturing in Pearl River.
On the Same Page
The first step was to create a global entity that focused solely on supplier quality reliability. Enter the Supplier Quality Excellence program, which was based loosely on Toyota’s supplier quality system and which, importantly, was identified by WCH senior management as a key strategic initiative. “They put it up in lights and said, ‘This is what we need to do,’ ” says Ron Perry, Senior Director of WCH Strategic Sourcing and SQE Co-Champion.
Finding the right people and the right team structure for the program was critical. The new position of Supply Base Manager (SBM) was set up at each manufacturing site; these individuals would be focused on assuring reliable supply of quality materials, developing relationships with supply partners, effectively managing supplier performance, and implementing continuous improvement efforts.
Some SBMs were hand-picked, while others readily volunteered. “I saw it as the perfect opportunity to marry my Quality background and the technology background that I had,” says Claudia Matheny, SBM at Richmond.
Pearl River Production: Tony Pattanayak, Supply Base Manager (left) and John Connor, Director of Procurement.
Migdalia Cruz-Lebron, SBM at Guayama, left her previous company to take the job. “I went through the interview process and saw the passion and interest that Wyeth had for making the program work,” she says. “I really felt that the team was in charge of this program.” Rounding out the team were members from Operations, Quality, Corporate, Manufacturing Site Procurement, Technology, Operational Excellence and Global Strategic Sourcing.
The team had two immediate tasks at hand: getting to know each other and work well together; and educating suppliers about the new program. The first task was accomplished through face-to-face meetings, regular teleconferences and other structured communications. The team was able to bond despite the fact that members spoke four primary languages (English, French, Spanish, and Italian) across the multinational sites.
“I realized early on in the face-to-face meetings . . . that people were reaching out to each other and saying, ‘Show me what you’re doing,’ ” says Secours. “Everybody wanted to ‘raise the bar’ at their own sites and they were eager to borrow ideas from their peers to make positive changes in their sites’ performance.”
“Everyone had a common vision of what an ideal state would be,” says Perry. “And that helped us overcome what would normally be perceived as a daunting global initiative.”
Passing It On
Taking the message to suppliers was the next hurdle. There were several elements of the program that would challenge suppliers: increased oversight of their activity, including a “scorecard” system by which their performance would be measured; increased communications with Wyeth and other partners, including more shared data and expertise; and higher expectations of consistency and continuous improvement.
Montreal Members (left to right): Srdjan Jovanovic, Sophie Sabourin, Paul Trudeau, Pierre Brossard, Marion Sahapoglu-Forest, Danielle Nguyen
The SBMs were charged with visiting suppliers and educating them about the program. They emphasized not just why Wyeth would benefit from the initiative, but how the suppliers themselves would become more productive and cost-effective. Wyeth committed to training key supplier personnel in Six Sigma and Lean principles, and to undertaking an employee exchange program that would allow supply representatives to spend time at Wyeth sites (actually gowning up and getting the full tour if necessary), and vice-versa.
Only one supplier was outwardly skeptical at the start, but it has since become one of the SQE program’s most vocal advocates. In fact, that supplier committed $2 million of its own resources to the SQE program. And now, this supplier’s suppliers have implemented their own operational excellence programs, notes Danielle Nguyen, SBM in Montreal.
Catalina Vargas, Director, Consumer Health Sourcing; Joe Vitanza, Managing Director, Pearl River, NY plant; Nancy Secours, Senior Director, Global Supply Chain Operations Integration; Ron Perry, Senior Director, Consumer Health Sourcing
“When [suppliers] saw that Wyeth was willing to invest in them, they were willing to invest in us,” says Catalina Vargas, Director of WCH Strategic Sourcing. As the program has matured, it has had an impact far beyond Wyeth. Some 80% of suppliers in SQE now have their own continuous improvement or kaizen programs, whereas few did at the start of the initiative. Wyeth has structured communications with 80% of these suppliers, and following the Toyota method of genchi genbutsu (“go and see for yourself”), the Supplier Quality Excellence SBMs have visited 60% of supplier sites related to the project. By the end of this year, Wyeth expects that nearly 100% of its consumer healthcare suppliers will use the performance scorecards to monitor themselves in terms of, for example, quality, delivery, price, and accuracy of invoices, and to share this information regularly with SBMs.
“Our vision is that one day we’ll actually changed the way people work,” says Perry. “Already, we’re changing behaviors and changing the culture in how we manage supplier quality excellence. . . . Our vision includes this aspect: that other companies, across industries, will point to us and say, ‘That’s the Wyeth Way.’ ”
There are other signs of improvement. In the time that it has been together, the team has had documented success in several key areas: reduction in overall risks associated with uncertain supplier quality, and elimination of back orders, downtime and waste.
- Investigation deviation reports due to supplier related quality issues across the five sites have decreased 68% thus far in 2008, vs. the same period in 2007.
- The potential for a supplier quality issue to arise has been reduced 53%, as measured by FMEA analysis with select suppliers who participate in the SQE initiative.
- On-time deliveries for all suppliers of packaging and raw material to the participating sites have steadily increased to 95% from an average 92% in 2007.
The SQE team has made excellent progress, but there is still more opportunity ahead to strengthen and fine tune the program. The team now talks about sustaining success. One sure sign of its confidence in the program is that it has begun asking suppliers to produce a “reverse scorecard,” in which they measure Wyeth’s performance, and to suggest ways in which WCH can better serve its suppliers. “We ask them to be brutally honest,” says Pearl River SBM Tony Pattanayak. “That’s helped us get a baseline of where we stood in the beginning of the SQE program. It’s helped us with suggestions for improvements, and it’s helped to expose some of our weaknesses.” As the SQE program progresses, and supplier quality continues to improve, any weaknesses should become harder and harder to find.