Kinaxis

Global Webinar Series - Pharma Supply Chain Part 2

Part 2: High product value, short product shelf-life:
Solving the Biopharma-supply chain conundrum through enhanced flexibility, visibility and responsiveness

Good morning, good afternoon and good evening to all the delegates who have taken time out of their busy schedules. This is Nari Viswanathan, the Vice President and Principal Analyst for the Aberdeen Group. We've had a great attendance today and really looking forward to this presentation. So the focus of this particular webinar is around high product value, short product shelf life solving the bio-pharma supply chain continental through enhanced flexibility visibility and responsiveness. There are going to be four presenters for today's session. First I would start off and the Vice President and Principal Analyst for the Aberdeen Supply Chain Practice and has conducted several studies around supply chain visibility and responsiveness. I will be presenting some of the findings from this particular report. In addition we will have three other presenters and I would like to read a brief bio so that you are familiar with their background. First of all I would like to present to you Elizabeth Kaszas, who is the Director of Supply Chain Corporate Planning for Amgen. Elizabeth has worked at Amgen Sales and Marketing Operations and Supply Chain Management for the past 15 years. She has experience at both the clinical and commercial supply chain functions of bio-pharmaceuticals. She recently led the global implementation of RapidResponse for production planning and inventory control across Amgen's regional and corporate supply chain divisions. Also joining us from Amgen is Chris Roth who is the Director of Corporate Planning. Chris has worked at Amgen in Master Data Management ELP Implementation Projects and Supply Chain Management for the past five years. He also manages the Corporate Production Planning team for mature commercial products. He holds a BS in Production and Operations Management from 2:05 and an MBA from Perdue University. Our last presenter of the day is Trevor Miles who is the Director of Industry Applications Marketing at Kinaxis. Trevor is responsible for identifying market trends and translating these into high level functional requirements for the company. He also identifies opportunities for value capture by Kinaxis customers and prospects. Prior to joining Kinaxis, Trevor worked for 2:32 Technologies, in fact I had also worked there and we were collegues at the time. One important point I wanted to mention is we are going to have polling questions throughout this presentation, so we will be asking for your feedback during the course of the presentation. Please feel free to give us your thoughts and give us your feedback. In addition to these polling questions, we have fifteen minutes at the end dedicated to questions and answers. Please feel free to submit your questions through the webinar by using the text box at the bottom right of your screen and send them to myself, Nari. And at the end of the presentation we will definitely try our best to answer as many questions as possible during the Q&A timeframe. For now, I am going to get started and talk about the framework for the discussion. As the topic indicated we are going to talk about the evolution of the bio-pharmaceutical supply chain but before we do that let's take a look at how the overall supply chain has evolved. So what we are seeing from the Aberdeen research Is that supply chains are no longer linear. They are not vertically integrated. We are seeing significant outsourcing at every aspect of the supply chain. And this has really resulted in the evolution of supply chains into what we call an integrated demand supply chain network. And there are five different elements of this network. The first is the demand network which is where we are going to look at buyers of services and products for example, retailers, distributors, value-added retailers and so on. For the bio-pharma supply chain, the distributors of the pharmaceutical as well as the end retailers like the Walgreens and Krogers. Those kinds of retailers are really the customers. From an enterprise side you are looking at different organizations, such as sales, marketing, operations, manufacturing and procurement. From the supply network side we are looking at suppliers, contract manufacturers, promotional design manufacturers, three tiers and so on. We are seeing a nascent trend where more and more bio-pharmaceutical manufacturers are looking at outsourcing their processes. Then we have the logistics network where we have third logistic providers where we have shippers, carriers and so on. And then we have the financial network where we have bags, financial supply chains and so on. And what we see here is a lack of visibility at the edge of the enterprise across these different elements of the network and to gain control of the processes is a key requirement that companies have. And these issues are highly prevalent in the bio-pharmaceutical supply chain because of the unique challenges that this industries has. In fact, the rest of the presenters, specifically those from Amgen will be talking about these in more detail but in quick summary these products are characterized by a very short life cycle in terms of the products which are 5:38, but then have a long product life because once the product expires they can have genetic drugs and profit margins dramatically reduce in that case. This industry is characterized by early stages of process outsourcing and we have several players. We have the raw material suppliers of the bulk chemicals or specialty chemicals, we have the contract service partners, or more than both the design outsourcing as well as manufacturing outsourcing we have the licensing companies, we have the brand owners and on the distribution side we have various roles such as the pharmacy's retail partners and so on. So what you see is the need for being able to balance supply and demand is very critical . And in these industries there is also a lot of focus on the supply network because supply is quite expensive and scarce and companies need to really focus on the working capital as well as the cost elements of the working capital. And these industries are also challenged with the lack of visibility and collaboration at various levels within the supply chain. And as part of this presentation we will be understanding how to enable visibility and collaboration. At this point in time we have a polling question that you can see on your screen. Please feel free to answer that polling question. What we are seeing from an Aberdeen research perspective is, you can see a quote from one of the VP's of Supply Chain at an organization where they talk about in the past they could get away with not having to focus on supply chain visibility but today with much more of a distributed operations they are having to constantly reinvent their multi enterprise network and having to focus on visibility. And what we see is there are really four stages. The first stage is establishing business to business integration with their trading partners and the second stage is ensuring that the data transfer between the trading partners but that will only get you to the stage where you can gain visibility of the processes but if you really want to be responsive then you want to make yourself the data and take position, the elements of collaboration and network intelligence comes into the picture. And an example of a collaborative process is sales and operations planning and we will be talking a lot about sales and operations planning as part of this discussion and the associated limit of having the websites available in real time and being able to take position as part of network intelligence which allows us to discuss in this presentation. I wanted to talk about one key data point from recent Aberdeen research where we ask companies about what is your top action to better manage complex supply demand networks and what we saw was these companies have identified that the need to improve visibility was the top action that they were focusing on and the second most action was in terms of trying to improve the collaborative processes between business partners, and as I have said before the third point in terms of trying to better integrate the financial planning and budgeting with the sales and operations planning process. It is what we call integrated business planning. So with this I would like to hand it over to Elizabeth to talk about some very specific decisions on Amgen and the kinds of challenges they are faced with and the processes they have adopted to manage their multi enterprise supply demand network. Elizabeth …

9:36 to improve supply chain visibility. I will use the next minutes to highlight key facts about our company and some of the fundamental challenges of a bio-pharmaceutical supply chain, I think you presented some of them Nari, and I will present some specific solutions we have implemented. Amgen was founded in 1980 and has been a pioneer in developing human therapeutic space on large molecule 10:15 delivered by injection. Over the years we have expanded into small molecule oral therapies but we actually concentrate on most of the delivery. We focus on finding the best therapy to fight specific disease process. And Nari, if you are online I'm going to ask you to move to the next slide. We were founded in 1980 and we have started to develop and commercialize our product in the 1990's. Amgen's R&D investment has been up to 20% of its global revenues in 2009. I think it was mentioned that our products have been used to treat over 80 million patients around the globe and this slide really shows where Amgen has offices; our products are distributed in these countries and many other markets. We have a significant presence in North America and in Europe with the research and manufacturing distribution and sales is really worldwide. We distribute nine products in the various strands presentation and packaging configurations yielding 2000 of skus , for example EPOGEN was our first commercial product and was launched 20 years ago and was used to treat anemia caused by kidney failure in patients in dialysis and our latest product, Prolia was launched this year in the US, throughout Canada and Australia and is used to treat osteoporosis . It is expected to be soon approved for the treatment of bone 12:16 so it is a highly anticipated launch. When it comes to the characteristics of the biopharma companies you characterized them very well. The first challenge we face derives from the fact that we have to deal with rather complex biology used to produce proteins and 12:48 supply their ability compared to other industries and it is a key component of supply and demand something that we factor in master data but certainly a constraint that we also look at and build safety stops around. When it comes to manufacturing it represents a major investment for companies, you very well see what we are talking about and production lead times are rather long compared to many other industries. We have end to end lead times that can be up to twelve months depending on the production process. Regulatory is the third key characteristic that shapes the bio-pharma supply chain. We need to comply with different standards within the US as well as other regions. We need adhere to strict approved expiration dating and we also have some major requirements when it comes to lot track/trace which actually requires us to be on some key capabilities in ERP and advanced planning tools. And finally it is important to highlight that the transition between manufacturing sites is expensive and quite time consuming. It can take several years to get approval for commercial production. So I wanted to give a high level look at the different constraints that do shape our supply chain and some of those can be very different than other industries. On the next slide I want to give a very high level and simplified overview of our manufacturing process. I think it is important to highlight that we tend to keep safety stops at different manufacturing stages. We do produce what we call a bulk. We deal with bio reactors 14:59 proteins that purify. We then fill this active ingredient in the vials or syringes and the product can be further processed into auto-injector devices and then we have the various packaging considerations to meet the specific country requirements all around the globe. On the next slide we have here a key component of bio-pharma. The product structure is quite different from high tech and other industries. We usually start with a few skus, what we call the bulk or key product ingredient which is different shaded between different strengths in different presentation and then we multiply the number of skus because of the different regional regulations we have to comply with and I think it is important to highlight that for these manufacturing stages the bulk as well as the drug product we have some specific expiration datings; 24 month for bulk and 24 month for drug product. So these rather short expiration datings combined with some high stop sell requirements and various countries up to 12 months combined with some level of safety stop to certainly mitigate for demand and supply variability do not provide us with very long selling windows so it is certainly something we need to factor in when we plan and use an advanced planning tool like your RapidResponse has helped us quite significantly in terms of managing that complexity. I think I already mentioned that the manufacturing cycle time is rather long and again this is a very simplified view, we have to manage up to twelve manufacturing stages from bulk to finished goods so if we go to the next slide, what's really important for Amgen has been for two years we have been facing the need to enter a lot of new markets, we have multiplied the number of skus we deal with quite significantly and we have expanded our partnership and we deal with many more logistic providers around the globe than we used to even two years ago, and it goes without saying that we have an increased level of complexity that needs to be managed to plan to deliver and we realized a few years ago that these complexities have required us to have a more integrated planning solution that would allow the corporate functions and also the size and region and to some extent the end users to share a common view of the plan to have the ability to generate scenarios; to really better understand how to plan for these increased levels of complexities. And I must say that after several iterations of advanced planning tools we were able to implement RapidResponse last year and I am going to ask Chris to provide you with the specifics of how we implemented the tool and more importantly what it gave us in terms of increased supply chain visibility so Chris I guess your slide will come next. Thank you. Thank you Elizabeth and hello everybody. To build on what Elizabeth has said already and tell you how RapidResponse has helped us to meet some of the challenges that we have had in our business. Essentially RapidResponse has really helped us expedite our monthly planning cycle and adjustments to our production and distribution cycles. Some of the key enabling tools within RapidResponse are listed on the left hand side of the slide; so let me take you through those. The first thing is that is provides us with a logical scenario structure that is very understandable by the business and helps us keep coordinated and understand simulation versions versus our live version that we are doing planning against. Second, we are using heavily customized data alerts that allows us to audit both our master and transactional data and also can send key reports as exceptions throughout the planning phases so that is quite an enabler. The third thing is that we use hierarchies and filters quite a bit to allow us to effectively drill down and focus on the vital information as we are going through the planning process which often times can be a time sync and under appreciated. Lastly, there are various workbooks and scorecards that are provided as we are going through the planning process and it helps us see our immediate impact and helps summarize what our S&OP dilemmas may be as we are going through the process and even after the process. So those two key tools there have enabled our planning process which is depicted on the right hand side. If I could say one word about our planning process is that we've really enabled collaboration. Where we start with our processes is really the marketing forecasts. We receive marketing forecasts and we assemble that today. There are thoughts about how to expand on that further given what we've been able to achieve with the tools so far. But we take it from the market forecast and look at by region the demand plan and the distribution across our distribution sites. From there we are planning at our site production schedule in the short term and for us it's about three to four months and we really are able to integrate with our site counterparts along with our corporate team which Elizabeth and I represent, and essentially from there we use that as a starting point to put together our longer term plan which goes out to up through three or four years and once we are completed with one of those cycles we actually summarize that information and can use that in our S&OP process ultimately resulting in input to our next marketing forecast in the next cycle. Really what we have seen is a speed through that process on the right enabled by RapidResponse. Move on to the next slide, another key capability that RapidResponse has brought us is integration with our SAP execution system. We are currently automatically synchronized using the close loop technology of RapidResponse by pulling daily transfers of master and transactional data from SAP into RapidResponse which really gives us our starting picture of inventory and firm receipts. This is incredibly important as we are trying to align with the demand changes in any supply variability that we may be seeing month to month. From there we actually use our master data and generate orders using the fast MRP engine in RapidResponse throughout our network and product structures. I think you have seen a depiction of that, that Elizabeth had shown earlier so that BOM structure really goes from a packaged product all the way down to our drug substance and it considers key settings in terms of safety stock and lead time offset, etc. And that is planning through our seven plan manufacturing stages and once we are done with that plan and we've collaborated and evaluated the final results, one of the scenarios we use in RapidResponse is actually pushed back using the closed loop technology into SAP for execution in the form of planned orders, purchase requisitions and basically that is what keeps us in sync and is built upon when we create actual shop floor orders and distribution movements throughout the supply chain. You can see how that loop is highly tied to the planning cycle that we showed in the previous slide. If we go into the next slide, this is depicting our funnel of scenarios and I think I could probably speak for many people in the audience that there are many many scenarios that senior management can come up with and even through the levels of management, so what we have been able to enable here is maybe not every question can be answered but we've certainly broadened our bandwidth of what we can answer in a much quicker timeframe. In the top of our funnel here we are showing some of the key elements that we are able to pull as levers as we go through the scenario process, so we look at different demand sensitivities, we look at different supply assumptions, whether we have longer distribution times or if we have longer disposition times, safety stock, etc. We also look at our work centre information to understand rough cut capacity for a number of hours, for a number of units, and lastly a very key element of what RapidResponse has brought to us is time phase parameters; some of the things that aren't necessarily enabled by your native SAP system and in there we can look at time phase receipt time, phase expiration and save safety stock and really a set different points over a period of time to monitor or manage in line with our product life cycles. The enabling capability of RapidResponse is enabling us to be able to perform risk base supply planning, inventory management scenarios, impact on capacity utilization and finally waste management which is what I'll talk a little bit more about in detail. This next slide is depicting how we are actually using some logic inside of RapidResponse that is really a key feature that we need in our industry and that is around expiration planning logic. We are using this to help reduce our waste and to ensure supply and for us, it is our motto which is in the middle of this slide which is "Every Patient Every Time" so as we said earlier in the slides we are a high service level organization so what are we start is earlier, Elizabeth had shown our manufacturing process and that was represented with a syringe, now that might be a vial or some other device but upon filling our active drug substance inside one of these syringes there is a clock that starts, and that clock is measuring our approved expiry time line. Across each of our products we have different expiry timelines but I am representing just a generic one for one of our products. From that point A on the slide we need to then package the product out into different presentations to meet country specific inserts and a number of packs needed by our end users; our end patients and ultimately that has to happen and leave Amgen's control before we hit, what we are calling a minimum shelf life and we consider that element our stop sell date (you can see the little stop sign in there) and that's to really give time for the wholesalers, pharmacies, and actual patient usage so that they can use the product before expiration. Now in an ideal world we would go through these cycles way ahead of time and wouldn't be right up against the clock, but there are times due to our high service levels, long cumulative lead times that we can get closer to our stop sell dating and that is something that our groups manage very actively and have needed tools which RapidResponse has been an enabler. In particular the planning requirements that we are looking for is first to identify our expiration risk to help us drive corrective actions well in advance of when the event may actually occur. Second, if there is nothing we can do to correct them, we'd like the planning tool to decrement any projected expiry order and re-plan to reach our safety stock so that we can see that we have loaded our capacity appropriately in the future. This is a summary of the logic itself and on the next slide it gives a detailed view of the planning sheet inside of RapidResponse, so if you are a RapidResponse user this should look fairly familiar to you and I wanted to point out a couple of key elements that Amgen users are seeing that may be an enabling technology that you would consider. First of all, you can see on the left hand side we have added a row in here called the expiry risk, and what that expiry risk is, it meets our need to actually identify and alert and drive our mitigating actions. It is telling us in our current bucket depicted by this timeline that we have 13,000 units that we are going to be hitting expiration sometime in the future so if there is some mitigation that we can take now we can actually avoid that expiration either by reducing the production or finding another demand that it might be able to be allocated to. As we look out in time, in this case, we are assuming that we couldn't mitigate it, you can see that the planning logic then shows an expired quantity for that same 13,000, it goes unused and it actually decrements it from our on-hand balance. That allows in future buckets when we have new demand that it will allow a new order to be kicked off and planned accordingly and load our capacity. This is a very key element to our planning process. We are using it mostly in simulation mode right now and we plan on implementing it across our process over the upcoming months. In summary I just wanted to summarize the different elements of how not only expiry planning but other functionalities within RapidResponse have helped us grow as a company, to meet our complexities and scalability needs. On the left hand side, RapidResponse has really been an enabler to help us align our network planning with our sites, in our distribution replenishment the collaboration effect there between the site of corporate function is very very important and is a key enabler of what RapidResponse can do just with alerts and messaging and generally using a single source of data. Secondly the expiry planning logic that's actually part of the planning analytics is something that we are using and plan to use going forward to help us manage those tight spots that we get into on occasion per product. Third bullet point here is around scenario analysis and the ever growing ideas of different scenarios that we can do we're trying to find everyday new ways to meet it using the tool and we've been really successful at delivering those analysis with our tool set to help optimize our network. S&OP reporting, I can't say enough about how flexible and how many reports we've been able to make in a very short development cycle I might add to meet our needs and to integrate with the functions outside the planning organization. And then lastly the integration of inventory evaluations scenarios with our finance group so we're really starting to see that our finance group is starting to join in and using the tool set because they can use the features and functionality of RapidResponse to help value inventory and help us project as we do our scenario analysis. So in terms of business impact, it's really provided us higher quality of planning outputs, scalability of planning and business complexity waste reduction or ability to actively manage expiration, improve our cycle time for planning our monthly planning cycle as well as simulation deliverables and lastly helps to consolidate and synchronize our network view. We are really hoping there is more we can add to this list over time and we are happy with what we've been able to achieve so far. So with that I will turn it over to Trevor. Hi all just thank you everyone for participating. Nari, I hadn't time to say that I would like to include my thanks. So it's left for me to try and wrap this up to bring in the different themes from the different speakers and really I want to bring those themes into focus and the value potential by bio-pharma of the greatest supply chain efficiency . What does that mean – ultimately you need to go to your bosses or the CFO somewhere to justifying projects you might like to go through and I just want to bring out some data that would illustrate some aspects where we really do believe and we have evidence that benefits can really be achieved hard tangible benefits. So we start from the perspective and many of the analysts such as Aberdeen and AMR and Ultimiter and a number of others have indicated that the high tech supply chains are recognized to be best in class for a number of functional and market reasons and I'll go through some of those, but just starting from the perspective of if we're going to look at what could be done in bio-pharma what could be done in pharma are there some lessons to be learned from some other industries and why not go to the one that's recognized throughout the world as being the area of the market where they have the best in class of supply chains. But we must pay attention to the functional difference and the organizational differences, many of which Elizabeth has brought out, and Chris mentioned the aspect right at the top of our customer services 34:05 they have a motto of "Every Patient, Every Time." Customer service has to be 100% and some of the drugs are at least very lifestyle alleviating and improving and in some cases they are related to life and death decisions and therefore anything less than 100% customer service is something very difficult to accept. If we look on the high tech side there is some consequences to the company that there is somebody that does not have that particular company's product to buy and might by somebody else's. Roughly that there is an equivalent product that they can get to very easily and therefore it becomes, in high tech they have to make a strong trade off between customer service and inventory. Elizabeth also showed very clearly the reverse V- shaped BOM where they start with very few ingredients and end up with a massive amounts of skus because of Amgen requirements because of different presentations, different strengths of visible drugs, so lots of different shapes of the BOM versus if you look at the assembly operation within high tech it is a regular A-shaped BOM where you take in lots of items and you are putting them together to manufacture finished goods with a lot less variation than there is typically within the V-shaped BOM within the pharmaceuticals. Nari has referred to the fact that pharmaceuticals by comparison there is some nascent outsourcing so people are beginning to do that. There are a number of companies out there are focused entirely on outsourcing. We've come across some companies that have actually outsourced their manufacturing 35:59 but compared to high tech it is still at very early stages, yet if we look at the visibility requirements that Nari was referring to these are beginning to show evidence of those requirements within the bio-pharmaceutical industry that are very prevalent within the high tech industry. Then highly regulated (I cannot stress to the audience) that is not in bio-pharma, how much churn, how much uncertainty this creates within the bio-pharmaceutical supply chain if there is some government body that is deciding whether or not and when you can sell your product into a certain region and if you want to make an engineering change you have to go back to the regulatory body and ask their permission to sell that formulated product into that region; that adds a lot of uncertainty into your market penetration. If you think about planning new inventories and remember Chris was taking you through all of the product expiry and if you've got 12 months lead time you probably want to start your bulk production a long time before you can actually sell that product into a particular region, but that's a lot of expiry risks that you are taking on and you need to be able to do some sort of what-if analysis to really understand what that expiry is. But something I must point out is, maybe not as relevant to the bio-pharma industry but high-tech sees a lot of price expiry so in many cases your components are going down in price which is a good thing but once they have been put into a finished good that finished good is going down in price very very rapidly compared to the bio-pharmaceuticals so there is a time by which if you manufacture the item too early the product price is going to be below what their manufactured price so they'd be making a loss on that. And there is such a rapid cycle of products within high tech that they've got to control the finished goods and in fact even the components strictly so that they don't waste a lot of expiry risk 38:19 obsolete within high tech electronics. The fundamental difference is if we look at really how the two organizations behave differently, and why they behave differently. In the pharmaceutical industry it is not unusual to have a 75% gross margin whereas in high tech a 15% gross margin is a pretty good one, so if we just think about what that means to these organizations; if a bio-pharmaceutical company loses a sale, they have lost 75%, if they have to throw something away because it has expired they have to throw away 25%, if we compare that to high tech, if they've lost the sale, they've lost 15%. If they have to throw away something, they have to throw away 85%. So they are going to be a lot more focused on the efficiency of the upstream supply chain in making sure that the right inventory is at the right place and not allow too much inventory because if they have manufactured a finished good and they cannot sell it they have to throw away 85%; they cannot recover those costs; a big difference. If we look at what that means in terms of the financial consequences to that I took some of the ten largest bio-pharmaceutical companies, analyzed the last years of their publicly stated financial reports and we see that the average days of inventory is 200 days, whereas if we look at the average days of inventory on hand in high tech it's only 30 days so radical different, one tenth of the number of days and Elizabeth has discussed some of that with 18 months of cycle time that's a lot of inventory that you carried in 40:18. We looked at cash to cash 220 days over the last 3 days within pharmaceuticals but only 30 days within high tech. Net result, is if we look at working capital ratios and working capital in this particular case is defined as the current assets minus the current liabilities of a revenue then we see that the working capital ratio within pharmaceuticals has been 33% or .33 whereas in high tech it's only .12. Now let's think about what that means to a company, if we take a 10 billion dollar company which is reasonable within the bio-pharmaceutical industry that difference of .21 in the working capital ratio means that that company if they could get working capital down to .12 within the high tech industry could save 2 billion dollars in working capital. Now there are some fundamental reasons for the differences and Elizabeth eluded to some of those. The asset costs are much higher in pharmaceuticals than they are in high tech electronics but that's not the case for semiconductor if you look at consumer electronics and more the high tech aspects of computers, peripherals and all of those, the asset requirements are a lot lower, nevertheless there is a lot more inventory as we see from the days of inventory and there is a lot that can be done for that. In fact we can look at some external studies that has been conducted recently by ATKearney, where they have looked at a number of companies and I would encourage you to go find the report on pharmapro.com where they give some more details of the sort of companies they've studied but more details on how they analyzed this information and if we look just at inventory by being within the 1st Quartile within the pharmaceutical industry so this is not a comparison against other industries but just if all the other companies within the pharmaceutical industries had days of inventory that was within the 1st Quartile within the pharmaceutical industry, the pharmaceutical industry would be saving $16.6 B which is a lot of money to be taken out of the supply chain. We need to balance that against the statement that is very relevant to Amgen, "Every Patient, Every Time." You need to go through an analysis of understanding what impact is that going to have on your customer service level and how much risk are you willing to take on that side, but nevertheless there are some companies that are operating at the level that clearly they are satisfied with their customer service level and if everybody operated with that level of inventory the industry as a whole would be saving $16.6B which is a lot of money out there, especially in these economic times. The question is how to get there. How can companies bring this all together, and Chris has mentioned a lot of this within the discussions, Nari has brought this out, Elizabeth and as well. I thought I would bring a graphic to indicate how all of this comes together. Chris certainly brought out the questions of bringing plans and operational alignment so being able to give reports into finance and we're seeing in some other industries how in fact people are interested in bringing very much more of a financial focus into the whole sales and operation planning process so now you can get four projections for example cash to cash a working capital within your sales and operations planning process and in fact one company where I was at a conference last week talking about S&OP they are talking about using the longer term sales scorecard as part of their budgeting process so you don't get finance pushing their budget; their financial forecast in terms of revenue but really doing a bottom up bringing in sales organization. I think there is lots of sense in that because of the aspect on the right hand side where we are talking about organization alignment; bringing all these organizations together, Nari has referred to the term of integrated business planning which is perhaps the extension of S&OP to bring in a lot more financial focus. Bringing all of these organizations together Chris has talked a lot about the constraint navigation of being able to understand what capacities are available; what lot sizes you need to write; what inventories are available, what expiry risk you've been exposed to; all of those things being able to navigate around those constraints is a key aspect, all in the approach to try and get very effective supply and demand balancing. I was very pleased to hear Chris bring out the term scenario analysis and indicate how much they are using those scenarios. So much of the supply chain especially as you are looking out into the longer term, is our demand really going to be that value. Are we really going to be able to get approval from our different regions for sales? Are we really going to be able to get that capacity up at that time? Is our product portfolio going to perform as we had planned? All those things are uncertainties that where you really need to be able to risk and adjust the plan, and not just the plan but what the scenarios give you is the ability to say the worst case best case and how do we operate in between those two best case worst case scenarios. What do we do to mitigate the worst case scenarios and take the maximum advantage of the best case scenarios? Those are the types of things that you can really do very effectively with a scenario planning type of capability. I hope I have drawn some attention to the fact that there is lots of potential benefits out there for people who can operate supply chains more efficiently and effectively within the bio-pharmaceutical space and maybe taking some lessons from other industries and understanding how this can be achieved. I want to thank the other speakers as well and now we can open it up to questions. Thanks Trevor. Thanks everybody for the discussions. You've heard quite a few questions and I'd like to get started. There are questions that span one of the strategic timeframe as well as the execution timeframe so maybe we can start off with some of the strategic discussions. The question is How is this process and the associated technology RapidResponse helping Amgen at the network and the market for principle. For example when the market for 48:03 for new geographies, how does this solution help Amgen? Elizabeth would you like to take that one? Sure. I think that the system, the advanced planning tool has allowed us to consolidate all demands and react very quickly in terms of do we have existing inventory, which type of adjustment we need to make. I think it goes back to scenario planning for a lot of the emerging markets we have highly volume variability in terms of demand, in terms of approval timelines, and we are constantly adjusting the quantities to be delivered, we try to optimize as much as possible expiration dating so again I think it goes back to the ability to run scenarios rather quickly and integrate outcomes of specific supply plans for an emerging market into the bigger picture into the next work plan. I have a question that comes to my mind, When you go there do you include sustainability, carbon footprint, those kinds of concentrations? Or is it not in the scope as of now? It is something we've been talking about internally but it is not in the scope of how we are targeting using the tool. You could make the argument that we are using scrap especially when it comes to materials like syringes and vials has some impact but that would be stretching it. It is not something that we actively managered. Let me add a little bit to that one. We have used the tool just from a general reporting standpoint to understand the volumes and pass those volumes along to our groups that are looking at total carbon footprint. Certainly just the manufacturing piece isn't the whole picture but we are an element of an overall picture. Yes, that makes a lot of sense. An additional question that we have got is How is the Amgen supply planning and procurement system integrated with distributors and suppliers? Do you see any potential applications for the product 50:27 that you have in extending into that. I am just going to say that it is certainly something we've been asked for and we are actively seeking best practices, we know that high tech has already implemented much broader network than what we have started with and we are looking forward to getting some experience from other users of RapidResponse so it is certainly something we are looking for to implement over the next two years. One of the next questions we have from one of the participants is we talked briefly about financial planning, can we specifically talk about what kind of reports is the financial organization using through your interface with the financial planning process and talk a little bit about that. Sure, I can take that one. Please add to it Elizabeth as we go through. One of the key capabilities that we have integrated is putting actual costs in as we've seen earlier some of our lots can take multiple months even years before they are consumed and so providing that capability to understand the actual costs rather than the using standard costs can sometimes significantly change the picture as we summarize. In addition, we have been putting together mid to long term summaries that get captured both in units and active grams and eventually in costs that get used by our finance counterparts. In addition to that there are scenarios that we would be wanting to cost, not all of them, and therefore we would use those, as well as the revenue aspects that we could integrate. Elizabeth, would you add anything to that? No you have covered the key points. Thanks Chris. A question that comes to my mind is this information used for example in the quarterly reporting to shareholders, things of that nature, external interfacting, financial documents or is it more internal focuses. I'd say that we are the first link in that process so we do provide initial data but there is a rollup and sometimes forecasting of products that aren't necessarily imaged inside of our SAP system yet because we are looking out over a longer period of time. But it is definitely a good chunk of that process, yes. Talking about the safety system, there is a question which has been asked, What is the reason why you adopted the RapidResponse solution on top of the system. So what kind of functionalities was lacking in SAP that drove you to look elsewhere? I'd say that in particular with the SAP supply plan aspect it was the speed of replanning was certainly one aspect of it and the lack of reporting or integrated reporting and the lack of good collaboration tools. I think those are some key ones. Elizabeth would you add more to that. I think those are the key ones, and you mentioned in the presentation that the ability to manage time space assumptions was also key for the product. In an expiration planning effort right? Process assumptions, good receipt times, process assumptions. It is not the capability that we have in the advanced planning tool as it is integrated with the safety. We have one additional question which talks about the approval process so once you have the S&OP plan developed in this kind of a solution is there an optimal process that happens before the data gets sent back to specifics? Yes there is and actually it is one benefit of the tool because reporting is integrated we have the ability to generate consolidated reports around production supply or a few other key metrics and we have the chance to review the proposed production plans with the manufacturing side before pushing the plan back to a safety focused solution. We have formal reviews between corporate and site. I'd say that one additional piece is that when we look at scorecards, it is our ability to look at what did we plan last time versus what are we measuring this time and that is a key metric that is shared as Elizabeth mentioned. That is helpful in clarifying the work flow that happens between the planning system and the execution system. That is what many companies struggle with so it is good to know that you have a formal process for that. One final question is around the deployment model. One of the users has asked whether are you using an on demand deployment model and what are the benefits in short term of this approach? We can mention very briefly that we are using an on demand approach and the main reason is that Amgen did not necessarily want to invest significantly in an IS support staff with the servers with the appropriate IS staff because really we have a relatively small number of end users and it is growing quite quickly but the IS resources are mainly outsourced and forecast on ERP maintenance and upgrade and the internal support for RapidResponse could have been diluted and we have been very pleased with the on demand approach from a disadvantage standpoint we have assessed that it's not necessarily cheaper but overall it is meeting our needs. That is helpful and I think it makes a point that given the process is so collaborative all demand type of approach collaborative is more advantageous in this kind of environment. With this, we have run short of time, most of the questions have been answered, if you have any questions that have not been answered we will definitely circle back and make sure we get those results. I want to thank all the participants and thanks to all the folks who have been listening and sending their questions as well.