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Building supply chain resiliency in an uncertain world
August 13, 2024
In this episode, Dinkar Saran, Pharma and Life Sciences Operations Partner at PwC, and Jim Cafone, SVP of Global Supply Chain at Pfizer, dive into operations transformation and its critical role in building resilient and sustainable supply chains, revenue growth and differentiation in an ever-changing world.
Their discussion features insights on how to navigate the delicate balance between short-term pressures and long-term challenges, exploring strategies for improving operations, enhancing agility and leveraging technology to drive productivity and adaptability.
Join us as we uncover key principles and practical approaches that can help your organization thrive in an evolving business landscape.
About the podcast participants
Dinkar Saran leads PwC’s Pharmaceutical & Life Sciences Operations practice delivering integrated operations solutions for PwC clients.
Globally he has worked across biopharmaceuticals, generics and CDMOs with the board and C-suite of multinational companies to enable quantifiable value and EBITDA improvements. He has extensive experience in mergers & acquisitions and has supported multiple corporate and private equity driven transactions on revenue and cost side diligence, integration planning, and post deal value capture.
Jim Cafone is the Senior Vice President, Global Supply Chain, at Pfizer. He is responsible for global demand forecasting, demand and supply planning, worldwide logistics, and inventory management.
Jim is an engineer by trade and has expertise in supply chain management and strategic sourcing. Prior to joining Pfizer, Jim spent almost two decades with Wyeth Pharmaceuticals as part of the manufacturing and operations analysis team. He held numerous positions within manufacturing, materials management, customer order management, physical distribution, and information technology functions. This included Vice President, EMEA Manufacturing and Supply and Vice President, Worldwide Logistics.
Episode transcript
Find episode transcript below.
00:00:01:10 Welcome to PwC Pulse, a podcast to provide insights to help you solve today's business challenges.
DINKAR SARAN:
00:00:10:01 Hello, I am Dinkar Saran, Pharmaceutical and Life Sciences Operations Leader at PwC. In this episode, we'll dive into how companies are building resilient and sustainable supply chains in an ever-changing world. I'm very pleased to be joined by Jim Cafone, Senior Vice President of Global Supply Chain at Pfizer.
00:00:29:02 Jim will share with us insights on how to navigate the delicate balance between short-term pressures and long-term challenges in supply chains. Jim, welcome to the podcast.
JIM CAFONE:
00:00:39:04 Hello Dinkar. Yes, good morning and yeah, thank you for having me today. I'm really delighted to be speaking with you.
DINKAR SARAN:
00:00:45:10 Likewise. So Jim, before we dive in, just a few things so our listeners can get to know you a little better. What's your favorite city in the world and why? And then who has been your biggest inspiration?
JIM CAFONE:
00:00:54:06 Yeah, so favorite city in the world, Dinkar. That's a tough question and that could always get you into trouble, right? But I'll do my best. So first of all, there are many beautiful cities in the world, but if you were to ask me like where would I want to bring myself to today, I am just a big fan of Dubrovnik in Croatia. It's on the Adriatic, it's a beautiful city from the medieval times.
DINKAR SARAN:
00:01:15:03 Wonderful. And we know it's a place where for many movies and recordings, and hopefully you'll get there soon, Jim.
JIM CAFONE:
00:01:22:02 Yeah, so why not? And to your question on inspiration, it, this may sound crazy, but my grandmother and grandfathers, both on my mother's side and father's side were all European immigrants and they all came over fundamentally with nothing and lived through the depression era and had been through some pretty significant geopolitical events back in the forties and fifties.
00:01:45:03 So, really worked themselves up, all four of them. So, if you really want to know sort of the biggest inspiration, it's my family. And going back to all of my grandmother and grandfathers that came here with nothing and did everything they could to sort of build the future for themselves.
DINKAR SARAN:
00:02:01:02 So Jim, you have spent much of your career in operations-related roles. What drew you to operations and to your current role in Global Supply Chain at Pfizer?
JIM CAFONE:
00:02:09:06 What's really interested me throughout my whole career is that supply chain is a horizontal science as opposed to a vertical science. And what I mean by that is when you're in supply chain, you get to see basically all aspects of how a company discovers, does its research, how it markets and sells, and then how in our supply chain world, how we plan, procure, manufacture, and deliver.
00:02:31:07 And also in my mind, it really, what drew me fundamentally is the whole idea like what I would call end-to-end systems engineering.
DINKAR SARAN:
00:02:38:10 Very interesting. So Jim, a lot has been changing in the last year. What do you see as top of mind of companies as they continue to evaluate and evolve their supply chains?
JIM CAFONE:
00:02:48:0 In today's world, there is no shortage of content on how you should organize around your supply chain. There are many different experts, there’s many different conferences, there's many different types of media. How do you cut through all the noise and how do you really focus on what is exceptionally critical?
00:03:09:00 And for us, top of mind is how do we drive a common language across the 30,000 colleagues that are in the Pfizer Global Supply Organization, right? Because you can't be anywhere and everywhere with that amount of colleagues. So how do you standardize the language?
00:03:26:04 And then how do you bring about a standardization of process, standardized metrics, and certainly a standardized continuous improvement loop?
DINKAR SARAN:
00:03:36:06 Resiliency is top of mind for many executives these days. Jim, what does supply chain resiliency look like to you? Especially, in today's world where we have digital, we have unpredictable geopolitical landscape, and customer landscapes and demands are changing.
JIM CAFONE:
00:03:50:08 You cannot be resilient if you don't have the common language of operating. In Pfizer, we call that the Pfizer Production System. It's basically a production system that tells you what you need to do from a process-centric team, how you need to standardize your work, how everybody from the shop floor all the way up to our CEO needs to have a common set of metrics that integrate both horizontally and vertically.
00:04:15:01 And then, how you have sort of one common toolbox and how you attack deviations from your standardized work and your measures. So, resiliency starts off with that. It also is very critical to have a common system care plan. So, what is system care? We talk about that in how we manage our data, how we ensure the quality of our data from an end-to-end perspective is robust and how we ensure that data reflects the realities of our supply chain performance.
00:04:46:07 Let me give you an example. If we have a particular operation that standard lead time for a particular biological operation is 20 days, let's say, right? Because you're growing cells. But the standard deviation of that is on a low side, maybe five days, but on a higher side could be 15 days. You have to really take into account your data on what is that lead time?
00:05:10:03 Do you put it in at the normal average? Do you put it in in a fashion that allows for certain amounts of deviations? The point I'm trying to make here is that resiliency is the standardize, measure, improve, but it's also a robust system care plan that we've deployed to ensure that the data in our systems represents the operational realities of our manufacturing, distribution, logistics, and customer service operations.
00:05:37:10 So when you have that, you have in my mind a very resilient supply chain internally. You can then expand externally and start to ask the same questions to all of your upstream and downstream manufacturing and supply chain partners is to what degree do they have the standardized measure and improve and what degree do they have continuity plans and those sorts of aspects. So, in my mind, resiliency starts inside and then it moves outside.
DINKAR SARAN:
00:06:03:00 Yeah. Jim, very interesting insights. It appears the theme of standardization is very key and central to this. Maybe just a change in tracks around productivity. How do you see productivity, especially as technology is being adapted more in supply chains and really very curious about, how you look at gen AI and what impact and opportunity it may have for supply chains?
JIM CAFONE:
00:06:24:08 So, the productivity digital space is exceptionally interesting right now. In our world, we have commonality of the work, the metrics from the shop floor to our CEO. We deploy technology not as random acts of digitization, but with a lens towards horizontal integration and vertical integration. So, what do I mean by that?
00:06:48:03 It's not necessarily being tied to organizational barriers or functional barriers, but it's all about how do you enable our frontline workers to do the work that they need to do, whether they're doing manufacturing, sales forecasting planning. Whether they're procuring materials, generating production orders, physically executing pharmaceutical, biological manufacturing.
00:07:11:08 And then, once they're completed, how do you then take that same information and build an export transportation order? And then, how do you move that in a most optimized way from a manufacturing plant in Europe to a country that is far away in Latin America or Southeast Asia or Africa?
00:07:30:09 And then, how do you receive the product? How do you do then customer service and then how do you please the customer through customer experience? We do all this through one common language of data. So, what I just described, we have one material master throughout the entire organization. We have one common way and we heavily govern our data and our data standards.
00:07:52:06 We start off with the data, but we don't generate what I would call random acts of digitization. What we do is, we deploy technology where we see the greatest source of opportunity or the greatest source of loss that could be cycle time loss, quality loss, patient loss. It's a hard thing to do. There is no shortage of people selling solutions, selling techniques, selling the latest hype.
00:08:19:04 And I think what works well for us is to really be practical and pragmatic and continue to lean on our operating philosophy, which again is standardize the work, measure it and improve it in a very dogmatic way.
00:08:35:10 But then, productivity is all about making that work intelligent. So, how do you apply common data? How do you apply machine learning in an end-to-end? There are a lot of areas where we have pretty significantly deployed process automation. And we have got some really interesting artificial intelligence applications that look across all 22,000 finished good SKUs across 180 markets.
00:09:00:03 And based on demand volatility, supply volatility, geopolitical events, transportation, weather, can actually help our colleagues predict, where we could have a supply issue. How do you sort of integrate all those philosophies then? And where can you get the greatest opportunity or solve the greatest leaky bucket or loss that you would've in your supply chain?
DINKAR SARAN:
00:09:22:05 Yeah, I love what you said around making the data intelligent. I think many of our listeners know that Pfizer has a very extensive footprint that you talked about, but also portfolio, evolving products. You're in various areas of different technologies and products, innovating. How does that impact supply chain? How does the supply chain adapt to support new and more complex products?
JIM CAFONE:
00:09:43:05 We take a very centralized approach. One platform does all of the long-range sales forecasting, demand planning, inventory management, procurement, manufacturing, physical logistics, all the way to the last mile, last kilometer, customer service logistics to patient delivery.
00:10:03:06 We're one shared platform inside of a very large company. Now, Pfizer has eight different business units inside of ourselves and it has many different types of what I would call supply chain archetypes. What is an archetype in our context? So, a vaccine follows a very different supply chain than an oncology product.
00:10:29:07 A hospital injectable follows a very different supply chain than a small molecule oral product. Gene therapy, right? Which we have a gene therapy product on the market now that has a completely different supply chain set of factors. So, every one of these supply chain archetypes that we have, you still have to plan, procure, manufacture, and deliver.
00:10:52:03 We build our supply chains to be able to accommodate many different archetypes. Other companies operate differently. They do it in a very distributed manner. They'll isolate off gene therapy and they'll isolate off consumer healthcare and they'll isolate off large molecule, small molecule, DEA specialty drugs, rare disease drugs.
00:11:13:05 And I'm not saying any which way is right or wrong, but I do say is that if you can build one common platform to accommodate multiple archetypes, we find that is the best way to operate. Because what's happening now, especially out in our customer bases, is products disease states are converging from a customer perspective.
00:11:35:04 Large hospital groups, governments, they're not just buying a single product any longer, they're buying many different products as a shared service. We're looking to provide that customer experience to them as basically having one face to Pfizer as opposed to having multiple faces. So, there isn't a business unit, a commercial person, an R & D person that can go out and build their own supply chain capability. They fundamentally have to come through us for every aspect.
DINKAR SARAN:
00:12:02:08 So Jim, at PwC, we do a digital trends and operations survey and one thing that stood out to us in a recent survey is two-thirds of the executives said that their companies are not getting the expected results from their technology investments. How do you see this and why do you think that is the case?
JIM CAFONE:
00:12:20:03 I'm not surprised by that survey result at all. And I go back to sort of what I said earlier. There are no shortages of content and people talking about what's the best way to organize around a supply chain and what's the best software tool, data tool, artificial intelligence. There's just a tremendous amount of language around this.
00:12:43:05 And candidly, the barrier to entry to having an opinion on this or selling a thought or a concept is very low these days. It's very, very low. So, I think what's happened is many people get enamored with technology without sort of the backdrop of what is the greatest source of opportunity or what is the greatest loss that I'm trying to mitigate, right?
00:13:05:07 And they're trying to do this by throwing technology without really fundamentally understanding the characteristics of the processes and the metrics around it. That's where you get into this phase of what I would call random acts of digitization and Pfizer's an interesting company and the fact that not only do we have many business units underneath one roof, it's no surprise that we do a lot of acquisitions of organizations with really great science.
00:13:31:03 I see first-hand through either companies that we're looking at and talking to or companies that we've physically then purchased or do a business development agreement with. I get to see a lot of supply chains. And what you see is, you see a lot of well-intentioned people, but you see a lot of fragmentation in the process, but you also see a lot of fragmentation in tools.
00:13:53:02 They may have the latest and greatest tool, but it's more vertically oriented within a silo. It's not necessarily horizontally deployed so that it goes across multiple business functions and multiple management structures. But it's really hard work when you have to move something from like a small isolated deployment vertically based to something very horizontal. And I think that's really where companies really struggle.
DINKAR SARAN:
00:14:16:06 I think the concept you talked about upfront, Jim, around looking at supply chains horizontally, the same philosophy even for how to apply technology investments is critical. Knowing that successful tech investments depend a lot on people and on your workers, that they have the appropriate skills. How can companies train their employees for this new environment?
JIM CAFONE:
00:14:36:10 What we're noticing is a lot of our colleagues are coming in with some pretty advanced digital fundamentals, mathematical fundamentals, STEM fundamentals, the use of algorithms, the use of technology to solve things. A lot of our biggest innovation, and funny enough, comes from a combination of our colleagues that have been within Pfizer for many years, but matching them up with colleagues that are just coming in that have probably have some different views on how the work can get done,
00:15:06:10 vis-a-vis digital. And it's through that you sort of jointly team up people in projects that really help sort of one and one equals three. You're always looking for colleagues that have like what I would call the natural curiosity for data and for puzzles, right?
00:15:24:09 Supply chain is one big puzzle, and you can't solve that puzzle today without data and the ability to solve problems through data and through sort of modern digital approaches. And why haven't companies gotten the digital return? It's not because they don't necessarily have the right tool sets. it's because they didn't have the right people to deploy them in the right horizontal manner to really engage those people in what are the greatest sources of opportunity and loss.
00:15:51:03 I classify it as simple, not easy, right? It's very simple, with everything I've said, it's just not easy. And I think a lot of it is not easy because you're not necessarily engaging people in the right way and going through that whole change, management of horizontal, engage the frontline workers and use digital to enable them as opposed to using digital to have a, I'll call it a fundamental marketing or storyline.
DINKAR SARAN:
00:16:19:04 Switching gears then for a moment, Jim. You used, love the terminology. It's simple but not easy and the topic of climate. Certainly, there's no conversation that is complete without that topic. So, what impact do topics such as clean energy, decarbonization, et cetera, have on the supply chain and how do you see supply chain executives and leaders like yourself navigating these?
JIM CAFONE:
00:16:39:10 When I first got into the supply chain field probably 30 years ago, you were always looking to optimize supply chains for costs, service. What service level do you want to deliver to your customer base? What cost do you want to deliver? What is your cost to serve? That was the biggest calculus that we were driving for at that time.
00:16:58:09 And what's really happened in the last probably three to five to seven years now is how do you start to add sort of the environmental footprint now to that whole calculus? How do you look at the carbon loads now for supply chains and what is not just the cost to serve, but what is the carbon to serve, particular supply chain?
00:17:20:07 If we're thinking about that in terms of that, and you can really get some good facts and data around what your carbon to serve is within our supply chain. So, what are some of the continuous improvement aspects that we're doing in order to sort of reduce that carbon to serve metric? We're investing quite a bit in biofuels and air versus ocean routing.
00:17:43:10 Trying to move as much as we can. So, we manufacture and sell a product that is critical to patient's lives. There are many times where we have to use expedited modes of shipment as an example, but there are many times where as we start to think about reducing carbon load, how do we tweak our safety stock policies?
00:18:03:05 How do we perhaps carry more inventory? How do we perhaps change the way our product packaging is done so that instead of what I would call densify storage areas, at pharmacies, at doctors, multi-dose vials, those sorts of things. There are a lot of things that we can do on that, but a lot of it really depends upon do you have like the right action plans in place?
00:18:28:02 And we're able to do that through our common data sets and we're able to rapidly model all that. What goes against that now is the geopolitical side of your question. So, we source products out of Asia. A lot of our sailings every day are running through some new geopolitical hotspots. When you get into different areas of the world, we're constantly now sort of trading off risk now against maybe carbon advantage modes of transportation.
00:18:58:07 Should we air freight certain things versus ocean? Should we split shipments? There's a whole series of calculus that comes into play and the work we're doing from our strategy perspective is all built on that common horizontal data platform I talked about. And we're able to candidly track and trace any product anywhere in the world.
00:19:17:09 Not just from a geo location, but also from a temperature, humidity, all sorts of like what I would call critical to patient quality conditions. So again, navigating all of this starts off with the basics of thinking horizontal.
DINKAR SARAN:
00:19:32:03 It looks like a lot of initiatives, but not a simple topic to cover. As we wrap up here, maybe just look ahead for a moment, help our listeners, what do you think are the most vital and greatest trends that are going to disrupt the supply chains of the future?
JIM CAFONE:
00:19:45:04 So first of all, at Pfizer, and I say this humbly, we are a student of many different industries and many different companies out there. I mean, the amount of learning we've gotten from the electronics industry, retail apparel, consumer goods, automotive, aerospace, like every industry is really doing some wonderful things that candidly we try to observe what those trends are in those industries.
00:20:14:04 Because in many ways they're not far behind for pharmaceutical or healthcare, or maybe in some cases we're ahead. But one of the biggest things when you talk about what are the trends that will disrupt supply chains, the best way to identify those trends is to listen to what other people are talking about and observing what other industries are doing.
00:20:34:05 And really being a student of supply chain. And I can't help but think the biggest trend right now, supply chain is the whole digital applications of driving supply chain operations. And it is such an important lever of advantage. I opened up sort of the podcast with this whole idea of standardize, measure, improve. It was all about standardize the assembly, standardize the measurement of it, and improve it where you could.
00:21:03:05 What I see now is the future trend is how do you digitally enable these supply chains and but how do you do it horizontally? Not how do you do it vertically and how do you do that through one common language of data? And that is exceptionally difficult. We're very fortunate in Pfizer that we have one material master, we have one customer master, we have one location master, we have one version of transportation lanes.
00:21:29:02 We characterize using everything as one language. So, every operation, all the 22,000 finished good SKUs, the 50,000 intermediates and the 300,000 raw materials we buy, we define that all through one set of data governance. We're able to do a lot of things digitally that perhaps other more distributed organizations can't do.
00:21:50:03 But I think harnessing the biggest trend coming forward is this whole area of artificial intelligence and how do you really be able to start to predict breakdowns, losses in your supply chain? And we get a lot of calls on how we do in the spirit of benchmarking, and I always sort of say, and again, it's the common theme. I've said is really try to understand what are your sources of opportunity and loss and how do you do that integrating in through multiple management structures?
DINKAR SARAN:
00:22:19:10 So clearly, what we are hearing, Jim, is digital and technology. And AI will have a very vital role. But what I picked is, it cannot be random acts of digitization. It has to be a very thoughtful approach. So Jim, thank you so much for joining us today and sharing your insights.
JIM CAFONE:
00:22:36:10 Thank you very much and I really appreciate the opportunity to be here.
DINKAR SARAN:
00:22:39:02 To our listeners, thank you for tuning in into this episode of PwC Pulse. We'd love to hear your thoughts about today's conversation and you can leave a review on your favorite podcast platform.
ANNOUNCER:
00:22:49:02 Thank you for joining us on the PwC Pulse podcast. Subscribe to PwC Pulse wherever you listen to your podcasts or visit pwc.com/pulse podcast to hear our next episodes.
ANNOUNCER:
00:23:02:09 This podcast is brought to you by PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity.
00:23:16:07 Please see www.pwc.com/structure for further details. This podcast is for general information purposes only and should not be used as a substitute for consultation with professional advisors.
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