How to improve effectiveness of supply chain management at sanofi pastour in vietnam

HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITÉ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL OF ECONOMICS & MANAGEMENT MBQPM4 “DOAN MINH CHAU” “HOW TO IMPROVE EFFECTIVENESS OF SUPPLY CHAIN MANAGEMENT AT SANOFI PASTEUR IN VIETNAM” MASTER FINAL PROJECT MASTER IN BUSINESS QUALITY AND PERFORMANCE MANAGEMENT Ho Chi Minh City (2014) STATEMENT OF AUTHENTICATION I, Doan Minh Chau, hereby declare that this assignment is prepared by myself in completion of Master in Quality and Business Performance Management Program (2012-2014) in Ho Chi Minh City, and that I have not submitted this material, either in whole or in part, for a degree at this or any other institution ACKNOWLEDGEMENT I would like to thank Mrs Vo Thi Phuong, Chief Representative of Sanofi Pasteur S.A Representative office in Ho Chi Minh city, who gives a lot of support for my continuous learning and allows me to access to company’s data and reports to complete this case study, and thank to my colleagues who provide me the relevant information and data mentioned in this assignment I would like to send my gratitude to Pro Jacques Martin for guiding and advising me on structure and presentation of discussion topic, my gratitude is also sent to all professors who gave lectures for MBQPM intake as knowledge transferred and experience learned from them help me to complete this assignment effectively I will keep a good memory of our classmates MBQPM4, with all interactions, sharing knowledge moments we have passed together where I learned a lot from their experiences which are also very useful to my final report And lastly, a big thank to my family for their patience, love and encouraging during my quality journey with Solvay since 2012 till the completion of this assignment TABLE OF CONTENTS • Presentation of subject • The importance of the subject • Structure of presentation Part I ANALYSIS OF SUPPLY CHAIN OPERATIONS: CHAPTER 1: COMPANY BACKGROUND Vision/ Mission / Organization SWOT/ PESLT /PORTER DIAMOND analysis 10 16-20 CHAPTER 2: STRUCTURE OF SUPPLY CHAIN From product to delivery process: 1.1 Demand Forecast 1.2 Sourcing and Purchasing 1.3 Manufacturing 1.4 Quality control 1.5 Distribution 23 23 25 26 28 28 Critical issues identification & analysis: 31 2.1 Shortage of product / Failure to deliver on time 31 2.2 Root-cause identification and analysis 2.2.1 Production capacity 2.2.2 Manufacturing process 2.2.3 Supplier 2.2.4 Quality control 2.2.5 Distribution 2.2.6 Regulatory 31 35 35 36 36 37 38 Part II IMPROVING SUPPLY CHAIN OPERATIONS: CHAPTER 1: INCREASING THE EFFECTIVENESS OF SUPPLY CHAIN OPERATIONS Production capacity 41 Manufacturing 41 Sourcing / purchasing 42 Quality control 42 Forecast Management 43 Distribution 43 CHAPTER 2: IMPROVING DOWNSTREAM PROCESS Supply and Demand Forecast management 47 Customer Relationship Management 53 Regulatory Affairs Management 55 Distribution capability improvement 57 PART III.CONCLUSION 58 LIST OF ABBREVIATIONS GPEI: GAVI: NGO: WHO: PAHO: UNICEF: EPI: JAICA: GMP: 10 SAP: 11FuturMaster: 12 HQ: 13 D&S: 14 IO: 15 FDA: 16 MTS: 17 MTO: 18 NICVB: 19 DAV: 20 CIF: 21 PMC: Global Polio Eradication Initiative Global Alliance for Vaccine and Immunization Non-governmental Organization World Health Organization Pan American Health Organization United Nations Children's Fund Expanded Program on Immunization Japan International Cooperation Agency Good Manufacturing Practices German company which is the market leader in supplying ERP software, systems and training Software for Forecasting, Planning and Supply Chain Optimization Headquarter /Global office of Sanofi Pasteur S.A in Lyon, France Demand and Supply Industrial Operations Food and Drug Administration Make to Stock Make to Order National Institute for Control of Vaccine and Biological of Vietnam Drug Administration Division /Ministry of Health of Vietnam Cost, Insurance and Freight Preventive Medicine Center LIST OF TABLES Part I ANALYSIS OF SUPPLY CHAIN OPERATIONS Table 1.1: Organization chart of Sanofi Pasteur in Vietnam Table 1.2: Distribution flow of vaccines in private and public market in Vietnam Table 1.3: Vaccine Customers Mapping Table 1.4: Vaccine’s public and private market 2005-2012 Table 1.5: Vaccine market 2012 in Vietnam Table 1.6: Long range planning 2012-2017 Table 1.7: Vaccine manufacturing timeline Table 1.8: Forecast is the first step in supply chain process flow Table 1.9: Make to Stock Model Table 1.10: Vaccine Manufacturing Process Table 1.11: Distribution of vaccine mapping Table 1.12: Vaccine temperature monitoring Table 1.13: Product allocation planning Table 1.14: List of SP products in supply constraint in 2013 Table 1.15: Ishikawa diagram for root cause analysis Part II IMPROVING SUPPLY CHAIN OPERATIONS Table 2.1: Risk assessment flow chart Table 2.2: Pareto chart on causes of vaccine storage Table 2.3: Moving –average forecast calculated over months’ period Table 2.4: Stock coverage end of month Table 2.5: Root cause identification list Table 2.6: Rolling forecast structure Table 2.7: Demand Model Reporting 2012-2013 Table 2.8: Product technical complaint tracking Table 2.9: Rationalization for direct importation model Table 2.10: SP Operations Key enablers Table 2.11: SP Balance Scorecard INTRODUCTION In recent years, most of business has to compete actively in a very fast changing environment to increase customer satisfaction and maximize profitability Supply chain is a key activity within the company to maintain competitive advantage According to Jacoby (2009-42), for many manufacturing firms that are threatened by low-cost competition, supply chain management has become a competitive necessity The effectiveness of supply chain management will help the organization to compete in a dynamic business environment which is combined by highly predictable and completely un-predictable factors Slack, Chambers and Johnston (2007-157) observed that the better the service the operation can provide to its customers, the better will be its potential to attract customer and therefore generate revenue This assignment aims to discuss the supply chain operations at Sanofi Pasteur S.A., a vaccine manufacturer, to see how important the effective supply chain management contributes to the overall performance of the company It is important to analyze existing constraints that impact the supply chain operations and to suggest solutions to improve the effectiveness of the supply chain management in order to increase the quality of service provided to Customers, to maximize profitability and to maintain competitive advantage in both private and public health sector in Vietnam market This assignment is divided into parts: the First part introduces an overview on Sanofi Pasteur S.A, business context in which the company operates as well as critical issues faced by the company which give negative impact on customer satisfaction, following by root-cause analysis The Second part proposes possible solutions and prioritized action plans to improve the effectiveness of the supply chain management, with strong focus on downstream processes to continuously improve and innovate to stay competitive in the market An overview on supply chain operations at Sanofi Pasteur S.A.is described hereafter in the First part of this assignment It covers the company mission, internal, external factors driving its business objectives in Vietnam market; the supply chain structure covering production cycle and distribution of vaccine in the market as well as critical issues faced by the company which give negative impact on customer satisfaction, following by root-cause analysis 10 Part I ANALYSIS OF SUPPLY CHAIN OPERATIONS CHAPTER 1: COMPANY BACKGROUND Vision/ Mission/Organization Sanofi Pasteur S.A (hereafter referred as to “SP”) is a French company who discovers, develops, produces and distributes human vaccine and biological products SP is the largest company entirely dedicated to vaccines The company provides more than one billion doses of vaccine each year, making it possible to immunize more than 500 million people across the globe With a broad and balanced presence in emerging markets, SP employed approximately 105 000 employees in 110 countries The 2009 net sales of Global performance are 29.3 billion Euros with 6.3% increase compared to 2008 on a reported basis A world leader in human vaccine industry, SP offers the broadest range of vaccines protecting against 20 infectious diseases caused by viral diseases such as: yellow fever, mumps, poliomyelitis, measles, rubella, influenza, hepatitis A and B, rabies, Japanese encephalitis, chicken pox and by bacteria diseases such as pertussis, diphtheria, haemophilus influenzae typ b infections, meningococcal meningitis, pneumococcal infections, tetanus, tuberculosis, typhoid, cholera… Every day, the company invests more than million Euros in research and development of innovated products such as dengue fever, Japanese encephalitis and new pediatric combo vaccines SP has entered in partnership with GPEI1, GAVI Alliance2, NGOs3 and international institutions including WHO4, PAHO5, UNICEF6, International Red Cross and others partners for active global disease prevention program With the Vision “A world in which no one suffers or dies from a vaccine preventable disease”, SP commits to protect and improve human health worldwide by: • Providing superior, innovated vaccines for the prevention and treatment of diseases • Playing an active role in the immunization community to maximize vaccination 11 Marketed in Vietnam since 1992, SP plays an active role in the immunization community to increase public health awareness and makes innovated vaccines available for the market needs In the last years, SP supplied to Vietnam market more than million doses of vaccines, annual turnover increased from 12.8 Mio USD in 2011 to 15.3 Mio USD in 2013 The turnover is expected to be triple in 2016 by introducing new vaccines to the market In Vietnam, SP has its representative office registered and operated in Ho Chi Minh city with main activities: - Carry clinical studies for registration purpose - Register and renew market authorization - Promotion marketed products The representative office is structured in form of business unit within Sanofi Group in Vietnam with main cross functions: Sales/ Supply/ Marketing/ Medical with flat organization chart shown in Table 1.1 below BU - Vaccines Business Unit Director Sales manager 15 Supply chain manager Group Product manager Medical manager Table 1.1 Organization chart of Sanofi Pasteur in Vietnam Source: Sanofi Pasteur Vietnam 50 capacity and reduce carried on cost Below Table 2.4 shows a stock coverage at the end of the month with both too high and too low level of stock that may lead to stock-out or obsolescence situation Therefore, it is needed to: Establish KPIs and closely follow-up the performance indicators to identify and eliminate the cause of Customers order reduction or cancellation Sales, Supply, Inventory data must be periodically reported through internet based system to be fast and accurate Regular follow-up with distributors to ensure the proper inventory levels and the frequency of delivery to avoid stock-outs, or reduce shipment to avoid too high stock level Fast sharing feedback and information from Supply side to react quickly to change occurred from Demand side Work closely with Distributors to have double loop learning to verify and revise the strategies to adapt to changes in the market Immediate action can be mutually decided to secure the stock ready for sales to the market No stocks Less than 1month of stock coverage More than 7months of stock coverages 11-Jan 3 11-Feb (1) (1) (1) 3 - - 52 3 11-Mar 12 3 13 - 52 2 11-Apr 52 1 - 52 11 11-May 52 5 8 - 52 11-Jun 52 10 3 13 - 52 2 11-Jul 14 - 11-Aug 52 24 11-Sep 11-Oct 1 52 52 4 (1) 23 17 - 2 1 17 2 - 3 - (1) 31 2 30 Table 2.4 Stock coverage end of month Source: Sanofi Pasteur Vietnam 1.3 Key success factor for Forecast Accuracy process Selection of appropriate metric is needed to reflect good barometers of supply chain management effectiveness At customization process, metric to be measured is 99% of orders delivered by time customer requests The following key market events need to be discussed on monthly basis during Demand & Supply meeting: 51 1.3.1 Rolling forecasts management: • Prepare sales data of main products at ABC classification (turnover) • Present main demand variations of month M versus M-1 and market explanation • Focus on product launching to well manage product life-cycle • Focus on rolling forecast horizon (up to 36 months), • Ensure the Rolling Forecast versus Financial Forecast consistency 1.3.2 Local inventory management: • Explain import plans according to local stock inventories and sales level to better rationalize the demand need to secure business and improve Customer Service level • The meeting minutes sent after the Demand and Supply meeting will be documented to validate Demand from the market for months ahead and to Track the Supply capability to closely follow-up monthly performance and measure the metric target Below Table 2.5 will help to track the sales backlog and understand the root-cause for problem solving process The 5Ws and 2Hs approach will be applied to identify rootcause and related failure process owner to solve the issues and improve the Customer service on monthly basis Table 2.5 Root cause identification list Source Sanofi Pasteur International Rolling Forecast is a complex and key process within SP supply chain operations (Table 2.6) Thus cross functional collaboration is vital to generate Forecast Accuracy 52 which will be transmitted to Industrial Operations to deliver the right product at the right time to satisfy Customer’s need Table 2.6 Rolling Forecast structure Source Sanofi Pasteur International There a need to track, usually on monthly basis, the result of sales performance and to compare it with the budget to identify risk or opportunity to take actions on time to be aligned with the targets Below Table 2.7 presents the Demand and Model tool, which is used to follow-up the sales forecast and the stock coverage on monthly basis SALE IN (kUSD) - FY A12 TOT AL w ith FX FX compensation TOT AL w /o FX PPH Pentaxim Tetraxim Act Hib Euvax B Ad Euvax B Ped DT Vax Tetract-hib IPV BOOSTERS Adacel Tetavax MENINGE Meningo FLU Vaxigrip NH Ad Vaxigrip NH Ped Vaxigrip SH Ad Vaxigrip SH Ped PNEUMO Pneumo 23 TER Total Rabies Verorab 1v+1s Verorab 5v+5s Verorab 1v+1a Verorab 1v+1s Bu Thyphim Stamaril Avaxim Ad Avaxim Ped Favirab Tetanea Okavax Trimovax Rouvax Tubersol 15,326 (564) 15,890 3,061 2,745 210 46 51 0 394 260 134 1,592 1,592 2,403 872 440 721 370 804 804 7,636 4,169 3,669 500 129 270 134 1,116 350 1,276 192 0 B13 14,807 (540) 15,347 2,432 2,182 153 68 19 0 11 614 364 250 1,000 1,000 2,492 1,133 458 533 367 600 600 8,209 4,090 3,090 1,000 212 210 90 1,200 600 330 1,333 144 0 A13 15,734 (540) 16,274 2,778 2,409 255 68 38 0 630 380 250 1,150 1,150 2,289 829 458 637 365 900 900 8,527 3,870 2,370 1,500 248 270 90 1,512 818 440 1,135 144 0 ST OCK A12/A11 +/% A13/A12 +/% 2,969 24% 408 321 -36% 24 2,648 20% 384 886 41% (283) 1,100 67% (336) 70 50% 45 0% 46 0% 22 (17) -25% (13) 0% (300) -100% (12) -57% 50 14% 236 140 117% 120 (90) -40% 116 1,075 208% (442) 1,075 208% (442) 590 33% (114) 74 9% (43) 128 41% 18 358 99% (84) 29 9% (5) 277 52% 96 277 52% 96 298 4% 890 269 7% (299) 0% 769 27% (1,299) (500) -50% 1,000 0% (25) -16% 119 150 125% 109 426% (44) 684 158% 396 19 6% 469 (360) -100% 440 (500) -28% (141) (48) -20% (48) (528) -100% 0 0% 3% 2% 3% -15% -21% 29% 0% 36% -39% 0% 0% 0% 36% 37% 36% -49% -49% -4% -4% 4% -16% -1% 13% 13% 10% -7% 0% -42% 100% 0% 79% 0% -49% 33% 65% 133% -7% -17% 0% 0% A13/B13 +/% 927 927 346 227 102 0 19 0 (2) 16 16 150 150 (202) (304) 103 (2) 300 300 317 (220) (720) 500 35 60 312 218 110 (199) 0 6% 0% 6% 12% 9% 40% 0% 0% 50% 0% 0% -21% 3% 4% 0% 13% 13% -9% -37% 0% 16% -1% 33% 33% 4% -6% 0% -30% 33% 0% 14% 22% 0% 21% 27% 25% -18% 0% 0% 0% Dec 11 December 2012 mth mth kdoses 3.6 7.7 Dec 2012 mth kdoses 0.0 16.4 0.0 29.3 9.0 2.0 7.0 0.0 7.9 6.4 0.0 0.0 18.3 3.3 8.7 3.0 0.0 3,770 5,751 3.0 0.0 3,770 5,751 1.6 2.5 37,597 2.5 37,597 0.2 0.9 0.0 0.0 3.8 3.0 0.5 0.0 42,258 35,327 500 3.8 3.0 0.5 0.0 42,258 35,327 500 2.1 3.1 14,372 3.1 14,372 2.7 0.0 2.2 4.0 2.7 0.0 2.7 2.6 122,160 83,287 38,873 2.7 ###### 2.7 2.6 83,287 38,873 3.1 1.4 0.0 2.3 0.9 4.0 2.3 6.2 0.0 2.7 4.0 1.8 3.5 0.0 2.4 9.1 7,065 4,250 2,200 13,395 7,065 16,465 19,997 0.0 2.7 4.0 1.8 3.5 0.0 2.4 9.1 7,065 4,250 2,200 13,395 7,065 16,465 19,997 Table 2.7 Demand Model Reporting 2012-2013 Source: Sanofi Pasteur Vietnam 16,929 6,660 2,611 13,108 10,059 0 4,280 2.0 7.0 0.0 7.9 6.4 0.0 0.0 18.3 16,929 6,660 2,611 13,108 10,059 0 4,280 53 To better improve the quality of supply chain service, SP needs to work in close relationship with Customers to well understand their real needs taking into account of “Demand driven chain” This will help to customize appropriate strategies to satisfy Customer’ s demand Customer’s relationship management becomes high priority to improve the effectiveness of SP supply chain operations Strengthen Customers Relationship to maintain Customer loyalty Jacoby (2009:130) pointed out that control of the customer interface and knowledge is critical to executing customization-based supply chain strategies In fact, there is a need to understand the Customers’ underlying needs to shape the customization strategy in order to serve them differentially and effectively In Vietnam vaccine market, Customers play very important role as they are Key Opinion Leaders who give vaccination prescription to the end-User (Patient) As most of SP products are in a matured market, it is vital for SP to increase Customer’s satisfaction and maintain excellent Customer’s relationship to keep their loyalty and engagement Keekey (2013) observed that the most certain way to fails is to focus only on products It means that innovation can be seen not only from product perspective but also from company image, service, and customer relationship At customization stage, it is important for SP to shift toward a new customer experience to reinforce Customer engagement, which can help SP to strengthen its value and position in the market as well as to generate more sales It is necessary to: • Cooperate closely with Distributors to control sales data and get feedback from Customers Strategic cooperation with Distributors enables rationalization of the distribution chain to increase the value added to Customers and end-Users Linking Customer data to transaction can help to determine Customer priorities in fulfillment operations as well as personalize strategic interaction with Customers to get more % of Customer’s mindshare • Make survey on Customer’ s satisfaction to identify areas which need to be improved to increase quality of service by reviewing on regular basis related metrics for example 99% of perfect order fulfillment or on-demand availability’s rate Timely delivery, prompt feedback on technical complaint (Table 2.8) or after sales service can make valuable connection with Customers 54 • Update and sharing scientific information and best practices to control Customers knowledge to access new segment for new product o Private market: Update and sharing experience on disease, vaccine and vaccination schedules will help Customers to enhance their knowledge which will be transmitted later to the end-Users Strict follow-up of routine vaccination by the end-Users will give less pressure for vaccine manufacturers in case of endemic outbreak o Public market: Collaboration on epidemiological data assessment in Vietnam to facilitate WHO/ JAICA to support EPI program Regular group discussions with healthcare professionals to update information on public health policies to increase coverage rate of target vaccination in EPI program This partnership will ensure long-term cooperation and sales expansion in public market • Social network plays very important role nowadays to growth business opportunities, SP needs to approach both internal and external Customers through virtual application to enable quick and effective communication to facilitate the capture of tacit knowledge process This will help to increase awareness on vaccines and preventable disease vaccines to enhance the active vaccination within the community to eradicate disease and access new segment • As quality is vital for vaccine and vaccination, it will be competitive to cooperate with Customers to provide more training to help them improve their awareness on quality aspect Certified training session on safe vaccination practices and cold chain management will help them to better manage their daily operational business as well as to maximize end-User’s satisfaction, which will bring more added-value and profitability to both SP and Customers Key success factor of Customers relationship management is personnel interaction Jacoby (2009: 143) stated that: “Personal interactions are critical means of gathering customer feedback that helps to up-sell, cross-sell and continuously improve the relationship This would meet two customers relationship management goals: having a high percentage of customers with more than half of their needs data 55 collected; and having a high percentage of customers providing customer service feedback within the last year” Thus it is important that SP staff must be responsive and customer focused, they can contribute towards another metric: a high percentage of customers inquire that resolve the customer’s concern at the first contact PRODUCT TECHNICAL COMPLAINT TRACKING Reported date Date of incident Product SPI11-VN-035 11-10-01 20/01/2011 22/01/2010 MENINGO A+C D0297 SPI11-VN-036 11-10-02 20/01/2011 10/04/2010 PNEUMO E0139 SPI11-VN-038 11-10-04 20/01/2011 11/10/2010 VAXIGRIP 0.25ml G7051 08/11/2010 SPI11-VN-039 11-10-05 20/01/2011 HD PTC No 2011 15/03/2010 Batch Process No TETRACT- HIB E2150-1 VAXIGRIP G7111-1 16/11/2010 SPI11-VN-040 11-10-06 20/01/2011 01/12/2010 Description PV If Yes Complaint Case PV Root Cause Close Date (Yes / Number No) No powder in vaccine Volume-Empty vial Syringe was broken Syringe- broken in the box No vaccine in vaccine Missing unit box syringe Needle of diluent went backward inside the Syringe-needle syringe No vaccine in vaccine Missing unit box syringe 08/02/2011 28/02/2011 01/03/2011 N 03/03/2011 01/03/2011 Table 2.8 Product technical complaint tracking Source: Sanofi Pasteur International Feedback from Customers/ end-Users is very important to SP to identify gaps, noncompliance in the downstream part and to actively notify the upstream part for continuous improvement or innovation New vaccines are always source of competitive advantage if they are timely introduced to the market SP priority is to faster the clinical trial process to get approval of new vaccines in 2016 like dengue fever and encephalitis vaccine The challenge is that timing for new product life-cycle cannot be highly committed due to delay in clinical trials at phase We will discuss below how Regulatory Affairs is a key step which helps SP to achieve transformational targets to bring back leader position in vaccine market Improve Regulatory affairs management Regulatory Affairs plays a very important role in the downstream activities to support new vaccine development and maintain market authorization for the marketing and distribution of vaccines in Vietnam 56 Every aspect linked to product’s characteristic, change in manufacturing and quality control process must be registered and get approval of Vietnam Health Authorities The approval process is time consuming due to complicated validation process thus active monitoring on Regulatory affairs is a key step to achieve both operational and transformational objectives Regulatory environment is changing so fast recently with high demand on quality criteria, SP needs to build reliable partnership with Vietnam Health Authorities and to closely approach DAV23 to reduce the uncertainty on regulatory requirements and avoid the bottleneck at registration process to faster validation and approval of new vaccine as well as extension of current product licenses Close collaboration and sharing information is a key success factor Clinical trials progress must be updated and aligned with SP business objectives Outputs from clinical trials will be used for registration process, and update on registration helps to validate of supply strategic planning Any delay in activities of one single process will impact the launching timeline of the new products Thus information must be shared and updated on regular basis among SP sales, marketing, supply team to decide the appropriate long term strategic planning and concrete action plans to achieve the objectives To be effective in regulatory affairs management, there a need to harmonize the local requirements of Vietnam Health Authorities such as DAV and NICVB with the international standards implemented for Asia Pacific Region to avoid: • Several submission and completion of registration file for one single product due to un-common format which take times and energies of different involved functions • Waste time for validation of new registration or renewal, which is the main barrier to import products timely in the market The other constraint also comes from the testing capability of NICVB as there is a gap between local laboratory’s standard and manufacturer’s standard SP needs to support them to approach new testing agents, method and techniques to enable them to perform the right process to timely release testing results for vaccine distribution to the market The post marketing follow-up plays also important role to collect any undesirable adverse reaction after vaccination Strong system of Pharmacovigilance needs to be 57 reinforced to closely follow-up at the front line and to timely report to manufacturer who needs to know it to change the manufacturing process to improve vaccine quality Proactive notification to Health Authorities in case of crisis, quality of SP product also helps to keep a reliable image of SP in vaccine market It will help to increase Customer’s truth toward social responsibility which is vital in quality of supply service Another constraint which makes vaccine un-available to market is limiting capability in distributing network Thus there is a need to improve the distribution process to reduce risk of stock-out, distribution cost as well as increase flexibility to response to Customers demand to become more competitive Improve distribution capability Looking at current distribution model, one of the main causes for vaccine shortage is limited stock level The new importation model will help to eliminate the stock- out issue caused by financial capability of current SP distributors A feasibility study needs to be carefully carried out benefit of direct importation right which is supposed to be granted to foreign company in the year to come Below Table 2.9 shows the expected benefits in implementing the new importation model, which can help to leverage the effectiveness of the supply chain capability to increase Customers satisfaction, reduce costs and stay competitive in the market There is a need to implement a pilot phasing to test the project’s hypothesis Pilot phase with in-market-experiments will helps to learn in reality optimal solutions for implementation and measuring the performance before jumping into full implementation The communication of this project must be transparent to current Distributors to avoid conflict of interest Collaboration is a key factor to address the topic to find optimal scenarios for implementation Current Distributors should be early involved in the project to bring more innovative initiatives, taking into account that they will concentrate on the logistic part of vaccine supply chain to reduce financial issue and will focus on Customer’ relationship to better serving them and growing their business 58 Current importation model New importation model SP has no right to import directly vaccine to VN SP has the right to import directly vaccine to VN Importation carried out by importers in big cities (Hanoi & HCM city) Importation is centralized in one importer in HCM city Apply consignment stock model Cost effectiveness perspective Different delivery schedules and small imported volume to avoid high stock due to limited financial capability, which cause stock-out effect Possibility to import big volume to benefit low cost and supply Customers need more quickly Flexibility to order big volume to response to Loss of opportunity sales due to vaccine un-availability Customers demand, can maximize opportunity sales in case of fluctuation in demand forecast Difficult to harmonize reporting system for database consolidation Harmonize and consolidate reporting system for database processing Quality perspective Vaccine samples for local testing and testing fees is Reduce vaccines sample & testing fees, reduce safety double even for one common batch of imported vaccine time and fasten time to release Challenge to ensues quality of vaccines before distribution to market Easy to follow-up and audit of product quality before distribution to market Financial perspective High distribution cost, risk of late payment to SP in case of unsold vaccines Reduce distribution cost, mitigate risk of late payment Environmental perspective Difficult to implement sea shipment and return of packaging for recycling project Green logistic: replace air shipment from France to Vietnam by sea shipment to reduce carbon emission to environment Easy to return packaging to re-use and recycle Table 2.9: Rationalization for direct importation model Source: Sanofi Pasteur Vietnam 59 CONCLUSION In conclusion, organization can only survive through sustainable development Handfield and Nichols (2002) define supply chain management as: “Supply chain management is the integration and management of supply chain organization through cooperative organizational relationship, effective business processes, and high levels of information sharing to create high-performing value systems that provides member organizations a sustainable competitive advantage” The dynamic of vaccine business is a combination of highly predictable and completely un-predictable factors To maintain leadership position, SP needs to reinforce and improve its supply chain operations in order to remain the most reliable high quality vaccines supplier to both private and public market in Vietnam Good management of the total supply network will help to reduce uncertainty and risks in the supply chain to contribute to overall increase in profitability and competitive advantage of the company SP needs to review their Business Strategies by taking into account of internal and external factors in Vietnam vaccine market to align its Supply Chain Strategy for setting and achieving objectives to remain competitive advantage KPIs and objectives must be reviewed regularly to seize the business opportunity The balance scorecard presented in Table 2.11 can be used as reference to follow-up the objectives and performance achievement Table 2.10 below describes key enablers to ensure the desired business results Depending on the selection of appropriate set of objectives on supply chain operations, SP needs to ensure a strong relationship between the results and enablers to focus on their monitoring and reporting to better control and improve the supply service in order to satisfy Customer’s demand and stay competitive in the market 60 Training & development , Retention - Succession • Innovate technology • Manufacturing infrastructure • Global sourcing • Customer service focused New vaccines on board from 2016: • Combo six in one, • Dengue fever • Japanese Encephalitis Table 2.10: SP Operations – Key enablers Source: Sanofi Pasteur Vietnam • Approach Supplier/ Customers in modern way • Data reporting and processing Information Technologye Solutions 61 PERSPECTIVES OBJECTIVES MEASUREMENT TARGET WHEN INNITIATIVES COMMENTS FINANCE F1 F2 F3 Achieve 2014 sales target at 15.7 Mio USD # 2% growth vs last year performance % of achievement increased vs 2013 actual Monthly sales 2-3% tracking view Monthly Maintain sales % of sales target of key achievement vs 90% tracking driver (rabies & 2013 actual review acP vaccine ) Control of operations budget Ensure supply forecast Due to shortage of some key products, SP accuracy and needs to expand and leverage sales of registration current portfolio, thus big growth can not effectiveness Focus on be highly achieved Key objective is Core business in private maintain market share of rabies vaccine and expand sales of flu vaccine sales market Loyalty program implementation and follow-up Strategic purchasing and procurement to reduce operational % of budget Quarterly costs Follow-up of allocation spent 95% review media campaign and on time promotional material preparation on time Table 2.11: Sanofi Pasteur Balance Scorecard Source: Sanofi Pasteur Vietnam As SP can not decrease price as India player, there a need to cooperate with Distributors to implement Loyalty program to maintain purchase from big Customers Commercial Sales target is informed and closely follow-up to block sales from competitor Late spending is also a criteria to reflect late implementation of promotion activities Budget control helps to accelerate, revise actions plan to achieve company objectives 62 PERSPECTIVES OBJECTIVES MEASUREMENT TARGET WHEN INNITIATIVES COMMENTS Monthly Monthly follow-up with headquarter Demand & Supply to control rolling forecast and replenishment process Quick access to information is key for business effectiveness Forecast Accuracy will trigger production process and balance Supply and Demand Timely feedback from Supply side help to secure stock and react in case of shortage Access to information on time will save cost & time to obtain license for importation to secure stock Monthly Share import planning to well prepare the warehouse capacity to perform localrepackaging of imported vaccine Share import planning will help to forecast of outsource employee for repackaging process on time Monthly Collaboration with Distributors to collect an report Pharmaceutical technical report to HQ To find root cause & solution for improvement Weekly Daily contact with Customer to get feedback on quality of product/service to improve distribution network To find root cause & solution for improvement Monthly Collaboration with Distributors to collect an report Pharmaceutical technical report to HQ To find root cause & solution for improvement Weekly Implementation of internet solution to change the way to approach Customers Facilitate access to Customers database quickly to control effectiveness interaction between sales team and Customers Rationalize bonus performance calculation Monthly Update product information during call visit of sales team and sharing experience during lesson learned workshop, roundtable meeting, symposium with doctors Keep Customers mindshare of SP products Maintain Customers' loyalty Monthly Training session on Safe vaccination and Cold chain management to better control of vaccine storage conditions Enhance Customer 's compliance with Good Vaccination Practice to control Adverse Reaction and reduce number of vaccines damaged due to non-compliance practices Quarterly Sharing experience and support the application process to open a Cooperation will help to get access to new Vaccination room in market segment to expand sales of flu the existing Hospital vaccine for chronic and at risk patients without vaccination room CUSTOMER C1.1 Increase effective % Order distribution to delivered on time 99% increase from Lyon to VN Customer' s satisfaction C1.2 Increase effective distribution to increase Customer' s satisfaction % of packaging materials 99% delivered on time to Distributors C1.3 Increase Distributors ' satisfaction % of Defect reported during transportation from France to VN C2.1 Increase Customers ' satisfaction % Order 99% delivered on time C2.2 Increase Customers ' satisfaction % of Defect reported by Customers C2.3 Increase Customers ' satisfaction % of calls reported online C3.1 Control of Customers Knowledge % of Customers remember SP logo, products name and indications C3.2 Control of Customers Knowledge % on time answer to Customers complaints on product/ service Increase Customer profitability % of Customers (Hospitals) operates successfully its 25% vaccination room inside the Hospitals C4 5% 5% 80% 99% 99% Table 2.11: Sanofi Pasteur Balance Scorecard Source: Sanofi Pasteur Vietnam 63 PERSPECTIVES OBJECTIVES MEASUREMENT TARGET WHEN INNITIATIVES COMMENTS INTERNAL BUSINESS PROCESS BP1 Establish and update procedures to optimize internal Survey processes to enhance collaborative relationship BP2 Ensure renewal of all product licenses to ensure availability of market authorization to import vaccine to the market % of renewal files submitted before deadline for vaccine 99% renewal timeline ( months before license expiration) Monthly Align registration plan with company objectives to well plan the renewal files submission timing Close follow-up and collaboration to obtain completed documents for renewal files on time BP3 Accelerate clinical trials to register new vaccines Protocol timelines Monthly Regular meeting to update work progress and identification of risk/ opportunity Closely follow-up will help to identify gaps and find solutions for improvement BP4 Apply technology to enhance business process % of MR can use successfully new 99% software to report online Quarterly Initiatives VacciMi platform to increase sales forces effectiveness and centralize Customers database Quick access to information is key for business effectiveness Control Customers database will help to design customized business strategies to satisfy Customers & achieve company targets 95% 90% Semester Harmonize internal process to synthesize, classify and codify database to ease the access and storage of company information and knowledge Breaking silos effects will help internal communication become more effective, people with open-minded Collaboration helps to create solidarity, enhance relationship to maintain and develop the learning culture inside the company Critical for business achievement, as without valid license, it is difficult to import vaccine / gain tender at hospital, PMCs GROWTH AND LEARNINGS GL1 Create favorable environment inside the organization for knowledge sharing and Pulse problem solving 95% Employee survey Revise effective reward system to motivate individual and collective performance GL2 Increase employee awareness and self learning ability Understand company strategy/ 95% objectives/learni ng organization People development % of senior managers to attend advanced leadership training course & % of junior staff attend soft skills and professional trainings GL3 50% Yearly Create Community of Practice or Project Team to generate and gather tacit knowledge at both frontline employees and senior executives using popular social network for private group or company forum to share knowledge, experiences or even failure, mistakes in real life practices People feels happy to be recognized by team / supervisors that they are part of the team success This will create a learning environment which helps to generate creativity and innovation Quarterly Create favorable environment for selflearning and sharing experience to capture tacit knowledge (on the work training/rotation/outdo or training) People will have more autonomy to enhance their capacity to apply learned experience to have trial and error while seeking for improvement They will not stay in their zone of comfort but will challenge themselves to be knowledge worker for the company‘s benefits Quarterly Retention program to keep senior and qualified people Training for junior people to acquire experience and intangible knowledge Knowledge management to keep intangible competitive advantage Increase employee 's satisfaction and loyalty Table 2.11: Sanofi Pasteur Balance Scorecard Source: Sanofi Pasteur Vietnam 64 LIST OF REFERENCES 1/ Philippe L Gomez, James M Robinson, Josepth Rogalewicz (2008), Vaccine manufacturing, Fifth editions, Elsevier Inc 2/ Robert B Handfield, and Ersnest L.Nichols, Jr (2002), Supply Chain Redesign Transforming Supply Chains into Integrated Value System, Financial Times Prentice Hall 3/ David Jacoby (2009), Guide to Supply Chain Management, The Economist in association with Profile Books Ltd 4/ Larry Keeley, Ryan Pikkel, Brian Quinn, Helen Walters (2013), Ten types of Innovation – The Discipline of building breakthroughs, John Wiley & Sons, Inc., Hoboken, New Jersey 5/ Peter Senge, Bryan Smith, Nina Kruschwitz, Joe Laur, Sara Schley (2010), The Necessary Revolution, Nicholas Bradley Publising 6/ Nigel Slack, Stuart Chambers, Robert Johnston (2007:203), Operations Management, Fifth edition, Pearson Education Ltd ... supply chain operations and to suggest solutions to improve the effectiveness of the supply chain management in order to increase the quality of service provided to Customers, to maximize profitability... Operations Food and Drug Administration Make to Stock Make to Order National Institute for Control of Vaccine and Biological of Vietnam Drug Administration Division /Ministry of Health of Vietnam. .. Regulatory 31 35 35 36 36 37 38 Part II IMPROVING SUPPLY CHAIN OPERATIONS: CHAPTER 1: INCREASING THE EFFECTIVENESS OF SUPPLY CHAIN OPERATIONS Production capacity 41 Manufacturing 41 Sourcing /