Supply Chain Resilience During

COVID-19 Pandemic:
Leveraging S&OP
Through Strategic
Partnership With
Suppliers
///////////

16 September 2021
Adrin Ramdana Rauf
 Agenda
Introduction
Detecting Disruption
Reducing Vulnerability

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 Introduction: Professional Milestones

2018 – Sep’21
2007-08
2012 2016-18 2018 Head of
2007 2008-10 2011 2013-16
2010-12 2012-13 2015 Supply Chain
Management Management
Trainee Graduated Supply Chain Master
Graduated Continuous Lean Six Operational
Manufacturing Procurement Hoshin Kanri Manager Scheduler for
Agro Industrial Improvement Sigma Black Excellence
Manager Master of Manager Facilitator Consumer & North America Mar 2021-now
Engineer Production Coach Belt Manager Pharma & Mexico
Planner Management
Head of
Operations

6 months
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 Detecting
Disruption
A Proactive Approach For
Predictability

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 COVID-19 in 2020 had sparked mobility disruption
The disruption peaked during a period between end of Q2 until beginning of Q4 2020
COVID-19 choropleth map; May 2020
Source: WHO

> 12 mio confirmed cases ▪ The global impact of the 2019 coronavirus disease
(COVID-19) has been well reported
> 0.5 mio confirmed deaths
▪ Many countries have thus imposed pandemic suppression
measures such as lock-downs and community quarantines
216 countries, areas affected in an effort to stem the progress of the pandemic.
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 Complex Network of Global Supply Chain in Consumer Health
Industry, particularly for Bayer site in Indonesia
Early wave of COVID-19 pandemic had signaled a forthcoming supply chain disruption

Materials Supply Network Map Supply Center - Cimanggis Export Destination

> 100 suppliers > 200 SKU

> 24 countries > 28 countries

> 1000 materials 4 continents

▪ In a globalized market, pharmaceuticals production in one

country has involved a complex supply chain network of
materials suppliers from many countries

▪ Global logistics mobility has become a pivotal factor to

enable the cross-border materials supply to arrive at the
production base

▪ ~ 90% of Active Pharmaceutical Ingredients (API) used in

Pharma Industry in Indonesia are imported (study by
INDEF)

6
 Data Driven Assessment
Risk level scale (RLS) is calculated using equation (1) as follow:
RLS = (rLT x wLT) + (rSL x wSL) + (rMQ x wMQ) + (rRS x wRS) + (rSC x wSC)
rLT : Lead Time risk rating
COVID-19 impact on: wLT : Lead Time weight
rSL : Shelf-Life risk rating
wSL : Shelf-Life weight
Table 1. Risk Level Scale
rMQ : MoQ supply coverage risk rating
Logistics • E- mail & phone
survey in Feb- wMQ : MoQ supply coverage weight
Risk Level Scale
Mobility May 2020 Low 1.0 - 3.6
rRS : Regulation Status risk rating
Medium 3.7 - 6.3
wRS : Regulation Status weight
• ABC analysis for Finished
High 6.4 - 9.0
rSC : Sourcing Complexity risk rating
Goods
Materials • Bill of Material explosion for A wSC : Sourcing Complexity weight
Supply Risk class Finished Goods (FG)
• Risk Level Scale (RLS)
Assessment assessment through
Consensus Oriented Decision Table 2. Evaluation Criteria for Raw Materials Supply Risk Assessment
Making Rating
Parameter UoM Weight
1 3 5 7 9

Supply • Box-plot analysis

based on
Lead Time =< 30 31-45 46-75 76-120 > 120 days 0.2
Shelf Life 60 48 36 24 12 months 0.2
Vulnerability regional supplier
base and the MoQ
0-1.9 2-2.4 2.5-2.9 3-5.9 >= 6 months 0.1
Analysis RLS distribution Cov erage

Regulation
Non-regulated NA NA NA Regulated NA 0.2
Status
Single sourced - Single sourced
Ongoing Single sourced
Dual sourced with however with non-commodity/
Sourcing qualification of commodity with
different parent- multiple specialty with NA 0.3
Complexity second various potential
companies manufacturing sites limited potential
manufacturing-site suppliers
of same supplier suppliers

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 Understanding Logistics Mobility Disruption

Table 3. Air Market Demand and Capacity Index

▪ Only ocean freight demand originated from S. Asia and MEA that
has normal capacity levels to serve the destination to S. Asia.
The rest are limited and some even saturated.

▪ Demand spike for multivitamins driven by COVID-19 pandemic in

Indonesia, has forced the company to opt for air freight mode for
better logistics mobility.

▪ Air freight frequency was > 30% higher in 2020 vs YoY 2019

Table 4. Ocean Market Demand and Capacity Index

Port locations are divided into six regions: North America

(NA), Latin America (LATAM), Europe (EUR), North Asia (N.
Asia), South Asia (S. Asia), Middle East and Africa (MEA).
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 Understanding Materials Supply Vulnerability

4%

Table 5. ABC Class Analysis result from 149 FG SKU to be produced by 18%
The Company for the next 12 months

% to annual
Item Class volume Count of SKU % to total SKU
A 70% 26 17%
B 21% 43 29%
C 9% 80 54% 78%

Grand Total 100% 149 100%

Low Risk Medium Risk High Risk
Proportion of risk level scale critical materials

Based on the boxplot analysis, we can infer that most of the

materials with high RLS are originated from region EUR and NA,
while for other region only an outlier came from N. Asia.

The results of the assessment shows that the materials vulnerability

for the A class items produced by the company rather high for the
Distribution of risk level scale of critical materials based on region of
origin ones imported from EUR and NA region.
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COVID-19 driven demand disruption
Society at large urgently needs vitamin to boost their immune system

Consumer purchase behavior trends in 2020

Source: Nielsen
 The Imperative of

Reducing
Vulnerability

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 Concurrent Planning Process
Managing information in a concurrent flow almost in the same cycle to speed up anticipation

Downstream

Plan Source Make Deliver

Upstream

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 Concurrent Planning Process
Digital collaboration for short interval control and quick decision making, enables agile and resilient
organization during unprecedented shock such as COVID-19 pandemic

Control Control
Tower Tower Logistics Service Provider
Global API Hub
Logistics Service Provider

Cust
PRO SCM
Shortening Forecast Horizon

Center of Gravity
Critical Material Suppliers Product Supply Center - Cimanggis
Capacity

Workforce
Company affiliates
Inventory at country of destination
(incl.PPE)

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 Product category mapping to understand product family
convergence driven by demand disruption
Product Family Convergence Matrix
6
Therapeutic Area
Nutritional 5 Nut-a

Cough & Cold

4
Analgesics

GROWTH
Nut-b
Digestive Health 3
Nut-c
Medicated Skin Care
2
Allergy Criteria:
• Growth (1-5)
Cardiovascular • # of Countries (1-5)
1
• Volume (1-10)

0
0 1 2 3 4 5 6
# of COUNTRIES
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 Counter Measures to mitigate the vulnerability
The mitigation was classified into three level according to the urgency and execution timeline

Planning Horizon Key Focus Area

Multiple Sourcing
Beyond
12 months Formula
Strategic Redundancy

Forecast
Aggregation
3-12 months
Tactical Inventory
Redundancy

Risk Pooling for

Flexibility
< 3 months
Operational

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 Operational Measure – Risk Pooling For Flexibility
Supplier get benefits from focused portfolio which give more predictable materials & component type to be
prepared/forecasted in the short-term

• Product family convergence showed Nutritional category as the focus in pandemic situation

• Most of the countries have Nut-a portfolio, focus on this product. Few others focus on Nut-b.

• Focus on 1 most common formula: e.g.: Formula with Flavor-x

• Focus on packaging format type that has the highest efficiency/line performance to debottleneck the capacity

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 Tactical Measure – Forecast Aggregation & Inventory Redundancy
4%

Table 5. ABC Class Analysis result from 149 FG SKU to be produced by 18%
The Company for the next 12 months

% to annual
Item Class volume Count of SKU % to total SKU
A 70% 26 17%
B 21% 43 29%
C 9% 80 54% 78%

Grand Total 100% 149 100%

Low Risk Medium Risk High Risk
Proportion of risk level scale critical materials

• With harmonized portfolio both on formula and packaging format, the degree of component commonality is increased

• Based on component commonality analysis, the most common components was included into the safety stock
adjustment process based on materials supply vulnerability analysis

• Prolong the materials ordering horizon based on the component commonalities to reduce supplier vulnerability

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 Strategic Measure
Concurrent process of bottom-up regulatory analysis and top-down multiple sourcing mitigation
SKU Prioritization Matrix
6

Regulatory Perspective
5
• Rx (by prescription only)
SKU-a Country-x

Regulatory Complexity
• OTC Drugs 4

• OTC Supplements
3

Formula Redundancy through Concurrent Engineering 2 SKU-b Country-Y

Prod Dev
1 Criteria:
• Reg Complexity (1-5)
Ramp Up • Vulnerability (1-5)
• Volume (1-10)
0
0 1 2 3 4 5
Production
Vulnerability
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 Terima Kasih

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