Patient safety is priority #1 for medical, life science, and pharmaceutical companies. Companies aim to coordinate safety up and down the supply chain, but that goal comes with significant difficulties.
Learn how Bayer is using analytics to identify and mitigate potential risk with suppliers, and hear some key takeaways from their journey.
Phaedra Hise:
Hello everybody and thanks for joining us for today’s webinar with Everstream and Bayer. We’re going to get started in a few minutes. We’re going to give our attendees just another minute to log on. Thank you.
Hi everybody and welcome to today’s webinar. Thanks for joining us today. And before we get started, just want to invite you to fasten your seatbelt and point your eyes forward while I run through our pre-flight safety check for today’s webinar. Everyone but the presenters are going to be on mute, but please do send questions at any time via the question toolbox in the go to webinar window. I’m sure you already know to close any of your extra windows to prevent any buffering issues. And just to let you know, we are recording the webinar and we’ll email it to everyone within 24 hours after the webinar’s over. So with that, let’s get started.
I want to introduce you to today’s presenters. We have David Shillingford based in New York. David is Everstream’s chief strategy officer with a decade of experience in supply chain management. From Bayer, we have Salvatore Lamanna, he’s based in Barcelona, Spain and he leads a risk management team for direct materials at Bayer. I’m Phaedra Hise, I’m the content marketing director at Everstream and I’m coming to you from Richmond, Virginia. We’ve got a lot to cover in today’s agenda and I’m going to turn now to David to start with a little bit about who Everstream is and our expertise on today’s topic.
David Shillingford:
Okay, thank you very much Phaedra and good to have all of you on the webinar today. We, if we could go to the next slide, want to talk just very briefly about Everstream and who we are and the reason we’re doing that is because a lot of people look at supply chain risk through a lot of different lenses and before Salvatore talks about Bayer’s approach to supply chain risk, we want talk about a few different best practices. Before we do that, we want to explain the lens through which Everstream analytics looks at supply chain risk and it is primarily through the lens of data and analytics. We provide a solution that helps companies discover unknown connections and relationships in their supply chains to look at the materials that are flowing through those supply chains and to be able to understand risk from one end of their supply chain to the other. When we talk about end-to-end risk, if we could go to the next slide, there’s a lot of different opinions on what end-to-end means. So when we’re talking about it, we’re really talking about from the raw material all the way through to final delivery. And what we and our clients do is very much driven by the data which requires end to end data. So data around raw materials, around suppliers, around logistics networks and the flow through those networks. Next slide please.
So the best practices that we’re going to discuss today, although we’re focused on life sciences, they’re actually coming from across all of our clients and we’re lucky enough to have hundreds of clients from which we can learn. And many of the best practices in one industry are equally applicable to other industries. So the best practices that we’ll talk about today are focused on life sciences but actually are applicable to almost every industry. Next slide please.
So we’re going to talk about three different best practices and these are things that we see across the industry, across multiple industries, and certainly over the last two years of significant supply chain disruption, it has become clearer than ever that certain companies have outperformed their peers and the three things that we’re going to talk about today are things that all of them have in common and have allowed them to outperform other competitors within their own industry. Next slide please.
So the first thing that we see is a common theme amongst companies that outperform their peers with respect to supply chain risk management is their ability to look across their enterprise. We hear a lot about silos up and down supply chains and it’s certainly a significant challenge for a lot of companies and something that digitalization strategies are looking to address. When it comes to supply chain risk, it is even more important than ever to be able to think about risk not just within sourcing or procurement or logistics, but to be able to do that in a connected and holistic manner. And part of this is to do with the way that the organization is structured and government governance from the top down so that different units are talking to each other and understand how risk is being propagated up and down the supply chain. The other side of this is where companies are able to systemically look at risk across their enterprise in a connected way. And part of that is to have a single view of risk so that a risk scoring mechanism is being used in the same way by sourcing and by procurement and by logistics, acknowledging that even if a supplier is low risk, if the inbound network is high risk, that is equally a problem when it comes to disrupting production and sales. Next slide please.
So the second best practice that we see as a growing best practice amongst our client base is companies that are thinking about their logistics risk in a holistic manner. And that means that they’re thinking about risk not only in transit, but they’re thinking about logistics risk during logistics planning and they’re thinking about it during network planning. And this is enabled by having risk scores that can be used strategically during network planning. The risk scores and predictive analytics using machine learning can be used during transportation planning as well as those models being used in transit. There’s more and more companies that are focusing on real time visibility in transit, which is an important progression from the older EDI based milestone updates. But the companies that are able to look at risk at the shipment level during transportation planning are the companies that are actually able to take action to change the outcome of their on time and in full service levels. Next slide please.
And finally, the third theme that we see is separating companies that are leaders in supply chain risk management is the way that they think about risk. Traditionally, supply chain risk has been very much looked at through the lens of third party risk where supplier risk is the primary focus of a company’s supply chain risk management efforts, which is a very important component of supply chain risk and risk assessment. But actually, the companies that are making the most progress and are furthest ahead have flipped that on its head and they’re thinking about risk through the lens of product, their analysis of supply chain risk is product centric. And this makes sense if you think about the question that the CFO is going to ask, that is, will we have the inputs and the production capability that will allow us to generate the revenue that we need to generate next quarter or next year?
And that comes down to having product availability and therefore supply chain risks should be thought about from a product-centric viewpoint. And that’s important when the data in the systems are being assembled to analyze supply chain risk because product-centric supply chain risk analytics requires that the product be dissembled into a bill of materials and that there is an understanding of where those inputs are coming from, and not just the supply that they’re coming from but the facility that they’re coming from so that external facility based location based risks can be taken into account. But also to be able to look not just at the supplier and the immediate inputs to that below material, but to understand where those suppliers are getting their inputs from, from tier two and tier three and all the way through to raw material. And that’s the technology is now available to do that without relying completely on tier one supplier surveys. And we’re seeing companies make an incredible amount of progress with their upstream visibility and the ability to connect that back to product, product at risk and ultimately revenue at risk. Next slide please.
So with that as an introduction, I would like to hand it over now to Salvatore to talk about the journey that that Bayer has been on with respect to their supply chain risk management program. Over to you Salvatore.
Salvatore Lamanna:
Thank you, David. Good morning and good afternoon everybody. I’m going to quickly present Bayer. We are a life company, life science company and a global leader in healthcare and nutrition. Our innovative products support efforts to overcome the major challenges presented by a growing and aging global population. We help prevent, alleviate and treat disease. We also aim to ensure the world as a reliable supplier of a high quality food feed and plant-based raw material. In line with our vision, healthcare for all, hunger for no-one, we aim to put in hand to the hunger and help everyone to lead the healthy life, while at the same time protecting the ecosystem. That is what we aspire to achieve, guiding by our purpose, science for a better life. In the next slide we can show you the organization of the Bayer group. We have three different division. One is crop science, then we have pharmaceutical and consumer health, and then we have the enabling function that support the operative business.
As you can imagine, we have really a huge number of supplier of diet suppliers for tier one and much more multitier suppliers in each division and we’ve faced some internal challenge to make visibility of this supply chain. Just to give you a background information, in the next slide you can show you how this partnership with Everstream started. So in 2017 there was a big hurricane that caused to Bayer a huge impact, not only because most of our supplier in this area had been impacted, but also some Bayer plants have been impacted by the hurricane. But at that time the information we got from the different area, so from the hurricane perspective but also from the production side, Bayer production side, was not so clear. So on one side we were not clear information about the location of the incidents or the hurricane and also the evolution of the incidents in which area of the countries going to continue the evolution of the hurricane.
But also on the other hand, the information about which are the material, the product making those plants, the material needed and the supplier impacted was not clear. That’s why we figure out that we definitely needed to make a visibility on these topics and also increase the risk perspective on this hand, so prevent the risk assessment with those focal points.
In the next slide we also summarize a bit, which is the information that we wanted to collect previously in order to be able to react on time whenever there is any issue around the globe. So we wanted to have in one unique portal, so the material, the products that we make and also the supplier that we are working with, and also be able to connect in real time the responsible of those suppliers on those products and also the receiver side of those products and increase the visibility of our supply chain making and end-to-end visibility from supplier until the production sites. So in 2018 we started the collaboration with Everstream and I definitely can say that Everstream is not only a supplier for us, but it is really a partner where together we try to have always updated data and try to receive from them always a clear information about which are the incidents around the globe.
In the next slide you can see which were the challenge that we figure out at the beginning when we started the collaboration with them. So it is really key to have and also to provide to Everstream good quality data about which are your product, which are your suppliers. As I presented at the beginning, we have different additions and also different goals for each division in different requirements. That’s why it was not really easy at the beginning to collect all the information needed in order to upload this data into the Everstream.
And on the other hand, also the data currency is really important because if there is some change in the responsibility of some suppliers and you don’t keep the information updating the portal, then the portal is going to update the wrong responsible supplier and at the end it makes no sense to send this alert to someone that is not responsible anymore on the supplier side. And the last challenge was to engage the colleagues to use this portal and… Sorry. And to keep in contact with the supplier every time there is any issue with a specific supplier or material.
In the next slide, please. What I wanted to collect is just some information about the real cases. So as you can imagine now with the crisis in Ukraine, it was really important to understand since the beginning, which were the supplier, which are the supplier that we have in those region in Ukraine, in Russia, which are the product that we buy from those supplier and to which final product those material goes. And also if we have any production site in those area, which is the impact if by any case we are not able to produce anymore our product. And with this solution it was really easy in few minutes to get all this information because, as I said, the big effort comes at the beginning when you have to collect your data and then when it is needed in a few minutes you are able to get everything and to visualize all data in your laptop.
In the next slide you can see the layout of the portal and also you can have a clear picture about your supply chain. Basically, you can filter by everything, you can filter by supplier, by region, by country, by products, by materials, and you can focus on what you would like to see and also verify if there is any issue with the supplier and so on.
In the next slide we can see a screenshot that I got a few weeks ago about some incidents in Moscow and in Russia more in general. And here, this is basically the information we receive on a daily basis. Sorry. On a daily basis from the everything side. So we receive information about the alerts, about the incidents, and then we are able to verify which are the supplier potentially affected by those alerts. And then it’s up to us to get in contact with the supplier and verify which is the status of the materials that we are buying from them and those other-
Phaedra Hise:
I’m just going to jump in for a second, Salvatore. We’re so grateful that you’re presenting, even though I know you’re recovering from a cold, and I wanted to give you a minute to get a drink of water if that would help.
Salvatore Lamanna:
It’s fine, Phaedra. No worries. Thank you so much.
Phaedra Hise:
Okay.
Salvatore Lamanna:
And those alerts are received directly by the category managers and the supplier manager and those are the ones in charge to get in contact with the supplier, verify which is the status of the suppliers, and the material that we are buying. And then as a second step, if there is already an alternative solution, we verify if we have to put in practice this alternative solution or working on it.
Next slide please. Maybe I advanced a bit, the slide. We receive those alert from the system and by the way, this is everything automatically because you have to set which are the alerts that you would like to receive and also to which colleagues to send which alerts. So there is a team behind and based on this connection, the responsible are directly receiving those alerts and they can directly work on it in real time. And in this case we can always ensure a safe delivery and reduce the risk of the stop of the production. And finally, as you can believe, you can imagine sustainability a key [inaudible 00:30:02] for us but also for the entire markets that we are having so far. So Bayer is [inaudible 00:30:12] to make our supply chain always more sustainable and the sustainable supply chain is a sustainability supply chain. And that’s all from my side.
David Shillingford:
Okay. Fantastic, Salvatore. Thank you for sharing those important insights and as Phaedra said, thank you for keeping going when you haven’t fully recovered. So what we’ll do now is we’ve reserved a bit of time for questions. I’m going to hand it back to Phaedra to manage the questions that are coming in.
Phaedra Hise:
Great. Thank you so much to both of you for a really insightful presentation. We’ve already got some great questions coming in so we’re going to dive right in. Just a reminder to everyone to submit your questions using the question box on go to webinar. So the first question we have, I think this is probably for Salvatore, is, about how much time and effort went into the initial part of the network [inaudible 00:31:26] process?
Salvatore Lamanna:
It is quite hard to give an answer to this topic, but definitely a couple of months. By the way, depend of the currency of the data that you have already in the system and also how much big is the company and also if there are different division with the different data structure, but definitely a couple months at least.
Phaedra Hise:
Okay, a couple of months. Great. And then this may be a question for David. How is ETA risk being calculated? What data is used for this?
David Shillingford:
Yeah, sure. I can answer that question. So what we’re doing there is we’re combining operational data with risk data. So there’s about 65 different variables that are being used inside the machine learning model and that’s coming both from historical shipment data, so tens of millions of historical shipment records, and that’s being combined with risk data. And the risk data is either predictive risk, it’s the risk scoring, or it’s real time incidents. And the machine learning models are combining all of that data to create a risk score against each shipment based on when it’s leaving and where it’s going from to, and in some cases what is inside the cargo. And that risk score can then be used to adjust the ETA either given as a risk to the ETA that’s being given or to update the ETA with a more accurate ETA.
Phaedra Hise:
Terrific. And now we’ve got a question about a sustainable supply chain, this would be for Salvatore. Can you come back to the aspect of sustainability of the supply chain? How is sustainability achieved and what are the goals?
Salvatore Lamanna:
Yeah, it is not always black or white. It is not easy to say sustainability is achieved. We always are working for a better sustainability supply chain but the first step that you need in order to work on it is to have a clear supply chain below tier one, so not only be one but also the multi tier suppliers. And this is the step where we are working on right now, we’re trying to make a visible supply chain below our direct suppliers. So to give a short question, we are working on it, but I cannot say we have sold this sustainable supply chain already.
Phaedra Hise:
Sort of the process for the entire world at the moment I think. Then we have a question probably for David, although probably both of you can speak on this, is the challenge of sub-tier visibility. Can you speak a little bit more about the technology that supports this?
David Shillingford:
Sure. I mean, the traditional approach to getting visibility to sub-tier suppliers really has been to survey tier one suppliers and ask them, and there are numerous challenges associated with that. And so a new and complimentary approach is to go from the outside in and that is achieved by taking billions and billions of transactional records, could be import export, they could be shipment records, any type of supply chain transaction that describes who is doing business with who, and to use AI, it’s really an entity resolution tool that is AI driven, to boil those billions of records down into millions of supplier records and the relationships that they have with each other. And then to be able to apply that data to a client’s tier one data to be able to map out the entire multi-tier network. And it’ll never be a hundred percent on day one, it’ll definitely be a process, it’ll depend upon how much data the client has and the industry that they are in as to how much of that supply chain can be revealed on the first day of that. But every week, every month, every year, that network is being grown out and it becomes a scalable way of building out multi-tier network and the data can be analyzed for risk, risk concentration, network concentration, inside graph database technology.
Phaedra Hise:
Thank you, David. We’ve got so many great questions. We might go a few minutes over. Next one is really for Salvatore. How do you avoid information overload? What filtering mechanisms do you recommend?
Salvatore Lamanna:
Yeah, this is a good question. At the beginning it was also a bit challenging to avoid, to receive too many alerts and maybe some of them are only relevant for us. It is key, from my point of view, to set really which are the alerts you would like to receive. So not only the ones related to the national disaster, but also maybe if you want to focus on the cyber security or violence or issue to the population and so on. And if you don’t want to keep the high of it, just unflag them. And also it is important to make the focus on the area from the incidents, so five of 10 kilometers from the area of the incidents and in some cases it is necessary even less, maybe just 500 meter, one kilometer from the area. This is really important to have the good setting in order to, as I said, avoid too many alerts where maybe some of them, most of them are not really needed.
David Shillingford:
If I could just add to that because it’s a really important point in the world of supply chain data and risk analytics and the answer to what often is called noise isn’t collecting less risk intelligence, it is having a system that is AI driven, that is filter driven, that is human driven, and an ongoing partnership between us and our clients to make sure that the filters, the categorization, the flagging, ensures that that person gets what that person wants to see and not other things outside of that. So it’s a really important point that we always want to be collecting as much intelligence across the globe as we possibly can, but also showing each user just what that user needs to see. I just want to underline that because it’s a really important point.
Phaedra Hise:
Great, thank you. We’re going to take one more question, and just letting everyone know that we will have people on our team reaching out to you if we didn’t have a chance to get to your question today live, just to follow up and make sure everything’s clear to you. This one for Salvatore, what was the most difficult challenge in change management? When you have silos of teams managing your suppliers, how do you bring them all together?
Salvatore Lamanna:
Engage. We have a really big organization in Bayer and, by the way, we start with the procurement organization using this tool now it is standard to our organization. We started with the procurement and in order to engage the colleagues on the tool, it’s really important to have really a quite a big number of meeting with them and explain the use of it and the needs of this tool and why we decide as an organization to work with this provider and this solution.
Phaedra Hise:
Great. Thanks once again, Salvatore, for presenting with us today, even though you’re not feeling well. And David, thank you too. Thanks everyone for joining us and we’ll be sending the recording out shortly.
David Shillingford:
Sure. Thank you. Thanks everyone.
Salvatore Lamanna:
Thank you.
