Bayer Supply Chain Management 23 rd Feb 2018

Bayer - Supply Chain Management ////// 23 rd Feb 2018 – Global Pharma Supply Chain Summit 2018 Sanjay Manjrekar Head - SCM, PH CH AH 1 /// Bayer 16: 9 Template 2010 /// November 2017

Agenda Best End to End Supply Chain Visibility 2 /// Bayer 16: 9 Template 2010 /// November 2017

Best End to End Supply Chain Visibility Old Approach on Supply Chain working Various functions were working in Silos and there was no coordination between various functions i. e. planning, logistic, order-to-cash, controlling, finance etc. resulting in either overstocking or stocks not available for sales. Need for visibility There were several reasons for increasing the need for visibility in the supply chain. With the Globalization and global supply chains bringing new challenges. Additionally, customers are becoming increasingly demanding and companies with limited in their ability to meet these demands because of cost reduction and risk minimization. A lack of transparency makes it difficult to see what is happening in a supply chain at any given moment. This can threaten the effectiveness of an organization and lead to wrong decision making, missed opportunities and high costs. But more importantly, a lack of visibility often results in poor customer satisfaction. End to End Supply Chain Planning We at Bayer realized that End-to-end visibility is a “must have” not a “nice to have” in order for effectively communication, proactively solve problems and provide the level of service expected from both partner organizations and customers. 3 /// Bayer 16: 9 Template 2010 /// November 2017

Best End to End Supply Chain Visibility We recognize requirement and have transformed the supply chain planning through cross-functional alignment and clear governance models to work towards a truly end-to-end value chain and extended beyond the four walls of our organization to meet the needs of the customers on the following topics; a) Improved internal cross-functional visibility and integrated into supply chain transactions and cost b) Streamlined processes for easier monitoring enhanced usability or efficiency. c) Improved timelines and accuracy of data exchange about supply chain transactions. d) Increased the visibility into supplier-side process with suppliers, 3 PL’s trading partners. e) Logistics needs to know the goods movement status B) Finance needs to know the cash flow projections C) Production needs to know the arrival status Defined the Key Performance Indicators (KPI) to measure the success of Supply Chain Visibility: Order delivery to customer completed and on-time Supplier orders delivered completed and on time Savings on total landed cost per unit Frequency of out of stock inventory 4 /// Bayer 16: 9 Template 2010 /// November 2017

Best End to End Supply Chain Visibility Invested in Technology: Technology being the only way to achieve the desired objective on end-to-end visibility. We adopted technology that follows a Control Tower concept. Enable Right Data access to the Right People: By implementing technology, access of data was given to right people for analysis and critical information was shared to the right people at the right time. An added element for data is the process of providing the required information and adding controls of the data and this technology to users who need the information, and controlling access to those who do not. Build Analytical Capabilities: By building analytical capabilities to make the data useful, we derived the business intelligence for strategic planning and decision making. This also provided with an opportunity to generate a higher level of intelligence by comparing their incoming process data to their expectations of both the process’ performance, as well as the process’ outcomes. 5 /// Bayer 16: 9 Template 2010 /// November 2017

Best End to End Supply Chain Visibility Conclusion: Supply Chain Visibility is imperative to sustain, be competitive and meet their customers’ needs. In order to achieve an end-to-end Supply Chain Visibility, we have moved to Stage 4 and 5 in Supply Chain Visibility Maturity which has helped in better planning, collaborating and execution. The improvement in maturing levels for an organization can be achieved by adopting the right technology to focus on the external events in the supply chain and ensuring collaboration at all levels is implemented. 6 /// Bayer 16: 9 Template 2010 /// November 2017

Best End to End Supply Chain Visibility In a complex global supply chain, we Bayer are working with various customer / business partners within and outside the organization in order to meet the customer demands, and yet reduce costs. Having end-to-end Supply Chain Visibility helped the organization’s success in meeting the objectives. “Bayer has moved from Stage 2 or 3 of supply chain maturity to Stage 4 & 5 which has helped in better planning, collaborating and execution. 7 /// Bayer 16: 9 Template 2010 /// November 2017

Best End to End Supply Chain Visibility Other Criteria where we worked on Supply Chain Visibility are as follows; 1. Customer Satisfaction: In a demand driven market where customers are looking for a faster response rate to improve their supply chain visibility we identified the potential disruptions in advance and took immediate actions on consumers expectation of right product at the right price in the right place at the right time with the right quality. 2. Inventory Management: We along with the manufacture explored options to keep the inventories low to improve the working capital. The “Just-in Time” (JIT) manufacturing concept has enabled us to keep inventory at a lower level to keep their production running and reduce the inventory costs, resulting in better working capital. Achieving the JIT concept provided us with opportunities in designing reliable supply chain processes to better support our customers and meet their bottom line finances for their supply chain. Supply Chain Visibility helps the manufacturer achieve the objective of fewer inventories and still meet market needs. It also provides up-to date information on the status and availability of materials and products. 3. Supply Chain Costs: A transparency in the Supply chain processes was maintained for the customer order, shipment planning, container booking, current location of the container, etc. Visibility to this kind of information was introduced for better planning of the supply chain process and tracking costs such as: a) Cost of Freight and Transport b) Cost of Clearance c) Detention and Demurrage charges d) Advance payments All the above elements which are critical have a complete control on the finances and have taken necessary actions to avoid any financial leakage such as duplicate charges by service providers, not utilizing complete container space in the movement of goods, and controls around free detention periods. 8 /// Bayer 16: 9 Template 2010 /// November 2017

Best End to End Supply Chain Visibility 4. Risk Management: We analysis the Supply chain risks which fall into two categories i. e. Compliance and Operations. An example of a compliance risk can be a late filing of an import or export transaction, sales returns etc. resulting in a late declaration to the government. An operations risk can occur when there is a lack of coordination between departments resulting in delayed goods arrival to a warehouse. To address both of these risks, we possess a complete transparent system which enables the flow of consistent, reliable, complete and validated data all through the supply chain process. The visibility provided complete transparency in the supply chain process and alerted the company to take the necessary mitigation steps and avoid risks in a timely manner. 9 /// Bayer 16: 9 Template 2010 /// November 2017

Cross Functional S&OP Order-to-Cash 10 Finance. Business. Partner/ / Finance Controlling Annual. Sales. Plan Annual Forecast / Field Target Sales Team / BU’s Quality SCM – Demand & Production Planning Medical Affairs / Regulatory Imports/ /Local. Production Imports Procurement /// SM & DI Cycle Meet / February 2018

Thank you! ////// Bye-Bye 11 /// Bayer 16: 9 Template 2010 /// November 2017