Supply Risk Management in Pharmaceutical

Fast development in the operating environment and fierce competition have driven companies to pursue efficiency and success through lean and global supply chains. At the same time overall uncertainty has increased in the business environment and supply chains have become a priority in risk management since their vulnerability may endanger business continuity. Although risk management should start at procurement strategy development phase, proactive contingency planning is also essential because it enables correct reaction and fast changes in process execution in the case of risk realization. This thesis is a case study conducted in the pharmaceutical industry where purchasing and materials management organizations face a number of challenges and limitations that have to be considered in supply risk management. The goal of the study was to discuss the operating environment, and identify and analyze supply risks and potential risk management practices. The study was concluded with suggestions for purchasing strategy development that take risk management considerations into account. This copy is the public version of the thesis.

Hankintariskienhallinta Suomen IVD-teollisuudessa

Kansainvälinen ja kiristyvä kilpailu on muuttanut yritysten liiketoimintaympäristöä yhä monimutkaisemmaksi ja riskialttiimmaksi. Yritysten keskittyessä yhä syvemmin omaan ydinosaamiseensa on ulkoisten resurssien hallinnan merkitys korostunut. Työnjakoa syventämällä tavoitellaan parempaa joustavuutta, ajanhallintaa sekä kustannustehokkuutta. Myös hankintatoimen tehtävät ja vastuualueet muuttuvat ennakoivampaan ja riskialttiimpaan suuntaan. Modernin hankintatoimen on kyettävä tunnistamaan, analysoimaan ja hallitsemaan riskejä yhä pirstaloituneemmista lähteistä ja muodoista. Proaktiivinen hankintatoimi osallistuu yrityksen strategiseen suunnitteluun ja riskienhallintaan. Hankintariskit voidaan luokitella seuraaviin kymmeneen riskiluokkaan: keskeytymisriskit, saatavuusriskit, hintariskit, varasto- ja aikatauluriskit, teknologiariskit, luottamuksellisen tiedon vuotoriskit, laaturiskit, konfiguraatioriskit, opportunismiriskit sekä riippuvuusriskit. Tässä tutkimuksessa hankintariskienhallintaa tarkastellaan hankintastrategian valinnan näkökulmasta. Hankintastrategian yksi elementti on toimittajasuhteen ja toimittajien lukumäärän valinta. Tilanteesta riippuen yhteistyöstrategialla tai perinteisellä kilpailuttamisella voidaan tavoitella parempaa riskienhallintaa. Yhteistyöstrategioita ovat eri tasoiset kumppanuussuhteet ja liittoutumat, jolloin suhde toimittajaan on syvä ja luottamuksellinen hyödyttäen aidosti molempia osapuolia. Riskienhallinnan näkökulmasta yhteistyöstrategia soveltuu parhaiten tilanteissa, joissa toimittajista on pitkä kokemus sekä hankintanimikkeen tuottama arvo on merkittävä. Kilpailuttamisstrategia eli hankintojen toteuttaminen usealta toimittajalta vaatii ostavalta organisaatiolta tehokkaasti hyödynnettynä suurempia resursseja kuin yhteistyöstrategian käyttö. Kilpailuttaminen soveltuu usein parhaiten silloin, kun hankintanimikkeet ovat tavanomaisia ja vaihtoehtoisia hankintalähteitä on runsaasti. Lisäksi usean toimittajan käyttö suojaa materiaalivirran katkoksilta sekä lisää hankintamarkkinoiden tuntemusta. Empiirisessä tutkimusosassa tutkitaan, miten soveltuviksi riskienhallintamenetelmiksi erilaiset hankintastrategiat koetaan Suomen IVD-teollisuudessa. Lisäksi tunnistetaan Suomen IVD-teollisuudessa merkittävimmiksi koetut hankintariskiluokat sekä selvitetään millä organisaation tasolla hankintariskienhallinta pääasiassa suoritetaan. Lisäksi selvitetään, millä menetelmin hankintariskejä pääasiassa analysoidaan.

Hankintojen johtamisen riskikartoitus: Case tutkimus

Tutkielma käsittelee kohdeyrityksen hankintatoimen riskitekijöitä sekä riskienhallintaa. Tutkielmassa tehdään kohdeyritykselle riskikartoitus sekä analysoidaan tärkeimpiä riskitekijöitä ja tunnistetaan kohdeyritykselle uusia riskinäkökulmia. Tässä tutkielmassa emipiirinen osuus keskittyy kohdeyrityksen tämänhetkiseen riskienhallintaan sekä riskitekijöihin, joita yritys kohtaa. Teoreettinen osuus toimii tutkielman viitekehyksenä riskitekijöiden ja riskienhallinnan osalta sekä antaa työkalut tutkielman empiiriselle analyysille. Tutkimus on toteutettu kvalitatiivisena haastattelututkimuksena sekä analysoitu teoreettisten mallien avulla. Työssä esitetään teoreettisia riskimalleja ja työkaluja riskienhallinnalle sekä riskiprosessille. Lisäksi esitetään kohdeyrityksen riskien arviointitaulukko sekä riskikartoitustaulukot. Riskille ominaista on sen toteutumisesta aiheutuneet vahingot tai kustannukset. Hankintatoimen riskit ovat lähinnä liiketoiminnallisia riskejä, joiden taustalla nähdään aina olevan tuotto-odotuksia. Riskienhallinnalla tarkoitetaan toimia joita tehdään riskien toteutumisen todennäköisyyden minimoimiseksi sekä toteutumisesta koituvien kustannuksien ja vahinkojen minimoimiseksi.

Ostoportfoliot hankinta-alan asiantuntijoiden strategisina segmentointityökaluina

Arvoverkostojen välinen kilpailu nykyisessä liiketoiminnassa on johtanut siihen, että toimittajaportfolioita pyritään hallitsemaan yhä strategisemmin. Yksi tapa hallita yrityksen toimittajaportfoliota on segmentoida toimittajat eri kategorioihin ja asettaa näille kategorioille strategiset tavoitteet. Segmentoinnin työkaluina voidaan käyttää ostoportfolioita, joita on suunniteltu useita erilaisia erilaisiin tarpeisiin. Käytetyin portfoliomalli on Kraljicin ostoportfolio, jota käytetään visualisoimaan yrityksen toimittajia ja tuotteita niiden tuottovaikutuksen ja toimitusriskin perusteella. Tutkimuksen tavoite oli ymmärtää, miten hankinta-alan asiantuntijat hallitsevat toimittajaportfoliotaan, painottaen erityisesti sitä, miten hankinta-asiantuntijat käyttävät tieteellisiä ostoportfolioita todellisessa liike-elämässä. Tutkimus toteutettiin laadullisin menetelmin, koska työn tarkoituksena oli ymmärtää syvällisesti tutkittavia kohteita ja pohtia niitä taustatekijöitä, jotka puoltavat tai hidastavat ostoportfolioiden käyttöä yrityksissä. Työssä haastateltiin viittä hankinta-alan asiantuntijaa, joista kaksi työskentelee johtavissa tehtävissä yksityisessä osakeyhtiössä ja kolme työskentelee johtavissa tehtävissä julkisessa osakeyhtiössä. Työn lopputuloksena voidaan todeta, että Kraljicin ostoportfoliota käytetään laajasti erilaisissa hankinnoissa, mutta muita tieteellisiä malleja ei käytetä. Portfolionanalyysin käyttö liittyy usein hankintaosaston kokoon, hankintahenkilöstön asiantuntevuuteen ja koulutukseen, strategisuuteen ja strategiseen vaikutusvaltaan yrityksessä. Niiden käyttö riippuu myös siitä, minkälaisia hankintoja tehdään. Haastavimmaksi ostoportfolioiden käyttö koetaan palveluiden hankinnoissa. Portfoliomallia hyödynnetään erityisesti, kun yritys kartoittaa toimittajakenttäänsä hakiessaan uusia muutossuuntia liiketoimintaansa.

Information exchange and disruption risk in multimodal maritime supply chains

Supply chains are becoming increasingly dependent on information ex-change in today’s world, and any disruption can cause severe repercus-sions to the flow of materials in the chain. The speed, accuracy and amount of information are key factors. The aim in this thesis is to address a gap in the research by focusing on information exchange and the risks related to it in a multimodal wood supply chain operating between the Baltic States and Finland. The study involved interviewing people engaged in logistics management in the supply chain in question. The main risk the interviewees identified arose from the sea logistics system, which held a lot of different kinds of information. The threat of breakdown in the Internet connection was also found to hinder the operations significantly. A vulnerability analysis was carried out in order to identify the main actors and channels of infor-mation flow in the supply chain. The analysis revealed that the most important and therefore most vulnerable information-exchange channels were those linking the terminal superintendent, the operative managers and the mill managers. The study gives a holistic picture of the investigated supply chain. Information-exchange-related risks varied greatly. One of the most frequently mentioned was the risk of information inaccuracy, which was usually due to the fact that those in charge of the various functions did not fully understand the consequences for the entire chain.

Approaches to Supply Chain Risk Management: Identification, Analysis and Control

Supply chain risk management has emerged as an increasingly important issue in logistics as disruptions in the supply chain have become critical issues for many companies. The scientific literature on the subject is developing and in many respects the understanding of it is still in its infancy. Thus, there is a need for more information in order for scholars and practitioners to understand the causalities and interrelations that characterise the phenomenon. The aim of this dissertation is to narrow this gap by exploring key aspects of supply chain risk management through two maritime supply chains in the immediate region of the Gulf of Finland. The study contributes to the field in three different ways. Firstly, it facilitates the identification of risks on different levels of the supply chain through a systematic analysis of the processes and actors, and of the cognitive barriers that limit the actors’ visibility and their understanding of the operations and the risks involved. There is a clear need to increase collaboration and information exchange in order to improve visibility in the chain. Risk management should be a collaborative effort among the individual actors, aimed at obtaining a holistic picture. Secondly, the study contributes to the literature on risk analysis through the use of systemic frameworks that illustrate the causalities and linkages in the system, thereby making it easier to perceive the vulnerabilities. Thirdly, the study enhances current knowledge of risk control in identifying actor roles, risk visibility and risk controllability as being among the key factors determining risk-management effectiveness against supply-chain vulnerability. This dissertation is divided into two parts. The first part gives a general overview of the relevant literature, the research design and the conclusions of the study, and the second part comprises six research publications. Case-study methodology with systematic combining approach is used, where in-depth interviews, questionnaires and expert panel sessions are the main data collection methods. The study illustrates the current state of risk management in multimodal maritime supply chains, and develops frameworks for further analysis. The results imply that there are major differences between organizations in their ability to execute supply chain risk management. Further collaboration should be considered in order to facilitate the development of systematic and effective management processes.

Risk Management in Sustainable Supply Chain

Growing awareness in corporate responsibility and issues related to sustainability is seen to increase innovativeness in a company as well as in its supply chain. The stakeholders’ awareness on sustainability has increased, and they demand the companies to identify sustainability risks and adapt procedures for mitigating them. The purpose of this thesis is to examine how risks are managed in sustainable supply chain. Definition of sustainability risks and risk management procedures construct the framework of the study. It is done through an empirical study conducted on 95 Finnish companies operating in the manufacturing industry. The data is acquired via an online questionnaire. The research has been conducted as a quantitative study utilizing the methods of statistical analysis, such as correlation analysis and factor analysis. The essential results of this thesis are identified risk-procedure connections, and the importance of different risks and procedures in the respondent companies.

Improving the effectiveness of supply chain development work – an expert role perspective

This study focuses to the intersection of three sets of activities in a company: expert work, development work and supply chain management, SCM. Experts and expert work represent a set of individuals whose efficiency and impact this study is intended to improve, while development work defines the set of organizational activities to focus on. SCM as an expertise area acts as the platform on which this study is built. The study has two aims. Firstly, it aims to derive a model helping an SCM expert to increase the effectiveness of expert work in development tasks by understanding the encountered organizational situations and processes better, reflecting his/her past and future actions to organizational processes and selecting and adjusting the processes and contents of his/her work accordingly. Secondly, it aims to develop applicable approaches and methods to understand, evaluate and manage the organizational processes and situations in development work. The integrative model on approaches and methods to improve the effectiveness of development processes is split to two aggregate dimensions: technical performance of the developed solution and consumption of resources of the development process. Six potential approaches and methods aiming at helping in the management of organizational dimensions are presented in enclosed publications. The approaches focus on three subtasks of development work: decision making, implementation and change, and knowledge accumulation. The approaches and methods have been tested in case studies representing typical development processes in the area of supply chain management. As a result, four suggestions are presented. Firstly, SCM experts are advised to consider the SCM development work to be consisting of development processes. Secondly, inside these processes they should identify and evaluate the risk of difficult decision-making related to organizational factors. Thirdly, they are prompted for an active role in implementation and change, supporting the implementation through whole process. Finally, the development should be seen in a holistic view, taking into account the stage of knowledge and organizational issues related to it, and adopt a knowledge development strategy.

Stress testing and risk evaluation of new capacity payment algorithm proposed by Market Council

In the Russian Wholesale Market, electricity and capacity are traded separately. Capacity is a special good, the sale of which obliges suppliers to keep their generating equipment ready to produce the quantity of electricity indicated by the System Operator. The purpose of the formation of capacity trading was the maintenance of reliable and uninterrupted delivery of electricity in the wholesale market. The price of capacity reflects constant investments in construction, modernization and maintenance of power plants. So, the capacity sale creates favorable conditions to attract investments in the energy sector because it guarantees the investor that his investments will be returned.

The analysis and mitigation of risks in FMCG supply chain: the case of British American Tobacco Eastern Europe

This work investigates the Bullwhip Effect, which is one of the most important phenomena in contemporary supply chain management. The author uses most recent theoretical apparatus to analyze operational activities of a leading FMCG company British American Tobacco Eastern Europe. This paper investigates and describes the process in BAT supply chain management and considers the impact of the Bullwhip Effect together with the potential risks threatening company's operations. Emergence of the Bullwhip Effect leads to supply chain inefficiency. This paper contains methodological supply chain risk mitigation recommendations, description of a real case study and an analytical study of internal and external supply chain processes

Maintaining supply performance during an ERP system implementation phase : case Cloetta Suomi Oy

Implementing an enterprise resource planning (ERP) system often means a major change to an organization and involves significant risks. It is typical that many of the ERP system implementations fail resulting in tremendous damage to the business. Moreover, running normal business operations during an ERP system implementation is far more complicated than normally. This thesis focuses on how an organization should manage the ERP system implementation process in order to maintain supply performance during the implementation phase. The theoretical framework in this thesis focuses on ERP system implementations with a critical success factor approach. Critical success factors can be divided into strategic and tactical level success factors. By considering these critical success factors, ERP system implementation project’s timeline and best practices of an ERP implementation, a critical success factor based ERP system implementation management framework is presented. The framework can be used as a theoretical framework when the goal is to avoid ERP system implementation phase issues that are driven by the ERP system implementation project and that may decrease organization’s supply performance. This thesis is a case study that was written on an assignment to a confectionary company Cloetta Suomi Oy. In order to collect data, interviews of the case company personnel were conducted. In addition, several other data collection methods were used throughout the research process. These data collection methods include examination of presentations and archival records as well as direct observations in case company meetings and in various work duties. The results of this thesis indicate that there are several factors that may decrease organization’s supply performance during the ERP system implementation. These issues are categorized under external and internal issues and further into six risk drivers that are suppliers, customers, products, staff, information systems and other projects. After the description and categorization of each issue, the thesis focuses on finding solutions on how to avoid or mitigate the impact of these issues on the organization’s supply performance. This examination leads to several operational activities that are also practical to business practitioners. It is also stated that a successful ERP system implementation that also causes minimal disturbance to organization’s supply performance during the ERP system implementation, is achieved by considering three levels of actions.

Risk Assessment of a Supplier in the Pharmaceutical Industry

The topic of this Master’s Thesis is risk assessment in the supply chain, and the work was done for a company operating in the pharmaceutical industry. The unique features of the industry bring additional challenges to risk management, due to high regulatory, docu-mentation and traceability requirements. The objective of the thesis was to generate a template for assessing the risks in the supply chain of current and potential suppliers of the case company. Risks pertaining to the case setting were sought mainly from in-house expertise of this specific product and supply chain as well as academic research papers and theory on risk management. A questionnaire was set up to assess the found risks on impact, occurrence and possibility of detection. Through this classification of the severity of the risks, the supplier assessment template was formed. A questionnaire template, comprised of the top 10 risks affecting the flow of information and materials in this setting, was formulated to serve as a generic tool for assessing risks in the supply chain of a pharmaceutical company. The template was tested on another supplier for usability and accuracy of found risks, and it demonstrated functioning in a differing supply chain and product setting.

Supply network risks and costs in Finnish project business

This report summarizes the results of the survey HAVERI – Supply network risks in business. The survey was conducted in Finland during the spring and summer of year 2013. The survey is part of a large two-year research project started in June 2012 in Finland (on-going 06/2012–07/2014). The project is launched and financed by TEKES, the Finnish Funding Agency for Technology and Innovation, and executed together with the researchers from Lappeenranta University of Technology and Tampere University of Technology. The overall goal of this on-going research project is to find out the decision-making practices in the project-oriented companies in their purchasing decisions especially in the mechanical engineering and construction industries in Finland. The objective of the survey was to gain cross-sectional data concerning the challenges, risks and cost factors in Finnish project business companies. The results show that Finnish companies rely on their experience and supplier references in their risk management. In general, the understanding of the total cost structure varies among the industries and companies. The main cost factor in risk management was costs before the actual purchase decision. Overall, it seems that the monetary value of the whole project and capability of purchasing personnel are the main influencing factors on risk management activity in project purchasing.

Pre- and postnatal nutrition – target for allergy risk reduction

A rapid increase in allergic diseases in Western societies has led to the conclusion that our modern lifestyle is a risk factor for immune dysregulation. Potential culprits and benefactors are searched among early dietary and microbial exposures, which may act to program later allergic disease. The aim of this thesis was to investigate the role of early maternal and child nutrition in reducing the risk of child allergy. The study population comprised of 256 mother – child pairs from families with a history of allergy participating in a randomized controlled dietary counseling and probiotic intervention (Lactobacillus rhamnosus GG and Bifidobacterium lactis Bb12) study from early pregnancy onwards. The dietary counseling aimed for a diet complying with dietary recommendations for pregnant and lactating women, with special attention to fat quality. Maternal dietary counseling was reflected in cord blood fatty acids suggesting better essential fatty acid status in infants in the counseling group. Dietary counseling with probiotics or placebo had no effect on child allergy risk, but associations between maternal diet during pregnancy and breastfeeding and child allergic outcomes were found in secondary analyses. During pregnancy, milk intake was related to decreased and cheese intake to increased risk of child atopic eczema. During breastfeeding, intake of vitamin C was related to increased risk of asthma and intake of egg was related to decreased risk of atopic eczema. The timing of introduction of complementary foods to infant’s diet was not associated with risk of atopic eczema, when adjusted with parental opinion of child allergic symptoms (i.e., potential reverse causality). In conclusion, the results demonstrate that infant fatty acid supply can be modified via maternal dietary changes. In addition, interesting associations of maternal diet with child allergy risk were discovered. However, no difference in the incidence of allergic diseases with dietary counseling was observed. This suggests that more potent dietary interventions might be necessitated to induce clinical risk reduction of allergy. Highrisk families can safely adhere to dietary recommendations for pregnant and lactating women, and the results support the current conception that no additional benefit is gained with delaying introduction of complementary feeding.