CTM or optimizer in Pharma Industry

[Former Member]

Dear Gurus,

Is CTM or Optimizer usually used in Pharma industry? I understand the reasons behind the selection of SNP solution that if you just need a simple supply planning with capacity levelling, you go for Heuristics, if you need rule based go for CTM and if you need cost optimization, you go for Optimizer.

In your experience, does Pharma industries go for CTM or optimizer? While I understand it's specific to the business model , does the Pharma industry process support the CTM or Optimizer?

Thanks.

[somnath_manna · Accepted solution]

Visu,

I shall put forth a different argument based on my experience with one of the pharma company mentioned by Ken and another that is not listed in the discussion so far.

According to my experience Pharma industry is more of Supply-driven rather than Demand-driven.

As a result PPDS pretty much is the most important planning engine where long-term sequence of orders are carried out. Campaign-based planing is pretty much a mandatory requirement in case of API / Active Ingredient manufacturing. To start with SNP is not capable of doing Campaign-based planning. So it does not matter if its CTM or Optimiser. Frankly speaking I find Heuristic much easier to understand and handle.

One Golbal Pharma major uses SNP for long-term planning (that too heuristic) basically to pass the demand from the markets all the way to the API manufacturing plants. Then PPDS is run for a shorter horizon depending on the product level. For APIs the PPDS plan is almost 1 year out - because when you are doing campaign planning each campaign (for a particular API) typically lasts 2-3 months. That means if on a manufacturing line (a complex series of pressure vessels and piping) you need to manufacturing 4 different APIs you will make the same API after 1 year (3 months per campaig x 4 APIs). For Semi-finished products (like forming the tablets) the production process is faster and hence PPDS planning is not done for 1 year out but maybe upto 6 months. As for the final finish and packing lines each Production Run lasts for few days and hence te PPDS plan is say upto 3 months only. Now given these different production levels you need to maintain master data parameters suitably to match PPDS and SNP planning runs.

This client did not use SNP Optimiser or CTM engine in their planning when I was working. Even now I they are not using these engines.

On the other hand another Indian Pharma major started off APO implementation using SNP especially CTM engine and over a period of time as they rolled out more and more of Production Planning at the plants they realised CTM is not serving the purpose. As far as I know they were in process of switching over to PPDS for the production planning and keep CTM only close to the demand side i.e. the Distribution Centers.

Hope this helps.

Somnath

[Former Member]

yes... several do...

You would have to get information from each... they usually don't like to advertise which engine they are using.

ken

[Former Member]

Not an easy answer...

Eli Lilly, J&J, Wyeth, Amgen, Genentech, all have implemented APO but the engines used vary and will depend upon your business requirements... Each Company has a different market perspective and can use multiple engines to solve different issues.

Ken Snyder

[Former Member]

Hi KEN,

Did any of these Pharma companies implement CTM? Any idea?

[Former Member]

Hi,

The use of CTM in Pharma industry is limited - the couple of implementations I have heard consists of VMI for Bayer, where heuristic methods are used to determine the replenishment quantities necessary to fulfill forecast sales. Corresponding sales orders are then generated automatically.

The other case study was for AstraZeneca, where SAP APO provides the:

Characteristics-based setup time calculation: A solution that

automatically generates a characteristics-based setup matrix

with reference to pharmaceutical criteria.

Day’s-supply-based heuristic planning system to implement

a demand-driven SCM concept for real-time calculation of

dynamic safety stock levels and days’ supply of finished products as a function of sales forecasts and the actual inventory situation.

Regards