The process of making large, sweeping changes across an entire organization can, for many companies, be a difficult and arduous process. For Sanofi North America (NA), the process of consolidating services and facilities may have had initial hurdles to overcome, but has since proven to be a positive experience.
“We have a team focused on our cost to serve and our operating model, while also being focused on our customers,” says Doug McLeester, vice president of the healthcare company’s North American distribution and supply chain team.
The company in 2012 consolidated Distribution & Supply Chain and several other functions – including finance, human resources and site services – that were formerly handled by affiliate businesses into a single Global Services Division (GSD). Sanofi NA consists of five affiliates: Sanofi Pharmaceuticals, which manufactures, develops and distributes medications including diabetes solutions; Sanofi Pasteur, a human vaccine company; Merial, which focuses on animal health; Chattem, a consumer healthcare company; and Genzyme, which focuses on rare diseases. Sanofi NA is a subsidiary of the global company Sanofi, headquartered in Paris.
A Streamlined Operation
The creation of the GSD enables Sanofi NA to concentrate their efforts on customer-facing functions including sales, product development and manufacturing. The division also provides consistency to behind-the-scenes functions such as communications and procurement across all five affiliates. “We wanted to allow our businesses to focus on their specific strengths and customer bases,” McLeester says. “This was a big change that has produced positive results for our internal customers and our external customers.”
The GSD distribution and supply chain team treats the affiliates as internal customers. “We are the last-mile providers to end-customers across all Sanofi NA companies,” McLeester says. “If we don’t provide excellent service, we will hear it. Our goal is to make sure the end-customer experience is a positive one.”
The company uses the distribution resource planning (DRP) method to determine demand, inventory and stock requirements. Inventory is managed through an internal system that allows vendors to download demand forecasts, which they can then use as a basis for manufacturing plans. Extensive sales operation and planning processes and periodic business reviews are also utilized. “We build our capacity around forecasting cycles, and make sure that what our affiliates told us during the previous cycle still applies,” McLeester adds. “This information helps us align our operations, ensures we have the right capacity in our distribution centers and make the right product placement decisions.”
Sanofi’s Global Services Division recently implemented a warehouse management system (WMS) that consolidates information from the affiliates’ five separate DRP systems. This enables it to use a single format for packing lists and other important documents. It has enabled a single front-end so all distribution center employees work in a standardized system regardless of the products. “The more we streamline our operations the more cost-effectively we can provide our services back to our affiliates,” says Bill Tarabek, Senior Director of Distribution Operations.
The WMS system is one of more than 40 major projects the GSD distribution and supply chain team has embarked upon since its formation in 2012. These projects, which include paring down Sanofi’s supplier list and aggregating other spending, have reduced the baseline budget by 30 percent, the company explains.
A significant undertaking can only be accomplished with the collaboration of other GSD partners such as site services, human resources, communications, corporate affairs and finance as well as the other GSD functions. Together these functions act as strategic, collaborative partners who leverage expertise, scale and resources.
Access to data and key insights from GSD functions was the cornerstone to project success. The GSD is comprised of 1,400 employees, providing support to more than 18,000 North American employees.
One of the most significant projects involved consolidating the distribution centers that were formerly used by the individual affiliates. Global Services reduced the North American distribution footprint from 23 to seven. The GSD distribution and supply chain team created four Multi-Activity Hubs located in Taylor, Penn.; Forest Park, Ga.; Reno, Nev.; and Kirkland, Quebec, Canada. All Sanofi NA products can be co-located within these hubs. “By absorbing our operations into those centers, we gained significant savings and got closer to the customer,” Tarabek adds.
The distribution centers stock products and ship directly to physicians and sales professionals, retail and specialty pharmacies, veterinarians, retail and wholesale channels and infusion centers. Sanofi maintains partnerships with logistic providers, including FedEx, to deliver its products in a timely manner.
Cold chain packaging efficiencies are the goal of another GSD project. At the time of the division’s formation, Sanofi used 65 different shipping containers, 24 refrigerants and 250 different packing configurations. The distribution and supply chain team examined the types of packaging it was using and the products it was shipping, and condensed its cold chain packaging capabilities considerably, saving on costs and labor. “Sanofi NA today uses 20 containers, five refrigerants and 50 total packing configurations,” says Lisa Moher, Head of Distribution Packaging.
Refrigerant used for packaging cold chain products is the focus of a sustainability-minded initiative. Moher’s team developed a rectangular water bottle that is roughly the same size as its current refrigerants and has the same thermal properties. The bottle, which has a removal cap, is filled with tap water and then refrigerated. After customers receive the product, they can unthread the cap closure, drain the bottle and place it into a recycling bin. Moher’s team is exclusively working with cold chain partner Sonoco, who will offer the products to any interested customer later this year.
“Sonoco ThermoSafe would like to congratulate Sanofi on being recognized for their supply chain leadership and ability to deliver life enhancing products. Through our strategic partnership, Sonoco ThermoSafe supports Sanofi’s mission to protect and improve human health worldwide by providing innovative temperature assurance packaging solutions,” says Vishal Khushalani, director of global marketing and business development.
The distribution and supply chain team is currently partnering with Rutgers University to develop an auto-loading device that will automate the loading and unloading of boxes on trucks. The device, a prototype of which is anticipated to be ready by the end of the year, will automatically load multiple sizes of small parcels in a truck and maximize the cubic capacity of the truck. The same device will unload the truck in a reverse sequence.
Several of the Global Services Division’s projects correspond with new product launches. The company recently gained the capability to develop artwork, labeling and packaging through an in-house print shop. “This gives Sanofi NA the ability to ship small quantities of new products to patients faster than traditional process,” McLeester notes. The company’s newest products include Toujeo, a long-lasting banal insulin; and Afrezza, the only inhalable insulin.
All of Sanofi’s improvement projects have a common thread. “We ask two questions before we do anything: Can we reduce costs and can we improve service,” Tarabek says. “If we can’t do either of those, we move on.”
Breaking Down Walls
“This team has really taken the ball and run with it when it comes to projects,” McLeester says. “We believe we are owners in our process, and are happy to satisfy customer demand through not just our products, but cost-effective services.”
Communication and collaboration among team members is fostered in part by an open office environment. “We transitioned from hard-walled offices and a neutral palette of color to an open concept table with vibrant pops of color,” Moher says. “The open concept greeted the teams with wireless devices, cozy breakout areas and streaming television – tools that allow the team to be fluid, active and mobile throughout our workday.”
For the team, walls have been broken down in more ways than just physically. “We are engaging more than ever, collaborating on a daily basis and having a great time in the process,” she adds. “Collaboration is our new present and future and we love every minute of it in our new spaces.”
The GSD empowers teams to collaborate, contributing to Sanofi NA’s success. “We’ve been lucky to have been given a significant amount of autonomy and we have an entrepreneurial spirit which enables us to create value for our patients/customer and our organization,” McLeester says.