19 January 2021 - by Hendrik De Cuyper
Until recently, freezer capacity had never been a scarce resource. Implicitly, it was always assumed to be freely available at a reasonable cost. However, as a result of the current COVID-19 pandemic, this is no longer the case. In the globalized world we currently live in, one cannot predict how long this crisis will last and how many more will follow. Therefore, in order to be able to handle volatile new product demand forecasts, pharmaceutical companies need to be proactive and start predicting their future freezer utilization and capacity.
Why? Because making a timely decision on whether to reallocate across sites, build, buy or lease in order to optimize freezer capacity, will lead to the most cost-efficient solution in the long run. Just read on to discover the key characteristics of the process resulting in a business modeling platform -such as Anaplan – the preferred system for facilitating decision-making.
Freezer capacity has almost never been considered a constraint. And if so, very limited. At most, freezer capacity was examined once a year during budget reviews or whilst performing manufacturing/distribution footprint studies. This means that freezer capacity was always calculated at a high level on Excel sheets without considering incorporating it into fundamental APS (Advanced Planning and Scheduling) solutions. Hence, the creation of structured data to model freezer capacity has never been properly set up in ECC systems. In the current context with the COVID-19 pandemic however, there is a lot of pressure and the need to build a solution that monitors freezer capacity utilization and requirements more frequently.
Driven by its modeling features, Anaplan offers a swift solution for gaining a detailed insight into this matter, compared with similar tools that often require at least 6 to 9 months to achieve this. Thanks to the fact that Anaplan is business-owned, an organization can stay agile and adjust rapidly to changes in the business environment. Moreover, Anaplan goes beyond managing (volatile) demand forecasting. Due to its flexibility, it can integrate several data sources that are typically not harmonized across ECCs, and it is able to reconcile them at low cost and with little effort. Having a tool that is agnostic to where the data is coming from is crucial in order to integrate this into the current IT landscape.
Taking the above into account, Anaplan can assist companies in managing freezer asset optimization and scenario analysis. Imagine you come to the conclusion that you need to revisit your partner contract model and make it more flexible. Another scenario could tell you not to add extra freezer capacity, but to merely move a portion from one location to another by either physically moving own stored goods or virtually reshuffling leased capacity as determined in the contract. This will also raise the question about whether one should either fully own or outsource freezer capacity. A prerequisite to the latter is that the full asset base should be known at a corporate level and not only locally per site, which leads to 100% asset visibility.
Anaplan is not only able to calculate multiple supply chain scenarios, it can also tell what the total cost of ownership (TCO) will be per scenario (reallocate, build, buy or lease). This can guide companies in going from a single point to a network solution, which makes it possible to not only reshuffle capacity locally, but also either to balance an entire network in the whole region by considering extra transportation costs or to adapt it by increasing or decreasing the storage capacity.
Furthermore, it should be possible to calculate the variance in forecasts and actual data. As stated before, in industries subject to a volatile R&D pipeline, where more and more products require cold chain storage and distribution, managing your freezer capacity both in the short-term (0-2 years) and in the long-term (3-10 years) is a must. This is where setting up a solid contingency and backup plan is necessary, in case of failure or extreme peaks in demand, decreasing contingency costs and increasing capacity optimization by determining the right level of safety stock, for example.
So, are you planning to make the most cost-efficient decisions when it comes to your long-term freezer capacity asset management? Do you want to gain insights into your freezer capacity needs in 8-12 weeks? Get in touch & let’s talk!