AstraZeneca Operations & Supply Chain

AstraZeneca is a renowned global biopharmaceutical company headquartered in the United Kingdom, widely recognised for its commitment to pioneering scientific advancements and the development of innovative therapies. Operating in over 100 countries, AstraZeneca focuses on addressing complex medical challenges in therapeutic areas such as oncology, cardiovascular, renal, and respiratory diseases, aiming to improve patient outcomes worldwide. The company’s success in the competitive pharmaceutical industry is deeply rooted in its emphasis on operational excellence, which enables it to deliver life-saving medicines efficiently and maintain high standards of quality and service.

Figure 1 - AstraZeneca Logo

Source – (Vivli, 2024)

Central to AstraZeneca’s operational strategy is its investment in advanced manufacturing and a robust supply chain framework. The company has embraced digital transformation through smart factory technologies, AI, and data analytics, allowing for real-time monitoring, predictive maintenance, and improved synchronisation of production sites. These efforts have significantly enhanced production efficiency, achieving a 44% reduction in lead times and a notable increase in productivity (AstraZeneca, 2023). This technological integration has also enabled AstraZeneca to navigate global disruptions, especially during the COVID-19 pandemic, ensuring uninterrupted supply and high service levels. Furthermore, AstraZeneca's dual supply chain strategy has played a crucial role in maintaining operational resilience. By creating parallel supply networks and partnering with regional manufacturers, the company has been able to respond flexibly to challenges like material shortages and logistical constraints. This report delves into AstraZeneca's key drivers of operational excellence, emphasising the impact of digital transformation and supply chain innovations, while proposing recommendations to strengthen its competitive advantage in the global market.

Evaluation of Two Key Drivers of Operational Excellence

Driver 1: Digital Transformation

Smart Factories: AstraZeneca has significantly invested in digital transformation to bolster its manufacturing processes, primarily through the development of smart factories. These facilities integrate advanced technologies like real-time data visualisation, AI-powered solutions, and digital twins to enhance the synchronisation of production sites. For example, the company’s efforts at their manufacturing site in Wuxi, China, have led to substantial operational improvements. The application of over 30 digital tools and AI solutions at this site has resulted in a 55% increase in production output and a 44% reduction in lead times (sarahrudge, 2024). By implementing digital twins and predictive analytics, AstraZeneca can simulate manufacturing processes to identify bottlenecks and optimise production flow, leading to a remarkable 54% productivity improvement.

Smart factories have also played a crucial role in AstraZeneca’s response to global supply challenges, such as those experienced during the COVID-19 pandemic. The real-time end-to-end visibility into demand, inventory, and production status across different sites has allowed AstraZeneca to adapt quickly to changes, ensuring that their supply of medicines remained uninterrupted even in challenging circumstances (AstraZeneca, 2024). This capability is further enhanced by data visualisation dashboards that provide on-ground teams with the insights needed to make timely, patient-centric decisions. AstraZeneca’s digital lighthouses, including their advanced sites in Sweden and Wuxi, serve as innovation hubs for testing and scaling new digital tools, which can then be implemented across their global operations.

Digital Building Blocks: AstraZeneca’s digital transformation strategy includes the implementation of "digital building blocks," which consist of a suite of Lean digital products designed to improve manufacturing and process control. These building blocks are developed and tested at key sites, allowing the company to validate their impact before scaling them across the network. For instance, the digital lighthouse sites in Sweden have seen improvements in efficiency and safety through the use of paperless solutions, advanced analytics, and real-time data integration (Knoll and Wonodi, 2020, pp. 72–74). This strategy enables AstraZeneca to reimagine how they supply medicines by making these digital solutions reusable, flexible, and scalable, driving greater value across their operations.

AstraZeneca’s focus on smart factories and digital building blocks has positioned it as a leader in the adoption of Fourth Industrial Revolution (4IR) technologies. The company's manufacturing sites in China and Sweden have been recognised by the World Economic Forum (WEF) as part of the Global Lighthouse Network, showcasing AstraZeneca’s excellence in leveraging digital transformation for operational efficiency (AstraZeneca, 2021). These sites set a benchmark for the pharmaceutical industry by demonstrating how digital innovations can be effectively scaled to enhance productivity and supply chain resilience.

Driver 2: Dual Supply Chain Strategy

Resilience During COVID-19: AstraZeneca’s dual supply chain strategy has been a key driver of its operational resilience, particularly during the COVID-19 pandemic. Unlike traditional single supply chains, which proved vulnerable to disruptions during the pandemic, AstraZeneca’s dual approach enabled the company to maintain parallel operations. This strategy ensured that if one supply chain network faced disruptions due to lockdowns or transport restrictions, the other could continue to operate and meet global demand (World, 2022). For instance, during the pandemic, AstraZeneca navigated more than 100 unplanned global events, including severe weather conditions and logistical challenges in international shipping lanes. This dual supply chain model was helpful, especially during the distribution of AstraZeneca’s COVID-19 vaccine, AZD1222, which made AstraZeneca decentralise its manufacturing and partner with local producers across various locations so as to guarantee supply Chain continuity even if raw material supply was inconsistent (AstraZeneca, 2019). This strategic change not only responded to such challenges but also highlighted a new way to create a more robust and adaptive supply chain for the pharmaceutical company.

Geographic Diversification: The second major factor that AstraZeneca has put in place to sustain the dual supply chain strategy is geographic diversification. Production centres have been set up in different areas so the company can address disruptions in given regions and effectively cater to demand in specific locations. For instance, the company was in a position to partner with local manufacturers, Increase the capacity to produce vaccines and avoid supply chain constraints (AstraZeneca, 2024). This strategy proved particularly effective during the pandemic, as it enabled the company to maintain a high service level of 99% despite the global volatility in supply chains. Moreover, AstraZeneca’s decentralised supply network is not only about resilience but also aligns with their sustainability goals. By producing closer to demand regions, AstraZeneca can reduce transportation emissions and improve the overall carbon footprint of its operations. The company has made strides towards becoming carbon negative by 2030, leveraging local production as a way to meet sustainability targets while maintaining supply chain efficiency (State of Flux, 2024).

Analysis and Evaluation of Effective Delivery Systems

Model: Lean Manufacturing and Process Control

AstraZeneca’s commitment to operational efficiency is evident in its integration of Lean manufacturing principles within its digital transformation strategy. The company’s Lean digital products and smart factory initiatives have significantly improved production processes, reducing waste and enhancing productivity across its global operations. Key sites, such as those in Wuxi, China, and Södertälje, Sweden, serve as "Lighthouse" sites, where innovative digital solutions are developed and tested before being scaled across the global network. Lean manufacturing at AstraZeneca emphasises continuous improvement and waste reduction (AstraZeneca, 2019). The company employs advanced analytics and AI to monitor production in real-time, using digital dashboards to visualise data and optimise workflows. This approach has led to notable improvements in production efficiency, including a 54% increase in output and a 44% reduction in lead times. For instance, the Wuxi site has utilised more than 30 digital tools, resulting in better synchronisation of production processes and a significant reduction in non-perfect batches by 80%. Such enhancements allow AstraZeneca to maintain high standards of quality while achieving faster throughput, ensuring that medicines reach patients promptly (AstraZeneca, 2021).

Moreover, AstraZeneca's emphasis on right-first-time manufacturing, achieved through real-time monitoring and digital work instructions, has minimised errors and rework. This process control capability ensures that the company can maintain its 99% customer service level, even amid global challenges like raw material shortages and logistical disruptions (World, 2022). The focus on Lean manufacturing not only aligns with AstraZeneca’s efficiency goals but also supports its sustainability objectives by reducing resource consumption and waste.

SCOR Model Application

The Supply Chain Operations Reference (SCOR) model is a valuable framework for analyzing AstraZeneca’s supply chain performance. This model outlines six key stages: Plan, Source, Make, Deliver, Return, and Enable.

Figure 2- SCOR Model

Source - (Perspectives on Various Issues of Interest, 2024)

Plan	AstraZeneca’s planning process is heavily data-driven, using predictive analytics and AI to forecast demand and optimise inventory levels. This approach allows the company to adapt quickly to changes in global demand, as seen during the COVID-19 pandemic when it managed to navigate over 100 unplanned global events. Through digital integration across its network, it is possible that production plans match the current market needs to avoid excess production or inadequate stocks.
Source	One of the essential principles of the company’s sourcing strategy is the building of stable partnerships with key suppliers within the frame of the iProcure concept. This particular approach categorises suppliers by their total spending and their relative importance to the business, which guarantees that the firm obtains adequate supplies of essential input materials. Thus, the general theme of supplier collaboration helped AstraZeneca to obtain the necessary inputs during the pandemic when shortages were observed in many countries.
Make	Significantly more has been paid off during the “Make” stage, and all thanks to the company’s investments in digital technology and automated systems. The application of AI solutions and digital twins has improved operational productivity, and the company will manufacture more than 26 billion tablet and capsule packs in 2022 (Maria Deloria Knoll and Chizoba Wonodi, 2020). The digital tools implemented at key sites, like Wuxi, have increased manufacturing agility, allowing AstraZeneca to adjust production volumes quickly in response to market needs.
Deliver	In terms of delivery, AstraZeneca’s dual supply chain model has been instrumental in maintaining a robust distribution network. This model allows the company to operate two independent supply channels, reducing risks associated with single-source dependencies and enabling continuity of supply even during disruptions. This capability proved essential during the pandemic when the company had to adapt rapidly to regional lockdowns and transport restrictions.
Return	The return process in the pharmaceutical industry is complex due to stringent regulations. AstraZeneca has streamlined this process through advanced tracking and digital documentation, ensuring compliance with regulatory requirements. By digitising the reverse logistics process, AstraZeneca minimises waste and ensures that any returned products are handled efficiently and in accordance with safety standards.
Enable	The “Enable” stage focuses on the digital tools and technologies that support AstraZeneca’s supply chain. The company’s digital lighthouses play a pivotal role here, serving as innovation hubs that facilitate the testing and scaling of new digital solutions across the global network. These sites, like those in Södertälje, Sweden, demonstrate the value of AI and machine learning in improving process efficiency, reducing development lead times by 67%. The integration of digital solutions enables better synchronisation of activities across AstraZeneca’s supply chain, contributing to its overall operational excellence.

Recommendations to Enhance Supply Chain Operational Excellence

Expand Digital Twins Across All Sites: AstraZeneca’s current use of digital twins has proven effective in optimising production processes, particularly at key sites like Wuxi in China and Södertälje in Sweden. By implementing AI-based digital twins across all major production facilities, AstraZeneca can further reduce lead times and enhance predictive maintenance capabilities. Digital twins allow the simulation of manufacturing processes, identifying bottlenecks and areas for improvement before they impact operations. For example, at the Wuxi site, these technologies contributed to a 44% reduction in lead times and a productivity increase of 54%. Expanding these capabilities to additional sites would provide a more consistent and efficient production process across the entire network, ensuring that any potential supply chain disruptions can be addressed proactively (Knoll and Wonodi, 2020, pp. 72–74). This approach would not only enhance AstraZeneca’s flexibility but also improve the overall synchronisation of its global operations.

Increase Supplier Collaboration: Strengthening partnerships with critical suppliers is vital for AstraZeneca to maintain a stable supply of raw materials, particularly for high-demand products like vaccines. The company’s iProcure methodology focuses on long-term engagements with key suppliers, ensuring that critical inputs are secured even during periods of global uncertainty, such as the COVID-19 pandemic. Expanding this strategy involves deeper collaboration with suppliers, including shared sustainability goals and the integration of advanced data-sharing technologies. By engaging 95% of its top suppliers with science-based targets, AstraZeneca can improve the quality and reliability of data throughout its supply chain, making it easier to track progress against Scope 3 emissions reduction goals (AstraZeneca, 2021). Additionally, by fostering closer relationships with suppliers, AstraZeneca can better manage risks like raw material shortages and fluctuations in supply, thus maintaining its high service levels and production continuity.

Focus on Sustainability in Operations: AstraZeneca has made significant progress toward its sustainability targets, including the Ambition Zero Carbon program aimed at becoming carbon negative by 2030. To further these efforts, the company should implement energy-efficient practices across all production sites, similar to the solar-powered facility in Mount Vernon, Indiana, which meets 10-15% of its energy demand through on-site solar installations. Expanding such initiatives to other facilities would reduce AstraZeneca’s Scope 1 and 2 emissions, which currently make up 84% of its operational greenhouse gas emissions (World, 2022). Additionally, increasing the use of renewable energy sources and improving energy resilience would contribute to reducing the company’s overall environmental footprint. Emphasising sustainability in the supply chain also aligns with AstraZeneca’s broader corporate goals and enhances its reputation as a leader in environmentally conscious manufacturing. By partnering with suppliers that have set their own science-based targets, AstraZeneca ensures that its sustainability efforts are mirrored across its entire supply chain, driving industry-wide progress toward carbon reduction (AstraZeneca, 2019).

Invest in Advanced Supply Chain Analytics: AstraZeneca should further invest in advanced supply chain analytics to optimise decision-making and enhance overall supply chain visibility. By leveraging big data, machine learning, and AI-driven analytics, the company can gain deeper insights into demand forecasting, inventory management, and logistics optimisation. For example, predictive analytics can help anticipate shifts in demand, allowing AstraZeneca to adjust production schedules and inventory levels more accurately. This approach minimises the risks of stockouts or excess inventory, which can be particularly crucial for high-demand products like life-saving medications and vaccines (Astrazeneca.com, 2024). Advanced analytics can also improve transportation and distribution efficiency by analysing real-time data on shipping routes and delivery performance, reducing transit times and logistics costs. Additionally, data-driven insights can support AstraZeneca’s sustainability goals by identifying opportunities for reducing carbon emissions across the supply chain. By integrating these analytics into existing digital systems, AstraZeneca can ensure that its supply chain is not only resilient but also agile enough to adapt to market changes and disruptions, ultimately supporting the company’s mission of delivering medicines swiftly and efficiently to patients around the world.

Conclusion

Conclusively, every aspect of AstraZeneca’s strategic planning has centred on digitalisation and a sound supply chain, making the company the benchmark for operational innovation in the biopharmaceutical industry. The company’s digital twin, therefore, involves linking the intelligent factories with the digital twin across the critical locations of the business to provide a more efficient production line through the decrease of the lead time and the management of the process. Such a digital environment allows AstraZeneca to act more flexibly while the market conditions are changing all the time. The second-line supply chain approach is one of the strategic pillars of the company’s stability since it has two supply chains operating at the same time to guarantee continuity of supply in the event of factors such as the COVID-19 pandemic. This approach helps to overcome regional problems while drugs get to patients without any interruptions. Another example of sustainable management at AstraZeneca is Ambition Zero Carbon, which plans to decrease the company’s environmental impact while also keeping it efficient. This strategy is also consistent with the company’s conceptual framework of its large-scale vision, and it will help the company become a contemporary and competitive actor in the sphere of delivering pharmaceuticals. The recommended strategies, which include further utilisation of digital twins, developing cooperation with suppliers, and pursuing sustainably oriented strategies, are intended to improve the company’s capacity to handle supply chain risks and challenges even more. These initiatives cannot only help AstraZeneca deliver the doses safely and of high quality but also help portray the party as an environmentally conscious manufacturer. With these explanations and such future challenges in mind, AstraZeneca is capable of satisfying present and future needs in an unsteady and competitive environment by developing new operational strategies.

References

AstraZeneca (2021). AZD1222 US Phase III trial met primary efficacy endpoint in preventing COVID-19 at interim analysis. [online] Astrazeneca.com. Available at: https://www.astrazeneca.com/media-centre/press-releases/2021/astrazeneca-us-vaccine-trial-met-primary-endpoint.html# [Accessed 9 Oct. 2024].

AstraZeneca (2023). Developing a global supply network fit for the future. [online] Astrazeneca.com. Available at: https://www.astrazeneca.com/what-science-can-do/topics/technologies/developing-global-supply-network-fit-future.html [Accessed 9 Oct. 2024].

AstraZeneca (2024). Two manufacturing sites join WEF Global Lighthouse Network. [online] Astrazeneca.com. Available at: https://www.astrazeneca.com/media-centre/articles/2024/global-operations-digital-ai-wef-lighthouse.html [Accessed 9 Oct. 2024].

Astrazeneca.com. (2019). Operations. [online] Available at: https://careers.astrazeneca.com/business-area-operations [Accessed 9 Oct. 2024].

Astrazeneca.com. (2024). Delivering on commitments & ensuring global efficiency. [online] Available at: https://www.astrazeneca.com/our-company/our-people/operations.html [Accessed 9 Oct. 2024].

Liu, A. (2024). AstraZeneca plans independent drug supply chains for US and China, CEO says. [online] Fierce Pharma. Available at: https://www.fiercepharma.com/manufacturing/astrazeneca-builds-separate-drug-supply-chains-us-and-china-ceo-says [Accessed 9 Oct. 2024].

Maria Deloria Knoll and Chizoba Wonodi (2020). Oxford–AstraZeneca COVID-19 vaccine efficacy. The Lancet, [online] 397(10269), pp.72–74. doi:https://doi.org/10.1016/s0140-6736(20)32623-4.

Perspectives on Various Issues of Interest. (2024). Applying the SCOR model to improve supply chain performance. [online] Available at: https://www.anandnair.com/nairblog/2017/03/applying-the-scor-model-to-achieve-control-in-the-midst-of-chaos.html [Accessed 9 Oct. 2024].

sarahrudge (2024). Supply Chain World. [online] Supply Chain World magazine. Available at: https://scw-mag.com/news/inside-astrazenecas-dual-supply-chain-approach/ [Accessed 9 Oct. 2024].

State of Flux. (2024). AstraZeneca. [online] Available at: https://www.stateofflux.co.uk/ideas-insights/case-studies/astrazeneca [Accessed 9 Oct. 2024].

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World (2022). The Oxford/AstraZeneca (ChAdOx1-S [recombinant] vaccine) COVID-19 vaccine: what you need to know. [online] Who.int. Available at: https://www.who.int/news-room/feature-stories/detail/the-oxford-astrazeneca-covid-19-vaccine-what-you-need-to-know [Accessed 9 Oct. 2024].

Operations and Supply Chain Management at AstraZeneca

Table of Contents

Table of Figures

Introduction