@Roland Gander (Novartis)

And the strength needs to be designed, and it needs to be intelligently designed. And this is how we see this also at the Vardis, and this is how we structure our work in order to become more resilient, that in the future we can keep our level of reliability, even if the world has changed dramatically.

Now let's learn and recap just a little bit what the drivers are for this change actually for us. And we all know, and this is nothing new for you, a few years ago we had that great experience during the pandemic that overnight we were sucked into a kind of a global experiment where supply chain rates were disrupted immediately, and we needed to develop very quickly a new way of work, which was by the sustain of the change overall.

But since then, many more things have happened, and we have geopolitical instability all over the place. We know what the disease

We currently very much in the Middle East, but there are more conflicts going on. have still the war in the Ukraine.

We have threats in different other areas of the world, which in the end are a threat for our cost basis, because they will drive up energy costs and inflation, and ultimately overall also for our materials, but they also pose a risk for our logistics and our supply risk.

Third one, policy fragmentation. Going a little bit along with geopolitical changes, countries, nations, and regions are more and more turning into protective race, how they want to drive their economy, rather than highly connected global race.

The consequence for us is that there is a lot of pressure on the price for us, because budgets are under pressure, and tariffs are implemented.

But at the same time, we also see that... From a regulatory standpoint and also from a political standpoint, the will to help us to bring innovation through launches quickly to patients is something that is not always standing on top of the agenda.

So this is also a threat to us that it takes really, really long from your investment in R&D, developing your products, going through things into studies, getting them even approved, but launching them and getting them to the first patients.

Fourth one, and that's the last one I wanted to mention, is one that is not so much with a negative touch.

It is that over the last few years, of course, we also developed new products. We developed new medicines, new therapies that came along in very many of those instances with more complex technology that needed to be applied.

And with complexity and supply chain, thinking about on-demand medicines. Now, taking all of that together, we think at Novartis, we took an approach that we separated our strategy to stay reliable, but changing our way of taking more strength into our resilience into two parts.

The first part, we call the foundations. This is more or less everything that we are doing on a day-to-day basis, which is keeping our house in order and creating a kind of a baseline strength for us and for our manufacturing networks.

First and foremost to mention, to be mentioned here, is of course the quality and compliance piece. We all know that if we have quality defects, big deviations from regulations or even recalls, this disrupts your supply chain modalities and your ability to supply immediately and can have a big impact.

Thank you, actually, on your strengths to be reliable. Second one, also very important, workplace safety and well-being. This is going along with the ability of your people, your teams, to stay engaged and motivated over a long time to retain your talents, which are key for everything that you are doing.

And I think there is an obligation that everybody who works in our factories is leaving the factory every day in the same health condition as they have arrived in the morning.

On the mid to long term, of course, we also need to take care about their well-being on a different level.

This is why we wanted to mention this here in the market of Ghost Foundation. Third one, this is one which is often very much debated about, but for us it is clear that environmental sustainability is actually a mandatory obligation for farmers.

industry overall. We are not just responsible for making our patients more healthy. We also want to play our part that we keep also our planet healthy.

I want to give you some examples for that because at Novartis we really take care of that and we have put the focus on it very much.

So for us, we took 2016 as our general reference here for all the numbers that are relevant in terms of environmental sustainability.

And already last year in 2025, we have been able to reduce 75% of our scope one and two carbon emissions across the whole network.

A lot of that has been achieved by diligently working to replace non-renewable fuel sources that were needed to add energy sources to electricity and switching to electricity sources that are coming from its renewable sources.

you. Thank In the end, this means now 75% that we have already, now at the moment, a lot of our manufacturing campuses working totally net zero on scope one and two.

And the journey will go on. There are precise plans, there's a strategy to achieve net zero in all three scopes of carbon emission by 2014.

But that's not all. We have also taken care of in an incremental reduction of the waste we are producing, of the plastic we are using in our products, and on the water consumption that is needed for our manufacturing processes.

Next, foundational principle, and that's a very obvious one. Talked already about it. This is all about that reliability that we want to have.

It's actually the supplier to be every time and in full able to provide your medicine and therapies. As I said, it's more and more unpredictable what is actually needed and where and how to get into there.

So it needs to be on a daily basis. You need to be able to change your plans in order to be able to reach customer service levels for consecutive years of more than 99.5%.

There is a lot of effort in it. Sometimes this also has some down times and means investments into it if you have for some regions or some products to build up your safety stock.

But in order to minimize that negative effect, you could always look into making it in a very detailed manner, not just applying one kind of benchmark number for your safety stocks, but looking into different products and different variants of products for different regions and define safety stocks, maybe even being built up in those...

Or dual sourcing is also one of the tools that can help you internally. You have more supply points if you run into problems to get the products out from one.

You have another one that can send you. Fourth one, cost competitiveness. As a matter of fact, your cost competitive is a central aspect of your strength to be reliable.

It creates efficiency. It creates productivity. And in the end, this also makes you able to have freedom to operate.

However, it needs rigorous benchmarking. And I think the most important thing is a cultural change to cost competitiveness, to have a net sector attitude in all your team members that are affected.

Thanks. By spending money, actually, to make them their own office in order to reach better levels of their possibilities.

So if we call this the first category of resilience, those foundations, they are followed up by amplifiers and enables that even make you better in your resilience in the future.

First one, it's directly connected to your manufacturing processes, and you can have different ways how you improve them. Either on the direct process side, you can use new technologies that are arising on the market, like AI and robotics.

You can use automation of other means. All of that portfolio helps you to get better, to increase your needs, to decrease your downtimes.

But one thing is very important. If you strive for the best possible... end-to-end solution, this might not always be the best thing to do because it takes very, very long to find your right design, to find the right partner, company, and supplier for your solution.

And maybe it's also complicated to implement it if you want to touch everything right first time. And when you have done it, technology development has already progressed so much that eventually there is already something new on the market that will be even better.

So for us, it is more important to focus on the time to implement and get to the new types of things rather than having a full-blown 100% suit.

giving you an example, I can only mention one, but as I said, there need to be hundreds of them in order to be really end-to-end effective in the EPS.

But this is, I think, a very... If you're in the field of thin and finish operations, especially nowadays with many of the new products that have as primary containers, wires or pre-fill syringes, you know you need to do 100% reserve inspection, which for a very long time we did in a manual way, which is a very time-consuming and tedious work.

You need highly qualified people, but for a very repetitive work. retention is always a problem. You have long training times for them.

And in the end, it's also human variability that plays a role, so that one is judging about the defect, maybe a little bit different than the other one.

And in the end, it's also quite slow compared to the capabilities of your thin engines. So optimizing this in a kind of a package solution to have machine learning helping you to reduce that force.

We were even able to drive this down from 10 to 30 percent, down to 2 to 3 percent, which is a massive step, by lifting up product quality overall, but also increasing that equipment utilization rate by almost a third, because you can now match and align the speed of your whole operation in your feeding, your wizard inspection, and your final packaging, was really a big step forward.

And the essential thing was that we, from the very beginning, try us to have this, yes, hybrid fit in one site.

As soon as we have the proof of concept that it works, we have it designed in a way that we can easily scale it on to the others as well.

Another example coming from the biotech world, we have created a real-time data analysis. This is the center for self-pulture processes.

We know self-pulture processes, based on biological processes, have still a lot of unknowns in every aspect that is happening inside the form of biorelip.

So with impact on your performance in yield and success rate of your product branches. What we did is we have fed hundreds of data points from different sensors of the manufacturing equipment itself, but also process parameters and even inputs from our raw materials and analytical data in order to have the system make a performance prediction in one single product that is directly compared to our goal in that.

So the first advantage you have out of that is that your operators immediately see when that curve is deviating actually from the curve of the golden batch, and the system gives you immediately also

And inside of the most probable group cost rates so that we can eventually steer against the project significantly. Next step will be that the system itself, with the boundaries of your process parameter ranges, is able to adjust in order to keep it on track.

Finally, boost up your yields and keep your success rates at very high level. Coming to the second category of enablers and amplifiers for resilience, going to cost leadership.

And this is something, yes, that's very blunt. It starts with your external spend, your logistic costs, your personal costs, how many people do you need, and all those aspects.

And there are often also some factors in it, which you do not have fully in your control to be changed and optimized.

Or there is a high risk of it. So we thought we start with the things that we have fully in our control and where we don't think we have a lot of risk between it.

And there are actually some risks for it. One that I brought to you here today, if you look at the top part of the slide here, that's a kind of a normal manufacturing kind of a production line.

You produce your product A, you need to stop when you have your campaign ended, you change over and take out the stuff from product A to be able to prepare for product B, and you produce that one.

Then after product B campaign has ended, you later need to go into a preventive maintenance phase and then creating downturns.

And because you're an innovator and you have sometimes bad luck in clinical readouts of your R&D pipeline, the next product even was canceled and you run.

So we said, hey, we really want to do something about that. We want to use our assets in the best possible way.

So on the bottom part, you see what we did. We, step by step, we tried to make that changeover more and more shorter, even trying to have overlap of changeover activities with already starting the next product in the first part of the CDP, while the second part is taking the changeover phase.

Having also intelligent systems and preventive maintenance principles defines the principle to reduce the maintenance time overall, trying to have sensors that detect failures of equipment before it actually happens, so that it can spread out and try to stop the clock of your manufacturing lines and not having maintenance slots overall.

We'll look for it. Making them very short. And finally, we also thought, why not enlarging our portfolio if we have risk in our portfolio and volumes?

Because we have to be prepared for development and pipeline products, which eventually will fade before they come to us.

Let's open up and partner with other companies that have other demands and use our capabilities together, acting as a sort of a CMO to keep your manufacturing nice one.

Next one. I don't think it starts. Next one is a specific example for something that is very relevant for all of us who are pioneering in new fields of medicines and services.

We started with cell and gene therapies. Recently, we stepped also into radio-fiction therapies. I didn't mean the first time.

It's not on a global scale to supply our products in that modality. Radiolizer therapy is characterized by quite a complex manufacturing process that is needed, a radioactive compound, and a very short half-life of your product, meaning that you need to write your planning on an on-demand system.

So when a patient is scheduled from the hospital, you get your signal to produce the batch, you produce it, and you need to bring it from your factory to the hospital within a few hours.

That brings a lot of complexity, and when you start off with that technology, you are not very reliable, and you are not very resilient, because there are many, many unloads and many firefighting things going on.

So we learned it is very important to really lay down all the filters of There are steps in between until the patient gets his treatment in order to reach at least 99% of all treatments being on time at the patient.

And yes, we heard it also before, I realized there are sometimes you need to also look into make versus buy decisions for critical components of raw materials.

In this case, it was isotope production that we needed to insource because it was very hard to find a supply partner and a network that was in the same pace of that modality being also on demand to deliver the isotope.

And in the end, it's also about when the batch leaves your factory to get to the hospital, you need to have a 24-7 GPS automated tracking of the batch at the airport, making sure it is really good on the cargo plane and having a plan E because if you fail to deal...

Delivering that time window, the patient has to be sent back home, which is very bad. So, lots of components, and the message behind this, even if you are in a pioneering field, don't underestimate that we need to try to get it right first.

And finally, and that's the biggest enable on an amplifier, is our group. That's the center of everything they are doing, and we need them to be skilled and engaged, and understanding also the needs, how to get them to that reliability.

Because they are the ones actually who are coming up with that creativity, who are implementing their labors, and also working on those foundational things, and who need to develop them even further.

So, I think it's that part of the leadership of each company that needs to take care of that as well.

And the outcome is that on both ends of your reliability and your resilience journey, you can see the box.

If everything works out, if it's a hard way to get there, then it's something that will actually never stop.

But by having then your house in order and your strong fundamentals in place and having a perfect pipeline for your accelerating enablers, you will be able to be a very reliable and you will that for your patients and your customers and deliver every time you need.

Thank you very much. Got it clear? No, Slido. Yeah, I do. If anyone would like to ask Roland a question, do we have any questions for Roland?

Slido. Slido. Oh. Good job. I don't know. Sorry to You I'm sorry to interrupt. And now we are moving into our final session of the day, Digitally Enabled Resilience.

Please welcome Apochid Gaget, Associate Professor of Supply Chain Management at the School of Management Apochid. Thank you. My name is Dr.

Avigaraj. work for the Legal Center at School of and Supply Chain Management at Crankham University, where we are very fortunate in the School of and Supply Chain Resilience.

So what I'm really talking about is the two key messages is we have talked enough of Supply Chain Resilience.

But let's really look at this problem from a holistic resilience perspective and what should be a structured approach to really digitally transforming your supply chains, along with the second key message is how can you actually establish yourself in terms of the digital maturity framework and progress one stage to the subsequent stage in the digital transformation maturity model.

So let me start with the fundamental platform of the building blocks for digitally unequal resilience. We are currently in the age of polycrisis.

Why I'm calling it as polycrisis is the risks what you see here on the screen are nothing new. We have been seeing these indirectly in terms of the climate change.

We are seeing this growing in terms of the cyber security as well as in terms of panics as well as the

So what is really key in terms of an interesting fact is that these risks are not coming independently. They are coming simultaneously with an increase in the frequency as well as the impact.

So we see this problem particularly as a holistic problem and how can we actually address this particular resiliency problem using digital transformation as an approach to doing it.

Now let me get back to a bit of the evolution of supply chain. The conventional supply chain is having far more siloed and fragmented.