“The Americans put a man on the moon in less time than it takes us to transfer a product between countries – this has to change,” says Luiz Barberini, who leads External Manufacturing for Bayer Consumer Health across Latin America.
Luiz Barberini combines over three decades of pharmaceutical supply chain expertise from roles at Pfizer, Merck and now Bayer with academic positions at Brazil’s leading business schools. His unique perspective spans both practical implementation and theoretical frameworks for supply chain excellence.
In this exclusive interview with PharmaSource, Luiz shares why pharmaceutical companies must fundamentally transform their approach to supply chain management, offering practical insights on breaking down organisational silos, accelerating time-to-market, and building collaborative supplier relationships in an increasingly complex global landscape.
Breaking Down Traditional Silos: Bayer’s New Operating Model
The traditional pharmaceutical operating model, with its separate departments working in isolation, is becoming increasingly obsolete. “Even today, most companies work in silos,” explains Luiz. “The Sales and Operations Planning concept was introduced to make different areas better interact, yet we still see competing departmental targets.”
“Procurement might have a 5% cost reduction target, while production aims for 10% inventory reduction. These targets aren’t complementary – they compete. Companies say ‘we are one team,’ but different targets tell another story.”
To address this challenge, Bayer has implemented what Luiz calls a “virtual team” model: “External manufacturing leads procurement, technical, quality, and supply chain areas. While they maintain their organisational reporting lines, we manage suppliers together as one team.”
Regional Autonomy: Delivering Market Responsiveness
One of Bayer’s most significant recent changes has been moving from a global to a regional external manufacturing structure. “What works in Brazil might not work in Ukraine or Thailand,” Luiz explains. “We need to understand different mindsets and cultures. One solution does not fit all.”
“The way we do business, approach customers, and sell our products varies significantly between regions. Some cultures are more aggressive in selling concepts, while others reject such approaches. Even within Latin America, different countries have their own pride in products and processes.”
The Paddle Ball Principle: A New Approach to Supplier Relationships
Luiz introduces an innovative analogy for supplier relationships using beach paddle ball: “Unlike tennis, there’s no net in paddle ball. The objective isn’t to defeat your opponent but to keep the game going by giving good balls to your partner so they can return good balls to you.”
“Many companies say ‘let’s send this to our supplier and wait for a solution.’ That’s like giving a bad ball and expecting a good return. Instead, we should ask: How can we help them with better forecasting? How can we understand their cost pressures? How can we modify our processes to reduce their costs?”
Dynamic Shared Ownership: Accelerating Decision Making
To address the industry’s traditionally slow pace, Bayer has implemented what they call the Dynamic Shared Ownership program. “We work in 90-day cycles, giving autonomy to smaller groups to make quick decisions,” Luiz explains. “This is revolutionary for an orthodox German pharmaceutical company, but it’s necessary for modern market demands.”
2025 Outlook: Critical Challenges Ahead
Looking ahead, Luiz identifies several critical challenges:
- Global Complexity: “We have 16 ongoing conflicts affecting global logistics. No aircraft can fly over Ukraine, affecting air traffic patterns and supply chains.”
- Sustainability Imperatives: “The pharmaceutical industry produces 4.4% of global CO2 emissions. Consider this: a 747 aircraft transports just 56 litres of vaccine, with the rest being packaging materials.”
- Generational Transformation: “We’re receiving Generation Z into our business. These brilliant minds think differently than we do. Companies must be prepared to adapt their processes to new mindsets while maintaining core supply chain principles.”
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