Categorizing Production Planning Uncertainty

Clinical Uncertainty

•Will the FDA approve our IND/NDA/etc., and by when?
•Will the product end up being safe and effective after clinical testing?
•What will it take to achieve our projected enrollment targets and schedule?
•How will global regulatory requirements impact our trial?

Commercial Uncertainty

•Will the expected market demand materialize?
•How accurately can we forecast demand in collaboration with Commercial Operations?
•Do we have adequate demand and supply planning processes?
•What unforeseen market (upside or downside) events could impact our supply planning?

Operational Uncertainty

•How do we plan and budget given the uncertainty?
•Do we have the manufacturing capacity (either in house or outsourced) to meet demand?
•Can production be scaled effectively to meet demand?
•How stable are our suppliers (raw material to production)?
•What if unexpected manufacturing or supply issues arise?

Regulatory Uncertainty

•How can changes in global regulations change the production planning picture?

Tools for Tackling Uncertainty in Production Planning

[i][COLOR=“blue”]Scenario Planning: This considers several possible future states and enables comparison without the need for sophisticated analytics and resources

Decision Tree Analysis (DTA): Tree-like analysis of decisions and their possible consequences, including chance event outcomes, resource costs, and utility

Discounted Cash Flow (DCF) and Net Present Value (NPV): Methods of valuing a project, company, or asset using the concepts of the time value of money, estimated and discounted to give their present values

Expected NPV (eNPV): Scenarios are defined to represent different outcomes, and each scenario is assigned a probability. A net, combined expected value is computed.

Simulation Modeling: Uses sophisticated analytics and resources to quantify the degree and range of uncertainty when multiple variables interact. Monte Carlo simulation is one such example.

Real Options Analysis: Moves beyond understanding risks, to develop flexible plans that can shift as conditions change, assuming a dynamic series of future decisions[/color][/i]