 Welcome to MIT Supply Chain Frontiers from the MIT Center for Transportation and Logistics. Each episode features center researchers and staff or experts from the field for in-depth conversations about business, education, and beyond. Today, Center Director Professor Yossi Sheffi speaks with Paul Grenadillo, Senior Vice President of Global Supply Chain at Moderna. Excerpted from the MIT Scale Network Winter Speaker Series, Yossi and Paul respond to a variety of questions about managing complex and constrained supply chains during exceptional times. Take it away, Yossi. Welcome Paul. The ability to quickly adopt production line to changing demand is one key to Moderna's success. How do you ensure that the supporting supply chain and many links and the sourcing demand planning is agile enough to keep up with the really amazing flexibility of the manufacturing process? Well, I'll take us back a little bit into 2020. As the pandemic started to unfold, we initially set a target amount of doses that we wanted to produce. And this was us as a small company saying, how can we contribute? What is what we can set as an initial milestone? And so we set a milestone of 100 million doses, which at that point in time seemed like... Not a lot. I mean, we had probably in our company's history produced tens of thousands of doses over 10 years in clinical programs. So this was a very, very significant statement. And so with that assumption, we started looking first at, okay, we need to figure out which supplies we need. Where are we constrained? How do we then work with those constrained suppliers to understand their capabilities to scale up, scale out, get CMOs to help them in producing more of the critical supplies we have? And it has been an incremental journey since that point in time at the beginning of 2020, probably up until around the middle of 2021, when we probably had the last significant push to get to the types of volumes per year that would match the production capabilities that we brought online. What's your production capability now? How many are you making? So our production capability as we go into 2022 as an example is between two and three billion doses of capacity. Last year we distributed a little bit over 800 million. Pretty remarkable considering September or October of 2020, our high-case scenarios were in the 400 to 500 million dose range. So we really, really surpassed what we even had set out as our goals, even in the fall last year. Okay. 2020. That's an obvious question. How do you do it? How can one scale it? Because this is not software development, this is making something really, how do you scale it? Yeah. So it was definitely a lot of team sport in this. The first thing, as I was describing, me and my team were really, really focused on the sourcing aspects of this and knowing the types of materials, the quantities that we needed. Our technical teams at the same time were saying, how do we go from the scale that we have today to the 20-fold scale that we're now using in production? And where do we then find our partners who can help with that? So we partnered with Lonza, with Catalan, with other CMOs around the world who have helped us to then expand our capabilities outside of the four walls of Moderna. Now all that being said, we did have the advantage of having a clinical manufacturing site in Norwood, Massachusetts, so not too far from here, which is where we did our initial phase one, phase two, and phase three production of COVID-19 vaccine, but also we're able to repurpose a lot of that facility to become a commercial manufacturing facility. And so that's then where we're doing the majority of our drug substance production for the U.S. market anyway, and are now starting to supply to many more markets from here, in addition to what we've brought online in Switzerland for the majority of our international drug substance manufacturing. Some people may not realize what the feat it is to make the small facility that's used for research to become a production facility. This had to be planned years in advance. That's right. There was another difficulty because at the time that you were developing, or Moderna was developing the vaccine, there were 130 other companies that were developing the vaccine. There were companies that were developing pharmaceutical. They all needed a lot of the same stuff. Right. So how did you get your stuff as opposed to others? So there were certainly places in which we overlapped in supply needs from many of the other companies, and some of it did have to do with COVID, other places that simply had to do with other life-saving medication, which did put the suppliers in a very challenging position of needing to figure out how do we set the right priorities for the world in the types of materials that are needed for program A versus program B. Now the US government certainly at that point in time, with a lot of our US-based suppliers anyway, was certainly helping to set clarity in which contracts for the US government were priorities versus others and did help I think in ensuring that the right quantities of materials were allocated based on the importance of the different programs and the perceived probability of success. And one of the amazing things is the United States at the time operated like a VC. I mean they were putting money even when they were natural, which to me was one of the, was the amazing thing about Operation War of Speed. For sure. I mean Moderna got... Right, yeah, I mean that certainly funded the development of COVID-19 vaccine and at least some of the production equipment that we used to scale up the facilities. Another question that also some of the students asked, how is the pandemic-reshaped business relationship both internally within the company with your function with others, as well as with competitors, suppliers, government? Particularly for Moderna, dramatically. So my team at the beginning of 2020 as an example was 23 people. We're now 135. So, you know, in addition to just the obvious of producing vaccines, scaling up the vaccine, there has been a lot of team building talent acquisition, I'll call it, as well as expanding and shifting how we're even organized within the team. We obviously didn't have nearly as many functions and teams within supply chain when we first started. We now have people in five or six countries globally, managing between our CMOs, our country supply chain, and our global supply chain activities. And then our relationships within the company, we didn't have commercial at the beginning of 2020. That was not a function we had as Moderna. We didn't have that yet. So that has been a relationship that we've had to build and foster as our commercial colleagues have joined the company over the past year and a half. And that has been very good because in many ways, obviously with 23 people, supply chain was very, very small at that time. So we've really grown up together as we built these two key functions to have the capability that we need to start interacting with governments and supplying product. The relationship with supplier has really changed from us as a customer, supplier as a supplier that is a big box somewhere that you order stuff from to partnership. And obviously, as I was discussing in terms of the type of scale up and changes in quantities that we needed from our suppliers, the need to get very integrated in our planning assumptions, the quantities that we need, the phasing, the changes required, the touch points has really changed. So we have weekly touch points still with all of our critical suppliers. In a couple of cases, we still have executive discussions by weekly basis to make sure that we're really keeping a pulse on what's going on that we need to understand so that we can react and be in sync on the upcoming changes. Looking back over the last two years, what are the most striking lessons you have learned as a supply chain professional? How does this experience help prepare you for future challenges? Yeah, so this has been pretty amazing. So I really had had a career in production planning, process improvement, and supply planning. And coming to Moderna was kind of a leap. It was something fresh and new and something that I was hoping I could grow into. As the company grew, I could grow as a supply chain professional as well. That all just happened a lot faster than I expected it to by several years. So actually, you mentioned the Harvard program that I was doing. I was doing that right up until March of the pandemic. So I came out of this this executive program and went directly into the pandemic. So that was a nice little warm up of case studies and for for for for group studies and and and lectures to real world global situation. How do we how do we assess when we started the pandemic? It was our initial concerns were we need to make sure that our materials that we do have sourced from China are secure because we were worried about border shutdowns or or workforce issues that they would have that could lead to supply shortages for us. So that quickly turned into we're actually going after creating a vaccine and on a whole different journey. So I've had the opportunity over the past year and a half to really get much more introduction to commercial supply chain, to contract management, to global distribution, cold chain management, leadership at a whole different level. So all of these things I think have been a very obvious business acumen improvement for me and help me then in decision making, connecting dots and being able to lead the supply chain function with more confidence. It's been, you know, very, very, you know, concentrated effort of something that most people would probably need 10 years to have experience across that many different aspects of supply chain. Yeah, one can one can hope that it's once in a lifetime that we are not going to have too many of those. The pandemic and what we see now highlighted a lot of staff shortages. In general, how can the supply chain professional competing with every other professional get the talent that it needs to keep to keep growing and it looks like it will keep growing. Yeah, it has been problematic and partially if nothing else if you think about I needed to hire around a hundred professionals from experienced backgrounds, because I didn't really have time to train and go through the basic programs like you may in a normal situation. Luckily for our international headquarters in Switzerland, there has been more of an abundance of available talent because of downsizing of other pharmaceutical companies in that region, Switzerland, lots of pharmaceutical companies, there's a lot of very, very capable people who have multi market experience and I was able to really tap into my previous teams that I had worked with or who had worked for me when I was working in Switzerland. So that was very helpful in the US. It was a lot harder to find one capable individuals who were in the Boston area already or willing to move and obviously moving during the pandemic is even harder than moving in a normal situation. And so that created issues and we've had to find that balance between how much remote work are we willing to accept to make sure we get talent fast and now versus what are we willing to wait for for critical positions that need to be local. But in general, I do think that there is a growing need to continue to create more supply chain capability globally. So I think certainly since I went to university, I think I've seen a big increase in the number of supply chain programs that are available. That wasn't something that I think was as prevalent at that time. And I think between that and you know, I mentioned people now know what supply chain is. I hope that that also then gets more students interested in what is supply chain. Is there a career potential for me here? I'd say that most of my team that I have today does not have supply chain degrees. They have degrees in engineering and management in science and have like I have in some ways stumbled their way into supply chain and really fell in love with it and stuck with it. And so that's great. And I think we want to continue that type of capability but more people coming out of university, understanding, you know, the key supply chain principles and able to jump into analyst roles, planner roles would really be super helpful as we continue. Well, I told these guys that they're entering the profession one of the best time ever. We're talking about the change supply chain just a kind of follow up. Go back, I have a colleague in civil engineering who does earthquake engineering. Every time there's an earthquake is in high demand. Six months later, nobody knows his name. The question is what will happen to supply chain? Supply chain, you know, the shortage at one point will ease. You know, prices will stabilize or get it to equilibrium. Are people gonna go back to say, what is supply chain? I hope not as a, at least so I don't have to answer the question of what does that mean when I want to meet people. But I don't think it will or at least not for quite some time. I see, I think that's hard to fathom. I think that this has gotten so ingrained into people's minds of what supply chain is. I saw something, I think at the end of last year that was, you know, 10 words that need to be, you know, removed and forgotten after 2021. And one of them was supply chain, which I had some bittersweet feelings on that just with the experiences that we've all been through. But I do think it speaks to the fact that people do know now what supply chain is. They're more in tune with the fact that there are disruptions, both simply in distribution, but also deeper to that in terms of manufacturing capacities as well as raw material shortages that are creating issues that are affecting us from everything from food to consumer electronics and automotives and everything that we're seeing on a daily basis. Yeah. Let me go back to some of the students' questions. You guys voted on some questions. Is this some interesting questions? How did you manage the stress of the supply chain team member during the pandemic? Is it still a challenge? Because you're just building the team. Yeah. Yeah, I think I would answer that as a teammate and as a friend, probably more than anything. So many of the people who joined my team, particularly at the beginning, were people that I had worked with in the past. And so along with simply having new team members, new employees, I had people that I had brought in from my life that I felt like, oh my gosh, I've sucked you into this chaos, into this intense stress that we're dealing with. But we have been working so collaboratively and connected together on a daily basis over the past two years that there's not long stretches of time where we don't hear from each other and it's just go do your work and leave me alone. So I think this team approach to everything has really been what we've rallied around, along with the fact that as you can imagine, we have such a clear, consistent single mission right now to help fight the pandemic. And knowing how that is invading our lives for all of us, it's very clear for us of why we are doing what we're doing. So that helps, particularly in those moments when you are overwhelmed. There are so many different priorities to deal with fires burning left, right, and center and trying to figure out how do I deal with this? And this is all bubbling up and it's 5 p.m. And I've got other things I want to be able to do that I'm going to have to just sacrifice for now. Thank you. With limited manufacturing throughputs and the high vaccine demand, how was your decision to prioritize the supply chain to different countries? So it's really been based on, as contracts have been signed, on the timing of when those contracts were signed and the phasing of the supply agreement. Those are really the primary reasons. And so that has just slowly stacked up over time. That's been the primary driver. Obviously, there's a couple huge players in the world that were steering things from the beginning as we talked, the US government obviously had a defense rated contract for our supply that we had to prioritize. And that's really what enabled a huge amount of our manufacturing capability that we've been able to bring online. It's really been based around our contracts and the phasing of that. Thanks. How do you manage the complexity of the international supply chain in the world with the demand for international freight become a big challenge? Right now, we have won a capability to and an appetite to spend on freight. So we are willing to pay those premiums to make sure that we're moving our product and getting it to where it needs to go quickly. But then secondly, we're getting priority. So what we were talking about in terms of the disruptions that we've seen across the supply chain, we have probably seen the opposite of that in many ways. We've gotten more supply. We've gotten more priority. That's not something that's going to last forever. This will normalize for us, and we're going to have to compete in the normal ways in the future. But there has been a, I think in particular, we saw this in 2020, a global response to knowing this is our priority. We all need to figure out how to do this together. And this is somewhere that we want to make sure we partner to find mutual solutions. And so it's been amazing to see the reach out that we had from many of the freight companies in 2020 of saying, we've got our plane standing by. You let us know anything you need. That kind of reach out from executives. And so that really enabled us to have really a priority service that we needed. But that's a short-term thing. How does Moderna face the supply of the other two vaccines? Is competition is complementary? A rival with the other vaccine didn't reach? How do you deal with your friends? Yeah, it's probably both complementary and competition. We certainly know within our manufacturing capacities that we don't have enough product capacity to be able to serve the whole world. So there's certainly room for more than one vaccine supplier in this space. But we certainly, from our own perspective, want to be seen as the preferred choice. And so there are things I think that obviously from a scientific perspective we're trying to do to differentiate ourselves. As with so many unknown concerns the pandemic, how does Moderna addressing product life cycle management for the COVID vaccine? Boy, that's a near and dear topic for me right now. So that's played out in a number of different ways. So as we have expanded our manufacturing footprint from a single site to what is now probably around 14 sites between drug substance and drug product, that plus different lines that we need to register different secondary sourced materials that we needed to register. It's created a huge amount of life cycle management that we have to manage on a daily basis. The other thing then that we think about as we look into the future, and that we even worked on last year, is the potential for variants. So we've made public that we're working on a Omicron specific variant. This is similar to what we had done about a year ago with beta, then a few months after that for Delta as well. And so those ones didn't necessarily come to market. But there were a lot of activities in the background planning for what would dual supply look like, what would a transition be if we were to introduce a Delta specific variant. And so we're constantly doing scenario planning and evaluation of what life cycle events would need to happen and what the phasing is that we would need to have to bring these on to our different production lines. And then the impact on our end customers of when are we expecting registration approvals so that we can plan for launches and supply. So what's tricky is that there are so many different alternate realities that could play out in the future for us that we're having to manage at the same time. And we don't know exactly how we're gonna move forward. And part of it, if we think about if Omicron wouldn't have come about, would we still be talking more about Delta? So we could be still be talking about is there a need to bring a Delta specific variant? So what's after Omicron? So there's this constant change that's happening in the environment outside of our company that we cannot control that we have to react to and see how we continue to maneuver. How has the management of non-COVID related product been impacted both by COVID and the research allocation for vaccine development? Because you were working on other stuff before COVID. Well, the company has grown dramatically. So I think at first, certainly in 2020, there was some, there certainly was some delay and impact to our other programs. But over the course of time, we've grown, I think, from 800 to 2,800 people in total as a company in the past year and a half, two years. So through that, we've also added to our clinical teams so that they have more self-sustained capabilities and are not as reliant on those of us who have been around longer. We are continuing with that. We now have a, at least from the manufacturing perspective, we have a separate clinical site that we're managing separate from our commercial so that we can make sure that we've got the right focus on our clinical programs. Okay. How does Moderna ensure that their office-based supply chain workers are not disconnected from the reality of the factory or the warehouse workers? Probably the same way that all of us have kept in touch with our friends, our loved ones, et cetera, over the past two years of video calls. So a lot of our office employees, one, partially remote, but then secondly, even here who are locally-based. There's often days when people are staying home and certainly right now, we're in a mode that we're having people stay home for the time being who can, who don't need to be physically in production or in our logistics centers. And part of that is for protection. But we've had what I would describe as cameras on environment from the beginning in our Teams meetings and our Webex meetings to make sure that people are being plugged in. But we've had to do interviews this way. We've had to do onboarding town halls, something like this we've been doing more virtually. So people have become very accustomed to that. Luckily, that has been able to pay off. Is there a detriment to not being able to be physically on the floor? Yes, that certainly is the case in some ways, but I think that the manufacturing management is also dealing with the same environment. So it's not like we are the outsiders to something else that's happening. So we're all recognizing the need that communication needs to be deliberate, that we need to stay connected and that face-to-face even if it's virtual is really, really important. Okay, what is something that looking back you would have done differently over the last couple of years? Hmm. I suppose in some ways it's a good thing that I have to think about this. Yeah, that means I haven't done anything so boneheaded that I regret. I think the thing that is maybe most on my mind is the controls and earlier startup of our life cycle management activities. So this is something that was, we were going through 2020 and the initial launch of the product was really not so much in our minds. We were thinking we've got one thing we've got to get done, let's get this to market and obviously we have had a very simplistic approach of we have one label for the US and we have an international label for the rest of the world and we don't have country-specific artwork. We've done things very plain, very simplistic, very much focused on efficiencies on getting as much supply as possible. As we have started to get then into more real world and reality, the more this is coming, the more that complexity is starting to create a wave of activities that we need to deal with. And I would say that we have a lot of work in front of us to stabilize that life cycle management. So I wish I would have started on that much earlier and recognize those risks that were coming in front of us. But at the same time, I have to protect myself a little bit. When we were in 2020 and in Q4 even, we didn't know if what we were doing was a 100 million hump to the US government and that was it, we were done. We didn't know what was happening with the pandemic. We didn't know what would happen with other vaccine makers. So there are things that were not known to us at the time and we as a company obviously did not want to over invest beyond what we needed for that moment in time, not knowing if this was gonna be a long-term commercial activity for us or a short-term thing. And then we went back to being a clinical company until the next thing came. So it's hard to know. Yeah. The question repeats some of the things. What was the biggest bottleneck in the vaccine manufacturing effort? It has, it's funny, I've put together a slide at the end of last year for my team's town hall that talked about this a little bit. It's changed over time. So it started initially being the raw materials. There were some where we thought we were gonna be constrained by 20% or to only 20% of the full 100% that we needed. And so that was probably the biggest thing that we overcame and that was a custom material that we were having produced. Then it shifted really to drug substance production and so this is our internal capabilities. Then it shifted to our drug product. Then it shifted to our quality control laboratories and then it shifted to most recently our distribution at the end of last year. So it's really been kind of a progression of working the bottleneck through the supply chain to the end of the process. Assuming that the new normal is the emergence of new variants and you need to continuously produce new formulation of the mRNA vaccines, how did this scenario will change what you do and what you work on? Sure. First, I think there's probably a big difference between new variants presenting themselves more like we would see with flu and not being such a dramatic pandemic scenario like we are facing right now. So if the severity starts to become more manageable and this starts to be treated more like a cold like the flu, then updating to new variants will be an ongoing course of business but hopefully something that is in the background and that public are not really needing to worry about in any sort of way on a daily basis. It's just like going to get your flu vaccine, you don't think about, oh, have they got this strand and that strand prepared for this year? So I think that that's one scenario. If there's a scenario in which COVID continues to be as severe and problematic as we are seeing in the last two years, I think that's obviously a very different public health issue that we would need to face, but I don't sense that that's the general thinking of public health experts. Yeah. Okay, guys, I'd like to take Paul very much and appreciate him coming here, so please join me. All right, everyone, thank you for listening. I hope you've enjoyed this edition of MIT Supply Chain Frontiers. My name is Arthur Grau, Communications Officer for the Center and I invite you to visit us anytime at ctl.mit.edu or search for MIT Supply Chain Frontiers on your favorite listening platform. Until next time.