Originally featured in Life Science Leader
Most life sciences supply chain organizations are happy to see the last few years in the rearview mirror. Trade wars, global health crises and increasing regulatory pressures have sent bio-tech supply chain leaders reeling with unprecedented shortages in labor, supplies and logistical capacity. Unfortunately, we’re not out of the woods yet.
Most bio-tech supply chains are stagnant, leaving them unprepared for today’s challenges. Specifically, bio-tech supply chains are largely*:
- Disconnected: lacking visibility and integration throughout the end-to-end value chain. 50% of companies lack visibility to effectively react to marketplace changes.
- Fragile: unprepared to withstand shocks and unable to capitalize on emerging opportunities. 43% of pharma companies lack the necessary agility and redundancy to survive major business disruptions.
- Static: unable to plan for and execute on growth. 6% of pharma companies are actively pursuing patient-centric transformation.
- Inefficient: poor usage and allocation of resources to drive value. 75% of pharma executives are in reactive mode and constantly expediting to meet demand.
However, given these challenges, pharma supply chains are capable of not only surviving but thriving by implementing Dynamic Supply Chain initiatives in which supply chains are connected, resilient, value-based and scalable. Here’s how.
The Connected Supply Chain
To be efficient, scalable, resilient and compliant, life sciences companies must build a robust information management architecture to distill insights from a flood of data.
Consider: weather has delayed a reagent shipment. The control tower has identified the risk and an emergency source if the projected arrival date exceeds the safety margin. However, the shipment arrives at the dock in time and is automatically inspected and accepted by querying the condition sensors. The pallet is robotically directed to the production supply area while the receipt is matched to the order for payment. This chain of events is enabled by a web of communications and analytics that operates across different technologies and crosses organizational boundaries.
Likewise, the increasing importance of biologic products is extending the supply chain all the way to the individual patient – who is often both a supplier and a customer. The end-to-end supply chain from specimen collection to therapy administration must be completely controlled and tightly orchestrated. In this case, the production planning and logistics must interface with the patient and facility scheduling system from the treatment planning phase. The key is to start with the data streams underlying your critical functions and build modular solutions that share the same core cloud platform. This speeds up value realization while building new capabilities iteratively. Build for the future rather than propping up the past.
The Resilient Supply Chain
In times of crisis, a supply chain shock kicks off a flurry of activity, often inwardly focused, to assess and triage the damage which, unfortunately, can take the focus off the patient. Those responsible for their organizations’ supply chain operations scramble to identify root causes. As many pharma supply chain executives have been reminded through the severe disruptions caused by the recent pandemic, today’s life science supply chains are vastly complex, making it difficult to quickly identify the issues and make timely decisions. As pharmas can now attest through recent lessons learned, achieving supply chain resilience is worth the effort.
Resilience begins through planning and preparation in four key areas: data, tools, resources and partnerships. Begin with data by determining what data will enable the right analyses and insights to provide root cause visibility. With a clear picture of the critical data, focus next on the tools needed (either manual or automated) to assist with data analyses, insight generation and, ultimately, timely decisions. Next, build relationships with contract development and manufacturing (CDMOs) and other key external partners that can provide resources to augment supply and/or capacity during times of significant shocks or fluctuations. Finally, develop an internal and community-based human capital plan to enable a flexible workforce.
Supply chain resilience should not be viewed as a zero-sum effort, but rather a continuous journey with each milestone providing incremental value. Resilience is often viewed in terms of cost avoidance and improved patient outcomes. Keep the patient in mind when beginning efforts to harden the supply chain. The path to resilience can be lengthy and complex, but any improvement in the four resilience areas is worth the effort.
The Scalable Supply Chain
We often think of small pre-commercial life sciences companies and “Big Pharma” multinationals as being very different in their supply chain needs. Surprisingly, the challenges for a new product launch are similar for each organization. What’s also similar are the inflection points and how to scale to meet the needs including:
Pre-clinical / Development: Focus on supporting the transition from lab research to pilot manufacturing.
- Phase 2 / 3 Clinical: Ramp-up clinical and manufacturing supply chain to support positive clinical findings.
- Launch / Post-Launch: Matching supply with demand through integrated business planning and commercial build-out.
- Market Expansion: Planning market access and network expansion while building internal and external supply capacity.
There’s no simple answer, but there’s a path to the right solution for each organization. Company strategy and the type of intellectual capabilities help drive the decisions. Is technology transfer the key to holding onto a competitive advantage or is controlled release of capabilities to partners the key to rapidly building market share? Are CDMOs and leveraged supply chains the answer to long-term scale or a way to keep the competition from beating you to the launch of a similar product? The answer is “it depends.” But Point B can help you figure out the best path for your supply chain.
To use an old adage, “size matters.” But in this case, bigger isn’t always better. Agility is more important than absolute size.
The Value-Based Supply Chain
All too often, pharma supply chains are perceived to be cost centers to be squeezed for savings. The complexity of typical life sciences supply chain operations and limited visibility many organizations have into their inventory can make the prospect of finding efficiencies daunting. Recent history suggests the best pharma supply chains can demonstrate real value to the organization beyond reducing expenses without compromising quality or basic service levels.
In Point B’s experience, leading life sciences supply chain operators continually identify opportunities to reallocate capacity – including that of labor, warehouse space, CDMO partners and third-party logistics partners – to higher value-added purpose. Through optimization efforts like automation, process optimization and selective outsourcing, the time and resources required to run non- or low-value supply chain tasks can be transitioned to high value-added activities such as operations consulting to internal business partners and dedicating time to additional continuous improvement and innovation activities.
In some cases, life sciences supply chain operations may become revenue generators by being able to leverage their differentiated competencies or freed up warehouse space to provide other pharmas contract storage capacity, logistical support and consulting services.
The Bottom Line
After decades of back-office obscurity, supply chain operations are suddenly a focal point in life sciences board rooms and executive suites. The old supply chain playbooks no longer seem relevant. Pharmas that will thrive in this new normal are reshaping their supply chains to be Dynamic: Connected, Resilient, Scalable and Value-Based