Forging an agile, secure supply chain

5 insights for executives series

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The CEO of Example Pharmaceutical Co. had urgent questions after hearing about a possible contaminated lot of biologics at one of the company's far-flung network of plants. The consequences for patients and the company — financial, legal and reputational — could be enormous.

What if the lot made it to pharmacy before it could be tracked and destroyed? What if other batches at the same plant were contaminated?

Which supply chain point was most vulnerable to fluctuations? What would this mean for product supply?

Patient outcomes were at risk, and so was the company’s business.

Could the supply chain deal with unprecedented complexity and risk while focusing on customer service and costs as well as anticipating change? Was the supply chain compliant, reliable and flexible in this ever more volatile business climate?

Example Pharmaceutical Co. needed more visibility into its supply chain. The CEO needed to understand the greatest supply chain risks and how to prioritize them.

1. What’s the issue?

In today’s global business environment, supply chain reliability and agility are more critical yet less assured than ever.

Supply chains involve more risk, and cost and margin pressures have never been greater. The competitive stakes are higher, especially in gaining access and share in emerging markets.

Life sciences supply chain management requires a comprehensive, disciplined approach and relentless application of the organization's tenacity to implement it.

The first step: improve the accuracy and transparency of customer, item, batch and inventory data. Companies that can see clearly across their supply chain operations can be more flexible and respond quickly to get the right product at the right time to the right customer.

2. Why now?

Key customer satisfaction indicators include on-time order fulfillment. With global supply chains spread across continents, visibility in terms of product traceability, manufacturing facility reliability, product margins and ability to meet market demands is key.

Recent EY surveys reveal that while life sciences companies are consistent in their recognition and prioritization of industry issues, there are clear differences in how leading and lagging companies are mobilizing to address those issues.

The industry is no longer moving as a single pack — the gap between leading companies and laggards in supply chain visibility is growing, and companies that don’t embrace the realities may soon find the gap difficult to close.

3. How does this affect you?

A global supply chain amplifies a world of vulnerabilities — from local events such as disasters or strikes to differing tax and regulatory regimes across the world.

Limited visibility into the supply chain increases the odds that your company’s response to new business requirements and potential risks will be fragmented, limited and delayed.

Inadequate understanding of the risks in managing a more complex global supply chain may lead to interrupted supply, or worse.

4. What’s the fix?

Using the following steps, firms can leverage performance improvement and risk management simultaneously to create agile, reliable, compliant supply chains:

  1. Determine the current state of your supply chain operations. Look at your planning environment through a framework that includes review of products, cost, regulatory non-compliance risks, tax impacts, vendors and traceability management. Define your cost and service profile across global markets. Evaluate your risks, governance processes and controls.
  2. Determine where you need to be. Define the service performance standards you and your service providers need to meet or exceed and how doing so will impact what’s needed to get the right product, to the right place, at the right time the first time.
  3. Identify the gaps. Prioritize based on compliance needs, immediate and short-term business requirements and objectives, competitive differentiation and longer-term support for your company’s business strategy.
  4. Address the challenge with:
    • An integrated team approach with shared objectives.
    • A relentless focus on improving performance in supply and demand planning, customer service, manufacturing efficiencies and logistics.
    • A risk assessment framework.
    • A governance mechanism, including a dashboard for ongoing performance management.

5. What’s the bottom line?

Increasing visibility and leveraging risk management can help your company develop and sustain an agile supply chain that is compliant, efficient and flexible.

The benefits are substantial:

  • Increased shareholder value
  • Ability to be first to market in emerging markets
  • Operations landscape that is fertile ground for increases in productivity

Companies that don’t strive for an agile, transparent supply chain are putting the company, shareholders and even patients at risk.

In today’s complex environment, life sciences supply chain leaders are finding ways to create agile, cost-effective, safe and secure supply chains by leveraging performance improvement and risk management at the same time.