4 minute read 18 Sep 2020
Scientists in laboratory

How life sciences companies reassess their supply chains due to COVID-19

By EY Global

Multidisciplinary professional services organization

4 minute read 18 Sep 2020

The pandemic has shown the strengths and the weaknesses of life sciences supply chains. Now companies must adapt to build future resilience.

In brief
  • Life science companies need to improve collaborations across the ecosystem to address supply chain challenges.
  • Governments and other stakeholders increasingly recognize the importance of supply chain resilience.
  • End-to-end visibility has emerged as a major need for supply chain management, with digital and data technologies potentially able to address this.

In 2020, the COVID-19 pandemic has caused closure of manufacturing sites, delays to clinical trials, and impediments to global trade logistics. Senior figures from four life sciences companies met with EY to discuss these and other supply chain challenges they have faced in 2020. In the industry’s response to the crisis, the discussion participants agreed that certain key challenges have emerged:

  • A serious focus on protecting colleagues, accelerating digital solutions in order to enable remote working while taking steps to protect workforces retained onsite
  • Monitoring and management of inventory, using analytics to predict demand and triage competing logistical needs
  • Engaging with governments, to respond to changing patterns of behavior, including steps such as export bans and the withholding of shipments
  • Building end-to-end visibility across the supply chain

Some of these challenges have needed immediate action, while others represent the “new normal,” expected to characterize the next 6–18 months.

The need to rapidly adapt may ultimately strengthen the industry by accelerating change. One participant noted that prior to the outbreak we could not have anticipated the rapid roll-out and uptake of products enabling remote working and remote management that we have seen in recent months. The “outstanding commitment” of staff during the crisis was also noted.

Collaboration with governments and regulators, and collaboration between companies

Regulators have shifted the bulk of their resources, capacity and attention away from everything except the COVID-19 crisis, delaying decision-making processes including product approvals, with knock-on impacts for supply chain. While working with regulators will be a key focus for the future, companies also need to work with governments and policymakers. We need to expect in future that trade will be more managed than it has been in the past and we need to address the “huge lack of understanding” among politicians and governments. The COVID-19 pandemic has given the industry a platform from which to educate.

Some governments have suggested localization of supply chains as a response to the crisis, but inventory management and building redundancy are now being heard in discussions more than simple localization, participants noted. Participants also agreed that in a pandemic situation we need to work even more closely together. At present, companies have an unusual freedom to share capabilities and capacities, and we should be utilizing this to address the crisis, rather than thinking in terms of imposing more boundaries and constraints on global cooperation.

Increasing resilience for the future

In the future, the industry supply chain planning will need to consider not only sourcing strategy but also epidemiological scenarios. Companies must look at where their continuity plans in place before the COVID-19 crisis proved effective and where they failed.

The crisis has taught some positive lessons about supply chains: overall, operations have proved “pretty resilient” during the crisis, and the industry has been able to demonstrate short-term scalability. Collectively, the industry may well feel operationally stronger now than it did before the crisis, and it has gained a lot of recognition as a very fast responder.

Moreover, people are now beginning to recognize the strategic necessity of supply chain planning, and to understand that long-term investment in the supply chain allows resilience. When it comes to safeguarding the supply chain, “this topic is on the table” now.

Building end-to-end visibility

What has emerged as an issue, participants agree, is the “visibility gap” within the supply chain. Traditionally, pharma is not particularly advanced in terms of connectivity: companies normally don’t see how products move through the extended supply chains. While in the automobile industry, for example, vendor-managed inventory is now the norm, at present, the pharmaceutical industry isn’t in that position.

As an industry, another participant contended, we need to discuss strengthening partnerships from end-to-end to build greater transparency. When participants have reached out and had conversations with suppliers, they have proved to be very open and helpful during the crisis.

Using digital and data to address supply chain vulnerabilities

Digital and data may hold potential to reinvent health care delivery models, including aspects of the supply chain. Data offers real-time information that can help to manage inventory,  reduce the perceived gap between local and global operations and thus increase resilience.

Some of the digital systems we’ve had to establish to address the crisis will remain. Recent months have shown there are no real barriers to mainstream adoption of telehealth in Europe and the US. At present, the traditional wholesale/distribution model is not adapted to home delivery. Nevertheless, this will be a growing model, and supply chains will need to adapt.

Lead through the COVID-19 crisis

We have a clear view of the critical questions and new answers required for effective business continuity and resilience.

Explore

Contact us for immediate support

Gain access to our help with crisis management, business continuity and enterprise resilience.

 

Contact

Summary

In 2020, the COVID-19 pandemic has created significant challenges for life sciences companies’ supply chain operations. Senior representatives from four companies met with EY to discuss these challenges, how the industry has adapted, and what can be done to improve future resilience.

About this article

By EY Global

Multidisciplinary professional services organization