Supply chain resilience enables patient care and controls cost

Regulatory demands, cost and complexity in life sciences and pharmaceuticals make resilience mission critical. A digital, purpose-led supply chain drives patient outcomes at a sustainable cost.

The industry’s supply chain leaders don’t respond to change, they anticipate it

For supply chains in life science industries to deliver competitive advantage in today’s dynamic business environment, the first priority of supply chain strategic planning must be understanding customer demand.

Unfortunately, these supply chains generally lag behind in this area. Gartner survey data on the future of supply chain indicates that just 19% of supply chains in life sciences and pharmaceuticals are designing new supply chain capabilities to enable customers to get their own jobs done, compared to 23% of supply chains overall.

Recent disruptions — including manufacturing consolidation, climate events, and economic and political upheaval — are driving healthcare supply chains to be reactive to backorders and recalls of essential medical products. This increases the total healthcare supply chain cost to serve, which already averages 37.3% of the total cost of patient care. Supply chain leaders in life science industries must invest in longer-term solutions that provide business continuity while maintaining profitability.

Digital technology can enable life science and pharmaceutical supply chains to better connect with their customers, and thus improve the demand signal that supply chain leaders work to fulfill.

Digitally informed decision making is largely an untapped opportunity for life science supply chains.

  • Fewer than half (44%) of life science supply chains use technology to calculate how different scenarios would impact their goal outcomes in a decision.
  • Those who do use technology to support decision making use advanced analytics (69%), performance tracking/enhanced visibility tools (17%), and artificial intelligence (AI) and machine learning (ML) (14%).
  • Mostly technology enables demand planning within the sales and operations planning (S&OP) process.

Leading supply chains in the life science industries are investing in automation solutions to enable the supply chain transformation needed for quality patient care at a sustainable cost. The top five areas of investment in targeted real-time decision execution among life science supply chains are:

  1. Logistics and distribution (56%)
  2. Order management and fulfillment (53%)
  3. Manufacturing operations (44%)
  4. Supply planning (44%)
  5. Product quality control (43%)

Three ways to reinvent the life science supply chain for greater sustainability

Many life science companies are declaring their sustainability goals publicly and connecting them with purpose toward their patients. Setting targets to reduce emissions throughout the life science value chain (Scope 3) is becoming a new business norm.

The supply chain organization is under unique pressure to provide leadership of supply chain sustainability, because the end-to-end supply chain is the largest corporate contributor of greenhouse gas (GHG) emissions, water usage, impact on forests and the circular economy.

Leaders in the global chief supply chain officer (GCSCO) community are building programs to advance progress on environmental, social and governance (ESG) initiatives over the next five to 10 years. Three steps are key to their success:

  1. Gaining a clear understanding of critical areas or relevant material issues of sustainability, such as GHG emissions, water usage, forestation activities and circular economy
  2. Conducting a gap analysis to determine the right corporate sustainability goals and timelines
  3. Adopting best practices in sustainability

A major barrier that life science supply chains must overcome to realize authentic achievement of sustainability is supplier capability. Thirty-one percent of life science supply chain executives say suppliers are failing to deliver on GHG emission reduction commitments, on which their sustainability achievements are dependent.

Other top challenges for the life science value chain include lack of data on ESG goals, poor internal decision making and alignment, and regulatory constraints.

There is a wide gap between current operational capability for sustainability in life science supply chains and long-term aspiration. The time is now to implement solutions to achieve ESG sustainability goals across the life science value chain. Gartner experts advise taking these three actions to build sustainability in the life science supply chain:

  1. Provide strategic suppliers with the training and support they need to report GHG emissions.
  2. Apply circular economy principles.
  3. Prioritize the sustainable growth of customers.

Three drivers of supply chain digitalization in life sciences and pharmaceuticals

Global supply chain disruptions have challenged access to patient data, patient willingness to join clinical trials, and regulators’ access to medicines.

As a result, supply chain digital transformation has become a growing imperative in life sciences and pharmaceuticals because it enables greater visibility and governance of fulfillment activities.

Without a more automated and connected supply chain, chief supply chain officers (CSCOs) in the life science and pharmaceutical industries risk supply chain disruption and lower customer satisfaction.

But digital initiatives can struggle to deliver tangible benefits and returns when they are not focused on targeted outputs.

The first step, then, for life science and pharmaceutical CSCOs who are leading digital transformations is to identify the data gathering and consolidation processes to automate. Assess the time and effort required in addition to the criticality of the process served. Leveraging incomplete, inaccurate and/or obsolete data often slows and sometimes even kills digital initiatives. Furthermore, chasing sporadic use cases fails to demonstrate transformational change.

Next, deploy digital tools to connect key data assets and eliminate manual processes. Running digitized supply chain processes parallel to the existing manual processes harms adoption rates and trust in digital transformation initiatives.

Finally, train people on new digital tools and concepts and build trust by updating employee development plans to focus on user experience and adoption.

10 must-have supply chain planning capabilities for pharmaceuticals

Digitalizing supply chain planning (SCP) has become a priority for most companies, and pharmaceuticals are no different. But when it comes to SCP maturity, the industry lags behind. Many have implemented supplementary planning technology in ways that are limited in scope and do not represent best practices.

Plus, pharmaceutical supply chains are highly regulated and need to be compliant with these regulations in customer offerings. Pharmaceutical companies are evolving their operations to adapt to the changing patient, but not at the pace of other industries due to high supply chain costs and manufacturing complexity.

Certain SCP capabilities are specific to pharmaceuticals, but it’s difficult to map which of these capabilities, as well as which digital functionality, is required to solve specific planning challenges in the pharma value chain.

To help pharma supply chain CSCOs, Gartner researchers identified the following must-have planning capabilities for pharmaceuticals: regulatory planning, shelf life planning, artwork planning, launch and tender planning, sequencing and setup optimization, QA/QC approval flows, clinical trials, CMO (contact manufacturing organization) planning, inventory planning and optimization, and strategic/long-range planning.

Once requirements are clarified, the pharma supply chain CSCO must choose the SCP solution best suited to the business’s current needs and future goals (e.g., more automated decisions). If possible, choose a SCP solution that covers every functional capability requirement so that all planning tasks across the pharma value chain can be performed on the same unified solution.

Source: Gartner