Pharma’s prescription for evolving supply change requirements: investing in new planning capabilities

Supply chain disruptions are affecting the performance of leading pharma companies. How do we treat symptoms that cost the industry around $35bn a year? With advanced planning technologies, synchronised demand and supply, AI-enabled decision-making and end-to-end visibility comprise the solution.

In a rapidly shifting global landscape, the pharmaceutical industry has reached a pivotal juncture. A confluence of challenges – from shortages in talent, raw materials, and active pharmaceutical ingredients (APIs) to stricken health infrastructures, product quality and patient safety – has tested the resilience of pharma supply chains.?

The stakes are incredibly high, with absent supply chain agility and steep inventory levels costing the industry approximately $35bn annually. However, as the adage goes, “necessity is the mother of invention.” Pharma companies are proving that adversity is often the catalyst for innovation and growth, giving the industry a chance to reinvent itself for a healthier future.

To usher in that new era, industry players are now rethinking their traditional planning strategies and investing in the next generation of capabilities:

1. Synchronised demand and supply
2. Advanced planning technologies
3. AI-enabled decision-making
4. End-to-end supply chain visibility

(1)? Demand and supply synchronisation

The pandemic laid bare the consequences of supply and demand misalignment, with a staggering 76% of pharmacists reporting major generic drug shortages in the wake of supply chain disruptions. A one-size-fits-all planning approach is no longer consistent with the delivery of required outcomes in a supply-constrained system.

The urgent need for a fresh approach is galvanising pharma companies into action, leading to the synchronisation of supply with real demand requirements – a task that is complex yet critical for maintaining service levels while also managing efficiency and cost.

The benefits of successful demand and supply synchronisation are significant. To name but a few:

• A 50% reduction in production variability
• A 10% increase in responsiveness
• A 30% reduction in inventory
• A 10%-20% improvement in service
• A 5%-10% improvement in overall equipment effectiveness

However, achieving demand and supply synchronisation requires not only a keen understanding of the global supply chain landscape but also an advanced technological infrastructure, and the ability to anticipate and respond swiftly to disruptions.

(2)? Advanced planning technologies

Many pharma companies are now expediting their transformation plans, which include the accelerated deployment of advanced planning technologies – powerful tools in any pharma company’s arsenal as they navigate this uncharted territory.

These systems facilitate a proactive rather than reactive planning approach, which frees up planner focus, with reduced firefighting and stress enabling leaders to quickly adapt to short-term changes in demand and supply. This is especially important in an increasingly supply-constrained world, where the ability to respond quickly to disruptions is crucial for avoiding costly delays and maintaining service levels.

Advanced planning technologies offer a slew of other advantages, including end-to-end visibility, information and data flow across functions, and collaboration within the business and with key suppliers and customers. If deployed and leveraged effectively, these systems can generate:

• Service level-led savings of 5%-20%
• Inventory-led savings of 5%-15%
• A reduction in forecast errors of 20%
• An increase in automation rates of 20%-40%.

(3)? AI-enabled decision-making

As noted in my last article, artificial intelligence (AI) is emerging as a game-changer in supply chain – especially in planning.

AI-powered technologies dramatically enhance the quality and consistency of planning inputs, decision-making and outcomes, with automated decision support and near real-time visibility, recommendations and predictions supercharging the business performance of pharma companies.

Moreover, as AI becomes more integrated into supply chain operations, it is redefining the planner role, laying down a more appealing career path that helps to attract and retain vital personnel. This couldn’t be more pressing than at a time when 56% of pharma players report talent shortages in at least one of their supply chain operations.

We’re now entering a symbiotic relationship with AI. Rather than replacing planners, AI empowers them, taking care of routine, data-heavy tasks and freeing up invaluable human time to focus on strategic, higher-value activities. AI lifts planners from a slow crawl and propels them into rapid flight – right towards more effective and efficient supply chains.

(4)? End-to-end visibility

The final piece of the puzzle in building robust and resilient supply chains is achieving end-to-end visibility – key to proactively managing risk and avoiding patient impact during current and future disruptions.

Amid ongoing supply chain disruptions, the acceleration of multi-tier supplier visibility has emerged as a priority for many pharma companies. Unfortunately, with traditional linear supply chains – characterised by reactive planning, poor external visibility and reporting, and limited connectivity into customers and suppliers – this is near impossible.

Fortunately, traditional models are now giving way to networked ecosystems that integrate customers and suppliers into the planning process and offer end-to-end visibility across the value chain. These advanced models offer early warning systems for potential disruptions, enable data sharing and systems integration and allow for proactive risk identification and resolution.

Given that industry players have been experiencing, for instance, shipping delays of up to 40 days, this shift toward data-driven end-to-end supply chain visibility is a huge deal. It marks the welcome departure from a siloed approach to something infinitely more holistic and integrated, with gains to be found in service, production efficiency, and cost.

Building immunity in pharma supply chains

Together, these four planning capabilities – demand and supply synchronisation, advanced planning technology, AI-enabled decision making, and end-to-end visibility – form the cornerstone of a robust, resilient supply chain.

By developing and integrating such capabilities, pharma companies can craft a strong foundation on which to build a new type of supply chain – one more immune to the crippling disruptions of our increasingly unpredictable global landscape.

As industry players continue their transformation journey, it’s important they remain vigilant, proactive and agile. What’s more, they must prepare to tackle the next big disruption, take control of key supplier flows, understand associated risks, synchronise demand and supply, and create the right environment to attract and retain top talent.

The path forward won’t be without challenges. But with a clear vision, strategic investment in advanced planning capabilities, and a willingness to innovate and adapt, pharma companies can turn these challenges into opportunities for growth and success.

Remember, the great supply chain reset is more than just a response to disruptions – it's a chance for the pharmaceutical industry to reinvent itself for a healthier future.

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