The Importance of Managing your Supply Chain costs

12th April 2016 (Last Updated July 18th, 2018 10:16)

Henry Kerali outlines the importance of an integrated supply chain

The Importance of Managing your Supply Chain costs

Over the last few years, the pharmaceutical industry has experienced flagging productivity and a waning R&D pipeline all in the face of high R&D intensity. While the reasons behind this malaise vary, the importance of building an integrated supply chain has never been more vital.

Experts say adopting end to end planning can help stem the tide by lowering supply chain costs ultimately streamlining processes as a whole.

When it comes to building an integrated supply chain, ensuring it's allied with your organization's strategic vision is essential. Furthermore, your priorities should be to deliver more products of value (patient driven), simplify the operating model (internally driven), and meet the R&D commitment of doubling the size of the pipeline at the same level of expenditure.

Here are five things to consider that will help drive success and improve performance in your supply chain:

View your supply chain as a strategic asset - Improving your forecast accuracy will create greater certainty in planning, lower overages, free capacity, and shorter lead times.

Develop an end-to-end (E2E) process architecture - Developing an E2E process ensures a common way of working across the supply chain. It allows higher-ups to gauge the impact of changes on the supply chain, such as a lost batch, the addition of patients to a study, etc. It also creates more transparency of requirements, which will aid operations and ease the workload on staff.

Design your organisation for performance - Supply chain management is involved throughout the end-to-end supply chain. Put together and agree upon a plan that integrates demand, supply and risk management. Be transparent on what your demand requirements are, as well as your supply needs across the clinical supply chain. In order to meet consumer demands, hold the appropriate flow of information while defining your optimal supply strategy.

Build the right collaborative model - Ask yourself how you can optimise performances with your partners while adopting this process? Assess your supply chain design, decide how much is needed, when and where (demand planning). Also assess your supply plan (logistics, timing and risk), ensure there's enough supply to be delivered to patients. Lastly, review your planning cycle on a monthly basis.

Have the right metrics in place - Be sure to have the right metrics to drive business success, and also make sure you're delivering good value.

So what are the benefits of an integrated supply chain through the use of E2E planning?

For one, it can help reduce your manufacturing footprint. Additionally, changing supply chain processes can help avoid large capital expenses, while helping you save costs where possible. In a three year span, for instance, GlaxoSmithKline's comparator average savings was a substantial £30m per year. So the merits of an integrated supply chain cannot be discounted; it can lead to better risk management resulting in more reliable decision making.

In short, when managing supply chain costs, here are some key things to remember:

1. Building an integrated clinical supply chain requires time and effort (and a lot of it);
2. Don't underestimate the amount of change management that will be needed;
3. Resource Optimization and Innovation (ROI) makes it worthwhile;
4. The work is rarely ever done until it's done;
5. Fresh openings often present themselves, take advantage of them!

 

References

Mark Landau, Director, Supply Chain Planning, GlaxoSmithKline, Managing Supply Chain Costs through E2E Planning (Presentation)