How pharmaceutical manufacturers can respond to change in the new world

COVID-19 has severely impacted the pharmaceutical industry and the supply challenges it has caused look set to persist for the foreseeable future, says Young Baik, Director, Industry and Solutions, Kinaxis

Pharmaceutical companies have already experienced drug shortages, cost increases and delivery performance degradation.

In addition to this, mandates by regulatory bodies requiring jurisdictional control and, in some cases, the adoption of technology that does not support end-to-end supply chain collaboration has contributed to testing times for drug manufacturers.

What organisations have learned from the pandemic is that the more agility is needed and used to counter volatility, the less relevant accuracy becomes.

Ultimately, it is a case of striking the right balance and being sufficiently agile to rapidly respond to fast-changing environments. In line with this, companies are setting specific goals to meet their internal objectives for improved customer service, profitability and growth, focusing especially on enhanced innovation, agility and speed.

The pandemic has also revealed the vulnerability of long, complicated and siloed supply chains. When a single country or site went dark, the lack of critical materials and reduced transport capacity forced companies to close down production.

Supply chain leaders and managers will expect the lessons learned to be used to create a resilient and agile supply chain that can withstand any disruptions and quickly respond to the crisis.

They will also need to understand and quantify risk exposure and develop contingency plans for each disruption scenario. Moreover, when potential future disruptions are identified, manufacturers need to quickly analyse a range of scenarios, assess impact and make rapid and informed decisions to minimise the impact.

Be prepared: make smart use of technology

What the pharmaceutical industry needs above all is the ability to reach across the silos that exist in each business to mitigate the impact.

Using concurrent supply chain planning, companies can simulate supply chain failures and prepare risk mitigation scenarios in both predictive and preventive ways.

The primary goal is to reduce supply chain risk by providing full visibility and transparency through the extended supply chain. Companies need access to real-time information on status of demand, supply and inventory … wherever they are.

This is a hugely valuable capability that gives leaders the confidence to make difficult choices during very demanding periods. Decision makers no longer feel as if they are plunging into darkness as soon as a crisis begins. They have the information they need to do their jobs.

COVID-19 spread around the globe in a matter of weeks; but, events such as ransomware attacks can overwhelm organisations in minutes, demanding fast but informed responses from senior management. Being able to respond effectively requires similar capabilities in each case.

In the event of a ransomware attack, the ability to implement end-to-end planning using an advanced cloud-based planning platform can be key to both mitigating the impact of an attack and helping to recover supply chain resilience as quickly as possible.

This and many other incidents prove that having digital and integrated planning capabilities amplifies a large organisation’s ability to pinpoint where changes are happening in the supply chain.

They understand why they are happening and take positive action with much greater clarity and confidence. These are the digital platform capabilities on which the recovery of the industry will depend for future resilience.

This is the main lesson of the pandemic so far. In just 12 months, the virus is bringing forward years of change in the way organisations conduct business. Many have been studying how their supply chains work and increasing the digitisation of their customer and supply chain interactions by 3–4 years.

As we emerge from the pandemic, companies will need help to lay the right foundation for such a rapid digitisation journey. The development of artificial intelligence (AI), machine learning (ML) and data analytics are major advances in this field, enabling companies to learn more about, audit and connect with their entire value chains.

It is inevitable that future disruptions will occur, whether through natural calamity, another virus outbreak or a highly penetrative cyberattack. Nobody can entirely predict the future, nor should they try to plan in minute detail for every eventuality.

Organisations must become far more agile, relying on accurate, current data from the entire length of their supply chains.

Whatever the months and years to come bring, using the right approach and technology will inject far greater agility and resilience into pharmaceutical companies, enabling them to detect the unexpected early and respond rapidly to counteract the impact.

Eventually, companies with agility and resilience will be a step ahead of the competition and will be able to sustain and grow their business in the unknown future.

As Charles Darwin stated in On the Origin of Species about his scientific theory of natural selection: “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”

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