Pharmaceutical Technology magazine was looking to get insight into the latest key trends in the life sciences and pharmaceutical industries and how they are likely to play out over the next year. Here, Kinaxis Industry and Solutions Marketing director Young S Baik presents his perspective.
Q: How are shifts in supply and demand impacting the pharmaceuticals industry today and how would you expect to see that play out during 2021?
A: Covid-19 has significantly impacted the pharmaceutical industry and its supply challenges will be further amplified this year. Pharma companies have already experienced drug shortages, cost increases, and delivery performance degradation.
Today, pharma supply chain challenges and risks are being exacerbated by a range of factors from poor visibility and transparency from an end-to-end supply chain/network perspective to supply chain agility being limited due to long manufacturing lead times. Other key factors exacerbating risk include mandates by regulatory bodies requiring jurisdictional control; organisations focusing on inventory as the sole and low-risk form of agility; and the adoption of technology that doesn’t support end-to-end supply chain collaboration.
To survive and stay competitive, pharmaceutical companies must look to address these issues and, in the process, seek out ways of achieving secure supply chain visibility, transparency, and agility.
Q: What changes do you anticipate pharmaceutical manufacturers making to their supply chains in 2021?
A: Historically, companies have invested millions in the pursuit of accuracy in a bid to eliminate volatility and chaos in their supply chain. 2020 changed everything. Many companies now realise the more agile they become; the less relevant accuracy is.
Ultimately, it is not an either/or, but a case of finding the right balance and being agile enough to respond quickly to fast-changing scenarios. In line with this, we are seeing companies setting specific goals to tackle external challenges and meet their internal objectives for better customer service; profitability and growth, focusing in particular on enhanced innovation, agility and speed.
Q: Are there any lessons that manufacturers have learnt in 2020 (such as heavily disrupted supply chains), that will change the way they plan/operate in 2021?
A: The pandemic revealed vulnerabilities in companies with long, complicated, and siloed supply chains. When a single country or a single site went dark, the lack of critical materials and reduced transportation capacity forced companies to shut down production.
Executives will never accept this in future. The first lesson is to understand and quantify the risk exposure and then develop contingency plans for each disruption scenario. Moreover, when potential future disruptions are identified, manufacturers need to quickly analyse various scenarios, examine impact, and make fast decisions to minimise disruption. This is why transparency beyond visibility becomes crucial moving forward.
Q: What will be the great business/economic supply chain challenges that manufacturers will face next year?
A: Global business uncertainty remains and implementing a sophisticated risk management strategy will be difficult. There are divergent views on the likely duration and impact of the crisis. Many organisations still cannot respond quickly to changing purchasing patterns. From a planning perspective, few have the capabilities to quickly simulate how they would recover or even react to unexpected events.
Q: How has Kinaxis helped manufacturers in the pharmaceutical sector in 2020, and how will they continue to support them in 2021?
A: For Kinaxis’ customers, the ability to reach across the silos that existed in their business is helping them minimise the impact. Using concurrent supply chain planning, they have been able to simulate supply chain failures and prepare risk mitigation scenarios. The main premise of this approach is to reduce supply chain risk by providing full visibility and transparency through the extended supply chain. Here are sample stories which Kinaxis has supported Global Leaders in the Pharma industry to drive digital supply chain transformation:
- “As we went through the COVID crisis, we actually had real-time information, and this was always our ambition out of [Kinaxis] RapidResponse. Real-time information on demand, supply, and our inventories, wherever they were. We had that and it was fantastic because we had to make some difficult choices during this period of time. It gave us so much confidence when we were heading into this. We didn’t feel we were in the dark, we felt we had the information we needed to do our jobs.” – CSCO at Large France-based Pharmaceutical
- Craig Kennedy, Senior VP of Supply Chain for MSD, recounted, at Logipharma 2019, their experience when they were hit with a ransomware attack in 2017. In just 15 minutes, 90,000 computers went down. Prior to the attack, MSD made some significant supply chain improvements. Line fill rates went from 84% to 96%, backorders were significantly low and they established an end-to-end planning organisation in a cloud-based advanced planning system (Kinaxis). It would’ve been a lot worse and taken a lot longer to recover without Kinaxis.
- More recently, Brian Thornley, Associate VP of Supply Chain for MSD made the following comment at his presentation during Kinexions 2020: “Having the digital capabilities and integrated planning capabilities, we are able to quickly recognise and pin-point where changes are happening in the supply chain, for understanding why they are happening, and to be able to take action much more quickly. And I am absolutely certain the recovery of the industry will be dependent on this type of digital platform (Kinaxis) to take us forward.”
Q: What areas do you feel they will need the most support in next year?
A: In just 12 months, the pandemic has brought about years of change in the way companies do business. Many have been studying how their supply chains work and increasing the digitisation of their customer and supply-chain interactions by three to four years. The increases are much more significant in healthcare and pharma. Companies will need help to lay the right foundation for such a rapid digitisation journey.
With the development of AI/ML and data analytics, companies can learn more about, audit, and connect with their entire value chains. Companies can expect future disruptions and surprises but a disruption in the supply chain doesn’t have to result in total chaos. Using the right approach and technology will help them detect surprises early and respond quickly to reduce the impact.
To learn more about Kinaxis’ presence in the Pharmaceutical and Life Sciences industry, please visit our website.