Executive Briefings

Powering Pharma With Supply Chain Analytics

Analyst Insight: Radically changing market conditions in the global pharmaceuticals industry are creating volatility in supply and demand, as well as affecting customer service levels and costs. Pharma companies are also faced with impending margin pressure from generics. In this environment, pharma executives are looking to improve efficiencies, understand emerging market customers and be better prepared to meet financial objectives. Supply chain analytics provides pharma supply chain executives with powerful tools to maintain a competitive edge. – Jay Welsh, Principal, and Srihari Rangarajan, Manager, Ernst & Young LLP

Powering Pharma With Supply Chain Analytics

For years, pharma companies have been challenged by various patent cliffs. Today, many of them have critical new products on the brink of launch. These drivers are prompting pharma supply chain executives to develop an integrated, unified view of their physical and financial supply chain operations in order to quickly deliver products with the highest quality, shortest lead time and lowest cost. But where does one begin? Studies reveal that the most significant analytical challenges – and solutions – for executives should focus on three areas:

• Visibility – to become proactive and systematic in supply chain operations, tracking products from cradle to grave

• Volatility – to proactively manage product availability and shipment, improve time delivery and reduce lead time

• Viability – to optimize costs by improving manufacturing performance and equipment effectiveness

Supply chain analytics provides answers in each of these areas.

Increasing visibility

For supply chain visibility to be truly valuable, it must provide an end-to-end view that enables a unified physical and financial vision of all supply chain domains. Increasing this visibility begins with enhancing metrics and reporting; this creates an underlying base platform for other performance initiatives. Analytics-driven “control towers” can monitor real-time critical events and key process indicators. The key is managing collaborative networks to secure real-time or near real-time data visibility across the supply chain. Pharmaceutical organizations should invest in building trust across their supplier/customer networks and increase transparency and accountability by providing a single source of information.

Managing volatility

Demand and supply volatility has increased significantly for drug companies, making inventory management a tremendous challenge. High inventory can be addressed by using a collaborative demand-forecasting solution. Pharma can mimic the consumer goods industry by leveraging distributor and retailer data for integrated business planning activities. Demand/supply analytics can be applied to these areas to anticipate demand, monitor supply and encourage adequate drug replenishment. These analytics can help pharma companies become more customer focused, optimize service levels and help facilitate regulatory compliance, while limiting risk of revenue loss through brand counterfeiting.

Ensuring viability

Drug companies have been collecting manufacturing, product quality and yield data for years, yet such information has not been used properly; data has been spread across the organization. Advanced statistical analysis, such as multi-variate analysis, can be used to understand process drivers and determine an optimal production process. Real-time measurements of process parameters allow companies to monitor manufacturing consistency and proactively identify product recall issues.

The Outlook

Pharma companies have traditionally underutilized supply chain data, but are now warming to its benefits. There is no “silver bullet,” but executives are sharpening their competitive edge by using data analytics tools, such as an end-to-end supply chain dashboard with multidimensional drill-downs, advanced demand sensing capabilities to handle volatility and incorporating immediate market data. The key is obtaining an integrated view of physical and financial operations that empowers executives to make more insightful business decisions.

The views expressed are those of the authors and do not necessarily reflect the views of Ernst & Young LLP.

For years, pharma companies have been challenged by various patent cliffs. Today, many of them have critical new products on the brink of launch. These drivers are prompting pharma supply chain executives to develop an integrated, unified view of their physical and financial supply chain operations in order to quickly deliver products with the highest quality, shortest lead time and lowest cost. But where does one begin? Studies reveal that the most significant analytical challenges – and solutions – for executives should focus on three areas:

• Visibility – to become proactive and systematic in supply chain operations, tracking products from cradle to grave

• Volatility – to proactively manage product availability and shipment, improve time delivery and reduce lead time

• Viability – to optimize costs by improving manufacturing performance and equipment effectiveness

Supply chain analytics provides answers in each of these areas.

Increasing visibility

For supply chain visibility to be truly valuable, it must provide an end-to-end view that enables a unified physical and financial vision of all supply chain domains. Increasing this visibility begins with enhancing metrics and reporting; this creates an underlying base platform for other performance initiatives. Analytics-driven “control towers” can monitor real-time critical events and key process indicators. The key is managing collaborative networks to secure real-time or near real-time data visibility across the supply chain. Pharmaceutical organizations should invest in building trust across their supplier/customer networks and increase transparency and accountability by providing a single source of information.

Managing volatility

Demand and supply volatility has increased significantly for drug companies, making inventory management a tremendous challenge. High inventory can be addressed by using a collaborative demand-forecasting solution. Pharma can mimic the consumer goods industry by leveraging distributor and retailer data for integrated business planning activities. Demand/supply analytics can be applied to these areas to anticipate demand, monitor supply and encourage adequate drug replenishment. These analytics can help pharma companies become more customer focused, optimize service levels and help facilitate regulatory compliance, while limiting risk of revenue loss through brand counterfeiting.

Ensuring viability

Drug companies have been collecting manufacturing, product quality and yield data for years, yet such information has not been used properly; data has been spread across the organization. Advanced statistical analysis, such as multi-variate analysis, can be used to understand process drivers and determine an optimal production process. Real-time measurements of process parameters allow companies to monitor manufacturing consistency and proactively identify product recall issues.

The Outlook

Pharma companies have traditionally underutilized supply chain data, but are now warming to its benefits. There is no “silver bullet,” but executives are sharpening their competitive edge by using data analytics tools, such as an end-to-end supply chain dashboard with multidimensional drill-downs, advanced demand sensing capabilities to handle volatility and incorporating immediate market data. The key is obtaining an integrated view of physical and financial operations that empowers executives to make more insightful business decisions.

The views expressed are those of the authors and do not necessarily reflect the views of Ernst & Young LLP.

Powering Pharma With Supply Chain Analytics