Compared with other industries, the life sciences and biotechnology sector has a ways to go before achieving true supply-chain efficiency, according to McDonnell. Challenges include the difficulties of managing supply risk, the high price of resources and assets, and the struggle to strike the right balance between cost and service.
Ten years ago, there wasn't much of a reason for bio-tech companies to focus on supply-chain efficiency, says McDonnell. They were too busy thinking about their core products and systems. Today, however, there is a compelling need for more sophisticated supply-chain capabilities.
The core fundamentals need to be addressed, he says. They include the ability to fashion a strategy that encompasses the end-to-end supply chain, one that understands the inter-dependencies among the various parts of an organization. Companies must know which key performance indicators (KPIs) are best for reporting past performance and making decisions about the future. Also of critical importance is the development of a sales and operations planning (S&OP) process. "That is the seed and foundation for higher-level supply-chain thinking, and execution toward targeted outcomes," says McDonnell.
Bio-tech companies also need to do a better job of collaborating with external partners. "This industry is going to rely more and more on third parties," McDonnell says. They will include providers of services such as distribution, logistics, manufacturing and even sales and marketing. The ability to maintain alliances, and share information easily with third parties, "becomes the new core capability" of bio-tech firms, he says.
Key initiatives that supply-chain executives should be pursuing today include the development of an end-to-end strategy, adoption of the proper KPIs, and push for S&OP capability. Emerging markets represent yet another opportunity for future growth, McDonnell says.
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