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How Digital Transformation Can Help the Life Sciences Industry

11/12/2020

image of medical bottle on a conveyor beltBy Maria Nieradka

In an October 13 blog post, author David Parker encouraged all businesses to look at how limited supply chain visibility exposes them to disruptions. This is more critical than ever to understand in the life sciences industries, where COVID-19 vaccines are being prepared to ship across the world. What disruptions are you unprepared for that increased visibility could help prevent?

This article was originally published on June 18, 2020.

Companies in the life sciences industry rely on a complex global network of suppliers, logistics providers and manufacturing organizations to get their products to the end consumer. In addition, the life sciences sector operates in one of the most regulated industries in the world; they must contend with strict regulations and requirements such as batch level traceability and a carefully controlled cold chain logistics infrastructure. To overcome these challenges, meet customer expectations and succeed in a competitive marketplace, life sciences companies would greatly benefit from end-to-end visibility in their supply chain, from the initial supplier all the way to the end patient.

Here’s a closer look at some industry challenges as well as the critical components of a successful supply chain in the life sciences industry.

Supply Chain Challenges in Life Sciences Range from Strict Regulations to Transportation Issues

The life sciences industry is one of the most highly regulated industries in the world. In fact, life sciences regulatory requirements in different countries vary greatly from each other, making it challenging for companies to develop a single drug that can be simultaneously submitted in all countries for approval.  In addition, serialization requirements (the assignment of unique, traceable numbers to individual items so that a drug can be tracked and traced electronically as it passes through the supply chain) are another level of complexity in some local markets, so the ability to be able to track and trace these products and have complete visibility is extremely important in order to access certain markets.

Many healthcare companies manufacture their active pharmaceutical ingredient (API) globally, then regionalize their drug product. Local market capability is important when it comes to finishing the product. When you’re shipping global product to regions, and regional products to local markets, and then to the end customer, there’s often a lack of visibility in transit, and that applies to both product location and sensor data.

A key challenge for supply chain executives in this area is to be able to manage for the unexpected. We try to get close to 99.9% success in terms of being able to deliver a perfect order, on time and in full. To get to this metric, you must have contingency plans if things happen, such as not being able to meet temperature requirements in transit. Logistics failures can have much more serious implications in life sciences than in any other; logistics/transportation providers must be able to demonstrate that the goods were handled appropriately at all stages of transport, and you need visibility into the supply chain to be able to demonstrate that.

Digital Transformation in Life Sciences

Companies in the life sciences sector are lagging in digital transformation when compared to other industries. I’m part of the executive advisory board for SCM World, and after talking with some of the Chief Supply Chain Officers from consumer companies on the advisory board, it was clear that they were much further down the path when it came to digital transformation initiatives. There are tremendous opportunities for digital transformation throughout life sciences organizations, such as improving finance, increasing visibility in supply chains, developing new products and engaging better with customers and patients.

Given the disastrous effect of COVID-19 on the world economies, global companies need to do a SWOT analysis to understand the opportunities, threats, strengths and weaknesses. Because of COVID-19, parts of the world are operating in a very different way; it’s not so easy to enter borders now, and when you do, how do you know that your product is secure? From a digital transformation standpoint, supply chain solutions will be driven from the sheer need to deal with what’s going on in the world right now in terms of extreme supply chain disruptions.

Risk Mitigation and Sustainability Should Be on Every Supply Chain Leader’s Radar

From a risk standpoint, the ability to integrate the supply chain and technology in order to mitigate risk is of extreme importance. I recommend having a “playbook” for natural disaster planning and decision making.  At one of my previous companies, I led an effort to make this a priority.  Ensuring that when a hurricane or earthquake occurs, there is an assessment of the end-to-end supply chain to understand the impact of a shortage of any component or critical service and then having contingency plans to mitigate the impact to the patient, is critical to success. Sustainability should also be an objective of supply chain executives. Supply chain leaders should be looking into initiatives that can enhance socio-economic value for stakeholders while minimizing the environmental footprint of their operations.

Supply Chain Leaders and CEOs Are Measuring Success

Supply chain leaders love to monitor metrics. The first key performance indicator (KPI) that every supply chain leader should be measuring is customer service; for those in the life sciences sector, it is about delivering the perfect order, on time and in full to the patient. Another important KPI is forecast accuracy; it is critical to understand demand to synchronize supply. The third set of KPIs that should be measured are around cost – specifically, capital expense, including inventory and operational expense. In life sciences, accessibility and affordability is paramount.  Many CEOs understand the importance of their supply chains and are looking at these KPIs to assess the health of their overall business and relationships with their customers.

Supply chain executives need to have a backbone for planning and have implemented Enterprise Resource Planning (ERP) solutions. These solutions provide good processes enabled by technology. You may be able to execute perfectly in manufacturing, distribution or procurement, but if you don’t have a great plan, you may be executing on the wrong things. That is why supply chain executives need to be highly connected to commercial leaders to understand product demand down to the details to not have excess inventory on one product and a backorder on another product. It is important for supply chain executives to focus on building a strong foundation for people, process and technology. If you’re a supply chain executive and you need to sell a business case for achieving greater supply chain visibility within your organization, remember that it’s always about building the foundation; any enhancements you make need must add value and tie into what the major corporate goals and objectives are, not just the supply chain objectives.

Final Thoughts

The world is changing rapidly, so it is extremely important to understand the latest supply chain tools and technology and the value that they bring to your business. Supply chain visibility is more important than ever to deliver products to patients. Technologies such as the Cloudleaf platform, that enable you to get real-time, granular data providing complete visibility into your supply chain, along with smart contingency planning, are now required to deal with managing day-to-day business, achieving business strategy and being able to manage the next risk that comes your way.

Reach out to Cloudleaf to learn more about how you can transform your supply chain into a data-driven strategic asset.