Some Measures to Strengthen the Supply Chain Resilience
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Pharma Tech Outlook: Pharma Tech Magazine

Some Measures to Strengthen the Supply Chain Resilience

Pharma Tech Outlook | Wednesday, December 15, 2021

Globalization and complexity have increased the complexity of pharmaceutical supply networks. With more outsourcing, new modalities, and new methods of reaching patients, they must be resilient to shocks.

FREMONT, CA: The global value of pharmaceutical items traded has increased sixfold over the last two decades, from $113 billion in 2000 to $629 billion in 2019.  Supply chains have become increasingly global, complicated, and opaque due to this growth. More corporations are outsourcing production to contract manufacturers, expanding their treatment options (such as cell therapy), and experimenting with new methods of patient contact. This results in supply networks for some products that are so intricate that they begin in Asia and around the world twice. Leading pharmaceutical businesses have successfully shifted their supply networks to boost growth and contain expenses. However, if companies do not identify and plan for the risks associated with these developments, they risk suffering catastrophic losses.

Methods for enhancing supply chain resilience

Transparency from beginning to conclusion

For pharmaceutical firms, a lack of visibility into the business activities of suppliers and suppliers' suppliers can pose a substantial risk. When it was discovered that overseas suppliers were using child labor, many consumer brands were accused of unethical labor practices.

A business's suppliers must be mapped by tier to gain an end-to-end supply chain perspective and identify weaknesses. Additionally, it is critical to have a firm grasp of exposures that extend beyond supply, such as how products are manufactured, delivered, and kept, as each stage poses its own set of potential hazards. For instance, the insolvency of a minor transportation provider in a vital location could result in the complete shutdown of an entire supply chain.

To gain a clear picture of what is happening at each step, leading and lagging resilience metrics in seven domains must be gathered from internal and external data sources: data security, finance, operations, organizational maturity, regulation, reputation, and structure (Exhibit 6). For instance, assessing a company's data security policies may uncover insufficient safeguards. Structural analysis may reveal a high concentration of suppliers in a location susceptible to substantial climate change effects, such as hurricanes.

Businesses can undertake these evaluations using a variety of technologies. Certain businesses collaborate with third-party organizations, particularly venture-backed start-ups, to make investments (typically less than $1 million) in mapping their value chains and establishing risk-monitoring systems. Others invest up to $50 million in digital and advanced analytics use cases intending to reduce operational risks. For example, specific pharmaceutical organizations utilize AI-driven root-cause analysis to enhance their quality. Others have established reliability rooms to monitor performance and risk metrics in near real-time across their end-to-end networks to discover and rectify issues before they cause disruptions.

Stress testing and reassessment on a routine basis

Businesses frequently utilize scenario planning and simulation models to identify vulnerabilities, quantify potential consequences, and minimize the repercussions. For instance, during the COVID-19 pandemic, a leading pharmaceutical business employed a digital-twin simulation to assess the impact of manufacturing slowdowns and shutdowns on patient drug supplies. This enabled the company to recognize that it had more time than anticipated to create and implement safer work practices in its production plants, allowing it to take the time necessary to find the best solutions. Once a business has visibility into its supply chain, it can continuously assess the likelihood of various hazards.

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