3 Methods That Can Improve SCM Flexibility In The Pharma Industry.

Posted by Fazal Sayyed

pharma industry

For almost a decade, the healthcare sector has depended on a just-in-time (JIT) delivery paradigm. While JIT helped the industry control costs and decrease waste, the procedures and technological systems that supported it were inadequate to meet the demands of a worldwide pandemic. During the initial wave of COVID-19, healthcare practitioners devised interim solutions to deal with a scarcity of personal protective equipment (PPE) and other crucial supplies. These practices are likely to remain in place long after we have returned to pre-pandemic levels of activity. In fact, the virus has prompted the industry to reassess its concept of supply-chain resilience.

To tackle these types of problems in the future, here are the three ways pharma companies can make their supply chain more flexible.

1. Simplify and digitise key procurement procedure.

Everyone understands that manual procurement processes using paper, e-mail, and fax paperwork delay supply-chain activities, especially during unanticipated peak demand. Nonetheless, certain procedures have yet to catch up with the most recent innovations. Manual processes caused a lack of transparency on order status, estimated delivery timetables, and supply-allocation requirements at the height of the crisis. Providers that had previously engaged in automation were better equipped to comprehend the elements that influenced care delivery and purchasing decisions. Knowing this, now is the time to create a comprehensive transaction management strategy to expedite provider and supplier contacts in a compliant manner, as well as streamline order placement, fulfillment, and settlement. Aside from time savings, optimizing transaction management processes provides improved visibility into the status of orders and supply.

2. Prepare your financial system for crisis.

Cancelled surgical treatments owing to COVID-19 caused financial strain on healthcare providers previously this year. At the same time, increased demand for PPE resulted in unforeseen expenses. As healthcare providers and their suppliers have noticed, appropriate planning for supplier payments and working capital is crucial to guaranteeing operational integrity. Providers are preparing their financial systems with expertise and experience. Suppliers and providers are attempting to leverage technology to make payment exchanges more efficient – one that generates a balanced financial equilibrium for both sides. While many in business acknowledge that a more robust supply chain comes at a greater cost, providers and suppliers may use financial automation to offset part of the cost rise—for example, through cost-cutting measures.

3. Opt for a Multi-tier Supply Chain with Third Party Manufacturers.

A well-thought-out make-versus-buy plan is vital for preparing for market drops. Companies that outsource manufacture of certain items might better deal with demand slowdowns by simply lowering procurement from a supplier rather than reducing factory capacity utilisation and incurring the cost of idle fixed assets.

Developing a make-versus-buy strategy necessitates a defined set of product and market criteria to identify when third-party suppliers are more advantageous than, say, a streamlined and flexible manufacturing footprint. If the volume is minimal—and, more significantly, if the medicine is not a high-priority breakthrough that needs meticulous intellectual capital safeguards – letting someone else create it is a preferable option. In-house manufacturing should be preferred when manufacturing scale and efficiency are attainable (typically the case for top-selling items) or the medicine is a unique item in the company's portfolio.

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