Supply chain pain points: Life sciences

AlexaCheater

8 life sciences-specific challenges and how to overcome them

Life sciences supply chain

As I mentioned in the first blog of this supply chain pain points series, working in supply chain is tough business. Every company’s supply chain is unique, with its own set of challenges and solutions. But when it comes to life sciences supply chains, things just seem to be a whole lot more complicated.

Regulations, expirations and generic and brand name labels add a certain complexity to the mix not always seen in other industries. Branded pharmaceuticals tend to be high margin products, while generics are lower margin with a large volume of new product introductions (NPIs). With an extremely competitive landscape, mergers and acquisitions are common, leading to a multitude of disparate enterprise resource planning (ERP) systems, wreaking havoc on end-to-end supply chain visibility. Here are a few more obstacles those of you working supply chain in life sciences have to contend with.

Lack of robust sales and operations planning (S&OP) tools

Traditional S&OP tools don’t always account for the specific needs of the life sciences supply chain. S&OP in this space requires volume level planning at multiple hierarchies and provide mix level detail including material and capacity constraints at the site and SKU level.

Solution: Implement an S&OP tool that provides easy balancing of supply and demand at multiple levels of aggregation. Planning functionality should include multiple time dimensions with real-time analysis, and give you the ability for robust scenario simulation to evaluate options.

Tenders, trade promotions and new product introductions

It can be hard to manage these types of demands considering they often don’t exist in legacy ERPs. Given approximately 80% of profit from new products comes during launch, this is a crippling obstacle for many.

Solution: Find a way to get that critical data into your ERPs. Supply chain management software exists providing just such a capability. You’ll also need the ability to model the probability of demand for tenders and trade promotions, including probabilities and priority-assignment. Modelling NPIs as pseudo parts (with their own pseudo demand and bill structures) provides much-needed visibility and analysis to projected fulfillment, revenue, capacity and material availability.

You can only satisfy demands with supplies meeting specific characteristics

Expiry dates, stop-sell dates and batch numbers – you have to account for all of these special attributes when looking at your supply. You may think you’re able to fulfill demand, only to discover you don’t have enough products meeting the expiry date requirements to actually deliver. That’s not a great way to improve customer satisfaction levels, and can lead to greater amounts of excess or obsolete inventory.

Solution: Enable special supply and demand allotment based on these unique parameters and make sure you factor them in when calculating available demand. It’s even better if your technology solution can handle all this automatically, including providing projected excess.

Expiry dates are associated with specific SKUs

With thousands of SKUs all with individual SKU and batch expiry dates, the odds of those items expiring on warehouse shelves becomes a real concern. It directly impacts availability and inventory excess. Not to mention what it does to your inventory risk and bottom line.

Solution: Calculate projected expiry at multiple levels when planning. And don’t forget to consider inherited expiry from lower level supplies. When a batch of products does expire, make sure to stop considering the quantity as viable and plan for new supply to meet future demand. Your best plan of action is to monitor product expiry by country and affiliate-specific criteria related to allowable shelf life, and set up a system of alerts before expected expiry dates, so you can take action before the item is no longer usable.

Campaign planning

Multiple production line setups often result in poor equipment utilization and way more inventory than you need at any point in time. It’s inefficient, costly and not a great way to run your operations if you want to stay profitable for long.

Solution: Make sure you connect production of the same material when executing through batches. This will help reduce the number of setups and make your production line more effective in the long run.

Transition dates are assigned for SKUs

That means if regulatory approvals are delayed or expedited, the change in dates affects supply and demand.

Solution: You should model transition dates to work to determine what materials you need to produce to account for the change (including lower level materials).

Increased outside pressures

As with any business, there are often outside pressures that have a big impact inside your operations, and those working in life sciences aren’t exempt. Things like shifts in regulations and changes in approvals are beyond your control. As are patent cliffs, which can have a monumental effect on your revenue streams as competitors get license to sell the same products.

Solution: Make sure you thoroughly evaluate supply chain risk and have all available information before making any decisions. Simulate scenarios and evaluate impacts across the entire supply chain, but ensure you compare the results against key performance indicators so you know exactly where you’ll need to make any tradeoffs.

Lot-for-lot planning

It can be difficult to manage lot traceability across all levels of your supply chain, including aligning supply to upstream work orders. Without that alignment, you risk not having full visibility into who supplied what and where it ended up. This becomes vital for accountability and in case of recall.

Solution: Connecting your end-to-end supply chain within a single system will help you alleviate this issue. You’ll be able to plan packaging work orders split from different bulk locations based on quota arrangements and create work orders from bulk locations based on products’ batch sizes. That way you’ll always have clear visibility into your supply chain operations.

These are just a few of the life sciences supply chain pain points. What other supply chain challenges do those of you working in this space have to overcome? Let us know in the comments area below. Don’t forget to check out the first blog in this series on consumer electronics supply chain pain points and come back to see what other industries we profile.

AlexaCheater

As the Product Marketing Manager at Kinaxis, Alexa helps develop and deliver informative, engaging and entertaining supply chain content that also works to promote how Kinaxis RapidResponse is revolutionizing supply chain planning. She joined Kinaxis in 2015 with more than a decade of communications experience. Alexa holds a Bachelor of Journalism (Honors) from the University of King’s College in Halifax, Nova Scotia.

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Discussions

  1. I am responsible for the Crop Protection Supply Chain in BASF Latin America. In this business we experience all the challenges above! Another one very relevant to this industry is seasonality. Most of our portfolio is used by our customers once a year in a 2-4 months application window and the demands can vary a lot short term within this period, driven strongly by weather conditions, among other variables (like commodity prices, new products registration timelines, etc). We have very long RM (Active Ingredient) lead times (average 1.5-2 years) and also need to pre-produce part of the finished goods volume due to capacity restrictions. In this scenario we need to do a lot of scenarios simulations, have fast communication among the chain and work strongly with risk management and decision dates in our S&OP process in order to minimize negative effects in our supply chain.

  2. Thanks for bringing up seasonality Eliane! It’s certainly a challenge many companies, not just those in life sciences face. It sounds like you’ve got a good handle on how to overcome it (simulations, quick collaboration, risk management). Hopefully others can learn from your example.

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