Is the pandemic the catalyst for long term change in Pharma and Healthcare?
16th February 2021
Our Service Offerings & Thought Leadership team are working closely with the University Of Bath and the students of the MSc in Operations, Logistics and Supply Chain management to investigate the trends driving changes and the common ways organisations are tackling them.
The global pandemic has seen Pharmaceutical and Healthcare supply chains under pressure like never before. Firms must reconsider their supply chains and cost metrics in order to continue to compete effectively in a market full of new entrants and innovation.
Re-evaluating location and cost priorities
Despite the apparent resilience of Pharma and Healthcare supply chains, the pandemic has brought to light the need for re-evaluation of key metrics when making procurement function decisions. Currently, India and China are the largest global producers of pharmaceutical ingredients, meaning that many pharmaceutical companies have incurred significant costs caused by supply disruption and logistical problems when sourcing their key inputs. At worst, companies who previously prioritised landed costs found their supply chains broken by COVID, and at best they experienced bottlenecks due to unprecedented increases in demand. This has forced organisations to reevaluate their financial priorities, with the need for a more critical look at risk implications regarding location and security of supply, rather than simply cost. Many have also been forced to reassess supply chains in order to increase their agility, and find new technological solutions to increase resilience.
Building resilience through supply chain management
In order to build resilience, organisations must consider the risks involved in location selection; over-reliance on a single location or supplier can result in significant vulnerability to disruption. A move therefore towards multi-sourced or more local sourcing strategies would be wise. By accounting for the potential costs involved in location-based supply chain disruption, companies can mitigate risks of escalated financial implications. By shifting locations closer to end markets or lower risk countries, organisations can limit the cost associated with long-term supply chain disruption.
Increasing the agility of operations could enable organisations to respond quickly to unprecedented circumstances, and facilitate the ability to scale up or down without the related costs. A prime example of innovation and agility in the face of COVID-19 has been the creation of the AstraZeneca vaccine. Collaboration between scientists, governments and organisations has ensured fast information sharing, and developmental innovation has been created through running developmental stages in parallel, expediting the process.
A shift to new technology?
These new demands created by COVID-19 disruption will force Pharma and Healthcare firms to find new and innovative ways to mitigate risk, most likely turning to digital-led tools in order to create more agile operations and continue to deal with the strain that the pandemic has placed on their supply chains. With new entrants to the market, firms must seek to innovate in order to maintain competitive advantage. One such way to achieve this is through the use of AI; it has already been invaluable in the fight against COVID-19; carrying out rapid analysis of scientific papers and enabling diagnosis of the disease. There is no doubt that AI can support the next challenge for Pharma firms – the production of sufficient vaccines to meet the massive global demand.
The need for supply chain agility in procurement is nothing new, but perhaps the pandemic has been a catalyst for actual change in pharmaceutical supply chains, teaching a lesson that processes can always be improved upon through innovation, and no supply chain is fully resilient to unexpected and unprecedented events. In the coming months, organisations will benefit greatly from the incorporation of new technological tools for supply chain enhancement and innovation.
For further insights, or a general discussion about Procurement & Supply Chain health in a post-Covid world, please contact Allison.Ford-Langstaff at Allison.ford-langstaff@4cassociates .com