Life Sciences: The Power of Supply Chain Leadership in Today’s Market
by Bob Reitinger, William Farkouh, and Jen Valciukas | March 28, 2023
Evolving regulatory environments, shifting customer demands, market disruptors, and pricing challenges are changing the life sciences industry. In this new era, where value creation is no longer only about the products, life sciences companies are placing an increased emphasis on building a strong supply chain via both infrastructure and talent. For CEOs and investors, it’s become critical in today’s market to have executive leaders capable of advancing supply chain operations, implementing technologies, growing partnerships, and mitigating vulnerabilities.
To accomplish this, life sciences businesses are assessing and requiring the following key skills when hiring supply chain leaders within their organization.
Dual Sourcing & Quality Control
In 2020, businesses experienced sudden shortages and delayed or stalled product production. Financial implications were costly and resulted in reassessment of sourcing channels. While the origin of these shortages has shifted, focusing on reducing underlying supply chain risks has remained a top focus of leaders. To mitigate risk, many businesses are implementing dual or multi-sourcing strategies. According to a recent McKinsey study, over 80% of respondents have implemented dual-sourcing strategies during the past year, an increase from 55% in 2020.
Dual sourcing of critical materials reduces the impact of natural disasters, political unrest, and general material shortages on your ability to meet customer demands. Transitioning to a dual sourcing strategy can be complex, so leaders should assure they are hiring supply chain executives experienced in dual sourcing implementation to ensure success.
Quality control is particularly important when developing a dual-sourcing strategy in life sciences. Failure to ensure quality across suppliers can be disastrous, as a lack of quality control will jeopardize regulatory compliance, market reputation, and negatively impact patient outcomes. Additionally, new regulations, such as the EU’s proposed Corporate Sustainability Due Diligence Directive should be considered when developing long-term procurement strategies. Moving forward, we expect to see dual sourcing expertise emerge as a key talent differentiator.
Product Rationalization & Industry Partnerships
Prioritization is a key component of supply chain strategy. Which product/s should we continue to produce? Are there opportunities for outsourcing?
As new innovative products rapidly emerge, product rationalization and industry partnerships have become increasingly important. When it comes to product rationalization, supply chain leaders must thoroughly examine the current product line for underperforming SKUs and effectively communicate findings with the broader leadership team. With prices and economic uncertainty continuing to rise, identifying opportunities to make thoughtful cuts can significantly impact profit margins and financial stability. These market pressures have also driven supply chain leaders to dedicate resources to the assessment of contract manufacturing partnerships and suppliers. Leveraging the expertise of a contract manufacturing organization that specializes in your product type can reduce supply chain challenges including disruption, quality control issues, and manufacturing delays.
The emergence of novel therapeutics such as personalized medicine, has leaders seeking supply chain executives with experience working with novel technologies and a diverse product line. Whether your business is undergoing product rationalizing or launching new innovations, ensuring your supply chain is optimized, partnerships are identified, and new customer demands are prioritized must remain top of mind.
Automation & Digital Enablement
Investment in automation and digital enablement technologies has become a fixture in supply chain strategy as leaders look to prepare their businesses for the future. Using technology to identify gaps, increase visibility, reduce disruption, and ensure environmental, social and governance (ESG) standards are met can drive efficiencies, significantly mitigate risk long term, and improve sustainability. Supply chain leaders with prior experience implementing AI, machine learning, and innovative software platforms are rapidly becoming sought-after skills for supply chain, sourcing, and procurement leaders today.
In the life sciences sector, digitization of the supply chain – from research and development to manufacturing and distribution – is critical to care delivery. For example, using predictive analytics in your supply chain can help to identify demand increases or shortages early. Similarly, machine learning technology has become integral to supply chain planning – automating planner roles and driving organizational efficiencies. In manufacturing and distribution, distributed ledger technologies, such as blockchain, can provide a link between the manufacturer, intermediaries, and customer – helping businesses to gain insight across the supply chain.
It continues to be a time of persistent innovation for supply chain. Particularly over the last three years, there has been a growing understanding of the value a highly strategic supply chain can bring to a business. From mitigating risk to maximizing efficiency and optimizing processes, having a best-in-class supply chain team can prepare your business for a technology-driven future. Supply chain leaders with proven technology experience, strong business acumen, and deep industry knowledge can ensure your supply chain is prepared for disruption, changes in customer demands or new innovations.
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