differentiated by supply chain a logipharma report 2018 · here are five recommended courses of...

Differentiated by Supply Chain A LogiPharma Report 2018

www.logipharmaconference.com

Differentiated by Supply ChainA LogiPharma Report 201801

LogiPharma is without doubt the number one industry supply chain conference in Europe. The combination of high-quality presentations and opportunities to network with peers from other companies makes it unique.

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Arie Moruanx, Global Surgery Planning Excellence Director, Johnson & Johnson

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ContentsIntroduction

Five Lessons Pharma Companies Can Follow To

Improve Supply Chain Visibility

Cold Chain as a Service (CHaaS): Building Virtual,

On-Demand, Cost Effective Cold Chains of the Future

Part 1: Challenges and Opportunities

Part 2: Investments and Technology

Part 3: Supply Chain Visibility and Demand

About E2open

About Controlant

About WBR Digital

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Differentiated by Supply ChainA LogiPharma Report 2018 02


IntroductionThe pharmaceutical industry is changing. There are new products, as well as new methods of manufacture, distribution and regulation.

All this means a more complex and competitive environment for supply chain, and an environment where supply chain is increasingly seen as a competitive differentiatior, rather than simply a cost-centre.

As a result, the hunt is on for innovative ways to improve the supply chain using the abundance of new technology available, as well as by importing the relevant lessons learnt by other industries. From rapid shifts in supply and demand, to impending regulatory changes, disruptive technologies and, of course, the need to maintain supply chain integrity, there are plenty of stress-factors to be aware of – and solutions to be found.

In advance of the LogiPharma 2018 conference, we wanted to investigate some of the issues which are driving transformation in the pharmaceutical supply chain today.

We approached 100 senior decision makers in the industry, with job titles like Vice President of Supply Chain Management, Global Head of Supply Chain, Director of SCM & Procurement, as well as others of a similar standing to compile this research report.

The results of our research have been aggregated, anonymised and are presented here to give you an insight into how your peers are responding to these challenges.

Additional contributorsDr. BernhardSchwisterVP Sales Pharma and HealthcareE2open

Mirko SenatoreDirector of Supply Chain Network Solutions and Excellence, EMEAPfizer

Will RobinsonLogiPharmaConferenceDirectorLogiPharma 2018

Jessie VanderVeenVP Marketing & CommunicationsControlant

Five Lessons Pharma Companies Can Follow To Improve Supply Chain VisibilityDr. Bernhard Schwister, VP Sales Pharma and Healthcare, E2open

Leading pharma companies are following the successes of other industries like high-tech and consumer goods. Here are five recommended courses of action for pharma companies:

1. Connect and collaborate using a business network. This is the foundation necessary to run a multi- enterprise supply chain. The modern approach is to leverage the cloud to connect electronically to all outside supply chain partners. Beyond connectivity, collaboration capabilities are also needed to support business interactions between the different actors, routing the information in both directions as required. To enhance these capabilities an intelligence layer is getting added to the shared information, that enables the involved partners to move towards an exception- based driven planning approach which builds the operating framework for a collaborative business process.

2. Understand the true demand. Demand forecasts are only an educated guess of what the future demand will be. The most innovative pharma companies start by leveraging concepts that leading consumer product companies have already successfully implemented: capturing vast amounts of demand-related information and feeding it into sophisticated software to better predict true demand. This means to capture and incorporate relevant downstream channel information, point-of-sale (POS) data or even trends that got captured via social media – whatever data is relevant to the business.

3. Control the quality at the CMOs. In the pharma industry, which is heavily regulated and where quality is critical, companies need to ensure end-to-end traceability. When external parties such as CMOs are involved, it is critical to track product quality across the multi-tier, multi-

enterprise supply chain. For this, companies connect to their CMO’s manufacturing execution systems (MES) to capture relevant manufacturing data at all stages of production. This provides the pharma company very granular factory transaction visibility to track material flows, lot genealogy, processing steps, and any associated parameters such as yields or test results.

4. Quickly re-plan across the network. A key requirement for pharma companies today is to quickly detect and respond to changes in the demand and supply picture. Leading pharma companies are using state-of-the-art planning applications that give them rapid decision support with what-if scenario capabilities. These tools allow planners to quickly evaluate the impact of new information, like a supply disruption or an unexpected order, and easily compare alternative plans to select the best option to be shared with all supply chain partners impacted.

5. Better manage the distribution. Finally, on the distribution side, pharma companies are also increasingly reliant upon a range of external partners for transportation, warehousing, and other value-added services. Given how critical it is to ensure the right supply of the right product at the right location, pharma companies are taking lessons from consumer product companies and are tightly managing their distribution partners, including complete downstream inventory visibility and the support of different replenishment models.



Cold Chain as a Service (CHaaS): Building virtual, on-demand, cost-effective cold chains of the futureJessie VanderVeen, VP Marketing & Communications, Controlant

Acceleration of product entry and delivery is challenging for pharmaceutical and supply chain logistics businesses, and the increasing speed of product innovation required in today’s global markets is staggering. Losses in global cold chains are increasing at an alarming rate, in a large part, due to supply chain complexity and silos. Those losses currently total over $35 billion in perishable products annually.

Cold chain monitoring as a subscription service is a virtual supply chain that provides a nimbler way of operating. CHaaS offers businesses an innovative, cost-effective approach to generating a higher return on investments by partnering with a service partner to support some or all of their cold chain needs, from procurement to production, manufacturing, quality, storage, distribution, and logistics — freeing up valuable company resources to focus on their customers and innovation.

CHaaS empowers businesses to collect, evaluate, and share data within a department or company, or across supply chain networks, removing unnecessary siloing of data and powering a broad base of applications and data analytics. The approach can help to significantly improve operational efficiency, reduce friction and waste in the cold chain, and improve tracking of shipments and assets. Businesses that leverage CHaaS solutions can realise lower upfront and variable costs while leveraging proven technologies, and achieving instant global scalability:

l Leveraging automated data capture to help ensure the quality and efficacy of temperature- sensitive pharmaceuticals in the supply chain through the last mile – without unpacking or tampering with the shipment.

l Optimising asset management and vehicle monitoring for improved shipment routes and excursions, especially where high-value assets are deployed.

l Enabling information sharing among supply chain partners, and product traceability records with customers and insurance and financial services companies.

l Utilising intelligent analytics to move from documenting product damage to preventing it.

l Streamlining operational logistics, including device calibration and inventory management, and through a variety of managed services offerings.

l Facilitating a solution that is easy to deploy and manage anywhere with less operational overhead. Companies employing CHaaS for part or all of their cold chain operational needs are positioned to quickly develop a competitive advantage over the competition. They can develop instant scalability by leaving the onboarding and continuing operational costs to trusted experts that serve as a virtual extension to their in-house supply chain management teams.

Part One: Challenges and Opportunities


Which are the biggest challenges for you in your role currently?Increasing forecasting

accuracy is a pain point which is shared across the industry, getting it wrong can have costly consequences. Under-forecasting means missing out on sales, while over-forecasting means that you are creating potentially large amounts of unnecessary costs. Ultimately, forecasting presents a gigantic opportunity – even a 1% cost saving across the board in addition to existing programmes can make a huge difference to business performance and profitability.

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Increasingforecastaccuracy

1

Innovating thedistribution channelstrategy to remain

competitive

2

Improving qualityand traceability

across yourentire network

3Managing thesupply chain

following a mergeror acquisition

4

Improvingend-to-endvisibility of

supply chain

5

Increasingperformance

of new productintroductions

6

Managing thesupply chain for arapidly changing

portfolio

7

Balancing costmanagement versusproviding excellentcustomer service

8


How far along is your company in implementing direct-to-patient distribution channels?

Direct-to-patient distribution has a proven positive impact on the patient as it helps them to adhere to their proscribed treatment plan. However, when respondents report that they have active direct-to-patient distribution channels they do not mean across the board. Regional regulations vary widely – in some countries you are simply not allowed to supply medication directly to the patient, while in others you can by law, but the regulatory constraints on the process may still make it very expensive.

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17%Fully operational - we have beendistributing by direct-to-patientchannels for over a year

22%We will be implementing it inthe next 1-3 years

8%Not at all

29%Deployed - we starteddistribution in the last12 months

24%We are actively discussing itbut there are no plans toimplement just yet


How prepared is your company for the global serialisation requirements outlined in the EU Falsified Medicines Directive?

Maintaining quality is a massive priority for manufacturers, as it ismeeting serialisation requirements under the Falsified Medicines Directive. This regulation is undoubtedly filling a much needed gap, and is ultimately all about preventing potential problems before they occur.

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23%Not very prepared, it would begood to find out how othercompanies are managing this

7%Not at all prepared -we need more information

43%Somewhat prepared,but we are still developingour processes andtechnologies

27%Very prepared - we haveall of our processes andtechnologies in place


Do you think your company should collaborate with others to achieve a more effective supply chain?

There are most certainly areas of the supply chain that would be served well by more collaboration, for example in emerging markets, where greater collaboration can have a huge impact on access to medicines. However, we should not forget that supply chain can be a powerful differentiator, and must be competitive if we are to spur innovation.

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“13%No – supply chain shouldbe used to differentiatefrom competitors

52%Possibly, but it dependson the situation

35%Yes absolutely – it’simportant to workwith other pharmacompanies to developa more effectivesupply chain


Which one of the following changes is the most likely to occur in 10 years’ time?

25%Direct-to-hospital and pharmacydistribution will be significantlymore common

3%Supply chains will befar more segmentedand specialisedaccording to product

43%Supply chain willmove from being acost center to acompetitive differentiator

29%Supply chain will havea much greater influenceon market access

Products are changingin the global pharma industry, with the focus moving toward completelynew types of products like gene-therapy, and other personalised medicines. With that comes a far more complicated supply chain, and the operation of that supply chain is absolutely critical as it directly affects the experience of the customer. In turn, the customer experience is a huge factor when they decide who to buy from. Because of this, supply chain will only become more crucial as a differentiator in future.

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Will RobinsonLogiPharma Conference DirectorLogiPharma 2018

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Part Two: Investments and Actions

What do you think the number one investment priority for meeting GDP guidelines should be?

13%Risk assessing and adaptingtransportation routes

27%Consolidating or findingnew transportationservice providers

4%Investing inpassive solutions

28%Reassessing and changingstrategy for freight –sea vs. air. vs. truck vs. rail

28%Investing inactive solutions

Investment in active solutions is very important as I believe that, under specific volume conditions, they can be simpler and less expensive than passive solutions. I would also mention investment in active monitoring as a major priority here, as this is one area that offers huge opportunity for the future, and one where the technology is improving all the time.

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Is ‘digitalisation’ a priority for you?There is a huge focus on customer-centricity at the moment in pharma. Digitalisation is a powerful tool to help pharma companies implement end-to-end visibility, and make sure that products are in the right place at the right time, all the while keeping customer needs in mind. Digitisation means pharma companies can plan better, respond more swiftly, provide a better service to their customers, and make everything more cost-effective.

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“37%Yes, somewhat – data analytics and an information-enrichedend-to-end supply chain is important

35%Yes – mobile apps and devices, data analytics are all extremelyimportant to the supply chain

25%Yes very much so - the digital patient, smart packaging and thesmart pill, mobile apps and devices and data analytics will beimpacting pharma supply chain imminently, if not right now

3%No – mobile apps and devices will not be used in supply chain –data analytics could be important though

0%No, not at all –the digital patient, smart packaging and thesmart pill are important to R&D right now - but not thesupply chain

0%I don’t know


Rank these disruptive technologies on which will have the biggest impact on supply chain in the next five years. (Based on average ranking)

4th3D Printing

6thArtificial Intelligence

3rdMobile apps for patientsand care professionals

1stBig Data

2ndBlockchain Technology

5thIndustry 4.0 and the Internet of Things

Big data ties into end-to-end visibility in a big way, and is closely integrated with a lot of these different technologies. It is the cleansing and the analysis of this data that allows for the kind of efficiencies and customer-centric value delivery that is so important for supply chain to become a true differentiator.

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Advanced technological capabilities, like cognitive computing, are driving change in a number of ways. They allow you to work more efficiently on planning and demand activities, all while taking into account a huge amount of data. It’s about automating as much as possible, and with that comes cost-saving, reduced human error, and increased speed.

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No plans to implement

Maybe in future, but not now

We’re actively discussing it

We’re in the process of implementing it

It’s already working for us

0% 1% 3% 46% 50%

Cloud Computing

0% 7% 40% 36% 17%

Customer Data Analytics

1% 23% 45% 30% 1%

Machine Learning

1% 29% 34% 27% 9%

Advanced Data Analytics

13% 25% 34% 25% 3%

Artificial Intelligence

0% 11% 51% 24% 14%

Supply Chain Data Analytics

To what extent is your company driving change in the supply chain using these technological innovations?


Would you consider using machine learning algorithms for:(Respondents were asked to select all that apply)

51%Demand Planning

38%Data Management

47%Inventory Management

42%Promotion Management

44%Safety Stock Management

Machine learning algorithms in supply chain aren’t new. Leading companies today are using powerful machine learning algorithms to more accurately predict demand basedon real-time informationand reduce surplus inventory in their supply chain.

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Dr. Bernhard SchwisterVP Sales Pharma and HealthcareE2open

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Part Three: Supply Chain Visibility

0

1

2

3

4

0% 9% 32% 36% 23%

Raw material / API suppliers

0% 7% 42% 35% 16%

CMOs / Packaging

0% 12% 43% 31% 14%

Distributors / Customers

0% 12% 42% 38% 8%

DCs

To what degree do you have visibility into the following tiers of your supply chain? (Please indicate the degree from 0 = none to 4 = clear view)

End-to-end visibility and tight coordination among supply chain partners is more important than ever, but companies are still suffering from limited visibility outside of their own four walls.

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How would you rate your visibility across your entire supply network?

Very Good

Poor

Good

Fair

9%

Excellent

32%

34%

24%

1%

Only 41% of companiessay their visibility isexcellent or very good.There is still a significant opportunity for pharmacompanies to improve visibility across all tiersof their supply chain.

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Being more responsiveto demand changes1: 6%

2: 16%

3: 40%

4: 30%

5: 8%

Being more responsiveto supply changes1: 11%

2: 28%

3: 31%

4: 16%

5: 14%

Improving qualityand traceability1: 16%

2: 22%

3: 36%

4: 18%

5: 8%

Better managingCMOs1: 8%

2: 27%

3: 33%

4: 27%

5: 5%

Building betterrelationships

with suppliers1: 10%

2: 25%

3: 36%

4: 22%

5: 7%

Building betterrelationships

with customers1: 16%

2: 23%

3: 33%

4: 23%

5: 5%

Enabling controltower-typecapabilities

1: 8%

2: 39%

3: 32%

4: 19%

5: 2%

What are your key priorities when implementing end-to-end supply chain visibility? (Rank each from 1 to 5 where 1 is the biggest challenge)

Achieving end-to-end visibility starts with better connectivity and collaboration amongst trading partners, followed by a better picture of demand and supply that is propagated to all parties.

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Which of the following factors influences your demand prediction the most?

By incorporating real-time data like channel inventory, POS sales and social sentiment, companies can significantly improve the accuracy of their demand predictions, typically by 30-40%.

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14%POS Sales

18%Patient Behaviour

5%History

34%Social Sentiments

29%Channel Inventory


Do you share with your CMOs? (Respondents were invited to select all that apply)

35%Long-term (yearly) Demand Plan

65%Inventory

28%Short-term (12 week)Demand Forecast

73%Material Availability

63%Production Schedule

Exchanging information in real-time across multiple supply chain partners requires not only a platform to capture and synchronise the information, but also automated tools andapplications to makesense of it and respondto changes quickly.

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What effect has Brexit had upon your European supply chain strategy? Nothing has been

done in terms of Brexit just yet, but obviously this subject is of concern to pharma companies, especially ones whooperate in the UK. There is a huge amount of scenario planning going on behind the scenes at the top pharma companies as they try to determine what effect Brexit may have on their supply chain in future.

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Brexit will drive up costs and will also lead to inefficiencies. To work around it we will need to make changes to supply contracts and also

re-think on our sourcing platforms. “

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We are reducing our dependency on the UK. ““

It is not a crisis situation for us,we regard it as an opportunity. “

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We are a pan-European business so now we need to plan earlier based on where stock is

going, where it needs to be held, and any impact this will have on service and cost. “

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A lot is changing. From cost, sourcing and distribution platforms and channels everything

will be altered. “

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We are in a situation of many unknowns,we have to wait to see how the trade and

policies change. “

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E2open is the one place, in the cloud, to run your supply chain, powered by the world’s largest direct business network and a broad portfolio of next generation solutions including Sourcing & Procurement, Quality & Traceability, Inventory Visibility & Optimization, Supply Planning & Response, Logistics & Fulfilment, S&OP/Financial Planning, Demand Planning & Sensing, Channel Data Management and Channel Performance Optimization. E2open enables the world’s largest and most complex supply chains to better plan, execute and collaborate. We understand supply chain. Bring us your challenges and E2open will deliver better outcomes.

www.e2open.com

Since 2007, Controlant has become a global leader in transforming and protecting cold-chains in more than 100 countries worldwide. Controlant’s next-generation subscription approach, Cold Chain as a Service (CHaaS), combines web-based cloud analytics software powered by wireless, real-time IoT sensors, and a powerful layer of seamlessly automated operational logistics, whichhelp businesses to optimize their supply chains from manufacture, through transport, storage, and last-mile distribution. Providing actionable insights through a single data platform, Controlant’sCHaaS technology and services enable businesses to shift from simply documenting waste to actively preventing it.

www.controlant.com


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