At the time of writing, the continuing global spread of COVID-19 is resulting in huge human and economic cost. The damage to lives and livelihoods is vast, and the race for a vaccine is well and truly on – according to the World Health Organization, as of late April 2020, there were five candidate vaccines in clinical evaluation and 71 in preclinical evaluations. While the vaccine hunt continues apace, organizations the world over are having to find ways to protect their employees, maintain operational continuity, address significant disruption to supply chains, and all while looking at longer-term strategies to avoid future adversities.
The impact on life sciences, and particularly the pharmaceutical industry, has been particularly hard felt because it extends through the entire global supply chain ecosystem, and because of an overreliance on a select few suppliers (particularly those in low-cost territories). In fact, EFCG estimates that upward of 80% of chemicals used to make drugs sold in Europe now originate in China and India.
But unforeseen events can provide valuable lessons for organizations and their supply chains. For example, the 2014 Ebola crisis and Hurricane Maria in Puerto Rico in 2017 prompted Johnson & Johnson to maintain key inventory at major distribution centers away from high-risk areas and to work with its suppliers to mitigate the impact of future crises.
There is particular pressure on biopharma, which is charged with developing, producing and distributing COVID-19 therapies and, ultimately, the vaccine. Biopharma will be responsible for facilitating one of the biggest distribution programs in human history, in an attempt to inoculate every human on the planet. Supply chains will, of course, be vital in facilitating this. This will require an astounding effort in organization, collaboration, logistics, and technical coordination. But the disease has already impacted, and called into question, the very system (the life sciences supply chain) that will be vital in distributing an eventual vaccine.
Life sciences organizations, in general, are facing a plethora of challenges – not only to discover and make treatments and vaccines available, but also to maintain supply chains for existing treatments and services. But quarantine and physical distancing measures within the workplace can impact the operation of factories and infrastructure. US census data shows that about 20% of the industry workforce in biopharma is engaged in activities that are vital in keeping sites up and running. These activities include material and inventory handling, production processes, and testing and maintenance.
Business continuity plans must be in place to prevent operations from grinding to a complete halt while protecting the safety of employees.
A recent report by The Capgemini Research Institute, “The great supply chain shock: COVID-19 response and recovery,” highlights two examples of quick thinking and frugal innovation by pharma giants Novartis and Pfizer, who have used micro-factories no bigger than a shipping container to produce drugs faster and more cheaply.
COVID-19 has shown us that we are all very closely connected; our societies, our economies, each other. To fight the virus, our supply chains must become more connected too – they must branch out like a hyperconnected network. Supply chains can no longer be so linear and rigid, too dependent on certain links that are vulnerable to disruption. A more agile, nuanced, and plural branching out in terms of partners, technology, and touchpoints, fed by data, is needed – an intricate web. If you cut a snake in half, it stops moving– it perishes. But if you cut a tentacle off an octopus, it can continue to live, adjust, (it has seven others anyway), and can even grow back the missing tentacle stronger than it was before.
To me, it’s clear that supply chains across all sectors will need more end-to-end visibility and resource prioritization to become more flexible.
Data and AI fed by touchpoints enable a monitoring system to ensure effective execution of risk mitigation strategies. For leaders to act on facts and make “now-based” decisions and mitigate risk, end-to-end value chain visibility and insight–based scenario planning are essential. AI and data can also build simulation models to predict demand and supplier lead times. It can bring into precise focus your operations and value chain risk and help anticipate future disruption to any part of the supply network.
The Capgemini Research Institute’s recent report, “The great supply chain shock: COVID-19 response and recovery,” gives a number of recommendations to organizations in transitioning out of the recovery phase to gain supply chain resilience and flexibility, including:
- Reassess customer demand – Sales & Operations planning teams have to be able to build a more complete picture of future consumer demand by simulating recovery scenarios before finalizing production and logistics decisions. It’s important to assess to what degree customer buying preferences and preferred sales channels have shifted.
- Improve forecasts – AI and analytics can help to develop new forecast models based on the latest customer sales and market data.
- Align operations – Drive transformation through the digitization of supply chains, the mapping of supply networks, and rethinking supply chain strategy. Organizations with sophisticated digitalization in their supply chains are able to respond more quickly.
To become more flexible and resilient, life sciences supply networks should be infused with Industry 4.0 capabilities, including intelligent analytics, AI, automation, and IoT. These technologies will ensure transparency across the global supply chain and enable more informed decisions fed by real-time data. This will be crucial in meeting higher demand for pharmaceuticals in the short term while, in the longer term, enabling the smooth and expedient rollout of the vaccine, whose distribution will have to be coordinated across multiple geographies simultaneously.
The actions of life sciences companies over the coming tens of months will be much scrutinized. This will also be the case after the pandemic has passed. However, I believe that despite the hardship, the pandemic could represent to the life sciences supply chain – not only an urgent challenge, but an opportunity to innovate and improve. Just like an immune system responding to a vaccine, supply chains worldwide are being presented with a chance to learn, grow stronger, and become impervious to future disruption.
Visit How to accelerate a healthy recovery in life sciences to learn how we help life sciences organizations respond to the current events.