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Navigating the Pharma Supply Chain: Balancing Risk and Resilience in Turbulent Times

3 Minute Read

My definition of supply chain is the art and science of mitigating risk in an otherwise constant flow. That definition has been tested over the past four years by COVID-19 and, more recently, war and political strife.  Supply chain is the metaphoric blood flow of a company, and if an artery is blocked, another must pick up the additional flow.  As simplistic as it may sound, it is key to understanding the importance of how a constant flow keeps the heart beating at a planned pace.   

To most in the pharmaceutical industry, supply chain consists of ensuring a constant flow of items in the bill of materials (BOM), but to supply chain specialists, it is defined by four specific variables: materials, external factors, systems, and partners.

Most folks understand two strategies in managing a BOM: inventory management and second source supply. Some have pushed suppliers to manage inventories on their behalf, otherwise known as Vendor Managed Inventory (VMI). But materials are much more than just inventory and flow of the BOM.  In the imperfect world that we live in, each material has developed its own BOM and supply chain.  We rely on these supply chains in a massive spider web of arteries. 

Previously, companies sought to own and control everything in their associated supply chains to satisfy the BOM.  The strategy then shifted to ensure that companies focused on only what they felt was most vital to their business.  Pharma companies began to prioritize development, sales, or marketing, and many companies, largely development in nature (the virtual supply chain), spun out of large pharma.  Because of this shift in mindset, manufacturing was deprioritized, and CDMOs became an extension of many companies. 

But what systems can organizations rely on to preemptively signal an incoming issue and keep the “heart” beating at a planned pace?  Many have utilized ERP systems to communicate and automatically order or ship materials. Unfortunately, this is often not an effective indicator of things to come. There is value in identifying key information, but knowing what to do with it is an entirely different conversation. Today, we see numerous systems that are tied up and down the vertical supply chain with the ability to give indicators that a potential ‘blockage’ is coming through the use of nodes, an early warning system, if you will. 

Choosing the right partner to help you manage the arteries that are distant to you is critical.  Our current environment is pushing the pharmaceutical industry towards onshoring, which will certainly reduce many external risks for a US-based customer.  But it must be weighed against the costs associated with cheaper production overseas.  The CDMO is a critical partner with systems that can mitigate risk as an extension of the pharma company itself. 

My role at Societal is to ensure we partner with our customers to give them that planned pace. To view more content like this, download our eBook, Pharma Supply Chain Risk Management, created in partnership with Contract Pharma.

Scott Rizzo
Senior Vice President and Chief Operating Officer
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