Supply Chain Management – A C-Suite Issue
COVID-19 has raised the subject of supply chain management to the national level as well as to the C-Suites of America’s Corporations. Solutions to most vexing problems lie in the examination of the supply chain of Life Sciences. The expression “Supply Chain” has been uttered every time COVID-19 has by medical experts, newscasters, politicians, corporate executives and the common man. Every problem has been examined and explained in the context of the supply chain. Historically CPG, Sports Footwear and Retail companies have developed supply chain management to be a matter of competitive edge. Supply chain executives have driven decisions right from the product design stage to manufacturing, distribution and satisfying the consumer. Healthcare is experiencing baptism by fire of supply chain management, from procurement to manufacture and distribution, while dealing with governmental interventions of policies, customs and regulations.
Re-Configuration of the US Bio-Pharma Supply Chain
The belief in the basic tenet of Globalization will remain unshakable because its rising tide lifts all boats in terms of global innovation, prosperity and human well being. In the past, the design of the global supply chain network of sources of supply, manufacturing, warehousing and distribution had been based on optimization of system-wide cost of manufacturing, distribution, transportation and carrying inventory for a required level of customer service. The unmistakable awakening today is that the optimization principle has to be modified to recognize the risk of a Black Swan event whose adverse impact of the disruption is colossal but probability of occurrence is infinitesimal small.
Integrated and Accelerated Approval for Drug Development
The inordinately long drug development cycles with high cost and low success rates, under the compliance purview of the Food and Drug Administration, is being challenged. With human lives at stake.The pace of development of a drug or vaccine or diagnostics has gone from slow motion to dizzying speed. Morphing of drug development with commercialization is taking place as DevOPs is taking hold in information technology.
The Fast Track Act (2014) and Breakthrough Therapy Designation of the FDA are also coming to the rescue of patients as tests, therapeutic drugs and vaccines are being developed with uncommon speed. Similarly, phenomenal results have been achieved in reducing the time to test for the coronavirus, from days to minutes. We have witnessed the positive impact of the Fast Track on clinical trials for Cell and Gene Therapy cures and can expect a quantum leap with scientific ingenuity confronting the present crisis.
Just as the Y2K Problem forced companies to review their business systems painstakingly, the pandemic will also have a greater impact, resulting in innovation for exponential growth.
Hospital Information Network
Governor Cuomo’s launch of an online portal to connect hospitals and healthcare facilities across the State of New York is the model to be emulated by the other States to potentially build a national grid. The plan merges all the hospitals into one operating system with hospitals spread from Buffalo to NYC. Hospitals will be sharing staff, patients, and supplies for the foreseeable future, with Albany overseeing the distribution of resources. Data managed includes demand (patient registrations, treatment, recovery, deaths, etc.), assets (hospital facilities, ICU and regular beds, equipment and tools), inventory of products and supplies (ventilators, masks, swabs, etc.), human resources (doctors, nurses and others), and hospital metadata. The team will be led by the State Department of Health and includes the Westchester, New York City and Long Island healthcare systems, the Greater New York Hospital Association and the Healthcare Association of New York State. The team will also work with FEMA and the federal government. Imagine the intrinsic value of a Hospital Information Network which will maximize the utilization of all assets!
Testing of patients, gathering of patient data, monitoring, visualization and analysis will gather momentum. Greater examination of Nursing Homes, Prisons and Labor-intensive businesses will save lives. Greater analysis of genomic data with data pertaining to diseases, demography, economic, social status, etc. augurs well for healthcare breakthroughs.
Digitalization: The New Life Line
For supply chain to become Intelligent, Responsive and Agile, it must be rewired through digital technology. The Healthcare industry can learn from Hollywood where digitization of the cash cow DVD nearly decimated the industry two decades ago when Bits and Bytes represented the content of a physical DVD and were delivered on the ubiquitous delivery channel of the world-wide Internet. But today, the Media & Entertainment industry may be the most insulated to COVID-19 pandemic because digitalization has transformed many major links of the supply chain. Its digital supply chain consists of Digital Conceptualization and Scripting of a film or TV episode, Digital Rights Management, Virtual Production and Sets, Digital Collaboration among Film Makers, Digital Dailies (daily Movie Production), Digital Marketing and Direct to Consumer delivery through Streaming. Very soon the word Digital will become redundant in the functions of the business.
Telemedicine and Telehealth, along with IoT, are beginning to gain ground considerably. The thermometer manufactured by Kinsa provides an intelligent heat map of potential COVID-19 patients across a million devices that are Internet-enabled. Not to be left behind will be the Apple Watch, Fitbit and other devices to generate signals for the infection for predictive modeling, along with Social Media contact tracing. Finally, the consumer will have a motivation for addressing issue of privacy so that equitable terms and conditions can be established.
Platforms for Supply Assurance
Lack of Supply Assurance has kept executives awake at night during the pandemic because the supplier network of a drug manufacturer may be constrained with single source of supply, suppliers scattered over continents, disparate and disconnected business processes and systems, and operating with non-aligned objectives. Tremendous stress has been imposed on the interface between manufacturers and their suppliers and the manufacturer and its customers. Amazon.com-like platforms are being built by conglomerates in Life Sciences with solutions from SAP Ariba, E2Open and others which allow seamless integration and collaboration of systems in real time between the trading partners. Such a platform as a service is growing today to enable continuous flow of information, goods and money between trading partners. Forecasts generated by the customer to feed the supplier and the supplier’s suppliers are driving supply resilience. Consignment Inventory or Vendor Managed Inventory or Supplier Managed Inventory is being resuscitated because safety stock for demand surges requires information sharing in real time and a common platform for doing business.
In strategic sourcing, demand planning, which has traditionally been a very sophisticated, data-driven technology, will begin to entertain “Just In Case” scenarios to ascertain preparedness for demand surges. The cost optimization of business will be made with consideration of risk in the long term. There will be a cost of risk mitigation and indicated as a reserve or contingency on the balance sheet.
Finally, shunning the inevitable single-source-supplier policy may face its death. It is a known fact that in the biopharma industry that every time we have to go through regulatory approval for a new supplier, the dossier required to be filed with the FDA, takes two years. Lars Gyldenvang, M. Sc. Pharmacy, CEO and Founder, Klint Medical Aps, describes it as the “Pharma Non-Sense” for it is an onerous detriment to diversifying suppliers for resilience.
Healthcare Enterprise Has a Soul
Dr. Prashant Yadav, Affiliate Professor of Technology and Operations Management at INSEAD, has pointed out that the “Traditionally, the social contract of our company is largely driven by the commercial organization for they are the ones who set the price and decide access. Result is that the biopharma supply chain community doesn’t have a social contract where we exist to fulfill a social role and that social role is to provide health technologies to end patients. The biopharma industry response to COVID-19 has clarified the social contract when therapeutics and vaccine are available.”
Protecting and rewarding the “First Responders” has finally become the national priority which never existed before the pandemic. We have seen the images of these brave people on television, the Internet, and Online, and read about it daily. Protection has been on top of everyone’s mind and keeping them safe has become a TOP priority. Personal Protective Equipment – Gloves, Masks, Face Shields, Gowns, Personal Hygiene products (Hand Sanitizer and Soap, Disinfectants, Wipes) and Paper Products (Towels, Wipers) are all critical and many actions are in motion to help our Front line in the COVID-19 War. These people have become a critical resource within the supply chain and increased engagement with hazardous materials & Decontamination Service Providers are additional phenomena we need to continue to monitor and support.