In industries such as high-tech electronics and consumer products, the demand-driven supply chain has been a disruptive innovation yielding significantly greater benefits compared with the historical supply driven strategy. In contrast, the biotech industry appears under-served in this regard where a transformation is underway in the industry from being innovators and marketers to becoming a bottom-line focused business.
Certain basic factors for the current phenomenon come to mind. The pursuit of excellence has led to extreme specialization where functional silos have been built and professionals have grown in those environments to higher levels of responsibility. Optimization has taken an inward view. This is evident in the single-minded functions of Research and Development, Clinical Trials Management, Quality Assurance, Manufacturing and Distribution. There appears to be a failure in recognizing that Quality Assurance, Risk Mitigation, Cash flow Management, to name a few, are the fundamental responsibilities of all professionals within an organization. We do not appear to take a holistic view, from end to end of a supply chain. We remain constrained by our functional responsibilities. Very often, the lack of experience in functions other than our own, limits our vision of the greater results that can be achieved. Imagine if a strategic sourcing person, for example, had experience in quality and was exposed to R&D, or a Clinical Operations had experience in R&D, the supply chain would be significantly enriched in terms of productivity, quality and patient care.
At a higher plain, the economic opportunities hidden in the interfaces between manufacturer and its suppliers and customers remain largely untapped. David Simchi-Levi describes supply chain management as a “set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouse, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements”. The requirement for collaboration appears to be an intrinsic prerequisite in the definition of SCM, something that remains a formidable challenge in forging a trading relationship. The new digital economy represented by Google, Amazon, Apple and Facebook and Netflix builds their supply chains on Simchi’s definition whereas the traditional manufacturing or service-driven economy has yet to overcome the adversarial relationships between the trading partners.
The basic requirement is to raise SCM to the C-Suite and develop SCM executives who take a holistic view of the business where the supplier, manufacturer and customer constitute the ecosystem. It will not be easy but there are untold riches at the end of the rainbow. Join me and dozens of biopharma SCM executives at the Bio Supply Management Alliance (BSMA), www.biosupplyalliance.com.
Author: Devendra Mishra, Adjunct Professor, Decision Sciences and Marketing, Graziadio School of Business and Management