Event Recap: Supply Chain Planning for Today’s Uncertain World

By Jeremy Friedler Sean Carroll Ryan Chapados

Uncertainty and risk have been consistent themes inherent to biopharmaceutical supply chains. The recent pandemic has only amplified this notion. Since the pandemic started, many emerging companies have struggled with issues related to the shortage of primary and secondary materials, limited supplier visibility, and an overall lack of the business process integration required to offset supply chain uncertainty and risk. Furthermore, many executives are now cognizant of the fact that there is still a lack of preparedness industry-wide in the event of another major supply chain disruption. Given these issues, companies are adopting new techniques and optimizing existing business processes for supply chain planning and scenario preparedness.

Thierry Bilbault, SVP of Manufacturing & Pharmaceutical Development at Akebia Therapeutics joined us to discuss supply chain planning in today’s uncertain world. We talked about how both emerging and established organizations can prepare for and adapt to disruption while enhancing resilience and flexibility in the face of risk.

Business Process Integration Offsets Uncertainty & Risk

The event opened with an overview of how the pandemic magnified the uncertainty and risk already inherent within biopharmaceutical supply chains. We described how many companies are still struggling with a multitude of supply issues including:

• Continued shortage of materials (not limited to just raw material and drug substance/drug product)
• Lack of preparedness for further disruptions
• Sole sourcing
• Visibility into supplier uncertainty
• Lack of business process integration

Then we offered a framework for assessing both internal (e.g., financial, resources, business process) and external (e.g., supply, demand, geopolitical, regulatory) uncertainty and risk. Cross-functional business integration, particularly closely orchestrated integration of Sales & Operations Planning (S&OP), is one of the best weapons for managing risk and uncertainty in turbulent times.

Many biopharmaceutical companies are now reevaluating their S&OP capabilities, most notably by expanding their planning horizon and moving S&OP from tactical planning within the monthly cycle to strategic and executive level planning.

Improving Supply Chain Resilience Through S&OP

In a recent engagement, Converge helped enhance a client’s supply chain and mature their S&OP. We brought necessary structure, tools, and stakeholder buy-in to enhance an informal S&OP process. The improved process definition and extensible tools then facilitated the ability to conduct multivariable scenario planning to address supply challenges.

The need for scenario planning drove the design and development of both processes and tools: the ability to modify demand, supply, and other variables and instantly view results via a dashboard was a priority. Development of a S&OP guidance document recorded current practices and provided a roadmap for further maturity enhancements at the rate the organization would allow. Finally, we built a sourcing scenario engine that addressed over-reliance on a key drug substance provider.

Supply Chain Planning Amid Uncertainty

Together with Thierry, we compared biopharma supply chain planning and S&OP considerations in the pre- and post-pandemic world. Six themes emerged.

1. S&OP as a Core Business Process – The value of S&OP to drive cross-functional and executive alignment for a forward-looking supply strategy has only increased in today’s post-pandemic world.
2. Segmentation and Alignment at Global & Regional Levels – Segmentation of supply parameters at a global, regional, and even local level, incorporated into the S&OP process allows for better insights into forward-looking supply and inventory considerations.
3. S&OP Enhancements Since the Pandemic Start – Short-term supply and demand planning horizons are no longer as relevant in the post-pandemic world. Companies must use a longer-term 60+ month planning horizon for S&OP to help offset upstream and downstream supply/inventory risks and uncertainties.
4. Cross-functional Considerations of S&OP – Cross-functional visibility, engagement, and decision consensus driven by S&OP enable responsiveness and resilience when supply chain disruption and uncertainty arises. Emerging biopharmaceutical companies in particular need to extend S&OP participation to non-traditional functions such as CMC and Quality, given the cascading effects of supply disruptions.
5. Executive Leadership Team and Board Level Interest in S&OP – S&OP output has gained increasing interest at the ELT and Board levels since the start of the pandemic, to make strategic tradeoff decisions to ensure supply continuity while continuing to preserve the cash runway over a multiyear planning horizon.
6. Specific Advice for Emerging Biopharmaceutical Companies – Build tighter alignment of S&OP with Supplier Relationship Management (SRM), enterprise risk management and financial investment considerations (e.g., CAPEX and OPEX).

Key Takeaways

• All biopharma companies should anticipate continued uncertainty, and should evaluate the suitability of their existing S&OP practices. Supply network challenges are rampant and extend beyond drug substance and drug product.
• Integration of the S&OP business process is still one of the best assets for managing supply chain and manufacturing uncertainty in turbulent times.
• Short-term planning horizons are critical for execution, but are no longer effective in accounting for the full risk. The shift to long-range (60+ months) planning as an output of S&OP has become more commonplace.
• To combat uncertainty and provide insight into financial decisions, companies place a premium on the ability to run “what if” scenarios to account for variability. This effort relies on business processes and tools.
• Integration and alignment of S&OP at the executive (SLT/ELT) and Board level opens opportunities to mitigate supply risk, allocate financial resources and CAPEX investments appropriately, and enables strategic tradeoffs to help offset supply chain uncertainty and risk.

For help with your supply chain planning, contact our team at info@convergeconsulting.com today.