How pharmaceutical brands can be resilient

Let’s approach the components of supply chain resilience holistically

While inflation and economic pressures force pharmaceutical brands to watch their pennies, they will do well to not tackle cost efficiency as a solo issue. Brands require resilience in an array of areas and chief among these is compliance. Stringent regulations must be followed, although the supply chains from which they are navigated, are incredibly complex.

So, can brands manage resilience factors, such as costs and compliance, holistically? Supplier expert and HICX’s CEO, Costas Xyloyiannis, says they can.

His view is that on the one hand, each factor has its own requirements. For example, if the supply chain is to be cost-efficient, then we must identify cost-cutting opportunities; if it is to remain compliant, then we must address supplier activities that pose risks. However, beneath every resilience factor, exists a common denominator. Directly impacting each factor, is whether the key risks and opportunities are clear. It’s all about visibility. Brands with poor quality supplier data therefore make themselves weak, whereas those with reliable data can be robust.

Pharmaceutical leaders who want to tackle supply chain costs with a holistic approach to resilience, can read on. Costas offers three insights to help you work smart.

• Pharmaceutical supply chains are among the most complex.

In the pharmaceutical industry, the definition of ‘supplier’ is particularly complex. Typically, suppliers are highly specialised in relevant fields, such as healthcare and research, and they serve various manufacturing plants to meet a unique range of purposes.

Another characteristic of the industry is that it’s open to high levels of scrutiny. Businesses must comply in a heap of areas, for example, data and privacy, waste management and corporate social responsibility. Those who fail to keep up with and meet legislation face severe penalties. Hefty fines and reputational damage are just the tip of the iceberg. To stay compliant, these businesses request a vast amount of information from suppliers, and they need it to be accurate. Before it can be accurate, however, supplier information must be captured and stored coherently.

• Complex digital setups are now a strategic disadvantage.

In practice, however, the way in which supplier information is captured and stored is haphazard. Over time pharmaceutical businesses have invested in various digital tools with which to transact with suppliers and manage them. The digital setup now is very complex: most tools are magnets for collecting and storing supplier data, which creates multiple datasets. And in this fragmented state, master data is compromised. It is riddled, when viewed as a whole, with outdated and duplicate entries which makes it difficult to tell which entries are accurate.

Supplier data informs what leaders decide and do, so when its quality is questionable so is the business’s ability to compete. First, bad data jeopardises compliance which attracts penalties such as large fines and reputation damage. Next, when a pharmaceutical business can’t see what suppliers are doing, it can’t meet quality and performance thresholds, for example, maintaining a specific temperature during transportation or storage. This slashes revenue and long-term business prospects. Finally, low supply chain visibility compromises the time-sensitive business of outsourcing warehousing and distribution. It’s a competitive disadvantage, therefore, to have poor data.

On the other hand, businesses with reliable data gain a strategic advantage. Suppliers and their information are vital assets. Their data is used by thousands of internal stakeholders and a whole array of functions—from Inventory Management and Quality Control, to the Board. Further, suppliers themselves directly impact performance. They represent value in the form of innovative ideas, supply in times of high demand, quality and much more. Businesses need suppliers. In fact, a recent HICX study revealed that suppliers are 24% more likely to go the extra mile for a customer of choice. It’s in a brand’s interest therefore to make the most of this vital relationship. HICX likes to think of this as Supplier Experience Management.

• Fixing key supplier challenges is beneficial, and possible.

Businesses that address supplier experience and data can be more resilient. The ability to be cost-efficient, compliant and generally competitive, requires two virtues: accurate supplier data, and satisfied suppliers.

To supply chains, accurate supplier data is the life-blood. It leads to compliance, which reduces the risk of fines and reputation damage. Further, it uncovers opportunities in supply chains with which businesses can make money.

Resilience also comes more easily to those businesses whom suppliers like. The equation is straightforward: treat suppliers well and they will treat you well. HICX’s study also shows that when stock or output is low, suppliers are 20% more inclined to prioritise orders for a customer of choice. This status, a HICX survey shows, is also likely to yield lower prices and better service. Winning supplier favour therefore reaches the bottom line. Further, the study suggests that being a customer of choice also brings better levels of compliance.

So how can businesses fix the data problem and improve supplier favour?  

The first opportunity involves the tools through which businesses manage suppliers: reconfigure this setup to create a golden record. What’s key is to have a central platform. Let it connect all the tools in the setup, vet all incoming entries for quality and govern the data. The idea is to capture and store master data in one place, and let it be accessed by other tools in the digital setup, but not altered. This way, data quality is maintained.

Quality supplier data, thankfully, also improves supplier experience, which leads to the second opportunity: reform the way in which suppliers are perceived. Drive a mindset in which every supplier is considered a valued partner, who contributes towards mutual goals. One application of this mindset is to, while rejigging the digital setup, be mindful of how it could improve the user experience of every supplier. Another is to drive a culture in which suppliers are treated well. Simple actions—such as paying them on time, only sending relevant information requests and being fair—will go far in the journey to becoming a customer of choice.

As the pharmaceutical industry works towards cost-efficiency in an ever-changing world, it will benefit from viewing the building blocks to resilience holistically. Within the complex pharmaceutical supply chains realm, compliance and general competitiveness can also be addressed. The answer is to focus on two problems as they relate to suppliers: data and experience. Let’s turn them into solutions. The way forward is to fix both digital setups and outdated mindsets. Getting this right will futureproof supply chains and make them truly robust.