In discussing how the pharma industry has adjusted to the supply chain issues brought on by the coronavirus pandemic, Catalent president and chief operating officer Alessandro Maselli invoked the words of Winston Churchill.
“Never let a good crisis go to waste,” Churchill famously said as he was helping form the United Nations following World War II.
Judging from a recent Fierce JPM Week panel discussion, which included Maselli and four other industry executives, companies are definitely not letting this pandemic go to waste as they quickly adapt their strategies based on lessons learned over the last two years.
Joining in the discussion were Al Boyle, Alnylam’s chief technical operations and quality officer; Som Chattopadhyay, Amgen’s vice president global supply chain; Kevin Cook, Sandoz’s vice president supply chain, North America and Holger Weintritt, Bayer’s head of product supply.
Supply chain resilience has long been a source of concern for Amgen, Chattopadhyay said, because of its size as a $25 billion company compared to its relatively small manufacturing footprint. Its largest facility, which is in Puerto Rico, employs 2,400 in 22 buildings.
“We have a lot of experience dealing with hurricanes, but never a pandemic,” Chattopadhyay said.
Still, Amgen’s guiding principles to ensure supply chain resilience—focusing on infrastructure, cybersecurity, digitization, business continuity and inventory—have served the company well over the last two years, Chattopadhyay said.
The benefits of digitization
At the outset of the pandemic, Amgen got some valuable “end to end visibility,” from an analytics unit it had established a few years earlier. The information helped guide Amgen through the turbulence created by the pandemic.
“We were lucky. We had a digital organization. We (already) were trying to digitize our supply chain,” Chattopadhyay said.
While a push toward digitization was already evident in supply chain management, the pandemic heightened its importance.
“We’ve learned that each company doesn’t have to build its own digital pathway to providers and suppliers,” said Cook, who mentioned Sandoz has joined the Healthcare Industry Resilience Collaborative (HIRC), which connects a consortium of suppliers and customers who work together to predict and prevent supply chain disruptions.
Use of such tools can sharpen long-range forecasts and supply outlooks. They also provide earlier warnings of supply and inventory risks.
“For the pharma industry, the time has come that we really have to come together and start integrating and building on trust and data sharing to get further views into supply chain because, as they say, information can replace inventory,” Cook said.
“We need to overcome the silo view of the future scenario and look at this holistically,” said Maselli, who has been named Catalent's next CEO. “And this can only be enabled by the digitization of the supply chain.”
The need for speed
At the outset of the pandemic, it quickly became apparent to Boyle and Alnylam that managing the supply chain was a whole new ballgame. Instead of assessing operations on a monthly or bi-monthly basis, Boyle said it required attention “weekly or daily.”
Weintritt described a similar mindset change at Bayer.
“We implemented a kind of control tower on a daily basis to make sure we could steer resources, distribution, production capacities and have good visibility on demand and supply changes,” Weintritt said.
To facilitate the ability to react rapidly to these changes, some companies gave more autonomy to their managers. This “unbossed culture,” as Cook called it, was embraced by Novartis and Sandoz.
“It wasn’t about having decisions going further up to get consensus,” Cook said. “We had empowered managers that run the business operationally that knew to make decisions when they needed to.”
Another pandemic-induced effect that will likely change the way companies do business in the future is speed. The urgent need for treatments to battle the coronavirus kicked the industry into overdrive.
“We have now experienced that a few things are possible in a timeframe that we never would have imagined before, Weintritt said. “When the pandemic is over, why can’t we act with the same speed?”
Weintritt added that the new emphasis on speed should also apply to regulators and other stakeholders.
Can less be more?
One response to the supply chain issues encountered during the pandemic has been to simplify. Cook cites a report from research firm Gartner that urged supply chain managers to limit the potential for disruption by reducing surface areas—defined as the sum of all products, processes and networks that make up the supply chain.
“When you have a smaller surface area, you can manage the disruption more effectively,” Cook said. “When you have large surface areas and complex movements, any of those can become weak points.”