Supply chain agility, the disillusioned data scientist, Amazon effect, and other tales from LogiPharma US 2017

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Photo of the stage of a LogiPharma US conference for the pharmaceutical supply chain leaders

I was at the recent LogiPharma US conference for the pharmaceutical supply chain leaders. However, most of the insights and the stories I took away from the event are applicable to other industries as well. Here they are:

1. Personalized medicine demands supply chain agility: During a highly engaging panel discussion on “Building a patient-centric supply chain”, Kevin Cook, VP of North America supply chain at Sandoz (a division of Novartis) talked about the unique nature of the recently approved Kymriah, CAR-T cell therapy for children and young adults with certain types of Leukemia. The therapy showed an 83% remission rate in the patient population studied! In CAR-T cell therapy, every single dose of a treatment is completely personalized, as it involves extracting the patient’s immune cells, bringing them to a production facility, genetically modifying them, transporting them back (at minus 180oF!!), and then reinfusing the patient to fight the cancer cells. So, personalized medicine is here! With it comes several logistical challenges.

While Kymriah is the ultimate example of personalized therapy, there were several attending companies that provided therapies for rare diseases affecting a few hundred to a few thousand patients across the globe. In such a high mix, low volume portfolio, decisions such as how to allocate short supply to patients in case of contamination of a manufactured batch, can be lifesaving. Brad Pawlowski of Accenture said it right during his opening remarks – “Instead of executing one supply chain a thousand times, we should get ready to execute a thousand supply chains, one at a time”.

With patents for blockbuster drugs expiring and with generic manufacturers from India and China expanding their market into the US, containing costs through speed and agility is becoming critical to pharma companies. In pharma, manufacturing batch sizes are driven by equipment efficiency. However, now there is an increasing need to be demand driven. Yes…. one cannot speed up the chemical or biological aspects of manufacturing beyond a certain point. But, efforts should be made to ensure speed and agility through the rest of the supply chain.

2. Enable agility while leveraging legacy investments: Many attendants have made heavy investments in the ERP systems. However, ERP systems come with the limitations of being inward focused and rigid. The newer cloud based technologies can layer on top of the legacy systems to provide an outside-in view across the extended network without having to rip and replace. One of the presenters talked about how while planning the purchase of API (Active Pharma Ingredient) for new product launches, his team plans across a range of optimistic and pessimistic scenarios for demand and make purchase decisions while weighing risks. Being able to quickly run such scenarios is not the realm of ERP systems or even several established advanced planning systems. However, newer technologies coexisting with legacy can help extract the best of both worlds.

3. Find the right home for your data scientists: While facilitating a panel discussion on enabling digital supply chains, Hussain Mooraj of Deloitte shared an interesting story of a disillusioned data scientist who recently left a large global pharma company. Hussain asked him why he left such a great company after a short stint. The data scientist said that this company did not know what to do with him! So, they placed him in IT with the group that is working on the ERP master data maintenance, which is an entirely different skillset. They had no career path for him and he ended up leaving the company. While leading in with this story, Hussain asked the panel where data scientists should belong in an organization.

Priya Durvasula, Head of Global Supply Chain IT at Bristol Myers Squibb responded that they formed a group called Business Insights & Analytics that reports into the CFO organization, with the leaders of the group having business, finance, and analytical background. They placed the data science teams in this organization. While there is no one right answer to the question, it is fair to say this type of structure would have provided a better home andcareer path for the individual in Hussain’s story.

4. Prepare for the Amazon effect: Amazon’s intent to get into pharma distribution came up in my conversations with several attendees. In a fireside chat, Scott Chilson, VP, Global Customer Experience of J&J, and Mike Douma, VP of Supply Chain of AbbVie, discussed how Netflix, Airbnb, Uber and of course, Amazon have disrupted many traditional industries loaded with higher cost models, and how Amazon could change the game for Pharma. There was general consensus that the rising healthcare costs are unsustainable (no surprise!!) and that supply chain professionals can play a key role in lowering these costs. Any move by Amazon should only accelerate such change in thinking.

During this chat, there was a question about who the customer is in the pharma world – whether it is the hospital purchasing the drug or the wholesaler or the distributor or the patient. Their response was that if we start with the patient as the customer, it becomes easier to find a common ground with the other stakeholders. There was also some discussion on patients using smart wearables to monitor their vitals, blood pressure, glucose levels, etc., and how this information may be leveraged to compress the cycle times for the supply chain. However, significant hurdles remain due to consumer privacy concerns.

5. Improve product launches through a cross-functional process: In an industry that places a high premium on innovation, launch process is quite crucial. In a very informative talk on “Improving new product launches”, Tiffany Cavallaro, Director of US Supply Chain for Amgen shared how they were able to successfully launch 94 new products in the year 2016 alone. Here are some key enablers:

  1. Charter a focused team to support launches
  2. Engage early with the commercial teams
  3. Map the end-to-end value stream and know the critical starting materials by working closely with R&D. Mitigate risks by negotiating expedited lead times where needed
  4. Keep manufacturing well informed
  5. Ensure distribution capacity is in place
  6. Communicate, communicate, communicate

She described supply chain management as the ultimate cross-functional role. Well… I suppose no need to look beyond her above list to prove the point!

Besides the above, blockchain was discussed, of course! While potential for the technology exists in the form of healthcare data exchanges, drug supply chain integrity and such, no company raised their hand to say they have proven use cases with demonstrated benefits. Lack of interoperability standards, lack of widespread understanding of the technology, and costs of enabling private blockchains are some of the challenges. But with the technology evolving fast, at the least supply chain professionals should stay tuned into what is happening.

On the whole it was a content rich event. Several attendees commented on how Pharma industry as a whole is lagging behind other industries when it comes to supply chain management. But then, I look at this as an opportunity. Pharma supply chain is in the advantaged position of being able to leapfrog into the digital world by taking cues from other industries that blazed the trail. Some market-leading pharma companies that I have been engaged with are taking full advantage of this position.

That wraps it up for me! Would love to hear your thoughts!

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