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Why Pharmaceutical Manufacturers Should Choose Microsoft Dynamics
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Why Pharmaceutical Manufacturers Should Choose Microsoft Dynamics 365 Finance and Supply Chain
Why Pharmaceutical Manufacturers Should Choose Microsoft Dynamics 365 Finance and Supply Chain 700 500 Xcelpros Team

Introduction

For businesses in the pharmaceutical industry, there’s a constant need to manage different challenges such as ever-changing regulations, severe production environment difficulties and complex equipment that can be difficult to maintain. Any equipment downtime could result in production losses and affect drug quality in the value chain, denting the brand image.

When it comes to pharmaceutical manufacturing, production schedules are incredibly demanding, especially when machinery is constantly under operation. These businesses work hard to ensure maximum availability of their assets in order to achieve production efficiency. This requires equipment to perform at full capacity with no downtime to create a competitive production environment.

Organizations in this industry looking to maximize their efficiency need to understand a few key points that help present a clear picture of the current state of plant equipment and manufacturing in general.

  • Poor equipment maintenance strategies can reduce a plant’s overall productive capacity by 5 to 20 percent.
  • Unplanned downtime is costing industrial manufacturers an estimated $50 billion each year.
  • Around three-quarters of all the plant equipment in manufacturing is more than 20 years old, which says a lot about the quantum of obsolete equipment and a significant cause of production downtime!.

Understanding equipment downtime, reliability and availability

For manufacturers in the pharmaceutical industry, having fully functional equipment is of utmost importance and means their business can operate normally. Understanding things like downtime, reliability and availability can be just as important if not more.

Scheduled Downtime is important for changeovers, cleaning, tool changes, early shutdowns, personal breaks, or any unplanned events that may occur, such as breakdowns or any repairs that can affect the core business. Equipment reliability is related to the health of equipment and how optimally it performs a task while considering attributes like quality and performance, and equipment availability is the actual time that a machine or system is available for production as a percent of total planned production time.

These are undoubtedly some of the biggest concerns for pharmaceutical manufacturers, but they’re not the only things that these businesses are required to deal with, such as

  • Increased downtime: This can lead to Supply chain disconnects, lower production, missed deadlines and increased penalties.
  • Spiking maintenance costs: This usually results in businesses reducing maintenance which can lead to complete failures, severely impacting revenue and operations.
  • Production dips: Usually caused by gaps in asset or equipment availability, this can halt production and affect the company’s revenue.
  • Equipment repair: Without a preventative maintenance plan, businesses are required to perform repairs as needed. This leads to uncertainty when it comes to the status of equipment and prolonged downtimes.
  • Equipment replacement: Upkeep is always cheaper than replacement. When equipment isn’t properly maintained replacement costs can easily end up exceeding the total costs of having a basic maintenance plan on board.
  • Drug quality of lower standards: Unreliable or under-maintained equipment can unknowingly produce lower quality products leading to fines, penalties and costly recalls.
  • Drug safety risks: As equipment ages it becomes easier for contamination to occur, which could lead to additional damages.
  • Loss of reputation: Missed deadlines, poor quality and unsafe products can have a severe impact on revenue and brand recognition.

Figure: 1Factors Leading to Poor Equipment Maintenance

Poor Equipment Maintenance In Pharma industry

A big reason this all matters stems from the U.S. Food and Drug Administration’s (FDA’s) decision to include equipment maintenance as one of the risk-based preventive measures in Current Good Manufacturing Practices (cGMP). With the USDA considering equipment maintenance as a key function of cGMP, it easily becomes one of the most critical factors for pharmaceutical manufacturers’ compliance and will be subject to even greater scrutiny.

Microsoft Dynamics 365 has been a game-changer for the pharmaceutical industry

More and more organizations are better able to control their machinery and minimize “time-to-insight” with Microsoft Dynamics 365 capabilities designed to help businesses gain total control of their data, offering integrated analytics and workflows. Microsoft dynamics for pharmaceutical companies lets businesses speed up the movement of goods, eliminate waste due to costly shelf-life expirations and returns, and improve production efficiency across their entire line. Microsoft Dynamics for pharmaceutical gives companies the ability to achieve the following:

1.Ensuring centralized Quality Control (QC) and regulatory support Organizations can use integrated quality controls and lot traceability to link raw materials through each operation of the production process. This helps accelerate and simplify compliance with regulatory agencies such as the U.S. Federal Drug Administration (FDA).

2.Managing better inventory more effectively Pull inventory in sequence, employing “best before” management, and enabling customer service to ship lots that arrive with the correct amount of shelf life remaining. Employ either first expiry/first-out (FEFO) or first-in/first-out (FIFO) calculations for inventory reservations, picking, reducing inventory and eliminating waste.

3.Conducting extensive audit trails Incorporate electronic signature functionality into existing business processes, providing complete visibility into batch production and audit trails.

4.Meeting GMP requirements Manage electronic quarantines, quarantine release by user and material type, printed material control/ obsolete components, lot control/ segregation, lot tracking, and drug and hazardous material reconciliation.

5.Improving production planning Accurately model the processing of costly ingredients to help minimize overruns and underruns. Shelf-life planning helps account for expiration dates during production and distribution.

6.Protecting recipes and formulas Dynamics 365 helps document various ingredients, storage requirements, manufacturing processes, pH values, particle size, and much more – all with the ability to review at any given moment. D365 lets you set security restrictions to ensure that only approved users are able to make changes, further protecting your critical assets.

Final Thoughts

As the pharmaceutical industry continues to evolve and grow, the need to understand and adopt intelligent technologies like Dynamics 365 becomes more and more apparent. Implementing solutions like Microsoft Dynamics 365 for pharmaceutical and other.

Pharmaceutical manufacturing ERP softwares is the best way for companies to maximize their asset availability and track machine reliability, letting them drive towards increased productivity, higher quality products and enhanced safety assurance.

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Making Pharmaceutical Supply Chains More Resilient
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Making Pharmaceutical Supply Chains More Resilient
Making Pharmaceutical Supply Chains More Resilient 700 500 Xcelpros Team

At a Glance

Building a resilient supply chain framework for pharmaceutical companies requires:

  • Understanding where the company is now.
  • Creating new business relationships with alternate raw materials suppliers, transportation providers, and other essential third-party businesses.
  • Weighing the benefits of a robust and versatile pharmaceutical value chain versus the impact on working capital.

Introduction

Pandemics, natural disasters, cyber-attacks, political turmoil, and other actions are beyond a company’s control. Any one or combination of them can thoroughly disrupt a smoothly running supply chain.

Critical supply chain areas getting battered by these disruptions include reduced or non-existent access to:

  • Essential precursor chemicals and components
  • Production facilities
  • Vital workers and managers
  • Transportation resources to bring in raw materials and ship out finished products

The unquestionable first requirement to improving supply chain resiliency is having access to accurate data and knowing what to do with the data-driven insights. Data sources such as the Industrial Internet of Things (IIoT) provide real-time information, and applications such as Microsoft Dynamics Supply Chain Management helps users evaluate existing information.

Precursor Chemical Supplies

A 2020 report from Avalere states that U.S. biotech firms making medicines here get their active pharmaceutical ingredients (APIs) from U.S. suppliers – import them or import finished products. These precursor chemicals accounted for $86.5 billion in the U.S. alone during 2019.

One issue U.S. companies are facing is the location of active pharmaceutical ingredient (API) manufacturers. According to the U.S. Food and Drug Administration (FDA), the top four places are:

  1. 1.U.S. – 28% (510 facilities for FDA regulated drugs)
  2. 2.European Union – 26%
  3. 3.India – 18%
  4. 4.China – 13% (230 facilities for FDA regulated drugs)

Figure: Percentage of API Sources in U.S. Dollars

Percentage of API Sources in U.S. Dollars

Figure: API manufacturing facility locations

API manufacturing facility locations

Canada and the rest of the world produce the remaining 20 percent of APIs used in medicines. Also, the FDA report states India, the EU, and the rest of the world have 1048 facilities making FDA-regulated drugs.

Adding to the importance of having resilience in the pharmaceutical supply chain are potential supply chain disruptions caused by using overseas suppliers. These include recalls, such as two from China cited by the FDA within the last six years.

One way to counter a dependency on foreign API supplies is by using advanced technology to produce chemicals and medicines at lower costs, the FDA suggests. Using the continuous manufacturing (CM) process to make finished products instead of producing batches with gaps between steps can be more effective.

Another method of reducing reliance on foreign API suppliers is using advanced technology. Newer methods producing APIs and finished dosage forms (FDF) helps in supply chain management in the pharmaceutical industry. The ability to rapidly respond to changes in demand, using smaller physical footprints that require smaller facilities, helps reduce pharmaceutical manufacturing costs potentially, offsetting overseas production advantages. High tech production methods, such as those in smart factories, also tend to have lower environmental impacts.

Pharmaceutical companies considering boosting their pharmaceutical value chain using this method can get help from the FDA. The FDA has an Emerging Technology Program (ETP) described in “Advancement of Emerging Technology Applications for Pharmaceutical Innovation and Modernization Guidance for Industry.”

The FDA is also working on a framework to develop miniature mobile manufacturing “Pharmacy on Demand” platforms to produce essential drugs at or near the point of care. This method, while requiring capital costs, provides the means of eliminating delivery costs.

Risk Sources

Before making changes to the current supply chain, CFOs should look at four primary sources of risk:

  • Sourcing of APIs and other raw materials risks. Counter risks by locating secondary suppliers and establishing working relationships with them.
  • Staffing and transportation risks. Consider having access to remote workers plus multiple methods of delivering finished products to customers.
  • Inventory risks. Contrast cash flow needs with inventories to be able to withstand short-term disruptions while also accounting for perishability.
  • Distribution risks. Be able to use multiple methods to deliver finished products to customers. Consider outsourcing part of the distribution to withstand problems in that area.

Strategic Questions

Before investing in building a resilient supply chain, CFOs would want to know:

  • How can we obtain the most accurate data on what we currently have? Is investment in IIoT sensors and other technology warranted?
  • What are our priorities based on what we have learned from the current pandemic? Is digitizing our data stream the top priority, or is securing a second or third API source more critical?
  • How do we balance internal conflicts? What will we do if a secondary API source that can deliver in the event of a natural disaster is more expensive than our primary source that cannot provide when we need the raw materials?
  • How do our risks integrate with risks from our third-party partners? How will a disaster impact their ability to supply critical products or services we need?
  • What do we consider a resilient supply chain? How much impact on near-term profitability is acceptable if we ensure that we can continue operations in the event of a significant supply chain disruption?

By the Numbers

$16 trillion (i.e., $16,000,000,000,000): Estimated total cost of the Covid-19 pandemic in the U.S. alone.

$85 billion (i.e., $85,000,000,000) lost by the Nasdaq Biotech Index in the week ending March 6, 2021, its third weekly loss in a row.

$242 million (i.e., $242,000,000) lost by the Health Care Select Sector SPDR Fund (XLV) in the week ending March 6, 2021, bringing the total loss to date to $1.68 billion

Source: U.S. National Library of Medicine and National Institute of Health

Strategies for Greater Supply Chain Resilience

Figure: 1A roadmap to digital transformation to a resilient supply chain

A roadmap to digital transformation to a resilient supply chain

According to a recent Deloitte article, CFOs can reduce their chain disruptions and improve their supply chain resilience by using these strategies:

  1. 1. Identifying and mitigating their most significant supply chain weaknesses. Questions to consider include: Where are your API manufacturers located? Are there alternative sources able to deliver the required quantities when needed? Are the raw material sources within an acceptable range of the production plants? Identifying these alternative suppliers helps ensure a more continuous input of raw materials.
  2. 2. Prioritizing investments in the supply chain infrastructure to ensure significant delays do not occur when disaster strikes. Technological improvements supporting product storage and movement (e.g., Microsoft Dynamics Supply Chain Management) can make processes more transparent and improve efficiency in financial transactions and information exchanges.
  3. 3. Balancing the supply chain investments with competing company requirements, such as costs and services. Deloitte cites, “managing working capital while restarting operations and rebuilding inventory as one major challenge of a supply chain disruption.”
  4. 4. Creating a playbook to handle the causes of supply chain disruptions.
  5. 5. Implementing the updates from the standpoint of cost, speed, and efficient operation. The Deloitte report states that supply chain leaders should work with CFOs to determine the effects of supply chain changes on their working capital.

Before Making Any Decisions

Before making changes to their current supply chain, CFOs, chief technology officers, and other executives should consider:

  • Evaluating where the current pharmaceutical supply chain stands.
  • Creating a plan or series of methods for sourcing alternate raw materials, workers, and production facilities should any natural or human-made disasters strike.
  • Analyzing the cost versus benefits of making the current pharmaceutical value chain more robust and resilient.

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Challenges of pharmaceutical supply chain banner
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Top 8 Challenges of Pharmaceutical Supply Chain
Top 8 Challenges of Pharmaceutical Supply Chain 700 500 Xcelpros Team

At a Glance

  • The Covid-19 pandemic not only came as a health threat, but it also disrupted the world’s socio-economic thread. Industries like pharmaceutical and biotechnology were at the forefront attempting to find solutions.
  • Pharmaceutical industry supply chain challenges that concerned top executives include shortage of raw materials, unprecedented changes in demand pattern, inability to plan lead-times and shortage of labor.
  • The pharmaceutical industry’s supply chain efficiency still has room for improvement and may need some transformative changes to thrive in the new normal.

Pharmaceutical supply chain challenges have been a major cause of concern for the industry throughout 2020. The challenges are still very much prevalent, even as the world moves ahead in the era of the new normal. This pandemic caused a major global socio-economic impact and led to disruption in almost all facets of the industry. Modern companies equipped with the right tools and technologies have been quick to adjust to the changes. Organizations that still functioned on archaic systems were struggling to adapt to the business processes changes brought about by the pandemic. Slow to adapt companies had to put in more effort to understand the needed changes and adapting to the changes without the right technologies in place was daunting.

Figure: 1Major Pharmaceutical Supply Chain Disruptors

Cotributors of Pharmaceutical Supply Chain Challenges

Added to that was the inability of companies to quickly onboard onto newer applications and get into the rhythm of modern cloud-based solutions. Some of the major issues that surfaced during the pandemic are:

  1. a.The demand for therapeutics and/ or vaccines led to an overdrive of pressure on the industry.
  2. b.The lack of resources and slow global travel have increased pharmaceutical supply chain disruptions.
  3. c.Changes in quality standards have added new tasks to the workforce that were not part of their day-in-the-life and had to adapt to rapidly.
  4. d.Changes in quality testing created adjustments in the test specification and additional steps in testing.
  5. e.Disintegrated systems made it harder for the workforce to stay agile and adjust to the changes that came their way.
  6. f.Inability to manage supply-demand cycles.

70%

of the leaders said that the pharmaceutical supply chain was vulnerable to ongoing problems caused by the continuation of the pandemic and that on-time, in-full delivery of medicines had deteriorated by almost 50 percent within the first few months of the pandemic.

Source: IDC Whitepaper Report

While modern manufacturing companies did rise to the challenges and leveraged solutions such as cloud applications, automation, Artificial Intelligence (AI), Machine Learning, and Big Data to their advantages, many risk-averse pharmaceutical companies are still prone to supply chain challenges due to the lack of right tools in place to make them nimble. Let us look at the top 8 concerns of the pharmaceutical industry supply chain that still are pressing concerns:

1.Unprepared for further disruptions: Different countries worldwide are struggling with second or third waves of the pandemic (and many have reported new mutant strains of the virus). These continuous disruptions have led to major disturbance in the pharmaceutical distribution system.

2.Technological bottlenecks are prevalent: The pharmaceutical industry has been highly apprehensive and traditional in adopting newer technologies. While the last decade has seen major leaps, there are still many bottlenecks in leveraging technologies to their full potential.

3.Shortage of raw material: The inability to plan effectively during the pandemic can cause many hurdles if procuring raw materials. Knowing lead times and accurate inventory quantities without a planning tool can slow you down significantly as you try to extrapolate data and understand your supply schedule.

4.Standard operating procedures and processes: As workforce within the pharmaceutical industry needs to be onsite, proper SOPs need to be set. This would add new processes that warehouse personnel need to be trained on. A lack of the right kind of training tools can add to the burden.

5.Managing cold storage facilities is resource-intensive: Some of the products have to be stored at very low temperatures to ensure that the potency and formulation remain intact. This would need pharmaceutical supply chains equipped with refillable dry ice containers or specialized freezers, both of which are not budget-friendly options.

6.Pharmaceutical safety guidelines and regulations differ across Borders: The pharmaceutical industry has to be very tenacious and alert when adhering to the safety guidelines and regulations. However, pharmaceutical supply chain challenges get magnified as the raw materials and drugs cross borders and these regulations keep on changing.

7.Rapid drug delivery: The historical task of bringing medicines to market is a race against time. Pharmaceutical operations and supply chain management handling need to be as efficient as they come to ensure lesser bottlenecks and plausible errors in these testing times.

8.Lack of integration across processes: When your inventory, manufacturing, labeling operations don’t talk to each other and are manually managed, the error rate will go up and business productivity will go down.

The year 2021 will probably push the pharmaceutical supply chain to its maximum limit yet. However, with the right strategy, technologies, and solutions, the pharmaceutical sector can rise up in these challenging times.

Key Takeaways

  • Pharmaceutical manufacturing and distribution companies are facing a once-in-a-lifetime level of challenge and they need to streamline their operations to ensure the efficiency of supply chains.
  • The pharmaceutical supply chain challenges have been a part of this sector for a long time and companies that are not properly equipped will tend to struggle more than others. This is the right time to transform to be equipped with the right technologies for a better tomorrow.

Take a assessment to get recommendations in transforming your pharmaceutical supply chain.

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How do smart factories help boost your supply chain
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How do smart factories help boost your supply chain?
How do smart factories help boost your supply chain? 700 500 Xcelpros Team

At a Glance

  • Smart factories can use technology to boost productivity and increase quality. Merging data and insights from the shop floor with the supply chain and the entire organization can uncover ways to improve operational efficiency and boost business relationships.
  • By connecting devices and sharing information, smart connected factories permit automatic optimization. The machines can adapt to changing conditions in real-time and run the entire production process without human intervention, a white paper from Deloitte states.
  • A smart factory is one where information is continuously shared between devices and resources. Sharing this information reduces waste, thereby increasing efficiency and productivity.
  • It impacts the supply chain by anticipating needs and automatically ordering materials. That in turn keeps the factory running at maximum efficiency.

The smart factory represents a leap forward from more traditional automation to a fully connected and flexible system.Source: Deloitte

Traditional factories tend to have discrete machines and production lines. Information gathered from one device stays with that device until manually uploaded into a computer network.

Smart factories eliminate the barriers between machines, using computer sensors to monitor every stage and every process, producing huge volumes of data. The information is shared vertically on the factory floor and horizontally with other departments. This method lets the company rapidly adapt to marketplace changes, expanding its offerings and encouraging innovation based on customer needs. Smart connected factories are much more than just machines knowing when to open and close valves. They integrate the entire operation—including supply chain, manufacturing, information technology (IT) and operations technology (OT)—into one unified, agile organization.

Characteristics of a smart factory

Smart factories share five characteristics. They are:

  • Connected across machines and departments
  • Optimized for reliability and predictability
  • Transparent for quick decision making and order tracking
  • Proactive for identifying potential problems before they occur and restocking materials before running out
  • Agile for quick changeovers and product modifications

Benefits of a smart factory

Important benefits of a smart factory include:

  • Using data to create pattern identification and mapping the production process. This method gains production insights and allocates resources more efficiently.
  • Identifying and logging all process problems from machine and worker input.
  • Identifying waste creation points and processes.
  • Sharing data not only with the factory floor but with sales, marketing, finance and other departments to improve overall results.
  • Mastering the smart supply chain, permitting advance ordering of critical components before running out of them and delaying production.
  • Customizing small orders, permitting small batch creation when machines are not in use on large projects.
  • Diagram an ideal state.
  • Develop a plan to make the ideal state a reality.
  • Monitor and continually adjust new processes—including educating and training employees—ensuring maximum efficiency.

How it Works

The information process begins by using machine sensors and operators to capture data points during the 7 Flows starting with the supply chain in the form of raw materials. Each of these flows is part of the Lean Manufacturing Process.

Seven Flows

The seven flows involve:

  1. 1.Raw materials
  2. 2.Work in progress
  3. 3.Finished goods
  4. 4.Operators
  5. 5.Machines
  6. 6.Information
  7. 7.Engineering

All of the flows working together tend to efficiently produce products with few defects, Kettering’s article states.

Software such as Microsoft Dynamics 365 Supply Chain Management is designed with these concepts in mind.

For example, Microsoft Dynamics 365 Supply Chain Management allows factories to integrate industrial internet of things (IIoT) and artificial intelligence in the process flows.

Technical Advances Enabling Smart Connected Factories

Recent technical advances permitting the creation of smart factories include the development of:

  • Sensors collecting information, providing access to various activities and processes.
  • Using connected IIoT (Industrial Internet of Things) devices transmitting the sensor data to a database that in turn, massages the data to identify and correct inefficiencies.
  • Analyzing data as it is being collected. This permits rapid responses to changing situations, such as correcting a manufacturing defect as it occurs.
  • Employing AI (artificial intelligence) coupled with machine learning permits self-correcting when detecting errors such as closing an open door that might affect a temperature-sensitive section.
  • Relocating some IT resources to “the cloud.” Cloud Computing reduces data costs by transmitting it to a remote location where an interconnected network of computer servers processes, shares and stores data in a secure location away from the factory.
  • Running a digital version of a process in advance. By identifying and correcting potential errors and sticking points in advance, actual production is not affected.
  • Keeping data secure from outside cyber threats and attacks such as ransomware or hacks that steal data or damage or destroy critical components.

When many people think of the Internet of Things (IoT), they visualize home products such as lights that turn on and off when people enter rooms, saving electricity. Maybe they consider newer smart refrigerators that let homeowners use an app on the attached touchscreen monitor to order food items when they are running low.

The IIoT expands this connectivity from computers and the home to computers and industrial machinery. For example, it allows remote workers to monitor temperatures and automated chemical blending, ensuring the correct mixtures.

Figure: 1Functions coming together within smart factory

Functions coming together within smart factory

Why Update Now to a Smart Factory Solution?

The rapid pace of technological innovations means that the cost of making some of these updates—computing speeds and data storage, for example—has dropped. Technology is more sophisticated allowing systems not only to gather information but interpret it and automatically make adjustments.

A more complex supply chain means manufacturers must be more nimble than ever before while also adapting to constantly shifting priorities.

Merging parts of IT with parts of OT, in combination with device hardware and software such as Microsoft Dynamics 365 Supply Chain Management lets factories analyze their data now in real time for smart supply chain management.

Smart Factory Categories

Smart factories come in four categories, all based on data.

  1. 1.Available—but not accessible—data that must be organized before being transmitted.
  2. 2.Accessible data, which is organized and stored in ways that permit analysis.
  3. 3.Active data, which can be analyzed by computer software such as Microsoft Supply Chain Dynamics 365.
  4. 4.Machine-controlled modifications using solutions identified earlier, all with limited human input.

Making Factories Smart

Owners and managers may want to start with a single device, get it working the way they wish and then gradually expanding to a full production line. Companies considering updating an existing factory will need to have methods of obtaining data from the factory floor, which might require updating or replacing some machines. The cloud can help with processing and storing the information but data collection takes place locally.

Investments in other technologies—including AI, augmented reality and optical sensors—may be required to understand the data and digitize the production process.

Another important change is staffing. Even though much of the work will be automated, skilled workers are still required. This could involve realigning departments and eliminating or drastically changing individual roles.

Key Takeaways

  • Technological changes are turning the dream of smart factories into reality.
  • Smart Factories have the ability to highly automate many repetitive steps using a combination of device sensors and computer software.
  • Factory data can be used to create artificial production lines. Running them virtually lets managers spot potential problems before affecting actual production.

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REFERENCES:

An Introduction to Lean Manufacturing

Importance of Data in Pharma Product Development
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Importance of Data & Analytics in Pharmaceutical Product Development
Importance of Data & Analytics in Pharmaceutical Product Development 700 500 Xcelpros Team

Introduction

Research and development (R&D) has always been the backbone of the pharmaceutical industry. In 2001, there were 1,198 pharmaceutical companies with active R&D pipelines. And in 2020, this figure spiked to 4,800. Due to the COVID-19 pandemic, companies have doubled their efforts in creating new products. In fact, more than 17,700 drugs were recorded in the global R&D pipeline in 2020—and a lot of them made headlines.

The world got a glimpse of how complex and costly it is to create new drugs. Moreover, that also sparked an unprecedented wave of data sharing and access not just in the healthcare and pharmaceutical industries. But in the IT sector as well. In fact, 96% of all companies will have hired a data specialist by 2022, according to “The Future of Jobs Report” by the World Economic Forum. This is why there has already been a huge uptick in the number of professionals pursuing data analytics careers, with worldwide big data revenue already predicted to have passed $203 billion.

In the pharmaceutical industry, multiple organizations came together to share and exchange data: Google Cloud provided researchers free access to critical information through its COVID-19 Public Dataset Program, and Rensselaer Polytechnic Institute offered government entities. And researchers access to innovative AI tools and experts in data and public health.

Figure: 1Role of Data in Pharmaceutical Product Development

Never before has data been so readily accessible and this has helped speed up the R&D efforts of many companies. In addition, data also helps the pharmaceutical products development in many other ways:

Improves research efficiency

Several companies were able to develop a COVID-19 vaccine in under a year—a record time—currently making it the fastest vaccine to ever be developed. It helped that pertinent data and information were exchanged freely between pharmaceutical companies, government agencies, and data analytics organizations.

Free-flowing data sharing, as seen during the pandemic response, makes the development of drugs easier as it cuts down several steps in the R&D process. And with the available information, researchers have a better understanding of the recipients of the product. This makes it possible for trials to acquire smaller sample sizes with higher accuracy, lower expenses, and in less time.

Creates precision medicine

Precision medicine is an approach to patient care that allows doctors to create diagnoses and treatments based on data on genetic make-up, environmental factors, and behavioral patterns. This approach allows companies to create personalized medicine for individuals’ genes and lifestyles. This data-driven approach also helps drug makers identify patients’ susceptibility to certain disorders, enhancing disorder detection. Since precision medicine has a higher probability of success compared to more conventional approaches, it also reduces trial costs.

One such example is Pfizer’s Xalkori (crizotinib), which they produced after combing through data from electronic medical records, clinical trials, and genomic data. They found that a small subset of lung cancer patients had a mutation in their ALK gene. And using this insight, they developed a personalized drug. “Had this compound been tested against a broad spectrum of lung cancer patients, it likely would not have been found to be effective. With this analytics-based approach, it was found to be very effective,” says Pfizer CIO Jeff Keisling.

Provides real-time analysis

It’s now possible to access real-time information—a feature that greatly benefits trials. With this, it’s easier to respond to issues in a timely manner, and create more accurate safety measures for trial participants, all leading to higher success rates from the R&D standpoint. Additionally, data can now be collected from real-world information such as health records, insurance claims, and even social media. This provides drug makers with evidence on how medicines work in an uncontrolled setting and across a wider demographic. This lets them make adjustments and improvements to the drugs.

Major pharmaceutical companies now have dedicated teams collecting data from studies and trials across different diseases. Their analysis of this information helps them formulate their drugs to be more potent and effective while combating the rising costs of traditional clinical trials and parallel development programs.

30%

of life science organizations will have achieved data excellence, or the concept of effectively using the right data at the right time, by 2022.

Source: IDC Health Insights prediction

Simplify production plans

After developing a product, it needs to be mass-produced and distributed. You need to know the appropriate targets for the best ROI. With the right data, companies are able to create a more solid production plan, reduce labor costs, eliminate waste, decrease the need for excessive inventories, and optimize equipment usage. This ease of production will only increase in the future both within the healthcare industry and companies connected to it. And with the pharmaceutical industry predicted to grow to $1.57 trillion in value, the role of data in streaming lining production processes will only increase.

Smoother supply chains

50%

of pharmaceutical and biotech companies will be using prescriptive data analytics with IoT data to optimize their supply chain.

Source: Worldwide Health Industry 2020 Predictions report

Today’s pharma companies are breaking away from traditional practices and are embracing digital transformation and pharmaceutical data analysis on a much bigger scale. This move allows them to understand and cater to the needs of both their customers and stakeholders. As we mentioned in our previous write-up on the ways to enhance customer experience. Using data analytics, you can improve your supply chain efficiency by easily validating data, detecting anomalies, benchmarking operations, and accessing mobile and logistic reports.

Moreover, data analytics for pharma development offers real-time route optimization and improved inventory management, freeing up man-hours which otherwise would’ve been spent tracking and monitoring business operations.

The use of data in developing pharmaceutical products is very beneficial. It helps prevent health issues and strengthen the patient care sector.

Article specially written for xcelpros.com By Nina Ross

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supply chain challenges in chemical industry
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Best solutions for Logistics and Transportation Challenges in the chemical industry
Best solutions for Logistics and Transportation Challenges in the chemical industry 700 500 Xcelpros Team

At a Glance

  • Chemical companies are reeling under a two-edged crisis- unprecedented fall in the price of crude oil and the upheaval brought in the global supply chain because of Covid-19.
  • Chemical companies have also faced issues like increased freight costs, excessive demand for chemical sanitizers, and changing government regulations across different geographies.
  • Mitigating costs, managing inventories, avoiding bottlenecks and rising to the challenges would be some of the top-most priorities of the executives managing chemical transportation and logistics.

Global supply chains have seen direct and ripple effects of the coronavirus or Covid-19 pandemic. The pandemic has caused operational upheavals and seen acute disturbances in logistics due to shortage of chemical raw material. Adapting to volatile market conditions in the face of a challenge shows the company’s ability to sustain growth. Determination, planning and willingness to adapt to changes are expected from the rapidly growing chemical companies.

To aid with their business continuity plans, chemical companies need to continue to reinvent their operational processes, inventory management strategies and transportation management. Supply chain challenges in the chemical industry are inevitable as every country responds differently to health and economic crises. A crisis changes the way you manage inventory, raw material procurement, monitor demand for certain chemicals, workforce procedures, freight costs, etc.

23%

of the USA’s chemical companies considered supply chain disruptions due to the coronavirus pandemic as their major concern for the coming future.

Source: PWC

Many comprehensive software applications have been developed to provide concrete solutions to mitigate the issues related to supply chain disruptions. Microsoft Dynamics 365 Supply Chain Management has been cited as the best software for supply chain management and a complete solution for distribution and logistics. Here are four primary concerns that chemical companies are facing when it comes to managing transportation and logistics:

1.Moving to Road and Railways: Transportation and logistics in the chemical industry have been heavily dependent on airways and waterways in bigger countries and across international borders. However, increased safety concerns and inflated costs make chemical companies shift to the transportation of raw material, and final products through roads and railways. The change in mode of transportation directly impacts the landing cost of the product. Inability to track accurate landing costs, end-to-end transportation tracking and scheduling are some major pain points in a chemical company.

2.On-time Delivery of Raw Material: There is a sudden and unexpected disparity in the demand for different chemicals. Demand for chemical surface cleaners, sanitizers has increased several folds across the globe (and understandably so), however majority of challenges are related to on-time delivery of material. Unpredictable transportation lead times and inability to deliver these raw materials is a big pain point in providing accurate receipt dates.

Figure: 1 High-level Disruptions in Chemical Transportation due to Covid-19 Pandemic

Transportation Management Process Flow in Dynamics 365

3.Transportation Planning and Inventory Management: A supply chain can run smoothly only when the inventories are managed well. Given the current times, chemical companies need to align their requirements and logistical arrangements with the availability of products in their respective inventories. This requires top-to-bottom visibility and high-level decision making to approve faster changes in material requirements. A major roadblock is related inefficient transportation planning to minimize delays.

4.Increased Freight Cost and Changing Regulations: With change in modes of transportation, and disruption of demand and supply pattern of chemicals worldwide, freight cost shot up by several times. Chemical companies have to deal with higher freight costs along with issues in logistics and supply chain management.

Despite all these pain points, chemical companies can reinvent their transportation and logistics operations to rise to the occasion. Here are certain measures that chemical companies can take to streamline their distribution demands:

  • Assessing the requirement based on geographies and allocating warehouses to meet those demands.
  • Labeling, stocking and categorizing chemical stock based on order priority and making them easily available for transportation.
  • Making use of serialization and bulk containers with barcodes for optimal supply and efficient tracking.
  • Appointing a special task force to manage transportation and logistics changes to optimize the supply chain and provide the single-point contact/ visibility option to all the stakeholders involved.

How Can Your Chemical Company Optimize Transportation and Logistics Operations Using Microsoft Dynamics

Microsoft Dynamics 365 provides the right features for a chemical company to manage operations, inventory and transportation. Once you get the view of your company’s transportation and chemical supply chain management in Microsoft Dynamics 365, you will be able to plan and implement optimization strategies for chemical transportation and logistics.

The information about chemicals are required to be maintained and tracked under high-level categories. Also, labeling batches, mentioning hazardous substances, barcoding containers and mentioning chemical properties is part of any chemical company’s logistics plan in Microsoft Dynamics 365 in conjunction with integrated chemical management.

Microsoft Dynamics 365 allows for complete inventory visibility through its Distributed Order Management (DOM) indicator. This allows all the stakeholders to stay on top of things, avoid bottle-necks or stock-outs during these unprecedented times.

Chemical companies can benefit from comprehensive Transportation Management module in Dynamics 365. The module is loaded with features that can let you manage your transportation and logistics while also letting you identify vendor and routing solutions for inbound and outbound orders. In these times of extreme price inflations and changing market dynamics, this module helps your chemical company cut operational costs in logistics by effectively planning inbound and outbound transportation. Highly advanced business intelligence built in the Dynamics 365 Transportation Management module helps chemical companies identify best-priced and most efficient carriers. Through this module, you can get real-time visibility of the entire order at all times.

Here are some of the most impactful benefits of Microsoft Dynamics 365 Transportation Management module for chemical companies:

  • Warehouse Management Efficiency
  • Enhanced Delivery Capabilities
  • Inventory Reductions
  • Real-time Supply Chain Visibility
  • Effective Customer Service
  • Set up Ad-hoc Cycle Counting Thresholds and Cycle Count Locations
  • Pre-schedule Route Planning for Efficient Transportation
  • Availability of Multi-packing Slips in Load Planning
  • Skip Trivial Freight Reconciliation Process

Every chemical company has a different shop-floor operation and needs customized production operations plans for kits and packaging (for transportation). This option is easily accessible with Microsoft Dynamics 365.

Companies can manage lot tracking, tracing of chemicals, route mapping, resource availability, and freight cost management. The system provides the option of generating individual or batch invoices.

The Transportation Management module in Dynamics 365 follows a well-vetted process flow that is dynamic and customizable, based on your transportation requirements.

Figure: 2Transportation Management Process Flow in Dynamics 365

High-level Disruptions in Chemical Transportation due to Pandemic

While it is true that the world is witnessing changes in the chemical supply chain and transportation due to the Covid-19 pandemic, companies can rise to the occasion with resilience, optimal use of resources and a systematic approach towards change in processes. There is a need for continuous innovation to stay ahead of the chemical companies’ curve to continue operations during this ‘new normal’.

Key Takeaways

  • Transportation and logistics of chemical companies are facing the ripple effects of disruption in global supply chain caused by the coronavirus pandemic.
  • While there are many challenges, chemical companies will need to reinvent their transportation management with the help of intelligent applications like Microsoft Dynamics 365. Once operations and processes are efficient, chemical companies can improve their transportation planning to ensure on-time delivery.

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How technology helps in optimizing the Pharmaceutical supply chain
How technology helps in optimizing the Pharmaceutical supply chain 700 500 Xcelpros Team

At a Glance

  • The Pharmaceutical industry has witnessed exponential growth during the past decade, and pharma revenues worldwide totaled 1.25 trillion U.S. dollars in 2019 – Per Statista.
  • This growth rate automatically created a need to boost supply chain visibility and inventory traceability.
  • Regulatory measures put forth by the government or agencies such as the FDA can create unforeseen challenges for Pharma companies.
  • Leveraging technology’s power and identifying solutions for Pharma to streamline operations can effectively boost your bottom-line and help in better quality control while meeting both regulations and market demands together.

Understanding the Pain Points

The inability to adapt to technological advancements and rapidly changing regulatory landscape makes managing pharmaceutical supply chains quite a tough pill to swallow. Successful pharmaceutical companies leverage the power of IT to streamline their supply chain operations.

Figure 1: Pain Points in Pharmaceutical Industry

Pain Points in Pharmaceutical Industry

The pharma industry has established itself as one of the fastest-growing industries in the past few decades, with a significant share of its investments in research, marketing, manufacturing, and development of its products.

In the present scenario, the table seems to be turning. The industry is struggling to keep pace with rapidly changing regulations and dealing with challenges such as:

  • Keeping up with the growing competition due to faster technological advances
  • The rapid development of new products to handle growing health concerns.
  • Healthcare providers and government reforms putting downward pressure on product prices of the industry.
  • Full traceability of the product pipeline to be on par with requirements like quality compliance, serialization mandate, and the rise of counterfeited drugs.
  • Issues related to delivering products to the market.

The above challenges highlight the importance of comprehensive solutions that help Pharma companies progress and overcome various hurdles in shipping products to customers.

Collaboration Within the Pharma Value Chain

To keep up with the growing list of challenges, Pharma companies are increasingly relying on third parties like CROs, CMOs, 3PLs to manage the following:

  • outsource research & development.
  • manufacturing of intermediates.
  • 3rd party logistics for warehouse and inventory management.
  • quality control testing.
  • shipping and distribution of products.

While this is beneficial for Pharmaceutical companies, it comes with its complexities, including the remote location of different departments, inventory, and testers. How do you run a pharmaceutical supply chain effectively when all the departments are functioning from other locations? How would you effectively manage workflows that involve the exchange of information with outsourced parties on multiple tiers of your supply?

A report by FDA showed that over 60% of the shortages in 2019 were attributed to supply disruptions due to manufacturing or quality issues.

Following are a few benefits for Pharma companies to be technology-centric:

  • Real-time & end-to-end supply chain visibility.
  • Collaboration with the Pharma value chain.
  • Optimized inventories with least stock out situations.
  • Higher margins through smarter channel allocations for an increasing share in the market.
  • Improved customer experience.
  • Visual analytics and reporting.

Digitize the Pharma Supply Chain

Companies require well-streamlined processes and collaboration using agile software solutions for Pharma that provide significant cost savings and flexibility. Technology for Pharmaceutical industry can be a helping hand to optimize the supply chains. Advanced Solutions for Pharma increase inventory visibility and lot traceability across your supply chain, ultimately improving the overall product quality. Post COVID-19, embracing technology as a growth enabler has become the need of the hour for the pharma industry.

Following the path of other industries like hi-tech and consumer goods, the Pharma companies also need to focus on these five initiatives:

01.Connecting and collaborating using a working business network

A digital business network sets the foundation of a multi-enterprise supply chain, where all departments are interconnected on the cloud, ensuring seamless information flow and collaboration. Unlike the outdated model based on point-to-point connections, this multi-tier network is much advanced and helps end-users stay in sync with counterparts and move quickly through the process. The ability to collaborate enables end-to-end visibility and collaboration – the two critical factors that support smooth business interactions among different business partners involved in the value chain. Seamless integration helps you get real-time visibility and coordination in your entire extended supply chain, including multiple partners.

Figure 2: Process of Temperature Control

Process of Temperature Control

For example, there can be immense damage caused to vaccines due to the drop in temperature in the storage areas while being transported from one place to another. Real-time data tracking can help with adequate temperature controls by notifying when the temperatures are above or below the desired levels.

02.Estimating true demand

Demand predictions are just well-painted guesses of how much percentage of the population would require a particular product in the future. Most innovative pharmaceutical companies are now following demand forecasting as per consumer product companies for their OTC products. They do this by capturing massive volumes of demand related data and feeding it into sophisticated demand planning software, which helps them predict demand effectively. The data or demand forecasts captured are shared with all supply chain partners, ensuring the pharma companies, suppliers, and CMOs align with the arrangement. Estimating actual demand helps them to bring significantly higher on-shelf availability and lowers the inventory.

03.Control quality for CMOs

Pharmaceutical companies need to ensure end-to-end traceability. How do they keep track of their pharmaceutical manufacturing supply chain when a CMO is involved? Having visibility into partner’s manufacturing operations and tracking product quality across the multi-tier system is essential for pharma companies. The real-time visibility can be done by connecting CMOs to your Manufacturing Execution Systems. A manufacturing execution system helps capture relevant data at all production stages, providing granular visibility into plant operations. Pharma companies will effectively track material flows, lot genealogy, processing steps, and associated parameters, such as yields or test results – critical information to ensure traceability. Quality control is of optimal importance for any serialization initiative within Pharmaceutical companies.

04.Faster planning across the network

Another essential requirement for companies is to detect and respond to changes in supply and demand faster. With largely connected systems and expanding business networks, companies have a clear, end-to-end visibility of the supply chain in the Pharma company and not just in-house operations; this includes expected lead times on inventory from a contract manufacturer or raw material supplier. However, traditional planning systems can impact your decision-making capabilities required to manage inventory shortages and suggest alternative purchase/ manufacturing scenarios. Advanced planning tools allow rapid evaluation of new buy-sell signals and easily recommend purchases from secondary vendors or alternate manufacturing routes. This new plan can then be shared with all the supply chain partners within the value chain through collaboration portals, tools, so forth.

05.Manage distribution

Pharma companies are increasingly relying on third parties for transportation, warehousing, and other value-added services. Ensuring product availability implies proper management of distribution partners. For downstream visibility, inventory management coupled with sophisticated stock strategies are needed. Proactive pharma supply chain management helps all products be delivered to the right customers to increase your sell-metric, which is critical when competing in the market.

Pharma companies will customize supply chains to suit the product types being transported – data will play a key role in enabling this vision.-PWC Pharma 2020: Supplying the future

Key Takeaways

  • The expectation of better customer experience is the same across all industries and progressive Lifesciences companies understand the need to embrace digital for Pharma.
  • More Pharma companies are continually evaluating ways to address supply chain challenges to meet customer’s needs ultimately.
  • A cloud-based agile technology network to increase visibility in the supply chain and keep all functions connected for better collaboration can boost your profits and increase growth potential.

As Dynamics 365 ERP experts, we recommend taking a test drive of the solution. Email us at contact@xcelpros.com for a demo. For our product list, please Click here.

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Customer Journey VP of Quality Control
Customer Journey VP of Quality Control 1440 810 Xcelpros Team
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Enhance Supply Chain Planning within Pharmaceutical operations
Enhance Supply Chain Planning within Pharmaceutical operations 700 500 Xcelpros Team

Introduction

The COVID-19 pandemic has created significant changes in market dynamics, forever changing the face of the global economy. Along with the pandemic’s impact on our daily lives, there has been a ripple effect in the day-to-day operations of Pharmaceutical manufacturing. As industries around the world continue to adjust to changes, Pharmaceutical manufacturers in specific, are noticing technology, process, and infrastructure gaps that are impeding growth and sustainability. Additionally, businesses that were forced to slowdown production during the initial stages of COVID-19 and are now getting back to full momentum, are finding it difficult to manage end-to-end operations.

Pharmaceutical companies cater to a customer base that is dependent on their products to manage patient health. This requires additional efficiency in everything they do, especially for planning supply-demand. The primary objective is to not halt manufacturing, as the dependencies can impact the entire Pharma value chain. Since pharma companies are quality controlled, there is an additional time factor that comes into the picture while determining the right deadlines to produce finished product and deliver to end customers. The entire process from drug discovery to packaging for delivery is a series of collaborations within the supply chain before the final product reaches the end customer.

Roughly 66% of the surveyed were concerned that COVID-19 could result in a possible supply chain disruption for pharmaceutical products. The statistic illustrates concern levels on possible drug supply chain disruptions due to the COVID-19 pandemic as of April 7, 2020. Matej Mikulic | Statista

The Planner’s Panorama

Due to the rapid changes in the global supply chains, production planners at pharmaceutical manufacturing are now tasked with surveying inventory and operations with a new set of eyes. Organizations need to be more watchful of new safety standards related to inventory storage, retrieval, usage of material, and equipment maintenance. Tools like Visual Gantt Charts are becoming invaluable for planning and managing inventory. The ability to depict a weekly schedule of operations for different production jobs and a clear picture of resource capacity is a core requirement for any good production planner. The production planner’s prime focus is to ensure there are enough raw materials and resources (equipment or human resources) to ensure a near-to-perfect supply-demand ratio. An additional element that supports a planner is to have inventory visibility within their current warehouse and plan transfers of inventory from overflow warehouses.

Operations gantt in batch manufacturing

Simple visual planning methods are no longer adequate to correctly manage all inventory-supply-demand processes and ensure proper movement of transactions across the company’s supply chain.

What planners need is a robust system that can track supply – demand by including a complex set of parameters such as lead times, working calendars, the capacity of equipment and capability of vendors to ship materials on a timely manner. Planners also need the ability to alert different departments of the next steps based on plans made for upcoming weeks or months. Any modern system should be able to offer required insights including the current state of batches manufactured and available equipment for future work orders.

A production planner often prefers handling the supply chain proactively rather than reactively by responding to the demands. The planner needs visibility of when the finished product will be ready, tested, and released for shipment. This type of planning helps overcome downtime and shortages in raw materials, which is a common issue in most companies. Responding quickly to changing inventory is one way for planners to be more proactive.

Process manufacturing operational efficiency

Even today, many small and medium-sized pharmaceutical companies continue to use a combination of excel sheets, inventory reports, and some old school methods when managing their supply chain. As industries continue to face changes related to the COVID-19 pandemic, only companies that have thought ahead and have invested in an automated AI-based planning system that can assess and predict future demand as well projected resource plans will be best equipped to handle their product delivery on time and in full. Companies now need a quicker and more streamlined process to take their products to market.

The Role of a Master Planning and Scheduling System

01. MPS Driven by Demand

The goal of a Master Planning and Scheduling (MPS) system is to provide suggestions to meet material requirements. If set up correctly, MPS systems respond to demand and plan supply accordingly. Demand usually comes from sales orders recorded in the Order Management system. Master planning ties Planned orders for Production or Procurement to corresponding sales orders. The supply requirements are then calculated based on settings for each item that is included in the Finished Goods Bill Of Material(BOM). The coverage settings of an item show precisely how and when to send feedback with a view of current stock levels or foreseen changes in stock levels from existing planned orders in place.

02. Planned Supply

MPS systems use algorithms for tracking the demand from sales orders, customer forecasts, safety stock levels, and calculating net-requirements for purchase and manufacturing. MPS also pulls together independent or groups of demands that trace back to the production of intermediate and raw materials to be consumed in different Manufacturing and Packout processes.

Determining the quantities required would depend on the inventory quantity setup of any single item. The requirement could be specific for a static batch size or dynamic quantities based on the demand needs. MPS systems provide planners the capability to either consolidate supplies across multiple demand orders, offering a comprehensive supply and demand management experience, or consider only the net change from the start of a full production run.

03. Lead Times

The ability to define lead times is critical to a master scheduling system. For instance, if a user enters a purchase lead time the system should account for the time it takes to receive raw materials after placing a purchase order.

I. Purchase Lead Times

Purchase lead times for a supplier can be set up based on different factors including

  • Pricing agreements
  • Time in days that a supplier can accommodate
  • Transportation time, and
  • Any other unforeseen coverage settings

Within Dynamics 365 Finance and Supply Chain, a purchase lead time found for a specific supplier and item combinations takes precedence over general settings of an item. This applies when (1) no vendor is assigned to the item, and (2) the Find trade agreements checkbox is selected via Master planning parameters form > Planned orders tab.

II. Production Lead Times

Production lead times are the details that can be configured in coverage settings; however, these values are disregarded when items are produced via routes. Routes, defined in the modern Production control modules, consider available resources (people or equipment) and their working schedule. In this situation, production lead times needed to create finished goods do not have to be specified by a user, as they are calculated automatically.

Planning for the Unknown

There are still unknowns within pharmaceutical production and operations. Without the right system, planners will struggle to retrieve the data needed to better streamline the manufacturing process. To help with this, Production Planners can benefit from valuable information like –

  • Batch production history and patterns of user behavior that show actual production lead times
  • Quality standards of work-in-process production run based on raw materials that are procured from specific suppliers
  • Quantity yields of past batches, actual scrap percentages based on changes in production routes and resources
  • Accurate actual batch costings in comparison with estimates

These additional details provide supplementary insights to help improve production, downtime planning, maintenance, and most importantly, promise dates to customers. Production planners need to be equipped with a system that presents elaborate sets of insights and actionable suggestions on how to plan/schedule production operations. A well reliable tool empowers a company to drive efficiency and growth.

An AI-ML & Analytics Centric Approach

Eventually, and soon, a standard planning system will no longer be capable for the Pharmaceutical supply chain to operate efficiently. Systems that reduce human effort, learn from history, and improve daily operations will become necessary to overcome inefficiencies. At the same time reporting possible issues and roadblocks that impact orders as well as deliveries, improves the overall plan vs actual picture. Production planners are proving to be more efficient when they have real-time and historical analytics available during the planning process to make better decisions while managing inventory and orders. A guided method of operating and reporting through actionable data can make your company a powerhouse within the industry. An intelligent and optimized planning system can help eliminate guesswork for the production planners in build a competitive edge in the market.

Final Thoughts

The supply chain within a pharmaceutical company is only as efficient as the ability of a planner to proactively coordinate supply, demand, and inventory. A robust planning system with an emphasis on analytics and guided user behavior can play a key role in building efficiency and moving shipments out the door, along with meeting the required quality standards.

Xcelpros has designed Microsoft’s offerings to enhance planning for Pharmaceutical, Chemical, or Biotech industries. For more information on Production planning and Scheduling tools within Microsoft – Schedule Demo

Maintaining an Integrated Supply Chain Key Solutions
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Maintaining an Integrated Supply Chain: Key Solutions
Maintaining an Integrated Supply Chain: Key Solutions 700 500 Xcelpros Team

At a Glance

  • Many organizations that fail to recognize supply chain as a strategic business function, tend to not move to a digital supply chain and lose out on the benefits that come with the transformation.
  • Traditionally, manufacturing companies have treated supply chain as a transactional function, a bargaining chip to reduce price and secure on-time delivery of raw materials. The modern supply chain is viewed as a strategic asset to the organization, integrated deeply with other business functions, aimed to increase customer satisfaction.
  • Companies unable to track hidden costs across the supply chain lose track of actual costs, damaging their bottom line. Proper supply chain monitoring can save anywhere from 20-30% of distribution costs.

The Supply Chain Challenge

Supply chain management is one of the most critical elements of success for any business in today’s global market. However, its application is undermined by many companies as business leaders face challenges to control the cost of a supply chain without compromising on its efficiency. Since COVID-19 we have witnessed drastic changes in methods and methodologies for streamlining supply chain operations. It, however, doesn’t take away some key fundamentals required for healthy functioning of a company’s supply chain and inventory management.

According to the Logistics Bureau, for companies running global operations, their supply chain cost could rise as high as 90% of their total expenditure.

The Supply Chain Slowdown

The problem lies in poor strategic management. Supply chain managers are focusing on cost minimization, most of them without having detailed field knowledge of how the system works, and the result is it is impacting other areas of the process such as inventory optimization, ‘on-time delivery in full (OTDIF)’ and customer satisfaction. Trying to improve one KPI is resulting in a cost spike in other areas of operations, which can have a long-term impact on revenue.

FIGURE 1 Where Business Leaders are Falling Short

Where Business Leaders are Falling Short

A robust supply chain needs strategic alignment and planning in line with the overall business functioning. For example, in order to control cost, you need to first understand the key drivers of cost in the supply chain and most importantly how to measure the supply chain cost. While the strategy is important, establishing an integrated supply chain requires a synchronized approach to planning, execution, and application of technologies in order to create an end-to-end unified system across the entire organization.

FIGURE 2 Key Elements of an Integrated Supply Chain

Key Elements of an Integrated Supply Chain

In this article, we will touch upon some interesting facts that make an appealing case as to why the Supply Chain strategy needs to be digitally enhanced and properly integrated with other parts of the business.

Switching from Traditional to Next-Gen Digital Supply Chain

The rapidly evolving business landscape is disrupting the way companies function. Moreover, the advent of the latest technologies and growing competitive markets are driving companies to push their limits and redefine supply chain operations.

Is your business ready to embrace a digital supply chain as a key distinguishing factor for its competitive advantage?

Most SMBs are holding back the transformation due to the fear of possible risks that could surface. Per our industry experience, it’s due to the age-old perspective in which company leadership is analyzing their supply chain. In most of the cases, we found that they are way behind the entire purview and don’t realize the true potential of a well-integrated, technologically advanced supply chain.

Traditionally, business leaders focused on pricing and product quality, but priorities today have completely shifted. Major Objectives and Key results of organizations are geared towards optimized supply chain and operations to boost businesses forward. With Industry 4.0, advanced analytics, and robotic process automation rising, companies are realizing the need for an integrated supply chain. This has become even more true as the Covid-19 crisis continues. Demand planning and fulfillment, supplier-customer relationship, customer retention, on-time delivery are some of the major expenses of a company. An efficient supply chain not only helps with cost reduction in these segments but also ensures growth, profitability, and customer satisfaction.

Top Reasons to Upgrade Your Operations with a Next-Gen Digital Supply Chain:

Shifting from a plant-level production planning to a demand-driven focus with customer-centric mindset but not compromising with the product quality

Getting rid of outdated processes and technology to match the transforming global business landscape

Reducing cost to formulate a more efficient value chain to remain cost-competitive in the market

Ability to outsource parts of your supply chain process in order to reap economic benefits and superior supply chain network design

Achieving more efficient product lifecycle management

Collaboration with stakeholders to integrate business processes for increasing visibility throughout the value chain

The Impact of Supply Chains

An integrated supply chain influences the overall functioning and improves profitability of the business. Going digital and increasing interoperability across these functions sets a business up to accelerated growth. Let us discuss a couple of key areas that are impacted by a well designed supply chain.

FIGURE 3 Upgrading the supply chain will improve your bottom line

Upgrading the supply chain will improve your bottom line

01. Supply Chain and its Impact on Customer-Centricity

When business leaders discuss improving their supply chain, their main focus is usually related to accelerating growth by cutting down costs, achieving better lead time, and ensuring on-time delivery; as all these factors contribute towards business development. What slips from their mind is what customers really care about. It all starts and ends with customer satisfaction. Delivering the right product at the right time improves your organization’s brand value and credibility to customers.

What the customer cares about is receiving quality products on the promised delivery date without having to spend too much time or effort. This can be seen in Amazon’s announcement of one-day delivery. Late and inaccurate deliveries bear a significant impact on customer loyalty.

70%

of industry professionals predict that their supply chain is going to be a key driver of improved customer satisfaction by the end of the year.

Source: Accenture

Your procurement division must understand the importance of cost-saving, but they need to be in line with the expectations of the customers and procure quality raw material for manufacturing the items. If expectations on raw material quality is not set, you could save money purchasing raw materials upfront, but end up spending more in the long run.

Let’s take a look at Kimberly-Clark’s journey to understand this better:

Kimberly-Clark is a manufacturing-focused organization that up to a few years ago did not have a supply chain division. Sandra MacQuillan, their first Supply Chain Officer, built a solid team to ensure the supply chain was focused on customer satisfaction. In the process, she integrated various functions such as procurement, quality (know more on quality management by clicking here), logistics, manufacturing, safety, etc. that are interconnected and delivered for one common goal – that is customer satisfaction.

Kimberly-Clark was able to achieve 25-30% cost savings by interconnecting various aspects of the Supply Chain, focused on better customer service, resulting in improved efficiency.

If you connect with the issues faced by Kimberly-Clark, or your supply chain is functioning in silos, it could be the best time to make a change. You can take this opportunity to update and integrate your supply chain with overall business functions and work towards a common goal like customer Satisfaction. A strongly integrated application will have the ability to incorporate holistic business functions including analytics, collaboration with notification, secure information sharing, control-based decision making using Artificial Intelligence, and more.

FIGURE 4 KPIs that are critical for supply chain monitoring

KPIs that are critical for supply chain monitoring

02. The Role of supply chain in sustaining business long term

According to the Logistics Bureau, nearly 50% of companies shut down within the first five years of operation. One critical factor contributing to these failures is an inefficient and poorly conceived supply chain. Supply chains in most organizations have evolved as a practice, rather than a well-designed process.

79%

of companies with robust and high-performing supply chains are able to outperform their average peers in terms of higher revenue growth. This fact signifies the positive implication of a connected supply chain for a business.

Source: Deloitte

5 Steps to Integrate your Supply Chain

Break down organizational silos

For an effective, integrated approach to Supply Chain Management (SCM) the organization must operate end-to-end as a unified entity.

01

Define organizational objectives

Move beyond basic business and functional unit design and metrics. Look at the organization holistically and define the objectives as a complete entity.

02

Align business processes

Take a cross-functional approach to business process design. Start at a high level and map out the supply-chain flow with the goal of creating an end-to-end mapping of the business process.

03

Design the IT architecture to support an integrated approach

Leverage a cross-functional approach to IT systems design. As much as possible, standardize the organization in terms of the applications that are used. Seek to eliminate as many disparate applications as possible in favor of a common set of applications across the business.

04

Reshape leadership and culture

For most organizations, the major roadblock in delivering an integrated approach to supply-chain management is culture change. Change of this magnitude must be driven by solid leadership. There should be strong collaboration to drive the effort to deliver an integrated supply-chain organization.

05

Final Thoughts

There is no way the importance of an integrated Supply Chain should be overstated or undermined. If you or your organization have not prioritized your supply chain efforts, it’s never too late to take the first step.

An intelligent ERP software comes with a holistic supply chain module along with advanced analytics to support the following functionality.

  • A manufacturing execution system
  • Financial and cost accounting
  • Inventory and warehouse management
  • Purchasing and planning of materials
  • Product information management
  • Sales and marketing of the products
  • Transportation and logistics management

In order to push a company forward especially post-COVID-19, a sound digital supply chain strategy would be needed.

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