Pharmaceutical companies have always focused on ensuring that their products do not run out of stock on the market. However, the large focus on production creates long and complicated supply chains with large inventories and long production times. Moreover, as a very regulated industry, it is difficult for pharmaceutical companies to adjust the supply chain and create transparency fast.
But what if we told you that the solution lies right under your noses? By working with your data, you can identify exactly where to optimise your supply chains and create transparency in your data. This will allow you to improve in three areas:
- Supply chain resilience
- Cost of goods sold (COGS)
The challenge with data in the pharmaceutical industry
Like all other industries, the pharmaceutical industry is impacted by the uncertainty caused by events such as heavy inflation, the gas crisis, the Suez canal obstruction, the invasion of Ukraine and macropolitical tensions. Unlike other industries, the pharmaceutical industry has high margins and is therefore not as badly hit on EBIT as low-margin production industries. However, if you do not continuously improve your costs of goods sold, even a high-margin industry will be hit. On the bright side, pharmaceutical companies generally have a lot of valuable data that can be used for that purpose. Unfortunately, these data are more often used to satisfy regulatory requirements than to improve business.
The problem is that data in the pharmaceutical industry is often stored on data islands, which hinders businesses from creating the transparency needed to improve the supply chain. Moreover, it is a problem in itself that the reason that pharmaceutical companies even have this data is that:
- The authorities require it
- The advanced equipment used in the industry gathers a lot of data
- Businesses gather data in their production processes to ensure product quality
In other words, the data is there either because it has to be or because it happens to be. Therefore, the data is rarely used for a greater purpose across the data islands.
Moreover, the fact that the pharmaceutical industry is so heavily regulated has almost created a cultural blockage towards changing things. It is as if the entire industry has come to believe that it is, in fact, not possible to make any changes due to regulations. However, while the pharmaceutical industry is more limited by regulations than other industries, there are indeed factors that are not governed by regulations that you can freely adjust to your advantage. The challenge is to find them.
How you can free up data in the pharmaceutical supply chain
Our research suggests that by implementing a data-driven approach, pharmaceutical companies can take charge of their data to create transparency and define where they can get the highest possible effect with the lowest possible effort.
The usual approach is to conduct manual analyses of the pharmaceutical supply chains to identify potential areas of improvement. However, because pharmaceutical companies operate with huge amounts of data and must comply with multiple legal regulations, the data-driven analysis must be precise, profound and continuously updated.
With our experience, we know how to identify and extract relevant sources, improve data quality and apply data sensitivity levels. The combination of supply chain experts and data experts results in a framework that uses parameterisation to showcase different outcome scenarios. We are using the latest cloud-based technologies that can be implemented and automated in your existing data architecture to gain insights and track progress daily.
Using the data-driven approach to create transparency and use data across islands, pharmaceutical companies will have an objective approach to improving sustainability, supply chain resilience and cost of goods sold:
- Sustainability: Analysing data across your data islands will provide a clear overview of where your unsustainable habits lie, for example, where you use too much energy and raw materials, etc.
- Supply chain resilience: When you start to analyse and understand where you have weak spots, it will also make it easier to take faster decisions and act on resilience in your supply chain
- Costs of goods sold: Analysing your data across islands will help you understand where your COGS is moving in the wrong direction, where opportunities lie and how to prioritise where to start
So, dear pharmaceutical companies, don’t be afraid to use your data. If used the right way, your data can revolutionise the industry!
Call for action
Morten Just Blangsted has more than 25 years of experience in the pharmaceutical industry in roles from project manager to managing director and for the past 11 years as a management consultant. He has particular expertise in leading supply chain transformations, sales & operations planning and operations management. Recently, Morten has worked closely together with Valcon’s data capability to solve the need for a data-driven approach in the pharmaceutical industry. Read more about the data services that we offer here.
Want to learn more? If you would like to learn more about how Valcon can support your pharmaceutical business, please email [email protected] and we’ll be in touch right away.