What role can supply chain play in preventing stockouts? While most drug shortages impact generics in areas like oncology and anti-infectives, weight loss drugs are capturing headlines today for the challenges many patients have in filling these prescriptions. They are lauded for their efficacy in helping patients lose weight, which improves health overall, and are relatively safe, making them attractive. The World Obesity Federation estimates that 2.7 billion people are obese or overweight, so the target market is substantial. But the very attractiveness of this treatment to patients has meant that demand far exceeds supply, prompting drug shortages and commentary in the annual reports of their makers. So how can supply chain orchestration help? I’ll describe three of the top areas: seamless collaboration, improved forecast accuracy embedded in the supply chain workflow, and disruption response.
Manufacturers of these weight loss drugs face a multi-headed hydra of the three c’s: coverage, competition and capacity. The cost of the treatment and use for weight loss makes insurance coverage complicated, and the attractiveness of the market means many competitors are nipping at their heels. But I’ll focus on capacity, since that is the supply chain lever. Supplies of the active pharmaceutical ingredient (API) semaglutide and the injector pens that dispense it are both scarce. Active trials are underway to deliver the medication orally, which would be easier and cheaper to make, administer and deliver, but no regulatory approvals have yet been achieved. And while this would ease production and cold chain distribution challenges, the pill form would require as much as 20x the API, which is already in short supply. So companies are tinkering with their supply chains in all kinds of ways, such as investing in new manufacturing capacity, buying a contract manufacturer, and adjusting how much they make of which dose to support those just starting treatment, but none of these paths are overnight fixes.
All this tinkering undoubtedly involves effort from across the supply chain, from sales to procurement to manufacturing to distribution and more. Historically these roles are siloed, focused on their own functional metrics. Yet the solutions to a multi-headed hydra necessitate working together, which concurrency facilitates. Synchronizing people, processes, and data is core to concurrency, so that the supply chain can be rebalanced to affect what is happening, with the impact of any change being immediately reflected across the entire network at once. Supply chain orchestration means the various nodes can plan together instead of sequentially.
One global pharmaceutical company refers to this as the “whoosh” effect, because switching out the walls between siloes from opaque to clear meant that suddenly everyone could see the same information at the same time, which makes collaboration much easier. Planning together allows companies to reduce excess inventory that builds up when they plan sequentially. It also fosters the creativity needed to quickly consider alternatives, like those the weight loss makers are employing. Asking these what-if questions entails assessing the impact on multiple areas, such as packaging, production, inventory, distribution, and of course customers. No one wants to be trapped in a conference room waiting for hours as various teams to dash out to run some numbers on an idea, so the ability to run scenarios iteratively together is only possible with the instant results concurrency delivers as part of supply chain orchestration.
If a labor strike were to shut down a key port for your shipments, supply chain orchestration would enable you not only to run scenarios to choose the best alternatives but choose those plans down to the route and the carrier level. And in this day and age, when sustainability is an increasing consideration, the greenness of the options can be a factor calculated into your plan. Whatever change you make can ensure your shipment arrives but also be automatically fed back into your plan so that supply and demand are kept in sync.
Runaway demand for drugs is hard to predict and even harder to manage, but not impossible. Supply chain orchestration can’t solve all problems, but it can maximize the ability of the supply chain to respond to any problem by marshalling all the resources to work together concurrently. When people’s health is at risk, that’s a goal worth fighting for!
Mitchell-Guthrie has an MBA from the Kenan-Flagler Business School of the University of North Carolina at Chapel Hill, where she also received her BA in political science as a Morehead Scholar. She has been active in many roles within INFORMS (the Institute for Operations Research and Management Sciences), including serving as the chair and vice chair of the Analytics Certification Board and secretary of the Analytics Society.
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