Finding Strategic Levers in the Supply Chain - Pharmaceutical Executive

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Finding Strategic Levers in the Supply Chain

Pharmaceutical Executive


Twenty first century supply chain

Today's healthcare customer is more complex than ever before. The new healthcare ecosystem encompasses payers and healthcare organizations as well as their preferred service providers, physicians, and a large number and variety of other healthcare providers that interact with patients, either directly or indirectly, during the course of a healthcare transaction. Creating a customer-centric pharmaceutical supply chain requires that information about customer needs, wants, and even desires be communicated throughout the organization. Executives responsible for supply-chain management should have opportunities to engage one-on-one with their customers in the locations where products actually are stored or used. For example, a recent conversation with an infusion nurse uncovered that the packaging for an IV product was stiff and hard to handle, and that nurses were getting paper-cuts. The supply-chain team collaborated with marketing and key customers to change the packaging to recycled paperboard and to improve ease of opening for nurses—a simple, low-cost modification that made the product more customer-oriented and eco-friendly.


Figure 1: Customer value levers.
The key to successfully harnessing pharmaceutical supply-chain innovation is a re-imagining of how product and supply-chain attributes can become customer value levers (Figure 1). This 360-degree view of value drivers that can be impacted by the supply chain illustrates the various supply-chain touch-points that can make an enormous difference in addressing customer needs.

Consider the following scenarios:

The manufacturer of an oral solution for treatment of infections in immuno-compromised patients received customer feedback that the product was extremely irritating for patients with oral mucositis, a frequent complication of some cancer therapies. This information led to reformulation of the product into two additional formulations that will address the needs of the full complement of patient types.

Responding to requests from a large national managed care organization (MCO) for ways to increase member adherence with chronic-care medications, a manufacturer challenges its supply-chain management team to devise low-cost adherence packaging solutions for several of its best-selling chronic medications. The plan is to test packaging alternatives within the MCO's current population to determine which approach delivers the desired outcomes.

A supply-chain manager visiting rural pharmacies in an emerging Latin American market learns that access to refrigeration is not commonplace, leading to a re-assessment of the formulation for a new pediatric product.

Focus on the Customer

The key to creating a customer-focused supply chain is providing supply-chain managers direct access to customers and integrating key customer information in operations. For example, the supply-chain team could "follow the product" from the time it leaves the company until it reaches and is administered to a patient. Experiencing every aspect of the product flow and customer experience provides significant insights to unmet customer needs. This learning experience should be a part of a multi-layer approach to learning about customers, including the extensive prelaunch research with prescribers and end-users that is done in partnership with commercial teams, or the wealth of customer qualitative or focus-group research that is done to support product configuration and distribution channels.


Figure 2: The customer-focused approach to identifying supply chain solutions.
Once supply-chain management is engaged in and focused on identification and resolution of customer needs and desires, their focus will shift to the identification of supply-chain solutions: how to design, plan for, source, produce, and deliver and service the product that satisfies customer needs and desires (Figure 2). By shifting the focus from internal customers, including R&D or commercial operations, to the larger customer ecosystem, pharmaceutical supply-chain management can become a dynamic contributor to 21st century healthcare delivery.

Strategic management of the supply chain is vital to winning with customers. Cost and quality are important, but they are not the only things customers care about: new services, flexibility in relationships, reliability of supply, and ability to creatively overcome obstacles in delivery of product are also core values. Pharmaceutical product portfolios and customers are becoming more complex. In order to stay ahead of this trend, customer-focused supply-chain capabilities will become a more important part of a company's competitive advantage.








Tom Reynolds is Director, Global Strategy, Janssen Supply Chain, and has comprehensive commercial, business development, and operations global experience across pharmaceutical, medical device, biotechnology, and consumer healthcare segments at leading Johnson & Johnson companies. He can be reached at
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