For stakeholders in life sciences supply chains, digitally enabled breakthrough opportunities lie ahead. Traditional supply chains are transforming to patient-driven operating models using new capabilities like digital network platforms. Given industry changes such as expiring patents and emerging personalised medicine, pharma companies must transform their supply chain capabilities, focusing on end-to-end patient outcome-based supply chains and dramatically improved healthcare effectiveness.
To successfully transform and win, industry leaders must first see ‘supply chain’ as the business operating model and business competitive weapon focused on patient outcomes, not simply on available supply to the patient. Supply chain is more than a linear set of point-to-point connected functions that must be integrated to move products.
Going forward: face facts and reality
Emerging digital technologies will ultimately disrupt existing pharma business operating models. New capabilities, such as smart analytics, will collapse traditional data and information sharing boundaries, resulting in greater end-to-end visibility and collaboration. The supply chain operating models we see today are being challenged to deliver never before seen business levels of agility, collaboration and economic value across the healthcare ecosystem.
To be more successful than past efforts these foundational changes must be led by business leaders from the top down, not just technology leaders deploying ERP-IT business models and trying to integrate businesses and acquisitions, as may have happened in the past.
Top-down business-led transformation around the core of supply chain strategy and execution is historically not a strength in pharma. Pharma businesses can no longer wait several years for IT to implement expensive, complex and often siloed integrated IT systems, especially in regard to the smaller nimble scale of personalised medicine and cell and gene therapy-based business models.
During the transformation journey, businesses and leadership teams are learning that ‘integrative and systemic thinking and processes’ are required to figure out the challenge of continuously and synchronously integrating siloed projects, metrics and measures across the various businesses, business units and functions. The reality is that they don’t all start from the same place. These initiatives must always bear in mind that they must deal with constraints that hold back effective transformational change and organisational effectiveness.
In the transformation to the patient-driven operating model with new associated business capabilities, businesses must first evaluate the way they operate in the patient driven model, versus supply driven.
The following strategic use cases are a useful foundation for most companies:
1. Manage the pivot of the business’ operating model from supply driven to demand driven by adapting metrics, processes, people and technology elements to outside-in patient-driven processes.
2. Provide accurate and real time in-process demand visibility in the digital twin together with relevant business context and maps to product flows.
3. Execute ‘smart’ orchestration of continuous, integrative business planning with accurate upstream and downstream visibility (versus traditional supply-driven sales and operating planning meetings and events).
4. Ensure continuous end-to-end visibility and traceability of all products and services from the start of supply into the hands of the ultimate product and service user, for example, the patient. The key here is treating visibility as a process capability versus a software system like an inwardly focused control tower.
5. Build a Digital Network Platform supporting cloud-based services and applications that expand the network of partners to leverage the power and economic value of two-sided business partner networks.
6. Continuously monitor and manage transformative change – so that change is assessed, led and managed.
7. Holistically deploy digital technologies to fundamentally change work practices and provide new business capabilities like advanced analytics capable of driving significant business improvements.
Transformation is a journey
All stakeholders and partners in market-based ecosystems have enormous digitally enabled breakthrough opportunities ahead. The business benefits will come not from simply improving traditional technology and data integration complexity, but from improved economic power, scale, collaboration, responsiveness, visibility and transparency given to all networked partners across the two-sided platformed market.
A fair question is ‘how can leaders manage this journey while keeping the business operating and at the same time fundamentally transforming business capabilities?’. For leading organisations, the answer has been to use the 5-stage maturity and capability model, initially developed at AMR Research, with ongoing continuing development by Gartner.
The 5+ Stage Maturity Model
Stage 1:
Reactionary Stage – How can I identify and fix a problem I didn’t expect?
Stage 2:
Project-Based Improvement – How can I formulate and manage a project and implement a solution that addresses the issue moving forward?
Stage 3:
Integrative Functional Excellence – How can I work with my function partners to improve efficiency and achieve functional excellence?
Stage 4:
Outside-in Collaborative Customer, Patient-driven Operating Models – How can I work with partners to become market, patient, and demand driven?
Stage 5: The Orchestrated Market Network – How can I be part of global digitally networked ecosystem focused on every customer and patient?
Stage 5+: The Unfolding Vision – What is the future and ongoing value to the Ecosystem of a fully digitalised market ecosystem?
The model is an invaluable change management and diagnostic framework to describe and codify the roadmap of progressively evolving business and supply chain capabilities (work practices, processes, people and technologies) that a company or system must systematically build, develop and deploy as the business evolves. The evolution is from reactive fix-it practices to orchestrated end-to-end patient-driven healthcare ecosystem capabilities and patient outcomes.
The 5-Stage diagnostic roadmap correlates evolving capabilities and practices that are built and evolve from linear and reactive supply chains through to advanced orchestration of key capabilities in patient-driven healthcare. The final stage of this model is where the end-to-end integrated supply chain is part of an extended partner network supported by enabling capabilities, such as a digital network platform. This holistically transforms the capabilities of the end-to-end life sciences and healthcare ecosystem.
In short, the model provides stakeholders and change leaders the ability to diagnose where their current capabilities are within their own business, supply chain and within the market-based network ecosystem, and then shows what the best practices are for leading the journey and completing a transformation.
The opportunities ahead
Traditional inside-out, point-to-point supply-driven value will still come from Stage 1, 2, and 3 supply chain, operations and manufacturing capabilities. These will remain a critically important foundation for any company and its own internal operating model with functions such as logistics, operations and procurement, as well as the management of external customer relationships such as contract manufacturers, suppliers, retail pharmacies, hospitals, distributors and suppliers.
In early stages of the journey, these will still be based on point-to-point and largely transactional processes. The non-linear exponential economic value and power of the network kicks in during stages 3, 4, 5 where the power of the network becomes the ecosystem differentiator. The stronger the partner network, the higher the economic value!
The economic value of a market-based network stems from the power of the market elements and partners collaborating seamlessly across the networked ecosystem using the capabilities of a Digital Network Platform. Economic value is derived from the real time transparency and collaboration processes between all interconnected partners in the market network-based ecosystem. To understand the difference, it’s as simple as going from a 1-1 connection with limited value to the exponential implications of many-to-many partners in the network, collaborating and exchanging data with each other.
The reduction in collaboration complexity, improved sensing and response capabilities stem from the fact that the constraints to doing business are no longer based on the time to visualise-integrate-respond and the complexity of integrating different IT systems, businesses, organisations and databases. The codified connectivity embedded in the Digital Network Platform, for example the Amazon Web Services (AWS) platform with its cloud-based applications and services, is the heart and soul of the networked industry ecosystem.
Roddy Martin is chief digital strategist at TraceLink
