Richard Farquharson, Head of Supply Chain & Planning EMEA at AstraZeneca - Making the supply chain "sexy" - How to engage the commercial operations in pharmaceuticals supply management

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The document discusses making the pharmaceutical supply chain more effective and engaging the commercial function. It notes that currently: 1) Lead times in the pharma supply chain are long, up to 400 days, and inventory turnover is low. 2) Stock outs are unacceptable as they affect patients' lives, but historically companies have avoided them by keeping lots of inventory. 3) To engage commercial functions like marketing, operations must provide customer insights, ensure product availability, manage risk, and challenge the status quo with innovative ideas that help drive sales and brand value. Both operations and commercial functions are essential to building effective, efficient future supply chains.

Making the pharma supply chain “SEXY”

RICHARD FARQUHARSON

AstraZeneca Pharmaceuticals
Head of Supply Chain & Planning for EMEA

Lead times are long, inventory turnover low

(Up to 400 days)

ASEPTIC UK RoW
Japan Italy EU
Japan CH
Italy Argentina Argentina

2

? Reasonably
predictable demand
for ~10 years

?

~ 12 years

Stock outs affect patient’s lives and are
therefore unacceptable

Regulatory
Authority +
Payer

REGULATOR

Patient DR Pharmacist Patient

PRESCRIBER DISPENSER CONSUMER

DECISION MAKERS

So what has all this meant historically ?
• Complete aversion to stock outs
• Lots of inventory
• Poor demand management & supply planning
• Little agility, complex and highly regulated
• Yet high gross margins
• Limited perceived commercial “value” in what Operations
has to offer

But things are rapidly changing...

Increasing pressure on prices

Even greater regulation
Volatile emerging markets

SEXY

SOTC

Distribution Innovative
channels Supply packaging
Reduction in cost Chain Top line sales
security
POS data
Responsive
supply
chain

Reduced S&OP
working
Range capital
management Excellent
Manage
stock
risk
availability

Dull

SEXY
Accompanying Market
diagnostics & access
services ?
Catalyse
Speed to
Lead
CoGs SOTC
& market
Partner
Distribution
channels Supply Innovative
packaging
Reduction in cost Chain Top line sales
security
POS data
Responsive
supply
chain
S&OP

Range
management
Reduced
working
capital
Just Do It Manage
Excellent
stock
risk
availability

Dull

Why do we need to engage commercial ?

 Marketing provides customer insight

 Operations ensures product availability and manages risk

....both are essential to deliver effective & efficient, future supply chains

 The 4Ps are not the sole property of marketing

How to engage Commercial?
 Partners not customers
 Get into the Commercial Business
 Take ownership of the whole supply chain: Right-to-Left thinking
 Bring innovative ideas and challenge the status quo

What are your experiences of engaging
the commercial function

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