Whether it's healthcare or not, the recent Covid-19 pandemic can't be ignored in setting up the future of your firm. In the life sciences industry, this outbreak has caused a global shortage of life-saving drugs and supplies. On the other hand, it led to a reduced demand for products used for non-essential activities which were postponed due to the worldwide lockdowns.
This demand shift exposed the health care sector's weaknesses, mainly caused by a reliance on third-part manufacturers, just-in-time (JIT) inventory combined with the lack of cloud-based visibility and collaboration platforms. To top it off, the redundancy, provided by the ample suppliers, disrupted the complete supply chain.
To best serve the patients, the life science companies must rethink their current supply chain practices and plan for the new 'post Covid-19' normal. Following the pandemic, there are four long-term effects predicted on the supply chains of the health care sector.
- Manufacturing heads back west
The supply chains of life sciences companies have traditionally organized their supply chains with a significant focus on cost reduction, rather than risk management, meaning that China and India have a significant share in amount of drug manufacturing facilities worldwide. With the recent outbreak in mind, we expect that China and India will control their exports more tightly, while other governments will pressure the life science companies to bring production back closer to home.
- Supply chain visibility becomes an urgent need
An end-to-end supply chain visibility is vital for decision making. A lack of it leaves the manufacturers blind. We experienced this particularly in the recent lockdown periods. In the short term, companies must develop supply chain visibility platforms that give them the ability to determine the coverage, requirements and ideal stockpile levels for every component, whether it is about finished or intermediate products. On longer term, supply chain "control towers" — central functions that use data to support decision making aided by scenario planning and simulations — need to be deployed.