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Mitigating Risks in Pharma Supply Chain

How to Mitigate Risks in the Pharma Supply Chain

Oct. 6, 2021
Gather information from internal and external data sources the leading and lagging resilience metrics in seven areas: data security, finance, operations, organizational maturity, regulation, reputation and structure.

With an increasingly complex supply chain, pharma executives are worried about the risk that poses to their companies. According to a study by McKinsey Global Institute, nearly 50% of respondents cite sole-sourcing of inputs as a critical vulnerability.

And 25% point to a lack of visibility into supplier risks as a major challenge.

In an article by Tacy Foster, Parag Patel and Kathrin Sika, at McKinsey, they outlined some ways to help companies build supply chain resilience.

End-to-End Transparency

A company must map its suppliers by tier to have an end-to-end view of the supply chain and identify vulnerabilities. Getting a clear picture of what’s happening at each stage requires gathering from internal and external data sources the leading and lagging resilience metrics in seven areas: data security, finance, operations, organizational maturity, regulation, reputation, and structure.

 Routine Stress-Testing and Reassessment

Companies often use scenario planning and simulation models to anticipate their vulnerabilities, quantify the potential impact, and mitigate the effects. For example, during the COVID-19 pandemic, a leading pharma company used a digital-twin simulation to understand the impact of production slowdowns and shutdowns on the supplies of patient medication. This helped the company realize that it had more time than it had anticipated to design and implement safer ways of working at its manufacturing plants, allowing it to take more time to get the best solutions.

 Reduced Exposure to Shocks

A company can also strike a better balance between just-in-time and just-in-case inventory levels, harden its physical assets to withstand hurricanes and storm surges, and provide financial support to distressed but essential suppliers. Many companies are experimenting with technologies that enable quick changes among suppliers and advanced analytics that help predict potential challenges better.

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