Five ways the digital supply chain drives success for life sciences

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Tackling supply chain challenges

Regulatory and market-based challenges — including dwindling pipelines, falling revenues, and a changing healthcare environment that emphasizes personalized medicine — are forcing life sciences companies to improve visibility and transparency in the supply chain. Compounding this situation is the need to: protect products against counterfeit, diversions and theft; meet compliance regulations; and monitor the market when faced with a lack of mature and consistent legislation, as well as poorly aligned manual processes.

These demands place greater emphasis on the quantity and quality of data produced, on the flow of products from producer to distributor to end user, and on the processes and platforms needed to support underlying compliance and risk-management requirements.

The supply chain of the future: an industry transformation

The digital supply chain is about the smooth management of products across the value chain. It comprises multiple distribution channels in multiple regions and with multiple collaborative partners, and it’s now integral to the overall business fabric and success of life sciences companies.

Increasingly, these companies are stakeholders in the overall healthcare ecosystem, going beyond the development of products to the enablement of care. At an organizational level, the supply chain must traverse the enterprise — from the chief innovation officer to the chief financial officer to the vice president of supply chain to the vice president of sales and marketing. The supply chain’s growing role in a company’s success is so significant that some companies have created the role of chief supply chain officer, reporting directly to the chief executive officer.

With so much at stake, companies must recognize and respond to the disruptive potential of digital technology in the supply chain of the future. Adopted correctly, new technologies have the ability to help enterprises innovate while reducing costs. Digitizing the life sciences supply chain, therefore, represents a transformative strategy to enable capital-efficient and agile innovation, improve the industry business model and process agility, and capitalize on an increasingly integrated healthcare ecosystem.

The emphasis must be on creating an environment that ensures a flexible, reliable, responsive, transparent and secure supply chain. To achieve these objectives, life sciences companies must:

• Shift from a stock-based model to a real-time, responsive, order-based model

• Harness predictive insights and cognitive intelligence to enable better decision making. Through predictive analytics, companies can determine whether devices are starting to show signs of impending failure or display performance issues, and they can identify subtle quality issues and gain distribution insights. Cognitive intelligence provides feedback about user perceptions through tools such as social media networks, science journals and information about product returns

• Automate policies and procedures to eliminate error-prone manual activities

Increasingly, life sciences companies are stakeholders in the overall healthcare ecosystem, going beyond the development of products to the enablement of care.

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Digital solution delivers supply chain insights

A large pharma company wanted to analyze and map its product footprint across multiple locations and monitor, record and predict the impact of events on its manufacturing and distribution.

Working with DXC, the company adopted a visual risk management solution called OmniLocation, which allows the combining, analysis, reporting and risk visualization of nine sources across 11 data feeds. As a result, the company has achieved the five key elements of a digital supply chain: revenue enhancement through cost-cutting, flexibility, transparency, traceability and enhanced security.

Benefits include the following:

• Decreased overall head count and eliminated most manual processing

• Generated supply chain analytics for flexibility, business value

• Created centralized, real-time, 24x7 tracking for greater transparency

• Allowed visibility and tracking to support product delivery decision-making

• Used insights to move inventory in case of incidents

The benefits were realized during the first storm to hit the supply chain after OmniLocation was installed: For the first time, the company had immediate insight into the facilities affected and was able to make decisions without having to compare lists and locations from multiple systems and event data sources.

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By embracing a digital platform across the supply chain that capitalizes on the Internet of Things (IoT), Industry 4.0, mobility, and serialization of products for track and trace, companies can be responsive, agile and compliant on the path to more capital-efficient and agile innovation.

Here are five strategic ways the digital supply chain creates an advanced, productive and cost-efficient business model.

1. Digital supply chain enables revenue enhancement.

Maintaining high-value product at multiple points in the supply chain is costly. To combat this, companies need to move away from a resource-intensive, inside-out or internally driven model where all activities connected with the supply chain are wholly owned and operated by each company. Instead, they should move to what might be termed an outside-in approach. This model pushes low-level yet cost- intensive activities to contract partners, achieving a streamlined supply chain that serves the needs of stakeholders and delivers business benefits.

Using the outside-in approach by working with an ecosystem of partners, supply chain decision makers can focus on delivering new revenue-generating business opportunities. For example, by transferring the delivery logistics to an established delivery service that owns the infrastructure, a life sciences company may provide faster delivery to emerging markets or add new markets to the inventory. This outside-in approach allows companies to deliver products to customers more quickly and to more distribution points than can an enterprise that manages delivery logistics internally.

Adopting the outside-in approach also allows companies to reconsider the elements of the supply chain they need to own. For example, by using a contract manufacturing organization (CMO), life sciences companies can avoid building and maintaining factories. Instead, they can pay the CMO to manufacture their products. The potential savings can be invested in a digital platform that allows the company to focus on achieving a progressive distribution ecosystem, expanding the reach of the product and reducing inventory buildup.

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Digitizing the life sciences value chain for a 360° view of the end-point customer

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With an ecosystem of partners and suppliers, life sciences companies can choose which areas of the business they want to prioritize, potentially moving away from heavy capital expenditure and, in so doing, driving down overall cost while creating the opportunity to increase revenue.

2. Digital supply chain enables flexibility.

As personalized medicine, personalized care and globalization push the industry from a stock-based model to a real-time, order-based approach, companies must find ways to build fast and responsive supply chains.

Life sciences companies need to ensure that their product is reaching the right patient at the right time. Thanks to technology advances, it’s often just a few short steps from diagnosis and recommendation of a patient’s need for a medical device in a joint to surgical implantation of a customized, personalized device. Central to this process is a flexible supply chain that supports custom design, build-to-order, prompt delivery and efficient data flow up and down the supply chain.

Digital supply chains result in flexible inventory management. Companies can now get away from stockpiling large volumes of inventory and instead move to a revenue-driving manufactured-to-order model. A flexible supply chain is a more responsive one, and by drawing on data-driven insights, companies can be better positioned to respond quickly to changing circumstances, such as the need to reroute inventory due to a forecasted storm or political unrest in a region.

Flexibility in the supply chain will become even more critical as compliance demands converge. In the United States, for example, the Electronic Product Code Information Services (EPCIS) data-exchange standard has been used to track and trace products in the supply chain, but as the default standard shifts to the Identification of Medicinal Products (IDMP), companies will need to incorporate or migrate to IDMP. This will require flexible infrastructure or the adoption of an outside-in model that can shift the migration to an external partner.

3. Digital supply chain enables transparency.

A digitized platform provides real-time visibility and transparency to the supply chain, letting companies know exactly where each piece of inventory is at any point on the path from producer to consumer. By moving to an outside-in model, one that is powered by an ecosystem of partners, service providers, vendors and customers, life sciences companies can gain real-time knowledge and data about the movement of a product, from procurement of materials to production, delivery and eventual consumption.

At a practical level, companies need track-and-trace capabilities, as well as a “control tower” view of exactly where a product is during any point of its journey. One priority is to break the “black box” effect that often prevents companies from gaining insight into what’s happening in the supply chain cycle. Instead, enterprises should leverage real-time, transactional data to enhance planning and inventory management and to deliver high-quality products. A digital platform that draws on big data and analytics allows companies to aggregate data across regions to predict future demand accurately and determine where, when and in what quantity to manufacture product.

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A flexible supply chain is a more responsive one, and by drawing on data-driven insights, companies can be better positioned to respond quickly to changing circumstances.

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Mobility is intrinsic to transparency, as insights need to quickly reach all players in the supply chain, wherever they are. For example, if a product needs to be rerouted or a partner is unable to deliver a product for whatever reason, that information needs to be immediately relayed to owners of the supply chain logistics so a quick decision can be made. The same information will be important to the sales team to help them in their dealings with customers. Mobility is, therefore, the first line of defense and must be part of any digital supply chain platform.

Transparency is also about knowing which customers are returning products and why — and providing this information to the commercial side of the business to determine whether a product needs to be changed. Big data and analytics solutions deliver this type of transparency by providing predictive and cognitive information that enables forward-thinking decisions.

4. Digital supply chain enables traceability.

An important element of transparency is traceability, or the ability to know precisely where a product has been on its way to the appropriate endpoint and when it safely arrives. This is a regulatory requirement aimed at identifying and eliminating potential counterfeiting or product diversion. The Drug Supply Chain Security Act (DSCSA), signed into law in the United States in 2013, requires companies to identify and trace certain prescription drugs. Furthermore, global track and trace regulations, incorporating the serialization, traceability and verification of pharmaceuticals, will affect more than 75 percent of the global drug supply by the end of 2018.

Just as traceability is crucial in delivery, it’s equally important in handling recalls. If a company can easily trace a product’s movement across the life cycle, it can handle recalls and returns in less costly ways. Traceability also helps companies meet compliance procedures for product disposal, ensuring security from theft and observance of environmental standards.

Beyond compliance, a comprehensive approach to traceability provides companies with the visibility to make decisions that improve the bottom line. Traceability in the digital supply chain provides insight into where products are at any given time, in real time. This helps companies foresee product bottlenecks or shortages and, combined with analytics tools, aids decision makers in determining the cost of having a product sit on the factory floor or with a distributor or consignment agent. With data at their fingertips, companies can control distribution and manage financial risk more effectively.

5. Digital supply chain enables security.

By digitizing and moving information to an electronic platform, companies gain enormous opportunities to streamline the supply chain, drive out process errors and improve oversight — but they also open themselves up to information leakage and security holes.

With next-generation platforms such as IoT, Industry 4.0 and machine-to-machine solutions, information about the supply chain is made available across the value chain and enhances decision making. Security is essential to prevent data from being exposed to and used by unauthorized programs or people. Cybersecurity capabilities allow companies to monitor and maintain a trusted supply chain, not only protecting important data but also ensuring that companies adhere to stringent regulatory requirements for data protection.

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Enterprises must take into account the data risks that come with expanding the supply chain through a partner ecosystem. Digital supply chain infrastructure lets companies make use of capabilities such as radio frequency identification (RFID), data leakage protection, identity and access management, application security, network security, and single sign-on, which protect against and provide insights into potential threats globally.

Security in the supply chain is also about protecting the product against threats of counterfeiting and tampering. By digitizing the supply chain, companies gain the oversight, transparency, traceability and insights needed to do this.

A Total Solution approach

The digital supply chain leverages digital capabilities to improve the global delivery of products in a timely fashion while enabling companies to respond quickly to changing market forces. Each component — revenue enhancement, flexibility, transparency, traceability and security — is linked to and underpins the entire value chain.

As life sciences companies transform their systems and processes to enhance innovation, remove cost, and respond to regulatory and market forces, a more flexible and progressive supply chain ecosystem becomes a business priority. The digital supply chain incorporates digital technology and intelligent devices to provide visibility, connectivity, mobility and big data insights across the value chain.

About DXC TechnologyDXC (NYSE: DXC) is the world’s leading independent, end-to-end IT services company, helping clients harness the power of innovation to thrive on change. Created by the merger of CSC and the Enterprise Services business of Hewlett Packard Enterprise, DXC Technology serves nearly 6,000 private and public sector clients across 70 countries. The company’s technology independence, global talent and extensive partner network combine to deliver powerful next-generation IT services and solutions. DXC Technology is recognized among the best corporate citizens globally. For more information, visit www.dxc.technology.

© 2017 DXC Technology Company. All rights reserved. MD_6190a-18. April 2017

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