Pharmaceuticals and Life sciences industry findings: Global Supply Chain Survey 2013

Supply chain performance

Supply chain performance

Supply chain performance:

The leading Pharmaceuticals and Life sciences companies achieve average EBIT margins (16.9%) with a high number of inventory turns (16.3) and excellent delivery performance (97.4%). The gap between the Leaders and Laggards is relatively low when it comes to EBIT margins and delivery performance but relatively high when it comes to inventory turns (16.3 turns versus 3.8 turns, respectively).

Organisational set-up:

Pharmaceuticals and Life Sciences companies typically manage their planning, operational procurement and delivery functions regionally, and their enabling, manufacturing and assembly and strategic procurement functions globally. They outsource about 6% of their planning and sourcing activities; a relatively high, 25% of their new product development activities; and 20%-40% of their delivery activities.

The key attributes of Pharmaceuticals and Life Sciences companies

Organisational set-up

Leading practices

Leading practices

Leading practices:

The most important value drivers for Pharmaceuticals and Life sciences companies are minimised costs (100%), maximum delivery performance (94%), maximum volume flexibility and responsiveness (78%) and complexity management (78%). The Leaders focus on collaboration with key customers and suppliers and end-to-end supply chain planning. They also continue to place great weight on continuous improvements in manufacturing.

Top differentiating practices

  • End-to-end supply chain planning and visibility
  • Order fulfilment cycle-time reduction improve manufacturing time
  • Collaborative planning with key suppliers
  • Decreased manufacturing costs through reduction of wastes
  • Inventory reduction
  • Decreased overhead costs through increased labour productiveness
  • End-to-end supply chain planning and visibility
  • Outsourcing to service provider
  • Involvement of partners for capacity reservation
  • Multiplication of sources and sole-sourcing avoidance
  • Regular review of suppliers’ financial risk and mitigation through risk-sharing partnerships
  • Visibility over short-term supply through order traceability, vendor-managed inventory and so on
  • Use of distributors and other channel partners
  • Differentiated distribution strategies
  • Development of multiskilled employees in order to cope with complexity
  • Return of supply chain to manage recycling
  • Responsible supply chain partner footprint and procurement framework
  • Integrated risk management
  • Import/export optimisation (e.g., bonded warehouse)
  • Intellectual property and patent royalty optimisation
  • Localisation of inventory ownership in taxefficient countries