Supply Chain Design and Analysis

Scenario

Over the last few decades, operations and supply chain management have become increasingly complex, especially in the pharmaceutical and biopharmaceutical industries. Traditionally, supply chains in these industries are designed to ensure a high service level, so that they may efficiently respond to patient needs.

The ‘trial and error’ method cannot be a viable option; pharmaceutical products are normally used to treat serious diseases, thus their availability – or lack thereof – is often a matter of life or death. Therefore, precise forecasting and efficient planning are of particular importance for these industries, and the weakness of these processes can generate unacceptably high levels of uncertainty in terms of output, and long lead times.

The combination of these factors implies that in order to provide an adequate service to customers, it is necessary to have risk mitigation strategies such as strategic stocks and/or excess capacity. However, an increase in excess capacity leads to increased operating costs.

Use of Simulation Modelling

Simulation modelling can be extremely useful for optimizing supply chain management since it creates a virtual replica of the supply chain in a risk-free environment. This replica can identify the ideal operating conditions, and explore various potential alternatives for a specific supply chain.

Specific Benefits

This approach helps to evaluate, for example, the effect of changing procedures or operating conditions (without interfering with the actual operation systems) and encourages open communication between the actors involved. In addition, decision-makers can develop detailed knowledge of the problems they face, and understand the relationships between the components of the system, and its performance. All this can occur with a simultaneous reduction in costs, and greater overall understanding of SCM processes and characteristics.

Industry: Biopharmaceutical

To learn more, read our full case study on Biopharma Supply Chain