Supply Chain Establishment and Optimisation


The finished goods supply chain, from packaging through to final customer is complex involving multiple requirements and many partners. This causes many trade-offs which need to be managed to deliver a fit-for-purpose supply chain.

For some organisations, the issue is establishing their initial supply chain and supporting capabilities. The move to commercialised product or expansion into new geographic areas necessitates the setting-up of an effective supply chain for the required region. This in turn requires selection of suitable partners and the implementation of the necessary processes, systems and organisation to manage this new supply chain. This takes time and requires expertise.

For organisations at the other end of the spectrum, supply chains may have become overly complex, ineffective and inappropriate. This is particularly true where organisations have grown by acquisition. In this case, a considered optimisation of the physical supply chains and supporting capabilities is required to rationalise activity and enhance performance.

Where to start

Establishing a new supply chain

For companies needing to establish a new supply chain, a sensible starting point would be the development of your supply chain strategy. We recommend a focussed cross-functional piece of work that defines:

  • The objectives and performance requirements of the supply chain
  • The key elements of each stage of the supply chain
  • The high-level requirements of partners and what would drive make-or-buy decisions
  • The underpinning capabilities required (processes, systems, etc) and organisational responsibilities
  • Governance requirements, programme design and resourcing

This will provide an agreed roadmap for execution.

Optimising an existing supply chain

When optimising your existing supply chain, the logical place to start is to assess the current state of your supply chain network and capabilities, so you understand what you have and what your issues are. You need to decide the scope you wish to assess and the stakeholders you need to have involved. The assessment needs to consider your supply chain network, processes, organisation, people, tools, systems and capabilities. For larger organisations, this can be a significant piece of work.

Be4ward can assist in the gap analysis, comparing your company’s capabilities against practices we have observed in our experience across the industry. From here, a ‘future state’ for the service can be defined, expressed in terms of supply chain network, processes, organisation, people, tools, systems and capabilities. A staged programme of improvements and projects can then be executed to deliver the future state in a prioritised manner.

What we've learned

Supply Chain design needs to work hand in hand with Commercial Strategy by understanding product and market dynamics

Not all supply chains are alike, and the needs of the market vary depending upon the therapy, product and service requirements. It is therefore important to ensure that the design of your supply chain meets these needs and facilitates the commercial strategy for your product. For example a product may be seasonal, named patient or extremely high cost and the supply chains for each of these will need different attributes. Highly repeatable large volume product supply chains are fundamentally different from small volume, dynamic and difficult to forecast product supply chains. The former must be repetitive and stable, whereas the latter need to be highly responsive and adaptable. Therefore, when designing your supply chain, make sure you start with a clear set of design requirements, agreed by key stakeholders across your organisation, to ensure you provide the supply chain capabilities needed.

There may be a lifecycle to your supply chain partners

As your business evolves and your products progress through their product lifecycles and you expand geographically, the supply chain partners you select may no longer fit with these new needs. Some supply chain partners are great at setting up something that is new whereas others are more suited to routine predictable supply. An example of this is where product lifecycle or territorial competitive environments may require lower cost approaches in some areas. Some suppliers may not be able to meet target cost of goods or service certain geographies efficiently and effectively. Therefore, accept that there will be key times when you need to re-evaluate your supply chain designs and partners to ensure ongoing fitness for purpose.

Be clear on responsibilities for sourcing with supply chain partners

Make sure that you are clear on what you want each of your supply chain partners to do and not do regarding sourcing. Which materials and components do you want your suppliers to source from their supply base? Where are you going to dictate the supply base to be used or even supply materials or components to your suppliers? Be clear on which materials and components are critical and where you want direct oversight, versus other materials that you will delegate responsibility for within the supply agreement.

Manage your risks

Know where your key risks are. Have a risk map for your supply chains and make sure you review and update it regularly. What are the likely scenarios and what are your mitigation strategies? Make sure your mitigation strategies remain viable and even practice them if relevant. Make sure you understand how governance, communication and rectification will be managed should any risk happen.