The pandemic revealed weaknesses in traditional pharmaceutical supply chains, causing procurement challenges and reduced profits due to labor shortages, geopolitical tensions, and regulatory changes. In fact, a McKinsey study⁽¹⁾ found that over a 10-year period, supply chain disruptions pose a significant risk to pharmaceutical companies, potentially resulting in a 25% loss of earnings.

To address these challenges, leading pharmaceutical companies have realized that the traditional ways of supply chain management and procurement are insufficient to tackle today’s challenges, prompting a shift toward digital transformation.

Pharma Industry’s Current Struggles with Supply Chain

Let us first look at some of the current challenges that companies need to address to improve supply chain resilience and reduce disruptions:

• Cold Chain Losses: Maintaining specific temperature parameters is crucial for preserving the quality of medicines and drug products during the supply chain process. According to the IQVIA Institute for Human Data Science⁽²⁾, the pharmaceutical industry loses approximately $35 billion annually due to temperature-controlled cold chain logistics failures.

• ‘Offshoring’: Offshoring of production and sourcing can create several challenges, including quality control issues, geopolitical risks, longer lead times, and increased transportation costs. As a result, many pharma companies are considering ‘nearshoring’ to improve supply chain resilience.

• API and Raw Material Costs: Active Pharmaceutical Ingredients and raw material costs account for a major chunk of pharmaceutical manufacturing costs. Cost fluctuations and shortages of these materials significantly disrupt the supply chain and increase production costs.

• Lack of Visibility: Limited real-time data access and visibility into critical KPIs hampers pharma supply chain performance.

Digitization: The Prescription for the Pharma Industry’s Supply Chain Headaches

As companies look for solutions to overcome supply chain challenges, many are turning to digital transformation. In 2023, Pharmaceutical companies will use digital supply chain tech more in 2023 to gain the following benefits.:

• Digitization helps track products in real-time to identify and address supply chain disruptions.
• It also ensures transparency and accountability in the supply chain.
• Digitization automates inventory management, preventing the risk of stockouts or overstocks.

The Digital Frontier: Revolutionizing the Pharma Industry’s Supply Chain

Digital technologies have been a transformative force in the pharmaceutical industry, revolutionizing supply chains by improving collaboration, integration, and efficiency. These advancements have helped companies reduce costs and enhance patient outcomes, making it essential for pharmaceutical firms to adopt these solutions.

At Moglix, we provide innovative solutions for improving the efficiency of supply chains. Discover how we helped a leading vaccine manufacturer implement just-in-time delivery to 16 plants across India. By doing so, the manufacturer was able to unlock working capital and reduce inventory carrying costs, leading to significant cost savings.

Contact us to know more about our approach and how we can support your digital transformation strategy.

Additional Reading:

1. https://www.mckinsey.com/capabilities/operations/our-insights/risk-resilience-and-rebalancing-in-global-value-chains

1. https://liviri.com/wp-content/uploads/2022/10/LIV_930_White-Paper3_BIO_v03.pdf

The COVID-19 pandemic, long-standing skilled labour shortages, and recent geopolitical developments have disrupted the global supply chain. As a result, companies are adopting various strategies to overcome these challenges. A recent McKinsey report(1) found that 67% of businesses have adopted digital tools for end-to-end supply chain visibility, making them twice as likely to avoid disruptions caused by early 2022 supply chain disruptions. Therefore, the digitisation of procurement is emerging as the most effective one for building resilient supply chains.

While more than 60% of companies have fully embraced digital transformation in procurement, others still face significant challenges in adopting and implementing digital tools. This digital divide is a significant issue that needs to be addressed in procurement functions. Let us take a closer look.

The Digital Divide: Analysing the Need-Gap in Procurement

Access to critical decision-support information such as production statuses, inventory levels, capacities, forecasts, KPIs, and more can be delayed when data is siloed and disconnected in procurement functions. Procurement functions still face challenges such as:

• Fragmented and outdated processes
• Poor data management
• Inefficient supplier management
• Lack of visibility into spend data

To overcome these barriers, procurement teams need to be more agile, efficient, and responsive to changes in the market by embracing digital transformation.

From Paper to Pixels: The Benefits of Digitising Your Procurement

Let us look at some of the beneficial impacts of digital transformation on procurement:

Automating Procurement Processes

• Digitisation can help eliminate the manual, time-consuming tasks that procurement teams have daily, such as supplier onboarding, contract management, and purchase order processing. 
• Automation can help reduce errors, increase speed, and free procurement professionals’ time to focus on more strategic tasks.

Improving Data Management

• Digital transformation can help improve data management by providing real-time visibility into spend data. This visibility can help procurement teams identify trends, reduce costs, and negotiate better contracts with suppliers. 
• By leveraging big data analytics and AI, procurement teams can gain insights into supplier performance, risk management, and compliance, enabling them to make data-driven decisions.

Enabling Efficient Supplier Management

Digitisation can help procurement teams manage supplier relationships more effectively by providing real-time insights into supplier performance, risk management, and compliance. This can help procurement teams optimise their supplier base, improve supplier performance, and reduce supplier risk.

The Future of Procurement is Digital: Join the Journey in FY 2024

The rise of digital transformation has elevated procurement from a tactical function to a strategic one, empowering procurement teams to generate value for their organisations. By leveraging technology, professionals can effectively tackle bottlenecks in the procurement process.

At Moglix, our tailored digital solutions are designed to streamline the entire procurement cycle. Download this case study to discover how we helped a major chemical company overcome supplier fragmentation, limited MRO purchase visibility, and procurement price variation challenges. Our solutions delivered an 85% reduction in processing of transactions, POs, and invoices and a 5% savings in procurement costs.

Contact us today to learn how we can help you digitally transform your procurement strategy.

Additional Reading:

1. https://www.mckinsey.com/capabilities/operations/our-insights/taking-the-pulse-of-shifting-supply-chains