ICRON Customer Centric Supply Chain Planning and Optimization solutions enhance the efficiency of pharmaceutical production and distribution.
This case study highlights how ICRON enabled our global pharmaceutical leader client to overcome challenges like long lead times, regulatory constraints, and unpredictable demand. By leveraging decision intelligence, they achieved advanced scenario planning capabilities, effective risk mitigation, and improved flexibility, resulting in enhanced operational efficiency. This transformation demonstrates how innovative solutions can ensure the reliable and timely delivery of life-saving medications.
Global pharmaceutical supply chains operate under some of the most stringent regulations in the world. Delivering life-saving medicines on time is not just a responsibility but a lifeline for millions. Yet, pharmaceutical companies deal with disruptions at every level of their supply chain, whether from fluctuating demand, evolving regulatory requirements, or unforeseen supply disruptions.
Our client, a multinational powerhouse operating across three major divisions—Crop Science, Pharmaceuticals, and Consumer Health—faced distinct challenges in each business unit. The Pharmaceuticals division stood out as the most intricate, with its complex manufacturing processes and unparalleled supply chain demands, requiring a transformative solution.
ICRON approached the case intending to build a more resilient, efficient, and cost-effective supply chain. As part of this, optimizing the global supply chain network was key to improving service levels and reducing end-to-end costs. But it was also critical to go beyond just solving existing issues. Our client wanted to be at the forefront of sustainability and efficiency in pharmaceutical manufacturing, and ICRON was determined to aid its pursuit of supply chain excellence. Understanding their supply chain goals was the foundation for developing a tailored and effective solution.
Ensuring timely delivery despite long production lead times, sometimes extending to several years.
Maintaining cost efficiency and profitability despite the necessity for highly specialized production facilities.
Succeeding in a highly regulated business environment requiring impeccable service levels, particularly for life-saving drugs.
Build a resilient and cost-effective supply chain network involving multiple sites in manufacturing and packaging solid, semi-solid, and liquid pharmaceuticals.
Integrate external contract manufacturers into the supply network to increase flexibility while reducing supply-side risks.
Use data-driven network design to determine optimal facility locations and resource allocation.
Orchestrating pharmaceutical production within regulatory constraints and in coordination with several external contract manufacturers to optimize production capacity and flexibility is complicated. It increased our client’s supply risks, which had to be mitigated to ensure the pharma company could achieve its goals.
To understand a supply chain planning success story, examining the challenges they faced when they began their journey is pertinent. As a prominent brand in the pharmaceutical industry, our client had a unique set of challenges.
Here’s a look at them:
Pharmaceutical regulations are stringent, demanding the maintenance of untouchable stock levels. This is critical to ensure the uninterrupted availability of life-saving drugs, where any delay or shortage could have dire consequences.
With production cycles that can span several years, pharma supply chains require precise long-term planning. A lack of foresight or miscalculations could lead to severe disruptions affecting supply reliability and financial performance.
Our client employed highly specialized and diverse production technologies tailored to specific products. Aligning the different production technologies and ensuring coordination across specialized facilities was challenging.
Introducing new pharmaceutical products presented a significant challenge due to unpredictable demand patterns. Complexities in demand forecasting increase the risks of overstocking or stockouts.
Legacy optimization models require significant computation time, offer low forecasting accuracy, and do not adjust their insights in real-time as new constraints and variables emerge.
The company’s facility footprint had grown organically rather than strategically, leading to inefficiencies such as duplicated capabilities, underutilized plants and high transportation costs.
Regulatory Requirements
Pharmaceutical regulations are stringent, demanding the maintenance of untouchable stock levels. This is critical to ensure the uninterrupted availability of life-saving drugs, where any delay or shortage could have dire consequences.
Long Production Lead Times
With production cycles that can span several years, pharma supply chains require precise long-term planning. A lack of foresight or miscalculations could lead to severe disruptions affecting supply reliability and financial performance.
Complex Production Technologies
Our client employed highly specialized and diverse production technologies tailored to specific products. Aligning the different production technologies and ensuring coordination across specialized facilities was challenging.
Unpredictable Demand for New Products
Introducing new pharmaceutical products presented a significant challenge due to unpredictable demand patterns. Complexities in demand forecasting increase the risks of overstocking or stockouts.
Limitations of Legacy Planning Systems
Legacy optimization models require significant computation time, offer low forecasting accuracy, and do not adjust their insights in real-time as new constraints and variables emerge.
Suboptimal Facility Footprint
The company’s facility footprint had grown organically rather than strategically, leading to inefficiencies such as duplicated capabilities, underutilized plants and high transportation costs.
Supply chain planning and optimization experts at ICRON recommend a unique combination of long-term supply chain plans and mid-term optimization models for pharmaceutical supply chains. This ensures a detailed and holistic evaluation of capacity development, investment decisions, and supply network alterations for an end-to-end planning overview. This comprehensive planning approach enabled our client to consider all the elements of their global supply chain in a long-term optimization model.
Decision intelligence was critical to the ICRON team's planning model for our client. The planning model enabled the pharmaceutical company to make informed decisions and mitigate risks effectively, supported by advanced mathematical modeling proficiency and advanced algorithmic capabilities such as heuristics, optimization, simulation, and data analysis.
Here’s a look at some instances where decision intelligence proved instrumental for our client:
Our client utilized advanced tools to identify potential bottlenecks in production capacity. This forward-looking approach ensures that investments or divestments in resources are carefully planned and updated annually to address shifting demands.
With operations spanning 150 brands, the pharma company employed aggregated models encompassing internal sites, key suppliers, and significant resources, creating a comprehensive view of capacity needs.
Our client transitioned from manual, Excel-based planning to optimized modeling tools. It enabled our client to manage the unpredictable nature of new product launches more effectively.
ICRON accommodated flexible data inputs, such as Excel and Python, essential for products with no historical demand data, powering a more adaptable and reliable planning process.
Our client utilized the multi-echelon inventory optimization technique to balance safety stock levels across its supply chain, ensuring operational stability while avoiding excessive inventory costs.
They adopted sophisticated risk modeling to simulate potential disruptions, such as unexpected plant shutdowns, enabling the company to prepare and respond proactively.
ICRON optimization tools evaluate multiple scenarios, including alternative routing strategies, adjustments to inventory levels, and capacity shifts, ensuring resilience in the face of supply chain challenges.
ICRON Supply Chain Network Design helped the pharmaceutical manufacturer build an efficient production and distribution network with minimum operational costs.
Evaluating their existing supply chain network using advanced analytics, enabled resource allocation optimization, minimizing transportation costs, and optimizing facility locations to reduce costs.
To ensure continuous enhancement of operations, our network design solutions also set up systems to track and monitor key performance metrics – to find insights into supply chain network performance.
Our client witnessed significant tangible and non-tangible benefits by implementing the new planning models created by ICRON.
Here’s a look at some of the most prominent benefits they experienced:
Simplified modeling process while maintaining a high level of detail brought about by aggregating data across products, sites, and packaging lines.
Planning models are aligned with compliance requirements and operational realities by integrating regulatory calendars and capacity assumptions, making it easier for our clients to comply with stringent requirements.
Reduced complexity and enhanced efficiency using standardized scenarios and a streamlined optimization process.
Seamless integration of future products with reduced setup times due to scalable models.
Multiple what-if scenario analyses enhance the pharmaceutical manufacturer's flexibility and ability to adapt dynamically to evolving uncertainties and challenges.
This case underscores the critical role of ICRON's innovative solutions in enabling our client to achieve resilience and agility within the complex and highly regulated pharmaceutical supply chain landscape. We empowered our client to navigate uncertainties, optimize operations, and ensure the continuous availability of life-saving products. This achievement reflects not only the resolution of current challenges but also the establishment of a strong foundation for future operational excellence and sustainable growth.
ICRON Demand empowers businesses to navigate uncertainty through accurate forecasting using AI-driven methods that take into consideration historical data, reaTime updates, and fast adaptation to changing market conditions and disruptions.
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