The obsession of drug makers to re-evaluate and minimize Operational costs is the New Black. Nowadays Consumer Health (over-the-counter or GSL drugs) has a profit formula quite similar than the Retail business, but unfortunately delivering safety and quality are simply not enough.
The decrease trend on sales of the biggest US drug retailers (WBA, MCK, CVS) is due to the consumers shift from traditional to online shopping “the Amazon effect”.
As a consequence, because of discounts and pricing pressures, the profit strategy is getting lower. Moreover fighting against Amazon is not a solution, it’s just like a patient who tries to cure himself using a Placebo.
Industry really needs a Turn the ship around, which implicates radically changing Supply Chain Strategy from Deliberate to a more Emergent one.
Indeed, the future is getting harder to read and winning strategies that used to work in the past are not effective anymore … this is the point that differentiates you from the rest.
In particular, if we analyze the evolution journey of Retail and FMCG to an Agile Supply Chain Management, we will obtain a present-day version of the 3 pillars of Organizational Transformation: People, Processes and Technology.
- Companies like Walmart Unilever and P&G are hiring the best talents where market skills and in-depth technical knowledge are the priorities to ensure creativity coming from top-rated professionals.
- Their excellence in processes goes from the latest up-to-date Lean methods (TOC, 6Sigma …) to the most innovative Customer Segmentation, Supply Chain Resiliency and Circular models.
- They invest in technology. Advanced Analytics such as: machine-learning and AI enhances and even automate, decision making by reinventing operational models.
… and this is just the beginning.
Supply Chainers who are able to adapt its company value chain, make good products even better and at the same time improving Profit Margin, will ensure that the company model will not be disrupted in the future.
- Bezos Starts the online drug war https://chiefexecutive.net/bezos-starts-the-online-drug-war/
- Gartner Top 25 Supply Chain list http://www.argentus.com/gartner-global-executive-partner-speaks-about-2017s-top-25-supply-chains-list/
- Deliberate versus emergent strategy https://hbswk.hbs.edu/item/the-business-of-life
- 2018 Trends to disrupt pharma supply chains https://www.pharmalogisticsiq.com/regulations/news/2018-trends-to-disrupt-pharma-supply-chains
- Beyond Supply Chains Empowering Responsible Value Chains http://www3.weforum.org/docs/WEFUSA_BeyondSupplyChains_Report2015.pdf