In supply chain disruption situations where demand impact is initially unknown, leading companies develop resilient supply chain planning processes and enable them with software and other technology that accelerates and amplifies their ability to adapt quickly to changing needs and expediently meet demands. Mature processes and tools consider both reactive and proactive supply chain risk management, tailored to the unique needs of the particular industry. In an exclusive interaction, Aatish Goel, Head- Integrated Supply Chain Planning – India, Cipla, explains Upamanyu Borah, how supply chain planning has become more critical than ever to integrate supply and demand across the supply chain while determining alternate suppliers, manufacturing sites and logistics flow. As such, companies will gain a more fully-rounded perspective on inventory levels, be able to ramp up production to keep the supply flowing and grant themselves a longer timeline to find additional producers of critical materials.
Tell us about Cipla’s ongoing activities and its work towards tackling COVID-19 pandemic.
Our organisational responsiveness to the pandemic has been largely reactive proactive, be it manufacturing, quality or the supply chain, every department and its executives were able to strategically think through their potential COVID-19 response options, considering the evolving situations and varied market demands.
Specific to procurement, the main concern was how to manage supply of raw materials from the sourcing points, to ensure stocking levels of our critical molecules as well as the volume of inventory for our top molecules is sufficient. We were constantly connected to our suppliers located in various parts so as to keep them informed on the kind of demand we are facing and prioritised ordering placing. Although we compose a lot of materials in-house, whether APIs or intermediates, but for developing them we do need a lot of key ingredients imported from across regions. Looking at all of this, we started gearing up for tackling the disruptions much earlier, somewhere around February.
Considering the planning side, our strategies were capable of answering of how close we were to the market and whether we are getting the demand signals on a real-time basis to accelerate and amplify our ability to adapt quickly to the changing needs. This was further boosted by our weekly meetings with the business teams, which helped us to understand the market vagaries and fine tune our procurement and supply strategies and rapidly ramp up manufacturing.
On the distribution side, delivering the finished stocks from the manufacturing units to the distribution centres was quite challenging considering the lockdown and severe restrictions but our teams were dedicatedly engaged in talks with our transportation partners to get on time availability of vehicles.
Furthering ‘patient centricity’ has become a key tenet of each pharma company’s modern vision. What does this buzzword actually mean to you? And how do you measure your performance on this issue?
Cipla has established all aspects of its business through the lens of its purpose ‘Caring for Life’. Patient centricity for us is not a buzzword but the very purpose of our existence. We have always been united in our commitment to patient centricity and practically embedding the ethos into our everyday work– making our drugs available at the right time in the right quantity through improved R&D and better compliance and quality assurance. Our executives from across departments share knowledge and integrate the data in order to further the common aim in a way that makes patient engagement and encourages innovation.
During the pandemic, the supply chain got exposed to many weak links, which continually changed with situations and made the supply chain more vulnerable. This tested the agility, capability, the ingenuity and the speed at which companies can move. Cipla’s ability to repurpose manufacturing, right from demand sensing, identifying capacity, and efficient distribution of products to the end customer has proved to be a model for flexibility and robustness. In addition, we assessed available digital channels to reach out to our healthcare consumers and gain credible and predictive information to re-evaluate priorities and strategies around demand and market behaviour to ensure best possible outcomes for patients.
How would you describe the uniqueness of Cipla’s supply chain model and related operations that you are spearheading?
Supply chain resilience has become more and more critical and crucial for us than ever before. We had already embarked on this journey to make the supply chain more reliable, which is further accelerated by the pandemic.
To talk about one of the many different approaches adopted, we ran a quick de-risking programme for most of the critical products for the domestic market. We looked at the entire portfolio; we segmented products into typical classifications– ‘crticial’ and ‘not critical’ and also studied their sourcing policies and criteria, whether single or dual source points, in-house or bought from contract manufacturers, and the eventual risks that may accompany. Subsequently, as a strategy, we took the top hundred products into consideration that contribute to 50% of our revenues and looked into increasing their inventory level as the imperative first step to build on demand-driven supply chain operations and be competent to cater to disease management amid the pandemic.
What’s your take on the domestic pharma industry’s approach to adopting technology, meeting compliance requirements, and driving business value? Is the industry an innovator, or a technology follower?
I believe, every pharma company continues to remain high compliant on all aspects of operations, be it sourcing, manufacturing, distribution, and even storage at the warehouse. This is and will continue to remain the basic foundation for a holistic supply chain to be in place.
Talking about technology, responding smartly to future crises would requires a high degree of creativity backed by artificial intelligence and IoT driven innovation, an openness to challenging assumptions, and a willingness to look beyond the obvious. IT tools have always been there and helping accelerate functions. What has substantially changed the rules in the last couple of years is an integrated approach to planning which is primarily driven by advanced automation and machine learning initiatives.
We have implemented SAP Business Planning and Consolidation (BPC) tools for the domestic market to support all operational and financial activities in our organisation– from planning (demand, supply, and capacity), budgeting, forecasting, and financial consolidation capabilities.
We have also deployed advanced warehouse management systems and moving onto to the next level of robotics process automation, which is more about Production Planning and Detailed Scheduling (PPDS) to ensure planning happens with exact times in the production plant including in-house production and external procurement.
What do you see as the most important changes shifting the dynamics and creating a more balanced domestic pharma market?
There has been a growth of the e-pharmacy players in India. This is representing the trend that is expected to deliver a transition in the mindset of the local population about the perspective of online availability of the drugs.
We have also seen companies coming into the B2B space in recent times and playing a crucial role in building the environment by boosting sales and marketing through emerging business models.
Also, pharma companies as big as ours which continue to grow organically, is constantly on the lookout for inorganic opportunities in terms of brands/subsidiaries which can complement overall business growth.
Another growing area that I observe is the ‘Wellness’ space. Lot of companies may look at this segment for scaling up growth opportunities. Cipla itself has renewed its focus on the segment by tapping into the growing health and wellness consciousness among urban population. In fact, today, consumers increasingly expect drug companies to help them achieve their wellness goals – and not just provide a drug.
In which areas do you see your organisation taking renewed efforts and changing for the better?
Today, there is a pressing need for pharma companies to re-imagine themselves as more than being just a products-and-pills company. Therefore, the need of the hour is focussed strategy building.
For Cipla, re-imagination in the post pandemic period would include Human Resources– how to mobilise talent, future hiring policies, revamping retention strategies, keeping the workforce motivated, and to inculcate purpose and value in their overall approach to work and objectives. Re-imagination would also mean management of the entire workforce on a virtual basis, considering that Work from Home is going to stay. Most importantly, re-imagination would mean to ensure that the infrastructure which is at place is capable of holding everything intact.
That said, significant opportunities are available to those organisations agile enough to adjust and re-invent their infrastructure, their product/service portfolio, people and processes, or their route to market.