Biotech taking ownership of the whole supply chain

Usually, there is a lot of energy and money dedicated to speed to market, service effectiveness, and driving new business models. Typically, this is represented as breaking down silos, which might include:

  • Demand forecasting
  • Supply planning
  • Production manufacturing
  • Logistics planning
  • Sales and operations

We’ll start with demand forecasting in a traditional supply chain. However, we could just as easily be talking about biotechnology manufacturing or hospital demand of vaccines at hand at any given location. Typically, we extrapolate demand. Then we observe the relationships between independent and dependent variances such as previous sales and future demand. Next, we apply internal data, past trends, and maybe customer signals (inputs). There is just one problem. COVID came and crippled this conventional demand-forecasting process.

Today, these areas are becoming more efficient by using sophisticated analytical approaches, with collaborations across multiple functions, channels, and suppliers. But guess what? It’s still not working. Healthcare and biotechnology companies required a new strategy. First, they tried the more traditional approaches to maximize value, including:

  • Focusing on employee safety and operational continuity
  • Improving productivity and performance management
  • Increasing asset utilization and efficiency (whether it’s beds turnover or sterilizing medical equipment and instruments)
  • Improving quality in day-to-day operations
  • Optimizing workforce management

These approaches saw some thin benefits but not the 10x returns that were expected. Then they took a page from the Amazon and Apple playbook. Amazon has methodically taken control of its whole supply chain.

  • Consumer side: amazon.com, amazon fresh, kindle, whole foods
  • Seller side: amazon.com marketplace, amazon shipping
  • Enterprise side: amazon web services, EC2 (processing), amazon cloud drive, AWS marketplace, S3 (storage)
  • Entrepreneur side: amazon publishing, amazon flex (use your vehicle to deliver packages), amazon studios (new film series)
  • Amazon prime air: drones deliver 5-30lbs in 30min or less. On January 6, Amazon bought another 11 Boeing 767-300 planes
  • Amazon’s transportation fleet: now over 30,000 amazon branded vehicles and another 20,000 branded trailers

Amazon wants to own it all. The ability to control demand makes you curious, but the desire to manage your supply chain is more interesting. This concept also played out with Apple. Apple recently dropped Imagination Technologies. Previously, imagination was responsible for designing graphics processing units, the type used in Apple in products like the Apple iPhone. Apple plans to create its internal capabilities within the next 15months.

Biotechnology companies started to pay attention and have been leveraging this to control their supply chains, concentrating on production manufacturing for scale.

  • Pfizer and its German partner BioNTech, made 120 million doses in the U.S. within the first quarter
  • Aurinia Pharmaceuticals and Lonza have expanded their exclusive manufacturing relationship.
  • L’Oréal signed a leasing deal with Micreo, a biotech firm specializing in bacteria
  • Estée Lauder Companies announced a collaboration with biotech firm Atropos Therapeutics to explore lab-made ingredients

These examples highlight strategy movement to take ownership of traditional supply chains that were solely supplier operated and controlled.

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Peter is a technology executive with 19 years of experience, dedicated to driving innovation, digital transformation, leadership, and data in business. He helps organizations connect strategy to execution to maximize company performance. He has been recognized for Digital Innovation by CIO 100, MIT Sloan, Computerworld, and the Project Management Institute. As Managing Director at OROCA Innovations, Peter leads the CXO advisory services practice, driving digital strategies. Peter was honored as an MIT Sloan CIO Leadership Award Finalist in 2015 and is a regular contributor to CIO.com on innovation. Peter has led businesses through complex changes, including the adoption of data-first approaches for portfolio management, lean six sigma for operational excellence, departmental transformations, process improvements, maximizing team performance, designing new IT operating models, digitizing platforms, leading large-scale mission-critical technology deployments, product management, agile methodologies, and building high-performance teams. As Chief Information Officer, Peter was responsible for Connecticut’s Health Insurance Exchange’s (HIX) industry-leading digital platform transforming consumerism and retail oriented services for the health insurance industry. Peter championed the Connecticut marketplace digital implementation with a transformational cloud-based SaaS platform and mobile application recognized as a 2014 PMI Project of the Year Award finalist, CIO 100, and awards for best digital services, API, and platform. He also received a lifetime achievement award for leadership and digital transformation, honored as a 2016 Computerworld Premier 100 IT Leader. Peter is the author of Learning Intelligence: Expand Thinking. Absorb Alternative. Unlock Possibilities (2017), which Marshall Goldsmith, author of the New York Times No. 1 bestseller Triggers, calls "a must-read for any leader wanting to compete in the innovation-powered landscape of today." Peter also authored The Power of Blockchain for Healthcare: How Blockchain Will Ignite The Future of Healthcare (2017), the first book to explore the vast opportunities for blockchain to transform the patient experience. Peter has a B.S. in C.I.S from Bentley University and an MBA from Quinnipiac University, where he graduated Summa Cum Laude. He earned his PMP® in 2001 and is a certified Six Sigma Master Black Belt, Masters in Business Relationship Management (MBRM) and Certified Scrum Master. As a Commercial Rated Aviation Pilot and Master Scuba Diver, Peter understands first hand, how to anticipate change and lead boldly.