The life sciences industry is currently under a huge microscope.
Focused on areas of healthcare, biotechnology, pharmaceuticals, and more, the industry has a long history of coming up with products to make the world a healthier place. Most of these advances are the result of years of planning, testing, and, yes…lobbying. They’ve been able to make great inroads in the fights against cancer, mental illness, and many different bacterial and viral infections.
But every once in a while something new pops up that wasn’t the current focus of these life sciences companies. For example, the SARS and MERS epidemics in the early 2000s, and most recently, the COVID-19 pandemic.
Developing a universal treatment or vaccine for COVID-19 has become a primary project for hundreds of pharmaceutical companies around the world. According to the New York Times, there are scores of vaccines in the various stages of production or testing. As these different options pass testing hurdles and prove to be safe for human use, companies will need to ramp up production and distribution to the public. Already, hundreds of millions of doses of potential vaccines have been ordered by governments around the world.
This is an important production cycle to get right; people are counting on the protection a vaccine can provide, so pharmaceutical manufacturers need to have a plan in place in order to fulfill these orders in a timely manner. A logistics solution such as SAP Integrated Business Planning (SAP IBP) can help ensure all boxes are checked.
What is SAP IBP?
SAP IBP is a group of different SAP supply chain planning applications. It includes solutions focused around sales and operations; inventory; demand; response and supply; and the SAP Supply Chain Control Tower, which provides real-time reporting on things such as forecast variance, material shortages, etc. The entire SAP IBP suite is cloud-based and serves as the successor to SAP Advanced Planning and Optimization, which was typically used alongside the legacy SAP ERP business suite.
Companies using SAP IBP can model demand and supply scenarios, collaborate with supply chain partners, and provide employees with an intuitive user interface to use in daily work. How would these tools prove handy in producing and distributing a COVID-19 vaccine? Let’s take a look.
How Would SAP IBP Help Pharmaceutical Companies?
Before mass-production of a vaccine can occur, it needs to be given approval by regulatory agencies following different testing phases. To ensure that the company is ready for production, however, it should begin planning to manufacture while testing is occurring. This way, when (and if) the vaccine is approved they’ll be ready to produce doses. Which world locations would need more doses? Which would need fewer? How quickly would inventory turnover occur? When might a new production cycle be needed?
SAP IBP for sales and operations is a great first-step solution for pharma companies looking to utilize SAP in their supply chain planning. Originally based around the SAP HANA database, this tool allows for financial analysis of production plans based on finished good costs and prices. If it appears that a forecast isn’t profitable, users can tweak parameters to see what would be needed to break even or return a profit. Advanced forecasting models and optimization tools further enhance the functionality in this tool.
SAP IBP for inventory allows companies the ability to determine where doses should be stored and distributed most effectively—for example, countries with hundreds of thousands or even millions of cases of COVID-19 would need more inventory, so companies should focus on allocating more resources there. This inventory management is important in a case such as COVID-19 where the speed of the delivery of the product is crucial.
SAP IBP for demand helps production planners model different demand scenarios to see what would be needed for each outcome. As new orders come in from governments, these numbers would change, so it’s important to keep on top of what is needed. And by running simulations for potential future orders, companies can see how production would need to change in order to meet it—do more plants need to be opened?
According to our book on SAP IBP, forecast accuracy is usually only in the 70-80% range, so it’s important to have flexibility in case a surge in orders occurs. With SAP IBP for response and supply, companies can perform demand-driven planning to be ready for changes by performing rough-cut capacity planning, supply optimization, and response planning. Since SAP IBP integrates its collection of tools together, planners can perform these processes more easily by comparing information across the entire supply chain, rather than having to rely on a set of integrated but disparate solutions.
Of course, all of these functionalities can be monitored through the SAP Supply Chain Control Tower, providing a holistic look at the daily output and more.
When it comes to meeting demand for healthcare products such as a COVID-19 vaccine, it’s important that companies are ready and not taken by surprise. With SAP IBP, life sciences companies like pharmaceuticals can perform all sorts of supply chain planning.
And once the plan has been created and the product is ready to be manufactured, it’s important to make sure the production assets are up to the task. Read this post to see how tools like SAP Asset Intelligence network can help maintenance planners ensure machinery is ready to produce and be alerted the moment that something breaks down.
Want to learn more about SAP IBP? Check out our list of books here.