Breaking Down Silos: Connecting Demand Forecasting & Supply Planning in Pharma

Key Takeaways

• Overcoming Silos: Effective supply planning in pharma requires bridging communication gaps between commercial demand forecasters and manufacturing operations to align workflows.
• Mitigating Regulatory Risks: Integrating demand data directly into supply planning in pharma helps companies manage strict compliance rules, short shelf-lives, and volatile market shifts.
• Enhancing Patient Outcomes: Optimizing supply planning in pharma ensures critical treatments reach patients reliably and on time, preventing costly stockouts and minimizing waste.

U.S. drug shortages have reached an all-time high in recent years according to data collected by the American Society of Health-System Pharmacists (ASHP). The first 3 months of 2024 has a record 323 drugs listed as “running low.”

Drug shortages can occur for many reasons, including manufacturing and quality problems, delays, and discontinuations. Manufacturers report shortages to the FDA and work with the agency to reduce the impact or if possible, prevent shortages from occurring. The pharmaceutical industry is in a uniquely challenging position to manage shortages for the following reasons:

• Manufacturing limitations: Pharmaceutical manufacturing is complex and highly regulated meaning that rapid increases in capacity are not possible in the short term.

• Supply chain constraints: Sourcing materials requires significant planning and takes place in a complex distribution network, which is also equally regulated and constrained by manufacturing and sourcing limitations.

To manage these risks and ensure pharmaceutical companies can meet these challenges, it is crucial that supply chains are closely aligned with anticipated demand and guard against potential disruptions.

The disconnected landscape: Demand forecasting vs. supply planning

Demand Forecasting, a crucial component of the Gross to Net ecosystem, forecasts market needs based on historical sales data, trending, and market events.

On the other hand, Supply Planning, a responsibility typically residing in a separate business function, focuses on raw material sourcing, production planning, inventory management, and distribution. This function ensures pharma manufacturers have enough stock to meet projected demand.

While both functions aim for optimal product availability, they often operate in silos. Demand Planning might forecast high sales, prompting increased production, but Supply Planning may face limitations due to raw material shortages or production capacity constraints. This disconnect leads to several key challenges:

• Inaccurate forecasts: Demand forecasts lack real-time insights into production capabilities, potentially resulting in misleading forecast outputs.

• Inventory issues: Misaligned planning can result in excess or insufficient stock, impacting costs and patient access.

• Reactive response: Siloed systems hinder proactive responses to market fluctuations and events, like the Inflation Reduction Act (IRA) for example.

• Decision-making bottlenecks: Lack of integrated data impedes informed decision-making at both planning levels.

Connecting the dots: The intertwined nature of demand and supply

In reality, Demand and Supply Planning are inherently linked. Accurate demand forecasts allow Supply Planning to allocate resources effectively, ensuring timely production of the right drug quantities. Conversely, timely insights from Supply Planning –  like production capacity limitations or lead times – inform Demand Planning, leading to more realistic forecasts. This two-way communication is crucial for a resilient and responsive supply chain.

• Demand informs supply: Accurate demand forecasts allow Supply Planning to allocate resources and production capacity effectively.

• Supply impacts realized in-demand: Supply constraints or production delays should be factored into demand forecasts to avoid inflated expectations.

Anaplan: Bridging the gap for optimized planning

Anaplan, a cloud-based platform, offers a powerful solution to break down the silos between Demand and Supply Planning. Here's how:

• Unified data platform: Anaplan integrates data from various sources providing a single source of truth. Both functions can access and analyze the same real-time data to make informed decisions.

• Scenario planning: Anaplan allows for the creation of multiple "what-if" scenarios. Demand Forecasting can explore the impact of a market event on production needs, while Supply Planning can model various manufacturing capacity scenarios to determine the most optimal scenario to meet demand.

• Collaborative planning: The platform facilitates communication and collaboration between Demand and Supply Planning teams. By sharing appropriate outputs from one model to another, they can share insights, identify potential bottlenecks, and adjust plans in real-time, leading to more agile and responsive decision-making.

Benefits of integrated planning with Anaplan

• Reduced inventory costs: Optimized production planning minimizes overstocking drugs with expiration dates and potential product waste.

• Improved patient access: Streamlined planning ensures medications are readily available when patients need them.

• Enhanced agility: The ability to adapt to market fluctuations and events fosters greater responsiveness, such as new drug entrants into the market.

• Data-driven decision making: Integrated data across historical actuals, syndicated patient data and inventory reserves empowers informed decision-making at all levels to optimize market access.

Breaking down the silos between Demand Forecasting and Supply Planning in the pharmaceutical industry is crucial for optimizing the Gross to Net ecosystem. Anaplan offers a powerful platform to achieve this integration, leading to more accurate forecasts, efficient inventory management, and ultimately, improved patient access to life-saving medications. By adopting this approach, pharmaceutical companies can ensure they have the right products in the right place at the right time, fulfilling their mission of delivering life-changing treatments.

FAQs on forecasting and supply planning in pharma

What is supply planning in pharma?
Supply planning in pharma is the strategic process of aligning manufacturing production, inventory levels, and material sourcing with market demand to ensure reliable product delivery.

Why is it crucial to connect demand forecasting with supply planning in pharma?
Connecting them eliminates operational silos, prevents costly drug shortages or excess waste, and ensures production matches real-time healthcare market requirements.

What unique challenges impact supply planning in pharma?
Key challenges include stringent regulatory compliance, strict temperature controls, short product shelf-lives, and unpredictable market demand shifts across global regions.

How do digital tools improve modern pharmaceutical supply chains?
Advanced analytics and cloud platforms provide real-time visibility into inventory and logistics, enabling teams to run scenario models and adapt quickly to disruptions.

How does effective supply planning in pharma protect patient health?
By ensuring an uninterrupted flow of critical medications from manufacturing plants to hospitals, it prevents life-threatening shortages and guarantees reliable access to care.

Want to learn more about how we can help break down silos with connected planning? Contact us today to start the conversation.