SCAIR® Case Study

A biopharma supplier undertakes a supply chain risk analysis to demonstrate its rigorous approach to client fulfilment

The Requirement

A supplier to major biopharmaceutical companies was identified as the sole source of certain biopharma materials. Consequently, one of these companies required evidence of the supplier’s supply chain risk analysis, as part of a due diligence exercise.

Furthermore, the supplier was coming under pressure internally from the finance team to reduce working capital in the form of safety stock. However, the supply chain leads were concerned about the message this would send about the resilience of their supply chains to customers.

The Solution

Our client undertook a SCAIR® analysis of its own supply chain to assure the customer and its stakeholders. One of the key benefits of SCAIR® is that it follows the value –  i.e. focuses efforts on the highest-revenue products – and this function was key to delivering a solution to the requirement.

The client manufactured a range of materials, including bespoke and standard specification materials, so the first challenge was to determine how to map the revenue streams.

  • Value streams were identified based on revenue reporting and processing routes
  • Key assets and critical suppliers for each revenue stream were modelled, and the loss in market share was also factored into the exposure estimate

Once the value streams were identified and the key assets modelled within SCAIR® (as a Baseline Scenario), the supply chain managers were able to use the Stock Scenarios functionality of SCAIR® to precisely target stock reductions. This was preferable to a blanket approach.

Using the Baseline Scenario as the reference point, two scenarios were set up:

  • The impact of reducing safety stock at core production stages by 20% across the portfolio
  • The impact of selectively reducing safety stock at core production stages by 20% for manufacturing assets that have alternative sources

The Results

The resulting exposure profiles proved invaluable to the supplier for two reasons:

  1. They provided the customer with the assurance of a rigorous supply chain risk management process.
  2. The results (contrary to current thinking) suggested that assets supporting the standard specification products came top of the list of exposures. This was because of the more competitive nature of the standard material marketplace and suggested that any inability to supply would see revenue permanently lost to the competition. This provided vital information about the company’s vulnerabilities.
  3. Comparison of the resulting Stock Scenarios enabled some compelling conclusions – the blanket 20% reduction approach raised the 12-month outage exposures by 40%, while the selective approach raised the 12-month exposures by less than 5%.
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