Blowing Cold

It’s lips may pay service but much of the pharma-logistics sector remains dormant when it comes to genuine supply chain integration .

Ask any stakeholder in the pharma supply chain whether collaborative working is a good thing and you'll nearly always get an unequivocal 'Yes'. It is fair to say that most pharma supply chain stakeholders agree that there is a wealth of benefits associated with collaborative working. But in practice real examples of integrated working in pharma-logistics remain few and far between.

Why is this? Is it because big monolithic companies don't have the flexibility or motivation to challenge habitual inertia? Is it because of entrenched attitudes, silo mentalities and departmental protectionism? Or is it simply because man's basic commercial instincts favour discord over concord?

Wholesale Change

In fact, it's all of these, and more. Objective reasoning can be one of the first casualties when it comes to existential questions around uncertainty, change and personal survival. Rationalising the status quo, however imperfect, is always a lot easier than justifying wholesale change.

'Why would we want to put all our eggs in one supply chain basket?', it can be argued. 'What about if we get in to bed with a bad partner?' And 'Who pays if we get let down? And so on.

These, and other censorious questions, are often enough to paralyse even the most earnest of integration missions. And, sadly, such mentalities reflect the inability of many hidebound commissioning parties to abstain from the time-worn, yet ultimately futile, tradition of nailing fellow stakeholders to the floor in their relentless attempts to squeeze out ever-lower prices.

Faint-hearted

The reality is that without across-the-board management support, without the right partners and without 100% commitment, a sustainable integration strategy can never be made to work. Today's relentless pace of change, remorseless competition, entrenched perceptions, vested interests and feelings of insecurity can all converge to make it difficult for companies to make the comprehensive internal and external relational changes necessary. Genuine supply chain integration is not for the faint-hearted.

The enormous challenges of pursuing integration must never be underestimated. Nonetheless, with the fundamentals in place, all the perceived and real barriers to integration are surmountable. By planning ahead, selecting the right partners and getting the correct controls in place, the benefits of collaboration can be secured while keeping all the attendant risks within acceptable limits. ‘Real’ integration is emphatically possible - but only when the entire supply network is involved from the outset and works smoothly and seamlessly towards common goals.

Asymmetrical Integration

The supply chain oppression and subordination that plagues some other industries is alive and kicking in the pharma-logistics sector. It is a fact that the majority of so-called 'collaborative' arrangements between shippers and their 'Tier One' partners then go on to omit, marginalise or railroad the numerous, upstream suppliers, service providers and other stakeholders that go to make up a supply chain. It is integration at its asymmetrical worst. It's symptomatic of an archaic 'buyer as king' mentality; one that is wholly dependent on a traditional 'master-servant' hierarchy of control, function and communication.

In a properly integrated supply model, every member not only needs to be valued, but needs to be convinced that it is in their individual interest, as well as i n the network's collective interest, for them to actively contribute. Each network member must be appreciative of the symbiotic nature of the relationships involved and have respect for the contribution of others.

And crucially, logistics providers, product suppliers and all other supply chain stakeholders must have 100% confidence that their fingers are not going to be jabbed out of the collaborative pie when it comes to the sharing out of bottom-line benefits.

The Bottom Line

It's not that supply chain integration doesn't work. It does. It's just that it is not easy to make it work. Many collaborative partnerships fail at the first hurdles. But, although there is a common perception that the ‘buyer always has the most to gain’, an integrated supply network that is conceived rationally and executed properly, will invariably work to the benefit of all parties.

In my next article "Culture Club" I'll be looking at how your company, its people and its partners, can develop the necessary mindsets for integrated working.