Digital supply chain twin: use cases and benefits
How to stress-test supply chain resilience
“How to stress-test your Supply Chain when disrupted by Corona pandemic” - example of a life sciences supply chain
One urgent customer request came from a globally operating biopharmaceutical company. This enterprise sources API (Active Pharmaceutical Ingredient) primarily from China, where Covid-19 impact was high at the start of the year. So, we were asked to stress-test their supply chain capabilities with regards to supply chain resilience.
We took a representative range of product brands produced and sold by the life sciences company for that purpose.
The client network modeled in the Digital Twin contains the following nodes:
- 8 manufacturing sites (including 4 Contract Manufacturing Organization sites; based in Europe and Asia)
- 38 global distribution centers
- 41 markets/affiliates
The manufacturing network of the company contains two stages:
- Bulk operations (sourcing API from China) can be done in-house or via an external contract manufacturer
- Packaging (primary and secondary) operations can also be done inhouse (in Europe and USA) or via an external contract manufacturer
The finished packaged goods are directly shipped to local distribution centers and warehouses.
To provide a robust and holistic assessment of the client’s supply chain resilience of the company, four key scenarios were defined:
This scenario focuses on evaluating the initial setup of the respective supply chain containing all distribution and manufacturing stages. As a result, potential optimization areas (e.g., decoupling points, inventory right-sizing) can already be detected.
API site shutdown
This scenario shows the impact of a strategic manufacturing site's shutdown for supplying the key input material API. Within this scenario, the length of the shutdown can be simulated. The Digital Twin highlights the impact of downstream operations (bulk manufacturing and packaging performed in Europe and the USA). In conclusion, this scenario pinpoints when certain markets cannot be delivered any longer with finished packed goods and the financial impact of lost sales.
2nd API source
This scenario simulates one mid-term countermeasure to minimize API supply disruptions. Introducing a second complementary API supplier into the sourcing network shows the impact when one API supplier has a site shutdown and extends the second supplier to compensate for this shortage.
Logistics services shortage
This scenario illustrates the effect of a limitation of transportation capabilities to ship the finished goods from the packaging sites in Europe to the receiving European markets. This specific case has become more relevant in December 2020 as global distribution capacities (in particular shipping) have become shorter and shorter.
The client’s Digital Supply Chain Twin builds the basis for many different analyses ranging from inventory right-sizing to strategic issues such as second sourcing. In the presented customer case, we found that the service-level significantly decreases depending on the disruption length and existing inventory buffers. A second source will benefit the service-level in the supply chain with or without disruptive events and help our case.