Feeling the Effects of Better
The life sciences industry is realizing significant supply chain and operational benefits by driv-
ing even modest increases in demand forecast accuracy. Companies included in a recent AMR
Research study pointed to improved demand management processes as the number one rea-
son for this increased supply chain visibility. And the benefits don’t stop there!
—Wayne McDonnell, research director, AMR Research
n a recent AMR Research study, 59 percent of life sci-
ences companies reported an increase in demand
forecast accuracy over the past 12 months. Demand
forecast accuracy is our proxy for driving visibility
across a life sciences manufacturer’s downstream supply
companies that increased demand forecast accuracy also real-
ized an increase in profitability. With companies where fore-
cast accuracy stayed the same or declined, the lift to the bottom
line was significantly lower.
• Beyond productivity and profitability, the companies that
chain. Achieving greater visibility to key downstream data drove increased demand forecast accuracy and supply chain vis-
such as demand and inventory will be critical for life sciences ibility also improved their new product development and launch
companies to drive a wide range of financial and supply success. Timely and efficient new product commercialization
chain benefits. The key points for all life sciences companies will be critical for life sciences companies as they aim to acceler-
to consider are:
ate pipeline productivity.
• The companies that realized increased demand forecast
accuracy pointed to three key enablers. These were better
demand management processes, improved integration of sales In 2010, we expect to see more life sciences companies focus on
and marketing with operations, and more robust sales and oper- demand forecast accuracy as a key lever of operational and sup-ations planning processes.
ply chain improvements. Slowly but steadily the industry will
• Improving the bottom line is near the top of every CFO’s build demand-driven supply chain capabilities on the foundation
agenda, and life sciences companies have been pursuing pro- of increased supply chain visibility. The leaders in life sciences
ductivity improvements for years. So it’s no surprise that in our are one step ahead. These companies are focused on understudy manufacturing productivity increased at those compa- standing how many supply chains they really have versus having
nies that had better demand forecast accuracy. However, with one strategy for all products, total costs to serve instead of cost to
a better understanding and control of costs, 80 percent of those deliver, and driving complexity out of their operations.