A Textbook Transformation: How Biogen Idec Overhauled Its Supply Chain

This is an excerpt of the original article. It was written for the May-June 2011 edition of Supply Chain Management Review. The full article is available to current subscribers.

May-June 2011

People, process, technology. These are the three core elements that determine the relative success (or failure) of any organization. We’ve heard this in countless management books and keynotes speeches. And it’s hammered home in business school curricula across the country. Now it’s our turn. This issue of Supply Chain Management Review is devoted in roughly equal measures to the three core elements. Our rational: Their importance can never be stated enough.

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Although strategic sourcing capabilities are well established in industries ranging from automotive to pharmaceuticals, they are still in the formative stages in the biotechnology sector.

It isn’t easy to drive the necessary changes. With their external spend increasing so fast, there is great pressure on biotech companies to rethink how their sourcing structures are set up to add most value. The first wave of strategic sourcing strategies is often targeted at cost-cutting through volume consolidation and leveraging of the organization’s total spend, followed by supplier base reduction and longer-term contracting. But as organizations mature, executives require their sourcing groups to develop and deliver additional capabilities. In a growing number of companies today, supply management is being asked to demonstrate deep insights into customer requirements, and to quickly translate those insights into product offerings that often rely more on outsourced capabilities.

Biogen Idec Inc. is showing how this can happen in the biotech sector. In the last year, the company has undergone a huge shift in the way it operates its supply chain, particularly in the management of sourcing.

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