Silos budget or value chain cost?

If you run a pharmaceutical site, you already know the environment is extraordinarily complex. You are managing regulatory expectations, batch schedules, equipment qualifications, supply agreements, and personnel, all simultaneously. Costs don’t announce themselves. They accumulate in the gaps between departments.

Here is the pattern I see repeatedly. Each department owns its budget in its own silo. Procurement optimises for unit cost. Production optimises for output. Quality optimises for compliance. Maintenance optimises for uptime. Each function does its part well. However, cost management across the full value chain, from purchase order to finished batch, is rarely integrated.

The result is that surprises carry a price tag: expedited shipments, overtime shifts, scrap, rework, and, perhaps most expensive of all, lost trust between departments or with customers.

The total cost is always delayed…

In my research I have found that this issue is not confined to mid-sized sites or hidden corners of the supply chain; it is equally present in some of the most recognised and sophisticated organisations in the world.

Pfizer: $5.6 Billion in inventory write-offs

In 2023, Pfizer recorded approximately $5.6 billion in non-cash inventory write-offs related to its COVID-19 products, Paxlovid and Comirnaty. Demand had shifted dramatically as the pandemic moved to an endemic phase, but production commitments and inventory had already been built to meet earlier forecasts. The write-off was so large it pushed the company into a quarterly loss. This was not a failure of manufacturing quality. It was a mismatch between supply planning, commercial forecasting, and the speed at which the market changed. Pfizer has since launched a multi-billion-dollar cost realignment programme and a manufacturing optimisation initiative to rebuild its margins. The lesson is stark: even at the world’s largest pharma company, inventory decisions that seemed right at the time can become enormous liabilities when the full picture is not connected.

Novo Nordisk: when demand outpaces capacity

On the opposite end of the spectrum, Novo Nordisk has been grappling with the cost of not having enough. The unprecedented demand for its GLP-1 drugs, Ozempic and Wegovy, outstripped its manufacturing capacity throughout 2024 and into 2025. The company acknowledged that production capacity had been “stretched” and committed roughly $9 billion in capital expenditure for 2025 alone to add capacity. Meanwhile, competitor Eli Lilly, which invested earlier and more aggressively in manufacturing infrastructure (over $50 billion since 2020), captured 60% of the US obesity drug market. Novo Nordisk’s supply constraints didn’t just cost revenue in the short term. They opened the door for a competitor to take market share that may be very difficult to win back. The spending was not silent here but it was loud and visible. The root cause was the same: a disconnect between demand signals and manufacturing readiness across the value chain.

Boeing: The Price of Fragmented Oversight

Outside pharma, Boeing’s story is one of the most instructive. The company outsourced major components of its 787 Dreamliner to over 50 international suppliers to reduce costs and share risk. Instead, the programme was delivered years late and billions over budget. Communication gaps across a fragmented supply chain led to compatibility issues, quality defects, and rework. In January 2024, a door plug blowout on an Alaska Airlines 737 MAX triggered renewed scrutiny. FAA audits found 97 instances of non-compliance. Boeing burned through $4 to $4.5 billion in a single quarter to fix its production line. The company’s CFO publicly stated that commercial aircraft margins would be negative 20% for the period. This is what happens when cost-cutting decisions are made in one part of the value chain without fully understanding the consequences downstream. The “savings” on outsourcing created exponentially larger costs in quality, rework, grounding, and lost customer trust.

The Common thread

Whether it is a rubber stopper, a COVID vaccine, an obesity drug, or a door plug, the mechanism is the same. Someone makes a decision that looks rational within their scope. But the total cost, including storage degradation, demand shifts, capacity mismatches, or quality failures, only becomes visible much later, and often in a different department’s budget.

Chasing savings while flying blind creates bigger losses later. Every time.