How to Detox the Pharma Supply Chain - Inbound Logistics
How to Detox the Pharma Supply Chain - Inbound Logistics
Pharmaceutical Logistics, Supply ChainAdvances in technology, new regulations, and more personalized medicine can make managing pharmaceutical supply chains a tough pill to swallow. Successful supply chains leverage new IT, share information, and embrace change.More to the Story:Pharma Cold Chain Heats UpSpeeding Lifesaving Drugs to MarketIn 2018, Amazon acquired PillPack, an online pharmacy catering to individuals who take multiple daily prescription drugs. "The acquisition signals the importance of e-commerce as a new retail channel for prescription drugs," says Kaushal Dave, global vice president of solutions development and customer engagement with Aera Technology, which supplies real-time cognitive automation.The emergence of e-commerce is one of several changes reshaping the pharmaceutical supply chain. Others include technology advances such as greater deployment of Internet of Things (IoT) devices, changing regulations, and the drive to more personalized medicine.Successfully navigating these changes will be key to effective supply chain and logistics management. "Due to the critical nature of the pharmaceutical goods being transported, supply chain excellence is critical," notes Alisha Greenwald, senior director of client strategy with BlueGrace Logistics, a third-party logistics provider. Challenges on the path to healthBefore achieving supply chain excellence, most companies will need to address several obstacles. One is the difficulty of accurately forecasting demand, particularly for new products that often take years to gain regulatory approval.Even for established products, accurate demand forecasting is hardly a given. It typically requires assembling data from multiple sources, such as historical transaction volume, sales forecasts, and supplier input. Information often is outdated by the time forecasts are finalized, leading to inaccuracies.Inaccurate forecasting also impairs inventory management. For example, companies using legacy technology and outdated information may not know they can reroute stock from one warehouse to another that needs the product. This blind spot can mean excess inventory in one location ties up working capital, while stock shortages at another eat into margins.The addition of e-commerce increases the complexity of demand forecasting and inventory management. Pharma companies will need to develop forecasts and inventory specific to this channel.The changing regulatory environment also is remaking the pharmaceutical supply chain. By 2023, the Drug Supply Chain Security Act will establish an electronic, interoperable framework to identify and trace serialized products throughout the supply chain, at the unit level, says Perry Fri, executive vice president with the Healthcare Distribution Alliance (HDA) and chief operating officer with the HDA Research Foundation. The next implementation milestone, coming up in November 2019, requires distributors to accept only products that contain the required identifier."With nearly 59 million units of pharmaceutical products affected annually, it is a large undertaking," Fri says.In addition, government entities across the country are proposing legislation aimed at addressing the affordability of prescription medicines and mitigating the epidemic of prescription drug abuse. These also will affect pharmaceutical supply chains, although it's too early to predict the likely impact.Along with these challenges is the growing application of personalized or precision medicine, in which physicians test for biological markers that can help determine which medical treatments and procedures will work best for each patient. Biopharmaceutical researchers predict a 69% jump in the number of personalized or precision medicines in development over the next five years, according to the Personalized Medicine Report from industry group Personalized Medicine Coalition.The interest in personalized medicine is understandable, as it should improve patient outcomes. At the same time, the expanding number of treatments boosts supply chain complexity.Technology fills the prescriptionHow can pharmaceutical companies tackle these challenges and continue to thrive? Technology will play a critical role. For instance, unit load devices (ULDs) enable pharma companies and distributors to closely monitor their shipments' location and status while in transit."Today's tracking devices go beyond GPS," says Leandro Moreira, director of the Health Technologies Distribution Alliance (HTDA), and vice president of YourWay, an integrated biopharmaceutical supply chain solutions provider.In addition to location, ULDs can provide information on a product's exposure to light, shock, or vibration. Some devices can tell if a package is positioned horizontally or vertically.Many devices now provide this data in close to real time, says Chuck Forsaith, senior director with the Pharmaceutical Cargo Security Coalition (PCSC), an arm of the HDA. Companies that know what's happening to their goods in transit can act to avert damaged or lost products.These types of devices also allow the air cargo sector to play a bigger role within the pharma supply chain. "These latest high-tech devices are our eyes, ears, and noses in the air and they help us manage shipment integrity," says Yulia Celetaria, global director of pharma with AirBridgeCargo, an international cargo airline. Over the past three years, the average growth rate (CAGR) for AirBridge's pharma shipments topped 45%, she adds.Digitalization—converting information into a digital format that computers can process—also allows for more accurate supply chain management. Jay Stanell, a director with accounting firm Grant Thornton, provides this example: A meter tracking the use of a package fulfillment operation finds that Product A consumes 50% of its capacity, while five other products each use roughly 10%. Software can take this information and accurately attribute the costs to each product, rather than simply spreading those costs evenly over the six products."Digitization changes data availability," Stanell says. "It enables companies to get data at the product level, so they can make 'eyes-wide- open' decisions regarding their technology investments."pharma gets a dose of BlockchainBlockchain may have a role to play within the pharma supply chain. "Blockchain technology enables the tracing and authentication of unique and valuable products within the healthcare and pharmaceutical supply chain," explains Luca Graf, head of digital innovation with Panalpina, a supply chain solutions provider. Each step—from manufacturing to packaging, storage, and transportation—can be monitored and recorded, he says.Several obstacles currently constrain blockchain's use. One is the lack of industry-wide standards and the siloed nature of data within the pharmaceutical supply chain. "The industry needs to step aside from peer-to-peer data sharing and move to information transparency to all supply chain stakeholders," Celetaria says.FAST PHARMAData processing speed presents another obstacle. While the private chains typical in supply chain and logistics are much faster than the public chains used for cryptocurrencies, it's typically difficult for a company to entrust its data to another company's private blockchain. Public blockchains enable collaboration and scalability but have slower data processing speeds.If the industry can solve these challenges, a blockchain-based tracking and authentication system will boost security, trust, and transparency within pharma supply chains, Graf says. This will reduce costs relating to both transportation and counterfeit drugs.Not every tool for improving the pharma supply chain involves technology. "Collaborating and sharing intelligence among companies when an incident takes place can help maintain supply chain integrity," Forsaith says.He points to a 2010 burglary of a pharmaceutical warehouse in Connecticut, where criminals made off with about $80 million in drugs. To access the drugs, they rappelled to the roof, entered through a hole they cut, and disabled the alarm.The warehouse alerted other pharmaceutical firms to the burglars' methods, prompting many to adjust their supply chain security. Since then, no similar burglary has occurred in the United States, Forsaith notes.Other lower-tech processes that can boost supply chain integrity include running driver teams, rather than solo drivers, for some shipments. When the drivers stop to refuel, one person remains with the vehicle at all times. In addition, the truck can arrive for its pickup fully fueled, minimizing the number of stops it will have to make on the road.When the PCSC was created more than one decade ago, U.S. pharmaceutical companies were losing between 40 and 60 large-scale shipments annually, Forsaith says. In 2018, that number had dropped to about four.Embracing ChangeThe changes currently affecting the pharmaceuticals supply chain appear poised to continue. Advancing technology will keep boosting and improving supply chain efficiency and transparency. The companies that take advantage of these shifts stand to gain."Pharmaceutical companies that have optimized their supply chains will continue to thrive," Greenwald says.
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