Your Ultimate Guide to Pharma Supply Chain Management
Introduction to Pharma Supply Chain Management
There’s no doubt that the backbone of the pharmaceutical industry is its supply chain. Without an efficient supply chain, the life-saving vaccines & drugs that pharma companies produce will not reach the patient when they need it the most. Did you notice the word ‘efficient’ before supply chain though? A supply chain is nothing if it isn’t efficient. You could be delivering medicines, but not in time; you could be delivering them in time but spoilt, expired, or with their efficacy impacted. And therefore, most pharmaceutical companies end up spending a lot towards managing supply chain and transportation inefficiencies. This is what has made SCM (Supply Chain Management) an even more vital function for the pharma industry.
How Does a Pharma Supply Chain Work?
Once launched, the most important step in a life of a medicine, a vaccine, or any other medical product is its delivery to the end consumer. Throughout its journey to its end consumer, the product goes through a number of stakeholders including pharmaceutical manufacturers, wholesalers, distributors, customers, information service providers, and regulatory agencies
How is a Pharma Supply Chain Different from a Regular Supply Chain?
The management of a pharma supply chain is comparatively more complex than a regular supply chain since it directly impacts human lives. The pharma supply chain is also responsible for the safe and timely distribution of generics, prescription drugs, OTC medicines, and biologics, and a lot of other things, each of which has special handling and storage specifications and risks.
Once it leaves the warehouse, a pharmaceutical product comes across a lot of different objectives and constraints that make the supply chain process complex. Pharmaceutical Supply Chains have to deal with multiple stakeholders. It is not just the manufacturers and distributors, but also government agencies, hospitals and clinics, medical research organizations, and of course the Food and Drug Administration (FDA) guidelines. The complexity further escalates as one also has to deal with the concerned healthcare management organizations, insurance companies, etc. All this makes the job of a pharma supply chain or logistics professional even more challenging
What are the Risks That Pharma Supply Chains Face?
While any supply chain faces challenges, a pharma supply chain is more prone to disruptions. Here are a few risks that a pharma supply chain faces:
Drug theft & counterfeiting – difficulty identifying and tracing the theft, and difficulty locating the breach
Condition sensitivity issues – damage/spoilage/expiration in transit and at warehouse
Cold-chain & pharma compliance issues – difficulty pinpointing disruption, overspending to compensate for the non-compliance
Inventory management issues – lack of accurate inventory data, First In, First Out (FIFO) management challenges, under/over stocking
Dependency on human resource – for data throughout the product’s journey and all supply chain legs
Shipment visibility gaps – in-transit as well as at the various facilities
Warehouse management issues – package segregation, lack of visibility, package location at warehouse
Limited viability of buffer stocking – overstocking leading to on-shelf expiration & understocking leading to shortage at time of high demand
The Bullwhip Effect
This is one of the biggest and least understood/addressed phenomena in pharma supply chain management. A pharma supply chain faces the bullwhip effect owing to unpredictable demand and insufficient data. With deficient information sharing comes increasing overstocking when moving upstream in the supply chain. It basically occurs when a change in the demand for the pharma products triggers the supply chain participants to order more goods to meet the increased demand.
This effect intensifies further when dealing with a vaccine cold chain and can get more and more problematic if it’s at scale like with the COVID-19 vaccine distribution. This is because the goods in pharma cold chains are extra sensitive to any kind of delays and disruptions. The bullwhip effect creates a ripple effect of fluctuation with even the slightest change in demand, and multiplies at each level, just like with a real bullwhip, after which it’s been named.
The inventory is affected at all levels of the supply chain including the pharma manufacturers, wholesalers, distributors, warehouses, and stores. It becomes increasingly complex at each successive level causing product and inventory over-stalking, giving way to bigger supply chain and cost issues.
How Have Pharma Supply Chains Evolved in Recent Times?
The pharmaceutical industry is one that's evolving every day, and the only way to catch up with it is to keep your supply chain on par with it. The pharma industry has become a global market and that has made the pharma product lifecycles shorter than ever. There's increasing pressure on pharma supply chain professionals to keep the distribution operations at the optimal levels.
It's not like you can catch up on efficiency at once and then sit back to relax; your supply chain must continually evolve at the pace the industry is evolving. There are a lot of roadblocks like drug counterfeiting, overstocking and shortages, and cold chain disruptions. The biggest recent example of how much an SCM professional has to deal with is the coronavirus outbreak that has disrupted everything, especially the pharma supply chains, which is an essential service.
The pharma supply chain has evolved into a digitized, highly consolidated process. But what most pharma companies still lack is a structured data capturing and evaluating process. With that said, the ultimate key to a successful pharma supply chain is and always has been end-to-end visibility — the hardest to achieve. It can be highly difficult to achieve that kind of 360-degree view of your entire supply chain when your operations are global. The most major and recent transition in the pharma industry is that companies are digitizing their supply chain operations.
Who Can Help You Improve Your Pharma Supply Chain Efficiency?
There’s are a lot of options to choose from when it comes to improving a pharma supply chain. But before making your decision, you need to properly analyse and weigh it in terms of how each of these options would affect your business. Here are some options that pharma companies are currently using to optimize their pharma distribution process.
Pharma Supply Chain Consultant
A pharma supply chain consultant works with the pharma company to find better ways to manage their supply chain by offering them the outside-in expertise that the pharma company lacks.
They can suggest the best course of action using past data analysis.
They can help you make better decisions using their experience.
They can help you fill the gap between the data you have and it’s analysis.
The data they provide can be unreliable owing to the source that is the pharma company itself.
This data can’t guarantee results since it has scope for error.
Pharma Distribution 3PLs
These are basically logistics companies that specialize in moving pharma and life science products. They may be experts in pharma compliances like GxPs and some of them also have specialized pharma logistics divisions.
Their operational expertise in handling pharma distribution operations for you including SLAs and pharma regulation compliance.
They cannot guarantee performance improvement since they focus mainly on moving things and not on optimizing your supply chain activity.
They lack transparency and accountability.
They can't prevent unexpected incidents from happening since their focus is distributed across clients.
Your Own Pharma Supply Chain Digitization Initiatives
You could work internally on digitizing your pharma supply chain and get on-demand visibility into your supply chain right from manufacturing to distribution, end-to-end.
Better data management and visibility using ERPs, TMSs, and WMSs.
Better information for better decision-making.
Better co-ordination between processes and departments and more control over your supply chain activity.
Inability to collect data automatically even with the most advanced ERPs, TMSs, and WMSs. Feeding the data manually to the machine or cloud could lead to manual errors.
Not on-demand since internal digitization initiatives take a very long time and are also dependent on consultants, internal IT teams, new tools, process re-engineering, etc.
Whichever option you choose, knowing what is happening in your pharma supply chain from door to door is key, and thereby, improvements always begin with getting complete and timely visibility of your goods.
Why Do You Need an IoT-based Pharma Supply Chain Monitoring System?
All the options to manage your pharma supply chain better have their own sets of pros and cons in how they affect your business outcomes as a pharma company. You can either choose wisely out of the available options considering which cons you could afford, OR could choose a fourth option that empowers you with quality and actionability – a good on-demand visibility solution.
With a good on-demand visibility solution, you can get:
Package-level visibility across all modes of transport that helps you know about stolen goods, improve chances of recovery, and manage package segregation and multimodal shipments.
Real-time location & condition data that helps you make quicker and better decisions and prevent damages that occur due to lack of timely information.
Unified visibility across chain of custody so that you can combat counterfeit drugs, have a clear line of accountability, and most importantly, have access to end-to-end data.
Ensure proper pharma compliances by keeping a check on 21 CFR Part 11 data management and NIST-certifications.
Demand signalling to keep a check on safety stock, which means to have optimum safety stock without incurring more costs that disrupt your working capital and profit margin.
Can a Monitoring Solution Plug the Gaps in Current System?
A pharma supply chain, especially a cold chain has a lot more moving parts than a regular one, which creates more chances of error and disruption. It's more exposed to risk and compliance issues. Even a slight excursion in the temperature of a vaccine, or a slight delay due to your package sitting on the tarmac in the airport for extra time could damage the product.
The wisest way to deal with it is to identify and diffuse such situations even before they arise. There are systems that can help you gain a good deal of visibility into your supply chain – data loggers – that have been here for quite a while now. But when dealing with something so important, data loggers aren't enough. You need more than that, a system that would capture complete information in real time about the location and condition, without relying on anyone in the chain of custody, and transform the visibility data into an actionable insight – a true end-to-end pharma supply chain monitoring and early warning system.
A pharma supply chain monitoring system provides you with data that's not only real-time, but also relevant and actionable, as against data loggers that only inform you about a situation post-event. It will act as an early warning system and provide live data and pre-emptive actionability to help reduce losses due to damage. It will give you better demand-supply predictability, wiser crisis management recommendations, and ultimately a healthy supply chain and market reputation for your brand.
How Can You Implement an IoT-Based Pharma Supply Chain Monitoring System?
You can completely transform your pharma supply chain into a digital one with IoT-based monitoring and the best way to do so is to outsource it to a company that can successfully use IoT, data analytics, and managed services so it is not an intensive IT effort.
Such a solution provider will help you digitize your supply chain and get a better visibility, which will ultimately bring in actionability, informed, and timely supply chain decisions into your logistics management culture. Once your supply chain is digitized, you won’t have to rely on bottom-up, third-party data for your supply chain, while being able to act on anomalies before they escalate through real, real-time, relevant data.
An experienced visibility solution provider like Roambee would completely automate and manage your supply chain visibility on your behalf. They will:
Collect real, real-time, relevant data by using IoT-based sensors
Manage data through cloud platforms (analytics & AI) and use it for the better management of your supply chain
Integrate with your existing internal system and processes so you don't have to deal with the heavy re-engineering of the process
Improve your ability to manage operations — Provide timely alerts and pre-emptive warnings to the right people so as to eliminate inconsistencies and disruptions owing to dependency on the human element
Such a visibility expert will handle your pharma supply chain for you so that you don’t have to rely on 3PLs and other data providers where there could be delay or room of data errors.