How Pharma Companies Can Make Their Supply Chains More Resilient?

In today’s world, as we confront various crises and disruptions, the ability to manage risks and cultivate resilience is paramount. One of the most significant challenges across all industries is ensuring effective Pharma supply chain management. The pharmaceutical industry, in particular, faces these challenges along with the added risk of jeopardizing patient safety.

Over the past decade, the supply chain landscape has undergone significant changes due to advancements in technology, the involvement of multiple stakeholders with diverse interests, and the process of globalization. The advent of Industry 4.0 has brought about substantial transformations in supply chain management and analytics. As we move further into the new decade, emerging technologies will continue to shape the efficiency of supply chains. This article delves into the latest trends and best practices that can empower pharmaceutical companies to build resilient supply chains capable of withstanding uncertainties and disruptions.

Understanding Pharmaceutical Supply Chain

The journey from drug discovery to regulatory approval encompasses a complex, multi-phase process. It involves several steps, such as drug discovery, clinical trials (phases 1 through 3), and finally, regulatory approval in phase 4, which marks the culmination of product development.

In the pharmaceutical industry, the supply chain starts with manufacturers and can involve distributors, repackagers, wholesalers, and pharmacies before reaching patients, who may be located in hospitals or clinics, through prescriptions. Today, the pharmaceutical industry operates on a global scale. To safeguard against supply chain disruptions, companies must have a comprehensive understanding of how their products are sourced and distributed. Pharma supply chain management has become increasingly complex due to issues related to authenticity and visibility. Furthermore, the emergence of personalized medicine presents new challenges for pharmaceutical companies.

Inefficiencies, financial losses, and compromised consumer trust pose significant obstacles to the pharmaceutical supply chain. Balancing risks and costs while maintaining collaborative integrity with different distribution centers has become intricate and interconnected. This supply chain imbalance is transitioning from a singular execution to a simultaneous execution of multiple supply chains. Consequently, it challenges the traceability, transparency, suitability, and capacity for disintermediation within pharmaceutical supply chain management.

The Need for Resilient Supply Chains

In today’s dynamic and intricate business environment, particularly in the pharmaceutical industry, the necessity for resilient supply chains has become increasingly evident. Supply chain disruptions can arise from various factors, including natural disasters, geopolitical events, regulatory changes, and global pandemics. These disruptions can have severe consequences, such as shortages of critical medications, delayed deliveries, increased costs, and compromised patient safety.

Pharmaceutical companies operate in a highly regulated and time-sensitive industry where the availability of medications can be a matter of life or death. Therefore, it is imperative for pharma companies to recognize the need for resilient supply chains that mitigate risks and ensure the continuous flow of vital drugs to patients worldwide.

Building Resilient Pharma Supply Chains

Pharmaceutical executives are well aware that relocating production closer to home markets would be costly and time-consuming. Instead, a pragmatic two-step approach can enhance the resilience of existing supply chains.

• Firstly, companies need to gain a comprehensive understanding of the risks present throughout their supply chain. To enhance transparency, leadership teams should map production sites, distribution centers, and material flows, including active pharmaceutical ingredients (APIs), excipients, and packaging, while identifying potential hazards.

Companies must also consider geopolitical developments that could impact supply and demand, leading to drug shortages. By evaluating their risk exposure at both the overall company level and individual site level, they can develop a comprehensive understanding of the potential impact.

• Integration of Artificial Intelligence in Supply Chains

Despite advancements in technology, many pharmaceutical companies still rely on paper trials and Excel for stock optimization. A study by Aspentech reveals that although some companies possess a wealth of data, they lack suitable AI software to effectively utilize it, resulting in inaccurate predictive analysis. To enhance patient care and maximize profit based on accurate forecasts, pharmaceutical companies can integrate backward and forward-looking Material Requirements Planning (MRP) into their workflows.

• Redundancy

To ensure quick adjustments in production volume, companies can incorporate capacity buffers within their manufacturing facilities. These buffers include safety stocks of critical drug components, flexible production lines with excess capacity, and agile shift models such as night shifts with a mix of employees and temporary staff. By establishing flexible contracts with suppliers and manufacturers, companies can shift production volume and location as needed. Additionally, multiple backup sources for critical materials and various quality certification options enable a rapid response to market shortages.

• Improvement in Data Sharing

Many pharmaceutical companies are still in the early stages of integrating and sharing data across multiple supply chains. While the industry remains vulnerable, significant benefits can be obtained by enhancing supply chain transparency. Inspired by Procter & Gamble’s success in data sharing across its global supply chain, many pharmaceutical companies are implementing similar strategies. For example, real-time data for inventory forecasting, plant operations tracking, supplier performance management, and weather-related delays can be achieved through data collaboration, benefiting all parties involved. Enhancing data sharing vertically and horizontally contributes to the efficiency of supply chains.

• Sustainable Packaging

Innovative technology developed for clinical trials aims to improve health literacy and patient compliance. Packaging with features like radio-frequency identification (RFID) tags and wearable devices collects real-time data during trials. This data is utilized to identify side effects and enhance outcomes for both patients and doctors.

• Empowerment

Leaders leverage technology and artificial intelligence to enhance visibility throughout the entire supply chain. This enables them to predict demand fluctuations, identify risks, and plan effectively for peak periods. Real-time product demand and stock data are shared with customers and suppliers, offering greater visibility. Through continuous analysis of public data and scenario simulation, weak links in the supply chain can be identified. In the face of disruptions, companies that integrate flexibility, redundancy, and improved visibility into their value chain will be well-positioned to predict and respond to challenges efficiently.

The Strategic Roadmap

Digitization has decentralized many manufacturing processes in the pharmaceutical industry, allowing for digital monitoring. Leveraging the Industrial Internet of Things (IIoT) and technologies like supply chain network design, forecasting, predictive analytics, Artificial Intelligence (AI), Blockchain Technology, and Digital Dashboards, organizations can improve process efficiencies, reduce cycle time, and increase profits. Implementing control systems such as SCADA, MES, and DCS provides valuable insights into plant workflows, machine activities, and regulatory compliance. Transitioning from traditional documentation processes to cloud-based paperless technology enhances regulatory compliance. Real-time monitoring facilitates informed decision-making while tracing and tracking the cold chain supply chain reduces counterfeit drugs and promotes trust and patient safety.

Digitizing the Supply Chain

In today’s rapidly evolving business landscape, digitizing supply chains is essential for organizational success. The convergence of a digitally-driven world and ongoing operational disruptions necessitates the adoption of digital tools and technologies to enhance supply chain performance.

By leveraging digital solutions, companies can reduce costs, improve efficiency, strengthen resilience, manage risks, and address environmental, social, and governance (ESG) concerns. Industry leaders widely recognize the potential benefits of digitizing the supply chain. However, a survey conducted by PwC in 2023 on Digital Trends in the Supply Chain revealed that a significant number of organizations (83%) expressed dissatisfaction with the outcomes of their supply chain technology investments. This highlights the need for businesses to take proactive steps in the supply chain. [Reference]

Looking Ahead: Building Patient-Centric, Digitally Mature Supply Chains

In envisioning the future, the potential lies in patient-centric, digitally mature supply chains that offer enhanced end-to-end visibility and real-time analysis of drug product movements. The emphasis here is on prioritizing the patient. The remarkable efficiency demonstrated by supply chains during the pandemic played a pivotal role in saving countless lives. Consequently, it becomes crucial to optimize the pharmaceutical and biotechnology industry’s supply chain to its fullest extent.

Despite existing limitations, pharmaceutical companies have a fortunate opportunity to bolster their capabilities and adopt data-driven, patient-centric decision-making processes. By doing so, they can establish a resilient supply chain capable of predicting long-term demand and supply. This, in turn, enables industries to function efficiently and effectively, working towards the betterment of humanity.

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