This week, Supply Chain Matters had the opportunity to attend SAP’s Supply Chain Management Summit meeting at SAP North America headquarters. The purpose of this day and a half  summit was to bring SAP’s current supply chain management applications customers together to share information and gain further knowledge on SAP’s various software applications supporting supply chain business processes.  It is part of an outreach program that involves various SAP Business Suite areas, where customers with similar interests can come together. The agenda featured a three hour deep-dive session in select SAP SCM applications including the newly announced Solution Extension, SAP Supply Chain Response Management by ICON-SCM as well as the newly upgraded SAP Transportation Management 8.0.  The most widely attended deep dive was that covering SAP Supply Network Collaboration (SNC).

Day two included quite a number of SAP customer presentations that shared their experiences and implementation learning on specific applications, and included roundtable discussions among specific industry players.  We will highlight our observations from attending certain sessions in a subsequent posting in this series.

In this specific post, we comment on a leadership change within SAP Supply Chain Solutions Management.  Hans Thalbauer is the new Head of Line of Business Solutions for Supply Chain Management, PLM and R&D. Hans replaces Lori Mitchell-Keller, who has now assumed a LOB solution management role for SAP Retail.  In our view, Lori did an extraordinary job of providing added focus and renewal to SAP’s efforts in SCM.  Her leadership in adding the response management solution extension to the product portfolio and for a renewed emphasis on SAP’s supply chain execution offerings is commendable and we wish her well in her new role.

Hans Thalbauer is no stranger to SAP SCM, having previously served in an SCM management role.  This author has had personal experience in working directly with Hans in my previous tenure at SAP, and I can assure the SAP SCM customer community that SCM is in good hands.  Hans was previously managing PLM solutions management, and his knowledge of that domain along with detailed SCM and manufacturing applications knowledge will serve him well. Hans can navigate the halls of Walldorf solutions development teams having resided for multiple years at that facility. He possesses an engaging style and sincerely cares about customer needs.

In subsequent postings, we will highlight some further impressions from the Summit.

Bob Ferrari

There is a very concerning supply shortage occurring among pharmaceutical drug supply chains, and the question is- what is the problem? The problem is acute and needs broadened visibility, since lives are at stake.

A recent Wall Street Journal article with the headline- Most Hospitals Face Drug Shortages, (paid subscription or metered viewing required) notes that the vast majority of U.S. hospitals have been forced to restrict the use of life-saving chemotherapy and critical-care drugs for the past six months.  Hospital emergency rooms and intensive care units are also impacted.

More than 80 percent of hospitals surveyed by the American Hospital Association report that they have delayed treatment, and 70 percent indicated that patients received less effective substitute drugs. The most staggering statistic- 99.5 percent of hospitals reported experiencing one or more drug shortages in the prior six months.  Nearly half reported 21 or more drug shortages. Other disturbing statistics noted are that pharmacists spend about 17 hours a week dealing with drug shortages. Hospitals report that they rarely or never receive advance notice of shortages or not informed of the expected duration of the shortage. The survey is so disturbing that Supply Chain Matters urges all readers to take the time to download and review the results. The U.S. Food and Drug (FDA) regulatory agency also confirms growing drug shortages but cannot provide public statistics.

Needless to state, this is a rather disturbing trend concerning a supply chain that has always professed to the notion of overcompensated safety stock inventories, because of the life or death consequences. From a customer satisfaction perspective- drug supply chains deserve an ‘F’.

The fundamental question is- what is causing this supply problem?  Hospitals and health care providers deserve definitive answers.

Reports are that the majority of drugs in question are generic, but not highly profitable, but some proprietary drugs are involved.  Multiple drug producers are involved. many are generic drug manufacturers like Teva Pharmaceutical Industries, Hospira and Sandoz, among others. Some point to a shortage in active pharmaceutical ingredients (API).  The WSJ points to industry consolidation and manufacturing problems.

A report in this morning’s WSJ notes yet another new shortage announcement. Johnson & Johnson is warning doctors not to start patients on its ovarian and myeloma cancer drug Doxil due to a supply shortage. J&J indicates that a contract manufacturer is experiencing production delays and J&J hopes to begin replenishing supplies by late August.

Supply Chain Matters, by this commentary, is calling attention to the obvious.  Drug related supply chains are failing, and lives are at stake.  We trust that our fellow supply chain bloggers will also sound the mantra and raise this awareness to this problem.  The symptoms obviously point to systemic causes, and the situation needs to be resolved quickly.

We urge our readers, especially those residing in hospital and drug manufacturing supply chains to provide first-hand observations.

What is going on and why are these drug shortages so acute?

How did the industry get to this point?

You can share your observations either by providing your own observations directly appended to this posting, or share them confidentially.  Send us an email to: info <at> supply-chain-matters <dot> com.  Supply Chain Matters will also attempt to reach out directly to drug companies for comment, and trust that companies will help provide plausible explanations related to the current conditions.

Once we gather our research, Supply Chain Matters will publish a future commentary.

Bob Ferrari