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Why the Supply Chain is So Important for Regulated Industry Environments- A Contributed Guest Posting

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Supply Chain Matters founder and Executive Editor Bob Ferrari recently provided a guest blog commentary hosted on the MasterControl Compliance Accelerated blog.

Within this commentary, Ferrari argues that there is little doubt that pharmaceutical, life sciences and healthcare related supply chains are unique in their combined mission to manage adherence to regulatory processes, insuring that the highest quality of products are delivered to healthcare providers, and to position supply chain capabilities and decision-making to support expected line-of-business and financial outcomes.  The role of the supply chain has moved beyond transactional to one of mitigation of risk as well as key business outcome enabler. The mission is now one of insuring agility, resiliency and more timely and successful business outcomes.

To perform this mission, industry supply chain teams need to provide a keen focus on fundamental core competencies that can support multiple missions. Outlined is a dedicated focus on five key supply chain competencies, which serves as a reminder to our Supply Chain Matters readership as well.

This was part of a series of exchanged guest postings on both this blog and that of MasterControl. In late June, Alex Butler, Medical Device Product Manager, Master Control, pointed out to our Supply Chain Matters reading audience, why a supplier quality management system helps to minimize supply chain deviations.

Both of our guest postings are an effort to provide broader education and awareness to the increased importance of supply chain business process and decision-making within regulated industry environments.

 

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Mitigating Supply Chain Risk- How a Supplier Quality Management System (SQMS) Helps Minimize Supply Chain Deviations

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The following is a Supply Chain Matters Guest Posting is contributed by Alex Butler, Medical Device Product Manager, MasterControl

 The increase in international sourcing of drug production continues to rise in pharmaceutical manufacturing. With this increase, the FDA continues to document issues with supply chain breakdowns, errors, material quality and numerous other critical issues surrounding these activities. Supply chain issues have been further magnified in recent years as various to the degree that U.S. congressional committees have questioned the FDA in several instances in an attempt to uncover the root cause of these breakdowns.

Supply chain management for regulated companies is historically fraught with challenges, including many catastrophic instances impacting consumers. In 1937, more than 100 people, including many children, died from ingesting Elixir Sulfanilamide, which contained the deadly poison diethylene glycol. This caused President Franklin D. Roosevelt and the U.S. Congress to pass the Federal Food, Drug, and Cosmetic Act (FD&C Act) as an effort to prevent future catastrophes.

Leap forward to 2011, when the FDA produced a report titled, “Pathway to Global Product Safety and Quality,” and later, the European Medicines Agency (EMA) tightened their Good Distribution Practice (GDP) Guidelines and the Falsified Medicines Directive to improve supply chain management and minimize risk. At an earlier congressional meeting, the Principal Deputy Commissioner, Joshua M. Sharfstein, M.D., discussed the safety of the drug supply. He said, “Protecting Americans from unsafe or contaminated drugs is not just an important responsibility of the FDA—it is our core charge. Drug safety was the primary reason for the passage of our guiding statute.”[iii]

While problems that arose in the past may have been minimized by regulatory enforcement and the adoption of extensive quality control systems by responsible pharmaceutical companies, the industry is now experiencing a new era of quality-related dilemmas rising in the supply chain. Today, supply chain deviations have become a global threat not only to pharmaceutical companies, but potentially to healthcare professionals and public consumers as well, primarily due to the lack of the establishment of a quality culture in pharmaceutical supply chains.

The “white elephant” that the pharmaceutical industry is reluctant to address is counterfeit medications. Counterfeiting has become a massive issue worldwide. Detection and enforcement efforts are on the rise, and officials, regulatory bodies and watchdog organizations are not necessarily unified on best enforcement practices. Although there are many ways and reasons for why and how counterfeit materials and medicines are breaching the industry, one of the most troubling issues is when materials and ingredients are swapped with materials that are either inert or toxic. In some instances, these have made their way through the supply chain, resulting in harm and even death to patients. To date, these incidents are most commonly occurring in geographic locations like China and India. Because border agents and supply chain managers can’t always tell what’s been tampered with, regulators and governments are demanding tighter controls on the global supply, manufacturing, movement and storage of goods.

One thing is clear: it is the responsibility of pharmaceutical organizations to assume a leadership position in addressing and conquering the issue of counterfeit medicines and the challenges plaguing supply chain management. As the FDA states, the issue of managing a supply chain rests with the manufacturer, regardless of where deviations are generated in the supply chain.[iv]

The FDA’s Focus Shift

Historically, the FDA has focused its enforcement activities, including warning letters, seizures, injunction actions, consent decrees, criminal prosecution and so on, at U.S. facilities. However, recently the FDA’s enforcement focus has included facilities in other countries. This has resulted in a large increase in investigations into high-production countries such as China and India.

The pharmaceutical supply chain represents a new frontier for international enforcement activities. The FDA is beginning to increase its headcount in several countries, which signifies an increased emphasis on enforcement worldwide. Overall, the number of inspections has remained flat, but the investigators are being more thorough and are issuing more violations. Moving forward, we can expect to see continued enforcement against pharmaceutical companies with this heightened supply chain focus.

Supplier Quality Management System (SQMS) Software Solutions Can Help

Quality takes on different dimensions depending on the country in which a product is manufactured. Although nothing can take the place of a staff of quality professionals who are familiar with the regulations and the nuances of supply chain quality management and are well trained on the processes involved, the implementation of an SQMS software solution can be helpful.  An automated SQMS can help standardize vendor management processes and can provide efficiencies that give supply chain quality professionals more time—and a standardized process—to minimize the risk of supply chain issues that are breaching the borders and walls of pharmaceutical companies  and prevent problems before they arise.

Many organizations manage their supplier quality management processes using a paper-based or hybrid-electronic system.  While this system may be adequate and in accordance with FDA compliance requirements, it leaves room for significant errors and substantial inefficiencies.

Top Benefits of Implementing an Electronic SQMS

Although most leading pharmaceutical organizations have transitioned to using a software- or cloud-based SQMS, the majority do not. With the tremendous growth happening in the pharmaceutical industry, small and midsize businesses (SMB) have new opportunities to secure previously unforeseen or unavailable shares of the market with their proprietary drugs, generic drugs and advancements. Unfortunately, the inability to capitalize on these new market shares is often due to the fact that the SMBs have not yet shifted over to a software- or cloud-based SQMS. Here are some of the most mission critical ways that a software- or cloud-based SQMS can mitigate or prevent supply chain problems that commonly lead pharmaceutical companies to deliver or accept counterfeit medicines:

  1. Maintain All Supplier Quality Data in a Centralized Location: A repository for automating, maintaining and controlling all supplier quality data and documentation – from non-conforming material reports and audit observations to contracts and service level agreements – is an essential component of maintaining security and compliance. A secure, centrally-accessible storehouse allows pharmaceutical companies to more easily and efficiently manage and monitor supplier statuses and ratings, records, corrective actions and approved vendor lists (AVLs).
  2. Smoother Internal and External Audits: An SQMS can automatically track and store information derived from supplier management audits to help ensure that regulatory guidelines are followed. With an electronic SQMS, pharmaceutical companies can securely store and maintain all information related to supplier management audits, including audit approval statuses, recent data derived from supplier audits and links to quality assurance auditing and analytics reports.
  3. Improved Communication and Collaboration: All departments involved in supplier management—including authorized external parties—can stay connected across geographically dispersed locations, which facilitates better communication and collaboration with vendors and minimizes complications relating to specifications and materials. In this manner, pharmaceutical companies can gain greater visibility into supplier quality, reduce errors caused by miscommunication and, ultimately, receive higher-quality materials or parts.

No system, paper-based or software-based, is foolproof.  However, pharmaceutical companies that implement SQMS software solutions, are seeing meaningful improvements in supplier and supply chain quality issues, significantly mitigating supplier risks, and gaining a higher return on investment for their efforts.

 

MasterControl Inc. produces enterprise software solutions that enable life science and other regulated companies to deliver life-improving products to more people sooner.

 

 


Supplier Visibility, Personalized Medicine and the Future of the Pharmaceutical Supply Chain

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The following is a Supply Chain Matters guest blog posting contributed by by EcoVadis CEO and co-founder Pierre-Francois Thaler.

Personalization is driving change in almost every industry, even pharmaceuticals.

Personalized medicine is poised to disrupt the future of drug manufacturing, bringing with it challenges that go beyond the walls of labs and hospitals. As a means of definition, the industry defines personalized medicines as targeted drugs that leverage genomics to move beyond one-size-fits-all drugs to those that are prescribed for individualized care. Distribution processes that have remained relatively static for years are now being upended by breakthroughs that allow for customizable treatments for individual patients based on a variety of biological factors.

For suppliers, this spells complexity: they must now simultaneously create many different medications at once for a few people versus mass manufacturing a few generic drugs for many.

While this is a meaningful breakthrough for the medical community, it presents a challenge to pharmaceutical and drug supply chain leaders. To meet the complexity associated with the manufacturing and distribution of personalized medicine, the industry must first address the structural supply chain reforms that will be needed in this new era of treatment.

As healthcare journalist Martin Barrow stated,

Present pharmaceutical supply chains are simply not that flexible. Big pharma is global. The supply chains feature plants around the world, located on different continents from the compounds being used to create the drugs. Add to this the complexity of global distribution networks and we start to see that the logistical transformation needed to speed up this latticework of sources and suppliers will pose a huge challenge.

In his commentary, Barrow further cites Richard Archer, chairman of the Engineering and Physical Sciences Research Council Centre for Innovative Manufacturing in Regenerative Medicine as warning that: “most of the existing manufacturing facilities and supply chain will be obsolete within the decade.”

In a more complex supply chain, there will naturally be operational and financial risks as a result of the potential loss of transparency such as payment delays and lack of inventory visibility. The pharma industry is susceptible to special risks associated with medicine, including but not limited to:

  • Waste management – Ensuring that all parties are responsibly disposing of potentially harmful chemicals
  • Counterfeiting – Eliminating the creation and distribution of knockoff pharmaceuticals
  • Delivery to customer – Safeguarding against prescriptions falling into the wrong hands and being sold illicitly

This complexity poses significant problems for supply chain leaders who already have difficulty tracking their suppliers. In a March 2017 EcoVadis survey of 360 global procurement leaders, only 15 percent of organizations said they have complete supply chain visibility the corporate social responsibility and sustainability performance of both tier one and two suppliers, and only six percent reported full visibility into tier three suppliers and beyond. The visibility into tier one suppliers and beyond allows organizations to determine if their suppliers are engaging in fair labor contracts, employee health and working conditions, sustainability performance tracking and ethical sourcing of parts and raw materials.

The need to scale up sustainable procurement programs to increase the depth of supply chain visibility is evident. In the pharmaceutical industry, the risks associated with a lack of visibility will be compounded as personalized medicine necessitates an even more intricate network of supply chain partners, creating a web of manufacturers and distributors that organizations will need to monitor. Companies that see the importance of supplier visibility – one of the top challenges facing procurement leaders across industries today – will be the most prepared for this changing landscape.


Supply Chain Matters Shares Our Top Ten Blog Postings in 2016

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An annual tradition for the Supply Chain Matters blog has been to look back to the prior year’s readership uptake and share with our readers the top ten blog postings of the prior year.

Admittedly, we are a bit late in compilating all of our 2016 readership data but we did want to publish this for readers, clients and sponsors.

The list provides a sense of what particular topics were of the most interest in our over 300 blog postings published in 2016.  SCM 250 76 Supply Chain Matters Shares Our Top Ten Blog Postings in 2016

In the Dave Letterman style, we start with number ten and work our way down to the number one topic of readership uptake.

Number 10:

Observations on the Rankings for Supply Chain Planning Technology (February 5, 2016)

After industry analyst firm Gartner published its Magic Quadrant Rankings for Supply Chain Planning System of Record applications in mid-January, this commentary shared observations regarding the rankings of vendors. Our takeaway was that the current landscape of supply chain planning, sales and operations planning (SO&P) and B2B supply chain network planning technology was far more influenced by line-of-business and supply chain leadership input needs and requirements. Hence many other sources of information support the buying decision beyond industry analyst rankings.

Number 9:

The Value Proposition for Cloud Computing is Broader in Scope and in Business Implications (January 22, 2016)

This Supply Chain Matters commentary explored the implications of a full Cloud-based technology suite in supporting broad supply chain business process needs after industry analyst Bob Ferrari completed nearly two days of briefings and conference presentations related to Oracle’s Cloud based technology offerings. One takeaway provided was to view Cloud from the perspective of a broader focus on an engineered suite of pre-integrated software applications that are continually updated to reflect changing business needs. Why settle for business application innovation every 1-2 years when every 6 months is an option, and with lower capital and overhead costs.

Number 8:

Sports Authority- A Disturbing Twist to Consignment Inventory Management Practices (March 17, 2016)

Characterized as one of the largest sporting-goods retailers, Sports Authority was weighted down with debt from a prior leveraged buyout a decade ago. We called attention to a disturbing development in the ongoing bankruptcy process, as the retail chain filed lawsuits with more than 160 suppliers challenging supplier claims to consigned inventories. We opined that this development had significant ramifications for supplier collaboration practices within retail as well as other consumer goods focused supply chains.

Number 7:

A Disruptor is About to Enter the Heavy Truck Equipment Market (June 20, 2016)

Supply Chain Matters has continuously provided our readers visibility to emerging industry disruptors who are leveraging advanced technology and platforms directed at supply chain related business process and asset needs.  Such visibility included the entry of Uber and Lyft and their potential to move beyond people transportation. In this posting we provided visibility to start-up Nikola Motor Company and its ongoing development of a Class 8, 2000 horsepower electric powered semi-tractor truck that will be named the Nicola One.  The actual unveiling occurred in early December.

Number 6:

Chipotle’s Consumer Trust Crisis Enters a New Critical Phase (February 9, 2016)

One of our early blogs in a series of ongoing commentaries we outlined from a supply chain lens regarding the business, brand and supply chain crisis that impacted Chipotle Mexican Grill after hundreds of consumers were sickened by a series of varying incidents ranging from E-coli outbreaks to norovirus that date back to the summer of 2015. We opined that too much attention was being applied to corporate marketing vs. supply chain and restaurant risk mitigation efforts. It is now April 2017 and the challenges to restore brand trust remain.

Number 5:

Look to the Cloud to Support the Modern B2B Network (September 1, 2016)

This blog commentary addressed an organization’s journey toward mature B2B information integration and how this is made possible by today’s advanced cloud-based platforms, applications and infrastructure. We opined that there is no question that analytics and broader, more predictive business insight capabilities are opportunities to transform B2B business and supply chain business networks. The opportunity — and indeed the necessity — is to leverage an end-to-end business network to synchronize planning, execution, customer fulfillment and more predictive decision-making needs.

Number 4:

Gartner 2016 Top 25 Supply Chain Rankings- Supply Chain Matters Initial Impressions (May 19, 2016)

Our annual commentary related to analyst firm Gartner’s Top 25 Supply Chain Rankings.  Our annual commentaries reflect our beliefs that ranking criteria can be misconstrued, especially when it tends to favor supply chains that avoid major ownership of assets and inventory, or tend to weight other criteria lower, such as sustainability and social responsibility practices.

Number 3:

A Tour of Healthcare Supply Chain Innovation in Action (February 4, 2016)

Executive Editor Bob Ferrari shared impressions and insights regarding a November 2015 visit to the Cardinal Health Healthcare Supply Chain Innovation Lab located in Concord Massachusetts.  The lab served as a hub to explore innovative technology approaches such as smart sensors and near-field communications (NFC) in addressing healthcare supply chain product demand and supply inefficiencies.

Number 2:

What are Specific Skill Needs and Gaps in Supply Chain Management? (February 26, 2016)

Supply Chain Matters highlights results and an infographic from a supply chain skills survey conducted by Canadian based Argentus Supply Chain Recruiting outlining what specific hard and soft skills are organizations looking for in their hiring and recruiting efforts. Supply chain skills and talent development content has consistently drawn reader interest.

 

And now, a drum-roll for our most read 2016 blog:

 

Airbus and Boeing Continue to Experience Supply Chain Scale-Up Challenges (May 2, 2016)

After announcing Q1 financial and operational performance results, both Airbus and Boeing addressed ongoing challenges related to their supply chains and expected performance for 2016 total aircraft delivery commitments. We shared candid comments from Airbus’s CEO as to the global producer’s most critical new product introductions and clear signs of concerns related to various supply chain challenges. We also called attention to comments from United Technologies regarding the new Pratt and Whitney geared turbofan engine, which turned out to be the weakest link in the Airbus supply chain. Finally we concluded that for the two dominant manufacturers of commercial aircraft, supply chain challenges have once again come back as concerns amid an environment of robust order backlogs. Each has different manifestations and supplier challenges, and each reflects on internal operational scale-up as well. We opined our belief that challenging product design among the most critical supply components, including aircraft engines would continue to be the linchpin towards achieving required production scale-up milestones.

 

Thanks again to all globally located Supply Chain Matters readers for your continued readership and frequent visits.

Thanks as well to our sponsors, clients, and network contacts for their continued support. We will no doubt, have yet another set of different topics of reader interest throughout 2017.

A final thought, why not consider having your company’s brand appearing as a designated sponsor or advertiser on this blog. Send us an email at info <at> supply-chain-matters <dot> com and we will respond with all of the information.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Hospital Supply Chain Survey Points to Needs for Broader Education and Alignment Across Healthcare Delivery Support Supply Chains

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Global integrated healthcare services and products distribution company Cardinal Health has released findings of a recent Hospital Supply Chain Survey and the results once again reinforce the need for far more supply chain management focused efficiencies among hospitals, along with broader stakeholder alignment across healthcare delivery supply chains.  DSC0083 300x245 Hospital Supply Chain Survey Points to Needs for Broader Education and Alignment Across Healthcare Delivery Support Supply Chains

The survey, conducted in late October 2016 included responses from slightly over 400 doctors, nurses, service line leaders or supply chain administrators. What especially caught our Supply Chain Matters interest were the findings indicating that 57 percent of physicians did not have the right products needed during a planned procedure. The study highlighted that one in four hospital staff have observed or heard of an expired product being used on a patient and 18 percent have observed or heard of a patient being harmed due to a lack of necessary supplies at the right time. The responses further indicate that nearly 20 percent of front-line caregiver time is consumed by supply chain management expediting or follow-up which then amplifies further to service line and other administrators.

A fundamental tenet of our community is that the supply chain exists to serve the needs of the end-customer, and in the case of healthcare, patients and frontline caregivers. Ladies and gentlemen of the healthcare focused supply chain community- these findings point to continuing systemic issues in your supply chain processes and they well should be garnering added calls-to-action.

Then again, from our lens, it is yet another indicator of the current stakeholder misalignments across healthcare supply chains. While most care givers, those on the front lines for delivering quality patient care and managing healthcare delivery costs, believe that the seamless operation of the supply chain is critically important, the other supply chain participants seemed aligned to other conflicting interests.

For the first time, we included pharmaceutical and drug supply chains in our industry-specific predictions for 2017. The principal reasons were twofold and somewhat inter-related. The increasingly global reach of the industry’s various supply chains is adding continued possibilities for risk and disruption. According to the U.S. Department of Commerce, the United States is now the biggest importer of pharmaceuticals from other countries. Pharmaceutical and drug production is now global in scope. Incidents of counterfeit drugs and medicines have been a constant challenge and lately, conformance to generally accepted production practices have become troublesome. Second, within the U.S. especially, there remains an enormous groundswell of political and social backlash directed at what is perceived as artificially high and inflated pricing stemming from conflicting buyer self-interests across the industry’s extended supply chain. Pharmacy Benefit Managers (PBM’s) negotiate pharmaceutical and drug prices on behalf of heath insurance plans and de-facto now include a far higher share of control over the supply network. The latter challenge alone is beyond explanation in a single blog commentary.

Latest Survey Responses

Survey responses from this latest Cardinal sponsored survey indicate a fair to poor rating among 52 percent of respondents for having the right product when needed, 53 percent indicate a fair to poor rating for the ability to keep track of recalled products or tracking product expirations, and 56 percent a fair to poor rating for the ability to manage inventory volumes. The full details of this hospital supply chain survey report can be downloaded at this Cardinal Health web link.

Let us be blunt and to the point. Processes for supporting timely supply of right product with the ability to manage updated and timely product information have proven business process solutions that have been acquired both in healthcare process pilots and from many other industries. Likewise, the technology needed to support accurate and timely product data is available today in either new product labeling, active item-level chip or other Internet of Things (IoT) enabling technology.  The missing element seems to always come back to the alignment of stakeholders across the extended supply chain and to leveraging process and technology investments consistently across the healthcare supply chain. Buying influence is a big determinant as well, especially when state and federal government are factored as buyer influences.

Frontline care givers should not be having to constantly manage supply and inventory tasks and similarly, hospital supply chain administrators should be allocating time to occasional supply and demand alignment exceptions. As the survey responses and the Cardinal report findings reinforce, such time is better freed-up for patient time.  Once more, today’s integrated supply chain planning and customer fulfillment systems are up to the task for planning healthcare supply needs.

We agree completely with the conclusion that improvements are long overdue and they are centered on the current conflicting stake holding interests. However, supply chain inventory management is basic and has proven solutions.

Again, by our lens, hospital teams should be viewing these challenges as both local supply chain management education and in external supply chain network-wide process alignment perspectives. Seek out supply chain management business process and technology experts for education. Work with your major supply distributors and PBM’s on the most efficient and cost affordable means to align with existing automated supply response management processes that link both manufacturers, distributors, and your local facilities in extended supply chain inventory supply visibility.  As we have noted in a prior Supply Chain Matters commentary, Cardinal Health supports its own supply chain innovation laboratory. Likewise, other distributors and manufacturers are willing to collaborate on overall supply chain visibility and addressing more automated local supply chain processes and decision-making needs.

This blog and this Editor is willing to do our part in broadening industry education and in visibility to new, more cost affordable technology or business practices. However, we as healthcare consumers, along with frontline healthcare providers need to be far more vocal in influencing the broader industry that local supply chain management supply and decision-making needs need to be far more intelligent and far more simplified for hospitals and services providers.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


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