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.
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.
In the Dave Letterman style, we start with number ten and work our way down to the number one topic of readership uptake.
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.
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.
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.
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.
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.
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.
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.
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.
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:
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.
© 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
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.
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.
© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
Thus far, we have posted deep-dives on the first nine of our 2017 Predictions for Industry and Global Supply Chains. The one prediction remaining is our final Prediction Ten, which for each year, dives into what we foresee as unique industry-specific supply chain challenges or environments for the coming year.
As Editor, I have also decided for the purposes of brevity and reader interest, to present each industry in a separate Supply Chain Matters blog posting. We will be also posting these industry-specific predictions in a faster cadence.
In prior industry-specific predictions posting, we dived into Automotive Supply Chain Residing Across North America.
We then moved to Apparel and Footwear Producers and Respective Supply Chains.
Pharmaceutical and Drug Supply Chains
For the first time, we are including pharmaceutical and drug supply chains in our industry-specific predictions for 2017. The principal reasons are twofold and somewhat inter-related. The increasingly global reach of the industry’s various supply chains is adding continued possibilities for risk and disruption. 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.
Today’s manufacturing and drug capacity profiles among proprietary or generic drug brands span countries such as Ireland, India, Israel, China, Singapore, and the United States. Some produce drugs for their immediate regions, while many export globally. Of late, there has been a shift of manufacturing away from the U.S. to take advantage of lower manufacturing cost and tax savings. The bulk of active pharmaceutical ingredients, the primary raw material compounds related to other drugs, are sourced in China and India.
According to the U.S. Department of Commerce, the United States is now the biggest importer of pharmaceuticals from other countries. Incidents of counterfeit drugs and medicines have been a constant challenge and lately, conformance to generally accepted production practices have become troublesome from production facilities across India, where many generic drug production facilities are located. The government of India recently cited 200 India based drug manufacturers for high risk in compliance standards.
Ongoing Business Challenges
In 2011, the industry reeled from an average of over 250 shortages of critical drugs as monitored by the U.S. Federal Drug Administration. Much has been accomplished to alleviate drug shortages since that time but continued work remains. As of the end of January 2017, the FDA was reporting 57 drug shortages, the bulk of which were included in categories such as Pediatric Medicine (26), Oncology (6), Gastroenterology (9), Endocrinology (6), among others.
For years, the industry has danced around or delayed responses to mandates for implementing item-level traceability and tracking of life-saving drugs and medicines. By November 2017, pharmaceutical companies will be required to mark their products with a National Drug Code (NDC), serial number, lot number and expiration date in both machine-readable and human-readable format according to the Drug Supply Chain Security Act (DSCSA) of 2013. A diverse group of 44 companies, from manufacturers to wholesalers to solution providers, have further come together to develop updated GS1 guidelines on the use of GS1’s Electronic Product Code Information Services (EPCIS) for lot-level management and item-level traceability of pharmaceuticals. DSCSA is planned to be implemented over the next 10 years in three different phases while companies are transitioning their systems and preparing for the various requirements. Ten years is a considerable amount of time and some on the customer and patient side continue with frustrations as to the industry’s overall progress.
This is an industry that continues to demonstrate a general lack of common goal collaboration across an extended supply chain with conflicting stakeholder interests. Thus, the challenge of business transformation or faster momentum can continue to be bogged down.
A recent wave of high-profile, large global-scale mergers and acquisitions have further disrupted individual supply chains in areas of assimilating business and supply chain processes, procurement software systems technology and talent.
The new Trump Administration and the U.S. Congress have cited the pharmaceutical and drug industry in the context for both new healthcare care reform, excessive drug pricing and in current sourcing practices of drugs globally. In late January 2017, President Trump, at a meeting in the White House with a group of high-lever pharmaceutical drug company executives, indicated that he wanted more manufacturing to occur in the United States.
As noted in our other industry-specific predictions, if the U.S. Congress were to adopt business tax reform legislation that could impose a multi-industry import tax, pharmaceutical and drug companies importing raw compounds and medicines could be financially impacted. We therefore predict the need for a lot of product sourcing scenario planning and analysis in the coming months.
For all the above, we include pharmaceutical and drug supply chains in our 2017 Industry Unique prediction category.
This concludes our Supply Chain Matters series of ten 2017 Predictions for Industry and Global Supply Chains, predicting a year that promises to be:
- Consumed by global uncertainty
- Somewhat challenged in terms of supporting business top-line growth
- Sure to place supply chain sourcing teams in constant scenario analysis and business advisor roles to senior management
- Noticeably higher in the supply chain risk potential
Again, our goal is to provide clients and blog readers insights and helpful information in setting agendas and initiatives for the existing year. Throughout 2017, Supply Chain Matters will be publishing periodic updates related to each of our predictions.
Our full 44-page Research Advisor Report is now available for complimentary downloading in our Research Center. We do ask that you provide basic contact information as well as a valid email address and phone number. As a reminder, we do not sell or offer reader and contact information to any third-party.
If we can be of any assistance to your organization in the coming year, give us a call or email us at: info <at> supply-chain-matters <dot> com .
© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
Here is some rather troubling news for pharmaceutical and life sciences supply chains.
FDA News and other India news outlets report that 200 drug manufacturers have been now cited by India’s national drug regulator for noncompliance and “high risk” for quality control lapses as part of an initial effort to crackdown on the country’s pharmaceutical sector. At face value, that represents a troubling portion of domestic capacity.
According to the report, The Central Drugs Standard Control Organization joined forces with state regulators to inspect upwards of 135 drug production facilities across India. Regulators initiated these steps to follow U.S. Federal Drug Administration (FDA) enforcement model guidelines and to address what was described as rampart quality control problems in the country’s drug market.
Apparently, none of the cited drug makers have been publicly named.
A Times of India report published in June indicated that the 200 drug manufacturers were scheduled for risk-based inspections based on an analysis of regulatory data recorded over the prior 5 years.
Global based pharmaceutical and life sciences companies that are currently outsourcing API or drug manufacturing within India should obviously take notice of this development.