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Jul 6, 2017

Why the Supply Chain is So Important Toward Supporting Business Success


Pharmaceutical, healthcare delivery and
food-related supply chains have a
critical and important mission of insuring
agility, resiliency and more timely
and successful business outcomes.

by Bob Ferrari

 

Managing Director, The Ferrari Consulting and Research Group


Founder and Executive Editor, Supply Chain Matters blog


Let me begin this guest commentary hosted on the MasterControl GxP Lifeline blog with a brief introduction to readers.

I term myself as an observer of multi-industry supply chains from respective management practitioner, technology implementer and industry analyst roles. I founded the SupplyChain Matters blog nine years ago to help industry supply chain teams understand the interactions and contributions of the supply chain toward responsive business processes and effective implementation of technology to support ever-changing business needs and requirements. I purposely selected the name of our blog masthead to reinforce to our readers that supply chains, along with their associated people, process and technology capabilities do matter toward supporting positive business outcomes.

Many readers of this MasterControl blog reside in regulated industries: pharmaceutical, life sciences, medical device or consumer products.  Thus, readers are fully aware and sensitized to the critical importance of consistent product quality, regulatory compliance, and process controls. It is literally the DNA in terms of overall perspective, including that of respective supply chains.


But, as is occurring in many industry settings today, supply chains have become much more complex and dynamic, with needs to support an accelerated rapid clock speed of business, more sophisticated and tech-savvy consumers, patients and/or suppliers, along with investor needs for greater returns in overall investment value. The supply chain is now increasingly looked upon as one of the critical enablers to address many if not all of these changing business needs, and supply chain leaders need to continue to be empowered to lead and educate business leaders on people, process, and technology initiatives to successfully address such challenges.

Some History


When we launched Supply Chain Matters in 2008, one of our first topics of blog coverage were incidents involving supply chains across China that experienced contamination of the life-saving drug heparin, pet food, and milk powder. Such incidents reflected a consistent pattern of initial high visibility and regulatory focus to the targeted contaminated end-product, followed by days or months of tracing back to the origins of the raw material uncovering the real scope and magnitude of the problem.  This often proved to be too late and too time-consuming to protect consumer safety. 

In 2012, the pendulum shifted towards global-wide shortages of life-saving drugs due to many domestic and global-based API suppliers either unable to produce required quantities or having to suspend production operations because of regulatory inspections citing lapses in good manufacturing practices. Agencies subsequently had to alert doctors and healthcare providers that in light of severe shortages of hundreds of drugs, there were clear signs that unauthorized or counterfeit versions of these drugs had infiltrated global supply chains.

Since that time, there have been more incidents of counterfeit drugs, critical supply shortages of life-saving drugs and increasing national debates focused on the higher costs of drugs and medicines. All have fueled increased regulatory legislation and scrutiny among the industry’s globally focused supply chains.



Over this same period, the pharmaceutical and life sciences sector has experienced a high level of merger and acquisition activity that has compounded the challenges for alignment of supply chain goal perspectives and important initiatives for supporting business needs. Multiple processes, systems and technology utilization continue to be rationalized.

Realities of Global Supply Chains


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.

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. In our exchange of guest blog posting, Alex Butler, medical device product manager, MasterControl, pointed out to our Supply Chain Matters reading audience:

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.

I would add that like increasing sophistication of cyber-crime criminals in stealing critical data, so is the sophistication of unsavory individuals in profiting from the high cost or limited supply of certain drugs and medicines.

The supply chain is smack in the middle of these two business needs and must provide the leadership and pathways for addressing many of these challenges.


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Recommendations and Insights for Supporting Business Success


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.

To perform this mission, industry supply chain teams need to provide a keen focus on fundamental core competencies that can support multiple missions. We recommend a dedicated focus on five key competencies:


Continual Alignment of Stakeholder Interests


Because your industry supply chain is unique, and includes global sources of supply and manufacturing along with multiple intermediary inventory handoffs, the alignment of supply chain-wide stakeholder interests is a continual need and important capability to insure proper context in key supply-chain decisions. The reality is that there are multiple customer and business interests, and it is important to have context to each.


Increased Partnerships


Pharmaceutical and life sciences companies, regardless of size, do not necessarily have to excel in the many aspects of end-to-end supply chain capability. Today there are multiple suppliers, trading partners, distributors, customer buying groups, transportation and third-party logistics providers that span the supply chain. Partnerships provide the opportunity for more detailed expertise in process, product, and other forms of required innovation. With today’s more global-wide scope, deeper partnerships take on increased significance in overall supply chain mitigation and needs for added agility to constant business change.


Control and Compliance


A mandate for stringent monitoring and control of all supply chain-related processes increasingly calls for the digitization of control mechanisms spanning the supply chain. That implies increased leveraging of automated and cloud-based software applications that monitor and alert to product abnormalities, product expiry, audit, and/or supplier compliance needs. Increasingly, electronic submission and response to product recall or product and process documentation is a requirement as well.


Supply Chain End-to-End Visibility


In many industry settings, supply chain end-to-end visibility has become essential. This capability especially applies to supply chains that deal with saving of lives and supporting of quality healthcare services. Having the earliest warning to potential product or process abnormalities, the ability to rapidly determine root causes, and the most timely data for critical decision-making, are by our view, important table stakes for your supply chain.


Continual Prioritization


With so many global-wide complexities, controls, and ongoing business changes inherent in the supply chain, and in line-of-business changes, it is important that supply chain leaders maintain a vigilant prioritization process, integrated with various stakeholders, that insures that all supply chain participants have a clear sense of top priorities, near and longer-term deliverables. This is especially important because the availability of skilled supply chain- related talent has become a multi-industry problem.  Existing people and resources need to clearly understand the timelines of business and regulatory compliance needs, process and/or supply chain related changes.

Pharmaceutical, healthcare delivery and food-related supply chains have a critical and important mission, and increasingly, that mission is concurrently internal and external in scope and impact. The mission is now one of insuring agility, resiliency and more timely and successful business outcomes. 



Bob Ferrari is a highly visible supply chain technology executive, noted industry analyst and consultant, with demonstrated and proven experience in business planning, process, and information technology transformation.  His focus spans global supply chain transformation and enabling information technology strategies. He is known and respected as a supply chain visionary and thought leader with a keen understanding of global supply chain business and technology trends.The author may be contacted via email: info@supply-chain-matters.com

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