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Identifying and Strengthening Weak Links in Pharmaceutical Supply Chains

10/2/2020

cargo airplanes at an airport at night

By David Parker

The ongoing COVID-19 outbreak has quickly exposed several possible weak points in pharmaceutical supply chains. If these weak links are not identified and strengthened, it could negatively impact pharma companies on several levels, from quality to compliance to service levels.

Supply chains for pharmaceutical goods start with the suppliers of drug substances, which are also referred to as active pharma ingredients (API). These API suppliers ship them to factories to be formulated. Then, the APIs are shipped to factories where they are packaged. Once this step is completed, the products are sent to companies that distribute the drug products to the end recipient, such as hospitals or pharmacies.

Often, the transportation routes between these various stages can be quite long, requiring trucks, airplanes, trains or ships. Every step along the way, these pharmaceuticals need to be properly stored in order to ensure they remain within a specific temperature range. If the drugs are stored in temperatures that are too high or too low (temperature excursions), the chemical stability of the drug may be impacted. In some cases, temperature excursions can even lead to a change in the drug’s physical properties.

Let’s look at a few typical supply chain weak points:

Poor visibility into inventories. Upstream supply chains include companies like raw material manufacturers, primary manufacturers, secondary manufacturers and drug packaging firms. Typically, these suppliers manage their own inventories, so it can be hard for pharma companies to have much insight into their inventories. This increase in subcontracting has resulted in a deeper tiering of supply chains. In fact, it’s not uncommon to have four or more tiers of suppliers in some cases. There are many issues that can arise from this situation, such as the arrival of goods either too late/too early, missing documentation or demurrage (a charge for the amount of days that an import container is under the control of the shipping line after the free time for pickup has expired).  It’s extremely difficult to have visibility into the entire supplier network without the use of a supply chain visibility platform.

Constraints in air freight capacity can cause shipment delays. Some parts of the world suffer from extremely limited airfreight capacity, leading to shipment delays. In addition, pharmaceutical shipments require special packaging equipment provided by fleet owners. A delay in packaging equipment can also lead to flight delays. Recently, airline execs and forwarders are warning that a severe lack of air cargo capacity will greatly hamper efforts to rapidly distribute a vaccine against COVID-19 once the medicine becomes available. The complex logistics of transporting large volumes of any type of highly temperature-sensitive medicines around the world in a severely capacity-constrained environment will present a daunting challenge for the air freight supply chain.

Consider these latest statistics:

  • Airfreight volume fell more than 27.7% year over year (YoY) in April, according to the International Air Transport Association (IATA).
  • Freight capacity fell nearly 42% YoY in April. International belly capacity fell by about 75% YoY as a result of flight cancellations due to the pandemic, according to IATA.​
  • Global capacity, measured in available cargo tonne kilometers (ACTKs), shrank by 42% in April compared to the previous year (-40.9% for markets).

Temperature deviations can result in spoiled product or reduced potency. Temperature deviations occur when a pharmaceutical product is exposed to temperatures outside the ranges prescribed for storage and transport. Because of this, companies need specific information about the condition, timing, and location of products, raw materials, and product subcomponents based on real-time data. One biotech organization was recently able to save $10 million to $15 million every year after deploying supply chain visibility software that enabled them to get real-time alerts about temperature excursions, avoiding product loss and missing delivery windows.

Partly missing chain of custody is an issue because in developed countries, a handful of large pharmaceutical firms control the market, and regulatory authorities require some form of chain of custody documentation. Chain of custody, when correctly executed, allows organizations to determine “who, what, and when” with a high level of confidence. For advanced therapies, the chain of custody not only includes verification of “who, what, and when,” but also “at what temperature.” Supply chain visibility platforms can provide complete chain of custody reporting, preventing issues such as incomplete shipment records or missing product serial numbers.

Too much of a focus on low-cost freight procurement is a problem; pharma supply chain managers are quickly realizing post-COVID that they can no longer single-mindedly pursue a reduction of costs when it comes to freight purchasing. This is because freight providers might offer their services at low cost, but they are unable to fully integrate with shippers’ processes. It’s important to adopt performance metrics for carriers that guarantee on-time delivery, appropriate service levels, and adequate capacity.

GDP adherence can be challenging. In the US, the world’s biggest pharmaceutical market, the FDA enforces GDP (Good Distribution Practices), which deals with the guidelines for the proper distribution of medicinal products for human use. GDP can be thought of as a quality warranty system, which includes requirements for purchase, receiving, storage and export of drugs intended for human consumption. Sometimes, supply chain service providers are only able to partly comply with GDP regulations. More than ever, the industry must take responsibility to increase visibility in the supply chain and improve relationships among all entities involved in distribution.

Solutions

There are several solution approaches that can mitigate these weak points in the pharma supply chain.

Enable end-to-end visibility into your supply chain – Ensuring that pharma products retain their integrity and safety is a challenge that requires increased visibility into your entire supply chain.

With advanced solutions like Cloudleaf’s Digital Visibility Platform, it becomes possible to get location and condition data all from one source in real time. Modern technologies such as IoT, advanced analytics, AI and machine learning are used to create a digital twin of your supply chain, processing millions of events every second to give you diagnostic and predictive insights including real-time location, condition, utilization and anomaly detection.

Manage raw materials and packaging materials effectively – Supply chain managers must deal with an increasingly complex system of vendors, activity and data to source, produce and deliver pharmaceutical products. Ensuring that there’s an adequate supply and proper management of raw materials is critical.

Digitize supply chain to ensure proper air freight planning – Air freight plays a key role in a healthy pharmaceutical supply chain system. Pre-shipment planning requires forecast data.  Production plans need to be aligned with equipment schedules and travel itineraries. Air cargo carriers are now digitizing their supply chain so that they can achieve greater visibility for their own organization as well as for their customers. By digitizing their supply chain, they can build agility into the supply chain mix, proactively giving supply chain managers more options when dealing with disruptions.

Systematically investigate deviations using a visibility platform – It’s important to systematically capture data about all non-conformity cases, and to use this data as a starting point for investigations and quality assurance. The Cloudleaf Visibility Platform uses AI/ML models to identify anomalies and find exceptions, providing organizations with continuous intelligence from the billions of data points collected throughout the supply chain. Pharmaceutical companies, bill of material suppliers, and service providers can use these real-time insights to improve processes and tighten inventory management.

Obtain real-time, reliable tracking information to ensure quality – Temperature-sensitive products require thermal and refrigerated packaging solutions to preserve product quality. To ensure that temperature-sensitive products don’t spoil or get damaged during transport, companies need accurate, reliable tracking information. With cold chain visibility, managers can get real-time visibility and location-based insights into their temperature-sensitive products, whether they’re in the processing plant, in transit or in the yard. This increased visibility also provides insight into the carrier (3PL/4PL) who is transporting the product at a particular point in time.

Pharmaceutical products require constant monitoring and attention to ensure their stability and viability, especially as more sensitive products bring logistics complexity and expanded risk. By deploying a digital visibility solution, you can identify and rectify weak links in your supply chain. Using a digital visibility platform enables you to get real-time temperature, humidity and location data on your pharmaceutical products, giving you the critical information you need to identify and maintain the integrity of your products.