Ways pharmaceutical can lessen the risk in global supply chains

4 November 2013

Robert Walmsley

Robert Walmsley

Global SAP Alliances Director

In recent years, it’s become increasingly apparent that the pharmaceutical supply chain needs a systematic adjustment. Complex supply chains have become under-utilised, inefficient and ill-equipped to cope with demands for new products. Due to increased threats stretching companies to breaking point, the long supply chains are naturally at the forefront of big pharma concerns.

Prominent threats include:

  • Global increases in counterfeit drugs

  • Risks with price, warehouses and supplier delays

  • Logistics delays and disruptions due to environmental reasons

  • Demand fluctuations

Here are some ideas supply chain managers of pharmaceutical companies can implement towards meeting these challenges in their company’s supply chains.

Enhanced traceability through serialisation

As one of the long-term banes of the pharmaceutical industry, increasingly small margins are profoundly influencing activities. Adopting new approaches towards traceability in a world of lengthening supply chains is critical.

Factors such as the increase in counterfeit medicines – believed to stand at 7% globally – have impact negatively on this. But also increasing is technology coming to the industry’s aid to help better control of medicines, with a range of packaging and labelling products becoming available to tackle the problem.

However, making sure this technology is fully integrated into the pharmaceutical supply chain is the only way to ensure companies can gain a full track and tracing solution that will effectively deal with counterfeiting.

Robust ERP

But in order to achieve this, an ERP system fully integrated into the supply chain is essential. Many vendors now provide this, including the multi-faceted big players – Oracle, Epicor, Sage – and more smaller companies providing niche, pharmaceutical supply chain software. A key method of increasing traceability is through the adoption serialisation as a tool also brings with it huge benefits.

Not only does it keep abreast of the supply chain process, but it also helps enhance patient understanding and patient safety, while combating the counterfeiting proving so costly. While current serialisation adoption in the industry stands at around 50% currently, there are still many companies yet to implement it, despite its relatively low-cost.

While R&D investment has grown above inflation over the last 30 years, the importance of IT solutions has been overlooked in comparison.

Supply chain analytics

Increased examination of the supply chain process through analytics is another effective method in identifying problems and improving efficiency. But due to the sheer scale of the supply chain, it can prove a complex process even for an innovative tool such as analytics. Manufacturers must examine which suppliers are the best and most efficient, as identifying the more efficient suppliers will ensure the supply chain works better. This can also have a positive impact on inventory, accounting for an accurate analysis of supply and demand.

The power of prediction

Using data to enhance prediction capabilities allows for issues and risks to be predicted earlier, such as seasonal spikes in demand. It also optimises inventory accordingly, giving efficient and accurate reports. This also accounts for overstocking and understocking, two longstanding industry burdens.

The former causes waste and force companies to lower prices to get rid of old stock in order to prevent heavy losses. The latter creates losses as the company will need to back order and sometimes need to compensate the customer for waiting. The worst case scenario is that customers deviate to competitors to get their order done on time, rather than wait for the back order.

Analytics can provide the catalyst for pharmaceutical companies to predict such based around stock control and supplier performance, allowing organisations to work with their suppliers before problems arise.

But if the pharmaceutical sector is to get to grips with its supply chains, it needs to start looking at its organisational processes from start to finish. While unsuccessful trials remain common and critical threats will only increase through the continued march of globalisation, the need for an industry step change in how supply chains are optimised is now.

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About the author

Robert Walmsley

Global SAP Alliances Director

SAP evangelist. Accountant and programme manager

After moving from IT programming into ERP systems, I qualified as a management accountant in order to understand what my clients were going through. I have ended up helping clients of all sizes and sectors by providing business-focused solutions based on SAP technology and I now spend my time working with Bluefin and SAP account teams to facilitate joint solutions that have the capability of adding real business value to our joint clients.

I recognise that it is often a challenge just to get sufficient headspace in today’s world to understand what value current and future SAP offerings could have for an organisation– so I focus on harnessing the innovation taking place within Bluefin and making it accessible for my clients. This is anything from Big Data, Mobility and Cloud, to deliverables like process efficiencies and reporting in areas such as margins, plans and forecasts.

Outside of work you’re likely to find me struggling to keep my house and garden in some kind of order, or supporting one of my children on the sidelines of a rugby, football or tennis match.

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