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Pharmaceutical Manufacturing and Packing Sourcer

Measure for Measure

Risk management is an ever-present requirement in the supply chain, especially when it comes to transportation, but a few simple strategies can be put in place to monitor and minimise potential problems

Life sciences and healthcare (LSH) supply chains are arguably some of the hardest to insulate. Multiple complications can arise due to the very nature of industry itself, including anything from compliance regulation and FDA approvals to patents and counterfeiting – all of which demand different protocol depending on the market in which you are trading. While many factors can impact the smooth running of a company’s supply chain, some events are more difficult to anticipate and therefore pose the greatest threat. Environmental and even social incidents, from the Icelandic ash cloud and the Japanese tsunami to UK riots and socioeconomic or political unrest, will all have prompted businesses across the globe to risk assess their operations.

While these events can’t necessarily be anticipated, planning is vital to ensure companies are adequately insulated against risk. Having a planned and strategic approach to risk management can be a large investment; however, just one incidence of supply chain disruption can have far greater ramifications than cost alone.

This has never been truer than in the LSH industry. In an industry that stakes its reputation on accurate and timely delivery, disruption to the supply chain can have serious consequences, especially in light of key stakeholders and end customers.

The industry was severely hindered during the Icelandic volcano eruption in April 2010. A predominant reliance on air freight distribution of high value, sensitive materials that required temperaturecontrolled transportation meant goods from inventory stocks were used due to a lack of inbound resources. Those with more robust contingency plans in place, such as those that took to re-routing deliveries via road and sea, inevitably fared better during the disruption.

Logistical Challenges

Although not all crises can be anticipated, a company’s supply chain can become exposed to risk on a day-to-day basis simply as a result of the way the company chooses to manage its operation.

As recessionary pressures take hold, LSH companies are looking for ways to reduce the costs in their supply chain, but these measures can unknowingly open the organisation up to greater risk. This is further complicated by the particularly strict level of compliance obligation in LSH. Companies need to try to find a balance between regulation, providing excellent service and cost control.

There are many eventualities to consider. Companies placing an over-reliance on just one supplier can expose the business to risk if that supplier experiences distribution difficulties. Selecting an alternative supplier from the same region could also increase your risk if the same incident hinders both suppliers’ ability to manufacture the product or raw material. Furthermore, while the desire to ‘far-source’ from manufacturers overseas is an appealing prospect, as manufacturing costs tend to be lower, businesses should be mindful that the further the distance a product, ingredient or sample needs to travel, the greater the exposure to risk. A large proportion of LSH supply chains source products from India, Hong Kong and China, but with pressure to trim the fat even further, pharmaceutical production is often outsourced to multiple worldwide locations – separating the production of raw materials, active ingredients, finished products and packaging often by thousands of miles.

Businesses need to expect the unexpected. Often the greatest hindrance to constructing a robust risk management plan is not considering every outcome. To insulate against risk, companies must ensure they plan for a multitude of eventualities, with the successful management of a crisis being achieved through analysing the company’s capabilities in the following key areas:

Multiple Routes

As exemplified around last year’s Eyjafjallajökull eruption, having diversion plans in place away from an incident or event is, at a very basic level, one of the most effective ways to plan for risk. A major part of being able to effectively divert from all and any incidents is the use of multimodal transport.

Multiple Hubs

In addition to flexibility in your supply chain to divert deliveries, businesses must consider multiple global hubs to house these deliveries en route – no matter where in the world the delivery is halted, especially when transporting perishable or time-sensitive items. The ability to re-stock freezer packs or dry ice is recommended even for regular journeys, but this capability in the instance that the delivery has to be diverted is invaluable. Without adequate temperature control the shipment may become worthless – resulting in a loss to both the customer and your business’ revenue.

Communication

Maintaining communication at all times across the supply chain operation is vital. It is only in having full sight across the supply chain that companies can seek to effectively restructure the operation as and when an incident demands. Up to the minute information is required, especially when working across multiple time zones – which is becoming more apparent with far sourcing from multiple overseas suppliers. Having a reliable operation with trained staff working to maintain communication at any time of day is an important factor for mitigating risk.

Intelligence

Ensuring the driver has an understanding of the sensitivities of transported goods is crucial. During transit, the driver is responsible for those items being delivered and as such needs to be equipped to both assess and maintain the integrity of those items on board. It may be that the driver needs to take the decision to divert to either a nearby hub or lab, or top up/refresh dry ice. It’s crucial that businesses invest in training drivers, so they understand the complexities involved in the movement of pharmaceuticals and are adequately placed to make these decisions. To aid this, implementing high spec tracking technologies so that a delivery can be monitored throughout its entire journey is another way to maintain the condition of sensitive packages, alleviating the risk of sample/product ineffectuality.

Navigating Red Tape

In the instance that deliveries get re-routed through a country that is unfamiliar to the organisation, being able to navigate customs regulations and understanding the administration involved in international delivery of pharmaceuticals and samples is vital. Trying to break through these barriers for an inexperienced company may result in unnecessary delays. This may be an area you find you need to seek advice from a relevant trade body or third party logistics provider.

Consistency in Health and Safety

Each business will have its own health and safety standards, and while you can work to minimise risk across the business, ensuring that a strict adherence to procedures is in place across multiple hubs, or even in the suppliers distribution centres itself, is often more complex. Businesses should ensure that high standards of health and safety are being carried out across the entire operation from country to country and from supplier of raw materials to that of active ingredients. Ensuring consistency in procedure from the point of conception to the last mile delivery is vital. Suppliers should adhere to best practice health and safety requirements, working in partnership with your company.

Contingency

In the event that an incident occurs despite careful planning, contingency routes and modes of transportation should be deployed with the sole aim of delivering the shipment immediately.

Conclusion

Allocating sufficient time to research the industry landscape, the markets you plan to trade with, opportune supplier locations, currency rates, customs, compliance procedures, health and safety and training are just a few in a long list of considerations that should be the focus of sophisticated information gathering, before implementing any kind of supply chain framework. The cost of successful implementation may seem high – but disruption to the supply chain may leave your customers dissatisfied, and your revenues and reputation diminished


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As Director of Industry Sales in DHL Express’ Life Sciences and Healthcare sector, Amanda Bridge strategically manages the development of key accounts across global, regional and domestic healthcare markets – driving growth and delivering end-to-end supply chain solutions to customers. Managing a team of five UK Key Account Managers, her role involves the provision of industry expertise and support to all the DHL sales channels, product development, and close liaison with industry bodies and media. Having worked in the healthcare arena for two years, Amanda previously comes from a commercial background spanning 15 years in DHL and holds a BSc in Business Studies. Email: amanda.bridge@dhl.com
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