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Pharmaceutical Manufacturing and Packing Sourcer

Risk Mitigation: The Invisible Component of Cold Chain Management

The practice of cold chain management continues to evolve rapidly. New developments in hardware, software and global connectivity provide an unprecedented window into cold chain performance. This has led to dramatic improvements in handling, storage and distribution, and the promise of greater cooperation among supply chain partners.

This has also convinced cold chain managers that their monitoring programme must be greater than the sum of its parts. Robust, responsive and accurate dataloggers are essential, as is powerful software and reliable, secure web hosting. However, smart cold chain management looks beyond the visible components of monitoring programmes to address their underlying structure and stability. One of these critical but less visible components is risk mitigation.

Defining Risk Mitigation

Risk mitigation of cold chain management is defined by three key, auditable elements:

  1. IT security and redundancy
  2. Supply chain risk management
  3. Disaster recovery planning

If these three components are properly structured, and if an effective quality management system (QMS) is put in place, the long-term viability and efficacy of a cold chain programme is substantially strengthened, as is the confidence of the cold chain management team.

In addition, knowledgeable managers also look to the stability, industry knowledge and thought leadership of their solution provider as another way to assess the strength and competitiveness of their programme.

QMS Commitment

A QMS represents a company-wide commitment to quality that enhances every activity a business undertakes. Hardware and software products should be tested against rigorous standards, including the National Institute of Standards and Technology (NIST), ISO 9001: 2008, and applicable elements of common good manufacturing practices (cGMP). Companies should also adhere to validation protocols and enforce quality control at every level. The underlying QMS would also ideally be grounded in a well-documented and audited programme of continuous process improvement and incorporate standards in relentless root cause analysis (RRCA) and corrective action/ preventative action (CAPA). Finally, manufacturing principles should consider utilising six sigma and lean manufacturing methods.

Managing Risk

Bearing QMS in mind, the three main areas which must be considered for risk mitigation, mentioned above, are examined in detail here.

1. IT Security and Redundancy

The first key element of risk mitigation focuses on the internal IT resources available to a company, as well as their standards for redundancy and security. New technology offers an innovative solution: a hosted database application, used by customers to collect cold chain and logistical data, monitor shipments and provide notification and alarms. Industry leading systems can work in online or offline modes, reducing impact on the real-time acceptance of product and ensuring data integrity in the event of intermittent internet connectivity at a remote receiving site. Network infrastructure and servers can be made fully redundant to ensure minimal impact for customers in the event of a server or network issue.

Customer-specific databases can be hosted on dedicated application servers in a hardened data centre, located in an offsite, independent facility that provides power sources, redundant points of connectivity to the Internet, and security mechanisms against fire, physical threats and natural disasters. All databases should be monitored and supported 24 hours a day, seven days a week, with a fully replicated mirrored site in a separate geographic region. Data can be synchronised between sites, regularly audited and compliant with Statement on Standards for Attestation Engagements (SSAE) 16.

The application and data hosting components should be built to satisfy the requirements of Food and Drug Administration (FDA) 21 Code of Federal Regulations (CFR) Part 11, including audit trail and traceability for all electronic records, multi-layered permissioning, and backward compatibility for previously acquired data files.

Ideally, customer data should be backedup according to IT best practices. Before the data is stored in an offsite data vault, the back-up process should include encryption and compression; these formats should remain throughout the length of storage. Backed-up data should be tested and verified to be recoverable annually.

Companies looking into the use of this technology should be asking key questions such as:

  • Is data integrity ensured?
  • Is data warehousing adequate and compliant with 21 CFR Part 11?
  • Can these cold chain protocols be audited?

2. Supply Chain Risk Management

Many companies consider temperature dataloggers and their related systems to be critical components of a QMS. Therefore, a disruption in the supply of monitors can lead directly to problems with the shipment of a customerís product.

There are three primary means of mitigating this risk:

  • Adequate safety stock
  • Dual-sourcing strategy for critical components
  • Multiple manufacturing sites

It is crucial for companies to employ high standards in order to meet the goal of adequate safety stock, factoring in the variability of demand at the component, work-in-process, and finished goods levels. The use of a pull-based replenishment system supports global flexibility and drives a high-velocity supply chain. Ideally, suppliers should maintain at least three monthsí finished goods inventory in various global locations, at manufacturing sites and in-transit. Safety stocks can be verified through scheduled reporting and site visits.

Sourcing strategies should incorporate alternate component qualifications, as well as testing and validating goods produced with these components. Quality procedures should ensure continuous testing, from the component specification through to the finished goods level, with quarterly reported statistics. Additionally, unit-level calibration should be linked to the unique serial number at the device level and documented in certificates of validation provided with each order.

Finally, if products are manufactured in various locations around the globe, it is essential that each manufacturing facility has the assets and infrastructure to meet consistent volume requirements. Primary manufacturers may also have remotely located sister companies that support the manufacturerís disaster recovery programme and provide added assurance.

Questions to ask should include:

  • Does my cold chain solution provider keep adequate safety stock?
  • Does my solution provider have a credible plan for the dualsourcing of critical components?
  • Does my solution provider have the reach and supply chain muscle to carry out its plans?
  • Do I feel comfortable that the risk of product disruption is minimised?

3. Disaster Recovery Planning

Companies should also consider adhering to a business continuity and disaster recovery protocol designed to either maintain or resume mission-critical functions in the event of a disaster. Such a plan should specify annual readiness evaluations, in addition to the ability to deploy multiple monitor programming sites and fulfilment operations around the globe. Key practices should mandate the monitoring of adequate safety stock, coverage by appropriate levels of general liability insurance to protect company assets and infrastructure, and immediate notification to customers in the event that disaster recovery is invoked.

Areas of consideration should include:

  • Does my cold chain provider have a business continuity and disaster recovery plan?
  • Is it adequate to meet the needs of my cold chain in the event of a disaster?
  • Are notification practices adequate?
  • Are my cold chain providerís insurance levels adequate to protect its assets and infrastructure?

Putting It All Together

Commitment to a disciplined QMS, rigorous security and redundancy practices, comprehensive supply chain risk management and powerful disaster recovery planning are all essential components of a companyís business strategy. Taken together, these practices provide companies with a high level of risk mitigation and a strong monitoring programme.


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Henry Ames serves as the Vice President of Strategy and Business Development for Sensitech. He joined the company in 2004 as Director of Strategic Marketing. Prior to Sensitech, he was a Principal at Megunticook Management, a venture capital firm, and before that he was Manager of Business Development for Yantra, a leading provider of distributed order management and supply chain fulfillment software. Henry earned an MBA from the FW Olin Graduate School of Business at Babson College, and a double major in Business Management and Entrepreneurship from Florida State University. He is a member of the International Air Transport Associationís Time and Temperature Task Force, the Consumer Healthcare Products Associationís Logistics Committee, and the Parenteral Drug Association.
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