Gaining a clear view of supply chain visibility
In the pharma industry, companies need to know where products are at any point in the supply chain, but with one of the most complex systems of any industry, what are the pressure points and how can they be managed?
“It should be every organisation’s goal to achieve supply chain visibility for multiple supply chain functions across the organisation, including your partner networks. Supply chain visibility capabilities lay the foundation – the capturing of plans, events and relevant supply chain data – to generate value and mitigate risk for an organisation.”
These comments, made by research organisation Gartner, point to the rising importance of the issue of supply chain visibility across all industry sectors. Given the global nature of the pharmaceutical industry and the size and scope of the organisations that dominate the market, it is unsurprising that its supply chains are some of the most complex in the world. It could be argued that the gaps manufacturers have to bridge are greater than most in achieving enhanced visibility, especially when supply chain complexity is increasing.
Obstacles to visibility
Pharmaceutical companies are ultimately responsible for guaranteeing the control and review of outsourced activities and the quality of purchased materials. For many this is a major challenge due to the obstacles posed by complex multi-tiered supply chains, inadequate IT systems as well as limited experience and resource capacity.
Supply chains have become even more complicated in the last 10 years because of the rise in excipient, chemical, API and CMO suppliers from countries such as India and China. On top of this, mergers and acquisitions can cause short-term lapses in quality control. When the focus is on completing deals as quickly as possible, manufacturing operations must be scaled back, which limits the ease with which supply chain gap analyses, supplier assessments and quality assurance checks (for example non-conformance, out of stock issues) can be carried out.
Lack of oversight, increased risks
Effective supply chain visibility is knowing where inventory is at any given moment. It is also having information and data available from every touchpoint in the supply chain that can be used to identify inefficiencies, monitor suppliers, ensure product compliance with industry standards, eliminate fraud and support service providers and customers. This helps manufacturers to respond quickly to disruptions, thereby improving processes and lead times, minimising waste, and increasing performance and profitability.
When visibility is poor, risks to operations inevitably increase. A specific example of this is an unexpected delay in production when materials received from further down the chain fail to comply with industry specifications or lack required certifications. Further operational delays arise when materials underperform in the manufacturing process, perhaps due to poor shipping controls or data integrity issues at the supplier that internal auditors were not trained to recognise. Poorly-written quality agreements with suppliers pose potential risks to businesses by exposing them to possible shortfalls in required drug products, reduced quality issues, broken contracts, an inability to impose penalties and, at the end of the day, lost business.
Pharmaceutical companies are not alone in their struggles to improve supply chain visibility. The Geodis 2017 Supply Chain Worldwide Survey of 623 supply chain professionals in 17 countries gave an insight into their challenges in this area. 70% of firms described their supply chain as ‘very’ or ‘extremely’ complex and only 6% said they had ‘full visibility’ of their entire supply chain.
So what can manufacturers do to address the problem? Processes need to be implemented that give businesses the power and knowledge to manage, control and review their outsourced activities and the quality of purchased materials at all points in the supply chain. Quality risk management and regular monitoring and review of suppliers, using periodic scorecard assessments, interim re-audits, and supplier corrective action reports (SCAR) should all be central to this. Equally important is the production of clear and organised supplier and quality agreements that leave no room for misinterpretation of requirements or vulnerability to legal loopholes.
Detailed records should be kept of the quality, and timely receipt, of materials. This information is every bit as important as other metrics in the evaluation of the constituent parts of the supply chain. Ensure on-site audits are in place and for-cause investigations conducted.
Suppliers should be regarded as partners provided they share information and act in accordance with the company’s expectations. Having an integrated IT infrastructure will make knowledge-sharing easier while facilitating real-time data that allows a proactive and spontaneous response to irregularities in the supply chain and the ability to manage fluctuating demand and capacity efficiently.
Finally, pharmaceutical companies must continually monitor geopolitical and geographical situations in order to anticipate and mitigate the risk of potential disruption to the supply chain from, for example, natural disasters such as earthquakes and floods or volatile political situations at home or abroad.
Reaping the benefits
Partnering with outsourced consultants can help to bridge the gaps in supply chain visibility. Enhanced visibility helps to identify and eliminate delays before they cause disruptions to the supply chain, maximises product profitability by cutting out wasteful processes and reduces inefficiencies. It also allows all tiers of the supply chain to work more effectively as partners, sharing information and real-time data to guarantee quality and demand levels are met – which, in turn, brings greater adaptability, integrity and profitability.
About the author:
Steve Cottrell is the President of Maetrics. He has long experience in the life sciences sector, working on business process outsourcing, strategic sourcing and clinical trial offerings.