Pharma must map its supply chains to manage risks and rewards of emerging markets

Dr. Robert Brooks explores why pharma must map its supply chains in emerging markets.

In the last few years we have seen a whole raft of supply chain disruptions hit the pharmaceutical sector, but to mitigate the risk of increased supply chain disruption, pharmaceutical companies must map their supply chains, to gain visibility and manage their entire supply chain more effectively.

As a truly globalised industry, Pharmaceutical and Healthcare is increasingly turning to emerging markets to develop new business opportunities and reduce costs by diversifying the manufacturing supply chain.

This offers something of a 'double edged sword' because while emerging countries are potential 'lands of opportunity', they also present a wide range of potential risks. These nations are 'emerging' because they do not always have the same standards in terms of regulations and compliance, ethics, CSR, social and environmental aspects.

As the complexity of Pharma supply chains increases, so does the potential risk for global Pharmaceutical companies, who in the last few months alone have seen their reputations and even share prices damaged by a string of supply chain scandals involving lower level supplier based all over the world.

Both the FDA and the EMA have cited the 'Globalisation' of supply chains as a key factor in supply chain disruptions and the resultant shortages of drugs.

How can Pharma companies be proactive to prevent and mitigate disruptions in the supply chain?

As recent news stories in Pharma have shown, supply chain incidents can occur at all levels within the supply chain.

The best way to address this is for Pharmaceutical companies to implement a single, global platform to collect, manage and evaluate the risk of all, suppliers across all countries. This facilitates the collection and coordination of all information – from basic company details right through to in-depth information such as audit results, financial assessments, bribery and anti-corruption policies and details on ethics and sustainability practices.

With this core understanding of key suppliers' activity, Pharmaceutical companies could then map their supply chains, to find out exactly who is supplying products through all the many tiers.

How to map the supply chain

A facilitated request for collaboration and information exchange through multiple tiers – evaluating each supplier and who they work with.

• Information from the right source is key – With an accurate database in place, buyers can implement programmes that send 'cascading' requests for information down through all the tiers of the supply chain to give total responsibility

Once all the suppliers have provided information, pharma companies can proactively identify and mitigate potential risks for the supply chain as a whole, for specific suppliers and for end users consuming our products.

• Collaborative working – Cross Divisions, Cross Sector - It is not easy for any individual company to create a supply chain map in isolation. In our experience, the most efficient and effective way to build a map is by working collaboratively with other similar companies to share the effort and cost.

There is no competitive advantage for any pharma company to see its rival struck by a supply chain incident as one issue affects all; particularly in cases where main buyers rely on the same suppliers

"Mapping your supply chain might seem like a big task but it isn't just a 'nice to have;' it's a way to get ahead and show value all the way up the C-suite."

• Motivate suppliers – It is crucial to get buy-in from suppliers because without their help, supply chain mapping cannot be achieved.

At first, some suppliers may be hesitant to release information, particularly if they feel the details are sensitive. As a buyer, it's important to explain the need for the exchange of information and reassure suppliers that they can control who has access to their information and that confidentiality can be maintained.

• Setting standards - Once pharma companies have agreed a consistent way of evaluating potential suppliers, they can set and implement standards that any supplier must achieve in order to be eligible for business.

When an understanding of the risk profile of each supplier, Pharma companies can implement continuous improvement and action plans to address any potential issues and help suppliers achieve the required standards.

Avoid the domino effect and act

The recent Dodd-Frank 'Wall Street and Consumer Protection' Act requires companies to report on their use of 'Conflict Minerals' – metals sourced in mines that fund terrorist activity. With mounting scrutiny of businesses' operations and ethics, how long will it be before that principle is applied to the provenance of all product components?

Mapping your supply chain might seem like a big task but it isn't just a 'nice to have;' it's a way to get ahead and show value all the way up the C-suite.

About the author:

Dr Robert Brooks is Director of Pharmaceutical and Healthcare at Achilles – which protects businesses from supply chain risk.

Closing thought: How can pharma companies be proactive to prevent and mitigate disruptions in the supply chain?