The pharmacy industry must evolve its supply chain to survive
The US pharmaceutical sector was left reeling by Amazon’s recent acquisition of online pharmacy start-up, PillPack, with stocks in a handful of traditional pharmacy businesses suffering combined losses of up to $15 billion of market value.
Although happening on the other side of the Atlantic, it raises some interesting questions for the UK marketplace, itself facing uncertainty as it waits for the implications of Brexit negotiations.
Patients are now looking for the same levels of convenience that have become normal in other areas of their life. This presents a significant challenge to “more traditional, product-centric companies” that have not necessarily thought through the impact of a more patient-centric approach to their supply chain.
Pharmaceutical companies have always been responsible for the consistent and timely supply of drugs. Now, though, the fast, accurate distribution of drugs to homes, hospitals or pharmacies, which can be tracked and traced all the way from the drug company, is the norm. This has created a demand for joined-up systems and processes that support this level of visibility and efficiency.
The ability to monitor and control the supply chain at all times is obviously key for pharmaceutical businesses. A study by Supply Chain Media, involving 67 pharmaceutical supply chain executives, found that supply chain visibility was a significant challenge facing the industry, with loss of control and deteriorating service levels also being major concerns.
These challenges are being met by a host of connected technologies that introduce intelligence and visibility into every step of the healthcare supply chain. In fact, recent research by GlobalData has claimed that the Internet of Things (IoT) is transforming the pharmaceutical industry at a rapid pace, with the potential to enhance almost any process within the industry. Spending in software and services is expected to reach £1.7 billion globally by 2020.
Increased connectivity — using devices, software and systems that communicate with each other — delivers the control needed by making it possible to gather operational data, analyse it and, when appropriate, automate the corrective action.
What we are seeing with IoT is complementary technologies working together to create a joined-up and connected approach that provides visibility at every single step of the supply chain.
With transport an essential link within any pharmaceutical logistics operation, companies must harness the technology available to streamline their operational processes, improve the overall delivery experience and achieve regulatory compliance.
Each individual organisation’s needs will define what is required but can cover a wide range of connected technologies, such as routing and scheduling, transport management, vehicle tracking and electronic proof of delivery.
Transport has a key role within the supply chain and, if approached correctly, it can reap rewards in terms of operational efficiencies, productivity improvements and cost savings. Using routing and scheduling software with the ability to plan at an individual driver or vehicle level, for example, will typically mean the creation of achievable delivery schedules with highly accurate time windows.
This not only results in measurable cost enhancements, but also performance benefits that improve the delivery experience for customers.
Distribution operations that then integrate telematics systems with routing and scheduling software enable their transport offices to compare the plan against what is actually happening on the road in real-time. This means that it’s not just possible to offer more accurate estimated times of arrival (ETAs), but also provide more meaningful customer communications.
Live warnings of any discrepancies — caused by unexpected issues such as heavy traffic, vehicle breakdowns or delays at a previous delivery point — mean steps can be taken to mitigate any negative impact. Automated email or SMS communications are also a useful way to provide customers with regular updates regarding delivery status or any potential changes.
Good Distribution Practice (GDP) outlines a set of procedures that are to be followed by any EU company with an involvement in the pharmaceutical industry. It requires that medicines are obtained from the licensed supply chain and are consistently stored, transported and handled under suitable conditions.
Any transport operation — whether third-party or in-house — is therefore responsible for protecting medicinal products from damage, contamination and theft, as well as ensuring conditions are maintained within acceptable limits while products are in transit.
The MHRA, responsible for monitoring GDP within the UK, does inspections to ensure compliance with the guidelines. Although this should be relatively straightforward to demonstrate in a manufacturing or distribution site, how does a manufacturer have an appropriate audit trail when goods are in transit?
It is necessary to show that shipments are being managed correctly, are secure at all times and have not been tampered with, and have been kept in the right conditions within appropriate temperature and humidity ranges.
The trend toward integrated technology solutions is contributing to enhanced compliance with GDP requirements during the transport process. Routing and scheduling software can ensure transport plans are created and managed within strict predefined parameters.
All deliveries should, as a result, be completed using appropriate vehicles and drivers with the necessary skills and training, within a specified duration and highly accurate time windows. Such an approach will enable a manufacturer to have consistent, compliant and optimised plans, but how is it then possible to ensure they are followed when vehicles and drivers are on the road and out of sight?
Integrating routing software with telematics technology makes it possible to compare planned versus actual performance using real-time tracking information. In addition, sensors within the telematics system can trigger alarms related to temperature and humidity deviations or any unauthorised tampering, which will help to minimise potential spoilage losses and reduce the risk of theft.
Paragon’s recent UK customer survey showed a shift in what people are looking for from transport services, with a staggering 85.6% saying that customer expectations had increased in the past 12 months. Amongst the respondents were a number of pharmaceutical businesses and logistics providers operating within the sector, so the findings offer a useful snapshot of current marketplace opinion and highlight how manufacturers are having to adapt to keep pace with changing demands.
The overriding reason behind the increasing customer expectations was the request for greater levels of visibility and accuracy, which included the provision of faster and more regular deliveries, as well as increased reporting and real-time communications.
However, this was typically expected to be achieved without driving up transport costs, so companies face the unenviable task of having to continually improve service levels without eroding already tight margins.
The importance of additional and more complex patient-specific services — such as prescription management, homecare services and home delivery — is also set to be a growing consideration for the pharmaceutical marketplace.
Patients are now expecting personalised care, delivered in-home at a time convenient to them, so advanced technology solutions are going to play an increasingly important role for those involved in the provision of these services.
The pharmaceutical sector must find clever but proven ways, using technology, to enhance the delivery experience without increasing costs and while achieving the necessary levels of compliance. Optimising planning will invariably create a more streamlined operating model, enabling these businesses to enhance performance while keeping costs to a minimum.