From the source of raw materials to the end customer – which for a pharma company is the patient, firms need to track the flow of goods and information. This is critical for the pharma sector since adverse conditions during transportation can reduce the potency of the product and in some cases cause adverse reactions. It is well known that supply chain visibility in India is restricted to CFAs and in some cases the distributor. But regulators around the world insist on complete visibility. SCMPro brings you a perspective.
Normally supply chain is an invisible part of the organization – till something goes wrong. Then everyone notices the supply chain. At 100 percent, no one says thank you, but at 99 percent, the knives are out. This is the experience of the supply chain professional. We know the big pieces of our supply chain. And we are trying to get them to work together. Arguably, the largest piece of our supply chain is surface transport. But we still cannot ensure that the driver who is driving the truck knows about the cargo he is carrying. Is he able to differentiate between potatoes and injectable? Therefore, what kind of care will he take and what kind of visibility will we have. And pharma companies have to depend on third party – in this case, the truck owner – for visibility. The need of the hour is to develop deeper trust among the different stakeholders – more than visibility. And in an environment where trust is higher than visibility, the chances that things go wrong are high. We need to improve visibility, but keep trust just as high. We need to also remember that the value of a medicine to a patient in the ICU is much more than the price.
Supply chain managers have to prepare for a fragmented supply chain – and be able to apportion accountability to this fragmented chain. They need to identify the primary, secondary, and tertiary players and be able to hold them accountable for their role.
It is time pharma companies spend some time training the stakeholders about the expectations. One way is to be transparent about the performance criteria for the entities in the supply chain. This helps bring visibility to the chain. In this way, they can address the complexity of the supply chain –resulting in a consolidated and integrated supply chain. There will be no more surprises. Another factor is how to treat the stakeholders. If we have to develop greater visibility, we also need a more humane approach to the stakeholders.
We are all familiar with the visible parts of the supply chain – the movers of products. At the same time there is a silent army working behind the scenes to keep the chain moving. In the Indian system, bad news does not travel at all – they are loath to bring bad news. However, entities need to realize that if they pass on the news in time, firms can take pre-emptive action to reduce its impact. Simultaneously, the consequences of nonperformance should also be defined. Once the stakeholders realize that nonperformance will not be tolerated, they will align.
The use of technology is at the core of visibility. Supply chains will increasingly use technology, which will enable collaboration across the spectrum. Technology allows firms to track goods throughout its journey. Third party service providers have emerged who can provide the industry with real time visibility. But for that to happen, industry needs to jettison cost based thinking, and embrace service quality.
There is a convergence of efficiency and effectiveness in supply chains. Pharma companies need to balance the long term advantages of visibility against the short term cost viability. Transparency is the foundation of good partnerships, and partnerships bring visibility. Firms need to resist the urge to cut costs without understanding its impact on quality of service. At the same time, supply chain professionals need to take VUCA leadership – leadership which can handle Volatility, Uncertainty, Complexity, and Ambiguity.
However, firms need to understand the desire to cut costs – everything a firm does is a function of the bottom line – either profit or profitability. They need to move from a cost centric thinking to a profit centric thinking. When the CFO asks for a cost cut, she is really asking for more profits. If this is the case, there are two ways to boost profits – one is to keep sales the same and drive costs down, and the other is to boost sales and the increased revenue will be able to absorb the delta costs. End to end supply chain visibility is less about technology and more about having the right mindset – of doing a win-win business.
As a good practice, India needs to develop transparency in its pharma supply chain. As an industry, we owe it to the patients. In any case, as India integrates with the global pharma supply chain, we will need to deliver better track and trace capability. Track and trace capability helps the patient know the life cycle of the prescription drug, from where it is manufactured, who is repackaging it, who is distributing, when it is prescribed and when it is sold. A major component of track and trace is serialization.
Serialization is a major step in ensuring end to end visibility. As on date, around 40 countries have introduced track-and-trace laws to help regulate product as it passes through the supply chain. Serialization is a core component of this effort to ensure transparency. Serializing product is assigning a unique, traceable number to individual saleable units of the product. Serialization is a complex process. With serialization, the focus shifts to producing a product, identifying each item with unique data, communicating that data to supply chain partners, and then—depending on the supply chain role, accounting for that data for several years to come. ♦♦♦♦♦