In 2020, the COVID-19 pandemic caused widespread disruptions in the pharma supply chain, leading to shortages of critical drugs and medical supplies. The pandemic highlighted the critical importance of supply chain resilience and the need for effective supply chain risk management. In response, pharmaceutical companies and their suppliers took a range of steps to mitigate the impact of the pandemic on the supply chain.
As we are all acutely aware, the pharma industry is highly regulated and relies on a complex global supply chain to ensure access to products, patient safety and product quality. However, supply chain disruptions are common and can have serious consequences for patient health and safety. In this article, we’ll explore best practices and solutions for reducing pharma supply chain disruptions, and actionable tips you can put into practise tomorrow to ensure a more flexible, resilient supply chain in the future.
Develop a Robust Risk Management Strategy
A robust risk management strategy is essential for reducing pharma supply chain disruptions. This strategy should include regular risk assessments, contingency planning, and ongoing communication with suppliers to ensure they have robust risk management procedures in place.
Without a risk management strategy, companies may not be adequately prepared to deal with potential supply chain disruptions, and may not have the necessary plans and procedures in place to minimize the impact of those disruptions.
In 1982, seven people in the Chicago area died after consuming Extra-Strength Tylenol capsules that had been laced with cyanide. This incident led to a nationwide panic and the eventual recall of 31 million bottles of Tylenol, costing the manufacturer, Johnson & Johnson over $100 million. The incident also led to significant changes in the way pharma companies manage their supply chains and handle product recalls.
At the time of the Tylenol recall, J&J did not have a robust risk management strategy in place. The company was unprepared for the crisis and lacked contingency plans for dealing with such an event. Furthermore, the company did not have adequate communication channels in place with suppliers and regulators.
The Tylenol incident highlighted the critical importance of supply chain risk management in the pharma industry. In response, J&J implemented significant changes to its supply chain management processes, including the introduction of tamper-resistant packaging and enhanced communication channels with suppliers and regulators. The incident also led to increased scrutiny of supply chain management practices in the pharma industry and the development of new regulations and standards.
Monitor and Manage Supply Chain Risk
Supply chain risk can arise from many sources, including supplier underperformance, natural disasters, cyber threats, and geopolitical instability. Pharmaceutical companies must have a robust system in place to monitor and manage these risks. This can include contingency planning, dual sourcing, and regular communication with suppliers to ensure they have robust risk management procedures in place.
Contingency planning: Plan to minimize the impact of potential supply chain disruptions by identifying risks and developing strategies to mitigate their impact.
Dual sourcing: Working with multiple suppliers for critical inputs to ensure continuity of supply and reduce the impact of disruptions.
Regular communication with suppliers: Establishing clear communication with suppliers to ensure they are meeting your requirements and to identify potential risks early.
Establish Clear Communication Channels
Effective communication is critical for managing supply chain risk. Pharmaceutical companies should establish clear lines of communication with suppliers and encourage them to report any potential risks promptly. This can help to identify potential risks early and ensure that suppliers are taking appropriate steps to manage risk. Some examples of communication channels are:
- Site visits/regular audits
- Phone or email conversations
- Regular meetings
- Web-based tools and software
Conduct Regular Supplier Assessments
Regular supplier assessments are essential for ensuring ongoing supplier compliance and identifying potential risks. These assessments should involve on-site audits, documentation reviews, and communication with suppliers to ensure they are meeting your requirements. Some reasons why these kinds of assessments are crucial include:
- Ensuring Regulatory Compliance: The pharma industry is highly regulated, and compliance with regulations is critical to patient safety and product quality. Regular supplier assessments help to ensure that suppliers are compliant with regulations and standards, such as Good Manufacturing Practices (GMPs), Good Laboratory Practices (GLPs), and Good Clinical Practices (GCPs) and many more
- Identifying Potential Risks: Regular supplier assessments can help to identify potential risks in the supply chain, such as compliance issues, quality issues, or process inefficiencies. Identifying these risks early can help to prevent them from becoming significant problems that could impact patient health and safety.
- Improving Supplier Performance: Regular supplier assessments can provide feedback to suppliers on areas where they can improve their performance. This can help to improve the overall quality and reliability of the supplier, which can enhance patient safety and product quality.
- Maintaining Supply Chain Transparency: Regular supplier assessments can help to maintain supply chain transparency, providing insight into the processes and practices of suppliers. This transparency can help to build trust between the supplier and the pharmaceutical company and ensure that suppliers are meeting the company’s requirements.
- Mitigating Potential Disruptions: Regular supplier assessments can help to mitigate potential supply chain disruptions by identifying potential issues early. This can help to develop contingency plans, prevent delays in product delivery and ensure that the pharmaceutical company can maintain a reliable supply chain.
Invest in Technology:
Technology can be a powerful tool for reducing pharma supply chain disruptions. For example, blockchain technology can be used to improve supply chain transparency and traceability, while artificial intelligence and machine learning can be used to identify potential risks and opportunities for improvement. Some examples of companies who have embraced technology to secure their supply chains include:
Pfizer: Pfizer uses blockchain technology to improve supply chain transparency and traceability. The company’s blockchain platform allows for the secure sharing of data and ensures that all participants in the supply chain have access to the same information.
Merck: Merck has implemented an advanced analytics platform to monitor and manage supply chain risks. The platform uses machine learning algorithms to identify potential risks and opportunities for improvement, allowing the company to take proactive measures to mitigate supply chain disruptions.
Novartis: Novartis uses digitalization and automation to optimize its supply chain processes. The company has implemented a range of digital tools, including artificial intelligence and robotic process automation, to improve supply chain efficiency and reduce the risk of disruptions.
GlaxoSmithKline: GlaxoSmithKline (GSK) has implemented a cloud-based supply chain management platform to improve collaboration and communication with suppliers. The platform allows GSK to track supplier performance in real-time and identify potential issues before they become significant problems.
Sanofi: Sanofi has developed a data analytics platform that uses machine learning algorithms to analyze supply chain data and identify potential risks. The platform allows Sanofi to take proactive measures to mitigate supply chain disruptions and ensure continuity of supply.
In sum, effective supply chain management is critical for ensuring access to products, patient safety and product quality in the pharma industry. To reduce pharma supply chain disruptions, companies must develop a robust risk management strategy, monitor and manage supply chain risk, establish clear communication channels, conduct regular supplier assessments, and invest in technology. By following these best practices and solutions, pharmaceutical companies can mitigate potential risks and maintain a reliable supply chain.