By Dilip Tavargeri
Compliance is the Top Priority
Pharmaceutical Track and Trace compliance deadlines are looming large on the horizon. Next big thing, after India DGFT compliance, is US DSCSA for Indian pharma. Not farther down the line are EU FMD and other global compliance deadlines. It is but natural that global track and trace regulatory compliance will be the top most priority for all pharmaceutical companies that export the products. In view of the track and trace solution complexity, need for engagement of many internal and external stakeholders, significant cash outflow and tight schedules; today companies must strategically align their critical resources in achieving compliance to avoid the major business risks.
Regulatory compliance, product safety and brand protection are the key stimuli to focus on the track and trace program. Below are few key focus areas to meet multitudes of country track and trace deadlines;
After Compliance: What Next?
If we take a pause and ask a simple question; can my company leverage the track and trace compliance to gain operational efficiencies and competitive advantage? The answer is a resounding YES! Companies must ask many key questions.
A significant value can be derived by synergizing the capabilities of advanced analytics, big data technologies and supply chain operational excellence. We feel that some of the areas that can be optimized leveraging the serialization event data are as below;
Inventory Optimization: According to a survey called ‘Preparing the Supply Chain that Pharma Needs’ in 2014 by the management consulting company A.T. Kearney, the average inventories in pharma industry, as measured in number of days of sales (DOS), was 178 days compared with 117 days for the best in class pharma company and 53 days for the consumer goods best practices. Clearly, there is a tremendous opportunity for the pharma industry to optimize the inventory levels across the end to end distribution channel. New visibility gained with the serialized supply chain event data can definitely support inventory optimization efforts that may be already initiated by the supply chain executives. Application of data science and machine learning concepts in the analysis of billions of supply chain events can be helpful in discovering various movement patterns throughout the supply chain. The shelf life expiration predictions can be made effectively to augment inventory optimization without impacting the customer demand for the lifesaving medications.
Supply Chain Visibility: With the added granularity gained in the data with lot numbers and serial numbers, it will be possible to track the supply chain performance effectively on near real-time basis. The internal and external cycle times may be measured and improved with the higher extended visibility into the product movements at individual unit level. Supply chains can leverage these new capabilities to improve the overall performance across the end to end supply chain. It would be possible for all pharma stakeholders to collaborate, improve the supply chain performance, optimize costs and provide a higher value to the patients.
Operational Efficiencies: As per the latest Gartner research on top supply chains of year 2016, only 2 pharmaceutical companies made the cut to the list of top 25 supply chains across the industries. Traditionally, pharma companies have a lower cost of goods sold (COGS) and higher operating margins in comparison to other industries. Although treated as important, operational excellence is not a top priority for many pharmaceutical companies. However, the supply chain managers are always looking for the opportunities to optimize the processes and costs. Serialization and aggregation can be used effectively to reduce the wastage and scrappage in the internal manufacturing processes. One of the critical measures of productivity called OEE (Overall Equipment Effectiveness) ranges between 40% to 50% in the pharmaceutical industry. Plant and line OEEs can be monitored and improved more effectively with the higher granularity and availability of the data.
Competitive Advantage: Finally, can the competitive advantage be gained from the huge investments made in the track and trace initiatives? Every pharmaceutical company must comply with the regulation to stay in business. However, the companies that are forward looking can gain competitive advantage with the innovative approaches towards process improvement and insights through supply chain analytics. Because of the competition and non-exclusivity in the generic industry, the companies that serialize and aggregate can gain advantage over the companies that choose not to aggregate products. Given a choice, the wholesalers may prefer the aggregated products due to operational efficiencies. Companies that can gain better visibility and optimize performance may increase the market share over the companies that look at track and trace as just a compliance requirement.
In summary, there are many benefits to be derived beyond track and trace compliance.
Although the current focus of the companies is to comply with the deadlines; eventually, there will be many solutions and initiatives that will help the pharmaceutical supply chains in providing higher value to the most important stakeholder, the patient.