Survey issued by TraceLink and IDC cites various challenges for pharma shippers amid COVID-19

While there have been some positive developments, in recent days regarding new vaccines for the ongoing COVID-19 pandemic, a white paper issued today sponsored by North Reading, Mass.-based TraceLink, a provider of supply chain visibility platform services for the life sciences supply chain, in collaboration with research firm IDC, highlighted the myriad challenges that the pandemic has wrought upon pharmaceutical shippers.

The white paper, entitled “Supply Chain Agility in the Pharmaceutical Industry,” was based on feedback from 532 surveyed global supply chain leaders across organizational levels and functions in pharmaceutical companies, wholesale distributors, hospitals and pharmacies.     

Some of the major challenges pharmaceutical shippers are up against, according to the findings of the survey, included: challenges with drug shortages, limited access to critical medicines, increased production costs, and rising concerns related to drug counterfeiting, diversion, and theft. What’s more, these challenges are coming at a time, when the sector prepares for a third wave of COVID-19 and readies for the safe global distribution of COVID-19 vaccines, testing, and treatments, the companies said.

Some of the survey’s key findings included:

• 46% of respondents have experienced drug shortages during the pandemic, with an equal impact on COVID-19-related treatments and those unrelated to COVID-19, but impacted by supply disruptions;
• 75% of respondents agree that the pandemic has or will greatly increase problems with drug diversion, including theft and counterfeiting of critical products (such as test kits, vaccines and anti-viral medicines);
• 70% of respondents agree that their supply chain is very vulnerable to suffering more problems with the continuation of the pandemic;
• Stockpiling medications, transportation delays and increased costs were among the primary COVID-19 challenges after drug shortages;
• On-time, in-full (OTIF) delivery of medicines to patients and from suppliers (a standard metric for supply chains) had degraded by ~50% within the first few months of the pandemic;
• 65% of respondents can no longer accurately plan supply and 63% have lost faith in their demand forecasts;
• Nearly half (43%) of respondents say they lack the necessary agility and redundancy to survive major business disruptions; and
• Only about 6% of companies are actively pursuing patient-centric transformation and only 14% are concerned about end-to-end visibility as a focus area in the supply chain

Roddy Martin, TraceLink Chief Digital Strategist, and Simon Ellis, Program Vice President, Supply Chain Strategies, IDC, provided insights into the survey’s findings.

Logistics Management: What are the main issues causing drug shortages for pharmaceutical shippers?

Martin: We need one version of the truth, with sharable data and common integrated processes. However, the lack of integrated end-to-end systems, processes, and data are preventing end-to-end visibility. As a result, companies lose the opportunity to share data, coordinate, plan, and collaborate between all upstream and downstream partners. This lack of process, data sharing, and visibility prevents the end-to-end supply chain from synchronizing the orchestration of suppliers from suppliers to the patient via shipping channels.

The end-to-end supply chain is fragmented, with disconnected systems and processes between businesses and functions. Many have their own systems and game plans; their own metrics, resources, and definitions of success. There is no “one common business planning network” for all partners to meet patient demand holistically, from suppliers to the patient. The total governance of patient centricity is missing and lost in individual agendas across the shipping system, and the result is a lack or orchestration and synchronization that result in excess inventory and drug shortages at different points across the system.

LM: With 70% of respondents saying their supply chains are very vulnerable, what are the primary reasons for that?

Martin: They can’t accurately see and coordinate suppliers and therefore cannot collectively orchestrate and build network plans to meet demand. This makes the individual components of the supply chain vulnerable to not meeting patient needs.

Because they cannot accurately see demand and supply and coordinate tradeoffs to meet demand, they cannot effectively conduct integrated business planning and allocate the right resources and move inventories to the right place.

The fact that supply channels are constrained, and variable means they cannot commit to meeting demand plans that meet patient’s needs.

LM: What are the main issues impacting forecasting, with 65% of respondents saying they can no longer accurately plan supply and 63% having lost faith in demand forecasts? 

Martin: Demand forecasts are variable because downstream data is not readily available to aggregate accurate demand and insights. It’s also not real time and lags as much as 40 days. Not only are demand forecasts inaccurate but they are also continually varying and changing as a result of both demand and disruptions. This is especially true because the demand need is driven by distributed patient infections, which are unpredictable.

This same argument applies to supply side variability, largely because of varying quality, supply constraints and supply cut offs from infected sites. Simple changes and constraints in the supply side chains coming together means that a simple component missing could constrain the whole supply chain, e.g., vials and packages for vaccines.

This continually varying supply and demand side change and unpredictability of the overall system forces manufacturers and partners to behave reactively and makes plans extremely difficult to work toward. Lack of visibility and real time insights prevent the ability to quickly sense and respond to disruptions that could minimize impact on all partners and patients.

Ellis: Also keep in mind that many or most companies still rely on historical data to inform their demand forecasts, and in turn their supply requirements. There is no useful historical precedent for COVID-19 to inform the forecasts right now, so many companies are “flying blind,” asking if demand is “true” demand or just hoarding. What impact will that have on demand next quarter, the quarter after that, etc?

LM: With 43% of respondents saying that they lack the necessary agility and redundancy to survive major business disruptions, what types of things can they do to augment that situation?

Martin: Based on the formula in the whitepaper Visibility + Agility = Resiliency

Companies can do the following to build towards the achievable outcome of a resilient supply chain:

Visibility: To start, companies should conduct a detailed value stream and risk analysis of their end-to-end supply chain and analyze the 20% of the issues causing 80% of the pain on an end-to-end basis (versus looking at local performance of say a function like quality).  For less mature companies the performance pains can be seen by inability to meet local schedule metrics like a site deliverable. For more advanced companies, analyzing end-to-end impact on the customer patient on time in full is the key – no matter where the issue occurred from supply to the patient.

Once the key 20% events have been identified and prioritized, the business can leverage a digital platform to aggregate the data, document the issues and build agile processes with internal and external teams.

The business can then identify and implement digital capabilities to ensure the real time accuracy of that data and ensure the continuous capability to share that real time data with partners.

It’s important for companies to take a network view of this requirement rather than an internal perspective. This means connecting and visualizing data from inside and outside the business in a patient centric way across all connected partners on the network.

Agility: One of the biggest pain points when it comes to limited agility is difficulty sensing a problem and activating a team of skilled specialists with tools, technologies, and analytics to solve the problem, investigate its total end-to-end impact, and track its ongoing status (making sure it doesn’t “break” again).

By implementing an end-to-end digital network platform across the entire partner network, companies can gain real time access and analyze the right data, allowing for collaboration between suppliers, partners and stakeholders.

Another common issue in the “limited agility “category is a lack of focus on the aspect of leading and managing change and building agility into the organization and the way it operates – even changing the culture. This change is not trivial and may involve a degree of unlearning and relearning, even reskilling.

However, new digital operating models are emerging, but they require new talent, advanced problem-solving skills, different approaches and organization designs, advanced predictive analytics capabilities, and AI (versus interpreting transactional reports from conventional systems like ERP)

The road to resiliency: Overall, the inability to respond to timely issues whether they are planned or unplanned is largely a function of the lack of visibility and the right data in the hands of the right team of leaders. Leading and managing disruption management teams using reaction rooms or operations meetings are key organization units to have in place.

Ensuring the right individuals with the right skills and capabilities (like technology, team and processes,) have the right data and analytics tools to sense and rapidly respond to urgent disruptions, to minimize the impact on upstream and downstream on partners in the network.