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The Darwinian Model is alive and well. Significant risks and opportunities are driving businesses to shed the inefficiencies of the past or go the way of the dinosaur. This is especially true in Healthcare. Given the personal and professional impact of timely, cost efficient and most importantly effective treatments, todays global healthcare industry faces enormous challenges and opportunities. Effectively trying to manage both ends of that spectrum is forcing executives out of the boardroom and into the supply chain. Heres a look at what were facing.
Furthermore, with the shift in power due to margin compression, regulatory pressures and competing demand for capital in healthcare, many provider networks have taken their supply chains into their own hands while manufacturers have opted to focus on their core competencies; research and development, sales/marketing and customer services, delegating supply chain operations to outsourced experts. These movements in the landscape are at the heart of the changing economy and more so in healthcare where the management of a secure supply of healthcare products is vital for the well being of patients.
tions can drive benefits in efficiency, lower inventories and improve fulfillment rates. Overall, visibility is driven by companies need to: Become more proactive and systematic in their supply chain operations Track and trace products throughout the supply chain, from cradle to grave Proactively alert customers of product availability and status of shipments Improve on-time delivery, reduce lead time and lead time variability Reduce and/or redirect working capital, as well as fixed and variable costs
These are fundamental capabilities for the supply chain today, and given the risk and regulatory oversight, clear visibility is vital in Healthcare!
Visibility in healthcare
Visibility in healthcare is certainly vital! Not knowing the route by which pharmaceutical products make their way to the consumer can lead to risk in counterfeits. In addition, with FDA regulations, life science companies need to trace drug and product information such as historical locations; time spent at each location, record of ownership, transaction history, packaging configurations, and environmental storage conditions to efficiently and safely manage the full lifecycle of such products in the supply chain. Major drivers for visibility in healthcare include the need to: Meet Pedigree requirements and deal with counterfeits Manage Product recalls Deal with offshore manufacturing quality Identify and mitigate diversion
Diversion
Diversion is an unauthorized channel in the supply chain and is another form of counterfeiting. Channel corruption within the supply chain can distort profits and revenue distribution which often leads to additional black market activities and diminished brand value, particularly in Europe where borders are becoming virtual.
Pedigree
A drug pedigree is a statement of origin that identifies each prior sale, purchase, or trade of a drug, including the date of those transactions and the names and addresses of all parties to them. Under the pedigree requirement, each person who is engaged in the wholesale distribution of a prescription drug in interstate commerce, who is not the manufacturer or an authorized distributor of record for that drug, must provide to the person who receives the drug a pedigree for that drug.
Recalls
According to the FDA, there were over 140 drug recalls in 2007. Similar to the food industry, when a recall is made, drug companies suffer twice: once from the massive logistics effort to pull their product from the supply chain and the second from the substantial negative impact on consumer confidence. Faced with a significant number of product recalls, the healthcare industry is seeking ways to better monitor the international drug supply from raw material to consumers.
To ensure the validity of data in the pharmaceutical industry, healthcare companies are looking to traceability and visibility for reducing costs, while improving product quality and drug safety. With the right visibility tools such as TECSYS iTopia, manufacturers, distributors and 3PLs are empowered to manage supply chain issues related to track and trace requirements for their healthcare products, and as importantly manage their supply chain operations more effectively. What is iTopia? Nonot another new drug! But it maybe a good medicine to remedy visibility issues in your healthcare supply chain. It is a powerful and flexible supply chain visibility application that allows you to easily assemble and create real-time, personalized views of all your enterprise data. 4
As CEO, I need to feel the pulse of my organization; where the challenges are, what is working for us, where we need to do further work, where we need to invest, where to lower cost. In brief, I need key performance indicators that represent realistic goals to my management and enable them to manage with confidence based on an up-to-date view of our operations. Richard Beeny, CEO LifeScience Logistics
Manufacturers believe that track-and-trace technologies will enable increased operational efficiency through improved product visibility, chargeback and returns processing, product recall ability and product security. Similarly, distributors and retailers see track-and-trace implementation primarily as a tool to achieve operational efficiencies. They believe the use of track-and-trace technologies will play a key role in future practices and processes on a wide scale, but will need to be phased-in for supply chain-wide adoption. Through automatic identification, traceability and visibility tools, healthcare companies are given the opportunity to make the Healthcare supply chain more efficient and accurate, and thus safer by: Reducing medication errors Making counterfeiting more difficult Enabling efficient and effective traceability Decreasing the production and supply chain cost
In addition to track-and-trace, the most common visibility applications include: Order Inquiry with drill-down by customer, item, PO, order date and the like Inventory inquiry to aggregate inventory from multiple warehouses into a single view Purchase orders visibility to view and update purchase order status from issue to delivery Dock scheduling to maintain inbound and outbound dock schedules for multiple warehouses
Visibility systems must also include powerful eventmanagement capabilities that can notify the appropriate individuals important key events occur which impact their decision processes; such as a product alert, a customer emergency, an inventory shortage or a delay in delivery.
Auto-ID and visibility technology can help manage risk and maintain pedigree by tagging pharmaceuticals and product packaging with barcode or radio frequency identification (RFID) tags. This allows products to be tracked, traced and recalled if necessary. However, up till now, the lack of standards and imperfect capture rate of RFID readers are a major concern to manufacturers. To move forward, serialization at the unit level will be required, but how that shakes out in the coming months and years, remains to be seen. At this point in time, bar-coding seems to make the most sense; some manufacturers have already taken that route for tracking and tracing products in their supply chain. Only 40% of drugs in the market currently come with barcode label!
Users must have the flexibility to set event triggers and communication methods with for e.g. RIM, sms, e-mail, and other electronic forms of communications. Powerful notification functionality helps keep operations on track. When an exception is detected, an alert is sent out to the relevant decision makers who can then use available tools to address the ramifications of corrective action. Distribution, transportation, and logistics are also integrated into this real-time process to support smooth and efficient supply chain.
Scaling
Given manufacturers expanding product portfolio, internal supply chain resources are not able to effectively scale. With 3PLs shared utility model, manufacturers are able to leverage the already established and maintained supply chain technology infrastructure and visibility tool to enable their business operations expansion. These tools, such as TECSYS iTopia, have the ability to extract information from disparate, sometimes hard to get at, back-end enterprise systems, pulling relevant information down to the desktop or mobile computing device where it can be consolidated, manipulated, graphed and shared with others. With intelligent visibility tools: Executives are able to determine where the risks are and where the opportunities lie. Customers may be able to access views to track their own orders, as well as check on inventory levels and reconcile outstanding credits or invoices. Vendors are able to see how their inventory is moving within the warehouse. Sales representatives are equipped with real-time information and always able to answer questions on product, stock and pricing. Customer service reps are able to deal with critical shipments, from tracking to status of orders.
Risk Mitigation
Companies that have traditionally distributed out of a single location face increasing pressure to develop contingency capabilities. Given the dollar value of products in their supply chain, especially in controlled substances and cold chain products, the need to mitigate risk drives the need for outsourcing.
Focus
While dealing with several of the pedigree issues related to their products, manufacturers have the opportunity to focus resources, reduce costs and improve quality by leveraging 3PLs established infrastructure.
Benchmarking
As a shared utility, typically 3PLs are able to sustain the healthcares industry best practices with greater frequency and ability than a manufacturer. This is especially true from a Quality and Regulatory Affairs and IT perspectives. 6
Moving forward
Undoubtedly, challenges and changes will be constant in the patent-to-patient supply chains. Evolutions together with the full-effect of globalization have increased the check points and therefore vulnerability in the supply chain process; adding risks and uncertainties to suppliers, consumers and regulatory bodies. While it is important to acknowledge the imperfect world surrounding the healthcare supply chain, we; whether manufacturers, distributors, 3PLs or retailers, are today empowered with advanced technology, best practice distribution processes and regulatory standards to make major strides forward in mitigating much of the challenges we are facing in our daily management of the supply and demand activities. Managements ability to achieve a nearly risk-free environment is primarily enabled by visibility technology that provides intelligence into every step of the healthcare supply chain. It is facilitating decision making and heightening the awareness level to effectively manage exceptions! As a CEO in healthcare supply chain management, avoiding extinction requires that I get out of the boardroom and into the supply chains of my customers. Having the right data and visibility tools allows us seize opportunities and mitigate risks. Its all about control. Having the control and extending that control are key to the value that we bring to ourselves and ultimately to our clients and patients.
Examples of benefits sited include: Improved visibility such as real-time visibility into customers orders Improved responsiveness to customer inquiries and supply chain exceptions Improved efficiency such as minimizing inventory and improved margins
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