UPS Identifies New Series of “Pain Points” in Pharma Supply Chains

The 2015 Pain in the (Supply) Chain survey recently conducted by UPS coincided this year with qualitative interviews of healthcare executives in North America to gain further insights into trends, challenges and opportunities having an impact on healthcare logistics.

Among the findings was that healthcare companies have made significant strides in just one year to address some top supply chain pain points.

For example, 75 percent of respondents report success addressing product security vs. 55 percent in 2014. Furthermore, 70 percent of respondents report success in addressing regulatory compliance vs. 57 percent in 2014.

However, researchers say other issues remain in the healthcare supply chain. Only 50 percent of respondents report success addressing supply chain cost management and the top challenge to managing costs is rapid business growth, cited by 56 percent of the respondents.

Physical protection from theft (46 percent) and poor supply chain visibility and too many supply chain hand-offs (40 percent) are the biggest product security challenges, say researchers.

Paradoxically, contingency planning is not prioritized by healthcare executives.

Another key finding was that “partnerships” are the top successful strategy healthcare companies are using to address regulatory compliance, product damage and spoilage and cost management.

Robin Hooker, director healthcare marketing, UPS shared other insights in an exclusive interview with SCMR.

SCMR: Was UPS surprised by any of the findings to the survey?

Hooker: What we find most interesting from this year's survey results are the strides that healthcare companies have made in just one year to address some top issues that have faced the healthcare supply chain for decades, and we are pleased to share the strategies that firms are leveraging.

SCMR: Security looks likes it's gaining attention.

Hooker: That's right. Despite increasing complexities, healthcare companies are experiencing more success addressing product security challenges. In fact, the reported success rate in this area saw a 20 percentage point jump over 2014 findings from 55 percent to 75 percent.

We see pharma companies becoming more optimistic regarding product security as they implement anti-counterfeiting initiatives as part of the U.S. Drug Supply Chain Security Act, which is a broad-based supply chain security and recall mandate.

SCMR: Does that raise any other serious concerns?

Hooker: Yes. The real question is how quickly will forward-looking firms reap additional business value related to inventory management by investing in systems that are not only compliant to DSCSA, but leverage the datasets for supply chain optimization.

SCMR: What about analytics and reverse logistics?

Hooker: The analytics and predictive power of managing inventories and logistics flows with knowledge of potential expiry dates at the unit level enables a new level of inventory control and potential savings in expired pharma return/audit/destruction cost.

SCMR: Any other takeaways?

Hooker: Healthcare companies also reported success addressing regulatory compliance issues and product damage and spoilage. Year-over-year, regulatory compliance success rates increased 13 percentage points from 57 percent to 70 percent, and product damage and spoilage success rates jumped 12 percentage points from 51 percent to 63 percent.

SCMR: So what are the key differentiators?

Hooker: We know that firms have viewed the variations in international regulatory guidelines as a headwind to global market access, but firms that rate themselves as successful in entering new markets leverage relationships with 3PLs that have integrated global healthcare transportation and distribution solutions.

SCMR: Can you elaborate on security?

Hooker: Certainly Protecting time-and temperature-sensitive products poses challenges in global supply chains. Successful decision makers are mitigating risk of delay or temperature excursion by leveraging transportation network thermal profiling studies conducted by some integrators, as well as some of the latest shipment monitoring devices and proactive tracking and over-watch bundles that allow the transportation provider to monitor, predict, intervene and even insure products.

SCMR: What about strategic alliances?

Hooker: Logistics and distribution partnerships are cited as the top strategy healthcare companies employed to address supply chain pain points. Partnerships with local third-party logistics providers (3PLs) is the top strategy used to combat regulatory compliance challenges cited by 55 percent, and 74 percent report success addressing product damage and spoilage by partnering with a higher-quality carrier.

SCMR: So, may we see this trend growing?

Hooker: Supply chain and logistics decision makers can no longer afford to develop global strategies in a vacuum. Collaborative models for accessing new markets are being redefined as a result of the market complexities of healthcare supply chain regulations—Mix in the record level of M&A activity over the past few years and you multiply that complexity. Now, more than ever, asset-light models that leverage multi-client global infrastructure for distribution and transportation simply logistics handoffs and dovetail well with the consolidation strategies being leveraged in the marketplace.

SCMR: Based on this year's responses, what new questions may surface in the future?

Hooker: The industry is facing the challenge of doing more with less and the question of where to invest and what to outsource is the key. We believe that firms that focus on core competencies and free up supply chain assets have the opportunity to leverage collaborative solutions that will be needed to face future supply chain challenges like cost management, regulatory compliance, product security and mitigating product damage and spoilage. These will remain top supply chain focus areas for healthcare companies. What's shifting is marketplace demand for higher levels of service, the increase of more sensitive, high-value biologics and medical device products entering the market, and innovative logistics strategies to address specific challenges and opportunities within these focus areas.

SCMR: Can you provide an example?

Hooker: Sure. The pace of drug innovation is quickening and becoming more specialized. A recent study by EvaluatePharma expects that by 2018, seven of the top 10 pharmaceutical drugs will be temperature-sensitive. The more sensitive large-molecule biologics require temperature ranges from 2-8 degrees Celsius or cooler, but the latest chimeric antigen receptor T-cell therapies that are in clinical trial require thermal protection down to minus one hundred and fifty degrees Celsius to protect the latest immunotherapies that show promise of being curative for certain types of cancers and are being used to treat your most medically-frail refractory patients. We are confident that some of these therapies will achieve breakthrough status and these advancements create new demands on the commercial supply chains that only collaborative approaches can address.

SCMR: What can our readers expect from the next survey?

Hooker: We will continue to scan the horizon for tomorrows “pains” in the healthcare supply chain – and the latest strategies to address them. Whether they fall into areas like regulatory compliance or new and emerging areas – we are seeking to uncover the challenges that will keep healthcare executives up at night and over the next decade and deliver the solutions that will let them get a good night's sleep.

Download: Eighth UPS Pain in the Chain Survey Snapshot

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