Is Everyone in Denial About Today's Pharma Supply Chain Challenges?

19
Jun

Is Everyone in Denial About Today’s Pharma Supply Chain Challenges?

 

Industry consultant Hugh Williams of Hughenden Consulting attended the FlyPharma Conference in Brussels on 6-7 June 2017. He was left wondering how pharma supply chain stakeholders will go forward from the challenges raised at the event. Can essential changes be addressed before external forces disrupt the status quo?


In two excellent days of the FlyPharma Conference, it was agreed by all parties that the objective for the shippers (manufacturers) is to get good quality product to the patient. It was clear from all the discussions that the issues that arise come about because of the very fractional nature of the supply chain and the fact that from the time when the product leaves the factory door, the care, rigour of process and discipline in executing a quality supply chain, is lacking greatly.

As it leaves the factory, the shipper hands over title of the product to a myriad of other stakeholders (freight forwarders, handling agent, transport company, ground handling crew, airline, etc). He assumes that because he has lots of quality requirements written into his contract with the forwarder, everyone else is tied into the same deal. This seems to be far from the truth.

Add to this the fact that only the shipper seems to measure the quality of performance (temperature excursions, OTIF, etc) from all the other players in the chain and you have a culture where nobody will take the blame unless it is crystal clear and where, most of the time, there is not enough data to tell them where the problem lay.

There was also much talk about the need for control, reliability and visibility but nobody had a clear idea how to achieve this. Collaboration gets a big mention but in an industry that is so risk averse and where there is a culture of protecting all data, trusting your colleagues in the supply chain is a massive challenge. The term partnership is also used a great deal, mostly as a desirable position, but this is also subject to the same constraints.

Added to this, there is the drive by Procurement to take costs down and, as everyone will agree, commoditising the whole logistics service! Even though the shippers are concerned with cost, what they want is a much more robust and rounded service, which sometimes means it will not be at the lowest cost. Especially as one shipper quoted that 30% of their scrap was down to logistics errors – surely, end to end, paying slightly more for a better service would reduce this %. But while Procurement is measured on cost alone, there will continue to be a lack of long term partnership and collaboration.

So, where does the industry go from here?

Fortunately, there are a small number of courageous people who have started a movement to change this across the various stakeholders. Whilst this is very early days, it seems to be showing promise. Pharma.Aero, an initiative started by Brussels Airport, has the potential to help all these distrusting companies to start to work together towards a common goal – a quality and robust end-to-end logistics supply chain (well, at least from the shipper’s door anyway).

There are, however, two major and serious challenges facing this industry, but it seems that at the moment everyone is in denial.

The first is the need to get their own house in order as it works today, when there is clear resistance to change. Secondly, there is the challenge of an external disruptive influence. It is now true that more than 50% of people who search for something on the internet use Amazon over Google. Put this together with the announcement that Amazon is going to explore getting into pharmacies (it is already selling medical supplies and equipment in the US) and you have an obvious challenge to the status quo. We have lost entire companies as a result of not recognising and responding to changes like this.

Time is short for the pharma industry. The big blockbuster drugs have gone, margins are much tighter and whilst they say the customer is the patient, the consumer has yet to flex his muscles. But it won’t be long. Saying “we are different” and hiding behind regulation will not afford protection for long!

Hugh Williams 
Managing Director
Hughenden Consulting