In the past 18 months, two major events have forever changed how pharma manufacturers view, plan for and manage supply chain disruptions in the United States.
The first was COVID-19. As the world shut down, consumers realized everything they wanted could be purchased online while carriers, already struggling with labor challenges from the pandemic, were caught off guard as they faced increased demand — creating delays not just for the general population, but for the companies that rely on carriers and the supply chain to keep their businesses running. On top of that, international delays became an issue as other countries including China and Italy dealt with their own initial COVID-19 waves. For pharma manufacturers, the pandemic created significant barriers to getting their therapies to providers and patients on time.
The second major incident to cause massive disruptions was Winter Storm Uri, which impacted the southern and eastern parts of the U.S. in February 2021. Despite the fact that the U.S. faces around 20 named winter storms annually, Uri brought unique challenges, paralyzing multiple carriers and their main shipping hubs, resulting in six million COVID vaccines being delayed. Experts shared that the average dwell time — the amount of time a shipment sits waiting for pickup or drop-off — increased by 308% the week of the storm.
These incidents created challenges for pharma manufacturers, hospitals, pharmacies and patients who rely on a stable and predictable health care supply chain. Yet, even as the U.S. struggles to understand what is specifically a COVID-19 issue versus what is the future of the U.S. supply chain overall, pharma manufacturers know they have a responsibility to manage through more unexpected supply chain hurdles.
Here we will outline some key considerations and actions pharma manufacturers should explore before, during and after a supply chain disruption— whether they manage their supply chain directly or outsource to a distribution supplier — to prevent delivery delays or potential drug shortages and ensure life-saving medication is getting where it needs to go.
Before the disruption
The challenges created by the pandemic and Winter Storm Uri have clarified the need for pharma to better understand the risks of the supply chain channel strategy, and where they fit into the mix. Contingency planning must happen before a disaster strikes — and can help with both seen and unseen supply chain incidents.
Monitor what you can
While Winter Storm Uri came as a shock to much of the South, many winter storms and hurricanes can be seen up to a week in advance. By dedicating time to monitoring storms, manufacturers can make informed decisions with clients or logistics partners if they should: stick to the agreed-upon schedule, use next day air versus ground to get ahead of the storm, or send extra product to critical locations in case the storm causes a transportation issue immediately after.
Understand carrier engagements
Many times, manufacturers look at shipping as a linear movement across the country, but it rarely is. It’s vital to know how your products move through the supply chain, including how products get from one location to another, and what hubs are involved. The reason Uri was so devasting for the U.S. supply chain was how many carrier hubs were located in affected areas, including FedEx Express’ primary distribution center in Memphis and UPS’ hub in Nashville. The storm also closed port container terminals in Houston and brought trucks between the U.S. and Mexico border to a standstill.
It’s important to talk to your logistics partners about the option to have engagements with multiple carriers. This gives you more of an opportunity to not have all of your product halted in one major hub area in the event something happens, giving your business a chance to pivot.
Know thy customerHaving a good understanding of how much inventory your customers carry could be the key to weathering the storm. If you know that the supply chain is about to be delayed by a number of days, this information can help make informed decisions about whether to ship out the supply immediately, or wait until after the disruption has been resolved.
Consider alternatives to typical supply/demand systems
There are many ways to ensure product is available to your customers so they do not need to worry when the supply chain is strained. With specialty drugs accounting for 73% of all medicine spending growth between 2011-2016, the cost of drugs continues to be one of the largest concerns for hospitals and providers, who look for innovative ways to store the expensive drugs without paying for them upfront.
Consignment inventory can lighten the demand during times of crisis by enabling your customers to stock expensive drugs and therapies, without the upfront cost. By stocking product still owned by the pharmaceutical companies, there is less of a concern that supply chain disruptions may result in access issues for critical medications.
During a disruption
While it may seem too late to make many critical decisions during a disruption, the actions companies take during these important moments have the potential to save lives.
Communication is key
The supply chain can be a fickle beast. A disruption that occurs in the Southwest could easily lead to delays in the Northeast, but customers may not understand that. They need to be aware of updated shipping and delivery timelines and understand why these delays are taking place. At the same time, manufacturers need to understand a customer’s needs and priorities for medications. Communicating early can enable manufacturers to set appropriate expectations with customers so they can manage their existing inventory wisely.
Once the disruption is over, communication is necessary to understand whether non-standard delivery times (evenings or weekends) are acceptable for a customer. If you understand your customer’s inventory, you can also prioritize which orders need to be shipped first to prevent critical drug shortages.
In some dire cases, by understanding customer inventory, manufacturers can alleviate supply chain delays by sharing inventory between customers directly.
Understanding your products and the cold chain
While it is rare, disruptions have the potential to result in a total shutdown of product movement. The blockage of the Suez Canal is a perfect, if not extreme example, of this taking place. Billions of dollars of products were stalled for a week as officials worked to free the ship. Had any of those ships contained drugs requiring cold storage and handling, the products may have expired during the canal blockage or ship backlog.
This example paints a picture not for just risk management, but for pharma manufacturers’ need to understand their products’ stability, and if it can be extended if cold storage cannot be maintained. Manufacturers may also consider investing in backup coolers that can last longer (120 hours) versus the normal-use (36-48 hours) coolers during times with a higher potential for disruptions like the holidays or hurricane season.
Collaboration with carriers
Carriers are on the front lines of supply chain disruptions. The better your partnership and collaboration with them, the better the outcomes will be as things do start to open back up or clear.
Collaboration with carriers can also help businesses understand if the delays will continue, and if manufacturers need to look into other options. Having a team — whether in-house or an external logistics partner — is key to developing these relationships in time for a crisis.
Additionally, while less cost-effective, understanding options with couriers can also allow businesses to bypass the traditional supply chain and ensure medication is getting to where it needs to go.
When the storm has passed
Supply chain disruptions large or small can put significant pressure on pharma manufacturers and the customers and patients they support. While it’s necessary to breathe a sigh of relief after they are over, there are still steps to be taken to ensure we are doing our part to assist with the fragile health care supply system.
Customer communication surrounding the disruption cannot end once the crisis has passed. They will expect more communication immediately after a disruption on when an order will arrive, if there are precautions that should be taken, and if they should expect delays on future orders based on a backlog of shipping delays. This is an excellent time to overcommunicate to customers on drug stability if the delay resulted in a longer period of time in transit than expected or allowed.
Review and assess
The final step is just as important as the first steps, and, in actuality, starts the process of managing through supply chain disruptions over again.
Now is the time to review what worked and what didn’t with logistics partners, customers and carriers. The global supply chain continues to be disrupted, and as new players enter the market, we may see new changes — and new disruptions. Assessing what worked will lead to a stronger strategy for the next time, and ensure customers feel seen in the process.