Strategic modernization of the pharma supply chain

Nov. 16, 2022
How new capabilities can help pharma enhance operational efficiency and resiliency

Misaligned logistics networks and limited visibility, automation, and control in pharma supply chain networks can lead to staggering waste.

For example, according to the International Air Transport Association's Center of Excellence for Independent Validators in Pharmaceutical Logistics, losses from excursions in deliveries of vaccines exposed to temperatures outside the recommended range are estimated to be more than $34 billion annually.

Shocks to the supply chain from natural disasters, the pandemic, political upheaval, international trade tensions and cyberattacks, for example, are impacting the profitability of pharmaceutical companies and reducing the sustainability profiles of their operations. What’s more, these shocks can adversely affect patient outcomes due to the delayed shipping of important and often lifesaving treatments.

These calamitous events are coming much more frequently and having a much bigger impact than ever before in disrupting pharmaceutical supply chains. The good news is that some strategic modernizations investments can make supply chains more resilient and also greatly enhance operational and resource efficiency.

Sustainability challenges

Supply chain sustainability and resilience are big-ticket items for global organizations, as pharmaceutical companies search for modernization initiatives that can lessen the financial and environmental impact of supply chain vulnerabilities. 

Pharma’s objective is to address these vulnerabilities, improve overall resilience and enable rapid recovery from adverse events — all while getting the operation on a more sustainable footing. This requires making highly strategic choices around where to modernize.

Sustainable package manufacturing is one crucial area that fits the bill. In the case of mass-produced over-the-counter (OTC) pharma products, efforts should be focused as far back up the packaging supply chain as possible to implement more sustainable ways of making packages in the first place. To ensure sustainability metrics are met, some pharma companies are partnering with, or even acquiring, sustainable packaging companies so they can have more control over this initiative.

Smart and reusable packaging is a related focus, particularly for higher-value therapeutics with strict temperature, humidity or light requirements and packaging that tends to be non-biodegradable. One solution is to develop more durable packaging equipped with IoT sensors and RFID that enable monitoring of the chain of custody, location, and quality and compliance. Instead of one-time use, this packaging is designed to be reused multiple times — all the while providing valuable ground truth data as products and materials move back and forth through factories, warehouses, clinics, hospitals, pharmacies and patient locations.

This is just a sampling of the many opportunities that organizations can find along the pharma supply chain to boost efficiency and save on costs while also meeting sustainability goals. To make the most of these use cases, pharma must embrace intelligent digitization to seamlessly align operations and logistics across ever-expanding partner networks.

The power of digital twins

To achieve maximum flexibility for choosing resilient and sustainable practices, pharma supply chains must pivot away from siloed data toward greater observability across all elements of the value chain. A single source of truth is needed that allows monitors the alignment to sustainability, quality and compliance goals, which are measured and adjusted in real time across the entire supply chain ecosystem.

As organizations break down silos and learn to better connect and integrate data, they begin to reach transformation levels of intelligent digitization across the end-to-end supply chain. This, in turn, enables digital twin modeling in which copious volumes and varieties of data help build exact, virtual representations of key supply chain components and processes.

Digital twin implementations incorporate ground truth throughout supply chain operations — from initial sourcing to the last mile delivery. Anytime excursions or other disruptions occur, digital twin models capture vast amounts of data from these anomalies. This data is then fed into artificial intelligence (AI) and machine learning (ML) systems with advanced reasoning algorithms that clarify patterns in the data and deliver actionable insights. These insights enable real-time decision-making and even predictive analysis, allowing supply chain managers to be more proactive in anticipating and even stopping some issues from occurring in the first place.

The best digital twins can easily extend across all partner networks —including suppliers, production, transportation and others — with low-code/no-code scripts that leverage AI/ML to generate predictive intelligence and automated workflows across the whole supply chain network. This enables continuous, minute-by-minute adjustments and real-time collaboration among relevant stakeholders — regardless of their location — to optimize operations, and therefore sustainability.

Realizing powerful benefits for efficiency

Pharmaceutical manufacturers that embrace modernization and digital twin capabilities don’t have to wait long to see the benefits. Cycle times are reduced as digital twins enable organizations to mitigate risk and foster innovation by pinpointing vulnerabilities and expediting — or even automating — fixes or preventive action. Competitive advantage is enhanced from better control over sourcing, manufacturing, logistics tracking and other supply chain operations — with granular visibility down to the individual item level. 

Especially in specialized use cases, such as pharmaceutical cold chains, the enhanced transparency and control from intelligent digitization across the supply chain can ensure quality, security and compliance throughout the entire chain of custody. Production costs are further cut by automated alerts that facilitate fast incident management and issue resolution from the right stakeholders, with data-rich and accessible visualizations to enhance collaboration and decision support.

Good for supply chains, good for the planet

A digital twin can also collect sustainability metrics across the supply chain that can be rendered in visual dashboards and include data such as the percentage of reuse or recycling in packaging, transportation carbon footprint, time lost due to adverse events and so on. This makes it possible for the digital twin to identify and address areas of possible wasted resources or even provide recommendations to optimize delivery and reduce emissions.

As another example, ethical sourcing becomes simpler because data sharing extends to include contributing organizations up and down the supply chain. Digital twins make it easier for the organization to identify ethical sources and then model options for alternative ethical sourcing to maintain both brand integrity and production agility by shifting to new ethical suppliers if another supplier is disrupted.

Finally, given the enhanced data and documentation capabilities, another key benefit from intelligent digitization and digital twins is the ability to streamline regulatory reporting on sustainability. This is no small matter, especially in light of research showing 92% of all companies in the S&P 500 are under close scrutiny to issue sustainability reports. For such companies, digital threads can enhance reporting with accurate metrics across the supply chain.

Not an either/or choice

Resilient operations and enhanced sustainability — proven through the use of digital twins — doesn’t need to be an either/or choice for organizations when it comes to setting modernization goals and priorities.

Modernization initiatives strategically targeted for the right use cases can transform pharmaceutical companies’ ability to meet sustainability objectives with real-time, continuous visibility and control of supply chain operations. In the process, these benefits — realized through intelligent digitization and digital twin technologies— can enhance on-time and in-full delivery, line-item fill rates and other key customer satisfaction measures that lead to enhanced revenue for pharmaceutical companies and optimization of patient needs.

About the Author

Mahesh Veerina | President and CEO, ParkourSC