For years, we’ve talked about the revolutionary potential of digitalizing the pharma industry. Truth be told, the efforts of most companies have merely grazed the surface of that potential. Recently, however, digital initiatives put in place by some forward-thinking industry leaders have begun to truly transform the playing field.
Ironically, the dreaded imperative to serialize has turned out to be one of the major reasons digital potential is being realized, thanks to the enforcement of regulations worldwide. Because serialization by its very nature involves the production and dissemination of huge amounts of data, companies are learning the value of harnessing this data for purposes far beyond what was originally intended.
Visionary companies have begun to recognize the value of digitalizing supply chains in order to attain a strong competitive advantage. Not only has digitization helped them achieve greater operational speed, efficiency, and productivity, but it also helped them fulfill their grander mission of improving the lives of patients by ensuring a safer and more expedient supply of pharmaceutical products.
A ‘Good’ Gateway Drug
Just for fun, I’m likening serialization to a “good” gateway drug because thanks to the tremendous amount of data it generates, it opens the door to more experimentation—and ultimately to more efficient operations, not to mention safer and better drug production.
Furthermore, the time to experiment with this gateway drug is now. With worldwide serialization deadlines fast approaching—November 2018 in the U.S. (DSCSA) and February 2019 in Europe (FMD)—the time is ripe.
The challenge, of course, is to figure out how to most effectively use the reams of data generated by serialization. Transforming this data into smart digital initiatives may ultimately open the door towards fundamentally transforming the way business is done.
Potential to Transform Pharma Operations
According to a paper published by PricewaterhouseCoopers, digitization holds tremendous potential for helping the pharma industry adapt to many of the growing challenges it faces with regard to operations and the supply chain.
These challenges include:
- A global market requiring companies to operate across geographies with an increasing number of SKUs, which makes supply chain management, regulatory compliance, and life-cycle management more complex
- A higher number of supply chain partners than ever before, making integrated planning across the network difficult, and hindering real-time decision making
- Increasingly competitive price and cost pressures, requiring more efficient operations and supply chain management
- More complex product portfolios and an increase in personalized medicine call for greater customer and supply chain segmentation, challenging companies to produce low volumes efficiently
- A growing risk of counterfeit drugs demands greater transparency and tracking in the value chain, so companies can better monitor the supply chain
- A need for better quality control and more visibility due to rising regulatory scrutiny around the world
Formidable challenges indeed. But digitization holds great promise for addressing these challenges, primarily through the emerging technologies that come under the umbrella of Industry 4.0—a collection of tools and processes that enable smart, decentralized production via intelligent factories (often called digital factories), the Internet of Things (IoT), mobile communications, advanced analytics (big data), the Cloud, and flexible, highly integrated manufacturing systems.
However, a study published by McKinsey & Co. concerning digitalization trends in several industries shows that this much-needed technological transformation is still in its fledgling stages in the pharmaceutical industry. In fact, pharma ranks next-to-last among the sectors surveyed, finishing ahead of only the notoriously slow-to-act public sector.
Pharma, then, has a long way to go. Let’s look at some of the tools necessary to place the industry on a proper path to digitalization.
Tools of the Trade: IoT and Beyond
Sensors placed throughout the supply chain can help transmit information in real time, providing insights that help sales and operations leaders respond faster and more appropriately. Through digitization and analytics, it also is possible to reduce downtime.
Digitization shows the potential for reducing downtime in pharma plants by 30 to 40 percent. Monitoring systems like the OEE Tracker offered by Supply Chain Wizard, have proven highly effective in helping to identify and improve operational efficiency.
Additionally, advanced analytics, big data, and the Cloud all are proving formidable in helping to integrate data and transform it into actionable metrics.
Because pharma companies have such complex supply chains, cloud-based networks make it easier to link multiple players through a single integrated network. Automation and digitization also can help deliver manufacturing efficiencies through such innovations as 3D printing. Advanced robotics and augmented reality hold great promise for improving human-machine interactions.
While these new tools and technologies can lead to impressive advances, at Supply Chain Wizard, we stress the importance of incorporating them into a well-planned strategic approach. Digital innovations need to be introduced thoughtfully and carefully, and tailored to specific needs and requirements, as there is no one-size-fits-all solution. Not that there isn’t room for trial pilot projects. In fact, thoughtful experimentation will likely prove useful for moving the digital train forward.
Transparency, Visibility, Collaboration
Transparency is vital to successful digitalization initiatives, as increased visibility into supply chain operations helps drive better and faster decisions, and improve operational processes. In becoming more adaptive and responsive, companies can improve planning accuracy, manufacturing efficiency, productivity, and inventory control. When information is visible across a network, all entities are better positioned to avoid overages and shortages within their own supply, and then are better equipped to reduce cycle time and optimize inventory for the end product.
And because there are so many stakeholders—both within the walls of pharma companies and outside of them—teamwork is crucial. Within companies, digital initiatives require assembling cross-functional teams of experts, commitment to capitalization of projects and, when advisable, working with experienced consultants who have guided others through the process.
Beyond that, collaboration with partners is critical in order to develop truly integrated end-to-end supply chain solutions.
Pilot projects can be a great way to get started. Supply Chain Wizard has spearheaded several promising digitalization initiatives, including:
- An Overall Equipment Effectiveness (OEE) tracking system to counteract a drop in OEE (%) due to serialization implementation, for a leading contract and development manufacturing organization (CDMO)
- Tracking drugs in real-time with IoT sensors to ensure efficacy and delivery to all appropriate partners, for a well-known non-profit organization
- Developing mobile tracking solutions to improve patient and hospital engagement, as well as supply chain visibility, for a brand owner
- A digital collaboration platform to improve project management efficiency and visibility for a prominent generics manufacturer
While the significant challenges of supply chain digitalization cannot be denied, it’s more critical to focus on the benefits digitalization brings, and the guaranteed loss of competitive advantage likely to ensue if ignored.
Digitalization makes supply chain optimization possible, and allows us to imagine a future where performance can be analyzed through every step of the testing, manufacturing, and distribution process—as well as the ability to forecast and respond to demand in real time. In helping to ensure visibility across the entire supply chain, digitalization offers the potential to lower overhead and increase production without sacrificing speed or quality.
Once again, with serialization deadline enforcement just around the corner both in the U.S. and in Europe, the time is ripe to get a greater return on the serious investments companies are making in expensive serialization solutions. Keep in mind that the best solutions are hardware agnostic, and that you can mine the troves of data generated by serialization to improve operations, increase efficiency and financial performance, and ultimately serve patients better.
About the Author
Evren Ozkaya is the Founder and CEO of Supply Chain Wizard, LLC, a management and technology consulting firm helping pharmaceutical companies establish serialization programs, and serving broader manufacturing industries with supply chain strategy and optimization programs.
This story can also be found in the November/December 2018 issue of Pharmaceutical Processing.