falseThe pharmaceutical industry’s supply chain has become the focus of daily headlines, and often not in a positive way. Today’s pharmaceutical products rely on ingredients and material from across the globe, and require the tightest, safest, and most efficient supply chain possible to produce the highest quality drugs. It is estimated that 80% of the active ingredients for drugs sold in the U.S. originate in the global sourcing chain outside the country, and Food & Drug Administration rules require drug companies to disclose the name and location of the manufacturer, packer or distributor of prescription medications. However, following a number of recent deaths linked to contaminated batches of the blood thinner heparin originally sourced in China, there is growing pressure to disclose much more sourcing information – including biological agents and bulking agents, each of which has its own supply chain around the globe.
The inescapable conclusion is that traditional supply methods and management are no longer adequate for the industry to meet heightened public scrutiny and potentially tighter regulation. Online technology to track and trace shipments offers the necessary solution – but only if that technology is properly structured to meet pharmaceutical manufacturing’s needs in a global marketplace.
How Regulation Affects the Supply Chain
The regulatory focus on pharmaceutical product sourcing is complex. Guidelines established by the Food & Drug Administration and other regulatory agencies for cGMP (current Good Manufacturing Practice) in the production of pharmaceuticals include requirements as they affect raw materials, in-process goods, packaging, labeling and finished goods as well as the manufacturing, testing, documentation and product release processes. The production of pharmaceutical products requires validating for the FDA every aspect of the receiving, analysis, storage and handling of drug actives, excipients and other raw materials.
And ensuring cGMP compliance must be integrated with the normal considerations between supplier and manufacturer. These include demand forecasting, stock levels, production plans, maximum and minimum inventory levels, reorder points and order quantities. It is unacceptable for chemicals or excipients to expire before the manufacturing process takes place, because their shipment was delayed or they were not shipped with proper temperature and humidity control. Additionally, every state has its own license requirements and timetables for what can come in or out of the drug production plant, and when this must happen. License requirements and special storage needs present one of the greatest challenges for both suppliers and third-party logistics partners assigned to build and implement supply chains strong enough to withstand the hardest knocks and unexpected events.
What Global Sourcing Requires
Given these constraints and requirements, pharmaceutical producers can only be effective at global sourcing if they know exactly how a supply chain can go wrong, why, and how to build chains that stand a better chance of weathering typical problems. Information control is king when it comes to creating an efficient global supply chain. That includes in-depth familiarity with the customs rules and regulations of every country through which freight will pass, in addition to understanding the associated service parameters and costs. Accurate information can eliminate calling backwards and forwards, chasing suppliers, forwarders, shipping lines and truckers, and generally spending tremendous time making sure that the whole production team is informed of any delays or problems.
To accomplish this, electronic tracking protocols are the ideal way to make sure a manufacturer always knows the status of mission critical factors in its supply chain. Cutting-edge electronic systems for ensuring that supplies are delivered on time and with proper quality require that the freight forwarding agency have a comprehensive electronic tracking system. This means that a company is able to track freight as it moves across the world, reducing the pressure on the manufacturer’s traffic department, and improving both efficiency and cost effectiveness.
What Electronic Tracking Does
Electronic tracking in its best form will be an intuitive solution that enables users to employ “real world” search criteria to determine shipment status. That includes such criteria as vendor or consignee identities, country of origin, and destination and most importantly a manufacturer’s own purchase order and bar code numbers. It will also show what has been shipped, what is in transit, what is due to be shipped, where goods are in the cycle, and how a shipment is performing against the manufacturing timetable. In addition to real time information, it should also provide historical data that can be used as benchmarking tool for shipment performance.
Electronic tracking also eliminates inefficiency from physical keying of routing numbers and freight identification by using EDI technology (Electronic Data Interchange). Not only is manual entry slow and inefficient, but it also leads to high levels of human error. Every time a person has to manually key in a product code, there is the chance that they will make a mistake, resulting in the products becoming invisible along the rest of the supply chain, forcing a company to stop everything and search – often with little success.
Where Extra Value Lies
In addition to automating and standardizing the data entry function, an effective electronic tracking system will:
* Alert producers automatically that certain key milestones have occurred, such as loading, sailing, arrival, and delivery – and more importantly warn about exceptions that are causing delays
* Transmit specific customized reports via email at certain convenient times and intervals according to a producer’s request.
* Provide online and real time updates on where a shipment is and what it consists of, right down to individual item descriptions, quantities, and SKU codes.
* Work with and display both estimated and actual departure and arrival dates.
* Offer interactive capabilities that allow the customer to authorize and initiate both the original transaction and any subsequent amendments, with the system documenting confirmation of the authorization.
* Be password protected and encrypted for security.
* Be easly scaleable for future feature enhancements and client customization
Such technology offers another global sourcing advantage. Before the use of online tracking, trading was generally limited to Cost, Insurance and Freight (CIF) terms that include insurance and freight charges, making charge verification difficult. In contrast, shipping Free On Board (FOB) offers the ability to negotiate more competitive freight rates and enhanced shipment control. FOB integrates perfectly with electronic tracking because increased supply chain visibility and control is a critical FOB benefit. By taking control of the goods as they go onboard at the overseas port of shipment, the importing manufacturer obtains accurate and timely shipment information by working with a third party logistics provider who works for them , not the local supplier.
How Producers and Shippers Can Work Together
A proficient logistics company specializes in getting products where they need to be and designing supply chains that utilize new and effective solutions to save money and improve efficiency. Pharmaceutical companies should use freight forwarders at the vanguard of new technological advance and cutting-edge supply chain methodology. Their services must be customized for use by both the smallest and largest businesses and corporations.
Freight forwarders are often able to find creative solutions where traditional supply chain handlers see obstacles. When it comes to challenges such as refrigeration, throughput, theft, customs and other regulations, and product tracking, freight forwarders have consistently been able to solve problems in a non-traditional way that, time and again, has proven their value.
Electronic tracking is the tremendous advantage that helps ensure both regulatory compliance and marketplace flexibility for shippers and producers. With such a track and trace mechanism in place, a pharmaceutical manufacturer will be able to test its supply links, make sure each one is doing what it is supposed to do, and will withstand the strongest scrutiny.
About the author: Simon Kaye is founder and CEO of Jaguar Freight Services with offices in London, New York, Philadelphia, Brussels, and Hong Kong, as well as operation networks in Europe, the U.S., South America, Australia, Asia, the Middle East and Africa. For more information, call 516-239-1900 or visit www.jaguarfreight.com
