3 Keys To Mastering The Life Sciences Supply Chain With A 3PL
By Richard Beeny, Co-Founder and CEO, LifeScience Logistics
In the past, most pharmaceutical companies performed their warehouse and distribution services within their own facilities, with very few outsourcing these processes to third-parties. The supply chain was much simpler then, essentially getting a product from point A to point B.
Today’s life sciences supply chain, however, is fraught with complex logistics challenges, including high-dollar product, specific temperature requirements, regulatory compliance, and correct licensure to distribute, receive, and store product. Economic recession and explosive growth in emerging markets have also forced companies to question legacy systems, and make strides towards more efficient global practices. In turn, manufacturers are increasingly turning to third-party logistics (3PL) partners to manage their now multifaceted supply chain systems.
This paper will outline the three keys to success in leveraging a 3PL in today’s increasingly complicated life sciences supply chain — understanding regulations, maintaining control, and staying focused.
Understand The Regulations
To know how to appropriately handle supply chain management, it’s important to first understand the basics of government policies that now or will soon impact the life sciences supply chain. For example, regulations such as California’s 2015 e-pedigree mandate and the EU’s Falsified Medicines Directive have truly set the stage for the expanded use of serialization.
Once in effect, the 2015 California e-Pedigree legislation will require every player in the pharmaceutical supply chain, from manufacturer through pharmacy, to track the progress of a pharmaceutical product down to the smallest item. Manufacturers must serialize, at the unit level, 50% of the products they ship to California by 2015, and the remaining 50% by 2016 — barring any federal intervention. You can read more at www.pharmacy.ca.gov/about/e_pedigree_laws.shtml.
In July 2011, the EU adopted the Directive on Falsified Medicines for Human Use, with the intent to crack down on counterfeit drugs. This new policy not only reinforces existing practices, but adds further measures to heighten safety in the packaging and distribution of drugs. To do this, regulatory authorities will require manufacturers and distributors within member states to begin implementing the following measures starting January 13, 2013:
- Place a unique feature on the outer packaging of drugs to ensure authenticity
- Meet heightened requirements for inspection of APIs
- Report any suspicion of counterfeit medicines
In addition, online pharmacies will have to display a logo on their sites with a link to official national registers.
Since these compliance deadlines are quickly approaching, it’s imperative that companies prepare now. Organizations must start an initiative internally to gain a firm grasp of these impending regulations, as they stand now, to address any issues that could stand in the way of meeting these expectations. A 3PL can be a valuable partner in this process, providing guidance and services to help validate data capture and management of products at each level. As mandates evolve, 3PLs can offer appropriate guidance to ease the warehousing and distribution processes, as manufacturers head toward full compliance.
For more information, you can reference the following sites:
http://www.mhra.gov.uk/Publications/Consultations/Medicinesconsultations/MLXs/CON195906
Maintain Control
If a drug manufacturer does decide to outsource its logistics operation, it is critical that they maintain an element of product and cost control it will incur in the storage and distribution processes. A 3PL can help overcome these challenges by providing flexibility, whether that applies to locations, storage and handling, technology, security, standard operating procedures, regulatory compliance, or reporting analytics. A company’s internal team can work together with a 3PL to design a plan that will provide solutions to these concerns, and allow for a seamless transition to an outsourced supply chain model.
The options a 3PL can provide allow a manufacturer to have the most control over its products and how they are maintained, without incurring potentially higher costs associated with an in-house operation. Overall, supply chain expenditures have skyrocketed due to globalization, mounting freight prices, technology advancements, high healthcare costs, new regulations, and increased commodity prices. 3PLs can measure these, along with many other potential metrics, to take that pressure off the manufacturer’s plate. Using the Supply Chain Operations Reference (SCOR®) model, participating 3PLs utilize a unified structure with standardized language, metrics, and business practices — as well as link business process, metrics, best practices, and technology features. In fact, many 3PLs have developed their own SCOR cards after years of being SCOR carded themselves. As a result, 3PLs that use this system garner ideas from numerous SCOR cards, and choose the qualities from each that they believe are the most vital for their manufacturing partners.
It’s also very important that a manufacturer have access to their products, to be sure they are handled correctly. For instance, when a manufacturer’s products are stored in a facility with other manufacturers’ products, companies want to make sure products are segregated and product security and integrity are maintained. Another issue is consolidated shipping, because manufacturers want to make sure their products have a secure shipment that is destined to arrive at its location on time, and in temperature. In the end, consolidated shipping can provide cost benefits, but manufacturers must be assured that they can maintain control over the shipments — along with how and when they are sent. A 3PL can handle these issues, while providing the transparency that their partner companies desire.
Stay Focused
Maintaining focus is the final key to mastering the life sciences supply chain. In today’s world, successful companies are focused on core competencies. Instead of having to deal with the complexities of the supply chain, life science companies need to concentrate on revenue-generating activities, and on reinvesting capital back into the business. A 3PL partner can take on a number of those complex supply chain challenges, including:
- Cost Pressures: Manufacturers are always looking for ways to keep costs down in the supply chain. Cost pressures force manufacturers to operate more efficiently. Finding ways to eliminate unnecessary costs is always a tough task. 3PLs can help to streamline the supply chain and eliminate those costs.
- Global Competition: As global competition increases, the need to focus scarce resources on core capabilities and leverage the expertise of others intensifies.
- Market Consolidation: As markets continue to consolidate and get more specialized, manufacturers must find ways to become more flexible in order to adapt to the ever changing supply chain environment.
- Increasing Regulatory Requirements: As discussed earlier, maintaining regulatory compliance is essential to keep the supply chain moving without any costly hold-ups, including fines or lawsuits.
- Product Security Concerns: A 3PL ensures that products are safe and secure throughout the supply chain through the use of track and trace technologies.
- Channel Pressures: Underutilized facilities, high labor costs, and expensive fixed assets have caused manufacturers to outsource all or parts of the supply chain.
Partnering With A 3PL
Logistics is a 3PL’s core competency, and partnering with one can be a viable, cost-effective solution to manage the life sciences supply chain, while allowing the drugmaker to focus on its core capabilities. A 3PL can become involved as early in the process as desired — whether to alleviate issues with platforms that monitor shipments, or simply find better ways to warehouse and distribute products.
Organizations that partner with 3PLs can expect to gain six main benefits:
- Cost Savings: Manufacturers can reduce costs by offloading the maintenance of warehouses and the employment of the personnel required to run those facilities.
- Risk Mitigation: Manufacturers can lower the risk to their products by not maintaining the entire portfolio in a single location.
- Customization: 3PLs can tailor fit solutions to any need or request of a manufacturer.
- Flexibility: Nothing is set in stone, so a good 3PL has the willingness and ability to be flexible, and adjust to any deviation from the plan and make changes in real-time.
- Reliability: A successful 3PL provides prompt service to its clients, making sure that everything stays compliant and deliverables are met on time and on budget.
- Transparency: Just like in house, manufacturers have complete real-time visibility to their products warehoused with a 3PL.
3PLs are well aware of what lies ahead in the supply chain and what is needed to overcome any obstacles. By letting a 3PL handle the complexity of the life science supply chain, manufacturers can focus on their core competency of creating lifesaving medicine.