Pharma logistics is currently facing many challenges but there are also a multitude of new opportunities. The times of globalization are now followed by digitalization: AI, data science, blockchain, big data, collaboration platforms and IoT open up new ways of looking at things – all with a significant business impact. In a series of articles, we will outline what you can do to make your pharma logistics “future ready” – ready for 2025!
Part I: Drivers for logistics 2025
In the first part of our series, we highlight some of the key trends in pharma that drive tomorrow’s logistics.
Globalization still matters
Pharma operations executives know that Globalization still represents major challenges. Growing international trade still enlarges supply chains of global manufacturing networks and sourcing markets. This exposes the supply chain increasingly more to disruptions and risks caused by e.g. extreme weather conditions, natural disasters, strikes and traffic. Combined with continuously growing regulatory requirements in pharma logistics, we are forced to mitigate risks, maintain control and monitor not only the journey of our products but also the temperature and humidity conditions. However, if we succeed in adapting the supply chain organization to an increasing speed of change, great opportunities are open to us. New markets like Middle East & Africa or the direct-to-patient business model are just two examples.
M&As: impact and opportunities
In recent years, especially two trends had tremendous impact on the pharma supply chain: mergers and acquisitions (M&A) and – often related to this – a portfolio enlargement towards large molecular pharmaceuticals (biotech). Such changes imply a significant effort, when it comes to adapting processes and IT systems assuring information can flow and regulatory requirements are met. This also includes the consolidation of distribution networks, as well as integrating or harmonizing product safety and temperature monitoring – just to name a few.
Merged businesses can of course achieve significant savings by reviewing their distribution network, uncovering inefficiencies due to duplicated logistics processes and systems as well as lacking process standardization, master data management and supply chain planning. A review of supply chain planning is specifically required, if new products with different sensitivities are added to the portfolio. Higher sensitivities can lead to shorter expiration times requiring shorter lead times and increased temperature control efforts.
Product sensitivity driving regulatory requirements and packaging solutions
Temperature control and monitoring can be a tremendous burden considering regulatory requirements and the many different loading devices that can be used to ensure product safety along the shipping processes, such as active or passive ULD (unit-load-devices) or thermo blankets – all with very different cost and insulation grades. But often you will find that there are more cost-efficient ways of transport or that the safety of your time-intensive and high-value medication is better protected by a different processual approach.
2025 – New technologies or just a new release of SAP
It seems all supply chain conferences and publications nowadays are only making reference to opportunities and treats of Artificial Intelligence (AI), blockchain, collaboration platforms and the Internet of Things (IoT), which are specifically relevant in pharma logistics regarding real-time tracking and temperature monitoring. No doubt, as we will outline, all of them will leave very significant traces, and in 2025 much will have already become part of operational routines. However, the year 2025 is currently driving much bigger change involving the release of budgets that go far beyond the testing and application of those technologies: Like other industries, pharma is affected by the announcement of SAP to stop their support of R3 by 2025, putting many of their customers (big or smaller) under pressure to migrate to S/4HANA and e.g. EWM by developing templated solutions, piloting those and contracting battalions of SAP consultants for the implementation. This is a major challenge to the industry, but it can also be a perfect opportunity to do the next step and incorporate some of “the new tech stuff” mentioned above in your new process model and benefit from increased process efficiency, reduced costs and an improved supply chain transparency!
In our next blog article, we will investigate how supply chain risk simulation and the use of data science in supply chain assessments can help to meet new requirements and challenges in pharma logistics.