TECSYS-LifeScienceLogistics-HealthcareVisibility

8/13/2019 TECSYS-LifeScienceLogistics-HealthcareVisibility

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The Darwinian Model is alive and well. Signicantrisks and opportunities are driving businesses to shed theineciencies of the past or go the way of the dinosaur.This is especially true in Healthcare. Given the personaland professional impact of timely, cost ecient and mostimportantly eective treatments, todays global healthcareindustry faces enormous challenges and opportunities.Eectively trying to manage both ends of that spectrum isforcing executives out of the boardroom and into the sup-ply chain. Heres a look at what were facing.

Change is constant in the supply chainMajor evolutions in distribution and manufacturing in the21st century have changed the dynamics of doing businessin North America and across the globe. Growth in im-ports has soared in the last few years fuelled by the Asiandomination of the manufacturing sector. This is especiallytrue in North America where manufacturers have becomeimporters and distributors with a new focus on eciencyand improved customer service.

Furthermore, with the shift in power due to margin com-pression, regulatory pressures and competing demand forcapital in healthcare, many provider networks have takentheir supply chains into their own hands while manu-facturers have opted to focus on their core competencies;research and development, sales/marketing and customerservices, delegating supply chain operations to outsourcedexperts. These movements in the landscape are at the heartof the changing economy and more so in healthcare wherethe management of a secure supply of healthcare productsis vital for the well being of patients.

The supply chain a network of resourcesThe supply chain is no longer a controlled entity withinthe four walls of a warehouse. Today, it is a network ofresources, scaered across facilities and entities in dier-ent cities and countries. To be eectively managed, supplychain resources need to be linked. Suppliers, partners andcustomers; each performing a role in the supply chain,and each user and/or automated process are small hubscontributing to the movement of goods, funds as well asinformation in the supply chain.

The need for visibility

To support todays business model in this high-velocity,complex and distributed logistics environment, real-timevisibility has become a key strategic imperative. Visibilityto suppliers production rates and shipment lead times, in-house inventory, historical data, and customer sales projec-

Richard BeenyCEO

LifeScience Logistics

Richard is Cofounder and Chief Executive Ocer of LifeScience Logistics. He has morethan 15 years of supply chain experience and has held a variety of operations, market-ing and business development roles. Richard most recently held leadership positions at

United Parcel Service and has served in both the U.S. Navy and U.S. Coast Guard. Heholds a Bachelor of Arts degree from the University of Texas at Arlington and a Mastersof Business Administration from Southern Methodist University.

Supply Chain Visibility in Healthcare

Beyond the DashboardA CEOs Perspective

Wrien by Richard Beeny, CEO, LifeScience Logistics


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tions can drive benets in eciency, lower inventories andimprove fulllment rates. Overall, visibility is driven bycompanies need to:

Become more proactive and systematic in their supplychain operationsTrack and trace products throughout the supply chain,from cradle to graveProactively alert customers of product availability and

status of shipmentsImprove on-time delivery, reduce lead time and leadtime variabilityReduce and/or redirect working capital, as well as xedand variable costs

These are fundamental capabilities for the supply chaintoday, and given the risk and regulatory oversight, clearvisibility is vital in Healthcare!

A look at the healthcare industry

With over $4.5 trillion in expenditure, the global medicalindustry is one of the worlds largest and fastest growingindustries, comprising various sectors: medical equipmentand supplies, pharmaceutical, healthcare services, biotech-nology, and alternative medicine sectors. Undoubtedly, themanagement and delivery of these vital goods throughoutthe healthcare supply chain are proportionally as complex

and important as its size and velocity.

Overall, the process of manufacturing and distribut-ing pharmaceutical products is similar to that of otherindustries. Companies purchase raw materials for bulksynthesis of active and inactive ingredients. Dosages areformulated and packaged. Products ow (from cradle tograve) through manufacturers warehouses, wholesaledistributors/3rd Part logistics providers, retail pharma-cies, medical institutions, and nally to the patient. Someproducts make their way back to their manufacturers dueto recalls and returns.

Today, the healthcare industry is characterized by a num-ber of drivers aecting its supply chain, including:

Globalization, competition and margin compressionIncreased regulatory oversightThe rise in IT budgets at healthcare institutionsGrowth in usage of medicationIncreased cost of drug development, production anddistributionMajor retailers driving packaging and labelling re-quirementsManufacturers desire to control the customer and takemargins away from wholesalersNew outsourcing models in the patent to patientsupply chain process

To meet these while improv-ing cost, reducing inventoryand maintaining high llrates is a signicant chal-lenge to any supply chain. Itis an even greater challengein pharmaceuticals becauseof the compliance and regu-latory requirements.


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Visibility in healthcare

Visibility in healthcare is certainly vital! Not knowing theroute by which pharmaceutical products make their way tothe consumer can lead to risk in counterfeits. In addition,with FDA regulations, life science companies need to tracedrug and product information such as historical locations;time spent at each location, record of ownership, transac-tion history, packaging congurations, and environmental

storage conditions to eciently and safely manage the fulllifecycle of such products in the supply chain. Major driv-ers for visibility in healthcare include the need to:

Meet Pedigree requirements and deal with counterfeitsManage Product recallsDeal with oshore manufacturing qualityIdentify and mitigate diversion

Pedigree

A drug pedigree is a statement

of origin that identies eachprior sale, purchase, or trade of adrug, including the date of thosetransactions and the names andaddresses of all parties to them.Under the pedigree requirement,each person who is engaged in thewholesale distribution of a pre-scription drug in interstate com-merce, who is not the manufactur-er or an authorized distributor ofrecord for that drug, must provideto the person who receives the

drug a pedigree for that drug.

Recalls

According to the FDA, there wereover 140 drug recalls in 2007.Similar to the food industry, whena recall is made, drug companiessuer twice: once from the massive logistics eort to pulltheir product from the supply chain and the second fromthe substantial negative impact on consumer condence.Faced with a signicant number of product recalls, thehealthcare industry is seeking ways to beer monitor theinternational drug supply from raw material to consum-ers.

Counterfeiting in the supply chain

The pharmaceutical industry also suers from drug coun-terfeiting, in 2007 there were thirty investigations by theFDA. Visibility to origin and ownership of products couldhelp prevent counterfeit drugs from reaching consumermarkets.

Oshore Drug Manufacturing

With the rise of the number of generic products and theirlower margins, manufacturers are driven to go oshore toimprove their competitiveness and protability. This hascreated thousands of oshore healthcare product manufac-turers in environments where strict adherence to six sigmaprocesses is extremely dicult to manage.

Diversion

Diversion is an unauthorized channel in the supply chainand is another form of counterfeiting. Channel corruptionwithin the supply chain can distort prots and revenuedistribution which often leads to additional black marketactivities and diminished brand value, particularly in Eu-rope where borders are becoming virtual.

To ensure the validity of data in the pharmaceutical indus-try, healthcare companies are looking to traceability andvisibility for reducing costs, while improving product qual-ity and drug safety.

With the right visibility tools such as TECSYS iTopia,manufacturers, distributors and 3PLs are empowered tomanage supply chain issues related to track and trace re-quirements for their healthcare products, and as important-ly manage their supply chain operations more eectively.

What is iTopia? Nonot another new drug! But it maybea good medicine to remedy visibility issues in your health-care supply chain. It is a powerful and exible supply chainvisibility application that allows you to easily assemble andcreate real-time, personalized views of all your enterprisedata.


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Manufacturers believe that track-and-trace technologies

will enable increased operational eciency through im-proved product visibility, chargeback and returns process-ing, product recall ability and product security.

Similarly, distributors and retailers see track-and-traceimplementation primarily as a tool to achieve operationaleciencies. They believe the use of track-and-trace technol-ogies will play a key role in future practices and processeson a wide scale, but will need to be phased-in for supplychain-wide adoption.

Through automatic identication, traceability and visibilitytools, healthcare companies are given the opportunity to

make the Healthcare supply chain more ecient and ac-curate, and thus safer by:

Reducing medication errorsMaking counterfeiting more dicultEnabling ecient and eective traceabilityDecreasing the production and supply chain cost

Auto-ID and visibility technology can help manage riskand maintain pedigree by tagging pharmaceuticals andproduct packaging with barcode or radio frequency iden-tication (RFID) tags. This allows products to be tracked,traced and recalled if necessary.

However, up till now, the lack of standards and imperfectcapture rate of RFID readers are a major concern to manu-facturers. To move forward, serialization at the unit levelwill be required, but how that shakes out in the comingmonths and years, remains to be seen. At this point in time,

bar-coding seems to make the most sense; some manu-facturers have already taken that route for tracking andtracing products in their supply chain. Only 40% of drugsin the market currently come with barcode label!

In addition to track-and-trace, the most common visibility

applications include:

Order Inquiry with drill-down by customer, item, PO,order date and the likeInventory inquiry to aggregate inventory from multiplewarehouses into a single viewPurchase orders visibility to view and update purchaseorder status from issue to deliveryDock scheduling to maintain inbound and outbounddock schedules for multiple warehouses

Visibility systems must also include powerful event-management capabilities that can notify the appropriate

individuals important key events occur which impact theirdecision processes; such as a product alert, a customeremergency, an inventory shortage or a delay in delivery.

As CEO, I need to feel the pulse of my organization; where the challenges are, what is working for us, where we need to do furtherwork, where we need to invest, where to lower cost. In brief, I need key performance indicators that represent realistic goals to mymanagement and enable them to manage with condence based on an up-to-date view of our operations.

Richard Beeny, CEOLifeScience Logistics


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Users must have the exibility to set event triggers andcommunication methods with for e.g. RIM, sms, e-mail,and other electronic forms of communications.

Powerful notication functionality helps keep operationson track. When an exception is detected, an alert is sent outto the relevant decision makers who can then use availabletools to address the ramications of corrective action. Dis-tribution, transportation, and logistics are also integrated

into this real-time process to support smooth and ecientsupply chain.

From an individual users perspective

Visibility tools are about providing intelligence throughthe transparent access to information anytime, anywhere,and by making this information easy to use by ltering outwhat is not important and by focusing on key indicatorsrelevant to the specic user.

These tools, such as TECSYS iTopia, have the ability toextract information from disparate, sometimes hard to getat, back-end enterprise systems, pulling relevant informa-tion down to the desktop or mobile computing devicewhere it can be consolidated, manipulated, graphed andshared with others.

With intelligent visibility tools:

Executives are able to determine where the risks areand where the opportunities lie.

Customers may be able to access views to track theirown orders, as well as check on inventory levels andreconcile outstanding credits or invoices.Vendors are able to see how their inventory is movingwithin the warehouse.Sales representatives are equipped with real-timeinformation and always able to answer questions onproduct, stock and pricing.Customer service reps are able to deal with criticalshipments, from tracking to status of orders.

Deploying visibility in healthcare

For years, healthcare organizations have had fragmentedIT environments with multiple applications and silos ofdata that cannot be quickly and easily accessedresult-ing in operational ineciencies, increased costs decreasedservice levels and risks to patients. Certainly, visibilitytools should be at the forefront of healthcare technologyadoption.

However, the high cost, time required and internal politicalstruggles are often the biggest barriers to integrate dispa-rate systems of healthcare IT. Healthcare organizationshave primarily two choices:

1 Adopt Enterprise Application Integration (EAI) suite totie together and capture all relevant data in disparate ap-plications.

2 Outsource to 3PLs: 3PLs provide an asset and servicesplatform for the management and visibility of healthcare

supply chains. It is a distribution and IT infrastructure typi-

cally built and maintained with a focus on standards, regu-latory compliance and best-practice distribution, businessintelligence and track and trace technology. With 3PLs,healthcare products manufacturers are able to achieve:

Scaling

Given manufacturers expanding product portfolio, inter-nal supply chain resources are not able to eectively scale.With 3PLs shared utility model, manufacturers are able toleverage the already established and maintained supplychain technology infrastructure and visibility tool to enable

their business operations expansion.

Risk Mitigation

Companies that have traditionally distributed out of asingle location face increasing pressure to develop contin-gency capabilities. Given the dollar value of products intheir supply chain, especially in controlled substances andcold chain products, the need to mitigate risk drives theneed for outsourcing.

Focus

While dealing with several of the pedigree issues relatedto their products, manufacturers have the opportunity tofocus resources, reduce costs and improve quality by lever-aging 3PLs established infrastructure.

Benchmarking

As a shared utility, typically 3PLs are able to sustain thehealthcares industry best practices with greater frequencyand ability than a manufacturer. This is especially truefrom a Quality and Regulatory Aairs and IT perspectives.


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Benets of Investment in visibility toolsand technology

With visibility tools, and after addressing pedigree re-quirements, Life science companies can reduce volume ofreturned products and reduced costs for product returnsand recalls. They can also address inventory managementeciencies, improve forecasting capabilities, reduced out-of-stock items, increase service levels, and achieve reduc-

tion in overall supply chain operating costs. Below areexamples of nancial benets sited at some companies whohave deployed visibility tools.

Examples of benets sited include:

Improved visibility such as real-time visibility intocustomers orders

Improved responsiveness to customer inquiries andsupply chain exceptionsImproved eciency such as minimizing inventory andimproved margins

Moving forward

Undoubtedly, challenges and changes will be constant inthe patent-to-patient supply chains. Evolutions togetherwith the full-eect of globalization have increased thecheck points and therefore vulnerability in the supplychain process; adding risks and uncertainties to suppliers,consumers and regulatory bodies.

While it is important to acknowledge the imperfect worldsurrounding the healthcare supply chain, we; whethermanufacturers, distributors, 3PLs or retailers, are todayempowered with advanced technology, best practice distri-

bution processes and regulatory standards to make majorstrides forward in mitigating much of the challenges we arefacing in our daily management of the supply and demandactivities.

Managements ability to achieve a nearly risk-free environ-ment is primarily enabled by visibility technology that pro-vides intelligence into every step of the healthcare supply

chain. It is facilitating decision making and heightening theawareness level to eectively manage exceptions!

As a CEO in healthcare supply chain management, avoid-ing extinction requires that I get out of the boardroom andinto the supply chains of my customers. Having the rightdata and visibility tools allows us seize opportunities andmitigate risks. Its all about control. Having the controland extending that control are key to the value that we

bring to ourselves and ultimately to our clients and pa-tients.

www.lslog.com www.tecsys.com

TECSYS-LifeScienceLogistics-HealthcareVisibility

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