13 Mar 2024

Pharmaceuticals Supply Chain Challenges and Solutions

A proper pharmaceutical supply chain works to ease consumers' lives. In this write-up, we focus on the challenges and solutions that are of utmost importance from an SCM point of view.

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Each disruptive event imparts a lot of learning for every sector. These bottlenecks, in hindsight, are the main catalysts that drive course correction, making the process more resilient, reliable, and, of course, better equipped to handle similar events in the forthcoming timeline. To serve the context of the write-up, it will be helpful to mention how 2020 challenged the supply chain industry. To say the learnings were a handful would be an understatement. The way supply chain management (SCM) approached its daily functions and stakeholders' accountability was upended entirely. The terms artificial intelligence and machine learning found their footing by challenging the traditional methods that were devoid of proactivity and agility. More so when it comes to the pharma sector and its necessity to ensure an all-season value chain.

In 2020, when the world halted its pace owing to pandemic, the pharma industry undoubtedly faced serious hurdles. With the workforce getting severely impacted and end-to-end functions finding retrograde pace to their business-as-usual tasks, over 70% of medical companies were subject to vulnerabilities, with full delivery of medicine decreasing by nearly 50%. While enterprises across the globe eventually ironed their way out of the unprecedented situation, it became pretty clear to the leadership that some perennial trial by fire will always be a part of the process. In this write-up, we’ll cover some of the crucial challenges in the pharmaceutical supply chain and the potential solutions that play a part in nullifying it.

Table of Contents

What are the major challenges in the pharmaceutical supply chain?

A diagram outlining a pharmaceutical supply chain, highlighting key challenges
  1. Global Market Dependence

    Supply chain is a complex network of numerous suppliers and stakeholders. This holds more true for a multinational corporation with its local supplier’s network and workforce at the core of it. With so many players crucial to the functioning of the end-to-end process, there’s always a possibility a disruption in even a single leg of the workflow will stand to have a domino effect. Such a situation came to the fore during COVID-19 when the extended lockdown in China, the source of global raw material procurement and manufacturing, led many companies in dire straits with huge financial losses.

  2. Cold Chain Integrity

    The most significant preliminary requirement for a pharmaceutical supply chain is the full proof working of cold chain. Considering medicines are a fragile asset that needs a temperature-controlled infrastructure right from their manufacturing to delivery and storage – it is indeed important for supply chain management to prioritize their safekeeping. Any deviation in handling of the consignment, mainly through the wrong temperature, can alter the product's efficacy.

  3. Regulatory Hurdles

    An essential aspect of the pharma industry is how well it keeps up with the changing landscape of guidelines and regulatory compliance. For organizations with a global footprint, it becomes slightly more complex to stay updated with every country’s safety guidelines. Though time-consuming, it is of the utmost importance to ensure that the SCM employed in the designated area adheres to each government norm.

  4. Demand Forecasting

    Owing to unpredictable market dynamics, majorly driven by factors such as medicine approval by the local govt., competitor activity, and the organization’s own performance and perception in front of its consumer base, finalizing demand for the defined timeline is a must for enterprises. This becomes an even bigger Achilles heel during a situation like a pandemic when the output needs to be exponentially higher. It's during events like these when a sound investment in demand forecasting software insulates the company from the ill effects of the unpredictable market.

  5. Inventory Management

    One thing to keep in mind is that medicines are perishable products. This means keeping a lean inventory model, while necessary, poses a fair share of challenges for the stakeholders. If you hold stock for an extended period, the consignment will be no good, and knowing medicine requires heavy financial investment throughout its supply chain functioning, the company will have a sour deal on its hands.

What are the solutions to challenges in the pharmaceutical supply chain?

Ever since the inculcation of an insight-based framework powered by AI and ML platforms, the challenges of the pharmaceutical value chain have been better handled with more resilient workflows. Supply chain management is now far better equipped not only to handle bottlenecks but also to make the most of market opportunities.

Solutions for pharmaceutical supply chain challenges
  1. Supply Chain Diversification

    To minimize the dependencies on the global market, organizations are now reducing reliance on one particular country or a supplier. By getting done with a sole supplier strategy, the diversification opens up fruitful avenues for supply chain continuity through a network of local region suppliers. This strategy not only comes ace during disruptive events but also pitches in big time when a conglomerate is looking to scale its operation.

  2. Automated Process through Tech

    Traditional methods are not only time-consuming but are also prone to fallacies. With so much data being processed daily, adopting automated platforms simplifies complexities and allows unprecedented transparency in the workflow. Further to back this point, it is important to mention the role of AI and ML-based platforms in achieving this level of supply chain efficiency. Lately, the introduction of Blockchain technology for transparency and anti-counterfeiting has created a far more secure roadmap for better shipment tracking with authenticity, reducing the risk of counterfeited drugs for consumers.

  3. Advanced Cold Chain Management Solutions

    A must for time and temperature-sensitive products like medicines, investment in advanced cold management solutions like real-time temperature monitoring, logistics infra for fragile equipment makes transit, packaging, and storage easier for the pharmaceutical industry.

  4. Regulatory Collaboration and Standardization

    This solution requires the organization's management and the government stakeholders to be on the same page. Both parties should collectively sort out a streamlined approval process, making medicines available much faster for the masses. Having a standardized code and proactively informing companies about any regulation changes help them adapt smoothly, especially if there are stock transits involving multiple countries.

  5. Insight driven Demand Forecasting

    Based on a company’s historical data assessment via an AI/ML platform, SCM can know the exact production number and optimize its resources for the best production efficiency. This is done through the application’s in-built algorithms, which instantly analyse complex information sets and churn out an astute action plan. With processes driven by informed decisions, management ensures more intelligent capital utilization.

It’s fair to say that when it comes to consumers, a faultless pharma supply chain functioning is a necessity. With the entire world dependent on it for its well-being, it is a must for both SCM and government officials to ensure that challenges are sorted out timely through smart collaboration and the infusion of technology in end-to-end value chain functions.

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