What is in this article?:
- What the Pharmaceutical Industry Can Teach Us about Supply Chain Security Best Practices
- Risks Have Serious Consequences
Industry supply chains beyond pharmaceuticals will continue to face challenges with cargo theft, government regulations and import/export security as market demands evolve.
Over the last few decades, increasing globalization and supply chain complexity have posed risks to pharmaceutical safety, ultimately impacting businesses and, most importantly, patients. Today, materials are procured from multiple countries, manufactured somewhere else, potentially packaged in yet another country and distributed and sold globally.
To successfully protect against these risks, proactive supply chain security must deliver actionable intelligence to mitigate those risks. Once implemented, this decision-based approach, utilizing information delivered in real time, allows for efficient business practices that not only protect a brand but also the many partners and people connected to that brand.
The lessons learned in both identifying risks and improving pharmaceutical supply chain security can be applied as best practices for a variety of industries.
This article explores the trends and risks currently impacting the pharmaceutical supply chain, as well as the innovative technologies available to secure it, which can be leveraged across other industries that have similar supply chain risks.
Key Trends Driving the Need for Supply Chain Security
According to the UPS 2012 “Pain in the Chain Survey,” 83% of healthcare companies surveyed rank tapping into new global markets as a top strategy for the next three to five years.
Today, up to 40% of the drugs Americans take are manufactured outside the U.S., as well as up to 80% of the active pharmaceutical ingredients in those drugs.
Furthermore, in 2011 the FDA projected that nearly 24 million shipments of FDA-regulated articles arrived at ports. This is compared to just six million a decade ago.
This rapid expansion of the global market opens companies up to an exponential increase in the number of vulnerability points, coupled with decreased visibility to them, due to insufficient supply chain information. Globalization also leads to a complex system of foreign, federal and state product safety oversight with an incomplete set of enforcement tools. This misalignment of resources leaves U.S. drug distribution vulnerable to a host of problems.
At any stage in this long, multi-faceted journey from raw source materials to finished products to consumers, products can be contaminated from four primary risks:
Intentional adulteration, due to contamination in the manufacturing, storage, or distribution process, or from ingredient substitution for economic gain, is more prevalent with global supply chains. Adulteration can result from a number of sources including foreign and domestic terrorist organizations or activists, economically motivated persons or groups, or even disgruntled employees.
Cargo theft is up due to the sluggish economy and security measures that rely too heavily on expecting people to consistently follow prescribed procedures. In the U.S. alone, cargo theft produces an annual loss of $35 billion and in 2011; the average loss per incident in pharmaceuticals due to cargo theft was $585,000.
Counterfeiting, which is fraudulently mislabeling a product in identity or source, is another significant risk to supply chain security, as well as diversion of products from the intended authorized market to another.