Hurricane season is approaching, and at least one of these natural disasters could provide a real-life stress test for pharma manufacturers and the drug supply chain.
Last July, a tornado tore through a major pharma manufacturer's plants in North Carolina, significantly damaging its infrastructure and all its products and creating a drug shortage for health care providers nationwide. Additionally, the global COVID-19 pandemic caused significant long-term disruptions to the pharmaceutical supply chains due to lockdowns, travel restrictions and increased demand for medical supplies.
Pharma must prepare for the inevitable next disaster by being aware of various common disruptions, taking the right steps to mitigate the costs and testing its resilience.
Have pharma supply chain leaders learned their lesson? Have physical and digital safeguards been implemented? If not, there's still time to prepare for natural and human-made disruptions.
Pharma manufacturers should leverage advanced digital systems to enable the supply chain and become more resilient; however, there is no one-size-fits-all approach. Different disruptions call for different protocols and methods and now is the time to prepare before summer when disasters are most likely to occur.
Types of disruptions
In pharma manufacturing, disruptions are inevitable. Various factors, from supply chain bottlenecks to regulatory hurdles, can impede the seamless production of lifesaving medications. Understanding these disruptions and implementing effective strategies to mitigate their impact is crucial for maintaining the integrity of the pharma industry and ensuring patients receive the medicines they need.
- Supply chain interruptions: The pharma supply chain is complex, involving numerous stakeholders and processes. Raw material shortages, transportation delays, and unexpected demand fluctuations can significantly impact manufacturing operations. For example, a natural disaster in a key manufacturing region can disrupt the supply of essential raw materials or key ingredients, leading to production delays, low stocks and shortages of critical medications. A recent earthquake in New Jersey and New York should be another wake-up call for the pharma industry, which has significant R&D and manufacturing capability concentrated in the Northeast United States.
- Regulatory compliance challenges: The pharma industry is highly regulated, with stringent guidelines governing manufacturing processes, quality control and product safety. Noncompliance with regulatory requirements can result in production delays, product recalls, and reputational damage for pharma companies. Moreover, navigating the complex and evolving regulatory landscape presents an ongoing challenge for manufacturers.
- Technological failures: In an era of increasing automation and digitization, the reliability of technology in pharmaceutical manufacturing has grown significantly. However, technological failures, such as equipment malfunctions, software glitches or cyber attacks, can disrupt production processes and compromise product quality and safety.
- Geopolitical situations: The U.S.-China trade conflict, the Ukraine-Russia war, and the Israel-Gaza confrontation are just a handful of examples of tension between state actors disrupting economic activities across the globe. The ripple effect of these can also be seen in the pharma supply chain, which is truly a globally interconnected chain.
- Human error: Despite technological advancements, human error remains a significant challenge in pharma manufacturing. From improper handling of materials to procedural mistakes, human errors can lead to product defects, production delays and regulatory noncompliance.
Supply chain planning components
By leveraging the following strategies, pharma companies can enhance their ability to anticipate, respond to, and mitigate supply chain disruptions, ultimately ensuring the reliable and timely delivery of medications to patients. These strategies include integrating weather warnings, improving infrastructure and prioritizing critical resources for full effectiveness.
Integrating weather warning systems into the IT mix
Weather events such as hurricanes, floods, earthquakes or extreme temperatures can disrupt transportation networks and impact the timely delivery of raw materials and finished products. By integrating weather warning systems into the IT infrastructure, pharma companies can receive real-time alerts and forecasts about potential weather-related disruptions.
This information can enable proactive decision-making, such as adjusting production schedules, rerouting shipments, or activating contingency plans to minimize the impact of adverse weather conditions on supply chain operations.
Removing redundancy in IT infrastructure
Redundancy in IT infrastructure refers to duplicative systems or resources that are maintained as backups to ensure continuity of operations in case of failures or disruptions.
While redundancy is essential for resilience, excessive redundancy can lead to inefficiencies and increased costs. By rationalizing IT infrastructure and eliminating unnecessary redundancies, pharma companies can optimize resource utilization, streamline processes and improve agility.
Consolidating IT systems, leveraging cloud-based solutions, and implementing virtualization technologies can help reduce complexity and enhance scalability, enabling pharma companies to adapt more quickly to changing market conditions and mitigate supply chain disruptions.
Creating digital windows in backup materials, supplies, manufacturing space and lab
Digital windows refer to real-time visibility into the availability and utilization of critical resources such as materials, supplies, manufacturing space and labor. By digitizing and centralizing data related to resource allocation and utilization, pharma companies can optimize resource planning, prevent shortages or overages, and improve operational efficiency. Advanced planning and scheduling software, workforce management systems and supply chain optimization tools can provide digital windows into resource availability and demand, enabling better decision-making and proactive management of supply chain disruptions.
The importance of mitigation steps
Risk reduction strategies and taking crucial steps to mitigate damage, such as integrating weather warning systems, improving digital tracking systems, and removing redundancy in IT infrastructure, are critical for reducing the risk of supply chain disruptions in pharma manufacturing. By implementing these measures, pharma companies can enhance their operational resilience and ability to withstand unforeseen events, such as natural disasters or technological failures, without compromising product quality or patient safety. Pharma manufacturers have the responsibility to implement effective supply chain management while also maintaining compliance with regulatory requirements and ensuring patients' uninterrupted supply of medications.
Stress testing the system
Stress testing involves simulating adverse scenarios, such as taking a key supplier out of the system to evaluate the resilience of the supply chain and identify potential weaknesses or bottlenecks. Pharma companies can stress test the supply chain by temporarily suspending orders from a specific supplier or simulating disruptions in transportation networks to assess the impact on production schedules, inventory levels and distribution channels.
Stress testing helps companies proactively identify vulnerabilities and develop contingency plans to mitigate the impact of supply chain disruptions. It also fosters collaboration with suppliers and strengthens relationships to ensure a more robust and reliable supply chain ecosystem.
Consequences of supplier disregard
If suppliers disregard the recommended mitigation methods, the pharma supply chain becomes more vulnerable to disruptions, such as raw material shortages, transportation delays and quality issues. Disregarding these methods can also lead to production delays, product recalls and reputational damage for pharma companies. Moreover, non-compliance with regulatory requirements may result in fines, penalties or legal consequences.
In general, it is essential for pharmal companies to learn and invest in emerging technologies, such as artificial intelligence, the Internet of Things (IoT), and big data analytics, which are already revolutionizing pharma manufacturing and leading to improved efficiency, quality and patient safety. Upskilling workers to understand how to utilize these advanced technologies ethically and correctly will help avoid further human-made issues as well.
By combining the digital world with the physical world of manufacturing, pharma manufacturers can help mitigate future supply chain disasters and prepare for the next natural disaster.
