Prescription for Supply Chain Visibility

According to the director of a leading global pharmaceutical firm (who requested anonymity for this article), a company’s approach to ePedigree, should be that during packaging of the finished goods, global trade item numbers (GTINs) are serialized at the unit level, and in combination with the already established Global Location Number, a company will know what it is and where it came from.

“We trade to a wholesaler, they trade to a distributor, that distributor trades to Wal-Mart, a Target local independent pharmacy, mail order pharmacy, etc., and then you pick it up or they mail it to you,” he explains. “Each financial transaction will be recorded so at the point of dispensing at the unit level the serialized product says ‘I’ve been dispensed and I’m authentic.’”

According to California’s requirements, by 2015 all pharma manufacturers will need to have half of their products serialized. The remainder will have to follow suit in 2016. If the Federal FDA supersedes California’s requirements as it has said it would, it may put its own Standard Numerical Identifier law in place, having one track-and-trace/ePedigree program for the U.S. vs. 50 independent ones. It is assumed that will be OK with California.

“They’re begging for that because they don’t want people to not trade with California because they can go to Nevada instead,” our source says.

But in the pharmaceutical world, saying this will happen and making it happen are two different things. Although manufacturers acknowledge it makes sense for inventory management, demand planning and supply chain security, many feel it will be hard to pull off in their multi-tiered supply chains.

“From a pharma perspective, compared to any other retail consumer good, it takes five or six handoffs before the customer gets the product,” our source continues. “When you buy milk, green beans, t-shirts or computers there are two handoffs. Retailers are already there.”

With generic drugs taking the profit margin away from branded therapeutic drugs, pharmaceutical manufacturers are shifting their attention to temperature-sensitive bio-pharmaceuticals. These may represent more profit, but they also have more handling requirements—especially when it comes to maintaining a constant temperature throughout the global supply chain. That’s where e-pedigree requirements may move from regulatory nuisance to industry best practice.

There are 37 worldwide government regulations, the most recent being Saudi Arabia and UAE, and all have mandated electronic monitoring. That means shipping 20 pallets for $X,000 from point A to B will double in cost thanks to the addition of active and passive shippers as well as electronic monitors as part of the import paperwork.

“Now that we have the World Health Organization and 30 other countries getting on board saying you will do supply chain maintenance and product serialization, temperature management and monitoring, logistics becomes a big factor, when it never was before,” our source adds.

Saving Transportation Costs

Right now pharmaceutical supply and operations planning is all about push. The goal with serialization will be to master the reverse supply chain as well as recall management. And, by the way, that will also improve S&OP.

If the major pharmaceutical companies were forced to adopt e-pedigree sooner, but within their own enterprises, many would already have one of the major raw materials: an enterprise resource planning (ERP) system. And according to Brian Hudock, a partner with Tompkins Associates, supply chain consultants, most of these companies have very strong ERPs which let them know the state of every product in their plants and DCs.

“It doesn’t get complicated until product goes out of the manufacturer’s hands at the DC and reaches wholesalers, retail outlets and hospitals,” Hudock says. “That’s where the system is breaking down at this point.”

Where it is working, logistics efficiencies are resulting in substantial paybacks. Hudock tells of one of the big pharma medical suppliers which looked at ordering patterns to see how hospital groups purchase. Many send P.O.s several times a day across the same product grouping. Historically the pharma companies have treated those as individual orders and packaged them as such. That could mean sending 25 parcels to the same customer address.