Finding The Gaps In Your Logistics Plan

By Gail Dutton, contributing editor

Supply chain gap analysis is moving from managing individual shipments to providing predictive forecasts that can improve an organization’s overall supply chain performance. Gap analysis is a critical tool to assess processes throughout the supply chain, but it is only one tool needed to optimize a quality system.

Abbott, for example, has an extensive, routine monitoring program as part of its supply chain risk management activities. According to Michael Douma, divisional VP of supply chain, global pharmaceutical operations at Abbott, “One hundred percent of shipments from both of our main distribution facilities are monitored. Metrics provide an objective basis for actions. They measure general performance and are used in risk management for root-cause analyses and in process improvement/optimization projects.” Specific targets for the improvements are confidential, but include reducing the annual number of exceptions and thus enabling continuous improvements and better control in the shipping process.

Monitoring is no longer focused solely on finished products. Now monitoring extends to the entire supply chain, starting with incoming ingredients and ending only when the product is in users’ hands. As Douma underscores, “Managing supply chain temperature during manufacturing is a rapidly expanding area of focus by many countries’ ministries of health. And, the issue of end-to-end supply chain temperature control routinely comes up during ministry of health meetings and customer audits.”

Key Supply Chain Gaps
“Within logistics, the most frequent supply chain failures occur in transportation and customs clearance – specifically around the handoff between freight forwarders and in-country brokers,” Douma says. There also is a high potential for packaging or handling mistakes that may lead to temperature excursions when products are exposed to very different external environments during shipping. “For example, shipping products from winter in Chicago to summer in South America requires very robust packaging to manage the changes in temperature and humidity.” Shipping from Chicago to Berlin, by contrast, is less challenging because environmental conditions are similar.

Not surprisingly, logistics experts agree that, although all geographic areas have potential perils, the greatest risks are in developing markets. Each nation typically has different cold chain requirements and different interpretations of those requirements. Currently, for example, there are more than 30 different GDP (good distribution practices) regulations from organizations and nations, and more in development. For the same product, one country, for instance, may allow no temperature excursions while another may allow excursions of 1° to 2°C or more. Some require data loggers, while others accept indicators. There is no blanket policy for handling the same product around the globe.

Working closely with their supply chain partners, including logistics providers, not only helps organizations stay abreast of changing cold chain regulations, but also helps them identify areas needing improvement. By working together, Douma says, “We found a better definition of specific conditions during each stage of shipment and the potential risks. We also realized there is a need to educate all supply chain partners on GDPs and on supply chain temperature management.”

To identify gaps in policies, procedures, and their implementation throughout the supply chain, as well as conditions that contribute to packaging failure, pharmaceutical companies need to analyze all the relevant data relating to a shipment, including time, temperature, packaging solutions, transportation mode, and the exact path it takes to reach its destination (the lane). However, “The quality of data is more important than the quantity of data,” stresses Niclas Ohlsson, CEO of TSS AB (a supplier of cold chain management solutions, including temperature monitoring), speaking at the 2012 IQPC Global Cold Forum.

Temperature Monitoring Expands
Acquiring temperature data is an obvious first step in any cold chain gap analysis. Although equipment and facilities — including cold rooms — have been temperature mapped for years as part of good manufacturing processes (GMPs), many ministries of health recently have begun requiring 100% supply chain temperature monitoring on cold chain pharmaceutical products imported into their countries. “Temperature monitoring of product in-transit and temperature mapping of facilities and/or equipment are critical to complete a comprehensive, value-added gap analysis,” Douma emphasizes.

To generate temperature records throughout transit, progressive companies pack temperature monitors inside several boxes for each shipment. They monitor temperature continuously throughout the journey, and the data is uploaded once the product is received. That data provides proof of actual product temperatures throughout transit. Shippers using GPS tracking may gain deeper insight by linking any excursions to a geographic location and handler.

Test in the Lab and in the Environment
Testing packaging is also advised — and not just to ensure proper temperatures. Distribution chain studies should test products against exposure to temperature, pressure, shock, and vibration during transit so formulations may be designed to minimize the chance that proteins will denature or that aggregates will form.

Shipment routes and packaging can be tested, either through a comprehensive testing facility or through real-world shipments. In controlled surroundings, shippers have the advantage of testing extreme conditions in a repeatable environment while conserving product. In that situation, shocks, vibrations, and temperature issues should be experienced concurrently, just as in actual transit. Conversely, realworld situations don’t test as broad a range of conditions, but have the additional advantage of undergoing customs clearance. If there are issues with paperwork or handling, they may be identified during a small shipment, before commercial quantities are shipped. This is particularly important in countries in which the pharmaceutical import market is not yet mature.

AstraZeneca, for example, has a well-established global presence and significant research, development, and manufacturing alliances in developing markets. When moving product, APIs, and samples throughout its networks, it knows that collaboration with its supply chain and logistics partners is vital.

Once AZ gathered comprehensive information throughout its supply chain, it shared both the data and the analyses with its carriers. “That gives our freight forwarders detailed insights on specific routes to help them identify actions they can take to mitigate risks,” says Christine Foster, senior quality assurance supplier manager at AstraZeneca. The company does this without fear of breaching trade secrets or reducing its competitive advantages, understanding that sharing data on routes, temperature, vibration, and other logistics data with its logistics providers helps strengthen its network. Others are more cautious. Abbott, in contrast, keeps much of its logistics data in-house.

Automate Reporting
In addition to changes in logistics, AstraZeneca also changed its reporting systems. Before beginning the program, “Reports were cumbersome,” Foster recalls. In June 2010, it partnered with TSS to design a comprehensive distribution chain analytics system that was implemented the following spring.

This new system provides an overview of logistics throughout the company, putting nearly real-time information about routes and performance criteria at managers’ fingertips, and allowing ad hoc reports for snapshots of specific concerns. The other benefit of the consolidated reporting system is that it enforces data consistency, removing site-to-site variation. “We can associate trends with cost of resources, enabling savings that can be applied to drug development,” Foster says.

Managing Nuances
From a logistics provider’s perspective, “Managing nuances of various shipping lanes, packaging, environments, and other factors that affect the cold chain efficiently through analytics helps the logistics industry be more responsive to customers without driving up costs disproportionately,” says Jerry Hammon, VP of transportation and logistics for GenPact, a business process management solutions provider, speaking during a logistics webinar. To realize efficiencies from any analytics package, however, organizations must overcome the challenges posed by operational silos, ineffective use of data, and the accumulation of meaningless metrics.

Organizations still operate in silos, with communication gaps between planning and execution that delay feedback and impair efficiency, Hammon says. The rapid proliferation of data makes sharing information across silos even more challenging. “The volume of data is growing at 40% per year, and it’s difficult to discern what’s relevant. More than 89% of companies don’t use their data effectively to make informed decisions. Instead, the trend is to gather more data,” he says.

To optimize efficiency, Hammon continues, “Identify the data sources and determine which are predictive and can affect business outcomes.” Also identify useful data that may not be recorded currently but that could be captured with existing technology. “Don’t be constrained by just the data that’s flowing toward you.”

By analyzing that data, organizations can make more informed decisions to help them select transportation modes and design logistics strategies. As Satish Armugam, assistant VP of transportation and logistics at GenPact, says, “Analysis can be used to drive efficiency in function. This results in gains of 10% to 12% in network design and optimization, 8% to 10% in carriers sourcing, and 6% in distribution center analytics.” These results can be achieved through more effective consolidation, mode shifts, capacity utilization, and load planning.

The long-term objective of data analytics initiatives is to move organizations from descriptive analyses to predictive analyses so they may address challenges proactively. Like biomarkers in drug development, predictive analytics identify lead indicators that forecast performance and provide insights to further optimize operations and yield competitive advantages.

Collaborating internally across silos and externally with supply chain and logistics partners is key to achieving the most effective outcome from any supply chain gap analysis. As Hammon says, collaborating ensures “We aren’t reinventing solutions.”