Tech is the key to ensure smart supply chains
The global fallout of COVID-19 put the supply chain sector under intense scrutiny during 2020 and the first half of 2021. Aside from obvious disruptions, the pandemic also highlighted the potential logistics chaos that could occur with the rapid return to trade. It exposed vulnerabilities in the production strategies and supply chains of most industries, including the pharmaceutical sector.
There were some valuable lessons too. The challenge now facing companies it is to ensure that supply chains are more resilient without weakening their competitive edge. Forward-leaning firms will use the lessons learnt from this crisis to build greater flexibility by adopting process innovation and new technologies such as robotics and automation.
As global supply chains became destabilised, the volatility exposed vulnerabilities including:1
- Enthusiasm for free trade waned. Several years of increasing momentum around free trade was reversed by an escalation of the US-China trade war.
- COVID-19 led to twin shocks, first on the supply and then on the demand side. In February 2020, supply shocks rippled through the network of suppliers, starting in China. This was followed by a demand shock as Western economies shut down. With a huge decline in global trade, shipping networks found insufficient demand to even sail cargo ships resulting in significant challenges as trade restarted and lack of capacity in shipping, containers and staff to operate the routes.
Harvard Review in its study, Global Supply Chains in a Post-Pandemic World, suggests that confronting fragile global supply chains requires diversified sourcing and reducing exposure to geopolitical risk. It indicates that while firms may seek to move from a just-in-time to a just-in-case mindset, there remains little tolerance for higher pricing. Moreover, economic principles persist, so diversifying supply sources risks losing economies of scale and the efficiencies that have been developed over time. Unpriced risks of disruption, such as maintaining greater inventory, must be paid for.
Ensuring continuity of supply presents other challenges. If a crisis creates a 20x surge in demand, how can that capacity be justified outside of the crisis? The economics do not support running a factory at 5% load.
On the upside, the shock of these two years allow for new opportunities in terms of innovation, simplification, and distribution. Here are some top tech considerations2 to ensure your supply chain stays relevant and flexible during this tumultuous time:
- Automate for greater efficiency
In a warehouse, operations such as picking and packing remain labour-intensive and the implementation of warehouse-automation technologies such as autonomous mobile robots and aerial drones, means that manual processes are fast becoming redundant. An article by McKinsey & Company points out that today’s automation systems are more capable and flexible than ever. “Fast picking systems can now handle between 1 000 and 2 400 picks per hour, thanks to advanced vision technology that allow them to handle objects presented in arbitrary positions or orientations.” Automation can also encourage pharma companies to handle fast-changing multichannel and omnichannel requirements efficiently while supporting quick delivery. The implementation of automation in the warehouse will provide pharma and logistics companies with more strategic freedom in their network-footprint decisions – ensuring they remain lean and agile in a competitive market.
- Blockchain for smarter security and visibility
The technology yields the potential for improved end-to-end visibility, transparency and security across global supply chain processes. No record can ever be erased, offering supply chain managers a solution to track the source of goods and establish trust in shared supplier information.
With the evolution of blockchain expanding its applications to further supply chain visibility, pharma companies can also look to deploy blockchain to prevent information leakages, help identify counterfeit items and fraud, and pinpoint at-risk suppliers in order to demonstrate that regulatory requirements are being met.
- Why you need machine learning
Data can unlock insights to optimise global supply networks. By harnessing technologies such as artificial intelligence (AI), pharma companies could proactively manage data and optimise strategic sourcing relationships. Coupled with predictive analytics, AI transformation can go much deeper than providing supply chain practitioners with smarter processes and functions. It will also offer pharma companies access to the tools to aggregate and analyse data from multiple sources ensuring complete visibility throughout the cold chain. Accordingly, supply chain managers will be able to predict hurdles and allocate resources properly before the cold chain process starts.
- IoT transforms manufacturing and output
The COVID-19 pandemic is a stark reminder of the urgency required to get life-saving medicines, vaccines and medical equipment to market quickly around the globe. The Internet of things (IoT) has proven to be critical in providing pharma companies with the right tools to identify COVID-19 symptoms and grant patients better treatment. It also has a positive impact on supply availability by improving batch processes in manufacturing.
- 3D printing for patient-centric product supply chains
As pharma businesses become more patient-focused, there is a growing demand for personalised products, made-to-order and localised products. 3D printing is a key focus for overcoming material complexities in the supply chain. While manufacturing products in certain locations can be done at a relatively low-cost, managing a global logistics network cannot, especially as transportation and trade costs are predicted to rise by 15 to 31% due to disruptions resulting from the pandemic. If supply chain players can decentralise production closer to where demand is, the industry could see a slow decrease in logistics and transportation cost and a reduction of carbon footprint emissions – a big plus.
The ability to build resilience and flexibility in the supply chain is a key consideration to future proof your business. If you need a knowledge partner, contact Clarity Pharma now.