Like other industries, pharmaceutical also has a supply chain department that performs material management for the entire process life cycle. This department is tasked with supplying the required raw material before it is required for producing the pharma product.

The success of a pharmaceutical organization goes hand in hand with developing, managing and controlling an efficient supply chain department. It can make or break the target market of a pharma organization and can also act as an efficient tool for discovering new markets.

The supply chain department is tasked with arranging the desired raw material and providing the required storage conditions – after the product leaves the manufacturing facility until it reaches the end-user by complying with all the regulatory regulations. 

What is supply chain department in pharmaceutical industry?

The pharmaceutical supply chain manages material flow from purchasing raw materials to delivering products in final finished form to its customer. It includes planning and executing all the related activities.

Various vital components and stakeholders in the pharmaceutical supply chain must coordinate, and more importantly, pharma organizations must adhere to regulatory regulations at every stage of material management for drug safety and compliance.

The working cycle of a pharmaceutical supply chain can commonly be divided into the following steps.

Planning

Planning is the foremost critical and vital part of a pharma supply chain. It defines the success of a supply chain and ensures it’s resilient to changing market dynamics. If it is not performed efficiently, it will destroy the entire production cycle. 

Planning includes practices and procedures for sourcing raw materials to deliver the final product to the consumer. It focuses on 

• How the capacity of a pharma manufacturer is maximum utilized without having over and under inventory levels

• How the inventory turnover rate can be improved

• Reducing lead time, in the minimum time possible, by designing policies and systems to solve regulatory and inventory problems

• Solving capacity issues by devising organization-wide and long-term systems

• Issues related to lost sales and increasing market shares

Procurement

The next step in the pharmaceutical supply chain is procurement. It is critical because this step indicates the capacity of a pharma organization to adhere to its sourcing policies, laid down in the planning stage. 

The primary process in this process is the supplier selection for supplying the required goods and services. The selection process is based on 

• The ability of a supplier to fulfil the requirement

• Cost-effectiveness, provided the supplier fulfils all the process, product or technical requirements

• The supplier that takes less time to deliver the goods or services

Production

The production process starts after the pharma organization receives the raw material. The production is planned and executed according to the market’s requirements. 

Production includes

• Receiving the raw material and storing it in recommended storage conditions

• production planning according to the demands of supply chain department

• manufacturing operations according to the approved product plan

• Ensuring quality on plant floor by frequent visit by quality department

• Quality inspection of the product in laboratory to verify the chemical composition and presence of active in the product

• Packaging operations according to the product requirements

• After final finished product is manufactured, it is stored in finished product warehouse

Delivery

Delivery is transferring goods from the warehouse to the target market, i.e. distributors, pharmacies, hospitals or direct patients. It involves processes that help in a successful delivery to the target audience, such as receiving orders, scheduling, arranging and managing shipments, billing and receiving payments.

Products are delivered according to the nature of product requirements. For example, temperature-sensitive products must be delivered in a temperature-controlled container.

Challenges for pharmaceutical supply chain

Due to the strict regulatory regulations, the sensitivity of pharma products and time limitations, the supply chain in the pharma industry faces some unique challenges not common to other industries. 

Let’s discuss some of these challenges, and after this section, we will discuss how to face these challenges.

Un-availability of raw materials

This is the most common challenge faced by the pharmaceutical supply chain. The raw material is unavailable at the required time, despite timely intimation by the production department.

Sometimes, it is not due to the inefficient working of the supply chain, but it is the result of un-preparedness in response to changing market requirements. It can also be affected by global and supplier-side factors. 

Supplier shipments can be easily affected by delays due to logistics issues, natural disasters such as COVID – 19 pandemic, and unexpected shutdowns. This condition creates an unpleasant situation for the pharma manufacturer, such as delay in production and inability to fulfil market orders. The availability of raw materials can also be affected by compliance issues at the supplier end. 

Unexpected disruption

Manufacturing industries are prone to unexpected disruption, and the same is the case with raw material suppliers. The nature of disruption can be many such as

• Plant breakdown due to failure in utility or manufacturing equipment

• Plant upgradation, installation or renovation work in the area

• Global disasters such as pandemics or effects of climate change

• Regulatory or compliance-related work

Suppliers are often prepared against this disruption, but chances are it can occur without any indication or prior information. Specifically, regulatory actions can be unexpected if not prepared in advance. When these happen, it can severely disrupt the routine supply of raw materials to the pharma manufacturer and could delay production planning. 

Temperature deviation during transportation

Temperature-sensitive products are an integral part of pharma raw materials, and they are shipped in specially designed containers that can hold the required temperature until the product reaches its final destination. A significant challenge for the pharma supply chain is preventing deviation in temperature from its acceptable range.

For these products, such as vaccines and recombinant proteins, even the slightest deviation in temperature makes the raw material useless for a pharma manufacturer, potentially making huge losses and increasing lead times.

Temperature deviation can occur due to problems with the refrigeration systems of the truck and errors in handling and transporting the shipment.

Compliance

As with the pharma manufacturing process, the supply chain is also regulated. The regulatory bodies require the pharma manufacturer to design all components of the supply chain per the regulatory body guidelines. These guidelines include temperature-controlled containers and logistics, packaging, labelling and documentation.

Each compliance action must be documented and produced during review by regulatory bodies. Primarily a pharma manufacturer must demonstrate that temperature-sensitive products are stored and transported in accordance with the regulations.

Another major compliance challenge is upgrading their supply chain per the updated regulations, a routine due to changing market requirements.

How to overcome these challenges

Let’s discuss some ways that a pharma organization can overcome the challenges mentioned above

Perform risk analysis for weak points in your supply chain

Risk analysis is an integral way of locating and pinpointing weak points in the supply chain. It identifies the maximum capabilities of a supply chain of a pharma organization and how it can react to vulnerabilities or disruption to the supply chain.

Risk must be analyzed for all possible supply chain scenarios, such as supplier shortage, logistics support, warehousing, controlled temperature facilities and planning. After the identification of possible risks, steps to mitigate them must be devised in a way that optimizes inventory levels, flexibility in response to demand fluctuations, and prevents shortages.

Plan well before time

One simple and effective way to manage supply chain challenges is by planning, i.e., planning well before time. Some ways that it can be possible in a pharma organization are

• Keep your market forecast updated and plan your production activities accordingly. It will help your organization to order raw materials well before the time

• Set up a monitoring plan across various departments such as production, warehousing, marketing and supply chain to have an insight into the current status of the inventory level, market orders, market forecast and production capabilities. 

• If there is a change in market requirements due to fluctuations, it must be effectively communicated to all stakeholders for immediate action and preparation.

Participate in exhibitions and trade shows to diversify your supply chain and reduce dependency

Exhibitions and tradeshows are an effective way of meeting possible suppliers under one roof. It provides an opportunity to expand business relationships without extensive travelling.

Try to participate in tradeshows and exhibitions where the supplier of respective raw materials exhibit their products and services. Use this opportunity to diversify your raw material sources so your organization is not bound to a single source.

This exhibition and tradeshows can also be used to increase your products' market base and footprint. 

Opt for shipper that provide temperature controlled facility

As discussed above, temperature controlled facility is critical for some products. It can destroy the entire batch of products and face regulatory action if strict temperature control is not achieved.

To solve this problem most quickly and efficiently, hire a shipper that can provide a temperature control container or facility. It provides protection to the product and relieves the pharma product manufacturer of regulatory acquiring compliance. The shipper is responsible for completing all the regulations, maintaining documentation and acquiring regulatory approval.

About the Author

Muhammad Asim Niazi has a vast experience of about 11 years in a Pharmaceutical company. During his tenure he worked in their different departments and had been part of many initiatives within the company. He now uses his experience and skill to write interested content for audiences at PharmaSources.com.