Why Now?
As the pharmaceutical industry explores new markets, the need for a secure supply chain has never been greater. Today most pharmaceutical companies are expanding into markets in Africa, Latin America, Asia Pacific, and Eastern Europe. Products are becoming more complex with long manufacturing cycles and more stringent shipping conditions. Additionally, the regulatory authorities are focusing more on the supply chain systems, applying guidelines and directives for third parties, such as airlines, freight forwarders and logistics companies.
The other factor is the trend of pharmaceutical high value products being sought after by organized criminal gangs to supply the illegitimate supply chain with lifestyle drugs and those that can be abused, such as painkillers.
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By GlobalDataThink of an Onion
There is no easy single solution to security in the supply chain. The multilayered approach comprises the best strategies, procedures and training at all levels and with everyone involved to mitigate the risk of loss in the supply chain from diversion, temperature excursion, physical damage or corruption.
Remember a process is only as good as its weakest part.
Security systems are dynamic like all other systems and are continually changing.
What Are We Designing Against?
When a product leaves the manufacturing facility, it is the responsibility of the supply chain to ensure its quality is maintained and that it is fit for purpose when the product reaches the patient.
Physical Damage
Any physical damage occurring in the supply chain will compromise the product’s quality. Physical damage can be attributed to a number of factors, such as inadequate packaging, rough handling, inadequate transport (i.e. open topped vehicles), and undue care (for example, products being left exposed to the elements or damaged during handling by forklift trucks).
Diversion and Pilferage
As stated earlier, organized crime has targeted pharmaceutical products resulting in the diversion of whole shipments from vehicles and warehouses. Pilferages are small thefts from shipments during its transport through the supply chain, and can occur in transit at airports or any holding warehouse. This can have an impact on the rest of a shipment as it will delay delivery pending investigation or it may compromise the product if packaging has been interfered with.
Temperature Excursion
Another area that will result in the loss of a product is the shipment being exposed to inappropriate temperatures either in a vehicle, warehouse or on the tarmac of an airport runway. Most products should be shipped at 15-30 degrees centigrade, however, cool chain products and products, whose stability and quality are reduced by inappropriate temperatures, should be shipped in appropriate containers to achieve this. The diversion of products will also result in the storage of products in inappropriate conditions. Criminal gangs tend not to have a Quality Assurance Department.
Bribery and Corruption
As supply chains widen, it is the responsibility of companies to embed anti-bribery and corruption policies into their supply chain processes. Failure to implement measures of precaution against bribery and corruption could result in large fines and imprisonment for individuals and companies.
Counterfeit
Supply chains should be designed to prevent counterfeit products entering into the legitimate supply chain. Your supply chain should also be designed so no rejected material or expired material is introduced into it.
What are the consequences of loss?
If we lose a shipment, let us consider the impact it has on our business. The obvious loss is the value; many pharmaceutical products are high value goods, however, we also have the transport costs plus the cost of replacement and re-shipping costs. Add to that the cost of any investigation and required actions post loss, the initial value starts to increase dramatically.
As many complex products have long manufacturing cycles, the replacement time may result in out of stock situations leading to patients being denied medication or being found an alternative supplier. Time delays could also disrupt clinical trials and could subsequently impact a company.
Other hidden costs to a company are the loss it suffers to its reputation. As well as losing product, the impact on society may result in death from misuse or abuse of your product or someone using your product and being harmed due to it not being stored or prepared in the correct way. Unlike other cargo theft, no one dies or is harmed when a shipment of mobile phones or laptops are stolen.
Add to this the media attention and the cost of dealing with this type of fallout. There is also the cost of increased insurance premiums and the requirements to be met by any regulatory authority who is involved. It is the prevention of these losses that is the gain of a well-designed supply chain process.
When we start to design the supply chain process it should be a collaborative exercise involving Quality Assurance, Security, Supply Chain, Legal and Compliance, and any third parties (such as, logistic companies, freight-forwarders and airlines or sea freight companies).
All third parties should undergo the required due diligence and auditing prior to being involved in the design with the appropriate contracts or service level agreements in place.
How to Start
The best way to start a design is to prioritize the high risk products and high risk routes involved in your supply chain. This would involve looking at the history of theft or quality incidents regarding temperature excursion or physical damage. The value of shipments and the risk of loss at the destination or throughout the journey should be considered. Knowledge of the product stability, the climate of the destination or the source country, the cargo theft of the area, and the perceived bribery and corruption of government officials in the countries involved should all be taken into account for risk analysis.
Risk Analysis
The risk analysis will put numbers to the various factors and will combine to give a Cargo Loss Number. There are many methods of carrying out a risk analysis but all are there to highlight risk areas and allow you to focus on high-risk numbers.
The method below uses a bubble chart to compare value, cargo loss risk, and perceived bribery and corruption.
The bubble chart above shows various routes to destinations A-Q. The bubble size indicates the value to these destinations. From the chart, the top right hand quarter shows destinations A and B to be high risk from cargo loss and high perceived corruption and bribery in these destinations. All other destinations are low cargo loss risk and low perceived bribery and corruption.
Mitigating the Risk
With the results from the risk analysis, develop strategies and tactics that can be implemented where high risk or high values are concerned. This will involve the physical security of warehouses, the actions involved in transport security implementing a security auditing program of routes and a temperature management program. Where bribery and corruption are a high risk, due diligence, auditing and training all third parties in anti-bribery and corruption policy is imperative.
We live in an ever-changing world where risk is also changing. To keep up with such changes, regular risk analyses should be carried out together with good security intelligence that highlights risk areas and any new potential risks in the supply chain. Any incidents should be investigated and corrective actions put in place, these should also be taken into account in any subsequent risk analysis. Once processes are set up they should be documented and trained out to the people involved and be securely handled by only those that are involved in the process.
Finally as supply chains expand, pharmaceuticals become more expensive and transport processes more complex it is imperative that the pharmaceutical industry realizes and mitigates the risks involved in the loss of product through the various causes within the supply chain…
*Tom Cochrane is the Head of Security Operations at Mundipharma International
