Logistics in Pharma Sector

Trends & Issues in Logistics Management for Healthcare and Pharmaceutical Organization Prof. Perumal Magayson Key Logistics Trends Logistics management’s primary focus is on optimizing the delivery of service to customers, by managing complex tradeoffs between customer service, transportation, warehousing and inventory. Some World Class companies have been able to reduce the costs of their logistics operations to 50% of the levels of their competitors. DEFINITION OF LOGISTICS

What is Logistics = Logical thinking + Statistics “Logistics means having the right thing, at the right place, at the right time in the right quantity at the right price. ” Therefore Logistics is…… ……is an optimization process of the location, movement and storage of resources from the point of origin, through various economic activities, to the final consumer. Key Logistics Trends Globalization Supply Chain Integration Flexibility and Speed Track and Trace Capabilities Collaborative Logistics Reverse Logistics Key Logistics Trends

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Transportation marketplaces Optimization Technologies Growth and expansion of 3PL and 4PL services UNDERSTANDING OF SUPPLY CHAIN MANAGEMENT The analogy that a chain is only as strong as its weakest link holds here as well. Organizations must first be able to provide quality products or services in a timely, cost-effective manner if they want to tackle broader supply chain issues. Total Quality Management, Just-in-Time manufacturing, concurrent product development, are just as relevant today as they were in the past.

UNDERSTANDING OF SUPPLY CHAIN MANAGEMENT SCM often requires significant changes in the firm’s organizational structure. SCM issues cut across functional areas and even business entities. Therefore, the responsibility and authority for implementing SCM must be placed at the highest levels of an organization. Firms that attempt to imbed SCM within a functional unit (such as purchasing, operations, or logistics) usually have limited success. UNDERSTANDING OF SUPPLY CHAIN MANAGEMENT

SCM requires firms to put in place information systems and metrics that focus on performance across the entire supply chain. This is because individual units that seek to maximize their performance without regard to the broader impact on the supply chain can cause problems a manufacturing unit’s decision to minimize its inventory levels may reduce delivery performance to the end user. UNDERSTANDING OF SUPPLY CHAIN MANAGEMENT The organizations that make up the supply chain are “linked” together through physical flows and information flows.

Physical flows involve the transformation, movement, and storage of goods and materials. They are the most visible piece of the supply chain. Information flows allow the various supply chain partners to coordinate their long-term plans, and to control the day-today flow of goods and material up and down the supply chain. UNDERSTANDING OF SUPPLY CHAIN MANAGEMENT SCM adds another layer of complexity to a firm’s strategy development efforts. – Years ago, firms could succeed by being particularly good in one functional area, such as marketing, finance, or operations.

Now firms recognize that they have to have sufficient capabilities across multiple functional areas in order to survive. – Elements of the Supply Chain Elements of the Supply Chain Customer Planning Purchasing Inventory Production Transportation MEETING THE CHALLENGE OF SUPPLY CHAIN MANAGEMENT How Does Supply Chain Management Work? MEETING THE CHALLENGE OF SUPPLY CHAIN MANAGEMENT MEETING THE CHALLENGE OF SUPPLY CHAIN MANAGEMENT How is Supply Chain Management applied in the Logistics Function? – – It provides for a strategic view of logistics functions. It is not simply what occurs inside of a company It is completely customer driven The Dynamics of Supply Chain Management Supply chain management is a holistic, enterprise wide view of how the productive resources and talents of an allied group of businesses can be blended to form a single channel system possessed of the flexibility to successfully respond to any marketplace opportunity with superior competitive advantage.

It is a boundary-spanning management philosophy that requires companies to search for competitive advantage by looking beyond the frontiers of their own organisation. What makes supply chain management such a potent marketplace force today is its ability to provide a seamless channel structure that is physically dispersed and consists of different competencies, yet functions as a coherent customer-satisfying resource whose boundaries appear invisible to the customer.

MEETING THE CHALLENGE OF SUPPLY CHAIN MANAGEMENT Where Do We Go From Here – Putting Theory to the Test 1. Unification means that not only logistics activities, such as inventory planning, purchasing and transportation, but also core business activities, such as marketing, sales and product development, performed by each channel partner function now as correlative processes. MEETING THE CHALLENGE OF SUPPLY CHAIN MANAGEMENT . Through the convergence of information systems networking and telecommunications technologies, today’s channel can bypass the encumbrances of dealing sequentially with the transfer of critical marketplace information and the traditional movement of inventory from collection point to collection point on their way up and down the supply channel. MEETING THE CHALLENGE OF SUPPLY CHAIN MANAGEMENT 3.

Supply chain management is a dynamic and open-ended approach to marketplace competitiveness. Similar to just-intime and total quality management, supply chain management is not a business formula or a computer system, but a continuous process of shaping and reshaping inter- and intra- company performance, information technology tools, product and services, and organizational and personal excellence to exploit the ever-changing context of customer opportunities.

Supply chain management provides channel executives with the opportunity to continually reposition the role of channel members, the mix of products and services, productive and distributive processes, human and technological resources and marketing strategies to respond to the marketplace with overwhelming competitive superiority. 4. MEETING THE CHALLENGE OF SUPPLY CHAIN MANAGEMENT 4. Finally, supply chain management is, above all, a business philosophy that enables individual companies and channel partners to achieve high levels of productivity, profit and growth.

In today’s global environment, competitive advantage belongs to those supply channels that can activate concurrent business processes and core competencies that merge infrastructure, share risk and costs, leverage the dwindling of product life cycles, and reduce time to market, and that gain and anticipate new opportunities for competitive advantage. 5. MEETING THE CHALLENGE OF SUPPLY CHAIN MANAGEMENT The Ultimate Challenge – Can You Achieve This? The ability to leverage the supply channel is centered around two critical dynamics: 1.

The first can be found in the engineering of cooperative marketing, product design and logistics processes. This activity enables the creation of customer-enriching, individualised combinations of products and services. MEETING THE CHALLENGE OF SUPPLY CHAIN MANAGEMENT 2. The second is found in the creation of partnerships, joint ventures, and “virtual” organisations that provide for the coevolution of customer value across companies by merging similar capabilities and core competencies, engineering joint development of new processes and technologies, and structuring new forms of vertical integration and economies of scale.

Full Potential of Supply Chain Management – Your Guide to Implementation Strategic Management Scope 1. Management process 2. Key Performance targets Traditional focus Products Sales Revenues Departmental objectives Process and product specification SCM focus Interorganisational process Extended process Investment in channel innovation Innovative and value-adding capabilities of the entire channel 3. Business goals and objectives Consistency of performance Departmental alignment Key benchmark metrics Focus on internal structures and organisational values Reductions in costs and defects Rate of improvements in products and processes

Alignment of channel objectives and goals Shared competitive channel vision Structured channel partnerships Co-evolving processes and objectives Rate of progress of entire channel Rate of channel value creation and innovation 4. Business relationships 5. Business process improvements LATEST TRENDS IN LOGISTICS Radio Frequency Identification (RFID) The first use of Radio Frequency Identification (RFID) was documented in the 1940’s by the British Royal Air Force to identify aircraft in World War II and was part of the refinement of radar.

During the 1960’s RFID was first considered as a tracking solution in the commercial world. The first applications involving RFID were developed over the next twenty years. These commercial applications were concerned with identifying an item inside a single location. LATEST TRENDS IN LOGISTICS The latest attempt to commercialize the use of RFID started in 1998, when researchers at the Massachusetts Institute of Technology (MIT) Auto-ID Center began to research new ways to track and identify objects as they moved between physical locations.

This research centered on radio frequency technology and how information that is held on tags can be effectively scanned and shared in real time. Mechanics Of RFID The basic principle of RFID is identifying an object using a radio frequency transmission. The technology can be used to identify, track, sort or detect a wide variety of objects. Communication takes place between a reader or interrogator and a transponder or tag. Tags can either be active, which means it is powered by battery, or passive, which is powered by the reader field.

The communication frequencies used depends to a large extent on the application, and range from 125KHz to 2. 45 GHz. Regulations are imposed by most countries to control emissions and prevent interference with other industrial, scientific or medical equipment. LATEST TRENDS IN LOGISTICS In a typical system tags are attached to objects. Each tag has some internal memory which it stores information about the object, such as its unique ID number, or details including date of manufacture and item information. When a tag passes through a field generated by a reader, it transmits this information back which identifies the object.

Until recently the focus of RFID technology was mainly on tags and readers, which were being used in systems where relatively low volumes of data are involved. This is now changing as RFID in the supply chain is expected to generate huge volumes of data, which will have to be filtered and routed to ERP or Warehouse Management systems. Electronic Product Code (EPC) Electronic Product Code is the emerging RFID standard developed by the MIT AutoIDcenter. It is the RFID version of the barcodestandard. EPC rfid also provides access to additional data about the origin and history of the specific batches or serial numbers.

The EPC tag itself identifies the manufacturer, product, version, and serial number. Benefits Of RFID Supply chain management is investing in RFID as it can give them advantages in visibility of their products through the supply chain. The benefits are seen as improving on other methods of visibility such as EDI, bar coding and Advance Ship Notifications (ASN). Other benefits of RFID can be seen outside of normal supply chain such as a reduction in theft from the store, transport or storage, and a deterrent to increasing product counterfeiting. Both of these issues are costing companies billions of dollars each year.

Pharmaceutical companies are increasingly worried about counterfeiting and RFID tags on each product may help with this issue. Advantages Of RFID Over Barcodes Unlike barcodes, RFID technology does not require line of sight reading. The tag can be read through other items while barcodes require line of sight. This implies that a RFID reader could read a pallet of mixed products, all of which contain individual RFID tags, without having to physically move any of the items or open any cases. If the pallet was full of mixed items, the large number of RFID tags can be read almost instantaneously.

The tags are not read simultaneously but the tags are read sequentially, but the time to read the tags would be microseconds. Advantages Of RFID Over Barcodes The data on tag can be changed or added to as it passes through specific operations. Read-only tags are less expensive than read/write tags. RFID tags are less susceptible to poor environmental conditions where barcode labels can become unreadable. RFID tags can be sealed within a plastic enclosure eliminating many of the problems that affect barcodes in harsh environments where they are exposed to chemicals, heat and other harsh environments.

TRENDS IN LOGISTICS Globalization – Long and complex supply lines – Global Distribution – Global Competition TRENDS IN LOGISTICS Customer power – – – – – High Level of Service Expectations Explosion of SKU-s Short Product- Life Cycle Strong Pricing Pressures : Price-Based Cost Lower Customer Loyalty TRENDS IN LOGISTICS Information and Communication Technologies – Huge advances in technology – The Internet – Strengthen our Trends TRENDS IN LOGISTICS Outsourcing – More actors in Supply Chain – Need for collaboration – greater than ever – The rise of 3PL/ 4PL TRENDS IN LOGISTICS

Security – Terrorism – The war on terror LATEST TRENDS IN HEALTHCARE NEW MODELS FOR NEW MEDICINE Chain Simplification In March 2007, Pfizer introduced its new “direct to pharmacy” model. This new distribution arrangement allows Pfizer to take full responsibility for its medicines from its manufacturing centres until the point where they are sold to the pharmacists and doctors who dispense them. The improved visibility achieved by the new system also means that Pfizer can be more responsive to stock shortage situations and better able to trace and recall its medicines if required.

This was the first move of its kind by a pharmaceutical manufacturer in the UK. NEW MODELS FOR NEW MEDICINE For the pre-wholesale logistics provider Alloga, through its partnership with UDG in the UK, it means delivering to one single company and fewer warehouses. The whole chain has been simplified, not only in terms of geography but also in terms of IT systems and processes; product monitoring can be more holistic, information management systems standardized and the margin for error significantly reduced. NEW MODELS FOR NEW MEDICINE

Overall, reducing error and product tracking has always been high on the industry’s agenda. Identification by individual box should be possible. RFID has been presented as a possible solution, but the technology is yet to find its place in the pharmaceutical supply chain. The costs are high but the major issue is the apportioning of the cost; who should be the party to shoulder the cost burden? At some point it may become a regulatory requirement but is not as yet. Mass serialization, by contrast, is a viable alternative.

Reimbursement issues have already pushed this practice through in Europe, with a tendency toward 2D barcoding at batch level. Ultimately, interorganizational collaboration and the blurring of boundaries will help the industry to overcome its tracking limitations. NEW MODELS FOR NEW MEDICINE Delivery Specialization The second trend, delivery specialization, has seen healthcare logistics become more sophisticated, high tech and precise in its operation. Biotechnology products being developed by pharmaceutical companies and specialized biotech firms are high-value and low volume but, most importantly, high maintenance.

Delivery requirements are more demanding. NEW MODELS FOR NEW MEDICINE It’s not simply about getting a product from point A to point B, temperature levels have to be regulated and, in cases of some chronic conditions, delivered to the patient’s home and followed by a homecare visit. The system should now not only monitor the fleet’s progress and status, tracking every batch and reporting in real-time the completion of the delivery, but the allimportant temperature levels of the cold chain can be monitored centrally, alerting head office to any potentially damaging changes.

Although cold chain capabilities are not new to the market, the prevalence of the offer amongst healthcare logistics providers is certainly on the increase. NEW MODELS FOR NEW MEDICINE Ultimately, the manufacturing company at the source of the supply chain will be able to view a complete history of the product in transit from manufacturer to end-consumer. Track and trace, 2D barcoding and, potentially, RFID will contribute to this service, in conjunction with best in class back-office management software that will be able to interface with customers’ systems.

One of the most valuable products resulting from the increasing IT sophistication and supply chain control is information. Previously diluted by the various layers involved in delivery of the product from source to consumer, logistics providers are now in a prime position to offer customers access to elusive sales and usage information. Product sales volumes and timings to customers, often pharmacies, hospitals or dispensing doctors, have historically been distorted by wholesalers’ isolated stock management systems and a lack of transparency.

NEW MODELS FOR NEW MEDICINE On the Horizon Personalized medicine has been a topic much discussed in the past but is yet to materialize. This involves the development of new treatments that take into account the patient’s genetic make up to reduce the emergence of side-effects. Each treatment therefore would be specific to that patient. The current delivery specialization model would transform into a more customized model, created for each treatment and each patient. NEW MODELS FOR NEW MEDICINE For chronic conditions, it is suggested that many products will be delivered irectly to the patient, making the logistics providers the main interface and brand representative to the end-consumer. It is also feasible that they could take on the responsibility for homecare and support, checking compliance and treatment efficacy. NEW MODELS FOR NEW MEDICINE For those treatments wherein DNA sampling is initially required in the development process, the logistics team would be best placed to provide this service, collecting the sample and returning it to the biotech company in the required condition. The skills required to perform this process would be of the highest level and the service completely customized.

In an industry where training uptake is claimed to be the lowest. Future of the healthcare sector could see qualified nurses in the driver’s seat. As the healthcare industry evolves, so will its logistics counterparts in an effort to offer the best solution to meet their needs and the needs of their patients. NEW MODELS FOR NEW MEDICINE Sidebar For chronic conditions, it is suggested that many products will be delivered directly to the patient, making the logistics providers the main interface and brand representative to the end-consumer. LOGISTICS IN HOSPITALS

LOGISTICS IN HOSPITALS Logistics in its original military usage is defined as the practical art of moving armies and keeping them supplied. In hospitals, logistics is the practical art of moving patients and staff and keeping them supplied. The effect of logistics on strategy and organization survivals has been profound through the centuries. When supply lines fail, for example, battles and wars are lost. Logistics is rocket science. LOGISTICS IN HOSPITALS Healthcare services of many countries are faced with challenges due to tremendous changes with their environment.

Changes like rapidly transforming demographic composition of the population, new medical procedures, and growing demands for healthcare services lead to steadily increasing costs. LOGISTICS IN HOSPITALS National authorities constantly reduce their financial support by lowering the subsidies and in some countries by the implementation of lump sum compensation systems. The cost pressure for healthcare service providers is rising enormously. In order to ensure the provision of high quality and costeffective health services for all the population across income groups, the control of costs in hospitals is becoming crucial.

The reduction of operational costs by optimizing hospitals logistics is still a novel method. A comprehensive view of supply chain and workflows is of highest importance for hospitals as well as for their suppliers. Experience shows that the optimization of logistics processes can lead to substantial cost savings. Logistics Processes in Hospitals 1. Automated Material Transport The transport of material is of highest importance in almost all logistics processes. Transport is executed either scheduled or on-demand. Compared to industrial operations the quality of material transport in hospitals is essential.

Wrong deliveries or inaccurate handling of items during the transport can have severe consequences for patients, employees, and hospital visitors. Logistics Processes in Hospitals On- Demand Material Transport: – Pneumatic Tube Systems – TranspoNet Logistics Processes in Hospitals Scheduled Material Transport – Track vehicle systems – UniCar/ MultiCar – Automated Guided Vehicles – TransCar LTC 2 Logistics Processes in Hospitals Automated drug management / pharmacy automation – Unit Dose- Automated Packaging – Pill Pick – Drug storage and retrieval – Box Picker

Logistics Processes in Hospitals In medical secondary process -Patient logistics – Ambulance service management – Drug management – Logistics of laboratory goods – Logistics of medical goods – Logistics of sterile goods – Handling of data and documents – Disposal of hazardous waste Logistics Processes in Hospitals In non-medical secondary process – Food management – Management of linen – Management of beds Logistics Processes in Hospitals In tertiary process – Management of administrational demands – Mail service – Disposal of hazardous/non-hazardous waste Thank You……………… END

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