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8/11/2019 What the Pharmaceutical Industry Can Teach Us About Supply Chain Security Best Practices
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6/14/14 10:What the Pharmaceutical Industry Can Teach Us about Supply Chain Security Best Practices | Supply Chain content from IndustryWeek
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What the Pharmaceutical Industry Can Teach Us about
Supply Chain Security Best Practices
Over the last few decades, increasing globalization and supply chain complexity have
posed risks to pharmaceutical safety, ultimately impacting businesses and, mostimportantly, patients. Today, materials are procured from multiple countries,
manufactured somewhere else, potentially packaged in yet another country and
distributed and sold globally.
To successfully protect against these risks, proactive supply chain security must deliver
actionable intelligence to mitigate those risks. Once implemented, this decision-based
approach, utilizing information delivered in real time, allows for efficient businesspractices that not only protect a brand but also the many partners and people connecte
to that brand.
The lessons learned in both identifying risks and improving pharmaceutical supply
chain security can be applied as best practices for a variety of industries.
This article explores the trends and risks currently impacting the pharmaceutical suppl
chain, as well as the innovative technologies available to secure it, which can be
leveraged across other industries that have similar supply chain risks.
Key Trends Driving the Need for Supply Chain Security
According to the UPS 2012 Pain in the Chain Survey,83% of healthcare companies
surveyed rank tapping into new global markets as a top strategy for the next three to fiv
years.
Today, up to 40% of the drugs Americans take are manufactured outside the U.S., as
well as up to 80% of the active pharmaceutical ingredients in those drugs.
Furthermore, in 2011 the FDA projected that nearly 24 million shipments of FDA-
http://www.ups.com/content/us/en/bussol/browse/industries/pain-in-the-chain.html?WT.mc_id=VAN7003728/11/2019 What the Pharmaceutical Industry Can Teach Us About Supply Chain Security Best Practices
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6/14/14 10:What the Pharmaceutical Industry Can Teach Us about Supply Chain Security Best Practices | Supply Chain content from IndustryWeek
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regulated articles arrived at ports. This is compared to just six million a decade ago.
This rapid expansion of the global market opens companies up to an exponential
increase in the number of vulnerability points, coupled with decreased visibility to them
due to insufficient supply chain information. Globalization also leads to a complex
system of foreign, federal and state product safety oversight with an incomplete set of
enforcement tools. This misalignment of resources leaves U.S. drug distribution
vulnerable to a host of problems.
At any stage in this long, multi-faceted journey from raw source materials to finished
products to consumers, products can be contaminated from four primary risks:
Intentional adulteration, due to contamination in the manufacturing, storage, ordistribution process, or from ingredient substitution for economic gain, is more
prevalent with global supply chains. Adulteration can result from a number of sources
including foreign and domestic terrorist organizations or activists, economically
motivated persons or groups, or even disgruntled employees.
Cargo theft is up due to the sluggish economy and security measures that rely too
heavily on expecting people to consistently follow prescribed procedures. In the U.S.
alone, cargo theft produces an annual loss of $35 billion and in 2011; the average loss
per incident in pharmaceuticals due to cargo theft was $585,000.
Counterfeiting, which is fraudulently mislabeling a product in identity or source, is
another significant risk to supply chain security, as well as diversionof products from
the intended authorized market to another.
In pharmaceuticals, the most serious consequences of these four primary risks are thosthat impact patient safety. Adverse patient reactions can range from minor to as severe
as death. Other consequences include drug recalls, and because drugs are tracked by
lot and not units stolen drugs can compromise volumes that are multiples of the actu
drugs stolen. In general, businesses can also incur daunting costs, such as revenue loss
8/11/2019 What the Pharmaceutical Industry Can Teach Us About Supply Chain Security Best Practices
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6/14/14 10:What the Pharmaceutical Industry Can Teach Us about Supply Chain Security Best Practices | Supply Chain content from IndustryWeek
Page ttp://www.industryweek.com/supply-chain/what-pharmaceutical-industry-can-teach-us-about-supply-chain-security-best-practices
recall costs, legal costs for damage to health or life and regulatory fines.
Ultimately, complications in any supply chain impact a brands reputation and require
time and investment to rebuild trust among customers, partners and patients. So while
the opportunity to tap into the global market can generate greater revenue and
efficiency, its important to be mindful of these risks so that appropriate security
measures can be implemented to protect a business supply chain.
Move from a Reactive to a Proactive Security Program
An organization can protect against these risks by implementing an end-to-end
proactive pharmaceutical supply chain security program that takes advantage of key
advances in technology including cloud-based services, location sensors and real-timeintelligent monitoring.
For example, cloud-based services enable remote video audits to ensure compliance wi
operational and regulatory standards. Advanced truck security and control solutions
with location sensors combined with an onboard system can detect trucks that are off
route and remotely shut down a truck to prevent cargo theft.
There are also Physical Security Information Management solutions that automatically
link disparate monitoring devices like video, access control and equipment sensors to
minimize the risk of manual oversight and allows for real-time alerting. This type of
technology correlates relevant information and incidents from multiple systems and ca
apply corporate policy to enforce consistent actions across the enterprise.
Value Proposition of Proactive Supply Chain Security
In addition to protecting people and assets, a proactive supply chain security program
provides the following benefits:
Product traceability
Early detection of derailed shipments
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6/14/14 10:What the Pharmaceutical Industry Can Teach Us about Supply Chain Security Best Practices | Supply Chain content from IndustryWeek
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Compliance with corporate and regulatory group standards
Beyond these tactical rewards, proactive supply chain security programs can help a
business retain its customers and partners and better protect its reputation. And in the
case of pharmaceuticals, it can save lives.
Whats Next?
Industry supply chains beyond pharmaceuticals will continue to face challenges with
cargo theft, government regulations and import/export security as market demands
evolve. To stay ahead of these threats, businesses must stay in tune with emerging
technology, consumer and market trends, collaborating with partners and peers and
engaging in industry-wide associations to share best practices, lessons learned and newideas about the future of supply chain security.
Above all, organizations must utilize this developing technology to arm their businesse
against increasingly sophisticated criminals.
Jay Hauhn is chief technology officer for Tyco Integrated Security, a commercial
security systems integrator.
http://www.tycois.com/