Today’s competitive market environment has forced pharmaceutical companies to learn that improving supply chain performance is critical to maintaining competitive advantages.
Forecasting, planning, procurement, financing, stock levels, and marketing strategies are the areas in which managers have to decide about them and balance their enter-related effects simultaneously to achieve organizational goals.
However, the healthcare industry faces an incredible customer demand for delivering medicine as a strategic product. How to boost the efficiency of the pharmaceutical supply chain and reduce compliance costs for existing and upcoming serialization requirements? Read the article to learn more about modern digitized healthcare supply chain management.
The role of supply chain management in the healthcare industry
Healthcare supply chain management involves obtaining resources, managing supplies, and delivering goods and services to providers and patients. To complete the process, physical goods and information about medical products and services usually go through many independent stakeholders, including manufacturers, insurance companies, hospitals, providers, group purchasing organizations, and several regulatory agencies.
In the era of value-based care, healthcare organizations focus on reducing redundancies and eliminating waste. Still, providers must also work together to reduce costs effectively and boost performance.
How does the pharmaceutical supply chain work?
The pharmaceutical industry is evolving quickly due to the increasing demand and supply of drugs and vaccines. The evolution and acceptance of costlier, more condition-sensitive medications and drug therapies, the growing, incongruent range of product types and treatments with shorter product life cycles, and other factors have produced new complexities for a pharma supply chain.
At the most basic level, there are five steps in the pharmaceutical supply chain to ensure that drug inventory is readily available for distribution to providers and patients. Those five steps are:
1 – Pharmaceuticals originate in manufacturing sites
2 – Are transferred to wholesale distributors
3 – Stocked at retail, mail-order, and other types of pharmacies
4 – Subject to price negotiations and processed through pharmacy benefit management companies’ quality and utilization management screens by pharmacy benefit management companies
5 – Dispensed by pharmacies and ultimately delivered to and taken by patients
Pharmaceutical supply chain challenges
The challenges that pharma companies are involved in are complicated and have an extensive range, including political, economic, social, technical, and legal considerations. The COVID-19 pandemic caused a lot of challenges for global logistics, and supply chain management in the pharmaceutical industry didn’t become an exclusion.
There are a lot of manufacturing areas where it is crucial to ensure the continuous availability of raw materials, insurance stocks, or extra supply channels. More than 70% of service providers noted their supply chains were significantly disrupted, which caused drug shortages, cost increases, and significant degradation of delivery performance from suppliers to customers.
The pharmaceutical supply chain is marked by generally poor visibility, particularly from an end-to-end perspective, with efforts more aspirational than actionable or achieved. 79% of companies felt that having timely finished goods visibility would dramatically reduce drug shortages
And this is just the tip of the iceberg. According to the Europol report, pharma products are the seventh most commonly seized counterfeit products worldwide. And the trade in falsified pharmaceuticals is continuing to grow. Due to increased geographies, faster lead times, limited visibility, and greater product variability, supply chains become more complex and create havoc for anti-counterfeiting efforts.
In addition, the productivity of companies suffers from material requirement planning errors and a lack of manufacturing pharma components and ingredients. They are often stuck using traditional operational enterprise software vendors with limited cognitive and augmented analytics capabilities while focusing on inventory as a safe, low-risk form of agility.
How can SAP help?
Pharma is one of the most regulated industries with many strict rules and laws, which may differ depending on the region and countries for supply. However, these rules apply to temperature and humidity levels and packaging, labeling, and handling. Keeping them all is a challenging task. Moreover, pharma companies must keep a strict record of the shipment statuses and report to regulatory authorities, which also have their requirements depending on the region.
Let’s take a closer look at the variety of SAP solutions that can help to overcome the challenges.
How Does the Pharmaceutical Supply Chain Work
Today’s competitive market environment has forced pharmaceutical companies to learn that improving supply chain performance is critical to maintaining competitive advantages. Forecasting, planning, procurement, financing, stock levels, and marketing strategies are the areas in which managers have to decide about them and balance their enter-related effects simultaneously to achieve organizational goals.
However, the healthcare industry faces an incredible customer demand for delivering medicine as a strategic product. How to boost the efficiency of the pharmaceutical supply chain and reduce compliance costs for existing and upcoming serialization requirements? Read the article to learn more about modern digitized healthcare supply chain management.
The role of supply chain management in the healthcare industry Healthcare supply chain management involves obtaining resources, managing supplies, and delivering goods and services to providers and patients. To complete the process, physical goods and information about medical products and services usually go through many independent stakeholders, including manufacturers, insurance companies, hospitals, providers, group purchasing organizations, and several regulatory agencies.
In the era of value-based care, healthcare organizations focus on reducing redundancies and eliminating waste. Still, providers must also work together to reduce costs effectively and boost performance.
How does the pharmaceutical supply chain work?
The pharmaceutical industry is evolving quickly due to the increasing demand and supply of drugs and vaccines. The evolution and acceptance of costlier, more condition-sensitive medications and drug therapies, the growing, incongruent range of product types and treatments with shorter product life cycles, and other factors have produced new complexities for a pharma supply chain.
At the most basic level, there are five steps in the pharmaceutical supply chain to ensure that drug inventory is readily available for distribution to providers and patients. Those five steps are:
1 – Pharmaceuticals originate in manufacturing sites
2 – Are transferred to wholesale distributors
3 – Stocked at retail, mail-order, and other types of pharmacies
4 – Subject to price negotiations and processed through pharmacy benefit management companies’ quality and utilization management screens by pharmacy benefit management companies
5 – Dispensed by pharmacies and ultimately delivered to and taken by patients
Pharmaceutical supply chain challenges
The challenges that pharma companies are involved in are complicated and have an extensive range, including political, economic, social, technical, and legal considerations. The COVID-19 pandemic caused a lot of challenges for global logistics, and supply chain management in the pharmaceutical industry didn’t become an exclusion.
There are a lot of manufacturing areas where it is crucial to ensure the continuous availability of raw materials, insurance stocks, or extra supply channels. More than 70% of service providers noted their supply chains were significantly disrupted, which caused drug shortages, cost increases, and significant degradation of delivery performance from suppliers to customers.
The pharmaceutical supply chain is marked by generally poor visibility, particularly from an end-to-end perspective, with efforts more aspirational than actionable or achieved. 79% of companies felt that having timely finished goods visibility would dramatically reduce drug shortages
And this is just the tip of the iceberg. According to the Europol report, pharma products are the seventh most commonly seized counterfeit products worldwide. And the trade in falsified pharmaceuticals is continuing to grow. Due to increased geographies, faster lead times, limited visibility, and greater product variability, supply chains become more complex and create havoc for anti-counterfeiting efforts.
In addition, the productivity of companies suffers from material requirement planning errors and a lack of manufacturing pharma components and ingredients. They are often stuck using traditional operational enterprise software vendors with limited cognitive and augmented analytics capabilities while focusing on inventory as a safe, low-risk form of agility.
How can SAP help?
Pharma is one of the most regulated industries with many strict rules and laws, which may differ depending on the region and countries for supply. However, these rules apply to temperature and humidity levels and packaging, labeling, and handling. Keeping them all is a challenging task. Moreover, pharma companies must keep a strict record of the shipment statuses and report to regulatory authorities, which also have their requirements depending on the region.
Let’s take a closer look at the variety of SAP solutions that can help to overcome the challenges.
1 – SAP Advanced Track and Trace for Pharmaceuticals
SAP ATTP for Pharmaceuticals provides a corporate serialization repository, serial number management, and regulatory reporting capabilities. Also, it enables the control of all serialization and regulatory data with partners, customers, and regulatory authorities. It also protects consumer safety through proper labeling management of packaging processes.
2 – SAP Extended Warehouse Management
Pharmaceuticals and prescription drugs are only allowed to be stored for short periods. Therefore, many companies use a time-only inventory model. This requires close cooperation with suppliers to ensure that raw materials arrive on schedule rather than earlier. In this case, SAP Extended Warehouse Management (EWM) can help your business. This solution offers:
● Manual process automation
● Traceability of goods and materials
● Transparency of management and accounting processes
● Increased quality of warehouse operations
● Control of raw material availability and usage
3 – SAP Digital Supply Chain
For supply chain management and all related processes, SAP offers the SAP Digital Supply Chain (DSC) solution, covering logistics, manufacturing, planning, and operations needs. With this solution, you can save on freight costs, optimize cash flow, and enhance shipping processes.
Here are some results of what you can achieve with SAP DSC:
● 87.5% faster delivery planning
● Increased transparency in the formation of the cost of freight transportation and distribution of costs
● Growth in productivity and quality through the centralization of tariffs and charge management
● 50% faster order processing and product availability
4 – SAP Business Network
Poor collaboration and lack of sustainability and purpose can be addressed with the SAP Business Network solution. It simplifies cooperation between buyers and suppliers and helps efficiently manage procurement processes, including buying and invoicing, supply chain collaboration, sourcing, supplier management, contract management, and catalog management.
By joining SAP Business Network, you achieve the following:
● 75% faster transaction cycles
● 60% lower operational costs on average
● 60% better accuracy of order processing
● 20% quicker cash collection from customers
● 15% higher customer retention rate
5 – SAP S/4HANA Cloud
The pharma companies must refrain from influencing labor and material shortages in raw material extraction companies. But they can ensure effective demand forecasting and planning with SAP S/4HANA Cloud.
SAP S/4HANA Cloud is an intelligent cloud ERP system offering characteristic-based segmentation to match supply and demand, control materials, etc. With this software, you get ready-to-work processes built on proven industry best practices.
Wrapping up
With questionable demand forecasts and unpredictable supply, achieving supply chain transparency and establishing effective materials planning is challenging for businesses. Despite this, the industry showed it is doable with a network of connected service providers sharing data and collaborating in real-time.
The COVID-19 outbreak is almost over, and businesses continue to recover. Inventory issues, lack of visibility, poor cooperation with suppliers, and regulatory challenges are just some of the problems pharmaceutical companies face. They should be leading a prioritized and coordinated business focus on resilient, responsive, reliable, and compliant product supply to plan and focus on meeting agreed service levels. But you can be confident in your company’s future with reliable SAP software.