In response to the changing economy, some companies are taking a different approach to supply-chain execution systems. This trend has businesses basing their strategies on reducing costs and streamlining operations rather than focusing on compliance with government or retailer guidelines. PharmTech Talk discussed this shift in priorities for pharmaceutical companies with Andre Pino, vice-president and chief marketing officer at Acsis, a provider of supply-chain security solutions.
PharmTech Talk: Can you explain the shift from a compliance-focused market to the concentration on tying supply-chain processes to business processes? Why is the shift moving away from compliance?
Pino: A year ago, compliance was the single-most important driver for supply-chain technology adoption. The economic downturn has manufacturers and distributors facing unprecedented pressure to cut costs and reduce inventory while simultaneously responding to new customer demands. Increased reliance on trading partners such as contract manufacturers, 3PLs [third-party logistics partners], and component suppliers adds additional complexity to the challenge of managing supply-chain networks.
Pharmaceutical manufacturers and suppliers are quickly recognizing that not having accurate and readily accessible information results in higher operational costs, waste, reduced revenues, damaged brand image, and competitive disadvantage. Cleaner, more reliable, error-free data is the goal for businesses in integrating supply-chain and business processes to positively impact the bottom line.
PharmTech Talk: What are your customers saying that indicates there is a shift?
Pino: Rather than implement supply-chain execution systems to meet a government or retailer generated mandate, customers are looking to “do more with less.” Of course the importance of compliance for manufacturers and suppliers remains, but the primary focus is on optimizing supply-chain execution, visibility and control. Customers are looking to reduce costs and labor requirements and streamline supply-chain operations immediately, and they are really focusing on near-term benefits with long-term benefits as a secondary focus.
PharmTech Talk: How is this approach different?
Pino: The difference is the level to which supply-chain execution systems are automated and integrated with business systems and processes, and how quickly companies are expecting implementations to yield return-on-investment (ROI). Manufacturers and suppliers are focused on spending money on projects that deliver near term ROI and cut costs quickly.
PharmTech Talk: How is the economy affecting your clients’ positions and options for supply-chain optimization?
Pino: Businesses are focused on the “here and now” and positioning themselves to be stronger and more competitive coming out of the economic downturn. Customers are searching for ways to leverage existing ERP [enterprise resource planning] investments and extending them through the supply chain with automated data-collection technology. By unlocking large stores of data and integrating this information throughout the supply chain, enterprises are targeting a more efficient operational environment both inside and outside the four walls. The clear objective is to optimize the existing business and supply-chain infrastructure holistically, in a timeframe adapted to the changing market.
In addition to the economic factors, this change in focus on ROI and seeing compliance as a secondary concern could be because the legislation is not yet in place. California’s ePedigree implementation requirements, thought to be a trial-run for a national standard once it was put into action, has been delayed from 2009 to 2011 and now to 2015. After the delay was announced, PharmTech discussed the implications and future of the implementation deadline with Arvindh Balakrishnan, vice-president of the Life Sciences Industry Business Unit at Oracle.
In the meantime, the US Food and Drug Administration is working to “develop standards and identify and validate effective technologies for the purpose of securing the drug supply chain against counterfeit, diverted, subpotent, substandard, adulterated, misbranded, or expired drugs,” under Section 913 of the Food and Drug Administration Amendments Act of 2007 (FDAAA), titled “Assuring Pharmaceutical Safety.” The agency is considering RFID, nanotechnology, encryption technologies, and other track-and-trace or authentication technologies in the development of its standards. FDA’s deadline is March 2010.