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Posted 7 July 2016 by
Arnoud Smeesters
Director Network of Operations Practice

The four heart attacks your supply chain lead should survive when facing anti-counterfeit regulations

With the emergence of thefts, counterfeit medicines and parallel trades within the pharmaceutical sector over the last several decades, the publication of anti-counterfeit regulations throughout countries and regions has been well received within the healthcare sector.

As supply chain lead within a pharma company, you have probably just finished your ERP upgrade, your advanced planning system (APS) rollout and the re-design of your distribution network. Lying on the sand of a sunny beach during the summer, you are happily thinking about your finely tuned and smoothly running supply chain operations, enjoying a well-deserved rest. If you suddenly feel like doing something, go for a swim in the sea in preference to a first reading through an anti-counterfeit regulation that your regulatory affairs colleague dropped on your desk just before leaving for vacation. Your heart will appreciate it!

Heart attack 1: SKU segmentation

Remember! You have been dreaming for months of those new three-letter acronyms (TLAs) for structuring your SKU segmentation: CSP, SEP, MCP and so on. Whether you have been calling them “standard export pack, “multi-country pack” or even something else, this segmentation is not valid anymore. Today’s rules of the game are national regulations, reimbursement numbers, GTIN/NTIN, etc. These are the new dimensions that will drive the redesign of your SKU segmentation. Make no mistake, this new segmentation will be thinner!

This is the time you remember why you had been looking at those SKUs: It was about optimizing the size of your packaging runs, decreasing your total safety stock and the like. It is now time to wake up. Welcome to anti-counterfeit regulated supply chains.

Heart attack 2: Real-time and extended integration

We all remember our first project integrating two internal departments (production, sales, etc.) on the same ERP, and therefore aligning around material master data. Taking it externally to 3PLs then followed. This is now “has-been” and belongs in the dinosaur era. We are now talking about a unique 2D matrix printed and scanned on secondary packaging at the speed of 400 units per minute on your packaging line. Shortly after, those millions of serial numbers should be made available to your co-packers and 3PLs. They might scan those to modify the aggregation of the packaging or maybe decommission them. The same serial numbers should then be recognizable as appropriate for sale as you are facing a smiling pharmacist on a Saturday morning, preparing your credit card to pay for your prescribed medicines. Each of your serial numbers should survive the extended supply chain, as the steadfast Tin Soldier did in Hans Christian Andersen’s fairy tale!

Heart attack 3: Rationalization of stakeholders

Sales conquerors have been stretching your supply chain for years. CMOs are expanding your packaging/production capacity, co-packers are supporting you in bringing fancier packaging to the end-consumer. 3PLs are delivering the goods to the right market. As you might have understood by now, heavy investments in serialization capabilities, as well as in end-to-end integration, are also going to be required within each of your supply-chain partners. Is the business case going to stack up with each supply chain partner? Probably not.

Looking at volumes, value, alternatives, it is now time to clean your stakeholder (CMOs, copackers, 3PLs, etc.) landscape. Learn how to make the difference between those in which you want to invest in strengthening the relationship and those where the line should be drawn.

Heart attack 4: Added weight of reverse logistics & value-added services

Although reverse logistics processes such as return, scrapping, etc., are adding no direct value, they help build customer service, and therefore have an indirect value. You might have been increasing the performance and cost efficiency of those processes, but there is more pain to come with serialization. Each returned/scrapped unit needs to be individually scanned for decommissioning. Will it be better for you to invest in full track and trace? Indeed, for that specific scenario—but as always in supply chain, the end-to-end impact must be looked at before drawing any conclusion.

Regarding value-added services (bundling, leaflet inserts, etc.), the impact on serialization, tamper evidence (if applicable) and aggregation (if applicable) must be looked at carefully case by case. Whether you went swimming or looked at the regulations, there is no reason to panic, nor to cancel your vacation. But it should be clear by now that those regulations radically set new rules in the supply chain game. Furthermore, they all differ in content (serialization, track and trace, etc.), validity milestones and transition requirements.

Before launching yourself into any project, take a step back, mobilize a small multidisciplinary team and make a 360-degree assessment. Looking at processes, technology and regulatory aspects in an end-to-end manner. Think out of the box, coherent, futureproof, cost-related—and it will deliver a robust supply chain transformation roadmap, minimizing the total cost of ownership for your company and meeting the regulatory milestones.

Jump into this transformation roadmap, with both feet, and don’t forget to book your next vacation!

Want to know how Bluecrux can support you in this journey? Get in touch!