Facilitating supply chain collaboration with blockchain technology
Veratrak considers how technology can overcome the barriers to supply chain collaboration
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With the introduction of serialization regulations and the prioritization of end-to-end visibility, the digitization of global supply chains is beginning to take centre stage.
Sharing reliable data and critical documents securely as products move through the supply chain is an area where improved cross-supply chain collaboration is critical.
The supply chain management market is expected to exceed $19 bn by 2021[1]and the digitization of supply chains is expected to have the biggest impact on revenue and earnings.
This is coupled with an increasingly complex supply chain as pharma manufacturers are accelerating the rate at which they outsource work to contract packaging organizations (CPOs) and contract manufacturing organizations (CMOs). Collaboration and visibility are vital if these relationships are to be viable in the long-term.
Why should we be...and why are not we already collaborating?
The life science industry is heavily regulated and risk-averse, which fiercely protects every aspect and piece of intellectual property. An endless focus on compliance paired with a fear of disclosing proprietary information to competitors has meant that life science companies have traditionally viewed collaboration as high-risk. In addition, investment, implementation, process changes and user training are all seen as resource intensive, potentially disruptive and invariably present a significant hurdle, unless there is a very strong business case for adopting new technologies.
Years of heavy merger and acquisition (M&A) activity have also left companies with abundant research and data tools that need rationalizing before sharing can even be considered. The differences between heavily customized, turnkey and in-house tools also mean that data formats vary widely, making data-sharing and potential collaboration more difficult.
However, despite these challenges, sharing, partnering and collaborating within the pharma supply chain will be essential if its players want to survive in the long term. Perhaps the strongest case for breaking down the barriers to collaboration is the potential of a supply chain where silos are nonexistent and collaboration between suppliers/partners is the norm.
Better supply chain collaboration will generate efficiency improvements across operations, which lead to positive results across safety, costs and speed to market.
Collaboration is also better for health payers – whether that be the NHS or private health insurers – as it can reduce the cost of treatments and improve access to healthcare. It also benefits patients by accelerating the time it takes to deliver new therapeutics or delivering superior solutions for common health problems.
A transparent supply chain will revolutionize the way businesses operate and offer huge value.
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SaaS
The response from tech companies has been to concentrate on delivering document and data management solutions that offer seamless onboarding, better support and more effective training programs.
Cloud-based, software as a service (SaaS) document management solutions are readily available in other industries; however, most are not built with the pharmaceutical industry in mind and lack the necessary compliance. However, this is changing.
SaaS platforms are the perfect collaboration engine, enabling organisations to on-board both internal and external partners to verify, authenticate, review and sign-off on critical documentation related to various stages of the supply chain. These span the production, packaging, shipping and dispensing of medicine.
Specifically, users can communicate seamlessly with supply chain partners at different organizations, and chronologically execute the steps required to release a product to market.
The overall result is increased visibility for supply chain partners, and the ability to better react and adjust to events — which ultimately leads to better care for patients.
Blockchain technology
Using the current technology solutions offered to the industry, pharma manufacturers are challenged with end-to-end visibility of the supply chain and its security, yet face significant liabilities when the supply chain does not function properly.
The enhanced security and traceability of a blockchain-based document repository, including full auditability and reduced liability exposure is an appealing proposition for businesses looking to deliver compliant data exchange and management processes.
But there is more value to be had from blockchain technology. The following real-life use case gives examples of where blockchain technology may improve collaboration across the supply chain:
Auditability and accountability
Paired with blockchain technology, SaaS platforms can be used to create an audit trail of all document events, which is a critical element of GxP compliance and reduces the regulatory burden associated with audits.
European market authorization holders (MAHs) are advised by the EMA to audit each of their API manufacturers on a risk-based schedule, approximately every two-three years[2]. Considerable time and resource is invested by MAHs on auditing and in turn, when a MAH is audited by the regulators they must provide all associated documentation. It is often the case that the legitimacy of batch documentation and data integrity are called into question. In cases where poor systems and processes have been the norm for many years, pharma companies can be opened up to litigation and reputational risks.
In a typical audit, a regulator will ask a pharma company to produce all the documents that were associated with the release of drug X to the market. Using blockchain, all parties which collaborate in the market release process have the same chronological record of information.
This audit trail is extremely useful for reporting to regulators, as well as for investigations into erroneous supply chain or manufacturing events. The log gives pharma companies 100% certainty that they are supplying the regulator with the most recent, authentic, and valid documents without any question of data integrity or tampering due to the immutability property of blockchain technology.
End-to-end visibility
Email, fax, and post remain the defaqto medium for the vast majority of third-party collaboration and reconciliation of critical documentation across the pharma supply chain. However, these tools are not secure, prone to delays and human error, and lack true auditability. Moreover, they maintain the status quo of siloing data and information, and impair supply chain visibility.
As a result, MAHs lack end-to-end visibility of the provenance of medicines, their route to the patient and the corresponding documents that detail these journeys.
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Every delay in a drug being released to market leads to lost revenue. Every outage or overage leads to stock obsolescence and puts patients at risk. A benchmarking report from nVentic[3] showed that the 30 biggest pharma companies collectively had over $115 bn inventory at the end of 2018. On average, if one of these companies reduces its days inventory outstanding (DIO) by just one day, they free up $21 mn in cash.
This is a saving that can be delivered with better supplier collaboration, visibility of partner processes and the data for each drug. These are fundamental contributors to leaner supply chains that get products to patients quicker and more safely. Using outdated collaboration tools means pharma companies can find themselves waiting weeks for necessary documents to be produced, resulting in a slower release of their medicine to the market.
Blockchain technology has emerged as one of the most powerful means to combat this obstruction by creating a single source of truth for proof of ownership, integrity, and existence for all documents. It provides a foundation for supply chain partners to more effectively collaborate on all documentation processes required to bring a drug to market and track it through the supply chain.
Using blockchain, every document event (uploads, new version, comments) can be recorded and is immediately immutable.
Conclusion
It is clear that organizations need to break down silos and facilitate better communication and collaboration across their partners if they are to remain competitive. Blockchain enabled SaaS platforms provide the perfect platform to enable this.
The industry’s adoption of Cloud and SaaS products will continue and we’ll see new business models for collaboration between suppliers and their customers start to emerge. However, it is vital that the life science industry’s unique challenges and processes are recognized - as such, GxP validated software providers that are developing purpose-built platforms will outperform industry agnostic software vendors in this space for years to come.
[1] https://www.gartner.com/en/newsroom/press-releases/2017-06-22-gartner-says-supply-chain-management-market-will-exceed-13-billion-in-2017-up-11-percent-from-2016
[2] "Compilation of Community Procedures on Inspections and ...." 3 Oct. 2014, https://www.ema.europa.eu/en/documents/regulatory-procedural-guideline/compilation-community-procedures-inspections-exchange-information_en.pdf. Accessed 5 Nov. 2019.
[3] "nVentic Big Pharma inventory trends benchmark report 2019." 26 Jun. 2019, http://www.nventic.com/Insights/White%20paper%207.php. Accessed 5 Nov. 2019.
