Achieving Best Practice Process Controlled Distribution in the South African Pharmaceutical Industry

Inadequate control of distribution routes from the manufacturing site to the final customer is a problem in any industry. In the pharmaceutical sector, however, the consequences of this extend way beyond the flawed supply chain. The health and safety of patients depends on product quality and integrity in this industry, and weak links in the pharmaceutical supply chain can cost lives. In partnership with client AstraZeneca, a multinational pharmaceutical company, Imperial Health Sciences embarked on a project to drive best practice process controlled distribution in the organisation's supply chain.

Imperial Health Sciences managing director Dr Iain Barton outlines the aim of the initiative: "Inadequate control of distribution routes in the pharmaceutical industry increases the risk of product quality being compromised by temperature excursions, as well as the risk of loss through theft or damage, substitution with counterfeits and delays. The elimination or reduction of these risks in the supply chain is achieved by employing effective distribution process controls, with delivery routes that are mapped, risk managed and robust," he explains. Together, Imperial Health Sciences and AstraZeneca undertook a comprehensive route risk assessment exercise that included route mapping and temperature monitoring. Collecting temperature data and route information Temperature data was collected using "I-Button" temperature loggers that were set up to record in three-minute intervals.

These loggers were securely placed inside the shipper containing product, to mimic the conditions that the product would be exposed to, as well as affixed to the outside of the shipper so that the temperature of the transportation chamber was logged. On return of the study box, the temperature loggers were retrieved and the temperature data was downloaded. All vehicles used in the study were dedicated, closed body vehicles used routinely for the transportation of pharmaceutical products. A combination of 1, 4 and 8-ton vehicles with a combination of a closed fiberglass hard body or double sheet corrugated iron closed bodies used. The study parcels were tracked using a parcel track and trace system which provided timestamps for when the parcel was handed over at point of dispatch, loaded into containers, cross docked, dispatched to destination and finally received at the end point destination.

Findings and lessons learnt A total of 74 data sets across all routes and seasons - spring, summer, autumn and winter - was collected and analysed by Imperial Health Sciences and AstraZeneca. The study revealed that the operational cut off times for the delivery of goods to the cross-dock facilities was acceptable, with the bulk of the delivery transit time happening through the night or in the morning, when ambient temperatures are cooler. Barton elaborates on this finding: "The majority of higher temperature recordings occurred in the 'last mile' distribution between the final regional distribution hub and the destination point. This time also coincides with the warmest part of the day and resulted in the high risk assessment at delivery points in Springbok and Tzaneen." He reveals that AstraZeneca's highest risk route was found to be the Centurion local route. "This is due to the dispatch of goods taking place in the middle of the morning and the delivery vehicle remaining on the delivery routes during the hottest part of the day - between 11am and 4pm."

Risks are mitigated

While the undertaking provided AstraZeneca with the assurance that product integrity on its routes is not threatened by temperature excursions, damages caused by handling or by security threats, it also revealed high risk routes where improvements could be made. "Where necessary, we have agreed on additional actions to lower the risk on some routes and implement extra controls, "says Barton. These include investigating the viability of temperature-controlled vehicles versus the use of insulated vehicles, and how these compare to regular closed body vehicles. Consideration is also being given to the use of temperature monitors where the risk is unacceptably high, and to the use of thermal blankets on consignments. Barton says that because of this exercise, client AstraZeneca has gained a thorough understanding of the risks on each distribution stage, and wherever possible, risks have now been mitigated. Where routes were found to be lacking, an alternative was found. "Protecting patients is an absolute obligation of the pharmaceutical industry, and, as a leader in healthcare supply chain management in Africa, it is critical in Imperial Health Sciences' business, too," he concludes

Adapted from: http://www.imperiallogistics.co.za/case-studies/achieving-best-practice-process-controlled-distribution-southafrican- pharmaceutical

QUESTION 3 (20 Marks)

From a supply chain management context, lead time is the latency between the initiation and completion of a process. For example, the lead time between the placement of an order and delivery of new cars by a given manufacturer might be between 2 weeks and 6 months, depending on various particularities. In your view, discuss why lead time is considered one of the causes of the bullwhip effect and also suggest strategies that can be adopted by supply chain managers in reducing lead-time.