With counterfeiting and theft increasing costs, eroding revenue and damaging brand equity, supply chain security has become a critical issue in many industries. But nowhere is this more evident than in the pharmaceutical industry. Estimates of counterfeiting levels vary, but it is clear that these problems cost the industry billions and are increasing yearly. Such breaches of supply chain security not only undermine profitability, they also endanger the lives of the patients who rely on the authenticity of the drugs they are taking.
Pharmaceutical companies are well aware of these issues - and so are the various governmental agencies that oversee the industry. The result has been rising government interest in strengthening pharmaceutical supply chain security and many agencies are encouraging the use of serialization, in which individual sellable units are assigned unique numbers that make it possible to track them as they move through the supply chain.
By definition, product serialization involves a unique number assigned and affixed to a particular item, inner pack, case and/or pallet of product. The serial number can be housed in multiple data carriers, including a linear bar code, data matrix 2-D bar code or radio frequency identification tag. The serialization number can be used with the supply chain to help verify if the product associated with the serial number was actually produced by the manufacturer listed on the item.
But while the global regulatory landscape around serialization is inconsistent, the overall trend seems clear: observers expect that governments around the globe will eventually regulate serialization for the industry.
Amidst reports that pharmaceutical manufacturers are stepping up serialization efforts, often many pharmaceutical companies adopt a wait-and-see approach with serialization: programs are postponed until the practice becomes mandated, and then there is a rush to find and implement a simple solution to comply with regulations.
The serialization processes involves a variety of activities and numerous internal and external parties, so companies need to take into account different factors to make the practice efficient and effective. In the face of complexity, the reactive approach-with its last-minute rush-increases the risk of unnecessary costs and having a system that fails to fully address serialization needs.
As fundamental as it sounds, the key to avoiding such problems is sound planning. Pharmaceutical companies should begin with a critical first step: the creation of a comprehensive serialization strategy. An effective strategy enables companies to not just react but to move forward with serialization in a deliberate, efficient manner. It enables them to make the best use of resources, avoid the missteps and costs of last-minute implementations, and develop a solution that truly strengthens security while supporting compliance-with a relatively lower total cost of ownership. At the same time, the strategy-development process can give companies a chance to step back and see other opportunities from serialization; for example to increase supply chain visibility and drive fundamental improvements that can help the company compete, such as improving the recall and returns and chargeback processes.
By its nature, serialization affects many areas of a company, including its trading partners. In formulating an effective serialization strategy, a wide variety of interrelated factors need to be considered. Comprehensive assessments and planning are instrumental to lowering costs and focusing on the compliance and business outcomes the company desires. Different alternatives should be analyzed in detail to properly evaluate the benefits and drawbacks of each, and to identify a flexible solution that reflects the business, logistic and engineering requirements at the individual sites that will be involved in the serialization effort.
A serialization strategy needs to address a wide range of activities. For example, efforts should involve:
• Packaging, to determine how the serialization will be encoded on the product.
• Manufacturing operations, to determine how serial numbers will be allocated to product lines, and how parent / child serialization hierarchies will be established and maintained.
• Logistics operations, to determine how serial numbers will be captured and tracked as product moves through the supply chain, both internally and with trading partners.
• Trade relations, to coordinate with business partners on the approach and timing of enablement of serialized product in the supply chain.
• Customer service, to be prepared to respond to inquiries about serial numbers of particular products at the trading partner or consumer level.
• Information technology, to ensure that the necessary infrastructure and repository is in place to support and to help companies take a strategic view of the potential of technology.
In addition, an effective serialization strategy should also give some thought to how the solution will be put into action in the organization. Because of the complexity of serialization and the numerous "moving parts" involved, it is usually best to adopt a phased approach. Companies can create a pilot solution that includes the necessary processes, skills and technologies. Such a pilot can involve only a small number of products in a limited geography with a limited number of close trading partners. But it will typically require implementation of much the planned technical infrastructure, and a fair amount of integration.
The pilot provides a valuable opportunity to test the soundness of the strategy and gain valuable experience before committing to a full-fledged roll-out. Once the pilot is completed, the solution can be implemented in a phased, controlled implementation. Overall, this approach helps reduce risk and keep the effort on track for delivering the expected business benefits.
At the same time, it is also important to prepare the organization for the new processes. The serialization strategy should identify any training needs in the organization, and this should lead to the creation of training materials and standard operating procedures for various types of users. Classroom training sessions can be effective in helping ensure that users are comfortable with the hardware, software and processes involved, and as a result the solution is more readily adopted by the organization.
Serialization is emerging as a key tool as countries look to introduce frameworks to enhance the quality and safety of pharmaceutical products. Before long, it is likely to be a requirement that pharmaceutical companies will have to take seriously in more and more markets if they want to sell and distribute their products.
Perhaps understandably, many pharmaceutical companies want to avoid the cost of serialization for as long as possible. But they should not put off efforts to plan for it. Serialization means more than choosing a vendor; it also means answering all the right questions, coming up with and implementing a solution that is practical, and preparing the organization for the new approach.
All of this takes time, which makes planning crucial. By creating a strategy in advance of serialization mandates, pharmaceutical companies will be ready to move forward with a cost-effective solution that meets their business goals-today, and over the long term. As with any initiative, pharmaceutical companies need to get the best return they can on their serialization investment-and a well-thought out strategy is the key to realizing that return.
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