Learning lessons: COVID-19 and its impact on pharma supply chains

Published: 29-Jun-2020

The COVID-19 pandemic has challenged businesses to think in unique and different ways, report Girish Pathak, Head of Supply Chain, and Guy Calcagno, Vice President, ACG Films and Foils

This black swan event exposed the vulnerabilities in the existing supply chain models of some companies and even entire markets, including the pharmaceutical industry, forcing businesses to rethink and transform their global supply chain model.

As parts of the world begin to get back on track and settle into the “new normal,” hurdles remain in terms of maintaining business continuity while keeping employee safety at the core of operations.

In this article, we will look at the different ways COVID-19 impacted the pharmaceutical supply chain and outline the learnings that came from the initial days of the virus. This article also explores how ACG’s Films & Foils business secured its supply chain to protect its clients and the public from the disruption in the supply of lifesaving and critical medicines.

Supply and demand shocks

The virus threw a curveball that nobody saw coming. The initial impact of COVID-19 on the pharma supply chain revolved around material and information delays. When, with immediacy and urgency, many governments sent countries and regions into lockdown, there was little time for employees and companies to prepare for a remote working scenario.

This led to delays for many organisations when it came to accessing information and documentation as all involved adjusted.

Delays in deliveries of raw materials were also caused because of the cessation of operations by small suppliers. Adding to the woes of manufacturers was the unavailability of regular transportation modes.

The international movement of supplies and goods was hugely impacted. For imports, these delays were caused by factors such as the unavailability of original documents, an increase in paperwork, etc. In contrast, for exports, some of these delays were seen because of reduced workforces at ports, resulting in difficulties in getting the containers for export shipments.

In full container load (FCL) shipments, delays were observed owing to vessel schedule changes, whereas in cases of less than full container load (LCL) shipments, consolidation was a problem because of the non-availability of products from other industries.

In the case of air shipments, freights were increased at some points by three to four times more than usual and were changing by the hour. Limited cargo flights were also subjected to cancellation. Like every aspect of the pandemic, it was a fluid situation. All these issues collectively resulted in an increase in lead times when sourcing raw materials, as well as the final dispatch and delivery of finished goods.

Building resilience through communication

Like many companies, as we scrambled to sort out what production was feasible and what demand could be met, we quickly realised that regular communication with clients, vendors, government bodies and employees would have to take centre stage.

Learning lessons: COVID-19 and its impact on pharma supply chains

Lines of communication were opened across the entire supply chain to sanity check the plans for running the plant and to ensure optimum capacity utilisation. This was followed by the development of a plan to fulfil raw material requirements.

We focused on the immediate needs and made sure supplies were available to ensure a continued and prioritised supply for critical drugs. Daily reviews with suppliers regarding the status of material were also set up to minimise delays.

We leveraged information-sharing platforms to provide continued support to vendors and transporters. Several new processes, such as daily updates to the leadership team on operational, SCM, IT and communication effectiveness, were minted to complement the existing ones to prepare for contingencies, which proved to be hugely useful.

We also conducted weekly meetings with top suppliers and customers from across the world. These meetings were regularly co-ordinated by the heads of sales in each region.

Digitisation of the supply chain and implementation of clear communication strategies helped us to counter and even offset future issues. We are currently focusing on best sales practices for the “New Business world.”

We believe that B2B selling will never stagnate and we need to think of innovative ways to break through and make quality connections with customers. We also understand that customers’ time is valuable; as such, we’re trying to become a solution-based supplier in these difficult times.

To overcome the challenges thrown by the pandemic, businesses will need to ensure fast, secure communication between suppliers and clients, as well as create a sound communication channel within the company that includes leadership, management and on-the-ground staff.

Diverting resources to achieve security and flexibility

For us, the logistics department played a critical role in the transportation and handling of deliveries. We understood early on that flexibility was essential and resources should be directed towards finding alternate solutions when, for example, certain vendors couldn’t provide the services or goods required for continued production.

We introduced back-ups and new vendors into the system when the supply chain was broken.

As the rules to cross state borders changed overnight, we adapted to new ones. For example, for consignments going by road, we arranged for special permissions for the transport vehicles by working closely with local governments and provided the vehicle drivers with all the necessary documentation and permits to reduce delays.

Keeping our workforce at the centre of our operations, we tried to make their journeys as safe and comfortable as possible by providing essentials such as food packets and water bottles (the rest stops and stores across the length and the breadth of the countries were either closed or posed a risk of exposure to virus).

Prioritising staff safety

For ACG, the health and well-being of its staff are paramount. We took extraordinary steps to ensure the security of our associates and their families. Some of these were

  • doctors were made available at the factory sites daily for everyone
  • temperature guns were installed at gates and entrances to facilities
  • staggered attendance and a multiple shift approach were implemented to ensure social distancing
  • a fresh set of PPE, such as masks and gloves, was provided to each employee daily
  • hourly sanitisation of the factories and commute vehicles
  • arrangements of groceries and vegetables for the workforce
  • the provision of sanitisation kits for employees to take home
  • aiding nearby villages with drug and sanitisation kits and information about COVID-19
  • special arrangements for overnight stays for the workforce in some areas
  • the provision of free medical insurance and assistance, should the need arise
  • safety audits.

Looking ahead

The COVID-19 pandemic will undoubtedly have a significant impact on the long-term running and attitudes of the pharma industry and how we operate our supply chains. Technology and its increasing integration into the supply chain will play a considerable part in countering the impact of COVID-19 and protecting the industry and clients from future disruptions.

Although pharma is traditionally conservative by nature, it will see a higher integration of technological advancements in the future. Moving forward, we will see further use of AI, IoT and digitised improvements in the pharmaceutical supply chain. The “me too generic” will struggle in the new dynamic world.

We also anticipate that going into a changed world, flexibility will become increasingly crucial as businesses will need to be able to demonstrate their ability to adapt and continue operations in the face of emerging issues.

Customers will be swift in selecting alternate quality suppliers that can show value in their supply chain as being resourceful, knowledgeable, innovative and flexible. Thus, there will be many growth opportunities for companies that are willing to be creative and solve new problems as suppliers.

A real commitment to safety, security and the needs of the customers, employees and suppliers will be evident in the way companies continue operations and work during a crisis. Today, a deeper understanding of the human touch in business is becoming steadily more important and we must work together to build quality relationships, collaborating and sharing information as a global team to build a better pharma future.

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