Market expectations of service and quality are continuously advancing. The health product consumer of today seeks and expects more service, more safety, more value and more customization. For this to happen requires enormous, and continuous, efficiency improvements on the part of the manufacturer.
However, productivity dividends are, like many things, subject to the law of diminishing returns. Supply network optimization offers a clear route to meeting the escalating requirements of the market while securing the long-term profitability and market respect of the participating organizations. Among the industry’s more savvy organizations, the efficiency battleground is moving from the factory to the supply chain with huge potential for efficiency gains, cost savings and competitive advantage.
Research by Accenture has indicated that, by implementing global strategies to optimize freight-related spend, shippers can lower transportation costs by up to 25%. Similar levels of savings have been recorded in other studies of pharma logistics rationalization. The bottom line is that major pharma shippers, especially those with multinational manufacturing and marketing interests, have it within their grasp to extract orders-of-magnitude improvements in value if they are prepared to support collaborative delivery models that go right down to the industry’s grass roots.
The new Team-Up initiative operates as a shipper-driven, single-focus ‘best practice’ group specifically promoting strategic partnering between all players in the pharma-logistics process. With this in mind, the Team-Up program came out of exploratory discussions at the LogiPharma 2016 Conference in Montreux followed by a roundtable consultation with key stakeholders. The idea behind the consultation process was to bring a senior representative from each of the main pharma-logistics stakeholders around a table to explore the potential for genuine end-to-end collaboration.
The need for reform
In the case of pharmaceutical manufacturing, the processes concerned are generally under continuous efficiency review and, as a result, most of the “low-hanging” productivity gains are quickly picked up. In contrast, pharma-logistics operations tend to be relatively comatose, often escaping root and branch analysis by pharma producers on account of their ‘non-core business’ status, and the anticipated cost and disruption of change.
However, it is becoming increasingly difficult to reconcile the growing demands for reduced costs with those for improved performance. Logistics companies are having to negotiate an ever more intricate labyrinth of regulations, performance standards and shipping routes while maintaining the profitability necessary for innovation, business development and shareholder return.
These logistical challenges are particularly acute in developing regions where there may be additional risks associated with infrastructure limitations, tax, duty and regulatory complications, poor market data, ramp and handling inefficiencies, language barriers, and a lack of trained manpower.
Team-Up is seeking to emulate the radical supply-chain re-engineering that is a recurring feature of many other logistics-intensive industries such as automotive, retail, aerospace and construction.
A preliminary portfolio of Team-Up goals includes:
- Realigning the corporate culture of pharma logistics to better support integrated working.
- Sharing collaborative best practice and providing the industry with practical advice and tools in order to standardize partnering methodologies and facilitate the assembly of integrated supply networks.
- Providing shippers and logistics providers with a recognized accreditation status for exemplary collaborative working and to promote these credentials to all sector stakeholders.
- Strengthening the business case for integrated supply networks by building an evidence-base from pilot programs and other evaluations.
Team-Up operates independently of any existing bodies and movements, and is not associated with any vested interest groups or particular segments of the supply chain. This makes it relevant to the entire pharma-logistics sector, including all modes of transport—air, ground and ocean. The Team-Up approach is of universal validity and has no geographical barriers—local, national or international. Furthermore, the Team-Up approach has been designed to foster the collaborative working practices that are implicit in partnership-dependent programs, such as IATA’s CEIV program, the Pharma.Aero group and other industry collectives.
Planning sessions are being held in late 2016 with a formal kickoff slated for early 2017. We invite all interested parties to contact the Team-Up organization and play an active role in its development. Contact us via www.team-up.global.
ABOUT THE AUTHOR
Alan Kennedy is a collaboration consultant and executive director of Team-Up. A pioneer of integrated supply chain working, Alan first got involved in the practical implementation of collaborative working methods in supply chains while working with the Electrolux Group in the 1980s. More recently, he has been involved in bringing best-collaborative practices to the pharma-logistics sector. He has presented at many conferences and published numerous papers on the subject of supply chain collaboration and integration. He can be reached at firstname.lastname@example.org.