Combatting Inclement Weather in the Midst of Supply Chain Preservation

The very first Groundhog Day celebration was held on Feb. 2, 1887, in the town of Punxsutawney, PA. Many have found this to be quite the entertaining tradition.

This past February, 135 years later, Punxsutawney Phil did in fact see his shadow, signifying six more weeks of winter.

If there is any chance that Phil’s prediction is accurate, companies who operate in the pharma supply chain—including Cardinal Health Third Party Logistics (3PL) Services—will have to maintain laser focus in making sure that all links remain unharmed, while also keeping the ramifications of COVID-19 in mind.

Pharmaceutical Commerce sat down with Joel Wayment, the company’s vice president of operations, to not only discuss the 3PL’s emergency preparedness strategies, but to provide an overview of what the pharma industry is doing as a whole, while a pandemic continues.

*Note: responses may have been edited slightly for brevity.

How is Cardinal Health 3PL Services able to get in front of complications such as blizzards and other inclement weather events to avoid interruptions, especially for those who rely on receiving shipments on time? What types of contingency plans do you recommend for these types of situations?

It comes down to a good monitoring system for inclement weather systems. We are constantly monitoring weather forecasts to understand what is going in the US, and what we—or our customers—might need to be alerted to.

Once we are notified, we notify customers, and walk through the possible scenarios that may happen with product in the supply chain. This is really important, because if you think of cold chain products, manufacturers need to know what that risk is that the product may get stuck, and how to minimize that risk.

One really important element of monitoring and evaluating risks with a customer is taking the time to understand their operations and inventory levels that they are holding. Is the inventory going to a wholesaler, who may be carrying 14-21 days on hand, or a direct customer that may be carrying just in time? What is the critical nature of the product? Is the shipment to support a scheduled patient procedure? Where is the shipment going in relation to the disruption? If a storm hits the West Coast, but customers are in the Midwest, your supplies may be fine to continue as normal.

As to how pharma companies can better prepare, know your customer. Know how much inventory they have, what’s critical to send, what to take risks on. The more knowledge you about your customer, their inventory levels and capabilities, the better place you will be in to pivot and adjust when a disruption happens. By knowing your customers and their inventory levels, in extreme situations, there are options to work with neighboring customers to transfer inventory to meet a critical patient need.

How did COVID impact (or further expose) the pharma industry’s contingency plans?

To put it succinctly, COVID impacted the availability of “things,” from labor to equipment, even product.

When it comes to the pharma contingency plan—most 3PLs have contingency plans for weather and other traditional disruptions—it was hard to anticipate the impact to the labor market, from our warehouses to carrier drivers and pilots. It has affected every link in the supply chain.

Another unforeseen challenge was the impact the pandemic had on FDA activity. As of November, the FDA reported 52 drug application delays due to the backlog of site inspections, despite the record number of products approved in 2021. For 3PLs to house drugs expected to come to market, only to be delayed due to site inspection delays, was a challenge to overcome.

Joel Wayment

How have you been working with pharma companies to prepare for these events? How well do they rate on disaster-preparedness? Are the large pharma companies more equipped to deal with such events?

It’s important to highlight that preparing for these scenarios is core to what we do. Any good 3PL does this already; disaster preparedness varies between small to large pharma based on the complexity of their operations and commitment to business continuity. The benefit for pharma companies that use a 3PL is the ability to tap into the extensive experience and resources that 3PLs have. Committing the time and resources to building, testing, and reassessing our contingency plans is a critical priority for our business each year. Never knowing when disruption may occur, taking the time to be prepared is critical.

How is technology being used to help predict or better prepare for these storms and disasters?

Having real time data on weather and how weather patterns are changing is really important, and something that just wasn’t available a decade ago.

One way in which we are using technology to better prepare is to obtain better real-time insights into the supply chain. Last March (2021), Cardinal Health partnered with the predictive supply chain visibility platform, FourKites, to create a central data hub for Cardinal Health’s next-generation cognitive supply chain network. This hub combines real-time supply chain visibility, machine learning and artificial intelligence (AI) capabilities to facilitate the unencumbered flow of inventory throughout the supply chain, and gives our customers full visibility to network in-transit shipments via Cardinal Health’s ordering platforms.

In which therapeutic areas were your services most urgently required, and what challenges did these areas present?

I would say it’s not so much therapeutic area based, but based on the life-saving products in times of disruption. This can often be a challenge to determine what is life saving, because all products are important for the healthcare ecosystem. That said, we also focus on what is going direct rather than wholesale because they tend to have less inventory on-hand at any given time, whereas wholesalers have higher inventory levels that potentially can help ride out the storm before replenishments can be safely distributed.

What advice can you offer clients for effectively communicating with customers? What can pharma companies be doing to help improve this process?

There are two big pieces of advice I can give. The first is to communicate in real-time as you receive updates, rather than waiting until you have all information. You may not have the complete picture, but even communicating bits at a time can help pharmaceutical companies prepare and understand what is happening.

The second piece of advice is to know your customer. This is the key to handling disruptions effectively while ensuring life-saving medication is where it needs to be.

What can third-party logistics providers themselves learn from recent events such as COVID? Were 3PLs “caught out” in this regard?

[There are] two specific learnings that I think 3PLs have learned from this pandemic.

The first is the workforce dilemma. We couldn’t have expected how COVID would change the workforce the way it has, and we need to continue to innovate and automate processes (where it makes sense) to minimize disruption created by a limited workforce. We need to strike the right balance between human labor and automation.

The second is the need to continue to diversify relationships with vendors. If one carrier is struggling and all shipments go through that carrier, the 3PL is going to struggle as well. It’s important to look at and qualify other vendors to minimize any disruptions that occur.

Could you describe a situation in which you dealt with these aforementioned issues and tackled them head-on?

We got a head start of the COVID situation because we had already started to pilot a work from home program three or four months before COVID hit. This made us better prepared to move virtual when everything shut down with minimal disruptions. Additionally, since the pandemic began, we’ve invested heavily in AI and automation to minimize the impact of labor challenges in our warehouses.

As to diversifying relationships, we run a transportation network called the Exclusive Pharmaceutical Transportation Network (EPTN). The network is designed to use shared-resource logistics to consolidate shipments from different pharmaceutical manufacturers onto shared routes as a way to offer more efficient and cost-effective shipping lanes to common destinations. However, we had EPTN running through one primary carrier. When we realized this carrier might have disruptions, we qualified more vendors to minimize disruptions and protect the value of this unique transportation model for our manufacturer partners, minimizing the potential delay in getting critical shipments to their customers.