By Steve Brownett-Gale, Marketing Lead at Origin
The pharmaceutical industry, with its reliance on complex and global supply chains, is particularly vulnerable to both climate and geopolitical risks.
The impacts of climate change are being felt in many, if not all, countries and industries globally. And the same is true for rising geopolitical tension and conflict.
Any disruption, however long or short, can affect the production and distribution of critical medicines, posing significant challenges to public health.
To mitigate the risks associated with a world in flux, the industry is implementing several strategies aimed at ensuring supply chain resilience and stability.
Assessing vulnerabilities
To protect their supply chains, pharmaceutical companies must first understand where vulnerabilities exist.
So-called ‘Supply Chain Mapping’ involves comprehensive assessments of the potential impacts of disruption on different stages of production and distribution. These assessments help identify critical areas that are susceptible to unexpected events such as sourcing of raw materials, manufacturing sites, and transportation routes.
Diversifying supply chains
To boost resilience, many companies are diversifying their supply chains.
This strategy includes sourcing materials from multiple suppliers and locations to avoid dependence on a single source that might be affected by disruption. By creating a network of unconnected suppliers, pharmaceutical companies can better manage risks and maintain production continuity even if one source is compromised.
Reshoring and local production
Reshoring – bringing back pharma production to a country or region – and investing in local facilities and partnerships can also help to support continuity and shelter supply chains from events taking place in global markets.
As a strategy, it may cost more in the short term, but in the long run it can save companies huge amounts if the unforeseen affects global supply and demand. Local production also allows for quicker responses to market demands and reduces the carbon footprint associated with transportation.
Enhancing inventory management
Pharmaceutical companies are improving their inventory management systems to buffer against supply chain disruptions. This involves maintaining higher inventory levels of critical drugs and raw materials to ensure sufficient stock during emergencies – something the COVID-19 pandemic highlighted the importance of.
Advanced inventory management techniques, supported by predictive analytics and AI software, help pharma companies to optimise stock levels and reduce the risk of shortages that can have sizeable impacts on public health.
Sustainable practices and innovation
As well as preparing for a world in flux, the pharmaceutical industry has a responsibility to take proactive action and help prevent disruptive events caused by climate change.
Actions include adopting greener manufacturing processes that minimise environmental impact and reduce resource dependency. Innovations such as continuous manufacturing, eco-friendly packaging and green chemistry techniques are also being increasing adopted by the sector.
Investing in infrastructure
To withstand extreme weather events, pharmaceutical companies are investing in more robust infrastructure to make its supply chain more robust.
This includes upgrading facilities to be more resilient to natural disasters such as floods, hurricanes, and heatwaves. Companies are also incorporating temperature control measures into their facilities and transport infrastructure to combat medicine spoilage caused by extreme heat.
Leveraging technology and data
In a global market, transparency significantly enhances supply chain risk management.
By leveraging big data, pharma companies can gain greater visibility and control over their supply chains, forecast potential disruptions and plan accordingly.
AI technology is super-boosting these efforts. Machine learning algorithms, such as artificial neural networks (ANN), can identify complex patterns and relationships in supply chain data, aiding more informed and quicker decision-making.
Collaborating with stakeholders
Collaboration with stakeholders, including suppliers, governments, and non-governmental organisations, is essential for more resilient supply chains that are more protected against market and climate volatility.
Joint initiatives and partnerships help share resources, knowledge, and best practices, creating a more integrated and responsive supply chain network.
