Pharma foolish to blindly chase the digital revolution
Collaboration enthusiast Alan Kennedy examines the consequences the digital revolution has in store for the somewhat inefficient pharma supply chain
The word digitization is rapidly being adopted as a ‘catch-all’ term for an array of technologies that all rely on digitized, i.e. numerical, data in order to function. This is evident in the “Industry 4.0” or “Fourth Industrial Revolution” concept that was initiated by the German government to promote interoperability between ‘smart’ technologies in the manufacturing environment. Automation and robotics may ostensibly be about physical material handling but their latest incarnations are all built around digital data sets. In fact, digital technology underpins practically all the main technologies that are currently shaking up, or are poised to shake up the pharma logistics world.
It’s also worth pointing out that although digitization is being hailed as ‘the next big thing’, in fact, like all ‘revolutions’ it has been gestating for decades and quietly being implemented for years, for example in the automated warehouse systems which have been slowly evolving for the past 70 years or so.
While they will may facilitate and accelerate decision-making, big data, smart algorithms and artificial intelligence (AI) will only ever be part of the answer. At the end of the day algorithms are written by humans and AI is still a long way from mimicking the reasoning, interpretation, intuition, nuancing, contextual awareness and other human qualities of cognitive intelligence.
There are many new technologies based around digital that hold promise for pharma-logistics including:
· Cloud-based IT solutions
· Simulation and modelling technologies
· Localized 3D printing
· Mobile apps
· Unmanned aerial/marine drones/vehicles
· Social media and context-related services
By harnessing, and often combining, the latest technologies, a lot of doors open up to hitherto intractable problems. For example, one area of immediate application relates to the tracking and monitoring of products en-route to market. Embedded sensors right down to the individual product will give live location and safety information. Other solutions that will require digital technology to succeed include end-to-end supply chain integration, omni-channel market segmentation, demand-based/make-to-order supply systems, value-based alternative care models and innovative pricing and payment systems.
Digitization of the pharma supply chain and compliance considerations
There is much potential for data-driven performance improvements in terms of temperature, geo-positioning and security with real-time sensors providing the backbone for better supply chain visibility and quality monitoring. For example, with technological advancements such as block chain - the ability to securely capture and control data will be greatly facilitated leading to greater confidence in data sharing. Similarly, the use of AI and robotics will eliminate errors, improve quality and accelerate decision-making. However, the industry must be prepared to work very closely with the regulators to ensure that digitization is developed to the benefit all parties. In particular it is very important that regulatory inertia and intransigence does not serve to stifle the potentially enormous pay-offs that digitization can bring in terms of patient/consumer safety.
The downsides to pursuing digitization
Jumping on board the digitization train in order to gain competitive advantage is not necessarily a wise move for everyone. At least not yet. Digitization invariably incurs a huge amount of up-front cost and many of the technologies are still at the developmental stage. Which means that being an ‘early adopter’ is not for the faint of heart. It could be catastrophic for a company to back the wrong horse just as it could be harmful for a company to sit on the fence for too long. For many companies the best strategy will be to closely observe what is happening and be ready to commit when the answers become clearer.
There are also serious barriers around issues such as data protection and data ownership. What about data security? What are the risks and consequences of system hacking and cyber-crime? Furthermore, companies are understandably very reluctant to share proprietary information and IP for commercial reasons, while for privacy reasons many consumers are very wary of having their personal medical histories becoming commoditized and commercialized. The interoperability of the Internet of Things (IOT) also has potential for cascading repercussions as the industry advances towards having multiple devices collecting data and interacting with each other. A seemingly insignificant event (such as the recent power surge at British Airways) can, in a more digitized, interconnected world, easily mushroom into a massive problem with far-reaching consequences
Areas in the pharma supply chain seeing the most digital revolution
Most of the industry’s big pharma and logistics players are already decisively involved in digitization. Some firms are claiming to be relatively advanced in supply chain digitization and expect to be fully digitized "in the next 18-24 months". However with so much at stake and so many options available, many smaller companies are sitting tight and adopting a 'wait and see' approach. They need to see which way the current is flowing before committing fully.
Other companies, no doubt anaesthetised by a history of relatively slow, incremental changes, are disturbingly intransigent to the disruptive, for some even terminal, potential of digitization. This is the head-in-the sand 'we've always done it this way' mind-set. Both the pharma and the logistics industry are cautious by nature and do not readily embrace change. The regulatory climate and the industry's overwhelming emphasis on safety further serves to reinforce this conservativism, so it would be unrealistic to expect pharma to be taking a digitization lead any time soon. However, at the end of the day while social, political, inertia and environmental factors may slow it down, nothing is going to stop the digital revolution.
How digitization is changing the role of the pharma supply chain professional
The type of person needed in the future pharma-logistics supply chain will be very different. The skill sets needed in a digitized world are very different from those in a conventional work environment. The problem is likely to be a dearth of suitable expertise unless the industry can make itself more attractive to bright young talent. This will create a huge demand for staff re-training, re-organization and cultural change. In most cases the key to successful digitization will be to blend young digital mavericks with mature logistics specialists that understand the operational nuances of the sector. Focused experience plus youthful energy will always win out. Also, the social (jobs market) implications of digitization are huge. For example, automation is going to replace a lot of handling staff while local 3D printing has the potential to substantially reduce the need for finished-goods transportation. For some, industry-wide digitization will be a lot harder to embrace than many expect.
Benefits of digitization for pharma logistics
Digitization, together with its bedmate Big Data, has serious implications for driving:
a. Faster, smarter, decision making
b. Cost reductions
c. Time reductions
d. Product / solutions development and optimization
Today’s typical pharma supply chain is very inefficient by comparison to similar supply chains in other industries. However, digital technologies will give the sector an opportunity to leapfrog into the 21st century. Smart algorithms, artificial intelligence and advanced robotics will free management from a lot of the tedious, repetitive drudgery that characterizes much of their workload at the moment.