Combating Cold Chain's Capital Sinkhole

How have recent regulatory changes affected cold chain distribution specific to bulk transportation?

I think there are a couple of things to evaluate in regards to recent regulatory changes and how they’re affecting the market as whole, but even more specifically to bulk transportation. One of the main points that came with the GDP change is the requirement for 100% temperature monitoring. As a result, there really isn’t a way to turn a blind eye to either performance or compliance.

Another major change is an increased scrutiny on shipping to label claim, especially with CRT products. This is forcing companies to utilise packaging where maybe they haven’t previously. Additionally, these changes may force companies that have shipped against wider temperature requirements to move to more robust packaging.

With both of these changes, the ultimate bottom line is an increase in packaging and transportation spend, and a reduction in efficiency from a transport perspective. A pallet instead of being flush in volume with product cases, now has to encompass space for a couple of inches of insulation, refrigerant, ancillary components, temperature monitoring devices, etc. All of a sudden I’m moving a lot less cases per footprint. As a result, costs will increase accordingly due to the loss in efficiency.

So where are weaknesses in container utilisation in the temperature control logistics market and how frequent are these issues cropping up?

One of the strategies that you often see is a “one-size-fits-all” approach. Generally speaking, achieving the required thermal performance in a pallet system presents a significant technical challenge. A lot of time is either spent in development and/or qualification of a particular system, and the performance qualification can be a lengthy process for bulk systems as well. In most cases, a system is implemented that becomes a “catch-all” for everything requiring bulk transport. From a training and management perspective that may be easier, but ultimately you may sacrifice quite a bit on the efficiency side of the equation.

With active containers, for the most part, you’re stuck with a single-size container. Unfortunately for an organization looking to reduce their spend, the lack of payload size options mean that in many cases you may not be able to use all the available payload space in a particular container efficiently, even though you’ve certainly paid for it. What you’ll find for many companies is that there are a significant number of shipments that are using less than 50% of the available payload space. Active containers carry a very expensive price tag to not utilise the payload space efficiently. Utilizing metrics, such as cost per vial and container utilisation rates, can help identify areas for improvement. Perhaps through aligning production schedules and planning, one can consolidate shipments of multiple products to improve container utilisation. Again, with the idea being that the more usable payload space that is filled with each shipment, the lower the overall cost of transport will be.

In addition to the payload efficiency, looking at the transport duration is also very important. For some shipments, bulk moves go between site to site within 48-72 hours, while others can take upwards of 2 weeks or more (due to significant challenges in customs clearance, local ground transport, etc). How does this impact efficiency? It’s the idea of tuning the solution to the need. An active container is frankly an over-engineered solution for a 48-72 hour shipment when many passive systems can easily maintain product temperatures within range for longer durations. Therefore, as one evaluates their bulk distribution model, moving past what is fit for use, but drilling down on what is truly required and tuning the selected solution to that need will help realize significant gains in efficiency with respect to reduction in packaging and freight spend.

As mentioned, on the passive side, there are more size options, so you are granted more flexibility to be efficient when you consider bulk distribution. Typically, most of the passive manufacturers are offering multiple sizes of passive containers. So you can take the “if it fits it ships” approach. If it fits in the smaller of the two containers - use the smallest container to save on packaging and freight spend. Alternatively, you could utilize large parcel sized boxes to consolidate small market shipments as well.

One of the challenges with passive systems is that often each packaging solution is designed as a unique entity, so they tend not to utilise the same technology and SKUs. From an inventory management perspective, you may have to manage many different SKUs and - due to a lack of common components - a number of different unique systems. For the pharma or the biotech manufacturer, this produces more training and more management. These are some of the soft costs that really can influence an organisation to say, “It’s going to be too much of a challenge to manage this through our quality system with respect to procedures through our procurement, inventory management and our warehouse personnel. So, we’re going to keep it simple and just stick with one design.”

What considerations should be made for bulk product transportation?

There are two main areas. The quality elements and the transport elements. The quality related elements tie back to the risk profile and defining the quality requirements.

In regards to the transport elements, some variables to consider are:

- Where are you shipping?

- What are you shipping?

- How frequently are you shipping it?

- Can packaging be consolidated with mixed loads?

Another element is mapping out production planning and forecasting. Often transportation and distribution are the last things that are considered as new drugs are being developed and ultimately delivered to the market. For many organizations, either legacy packaging solutions are used or there simply aren’t the adequate resources to dedicate to create a strategic scheme on the product’s distribution handling, and as a result, efficiency is lost. This reinforces the idea that true efficiency is going to be obtained with more data. Where do you get data? - From your customer service groups and through production planning and management. For example, when certain elements are ready to be delivered whether it’s moving bulk over to a fill-finish location or moving bright stock over to a label-pack facility, those types of key points are where you have opportunities to potentially deploy strategies like mixed loads and making the best use of the container payload space that you’re already paying for.

It certainly does involve some amount of planning and logistics upfront, but I think once you put those processes in place it becomes a much easier. Ultimately what it does is it provides management with visibility in terms of how you’re managing your supply chain and how data and metrics are driving your decision making.

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How should risk and risk profile influence decisions on bulk transportation?

A risk profile guides cold chain management via quality requirements and business considerations. It generally is a product of input from various groups throughout the business. The risk profile will contain the critical to quality requirements that have to be met. These requirements will be a function of the attributes of the particular product and reflect the anticipated supply chain.

What elements should be evaluated in developing a risk profile for bulk transportation of temperature sensitive products?

There are a lot of elements that go into developing a risk profile and every organisation handles it slightly differently.

One of the key variables to evaluate is the time required to replace a particular product. For example, a vaccine that can be manufactured very quickly and has a lot of inventory sitting on the shelf may be treated differently than a biologic which takes seven months to produce and has inventory constraints. For the vaccine, I may be able to accept a bit more risk in my transportation scheme because it can be replaced quickly if there is an excursion or an issue.

The next element is a product’s value. The value of your product is really going to provide perspective on the amount of risk you can be willing to assume. With the products of a much lower value it may be sensible to assume some amount of risk into the supply chain to use packaging that is more tuned to the value of the product rather than a high-value active solution.

Another key element to consider is the stability of your particular drug. Perhaps your drug has stability beyond label claim, and this may allow you to leverage less expensive packaging. That may influence your regulatory filings however, so there is a lot to consider here.

The expected shipping lanes that you’re utilising are also important to evaluate. Some lanes are generally very easy (US to Europe), while other lanes are very complex and peppered with added control challenges (to Brazil). It is important to characterize all of the expected transport lanes and tune your packaging accordingly.

Finally, ambient temperature profiles. These profiles end up being a method that companies use to quantify the amount of risk they want to assume. If they are willing to use fairly benign ambient profiles in a qualification scheme for packaging, this will drive down packaging costs. However, this introduces risk into the supply chain in the form of excursions By developing profiles through applying confidence intervals and stripping out some data, a firm could end up with profiles they deem are more representative for 90% of their shipments and so they are prepared to assume some risk with the remaining 10%. This is a very different risk profile to a case where the firm opts to use ISTA 7D as a standard, which is seen to be one of the most challenging set of profiles out there. In this case, the packaging is assured to perform very well in the field because that standard reaches far beyond the challenges that the packaging is experiencing during live shipment at the moment.

So how would you evaluate the overall effectiveness and efficiency of an organisation’s bulk transportation management?

I’m very much of a Lean and Six Sigma kind of guy, so it’s about data and metrics- that’s really the key.

One of the metrics that I have explored is the cost-per-vial or cost-per-syringe for each individual move. Direct comparisons can be drawn from shipment to shipment, product to product, month to month or year to year. Here you can uncover a true expression of your efficiency - the lower that dollar value, the more efficient your distribution scheme. It isn’t necessarily that I’m using the cheapest packaging, or even that I’m using just standard freight as opposed to a white glove service. What it’s telling you is that I’m really maximising my container utilisation. I’m making sure that if I’m paying for a certain amount of space that I’m using as much of that space as possible.

The other area you may investigate is your freight efficiency. Downsizing from a larger size container to a smaller size container will see the cost per vial reduce significantly just based on the packaging spend and also in freight savings because I am occupying less space.

What is there to be gained if pharma firms focus on becoming more efficient and measured with their container utilisation within the cold chain?

It’s all about dollars. You know I think that’s really kind of the biggest thing that you’re going to get.

Also this efficiency will provide better visibility for manufacturing, production planning and inventory management. If I’m better managing my freight through the consolidation of orders, I have a clear idea on the time when products are ready to ship, so containers can be lined up. This ability to forecast will allow firms to accommodate for scheduling for active containers in advance – which can be a challenge.

The advantages of forecasting and avoiding delays can be applied with passive systems. When maintaining inventory on systems, a needed container can be acquired as well as the refrigerants that need conditioning, so the components are prepared when that order is ready to ship.

What are some of the challenges specific to bulk transportation of temperature sensitive products, looking at maybe future challenges, and how does the Imperium family address those challenges and how the Imperium family fits into the various risk profiles organisations have developed for their products?

The challenges seen in the market with respect to bulk distribution are spurred by the EU GDP revision enforcing the need for 100% temperature monitoring as well as controlled room temperature requirements.

CRT is:

A) A challenging requirement from a technical perspective to manage thermally.

B) It’s one that a lot of companies don’t have experience in managing previously.

A lot of companies are scrambling around to locate halfway decent solutions out in the market, let alone good ones, to try and manage that particular need.

In regards to packaging efficiency, one apt strategy is to implement not just a solution to manage bulk distribution but a number of different solutions tuned to your specific needs - duration requirements, sizing requirements, or the risk profile for your particular product.

If we view the macro picture for a pharma or biotech company they may manufacture CRT products, they may manufacture 2-8°C products, they may have to move some products at different phases of the manufacturing process in frozen state. Products in the portfolio may be very high value and others quite low. So the various products in the organisation may require differing perspectives for their risk profiles, packaging management and transportation management.

When I designed the Imperium® family of pallet solutions, I leveraged a lot of my experience at the large biotech company I worked for. The goal was to design a single passive platform of solutions that can be tuned to meet specific organizational risk profiles. We achieved this with our patent-pending technology and which can be tuned interchangeably between the needs and solutions.

There are different levels of solutions available utilising phase change materials for the higher end solutions, but we also have water based configurations.. These could be seasonal solutions that last for four to five days. The next step up we introduce phase change material into the solution for a cost, for the benefit of a much higher performing solution that is a universal pack-out so you don’t have to be concerned with anything seasonal affecting the system’s performance.

To extend the performance level out to five to even seven days, you have our Plus level solution, or for more stringent risk management we developed our Elite level solution. We actually embedded vacuum-insulated panels into the walls along with the EPS insulation we use as standard, and have created solutions that are going upwards of ten days, either 2-8°C or CRT.

With multiple configurations (21) available on the single Imperium platform, pharma and biotech companies are able to address most, if not all, the various risk profiles they might confront. All Imperium configurations use many of the same common components, pack the same and look the same. They have the same set of internal components, but all we’re doing is changing the insulation that we put in the outer wall or altering the refrigerant inside of the system. Simply by changing those things we’re able to go from one configuration to another to allow us to align to specific risk profiles.

Them Imperium family has configurations for CRT, for 2-8°C, and configurations for a wider controlled ambient storage requirements (for example, 2-25°C). Also, we are developing frozen configurations using dry ice, and we anticipate having some frozen solutions using PCM as a coolant, PCM as opposed to dry ice for regions, like China, where you can’t ship dry ice.

When I developed these solutions and put, virtual pen to virtual paper, I had the specific biotech manufacturer I worked for in mind. I intended to create a high performance passive solution that offered a viable alternative to active containers as well as to some of the high end passive solutions.

The solutions in the market currently are wonderful, but each come with their own challenges. Active containers can be very difficult to get positioned for when you need them and they come with a huge price tag per move, because the reality is you’re paying essentially three transports for that container.

For high end passive solutions, now these are again either leased for use or something that you purchase and actually manage this return reuse process. While these things typically sound great in boardrooms, the reality is much more difficult when it gets to practical application and management. There are a lot of soft costs that are buried into return-reuse programmes that do not get captured. These containers have to be inspected, they have to be cleaned to make sure that refrigerants didn’t leak, you need to ensure the insulation is still intact. Then, on top of that, now you need to ask typically corporate distribution and logistics teams or site distribution and logistics teams to manage all the return freight and positioning.

If your distribution model is comprised of lanes that aren’t close-loop, this is a huge challenge. If you’re shipping to a site outside of your organisation, their urgency to make sure you get your container back may not be the same as if you’re shipping intra-organisation which allows you to have more control over the return logistics.

Also, if a lane is not on a closed loop and the site in question doesn’t have a use for that container in another transport leg, I’m now left with paying to move that empty container back to the origin site. So now I have two freight spends for that particular container. Unless you’re getting enough returns and enough turns on that container, and it’s holding up during transit where you’re not having to replace parts, frankly speaking, it’s going to be very hard to see the kind of ROI that a lot of companies really want. The reason for that is they don’t look at the soft costs of managing the return reuse programmes.

Certainly, you can lease high-end passive systems, but again it’s coming with all the costs that you get in using an active solution. The Imperium solution is designed to be a disposable system. We’ve been able to get our Elite level system to price points that are similar to those expected to lease an active container, but you can have it inventoried on the shelf. I can pull it when I need it. I don’t have to necessarily pay for a white glove service because I’m just going to box it and will not have to open it until it gets to its destination because our elite CRT solutions during qualification maintain temperature upwards of ten to 11 days against ISTA 7D profiles. If people are faced with the box being stuck for three weeks, it can just be stored in a controlled warehouse. In the end, these solutions in terms of cost will provide some manner of efficiency, but also a lot of flexibility.

Efficiency was designed into the Imperium solutions. Three sizes of containers were designed simultaneously resulting in the widest range of passive pallet solutions available, while providing the flexibility for organizations to choose the options that help them in turn reduce cost and minimize risk. As far as I know, there really isn’t anyone else out there trying to take on that kind of challenge.

It’s hard enough to design for one size, we offer three configurable sizes.

- Imperium XL can accept a 48 x 40 pallet footprint.

- Imperium Standard resides in a 48 x 40 pallet footprint and stands about 60 inches tall,

- Imperium Half is optimised for narrow body aircraft transport.

We’ve created seven different configurations for each of the three available sizes. In total we are rolling out 21 different configurations, plus a couple of dry ice configurations in our half pallet solution. With regards to our customer offerings, we can supply different sized containers to cater for all of their needs (2-8°C, CRT and ambient) The only assembly that is required is to either change out the wall, depending on whether you select an XL or a standard configuration, and change out the bottles.

What considerations should be made when choosing passive systems for bulk transportation?

Certainly you’re going to go back to your risk profile, your duration, the lane complexity and potential for customs delays. Also, packing efficiency is important so as you’re evaluating solutions for manufacturers A, B and C, you consider the amount of product that can fit into each solution.

Lastly, the practical utilisation of the system. I can tell you that I was very sensitive when I worked for the biotech company towards the guys in the warehouse. These guys aren’t usually as technically aware on how the solutions actually work. As a designer of solutions, I needed to ensure that this end user was in mind.

I sculpted designs for the Imperium that are intuitive and involve as few touches as possible. For example, by colour coding our refrigerants as reflected in our pack-out diagram, and having slots which are predefined (so bottle A can’t go in slot B), the box can only be packed in the correct way. The packing process for each container is as simple as possible for the guys in the warehouse to aid their success rates.

Another relative consideration is the SKU management. Do I have a number of common SKUs that I can be used through a platform of different solutions as I need them, as opposed to having to order three specific refrigerants for box A, two more specific refrigerants for box B and maybe another three more for box C. In this particular scenario I would have to manage eight, 10 or even 12 different refrigerant SKUs and be aware of my order points for each to avoid potentially missing shipments. Common SKUs give you a lot more flexibility.

What advantages do your disposable passive systems have over active and high end reusable passive systems?

Certainly cost is going to be one of the biggest drivers. Even on a high end disposable passive solution, if you’re spending, say, $2,000 to $3,000 on a pallet system, when you consider the total cost- total spend, freight spend, this disposable passive solution is always going to come out on the plus side of the ledger versus a lease solution. Simply stated, “if you’re going for a lease, essentially you are bound to a ‘by-the-glass’ type of approach, and that’s a fixed cost with every single move regardless of the amount of space you utilise in that container”.

Also, these systems give firms more flexibility for transportation. If I have to manage reusable containers, I’ll need corporate distribution and logistics teams to manage the location of things on a global scale, especially if I’m a multinational company. We would need awareness of where containers are in transit, where they are at our different sites. I may have to move them from site to site just to satisfy a particular transport need. There’s a large amount of red tape that ends up ultimately going into managing those processes. And if you’re just doing it on a lease for use standpoint, well, that gets away from any of the reusability aspects of it.

So there all you’re doing is essentially paying for a service. At the end of the day for that service I may spend $13,000 to move a 48 x 40 pallet of product, I might be able to do that for half that in a disposable passive solution.

I think a lot of people have made the decision to go especially to active solutions just from a performance standpoint. Well, in regards to the Imperium solutions – their engineering and carefully crafted design – the maximum amount of tools have been used to provide high end thermal management performance from a solution that you can take and throw away when it gets to your site.