It is Time for a Serious Talk with Our Cold Chain Shipments



Eelco de Jong
04/29/2012

In a recent radio commercial a person is calling his friend in panic: "Hey, how are you? I was getting really worried as I haven’t heard from you for 12 seconds. No SMS, no tweets, no WhatsApp. Is everything OK with you?". This commercial illustrates how the rise of the Internet and mobile communication have changed personal communication. In today’s connected world we can be assured we receive any important information from our family, friends or colleagues almost immediately.

In the near feature the technologies that have changed personal communication will have a similar impact on the way we communicate with physical objects. We believe that this "Internet of Things" will create tremendous value for cold chain management practices.

In the pharmaceutical industry the use of digital data loggers has become a standard component in managing high-value shipments. These devices record exactly when something is going wrong in the transportation process, but keep this information silent until the product arrives at its destination. At that moment it’s already too late to prevent any problems. This approach is widely accepted, but we believe that in our connected world we should no longer accept this way of working. Cold chain management simply deserves better.

It’s time that our valuable cold chain shipments start talking with us in real-time. Shipments should keep us informed about their condition and location, and immediately warn us when something is about to go wrong. This can help to address the most critical challenges faced by pharmaceutical manufacturers. In-transit visibility and pro-active intervention can immediately improve process quality and process efficiency. In a next phase it may result in further supply chain optimization, with lower inventory levels, shorter lead time and more flexible supply chains.

Some early adopters are showing that the business value of his approach is real. Panalpina Air & Ocean, the internal service providers within global freight forwarder Panalpina, has been using wireless sensors to monitor pharmaceutical shipments since 2010. This implementation has been driven by a vision for pro-active intervention and management by exception principles. The initial implementation has already resulted in major improvements in process quality and customer service.

Despite these critical benefits, the pharmaceutical industry sometimes seems reluctant to embrace technological innovations. In my discussions with various industry participants over the last few years, I have identified the following factors that slow down innovation:

  • Limited knowledge about technical capabilities. Wireless communication technologies are developing rapidly. This makes it challenging for end-users to keep up with all developments in technologies such as RFID, wireless sensor networking and GPS/GPRS sensors. This means that the technology industry has a responsibility for education and realistic communication.
  • Insufficient quantification of the business case. New solutions create opportunities that go beyond the imagination of many organizations. It is up to the visionary companies to realize the initial benefits and create a competitive advantage. At the recent Cool Chain Europe conference in Basel I met with a supply chain manager from a pharmaceutical manufacturer that had a clear vision how real-time visibility could help to reduce costs in the clinical trial supply chain by reducing inventory levels and waste. These visionary companies will need to prove the business benefits, so that the rest of the industry can follow their example.
  • Organizational consequences. In global supply chains many companies work together to deliver a shipment to a customer. This environment complicates the implementation of new technologies across the supply chain. Furthermore, the benefits cannot be achieved with technology only. Technology is only an enabler and achieving the business benefits requires organizational processes and changes. As we start to collect more real-time information, management by exception principles will become critical. Furthermore, it sometimes seems that the strict quality assurance and validation requirements at pharmaceutical manufacturers favor the acceptance of the ‘status quo’ and existing solutions, resulting in ‘innovation reluctance’.
  • Technical constraints and limitations. Despite all the recent technical innovations, some limitations still remain for the use of certain technology products. For example, GPS/GPRS sensors can be used for road and ocean freight shipments, but at this moment these devices are still difficult to get approved for use on air transportation.

In the next few years we will work with our customers, technology partners and research institutes to address and remove the remaining obstacles for real-time cold chain monitoring. We have no doubt that in the future pharmaceutical shippers and logistics service providers will talk to their cold chain shipments in the same way they communicate with other people today. In the not too distant future this may result in a commercial where a cold chain control tower is contacting a shipment with the question ‘Is everything OK with you? Can you confirm that you are really stored in the cold room?" And the shipment will respond that everything is fine, as we have created a supply chain where excursions are something of the past.

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