New Challenges and Opportunities for Cold Chain: Part I

Operational excellence to expedite delivery of “cool” cargoes has been embraced by carriers, shippers and intermediaries alike as they concentrate their efforts to capture market share in the topsy turvy world of temperature-controlled transportation.

Nils Markman, global director of operations for World Courier – a London-based research firm specializing in biomed logistics, notes that the rise of targeted therapies and the globalization of specialty pharmaceutical commercialization present a host of opportunities for manufacturers.

“The foundational premise is clear,” he says. “More commercial and clinical trial drugs are being shipped to more patients in more countries than ever before. Healthcare is becoming more innovative and more accessible at the same time.”

With these opportunities, however, come great challenges. The increase of global clinical trials for high-value cold chain products means that the stakes—and the costs—for each trial have risen dramatically.

The distribution of specialty medications to emerging markets means that the total supply chain must be evaluated more stringently. The industry now operates in an environment where there is no “acceptable loss” of product or samples.

As a result, global manufacturers must constantly evaluate the advances in technology, processes, and resources that keep cold chain products safe.

“They must remain vigilant over the growing and diverse risks in the supply chain and understand the need for increased expertise from their partners,” declares Markman. “They must stay focused on continuous improvement across all parts of their supply chain to ensure that drugs are delivered safely and effectively, while risks are mitigated appropriately.”

Addressing risk

Variations in temperature can partially or wholly void a shipment and lead to millions of dollars in lost sales for the company, note analysts at Deloitte Consulting. Furthermore, it is not uncommon for companies to add multiple linkages to a global supply chain with little thought to the complexity and risk associated with its extension.

“Many companies realize flaws in their cold only after it has reached a level of complexity that is difficult to simplify,” observes Adam Windnagel, a business analyst with Deloitte in London.

Corporate deployment decisions are often driven by talent, market costs, and local market access. However, as companies grow the interlinkages of the cold supply chain are not always given full consideration. Growth of activities such as bulk, fill/ finish, packaging and distribution add complexity across the network. Given the potential and significant risk to both patient health and fiscal impacts, companies should consider the implications of a location's access to cold chain infrastructure.

Deloitte analysts note that each company's business model, global market and operations infrastructure vary. However when evaluating cold chain as a factor in site selection decisions, they advise global logistics managers to consider the following questions:

*How many product movements are necessary?
*Can co-location of operations such as bulk, fill/ finish, and packaging reduce number of product movements?
*Do the operations have proximate access to transportation facilities with cold chain capabilities?
*Can the location meet proximate access (road) and global access (likely air) needs with cold storage capabilities that meet your product needs?
*Is the location of the operation(s) able to readily access growth markets?
*Does the location and its place within the network allow for flexible growth?

“Companies that invest adequate time to understand and answer these questions in advance can often avoid long term supply chain problems,” says Raj Vohra, a senior manager at Deloitte. “The capital investments in operations along the biopharmaceutical supply chain are significant and it is often difficult, expensive and time consuming to unwind a complex supply chain.”

As a consequence, say analysts, it only benefits companies to strategically factor in considerations for near and long term supply chain along with other relevant operation drivers such as talent, tax and costs when making site selection decisions for operations throughout their value chain.

Next in Part II: Flying Pharma

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