The long road to continuous manufacturing in pharma

Continuous manufacturing could have significant success in improving the pharmaceuticals supply chain, but challenges remain.

The journey to continuous manufacturing in pharmaceuticals is going to be a long one. As a recent report on another, related technology – 3D printing – made clear, the shift to continuous manufacturing in pharma has been “slow”. Most still hold to traditional batch processing methods.

That’s despite the benefits it potentially provides – proven in a wide range of other industries like oil, gas and petrochemicals. Most notably, perhaps, is efficiency: Frost & Sullivan’s report notes that continuous manufacturing can cut production time to less than 10 days (which could then be further cut with 3D printing); the US Food and Drug Administration (FDA) has estimated some drugs that take a month to manufactured through batch processing, could be produced in a day.

Linked to that, continuous manufacturing also promises to cut manufacturing costs: by up to 40 to 50 per cent, according to the US National Science and Technology Council’s Subcommittee for Advanced Manufacturing. Estimates put waste from inefficiency in the pharmaceutical industry at up to $50 billion a year.

A quality argument for continuous manufacturing

Finally, continuous manufacturing has the potential to improve quality. Reducing human input – and error – from production, it could help cut contamination and mistakes that lead to waste and product recalls. And it’s not just the technology companies making that case: it’s one reason the FDA has been keen to accommodate uptake of continuous manufacturing.

As the deputy director in the FDA’s Office of Pharmaceutical Quality, Center for Drug Evaluation and Research, has put it: “[B]y eliminating breaks between steps and reducing opportunities for human errors during the stops and starts in the batch process, continuous manufacturing is more reliable — and safer.”

In short, continuous manufacturing could help address both drug shortages and recalls from production issues: two key supply chain challenges the industry faces.

Demand for data

So, if it’s faster, cheaper and results in better quality, why has the move to continuous manufacturing been so slow?

There are a number of reasons. One is the up front costs, with the need to invest in new equipment. For some producing small quantities, it may also be difficult to justify round-the-clock production.

But there is also the fact that the move to continuous manufacturing is demanding – and potentially risky if not handled correctly. The benefits to quality, particularly, are achieved only by building it into the continuous process at the outset – so called “quality by design”. Regulators, too, must be satisfied that the process and controls in place are adequate.

Two things are particularly important to meeting that challenge, and both were picked up on in a speech earlier this year by Stephanie Krogmeier at Vertex Pharmaceuticals.

First, is the data challenge that continuous manufacturing can bring, ensuring the right information is available to control the process and satisfy regulators. The move to continuous manufacturing and increased oversight of data are closely tied in the FDA’s approach.

Second, and possibly even more important, is leadership. As Krogmeier made clear, the move to continuous manufacturing needs commitment, and that has to start at the top. As she said: “You need the full support of management. If you don’t have someone in senior management driving this, you will fail.”

Going local? Brexit, Trump and supply chain challenges

Businesses have a window of opportunity to make preparations for a more protectionist future. It will not be open forever.

John Major’s intervention aside, a hard Brexit remains the government’s position on the EU, and industries are starting to take note. Today, The Times reports UK car manufacturers are looking to source more parts domestically in response to the threat of tariffs when the UK leaves. Over time, the current ratio of two thirds sourced internationally to one third at home may be reversed.

The concerns are not restricted to the UK, nor worries over Brexit. Going local was a key message at this year’s Davos meeting of the World Economic Forum, as businesses try to pre-empt a Trump-led populist backlash against globalisation.

America first: bringing production home

Furthermore, while they’re particularly exposed, it’s not just car makers in the firing line. According to the new head of the President’s National Trade Council, repatriating international supply chains is a priority for the new administration.

“It does the American economy no long-term good to only keep the big box factories where we are now assembling ‘American’ products that are composed primarily of foreign components,” Peter Navarro told the Financial Times

“We need to manufacture those components in a robust domestic supply chain that will spur job and wage growth.”

In the UK, meanwhile, the Road Haulage Association has warned of fresh food rotting as Brexit “cripples” supply chains – tariffs or no tariffs – if the right customs controls aren’t in place.

Time to future proof the supply chain

We’ve noted before that predictions about the impact of Brexit are particularly unreliable. Confirmation the UK will exit the single market and full membership of customs union have given us some indication of what to expect from Brexit. Until negotiations get well underway, however,  and even then, there will continue to be massive uncertainty as to the final trading relationship, tariffs and customs arrangements in place.

The same is true to an extent in the US. Despite the frantic activity of the Trump administration, it will be some time yet before it becomes clear to what extent Trump wants – and can – pursue an isolationist trade policy.

These are not reasons to wait, though. Rather, they give time to act – and it may end up being a narrow window of opportunity. The speed and size of currency movements since the Brexit vote has already shown how quickly things can move. Likewise, in the US, should some of the more worrying potential consequences of the new administration’s policies and rhetoric materialise, they could do so quickly.

If organisations don’t yet have the confidence to anticipate the future trading landscape, they do at least have sufficient warning that changes are on the way. They need to be building resilience in their supply chain now – ensuring they have the visibility and flexibility to react when the time does come.

No lucky strike for supply chains

It’s a new year, but the problems for supply chains are much the same. Among them, increasingly, is industrial action.

December drew comparisons with the Winter of Discontent with strikes or threats by Post Office staff, train and tube drivers, airport workers, and even Argos delivery drivers. With the tube strikes this week, that discontent has followed us into 2017.

As others have noted, comparisons with the 1970s are overplayed. It actually became harder for unions to take legal strike action in the UK last year, for example, with the passing of the Trade Union Act in May. Unions now require a ballot turnout of at least 50% for industrial action – and 40% support of all eligible to vote when it comes to vital public services such as health, education, transport, border security and the fire brigade.

Nevertheless, recent activity does suggest something of a resurgence in the UK following a near-record low in the number of days lost to industrial action in 2015. The action we’ve seen also has significant impacts. Academics estimate the Southern Rail strikes alone have cost the UK £300 million. The tube strikes this week may even cost the same, according to some of the higher estimates.

Moreover, while levels of UK industrial action have trended downward in the last few decades and remain modest, they’re much higher elsewhere, including in some of our near neighbours. France, Denmark, Norway, Belgium (which saw a particularly high number of strikes last year), Spain, Finland and Ireland have all lost anything from double to seven times the number of days as the UK to action in recent years. If businesses are not directly affected themselves, others in their supply chain may well be.

All of which is simply a reminder that industrial action remains a key threat to the supply chain. Businesses need to build in resilience and redundancy to account for it, and to do that, they need to have an accurate view of their exposures.

Time to get serious on supply chain cyber risks

The new Cyber Highway service makes it easier than ever for businesses to start to asses the cyber security of their suppliers. It’s an opportunity more need to take.

Cyber is rising up the supply chain. Last month former Home Secretary David Blunkett launched the Cyber Highway, a new website through which business can check whether suppliers are certified under the Cyber Essentials scheme.

The scheme promotes basic standards of “cyber hygiene” to protect against common risks such as hackers and malware infections. Businesses can have a self-assessment questionnaire independently reviewed by an external certifying body to gain a Cyber Essentials badge or have an external body actually do the tests for a Cyber Essentials Plus badge.

For central government, all contracts handling personal information or providing certain ICT products and services have required certification with the standard since October 2014. Two years on, the new Cyber Highway site makes it easy for private sector businesses to effectively apply the same standard. They can now track suppliers' progress towards Cyber Essentials certification in real-time.

It’s hoped this will, in turn, prompt more businesses to sign up to the scheme and work to achieve certification – vital following the vote for Brexit, according to Blunkett.

“It is more important than ever, post-Brexit, for businesses to hold an internationally-accepted certification, as competition increases and an extra level of cyber-resilience is required,” he said at the launch.

Opens doors: Risks from suppliers, vendors and customers

There’s also a couple of other reasons to welcome such moves.

One is that many big security breaches can be traced back to attackers exploiting vulnerabilities of suppliers.

That might mean criminals targeting businesses’ raw materials suppliers or just service providers. The data breach at US retailer Target, which in 2013 had 40 million customer details stolen and leaked, remains perhaps the prime example of the latter. That attack was the result of network credentials stolen from its refrigeration, heating and air-conditioning subcontractor.

The second reason to welcome initiatives like the Cyber Highway is related to this: Many businesses still seem to be complacent about this aspect of their supply chain risk.

A recent survey by insurance brokers Marsh found that only a quarter of UK large and medium-sized corporations assess their supply chains for cyber risks. As the report notes: “[T]he overwhelming majority of companies are leaving themselves exposed to third parties, from service providers to customers.”

Anything that gives businesses the tools to start changing this can only be a move in the right direction.

The Brexit case for proactive supply chain changes

EU vote has brought risks, but also opportunities. It’s time for a review.

Brexit is among the factors pushing supply chain risks to a three-year high, according to a new survey. The Chartered Institute of Procurement and Supply quarterly Risk Index is up one point on last quarter, and up almost two on last year to reach 80.8 (out of 100).

Two months on from the EU referendum, however, we’re actually little closer to knowing what Brexit will mean.

With the government still not invoking Article 50 (despite some pressure), negotiations for the UK’s withdrawal from the EU have yet to even begin. Theresa May has said it will not be triggered this year, and there is “idle chatter” of further delays – perhaps until after the French and German elections in May and September, respectively.

In the absence of those negotiations, we’ve no way of knowing the likelihood of any of the various options: whether we’ll end up with someone similar to Norway’s membership of the EEA or an entirely new arrangement – a “special status”.

In one sense, then, we’re no further on than when we last looked at this issue. Yet, the intervening period has been useful in a couple of respects.

Supply chain risks sooner rather than later

First, it’s shown us that some of the more dire speculation about the impact of Brexit was just that. Both unemployment and retail sales figures have so far confounded the doom-mongers. There’s no guarantee that will last, but it makes it clear that predictions about the impact from Brexit are unreliable.

It also makes it clear that there’s still time to make changes to respond to a new environment. But that window could close soon.

For many, the risks need to be monitored closely well before the final parting. As a recent report by Credit Suisse makes clear, for instance, many UK exports are not goods being sold to consumers but components used by EU manufacturers’ products. Those EU producers are likely to be reviewing their supply chains now, even if you are not.

“Indeed, the risk is that the current uncertainty surrounding the UK’s membership of the EU may be sufficient for some EU companies to slowly shift sourcing parts of their value chains away from the UK. As such, the negative effects on UK export demand may occur sooner rather than later,” the report notes.

Making the most of Brexit

But Brexit also presents opportunities. Whether it forces you to or not, Brexit probably should change your supply chain – or at least make you consider changes. A lot of companies have taken this to heart, with a survey of retailers by Barclays showing many looking to new sources.

In fact, the Brexit vote – like any big change – is a prompt to review the supply chain to check its robustness and its efficiency, because where there are risks, there are also often opportunities. It’s better to try to address both early on.

Will Brexit break your supply chain?

Brexit means uncertainty and complexity for supply chains, but that shouldn’t stop us planning

We know the result, but not much more. The only certain conclusion we can draw from the EU referendum vote is that we’re in for a period of uncertainty.

In one sense, little has changed. The UK’s membership of the EU continues. David Cameron has said it’s up to whoever replaces him to officially notify the European Council of the UK’s intention to leave and that won’t be until September. Then there’s a two-year period to negotiate a “withdrawal agreement”. Even that may be extended.

The UK could remain in the EU into 2019 or longer.

So, on the one hand, nothing’s changed. On the other, everything is different. Whether you support Brexit or think it’s madness, it’s impossible to deny it’s a game changer.

Volatile supply costs

First, there’s the short-term uncertainty. Even the most optimistic supporter of Brexit would struggle to claim we’re not likely to see increased volatility. Big currency moves, for example, are likely to be a fact of life for some time to come. We’ve already seen a 31-year low against the dollar. One analyst has predicted it could fall to parity by the end of the year.

Whether that’s true or not only time will tell, but less settled currency markets will be here for the foreseeable future. The impact on costs of overseas supplies and raw materials could be significant.

Uncertainty also means investments are more difficult to predict, both for businesses themselves and for suppliers. That could affect plans to support growth.

Longer-term, though, the big questions are likely to be about access to markets.

Diverging Regulation and Standards

This is not always going to be simply about tariffs. There are other dangers in going your own way.

Before the advent of the single market, for example, it was often impossible to sell a product designed for one EU market in another due to different technical standards or regulations operating in each.

Manufacturers must keep an eye on these barriers creeping back in. Existing harmonisation in industries may be eroded over time by new regulations and developments in either Britain or the EU. Equally, they may be the result of intentional protectionist measures introduced by the remaining EU countries.

Like any change in tariffs, this will only become clear with time. There is one thing we can already bet on, though: increased complexity

Increased supply chain complexity

Any arrangement other than membership of the EEA like Norway’s is likely to see either a change in the UK’s terms of trade with the EU or the possibility to change its terms with those outside – and perhaps both.

That could mean opportunities, as well as challenges. But if it means sourcing from new markets or just navigating new rules when buying from existing suppliers, it will mean changes to the supply chain that have to be managed.

There’s no crystal ball, but there are things businesses can do to prepare now.

Most obviously, they need to look at anything they can do to make their supply chains resilient. Dual sourcing from suppliers both within and outside the EU could be one way businesses hedge their bets, for example.

Even before considering that, though, businesses need to make sure they really understand their supply chains, and have visibility across them. That will enable them to consider the impact the various possibilities may have and plan accordingly. It will also mean they can react faster and more intelligently to the dangers and opportunities Brexit brings when the time does eventually come.

Power, money – and technology: the rise of the supply chain CEO

Evidence supply chain management is increasingly critical to corporate success

Money isn’t everything, but it helps, and supply chain management professionals are likely to welcome evidence of rising salaries. According to the recent Institute for Supply Management (ISM) survey average salaries in the US grew 7.9% last year, while the proportion of supply chain managers making $100,000 or more is now up to 44%.

There’s evidence it’s not just a US trend, either. In the UK, another recent survey has predicted increased pay in the coming year, albeit at a slightly more modest rate of 5%.

For me, though, a more telling piece of evidence of the status of supply chain management is more anecdotal: the increasing numbers of supply chain managers who have gone on to lead their organisations as chief executive (where, of course, the financial rewards are all the greater).

As a recent article in Forbes notes, the role call of CEOs from a supply chain background includes leaders of some of the world’s biggest and best-known companies: Tim Cook at Apple, Mary Barra at General Motors, Brian Krzanich at Intel, Fabian Garcia at Revlon, John Hendrickson at Perrigo…

All told, it seems career prospects for supply chain professionals look pretty good. What’s perhaps even more interesting, however, is what that tells us about supply chains themselves.

Setting the course: supply chain strategy as corporate strategy

On the one hand, it clearly sends the message that supply chains are important – and touch a lot of the business; the Forbes piece says chief supply chain officers (CSCOs) now often control more than half companies’ spending and have two thirds of employees reporting to them directly. In short, supply chain managers are good choices to run the business because they know the business.

It also notes, correctly, that globalisation and changing manufacturing patterns means supply chains have become enormously complex. The supply chain function has had to attract smart people, and it’s perhaps not surprising some of those sharp minds rise to the top.

The reason for the increasing profile of supply chain managers, though, can probably be summed up more simply: Supply chain management has become a strategic position, making the progression to CEO more natural.

As the writer puts it: “The modern CSCO approximates the thought process of the CEO, balancing risk and opportunity, fighting the near-term battle with an eye on long term strategy, and focusing above all on profitable growth.”

The role of supply chain software

I would add one further thought: That this transformation is heavily supported by the increasing role of technology.

First, much of the logistics, administration and number crunching is increasingly automated, enabling supply chain managers and their departments to focus on more strategic issues. Second, it’s only through technology that supply chain managers can actually gain the visibility and understanding of complex supply chains – and associated risks – they need to make decisions.

That’s unlikely to change. After all, if supply chain managers are to keep making the step up to leadership, they’re going to have to show more than just that they’re responsible for making strategic decisions; they’re going to have to demonstrate those decisions are the right ones for the business.

Thailand Floods Devastate Hard Disk Drive Supply Chains

The impact of the recent floods in Thailand upon hard disk drive (HDD) production in the fourth quarter of this year means retailers world-wide are bracing themselves for PC shortages in the run up to Christmas.

This HDD availability issue won’t pass quickly
Production at two of the world’s largest HDD makers – Western Digital and Seagate – has been badly hit by the flooding (the worst in the country for more than a century), and it could be well into 2012 before they fully recover to normal output.

Toshiba and the HDD motor supplier Nidec have been affected too, with Nidec’s manufacturing facilities being inundated with water.

(Note: 60% of Western Digital’s HDD production is located in Thailand, along with 50% of Toshiba’s. Thailand is second only to China in HDD production.)

The HDD shortage is set to hit Notebook PC assembly/production the worst – sourcing HDDs from other suppliers will result in inevitable price rises.

Key questions to ask
The floods in Thailand have caused short-term price increases for all types of PCs, and will create shortages when manufacturers’ strategic stock runs out.

But

And…

It’s the whole IT industry being impacted; those PC manufacturers who were most prepared with their contingency planning should be the ones that will fair best.

For some computer manufacturers and media player, set-top box and stand-alone hard drive producers, performing a supply chain risk analysis and quantifying the exposure (by sensibly investing in contingency planning/mitigations) before the floods will be feeling like their smartest business move ever now; acting on analysis findings will be providing them with a real competitive advantage.

Risk assessment and supply chain analysis is surely a ‘no brainer’ now?
Granted, the challenges facing companies in the technology industries (re: building resilience in their supply chains) are huge, with many firms claiming that, the speed of innovation is so steep, they never really have the time or resources to build true redundancy into their chains.

But surely the lesson from the Thailand flooding catastrophe is that making time to risk assess and analyse supply chains (by using a simple and effective tool like SCAIR, which helps to make sense of a complex area of risk) has to be at, or near, the very top of every type of aforementioned manufacturers’ ‘jobs to get done’ priority list from now on? Or at least well before the first raindrop of next summer’s Southeast Asia monsoon gently falls?

Sources:
www.channelregister.co.uk
www.digitaltrends.co.uk

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