Home Logistics & Manufacturing A Supply-Chain Approach to Solving the Coronavirus Challenge

A Supply-Chain Approach to Solving the Coronavirus Challenge

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The coronavirus is spreading globally because of the network effect. Virus infection increases exponentially as the planet goes about its normal life, and more people come into contact with one another on a daily basis. They travel, and goods move, but so does the virus, whether we like it or not.
At the same time, however, the networked operating model of supply-chain capabilities offers a solution to the exploding coronavirus issue.

The virus moves as its own supply chain, from source to recipient (patient), then from patient to patient under a network model. It doesn’t recognize boundaries, and it thrives on physical connections.
Therefore, to counteract the spread of the virus, we need global transparency and analysis of related events. The capability to codify symptoms and share lessons is fundamental. By learning from confirmed infections, we can model and counteract outbreaks quickly and efficiently.

The challenge is that we need agile digital and IT capabilities that allow us to do things at scale — things we couldn’t do in the past because of technology and complexity constraints

In a nutshell, the solution to the coronavirus issue lies in the ability to build end-to-end supply-chain visibility, performance, and risk analysis capabilities. In addition, we need to create responsive planning and execution processes across countries and cultures.

 

Pharmaceutical Cold Chain Expertise

Pharmaceutical supply chains continue to reach new levels of complexity that challenge even the most seasoned logistics and supply chain professionals. These complexities include:

⦁ Innovative, advanced therapies;
⦁ Emerging new temperature requirements for products;
⦁ Expanding global supply chain to naïve patient populations; and
⦁ Additional regulatory scrutiny over good distribution practices throughout the supply chain.

Within this evolving world of biopharma, it is estimated that two-thirds of biopharmaceutical manufacturing is outsourced.1  Therefore, the supply chain is not only complex but also largely virtual for pharmaceutical companies bringing their therapies through clinical development and ultimately to market.

As a result of the increasing trend of virtual pharma supply chains, pharmaceutical sponsors view relationships with their contract manufacturing partners as not only critical but vital to the success of their therapies.

 

Challenging forces for Pharma

Although the biopharma market continues to grow, with a record number of FDA-approved products in 2018, there are several factors that challenge the industry today. For one, drug pricing has become highly visible and scrutinized by the U.S. government and administration. Although it remains unclear on how pharmaceutical sponsors will be impacted by government pricing pressure, it is certain that pharmaceutical companies will seek areas to contain and reduce costs in their supply chains.

 

COVID-19 – The dark side of global supply chains

The coronavirus, now known as COVID-19, the outbreak in China has slowly but steadily rattled the global economy, disrupting virtually every major industry, from food, fashion, pharmaceuticals, entertainment to automobiles and technology.

The first casualty was obviously the travel and tourism sector. Over the last couple of weeks, a series of major airlines have canceled flights to China, the impact of which is now seen across the globe. The slowdown of the travel sector including cruise shipping alone has impacted many supply chains – even movie and entertainment industries such as Disney World, within three weeks. One may not yet see the supply chain impact on the travel sector, but it has indeed disrupted many businesses over the last two weeks.

As Covid-19 spreads, although not deadly as SARS of 2003, its effect on business is amplified and the global economy is once again threatened with a downturn; oil prices have dropped by nearly 20% from a month which will give rise to other market disturbances in the coming weeks if the situation does not stabilize.

 

The importance of supply chain security

When one studies the subject of logistics, one always looks at supply chain security. This may be in preparation for geographic and natural reasons, infrastructure restrictions, political developments or man-made conflicts such as wars. But rarely do companies plan for this type of disruption, and if logistics managers are not geared for the multiplier effects the COVID-19, they may be at its receiving end soon as the real ramifications of the crisis have yet to properly hit the global supply chains.

 

Coronavirus and the Automotive and Pharmaceutical Supply Chains

Earlier this week, the death toll from the Wuhan coronavirus rose to over 1,000 people, invoking memories of the 2003 SARS outbreak. However, the coronavirus has yet to be contained and appears to be more contagious than SARS. While the human aspect of this outbreak is clearly the biggest story, the virus is causing major disruptions in global supply chains as well.

China’s economy has grown significantly over the past twenty years and is now a piece of imports and exports for all major world economies. This outbreak has caused companies to start rethinking their overall supply design and contingency plans. While supply chain risk has always been a part of the overall planning process, the impact of coronavirus on the global supply chain has certainly brought supply chain risk management to the forefront of the company’s minds.

 

The Impact of Coronavirus

One of the biggest questions people aren’t necessarily asking but should be is “what is the impact on logistics?” Considering China is a major manufacturing hub for the world, figuring out exactly how products going to get to consumers has become a bit more complex. Air carriers have begun suspending their flights, and certain borders have been essentially closed to every other mode of transportation. Some countries are looking at completely banning all products from China until the coronavirus outbreak has been neutralized.

The timing of the coronavirus is a double-edged sword, and you can look at it from both the positive side and the negative side. On the positive side, the lead-up to Chinese New Year is a good thing. Factories normally shut down for the holiday, which means that lots of inventory have been shipped ahead of time. In the two weeks leading up to the holiday, there is a general surge in volume as companies know that for a two-week stretch, not much will be happening from a production standpoint. This ensured that cargo left China before the outbreak hit.

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