Supply chain woes can lead to billion-dollar problems: Cloudleaf

By Jenni Spinner

- Last updated on GMT

(Zoonar RF/iStock via Getty Images Plus)
(Zoonar RF/iStock via Getty Images Plus)

Related tags Supply chain Data management Revenue Research Market Artificial intelligence

A new survey from the supply-chain analysis company revals inefficiencies, inaccurate data and other flaws can be costly in terms of revenue, reputation and patient lives.

According to the recently released Supply Chain Visibility report—conducted by Cloudleaf and Sapio Research—snags in the global pharmaceutical supply chain cause huge problems at various levels. For example, cold-chain failures reportedly can cost each company up to $1b in lost revenue, and more than 1m doses.

Outsourcing-Pharma (OSP) connected with Mahesh Veerina (MV), CEO of Cloudleaf, to discuss the notable findings in the report, and how companies can tighten up their supply chain to avoid hemorrhaging of revenue as well as damage to their reputation.

OSP: Could you please provide an ‘elevator presentation’ description of Cloudleaf?

MV: Cloudleaf’s technology delivers continuous visibility and actionable insights across the supply chain, helping customers to make the right decisions in real time, to increase revenues, avoid disruptions, reduce waste, and ensure regulatory compliance. Our future-proof and device-agnostic platform supports more than 400 APIs to connect to any sensor or new IoT device and integrate with existing enterprise resource planning (ERP) systems.

Cloudleaf customers have achieved improvements in supply chain visibility of as much as 10 times in the first year; return on investment of as much as 70 times and annualized value in the tens of millions of dollars.

OSP: Why did your firm decide to conduct a survey of the pharma supply chain—what issues or concerns warranted such a study?

MV: Over the years, the costs of an inefficient cold chain have become astronomical, especially in life sciences. Currently, the biopharma industry loses nearly $35b every year due to failures in transporting and storing temperature-sensitive medical products, including vaccines, blood, tissue, and drugs. The impact of these losses is not limited to dollar amounts. They can also be the difference in patients around the globe being able to access the treatments they need when they need them.

The stakes become even higher today when considering the recently approved COVID-19 vaccine, which requires consistent storage at extremely low temperatures from the time it’s manufactured to when it goes into the arm of a patient. Any vaccines that experience failures in their temperature requirements must be thrown out.

The United Nations estimates that as many as a billion COVID-19 vaccines could be thrown out due to temperature failures. Given the limited raw materials and high urgency timeline the industry is already working with to make the vaccines, cold chain failures will present major setbacks in vaccinations and bringing the pandemic to an end.

Pharma companies must be able to track product traveling through the supply chain with reliable and holistic information about its condition to prevent this from happening. As such, we wanted to create a survey that would help inform these companies where in the cold chain failures are likely to occur and how they can take steps to prevent those failures.

OSP: In your announcement, you say “92% of respondents cannot trust data coming in from their supply chains.” Could you please elaborate, and share why that’s a big deal?

MV: While 92% of total respondents (spanning across multiple industries), another 89% of respondents in the pharmaceutical industry said they could not claim 100% trust in the data coming in from tracking their products within the supply chain. This indicates that the industry is aware that current supply chain monitoring practices are not  effectively enabling them to track product and mitigate issues with cold storage throughout the pharma supply chain.

This is unsurprising, however, considering that 99% of pharmaceutical industry respondents also claimed to be using some form of manual process to achieve supply chain visibility, including spreadsheets, pen and paper, and even alarm clocks. Even the smallest manual process can call for inaccuracies in the data, which sparks mistrust and inherently less efficiency.

OSP: Can you share any ways in which that trust could be restored?

Mahesh Veerina, CEO, Cloudleaf

MV: In order to achieve complete trust in the data coming in from their supply chain, pharmaceutical need a guarantee of holistic, real time ground truth as their products travel through the supply chain. Many organizations are already using Internet of Things (IoT) sensor devices to track products in real time.

Unfortunately, many organizations think they only need to track at the palette level as opposed to the individual unit level, and they often only track hard attributes within their supply chain.  These are traditional attributes such as location, temperature, vibration, humidity, etc.

True end-to-end visibility must account for these hard attributes, but more importantly, soft attributes as well. There are two types of context for soft attributes:

  • business process context such as purchase orders and payment terms
  • environmental context, such as weather and traffic conditions.

By tracking these changes in hard and soft attributes, companies can make more accurate predictions, plan better, make quicker decisions, reduce risk and increase revenue. Being able to rectify any potential problems before they become irreversible will vastly improve the trust companies have in their supply chains.

OSP: What other notable or surprising findings does this report share?

MV: The financial impacts of the lack of cold chain tracking reliability are staggering. The report found that $95m is lost annually in medical inventory due to spoilage resulting from cold chain failures. However, that number jumped to $138m lost at companies with over 1,000 employees and another 6% said they lose $500m– $1b.

Beyond finances, respondents in the pharmaceutical industry claimed to lose 202,600 doses of medical inventory annually due to cold chain failures. Another 6% of respondents in the pharmaceutical industry claimed to lose more than 1 million doses each year due to cold chain failures.

OSP: Overall, what lessons should pharma leaders extract from this report—how could it be used to improve gaps/inefficiencies in their operations?

MV: Leaders in the pharma industry have an imperative task to mitigate the blind spots in their supply chains in order to save costs as well as human lives. While COVID-19 has fast tracked digital transformation in many ways, it still has far to go in the pharma supply chain, with 53% of respondents in the industry still not using software to achieve supply chain visibility.

Through technology adoption, pharmaceutical companies have the opportunity to mitigate and even eliminate the biggest challenges they face in their supply chains, including product quality & integrity, product damage, temperature excursions, delayed or lost inventory, and compliance issues.

OSP: Do you have anything to add that we didn’t touch upon above?

MV: The massive disruption caused by COVID-19 has pushed real-time supply chain visibility to the C-suite and board level discussion at most organizations. Most companies are now driving towards an agile, resilient, and customer centric value networks to deliver delightful customer experiences.

For example, in the pharmaceutical industry, to deliver a delightful patient outcome, you need complete end-to-end real time visibility into the customer’s order journey and lifecycle of the order from raw materials to manufacturing to the patient. To deliver a complete picture into the end-to-end order journey, companies need continuous visibility into physical product movements across the global network.

This study clearly highlights the demands driving the rapid acceleration of digital transformation in supply chains and adoption of modern cloud-based technologies like IoT, sensors, data lakes, digital twins and AI/ML.

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