UPS: Increasingly complex supply chain calls for action, collaboration

By Jenni Spinner

- Last updated on GMT

(LeoWolfert/iStock via Getty Images Plus)
(LeoWolfert/iStock via Getty Images Plus)

Related tags Logistics Supply chain Supply chain management UPS distribution COVID-19

A representative shares ways that COVID-19 has impacted the already intricate pharmaceutical supply chain and offers suggestions to stay ahead of the curve.

During the recent CPhI Worldwide event (online and in Milan, Italy), UPS offered a presentation entitled How the Pandemic Accelerated the Evolution of Cold Chain Logistics​ Recently, Outsourcing-Pharma connected with Cathy O’Brien, managing director of enterprise accounts for UPS Healthcare Europe, to further explore what might be on the horizon for medicine production in Europe.

OSP: Can you give an overall context of why pharmaceutical supply chains have become more complex – particularly in the last year?

CO: Over the last 10 years, we have seen the pharmaceutical industry focus on lowering costs and moving the majority of its API production bases to Asia, something which it has been very successful at. At the same time, we have seen more biologics come into the market, requiring more specialized storage and transport conditions – all with limited margin for error. What we’ve seen as a result are longer, more complex supply chains.

This was all before the pandemic hit. We’ve seen those supply chains tested but also had to build brand new ones, in record time, for the distribution of billions of doses of Covid-19 vaccines. The combination of these trends has required an industry-wide rethink of how we construct and maintain supply chains.

OSP: What are the lessons being learned from the vaccine distribution networks?

CO: It has been an immensely challenging issue, and one I’m proud to have played a part in firsthand. When creating these networks, we knew how vital it was that not one single dose of vaccine was wasted. It took a holistic approach, exploring root and branch with both governments and vaccine manufacturers right at the beginning of the vaccine’s development to create the networks we needed.

This work, undertaken in an unprecedented amount of time, has meant we’ve been able to deliver over 800m vaccines, in over 100 countries with an on-time delivery rate of 99.999%. This is a level of service that we should be aspiring to industry-wide. It’s not only incredibly important to patients but also crucial for the industry from a sustainability point of view, as there are huge gains in terms of efficiency to be made.   

OSP: What initiatives are you introducing to make distribution more sustainable?

CO: Creating and investing in sustainable solutions, and the kind of innovative thinking that entails, plays an important role in any business. As a company, we will be carbon neutral by 2050, but in the immediate future, we will see a 50% reduction in CO2 per package delivered by 2035 and power all our facilities with 100% renewable electricity by 2035 (we expect to be 100% in Europe before the end of the year).

We’ve already seen greater efficiency and sustainability through our vaccine delivery networks, but we’re also running programs that vastly reduce packaging waste, including the development and use of reusable containers. In short, sustainability and climate action aren’t just the right things to do, they make business sense, too. 

OSP: Did you see a difference in how COVID-19 distribution networks were set up globally?

CO: The one constant between successful vaccine networks worldwide has been collaboration. That goes for drone deliveries in rural Ghana, right through to deliveries to large-scale vaccination centers in Poland.

Through this collaboration, we’re also evolving and learning for the future. Working with partners like GAVI and COVAX we have seen the impact of drone deliveries in rural, hard-to-reach areas of Africa which are essentially unreachable with freezers by conventional transport. The next step is looking at how we can translate this technology to highly urbanized areas. Imagine time-critical medicines avoiding rush hour traffic!

Real-time tracking and digitization of pharmaceutical supply chains is another area that will continue to grow at a pace. That’s why we have recently launched our UPS Premier service across Europe, which can locate packages within 10 feet of their location anywhere in our network.   

OSP: What are the immediate challenges for 2022?

CO: It’s no secret that we can expect to see supply chain capacity remain constrained for the immediate future. We will continue to need to work closely as an industry to plan resilience and flexibility in our supply chains, as well as build in contingencies. This is especially important for in-development pharmaceutical products, like biological therapies. The good news for the pharmaceutical industry is that companies like UPS Healthcare have been looking at cold chain solutions over the past few years and invested accordingly.

In 2021, we invested in over 36,000 square meters ​of cold-chain GMP coolers and freezers in newly dedicated and upgraded healthcare facilities including in Italy, Poland, the Czech Republic, the Netherlands, and Germany. Able to support the storage of biologics ranging from 2°C to as low as -80°C, these facilities are adding to the existing 1m square meters of dedicated healthcare warehouse space across 34 countries.

Finally, one other major trend, and one that’s not isolated to the pharma industry, is governments and business focusing on shortening their supply chains. For pharmaceuticals, this often means bringing the production of APIs, ingredients, or finished products back into the regions where pharmaceuticals are consumed – rather than relying upon hubs in Asia. From a distribution point of view, this means that we are not only looking at a shortened supply chain but potentially a greater number of production sites. 

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