23 minute read
6 How Covid 19 amplified the importance of cold chain 1
EVOLUTION OF SUPPLY CHAIN MANAGEMENT
Both industrial engineering and operations research have their roots in logistics. Fredrick Taylor, who wrote The Principles of Scientific Management in 1911 and is considered the father of industrial engineering, focused his early research on how to improve manual loading processes. Operations Research began when scientists demonstrated the value of analytics in the study of military logistics problems in the 1940s as a result of the complex requirements of World War II.
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The evolution of supply chain management has been characterized by an increasing degree of integration of separate tasks, a trend that was underlined in the 1960s as a key area for future productivity improvements since the system was highly fragmented. Although the tasks composing logistics have remained relatively similar, they initially consolidated into two distinct functions related to materials management and physical distribution during the 1970s and 1980s. This process moved further in the 1990s as globalization incited a functional integration and the emergence of logistics in a true sense; all the elements of the supply chain became part of a single management perspective.
Stepwise and according to improvements in information and communication technologies, the two ends of the assembly line became integrated into the logistics of the supply chain: the timely supply of raw materials and components from outside, and the effective organization of distribution and marketing. High rack storage, which later became automatically driven, or the internal movement of packages by flat robots was early expressions of logistical engineering. Initially, logistics was an activity divided around the supplying, warehousing, production, and distribution functions, most of them being fairly independent of the other.
Although supply chain management (SCM) has only recently appeared as one of today’s most powerful strategic business concepts, its
development can be traced back to the rise of modern logistics. In fact, although SCM represents a radically new approach to leveraging the supply channel in the search for order-of-magnitude breakthroughs in products and markets, it, nevertheless, is closely connected with and in many ways is the product of the significant changes that have occurred in logistics management.
GREEN SUPPLY MANAGEMENT
Green Supply Chain Management (GrSCM) aims to integrate environmental thinking into supply chain management. This includes product design, material sourcing and selection, the manufacturing process, delivery of the final product to consumers, and end-of-life product management.
Central concepts associated with GrSCM:
• Green purchasing and procurement • Green manufacturing • Green distribution • Reverse logistics • E-waste.
Ways to build Green Supply Chain
• Product Selection • Process and production • Business Partners selection • Logistics Design • Packaging Material • Reverse logistics Design • Information Technology • Green Building: Deploying greener practices in Design, construction and maintaining the buildings.
Benefits of GrSCM:
• GrSCM will help us to gain a competitive advantage and help us to attract new customers. • Increased use of resources, improved efficiency and reduced production cost. • It contributes greater towards improved financial performance. • Reduces risk by avoiding hazardous material that leads to environmental effect. • Improved quality of products and services gives higher customer delight and reputation.
DESIGN THINKING TRANSFORMATION IN SUPPLY CHAINS MANAGEMENT
Design thinking is about designing products, services and processes, always with the end-user in mind. When you apply design thinking to the supply chain, you have to think of every stage of the process, from “farm to table.” And your ultimate objective has to be designing it for the end user.
The three key stages of design thinking:
Stage 1: Examine Business Processes Stage 2: Explore Rapid Prototyping Stage 3: Execute a Robust Customer Experience
There are many tools and methodologies deployed to realize this value of effective supply chain and some of the most popular concepts in the efficiency movement are:
• Six Sigma • Total Quality Management (TQM) • Lean Manufacturing • Outsourcing • Digitization Supply Chain Design at the very basic level refers to decisions taken by managers regarding the design of the physical (e.g., facility location, inventory levels); financial (e.g. cash-to-cash cycle, costing) and information flows (e.g. communicating with suppliers, demand forecasts) of the company’s supply chain to achieve its goals of superior customer value at the lowest supply chain and overall cost.
About the Author:
Dr. Pranjal Kumar Phukan
Over 25 years of experience in Supply Chain & Operations Management across top firms and global brands and has a strong background in network design, distribution, logistics, planning and supply chain transformation activities. Consistently demonstrated leadership abilities in achieving operational improvement by working closely along with the management and plugging the loopholes in the system by setting up systems and processes in place. An effective communicator with excellent problem solving and stakeholder management skills.
The Corporate Angle
New Challenges in Pharmaceutical Industry
Introduction
The Pharmaceutical industry has seen unprecedented growth over the years. This has resulted in many more players entering this space. As the world moves to a new normal each day, the industry offers a unique set of challenges.
Pricing Pressures
Based on a historical blockbuster drug growth paradigm, the life sciences sector has enjoyed healthy growth rates and achieved one of the highest profit margins across all industries. Its pipeline paradigm, valued on the ability to develop and bring drugs or products to market, has generally led the industry to focus on growth rather than value. But the pressures to increase efficiency and decrease waste have grown dramatically over the past few years. Significant blockbuster drug patent expirations from 2012 through 2015 mean that many companies are now pouring money into R&D to boost their pipelines. Adding to the pressure, the costs of bringing a new medicine to market have never been higher. Deloitte’s analysis of 12 leading biopharmaceutical companies shows that the costs of the traditional, fully integrated pipeline process from idea to R&D to commercialization have increased from $1.188 billion in 2010 to $1.539 billion in 2016.5 Deloitte’s analysis reveals that annual R&D returns for large biopharmas declined from 10.1 percent in 2010 to 3.7 percent in 2016. This time around it is the biologic drugs, which are more complex and expensive to develop, that are expected to be the growth engine of the pharmaceutical industry, increasing the need for capital. Health care reform and the shift to value based medicine generally means that buyers of pharmaceutical or life sciences products need to deliver impactful patient care but with fewer resources, and they are not willing to pay blockbuster prices. Moreover, drug pricing is becoming a hot political issue globally, with societies balking at high drug prices. Additional factors exerting pricing pressures on the sector include increased regulatory compliance and globalization of health care, with governments negotiating lower drug prices.
Personalized Medicine
Personalized medicine is no longer a thing of the future. The approval by the FDA of tests developed by personal-genomics Company, 23andMe, gives patients an opportunity to better understand their health risks for Alzheimer’s or blood disorders. Empowering patients with information about their genetic proclivities means they will likely expect medications to ameliorate the risks presented by their specific genetic profiles. Kite Pharma is developing innovative cancer treatments that involve removing a patient’s immune cells, engineering those cells to identify cancer, then infusing those cells back into the patient to kill cancer cells. Juno Therapeutics, which also develops personalized cancer treatments, stresses “the power of individualized treatment.” The manufacturing, dosages, and distribution of personalized medication can be exponentially more complex, expensive, and technology- and data-intensive than is true for chemical drugs. Personalized cancer treatments require blood to be collected, shipped, processed, shipped back, and reinjected. To ensure patient safety, it typically requires a complex supply chain, which needs to be carried through and recorded at every step, something that is next to impossible without a connected, electronic data transfer across the supply chain. Thanks to technologies such as additive manufacturing (also known as 3D printing), medical devices—dental or knee implants, for example—are also best “made to order” based on specific patient geometry, thus improving outcomes. The potential for medical outcomes from the personalized approach is reflected in the sector’s growth projections. The US global personalized medicine market is forecast to reach $2.4 trillion through 2022 at a compound annual growth rate (CAGR) of 11.8 percent—more than double the projected 5.2 percent annual growth for the overall health care sector.
Expectations of tech savvy customers and regulators
The life sciences sector does not operate in a vacuum. Blurring of the lines between industries and the idea that there is just one single customer means that life sciences should meet the expectations created by the digital revolution. Just like any other industry—think of the impact of e-commerce on traditional retailers or the shift to self-driving technologies by traditional automakers—the life sciences sector is ripe for change. An increase in online pharmacy operators typically requires manufacturers to change their traditional sales and distribution models and become faster, more transparent, and more efficient. This is not going to happen when it takes inventory four months to move through a traditional supply chain. Almost every executive from every industry cites Amazon when asked about customer experiences. Customers expect the quality, visibility, and speed of fulfilment that today’s technologies enable, which is possible with a digital supply network in place. Regulators are also increasingly expecting companies to conduct data-driven investigations, and to demonstrate the ability to trace design of manufacturing modifications, or prove the resolution of the root of a problem with a data trail. While the intense regulatory environment may be a challenge, it can also become an opportunity by applying digital supply networks.
Another highly regulated industry, financial services, also runs on compliance. Its digital investing is typically geared for compliance at first, but financial executives are beginning to realize that their technology investment will go much further if they use it for other areas, such as
becoming more customer-centric, for example. The life sciences sector has an opportunity to become more digital-driven and data-centric not only in compliance but also in business outcomes.
About the Author:
Sandeep Chatterjee
This case has been written by Sandeep Chatterjee, IIM Kozhikode (Batch of 2003) and Associate Director, Deloitte Touché Tohmatsu Services, Inc.
Corporate Angle
Impacts of a crisis are never a gender-neutral, COVID19 is no exception!
Mr. Samuel Veerasingh MD - Remote Operations
The last year and a half has been a nightmare for every human living on this planet. Sad to have lost millions of lives as the Pandemic caught us by sheer surprise. After all the moaning, slowly and steadily we are finding our feet back on ground. I must admit that this global pandemic has been a leveler is some sorts. Like every other set-back, I have been trying to think of a few strong learnings and a few positives if any… Dignity of labor has a new meaning. We are forced to shut down our hyper-hierarchical mindset. While we valued the help from our domestic helpers, we took them for granted. Today, they are on a forced sabbatical enjoying their much-needed break while we are scrubbing our floors and no longer craving for exotic gourmet dishes but cooking our idli-sambar ourselves. Our ego curves have certainly flattened. The impacts of crises are never genderneutral, and COVID-19 is no exception. If I were to be forced to look for the positives of Covid-19 and the thoroughly miserable year we have all just endured, then surely the upside is that many of us have discovered that working flexibly, from home, is not only possible, but can also be successful. And it has been a feature of the workplace supported by men as well as women. The pandemic has been a great leveler, and we have been in the same boat, or stuck on the same conference call, and those female employees who had previously had requests to work from home rejected by male bosses have suddenly been able to demonstrate that it could work. Productivity might go up, not down, as we ditch the daily commute. But there is always a “but” the WFH revolution did not apply to everyone equally. Yes, large numbers of both male and female employees found they could work from home, but many could not. And juggling childcare responsibilities while conducting the endless calls is not always easy; and during the course of the pandemic this burden seem to have fallen predominantly on female shoulders. We may have laughed at the children that appeared in the background of conference calls, or interviews, but there were many times when women looked anxious, genuinely worried that colleagues would judge them for the inability to manage home-working and childcare responsibilities.
When we went into the pandemic female employment was at a record high. However, my biggest fear is that when we come out we will have slipped back to the 1990s. We know the sectors in which women are most likely to be employed are also the ones staring at a pretty bleak future. A big percentage of retail workers are female, and we have already seen enormous redundancies in that sector across the globe. Throughout the pandemic we know women have done the greatest proportion of caring, whether for the young or the elderly. We know they have been in front-line health worker roles in large numbers. We know they have been on the supermarket checkout enabling us to get our groceries. We know now there need to be solutions to make sure their employment chances are not disproportionately affected, because many of them are scared that they are. For everyone who speak highly about woman empowerment, NOW is the time to walk the talk. Now is the time to make the workplaces twice as friendly as they were for woman colleagues. Having said that, WOMAN truly are a synonym to resilience hence come what may, they will BOUNCE BACK!
Emerging Managers
Mr. Shivanand MBA-22, NITIE, Mumbai
How Covid-19 amplified the importance of cold chain
Pharmaceutical companies and a host of other parties, including the federal government, nonprofit organizations and pharmaceutical suppliers, are busy readying the supply chain to handle that high number of vaccines. This is taking place while trying to maintain production of other inoculations — including the seasonal flu — and other medical products using some of the same materials and manufacturing capacity. The vaccine supply chain involves not only manufacturing the vaccine contents, but storage and packaging components, cold-chain transit, domestic and global shipping, distribution strategies and storage. COVID-19 vaccines could be ready for some frontline workers and at- risk populations later this year or early 2021. Unlike with traditional development timelines, interested parties are throwing money at this development process to speed up availability. Vaccines are complicated to manufacture, even compared to other pharmaceutical products. Producing the antigen, which provokes the body's immune response, uses different techniques depending on the vaccine's design. The vaccine candidates use different technology types, like protein-based, non-replicating viral vector or DNA vaccines. This means the equipment and processes to produce the vaccine differ.
The filling and packaging materials vary as well, whether in multi-dose vials or single syringes. All of this is done in a highly sterile environment with temperature controls and using skilled personnel. Equipment and processes must be tested and government-approved, along with testing the finished product. The logistics of delivering a vaccine to billions of people worldwide will be a crucial step, particularly early on when the supply is limited. Guaranteeing that vaccines don't lose their potency will be a challenge for all companies developing shots that have to be refrigerated. The BioNTech/Pfizer experimental vaccine, called BNT162b2, however, must be stored and distributed at -94 degrees and once thawed can be kept in a refrigerator at below 46 degrees for up to seven days. These requirements will make
it very difficult for community clinics and local pharmacies to store and administer. Meanwhile, vaccines that don't need refrigeration could have an edge in parts of the developing world that don’t have the necessary electrical infrastructure. Some, like ones that use inactivated viruses to prevent hepatitis A, have been found to be stable after being stored at temperatures of up to 99 degrees for nearly a year. UPS announced its involvement with pharmaceutical vaccine manufacturers to provide transport of drugs and ingredients for clinical trials and manufacturing. It will also distribute the vaccines, when they're ready, commercially via cold chain.
Reference:
https://www.prospectmagazine.co.uk/economics-and-finance/economics-has-a-gender-problemand-it-starts-at-school
x Emerging Managers
Mr. KSV Naresh MBA-22, NITIE, Mumbai
Managing supplier risk in the era of corona virus
With global supply chains staying global for a foreseeable future, how does one equip their Supply Chain to stay out of trouble?
Disruptions of COVID 19 scale do not happen often but your supply chain is constantly exposed to threats from seemingly smaller risk events that recur through the year. What they lack in scale, they make up for in frequency. For instance, events like factory fires, strikes, power outages, capacity shutdowns, bankruptcy may be easy to ignore in isolation but add them up and you will know the damage they do to your bottom line. Here are some ways to keep supply chain out of trouble:
Develop a sense, stay informed and know where to look for risk events:
Information is power and timely information even more so. Many organizations depend on individual buyers and supply managers to keep a tab on their suppliers. But with thousands of suppliers this isn’t an easy or efficient mechanism. Have a consistent and reliable way to collect and disseminate information.
Map it all:
In the world of ‘just-in-time inventories’, the Ford story is one of the most relevant cases in point. During the Thailand floods they were forced to shut down the operations of their most profitable line of cars because of their inability to get supplies in time. Later, Ford realized that they had several sub suppliers that were also in Thailand and severely impacted as well. So the damage done was incapacitating at an overall level. Having the entire network of sub suppliers tracked and mapped is on every sourcing organization’s wish list and rightfully so. Gather data about sub suppliers from your primary suppliers or use third party sources to get the information to the database. For more evolved organizations this can be made a part of a stricter supplier onboarding process.
Making it mandatory for primary suppliers to disclose their sub suppliers could go a long way in protecting your supply chain in future.
Plan for alternates:
An easier way out of such risks could be to have a ready- repository of alternative suppliers identified. These alternates should be identified for every critical function of your supply chain and preferably be geographically diversified to mitigate risks. It is crucial for your primary suppliers to zero down on alternatives since risk becomes exponentially higher as one goes down the value chain.
Tackle it at design stage:
Sourcing is a supply organization’s drawing board. Considering the intelligence of past and future events, while making sourcing decisions builds risk resilience within an organization in the design stage itself. Once you include these in the supplier ranking mechanism and assign relevant weights to it, you will not fall victim to the domino effect of external supply chain risk.
Have a continuity plan:
Having a business continuity plan is considered as a hygiene factor. Ideally, everyone should know where to start and what to do when such events strike. If your organization does not have this figured, then this is the place to start and then move forward.
Emerging Managers
Blockchain Use Cases in Manufacturing
Mr. Ajay Narendra MBA-22, NITIE, Mumbai
The manufacturing industry, which accounts for 17% of the global GDP, has always been plagued with several problems such as quality control, inefficiency and more. Blockchain has the potential to radically transform it by offering visibility across every aspect of manufacturing.
Here are 7 potential use cases of blockchain technology in manufacturing: Improved Tracking and Traceability: An IoT-powered system can be used to track the origin of a manufacturing part from the point of production till retail destinations, thereby enhancing transparency and traceability for everyone in the value chain. The data gathered from IoT sensors can be fed into the Blockchain, allowing for a shared view and ensuring that there are no gaps in handling goods as they move along the supply chain. Multiple processes involved such as documentation, acquiring certifications, timestamps, quality checks, can all be improved significantly with the implementation of Blockchain.
Efficient Procurement of Products:
One of the major causes of financial loss for manufacturers has been inefficient procurement of products. The complex supply chain often exposes organizations to risks and unwanted expenses. With Blockchain solutions, companies can streamline and automate their supply chain and speed up the procurement process- both ordering of goods and payment involved.
Efficient inventory management:
Blockchain enables you to connect with every stakeholder in the supply chain- supplies, distributors or even retailers, the records can be accessed by everyone in the network. This means, everyone holds a copy of the information, thereby eliminating confusion created in the supply chain processes. This helps to plan and manage inventory better.
Better Payment Process:
Smart contract functionality of Blockchain automates the payment process and ensures
quicker and guaranteed payment to the suppliers.
Elevated customer engagement:
Blockchain databases can be analyzed and used to create forecasts and predictions- not only to resolve the lags in the supply chain but also to elevate customer experience by ensuring transparency of product origin and manufacturing process.
Improved data security:
Communicating information such as invoices and contract details in any supply chain can be very risky using traditional methods. This is where Blockchain helps to keep the information secure with the best cryptography techniques. Since information blocks are nothing but chronologically stored copies of documents that are linked to the previous block, the chances of information getting hacked is eliminated.
Cost Reduction:
Considering the direct transactions and limited infrastructures in use, the reduction in the cost of manufacturing via a blockchain network becomes another factor that enhances its traceability. In essence, a manufacturer wouldn’t have a need to secure the services of multiple auditors to trace and confirm the status of goods; since that can be done cheaper and more effectively on the Blockchain network.
Emerging Managers
Ms. Shushree Shweta
Grand Ecola, MiM, 2021 SKEMA, Paris
Prada’s Bold Step Towards Sustainability. First Luxury Brand To Sign Sustainability Deal.
In order to encourage sustainability, Prada has signed a 50 million euro (£43 million) agreement with Crédit Agricole Group, a financial services business this year. The five-year sustainability loan, the first in the luxury industry, allows the Italian fashion house to change its interest rates on an annual basis if certain goals are attained. These three target which were chosen by Crédit Agricole, include the use for a certain period of time or training of Prada staff and fashion houses in a number of stores using appropriate quantities of sustainable nylon. Also an emphasis is made to move to nylon substitute and re-nylon. There is also planning to provide LEED (Leadership in Environmental Design and Energy) certification to involved personnel. Alessandra Cozzani, Chief Financial Officer at Prada, explained the value of the Sustainability Loan stating that there is a financial stake in achieving these objectives. This step shows that sustainability is a prioritised element in the strategy for the development of the Prada Group. According to data obtained from the news and analysis service Environmental Finance, The Prada loan is a new initiative in the luxury market and it will empower the sustainabilityrelated credit in various industries that has already gained a lot of momentum in recent years.
Demand for sustainable loans rose from $5 billion in 2017 (£3.88 billion) to $40 billion the following year ($31.05 billion). Crédit Agricole’s corporate banker Alberto Bezzi said the uniqueness of the Prada bid was a way to assess the luxury group's attempt to be more successful. Just one of the environmental-
friendly projects recently funded by the brand is the ecological loan. Earlier this year the luxury label launched a nylon bag range made of recycled plastics. The six bags in the collection are made of recycled artificial fabric from the recycling of marine plastic, fishing nets and textile waste. Prada announced its plan to remove fur from its female collections in February 2020. Focusing on advanced materials will allow the Group to test new creative design frontiers and meet the demand for ethical goods. Prada will hold a third conference on 'Shaping a Future' in New York to discuss ethical issues in the workplace. It’s a series of conferences that Prada has been organising since 2017 to with the aim of stimulating a debate on the most significant changes taking place in contemporary society.
Sustainability is an Operating Principle
This year, Prada has stepped up its sustainability game, like most of the big fashion brands. In June 2019, along with a pledge to use only recycled nylon by the end of 2021, the Italian fashion house announced the launch of its ReNylon line. Then at the G7 summit in August, the Fashion Pact was signed by one of 32 companies, pledging to achieve three main sustainability objectives: • Eliminating greenhouse gas emissions by 2050
• Reducing single-use plastics by 2030 fostering creativity for elimination of micro-fiber waste.
The brand became the first luxury company to sign a sustainability-linked loan at the beginning of November, which means it will lose out financially if it fails to meet its green goals. Prada continue to look at moving to sustainable energy and saving raw materials. These are the kinds of initiatives that they started a couple of years ago. Prada has also invested in an energy efficiency and sustainability project in recent years. These project unveil three new gardening plants designed by Guido Canali in Italy. It focuses on the importance of nature.
Then what's the drive behind this renewed focus on sustainability and green products?
Today, we need to help improve the market, the culture and give an option to our consumers to ingrain the green initiative in their lifestyle. The majority of the younger generation understand the importance of sustainability and are in its favor. Very soon, all the populace will share this importance. In words of Prada’s chairman Carlo Mazzi in an interview with vogue: “If we want to continue to be a creative and innovative luxury brand company, we need to understand our customers and what could happen next, what they consider to be important in their lives."
In particular, he emphasized on the need for a wider cultural shift in order to resolve the issues of sustainability and climate change entirely. The government, for example, is planning to end its participation in the Paris programme in the US. This is because most Americans do not agree with the need to address the climate crisis. Any lawmaker will change his position as soon as the majority share these views. Mazzi points out that when it comes to the role of fashion in promoting sustainability, it cannot be simply a sales tool, recognising the extent of the challenge. While the use of regenerated nylon from old fishing nets is one of Prada's big goals, it is also looking for alternative sources of other raw materials. "The problem is very difficult," he said,
