Running Head: SUPPLY CHAIN MANAGEMENT 1 Supply Chain of Vaccines QMB 6616: Business Process & Operations Analysis The U.S. health care system is notorious for being one of the most expensive in the world. And, of course, it s a highly complex industry, with countless specialty products and components: equipment, drugs, and specialized tools crafted to the most stringent specifications. As a result, the world of health care has all the ingredients for a supply chain nightmare. When thinking of a supply chain, the first thing that comes to someone s mind is getting something from point A to point B. You some have middlemen in between, perhaps a factory, and even trucks for transportation. Get the product, make it, deliver it. Simple yet so complex. There are so many factors to consider with the supply chain. What is your product? Who is your customer? What are the steps to process the product? Do you need factory workers? Machinery? Perhaps you need drivers. If so, you need a truck that requires gas and insurance. Not so simple after all. Supply Chain Management (SCM) is the supply chain activity that focuses on maximizing customer value and achieving a sustainable competitive advantage. SCM is ensuring that the development and operations run smoothly and are effective and efficient. Every sector has its supply chain operations, and each tends to run differently, yet all having the same end-goal. In this paper, we will explore the Pharmaceutical Supply Chain Process, Cold Supply Chain Logistics, Risk Management, the current relevance of the pharmaceutical Supply Chain challenge of COVID-19, and Cold Supply Chain Logistics Disruptive technologies. Pharmaceutical Supply Chain Process of Vaccines Currently, the U.S. and global community face massive national quarantine and business shutdowns to gain infection prevention and infection control from the COVID-19 pandemic. Now, more than ever, biotech pharmaceutical companies are in high demand to create a vaccine for protection. These companies are in the testing phase of an effective vaccine. Smith, Lipsitch, & Almond (2011) will provide the process of what pharmaceutical companies go through within the pharmaceutical supply chain process from vaccine manufacturing to distribution. Yeon (2017) and Fein (n.d) will provide the last process from distribution to End Users. Manufacturing Process Stage-R&D and Logistics Running Head: SUPPLY CHAIN MANAGEMENT 2 According to Smith, et. al (2011) the Supply Chain of pharmaceutical production of vaccines begins with Research and Development (R&D) of a disease target such as shingles or COVID-19. The process begins with the planning of potential biochemical solutions of a vaccine with deep considerations of technologies for vaccine creation, stabilization, adjuvant -modifying agent, device delivery of dosage design, capacity, and logistics of supply and distribution factors. Production Stage The production method used to create the vaccines have influences over manufacturing capacity and the cost of the product (Cost of Goods-COGs). Some vaccine production results in a high capacity of doses at low cost while others result in lower capacity production of vaccines with high cost due to higher levels of quality control, time, high resources, high facility use as a high production investment expense. Testing & Licensure Requirements Stage According to Smith et al. (2011), production requires extensive quality control (Q.C.) measures at each phase for government approval, license, and compliance. Quality Control measures several levels of testing for toxicity, and therefore there are several testing processes that a vaccine in the production stage must perform. Each vaccine is checked by many different Regulatory Agencies (CDC, FDA, WHO) that have their vaccine release requirements. Each vaccine also has different requirements that must be met based on each country s criteria if it is to be released globally. It must demonstrate physio-chemical balanced concentration, effectiveness, and safety to be approved and licensed for sale by government regulatory agencies. Manufacturing Corporations Hanson (2019) reported on the top Manufacturing companies. The top three companies as of 2019 in the United States are Johnson & Johnson, Pfizer, and Merck & Co. Distribution Process Stage Distribution of vaccine is a crucial part of the overall supply chain. The vaccines must be licensed and designated for a market with specific Cold-Chain shipment requirements and inventory control measures. To avoid supply problems, the development and formulation of vaccines must be made with long shelf-life to maintain inventory without delivery failures. Second, manufacturers must gain long-term shipment arrangements based on demand forecast and budget to guarantee purchases and return of investments. Yeoh (2017) provided different types of transportations of cold chain products such as pharmaceutical vaccines. The products can be transported by land through truck transportation, railway wagons, and Running Head: SUPPLY CHAIN MANAGEMENT 3 refrigerated cargo containers with cold systems. They can be transported by sea through refrigerated ships. Last, they can be transported by air through refrigerated chambers and freezers. Managing Cold Supply Chain Vaccine Logistics Cold chain management is crucial in many industries, especially in the transportation of vaccines. Maintaining adequate temperatures is vital to the actual vaccines, and cold chain management must ensure that the product remains within a viable temperature throughout the supply chain. Many factors play into effect when designing a cold chain such as temperature tracking, selection of containers that affects temperature variation, and distribution routes. The World Health Organization has reported that vaccines in conditions below its required temperate range are ineffective, and almost half of all vaccines are wasted due to low temperatures (Sme, 2005). Storing and handling vaccines must be kept in a temperature-controlled environment from the time they leave the manufacture to the time they are administered. Domestic and transnational supply chains sometimes only require one transportation mode. However, intermodal transfers are critical for the cold chain. Knowing how to ship vaccines with temperature control adaptation carefully is the key to success for industries that rely on cold chain. Factors such as the size of the shipment, outside temperatures, and even the ambient are important to consider. Major cold chain technologies that provide a temperature-controlled environment during transportation using either dry ice, gel packs, eutectic plates, liquid nitrogen, quilts, or reefers to methods to store vaccines during transportation. Cold Supply Chain Operations Maintaining shipment integrity and not suffering setbacks or temperature anomalies required a comprehensive logistical process. This process concerns several phases: Shipment preparation: When a temperature-sensitive product is being moved, it is vital first to assess its characteristics. Cold chain devices are commonly designed to keep the temperature constant, but not to bring a shipment to this temperature, so they would be unable to perform adequately if a shipment is not prepared and conditioned (Rodrigue & Notteboom, 2020)Modal choice: Several key factors are taken into considerations on how the shipment will be moved. Vaccines are often transported in a plane, container ship, or a truck. Vaccines have to be properly packaged to sustain the distance (Rodrigue & Notteboom, 2020) Custom procedures: When a shipment crosses a boundary, custom procedures can become very important, since these cold chain shipments are time-sensitive. (Rodrigue & Notteboom, Running Head: SUPPLY CHAIN MANAGEMENT 4 2020). The Last Mile : The last stage of the shipment brings forth key considerations concerning destination and delivery time so that labor and warehouse space is readily available to receive the vaccines. Since many of these deliveries take place in an urban setting, one must also take into consideration traffic congestions (Rodrigue & Notteboom, 2020). Integrity and quality assurance: Once the shipment is delivered, the temperature is recorded. This step creates accountability for the shipment. If the shipment is at any point compromised, efforts are made to identify the source and corrective actions. The value of a pharmaceutical cargo can reach upwards to $50 million (Rodrigue & Notteboom, 2020). Cold Supply Chain Risk Identification Supply chain risk is variation in the distribution of possible supply chain outcomes, their likelihood, and their subjective values and the correlation of occurrence of an incident with the inability of a supply chain to deal with that. To assess and mitigate risk, decision-makers need to quantify the risk. Standard deviation, mean-variance approach, and value at risk are a few measures that have been used in quantifying the risk. Supply chain risk can be measured in terms of disruption in the supply chain at the manufacturer, carry and forwarding agent, distributor, wholesaler, retailer, or during transit between any one of these. These risks can be divided into internal and external factors. The healthcare organization must manage the risk proactively; otherwise, it can cost human life. To identify the risk, a hospital needs to undertake an audit of hazards on the supply chain. A risk profile attempts to find out how vulnerable are of the supply chain is and where management needs to focus its attention. Risk Profile for Strategic Decision Making Running Head: SUPPLY CHAIN MANAGEMENT 5 The risk profile is, directly and indirectly, impacting the strategic decision of the organization. The risk profile of a healthcare organization can force it to increase the number of a supplier or change the supplier. There are large potentials risks in any business, and strategies can be put in place to manage five categories of risk. One risk factor is Supply Risk. Which involves picking the correct strategy to fit each business type. It involves mitigation and the right kind of management approach to take, such as identifying Demand Risk to have market data to assist in making the right decisions regarding market trends. There is a Process Risk in which it is vital to understand the capacity of employees as production has a large impact on business revenue. There are Control Risks regarding quality, and financial issues in which proper monitoring, feedback, and response are issued must be planned out strategically for the organization, such issues could be staff-related issues. There are Market Risks regarding advertisement, product integrity, brand reputation, and financial integrity that must be looked into to maintain strong attractiveness from the perspective of internal and external customers. Proper risk management will ensure a reduction in excessive inventory, increase quality, reduce waste in the supply chain process. In any business identifying risks is a must, and the company needs to understand its processes to pinpoint the most critical threats. The six steps in developing the risk profile are; Prioritizing the drivers Identify critical infrastructure Locate vulnerabilities Model scenarios Develop responses Monitor the risk environment Cold Supply Chain Risk Management When focusing on the risk associated with the cold chain, it is not easy. Shippers are to expect the worst and give their best when handling high-value shipments such as vaccines. For starters, there is pressure to meet cost efficiencies. Despite cold chain technology, the most reliable solutions out there aren t easily available because they are expensive. For this, the required effort in the cold chain is high. You also face risks associated with customs and compliance issues as each country has its regulations and levels of enforcement. Certain risk is often inevitable such as poor packaging which results in damaged vaccines or modal breakdowns, risking the cool temperature to increase. Distribution Corporations & End Customer Process Stage Running Head: SUPPLY CHAIN MANAGEMENT 6 Fein (n.d.) provided information regarding the top three distribution companies as AmerisourceBergen Corporation, Cardinal Health, Inc., and McKesson Corporation. These three corporations are the largest and most profitable corporations in which together make more than 90% of total revenues in the United States from distribution. Yeoh reported on different types of distributors. There are Full-Line Wholesaler-Distributors that buy, maintain inventory, and sell the manufacturer s complete product line. The sale to outpatient medical organizations from independent drugstores, supermarket pharmacies, institutions, healthcare facilities such as physician offices and other medical organizations. Second, there are Specialty Distributors that sell pharmaceutical products mainly to physician clinics, hospitals, and outpatient clinics. Last, there are Special Pharmaceutical companies that sell specialty drugs, and they may be both Full-Line Wholesalers and Specialty Distributor Organizations. The largest wholesalers in the specialty business are AmerisourceBergen, Specialty Solutions, and McKesson Specialty Health. Yeoh provided an overview of the Pharmaceutical Supply Chain Process regarding logistics. Pharmaceutical cold-chain products are moved from Manufacturer to Distributors who then transport the products to the End Users who are: Retail Markets, Pharmacies, Hospitals, and other organizations that either sell or provide vaccination services to their clients and patients. The relevance of Supply Chain Management of Vaccines-COVID-19 The unprecedented pandemic of COVID-19, the effects are hitting hard. Despite the death of over 181,000 people and crashing economies, we are also seeing major disruptions in the supply chain on a scale never seen before. Organizations are also experiencing major disruptions cold chain, with imports and exports out of regions such as China, Italy, and the United States is severely impacted. Airlines are dramatically reducing flights, and countries like the United States have banned flights from certain countries as well. With the global spread of this virus, the number of individuals who require the vaccine will be inflated. Where would all these vaccines be stored? All the pharmacies will probably not have enough capacity to store the vaccines, so an idea would be to use hockey rinks nationwide to store these vaccines. The temperature inside a hockey rink is cool enough to meet the temperature required for a viable vaccine. Future Directions & Disruptors for Cold Chain Management Concerning third world countries, there have been improvements in management, equipment, and transportation, which has allowed them to speed up vaccine distributions as a Running Head: SUPPLY CHAIN MANAGEMENT 7 result of finding bottlenecks and reducing the number of steps in the system. In low-income countries with restricted access to energy, having solar-powered refrigeration is already helping ensure adequate storage areas. Technology is essential in cold chain logistics. Apart from the general tracking of shipments, technologies that can control the temperature with a Bluetooth monitor is also something disruptive with transportation. Because of technology like CargoSense, it has been able to verify that 90% of the temperature-controlled air freight problems happen on the tarmac . As a result of CargoSense, knowing the temperature through the supply chain cycle will allow all partners involved in the shipment to focus on securing the right temperature range (M.D. Logistics, 2016). Another direction for the cold chain is to eliminate the process. The overall aim is to manufacture vaccines that remain viable at 104-degree Fahrenheit. By freeze-dying the vaccines or by liquid stabilization, we can eliminate the need for refrigeration during shipping and storing (Imperial College, n.d.). Emirates air has also created a comprehensive plan to limit temperature incursions. Their SkyCargo has created pharma corridors that link various destinations that are designed to maintain strict end-to-end temperature control for sensitive goods, performing under cool-chain standards (Wood, 2018). Running Head: SUPPLY CHAIN MANAGEMENT 8 References CDC. (2018, January 25). SHINGRIX Vaccine Storage and Handling. Retrieved from Choudhury, T. (2019). A Systematic Literature Review on the Service Supply Chain: Research Agenda and Future Research Directions. SSRN Electronic Journal. DOI: 10.2139/ssrn.3321528 Imperial College London. (n.d.). Eliminating the cold chain. Retrieved from Fein, A. (n.d.) 2018 MDM Market Leaders: Top Pharmaceutical Distributors. Drug Channels Institute. Retrieved from: Hanon, D. (2019). The Top 20 Pharmaceutical Companies in the U.S. in 2019. Retrieved from: Lloyd, J., & Cheyne, J. (2017, March 30). The origins of the vaccine cold chain and a glimpse of the future. Retrieved from Mandal, S. (2017). The influence of organizational culture on healthcare supply chain resilience: moderating role of technology orientation. Journal of Business & Industrial Marketing, 32(8), 1021 1037. doi: 10.1108/jbim-08-2016-0187 McKesson. (n.d.). Five Health Care Supply Chain Management Trends to Know. Retrieved from M.D. Logistics . (2016, September 5). Innovation in Cold Chain Logistics. Retrieved from Rodrigue, D. J.-P., & Notteboom, D. T. (2020, January 30). The Cold Chain and its Logistics. Retrieved from Schneider, J. (2020, March 26). COVID-19 s effect on supply chains. Retrieved from Running Head: SUPPLY CHAIN MANAGEMENT 9 Smith, J., Lipsitch, M., & Almond, J.W. (2011, June 12). Vaccine production, distribution, access and uptake. National Center for Biotechnology Information, U.S. National Library of Medicine doi: 10.1016/S0140-6736(11)60478-9 Sme, S. (2005, March 9). Supply Chain Resource Cooperative. Retrieved from n Woods, R. (2018, February 28). Top 5 cool chain innovations making a difference in supply chain quality. Retrieved from Yeoh, J. (2017, September 26) The Logistics of Transporting Perishable Goods for Cold Chain Management. SIPMM Institute. Retrieved from: Zepeda, E. D., Nyaga, G. N., & Young, G. J. (2016). Supply chain risk management and hospital inventory: Effects of system affiliation. Journal of Operations Management, 44(1), 30 47. doi: 10.1016/j.jom.2016.04.002 Running Head: BLOOD SUPPLY CHAIN 1 Blood Supply Chain QMB 6616: Business Process & Operations Analysis The value of blood and blood products to the healthcare industry cannot be understated. Transfusions have saved tens of millions of lives globally (Slonim, Wang, & Garbarino, 2014). About 32,000 pints of blood are utilized every day in our country, and without blood transfusions, 4.5 million Americans would die each year (56
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