Waiting for a package is one thing. Waiting for a life-saving drug is another. The success of your drug manufacturing company depends on getting your medications to patients as quickly as possible along a finely-tuned supply chain.
For this edition of Ask a Supply Chain Expert, we spoke with Chris Van Norman, vice president and general manager of strategic operations at McKesson. We asked him what makes for a speedy and reliable supply chain and how it can help your drug company reach its operational and clinical goals.
What are you responsible for in your role at McKesson?
Van Norman: I oversee our two national redistribution centers. Drug manufacturers ship their products to us, and we disperse those products to our 26 distribution centers around the country. From there, we ship those products to our customers, which are mostly pharmacies, hospitals and physician practices. Our focus is to make sure everything gets to where it’s supposed to be on time and in the right condition.
What are some common operational challenges that manufacturers face in drug distribution?
Van Norman: Their two big challenges are speed and reliability. Everything in the drug supply chain right now is about getting the right products to the right customers as quickly as possible. The third challenge is how to do that without unnecessarily adding to your inventory or shipping costs.
Let’s talk about speed first. Why is that a challenge to manufacturers from a distribution standpoint?
Van Norman: There are multiple links in the supply chain that get your product to your customers and then to your customers’ patients. The more links you have in that supply chain, the more chances there are that things are going to slow down. Not only do you have more handoffs, you also have more things that could go wrong at each handoff. You should try to take as many links out of that supply chain as you can to keep the time from your plant to your patients as short as possible.
Other than taking links out of that chain, what can drug manufacturers do to improve distribution time?
Van Norman: There are a lot of small things that can have a big impact on how fast your drugs reach your customers. For example, do your barcodes read well? Are you successful in sending your advanced shipping notices (ASNs) correctly? Are your pallet’s type and condition setting your supply chain up for success? Do your case pack sizes make sense for the volume of the product? Do you have a way to track where your shipment is along the supply chain route? Do you have people in place to react quickly to issues with ASNs, barcodes, shipping discrepancies, etc.? There are lots of other shipping protocols that you can use to make distribution as efficient as possible and avoid delays.
The other challenge that you mentioned was reliability. What do you mean by that?
Van Norman: Reliability and speed are related but different. Reliability relates to accuracy and consistency: Is what you shipped what was delivered and is your delivery helping your customer achieve consistency in their supply chain and their operations? Your distribution process needs to be reliable.
How can drug manufacturers work with their distributors to improve reliability?
Van Norman: Again, the biggest opportunity is reducing the number of touchpoints. The more touchpoints you have along the supply chain, the more opportunities there are for something to go wrong. And many of the things that could go wrong are out of your control, like weather or traffic. The fewer places your drugs need to go before they reach their final destination, the better. That reduces the chances of running into something unexpected that causes reliability problems.
How can technology improve distribution reliability for drug manufacturers?
Van Norman: I mentioned barcodes earlier, but barcoding is fairly basic. Your distributor should be using sophisticated flow-through technology along the entire supply chain. You should know where your products are at all times and how long it should take to get from one point to another. So, for example, if something shipped but didn’t arrive at the expected time, your system will alert you to the problem. By studying that data over time, you can spot and correct links in your supply chain that are regularly giving you problems.
How does speed and reliability in distribution affect manufacturers from a clinical standpoint?
Van Norman: The big issue there is drug shortages. Drug shortages are prevalent for a lot of reasons. One of the reasons is demand. A shortage can occur when the demand for one of your drugs exceeds the supply. In that situation, every bottle, every vial, every box is critical. It’s critical that every one of those bottles, vials and boxes reaches their destination on time and undamaged. Speed and reliability are essential to get patients the drugs they need to feel better or even survive. Pharmacies shouldn’t have to worry about distribution. It should be a given that they get the right drugs at the right time to dispense to their patients. There’s a lot that happens behind the scenes, but the end goal is for distribution not to even be noticed.
When distribution is noticed, how forgiving are pharmacies or providers as customers?
Van Norman: It’s all situational. If it’s a delayed or incorrect shipment of a blood pressure drug that the pharmacist already has 10 of on a shelf, that’s one thing. But if it’s an injectable drug that’s in short supply and is needed for surgery that afternoon, it’s another. Pharmacies and providers have choices of manufacturers. As a manufacturer, from a business standpoint, you should work with a distributor that doesn’t give pharmacies or providers reason to consider buying from someone else.
What trends should supply chain leaders at drug manufacturers stay on top of, and why?
Van Norman: I think we’re in the golden age of the consumer. Everything has to be fast, and it doesn’t really matter what industry that you’re in. If you’re the pharmacy or the patient, your expectation is that the drug you need should be there immediately when you need it. That’s a shift that manufacturers have to make. Your five- to 10-day lead time—from plant to pharmacy—is not in line with what everyone has come to expect in their everyday lives. That’s how distribution can help. Distribution can drive that lead time down with supply chain best practices.
What do you like most about working with drug manufacturers on their distribution challenges?
Van Norman: One of the most interesting things is seeing how weather affects distribution in different parts of the country. Winter. Summer. Hurricane season. Droughts. Floods. Fires. We have to be ready for anything, and we have to be prepared when things change overnight. We know what we do is important. We know what we do saves lives. When we overcome challenges like the weather and get patients the drugs they need when they need them, that’s the most satisfying part of the job to me.
Editor’s note: Have a question for one of our supply chain experts? Please leave a comment below and let us know what you’d like to see covered in a future edition of Ask a Supply Chain Expert.
Related: Learn more about McKesson’s pharmaceutical distribution services