Learn about material segmentation, a unique approach for characteristics-based planning and execution.
By Stephen Cloughley, Senior Director, SAP Life Sciences IBU
The coronavirus has emphasized the cracks and fissures within many standard supply chains. An interesting outcome is that exposing the weaknesses has led to a faster adoption of technologies that have been discussed frequently but not adopted.
In looking at the life sciences supply chain, pharma companies have been overly burdened with manual processes when distributing regulated medicines and medical devices. For life sciences companies that sell their medicines globally, they must ensure that their products comply with regulatory bodies in the destination countries before selling them.
Tracking compliance for each drug to each country has always been difficult. Materials with different characteristics required multiple material codes that could quickly become impossible to manage manually. For those working in regulatory affairs, quality assurance, and supply chain management, they lack visibility into the shelf life for bulk dosages and are dependent on too many spreadsheets and unwieldy master data. Not having a streamlined process that matches supply and demand with product and market attributes has caused:
- a significant increase in the cost of master data management,
- higher inventory holding costs,
- loss of productivity, and
- risk of penalties.
Demand and Supply Segmentation Creates a More Resilient Supply Chain
Executing supply chain processes does not have to be this challenging. Demand and supply segmentation is a new capability that merges demand and supply planning with segmentation setup, master data, and reporting. It streamlines supply chain processes by surfacing granular information about product and market attributes, such as destination country, production source, submission number, active ingredients, and shelf life, that are associated with the material number. Linking that detailed information opens up the possibility to match logic to demand and supply so that companies can quickly and accurately know if they are in regulatory compliance, plan, and execute effectively.
The problem for the pharma company is knowing which drug version meets European requirements and which meets all other country compliance. Segmentation creates visible, digital breadcrumbs that confirm that the drug product will meet each country’s regulatory requirements.
While every pharma company, especially the larger ones with multiple drugs, plants, and manufacturing processes that distribute their medicines globally struggle with this problem, few have found a reasonable solution. For those that want a more streamlined process for enforcing regulatory compliance, segmentation can reduce the risk of not meeting regulatory requirements.
The benefits, fortunately, don’t stop at compliance, segmentation can better support health authorities with approval references, pharma companies with production process version, medical device makers with software and component design versions, and personalized medicine with “lot size of one” identifiers for patient or donor cells.
In all use cases, segmentation enables:
- Separating stock based on attributes including ingredient’s country of origin, potency, production process, or vendor
- Segmenting customer demand based on attributes such as regulatory requirements or priority
- Defining optimal match logic between stock and customer demand
- Preventing overstocking and out of stocks by matching customer demand
- Avoiding customer returns due to not matching deliveries
- Streamlining materials and master data maintenance
- Minimizing production planning complexity
Preparing for Global Order Fulfillment
In our new world order, a global population is anxiously anticipating any proven treatment for the coronavirus. Pharmaceutical companies will unquestionably be under extreme pressure to safely deliver vaccines and medicines that alleviate symptoms for the virus. Segmentation could prove itself as a faster, more accurate path for planning and executing the distribution of a highly sought-after drug product to a global population that is ready and waiting.