SMITH BRAIN TRUST -- Canadian National Railway recently announced a $16 million upgrade to its refrigerated cargo handling capacity to keep pace with increasing demand from producers of chilled or frozen foods. Similar focus on the supply distribution of medicinal products comes from a new white paper by Lisa Harrington, senior research fellow for the Supply Chain Management Center at the University of Maryland’s Robert H. Smith School of Business.
Global demand for expensive and structurally complex and temperature-sensitive biologics and specialty drugs is growing -– particularly in emerging markets, Harrington says. The life science and healthcare industry needs a new generation of smart, cold supply chains to meet those critical challenges and improve healthcare standards. According to the DHL-commissioned paper, global spending on healthcare is forecast to reach $1.3 trillion by 2018, with one third of that spending in emerging markets by 2020. In the United States, specialty drugs are on course to quadruple to more than $401 billion in five years. Distribution of these drugs and increased global demand will trigger approximately 60 percent growth in cold chain logistics, reaching $13.4 billion by 2020, the paper reports.
Harrington breaks down the essential elements needed to maximize efficiency in a smart, cold distribution chain, looking beyond refrigerated trucks, containers, ships and trains. Ingredients include:
A highly specialized and compliant network. “Securing product integrity requires the physical infrastructure to be designed and operated for life sciences products only,” Harrington says. “It also requires having the right staff in place who fully understand end-to-end cold chain compliance. As providers of life-saving products, life sciences and healthcare companies have a responsibility to protect the lives of patients. Making sure their products arrive in perfect condition is critical. Partnering with the right logistics provider can ensure that.”
Balancing risk and cost in packaging and handling technology. Today, shippers can choose between passive and active solutions, Harrington says. “When making their decision, though, manufacturers must consider a wide range of factors, such as the value of the product, its temperature-management needs, regulatory compliance requirements, customer and market risk, as well as total cost.”
Total cost strategy. Companies often base their supply chain decisions on the direct costs visible to them -– typically from transportation and packaging, Harrington says. “However, that’s just the tip of the iceberg. Potential indirect costs such as product losses, brand risks and regulatory issues are usually not accounted for due to the different siloes in an organization.”
Harrington’s study, “The smarter cold chain: Four essentials every company should adopt,” Is downloadable here, via DHL.