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IBM and Antares Vision together to improve the pharmaceutical supply chain
IBM and Antares Vision together to improve the pharmaceutical supply chain

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Date

10 September 2020

IBM and Antares Vision together to improve the pharmaceutical supply chain

It feels that a decade of “Black Swan” events hit in a span of months. But that logic is wrong.

Unfortunately, these are not “Black Swan” events, this is the supply chain we created.

After struggling for months to access medical equipment and lifesaving products, the world is rethinking the need for buffer stock and questioning and the wisdom of a globally dispersed, just-in-time supply chain. These supply chain challenges are further compounded by international transportation capacity reductions, export restrictions placed by countries on essential goods and unplanned production facilities closures.


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But the point is:

our pharmaceutical shortages are not new, nor are they solely driven by Covid-19.  As the United States Food & Drug Administration Drug Shortages Task Force points out in their February 2020 report, more drugs are in a “shortage” status than ever before.  And this was pre-Covid.  Clearly something has been wrong for a long time.  Covid-19 is just the breaking point causing us to pay attention. 

Covid19 challenge in pharmaceutical supply chain for IBM and Antares Vision

At first glance, the easiest solution is to “reverse” the supply chain trends causing these challenges.  As a result, governments are restricting exports and rethinking free trade.  Companies are increasing their buffer stock and Healthcare facilities are over-ordering.  There are many actions being taken at a micro level that, probably, have some usefulness but ultimately are not a sustainable solution.

 

Instead we propose a new path.  And it starts with a counterintuitive idea. We believe the issue is not that the last 30 years of supply chain innovation took us too far. But rather, that it did not go far enough.

 

Effective, responsive markets require crisp, unambiguous signals.  They require information.  Unfortunately, our business models focus too much on the competitive advantage information providers and discount how selective information exchange between trusted parties may enable market efficiencies.  Consider some of the following common business decisions and their impact on the supply chain:

BUSINESS DECISION

  • Suppress information about point of origin or component supplies;
  • Suppress inventory levels and consumption patterns;
  • Short term, auction style, price as the primary concern, sourcing strategies with quality relegated to an afterthought.

IMPACT ON SUPPLY CHAIN (THE OVERALL MARKET)

  • Difficulty identifying risk of common suppliers and risk modeling;
  • Difficulty with demand sensing and lagging production increases / decreases;
  • Lack of incentive for long-term investments and to continue improving quality.

The list goes on, but the underlying message is the pharmaceutical market is not gaining information or processing signals fast enough to assess risks, value quality, establish price and, in general, maintain equilibrium. 

 

We believe the answer is a new approach to sharing information. 

 

This does not mean wholesale sharing of everything about our supply chains. 

 

Instead just as the internet gave us a new, more effective, way of connecting to conduct business we need a new, more effective, way of communicating supply chain information we choose to share with our trusted trading partners.

 

It starts with a new not-for-profit entity whose sole purpose is facilitating the exchange, and protection, of information. It will follow the model of the internet being a trusted, non-proprietary, market where private information can be exchanged lowering the transaction costs for all.  Like the internet it will be built upon open source software enabling transparency, trust and avoiding profit seeking motives. This entity exists to advance the industry, not shareholders, and it will be governed by the industry to maintain focus on the industry’s needs.

 

The time to embrace a new approach is now and it is driven by the shift to more granular tracking as required by the Drug Supply Chain Security Act and similar regulations.  The emerging regulations will generate more information about our supply chains than ever before.  The explosion of supply chain data in turn increases the urgency of creating an equitable information exchange.  This does not have to place companies at a competitive disadvantage by sharing currently proprietary information.  But it gives us a new way of selectively sharing information to strengthen our supply chains. 

 

This is already happening in other industries.  For example, in France consumers have the ability to track the provenance of their poultry and understand the conditions under which it was raised and processed.  This transparency is a differentiating feature and consumers are paying a premium for this information.  Its unlikely consumers will check the provenance of each food item they buy, but the point is that the technology to do this exists even on products at a low price point.  And it’s not just the consumer who benefits—all parties in the supply chain gain value especially in extraordinary circumstances such as recalls which may now be more targeted.

 

Antares Vision and IBM are working together to bring this innovation to the Pharmaceutical industry.  The expertise of Antares Vision to collect information from manufacturing systems coupled with the storage and analytics software from IBM will give us powerful new supply chain insights to better manage our just in time inventory solutions.  It will give supply chain participants new ways of distributing and managing this information.  And the improved management tools will enable more efficient markets that are resilient and generate better supply-demand signals. 

 

We are in conversations with governments and industry participants on how to create a not for profit to create and govern this solution. 

 

This will not be an Antares Vision or IBM solution; it will be the industry’s solution balancing the objectives of all participants and not seeking to generate a profit. 

 

The project is ongoing and is opened to all the Pharmaceutical industry. Join us to improve the supply chain paradigm and click here to receive more detailed information.

To learn more, please contact: attilio.bellman@antaresvision.com

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