Healthcare shippers and logistics providers often have different expectations and priorities, while those within the logistics chain also sometimes speak different ‘languages’. But these are aligning, delegates hear
The logistics chain is only as strong as its weakest link, and this stands especially true for temperature-controlled services. Irresponsible handling can easily destroy a shipment of tremendous value, and pharmaceutical companies depend on a flawless service when it comes to sensitive goods.
The Cool Chain Association (CCA) has for many years been highlighting these issues and working on best-practice initiatives among its members and the wider cool-logistics sector. For some time, the CCA has also been pushing for standardisation in the pharmaceutical air cargo supply chain, including highlighting the need to IATA at the CCA’s ‘Pharmaceuticals in the Cool Chain’ conference in 2013. Indeed, at that conference in Lisbon, Sebastiaan Scholte as Chairman of the CCA asked Des Vertannes of IATA personally and publicly to lead and set such a standard, and Marcel Fujike from forwarder Kuehne + Nagel also challenged IATA to take action. And so the CCA warmly welcomed IATA’s decision to develop the Centre of Excellence for Independent Validators for Pharmaceutical Handling (CEIV Pharma) certification programme, which it launched in January 2014.
Regulations like the EU’s Good Distribution Practice (GDP) (upgraded in September 2013) or certifications like IATA’s CEIV Pharma are dedicated to ensuring patient safety and preventing money being wasted; IATA valued the global pharmaceutical logistics market at $64 billion in 2013.
And these were among the key topics discussed at the Cool Chain Association’s third CCA Pharma & BioSciences Conference in Basel in early October, where a number of implementations were presented highlighting the benefits and challenges of CEIV certification, and making comparisons with GDP.
CCA secretary general Edwin Kalischnig, CEO of Xtreme Technologies, highlighted that pharma companies, like every industry, are bracing themselves for major changes, and while the opportunities and challenges are massive, these changes will impact logistics providers as well. Healthcare is evolving, patients are better informed and hence more demanding, while many different national rules and regulations are intervening in how treatment should be provided.
Pharma survey findings
The first presentation drew upon the findings of the latest ‘Pharma Management Radar’ survey by Camelot Management Consultants, a consulting firm specialising in the pharmaceutical market. The survey indicated that Temperature Control, Traceability, Security and Regulatory Developments were among the key topics within the pharma industry at the moment, as are initiatives like GDP or CEIV, according to Andreas Gmür, partner and head of logistics practice at Camelot Management Consultants.
“Subjects like temperature control or traceability are becoming more important because companies are challenged to implement them, while the regulatory side is still not very clear everywhere,” Gmür noted. “However, the implementation is necessary for taking the next steps in healthcare. Customised treatment, homecare or direct-to-patient deliveries are definitely on the agenda of the shippers.” Finding the right balance between ‘Low Cost’ and ‘Low Risk’ also appeared to be a constant challenge.
Camelot noted that limited IT solutions were currently a major obstacle and limited visibility for end-to-end traceability. Real-life examples of temperature excursions show that new systems require a more regional or even global solution design with a risk-based approach, contingency plans, and integrated transport management, processes and systems.
According to the survey, market trends that will impact logistics in the coming five years include Customized Treatments, Homecare, and Direct to Pharmacy/Patient Deliveries. These will result in more patient-centric solutions offering new services “beyond the pill” as well as stronger patient focus and alternative distribution channels.
Integrated strategies within manufacturing, supply chain, distribution, and sales will also enable new value creation across the value chain, the survey indicated. This will result in multi-channel management, visibility, new replenishment concepts, collaborative logistics and flexible, small batch packaging. Meanwhile, the Internet of Things is slowly but surely gaining relevance in enabling these developments.
Christian Hay, senior consultant for healthcare at GS1, provided an in-depth view of the different types of codes and technology available for serialization and traceability, noting that track-and-tracing can enhance the processes considerably. “Modern traceability is much more than just knowing where the item comes from and where it goes to,” he noted. “With the new Electronic Product Code (EPC) standard, you can not only track items but you also track events about the shipment.” Temperature changes or opening of containers can be linked and monitored with ease. And the security increase is important as well as the high value of pharma shipments is attracting theft.
He said there are global standards available and they are ready to be used, but there are still deviations that need to be taken into consideration, he observed. The EPC (Electronic Product Code) and EPCIS (EPC Information Service) are two likely candidates for pharmaceutical information dissemination and are already regularly used in combination with RFID technology.
Communication issues
Processes and regulation are necessary, but one very basic problem leaves the community frustrated: poor communication, noted Stavros Evangelakakis, global product manager at Cargolux. “Everything is connected, but when shippers, ground handlers, freight forwarders and carriers work together they often do not speak the same language.”
The CCA conference in Basel was intended, therefore, not only to be a useful networking opportunity, but also to help those involved in the business to speak a common language and express the concerns of the community. Indeed, CCA aims to be a discussion group to understand the processes better and improve them.
Manu Jacobs, director of business development, pharmaceutical logistics from Air France-KLM Cargo commented: “It took about one year to transform GDP into ‘air freight language’.”
He said AF-KLM had developed a new website with track and trace information, proactive communications, and complete shipment status for its customers, improving visibility across the pharma network. The airline group also uses advanced technologies like RFID, GPS, and GPRS for connectivity and automated identification.
But he said it was after the implementation that the real work started: living up to the standards and persuading shippers to accept the standards. He said the feedback from shippers was generally positive but there was still room to move forward. But GDP and CEIV have forced the community to talk.
He also outlined how the pharma business was growing by 5% annually, year over year. Although pharma shippers are using more sea freight, they still rely heavily on the airline industry for its speed and efficiency. However, air freight’s market share is down from 17% in 2000 to 11% today, he observed, with the majority of shipments still going by truck.
Next on stage, Nicola Caristo of Alha Group, a cargo handler at Malpensa Airport in Milan, pointed out that Italy is the second largest Pharma producer in Europe, ranking among the ‘top 10’ importing and exporting countries worldwide. Alha’s solution model is geared around critical areas such as: facilities and temperature monitoring; trained staff and accountability; control points and compliance; service, security, and transparency.
Daniel Setz, senior vice president and head of global cargo operations at global handler (and the event’s main sponsor) Swissport, said a standardised industry approach to handling pharma shipments in transit warehouses was necessary. Setz outlined how activities at the terminal and at the ramp can easily break the cool chain if they are performed by two separate companies. That is why Swissport integrates those activities, based on a formula of global standards, quality, and efficiency, he explained.
In order to catch up with other means of transport, he said the air cargo industry needed to modernize and improve speed through a focus on quality management (via Cargo 2000), end-to-end transparency, as well as interface and partnership management. And digitalization is a must, with a strong focus on e-Freight initiatives, developments and messaging performance, he added.
He said innovation will help to improve speed and quality, noting that Swissport had introduced its new Cargo Customer Portal with a mobile ‘Event Management Tool’ that ensured an efficient operation and compliance with applicable SLAs, real time information for stakeholders, and pro-active management of operations and performance by capturing quality milestones.
CCA secretary general Edwin Kalischnig moderated a lively panel discussion on the topic: ‘Temperature controlled supply chain management − an end-to-end approach’, with a lot of interaction from the audience. Handling agents expressed concerns about the constraints on the ground and the investments needed to provide better infrastructure. They noted that shippers expect a lot from a handling agent but the financial compensation is rarely sufficient, while forwarders and airlines receive yield premiums for pharmaceuticals.
Handling constraints
Not all pharma shippers are aware of the handling constraints, participants pointed out, noting that risk managers and sales representatives within shippers are often not the ones concerned about transport. This creates an unhealthy situation where shippers either demand too much or not enough, and often pharma companies expect a service tailored to their needs.
Andrea Gruber from IATA and Brice Bellin from forwarding and logistics group SDV delivered a joint presentation on CEIV Pharma certification, describing what certification entails and outlining SDV’s experiences as one of the first certified forwarders. CEIV Pharma is a globally consistent IATA standard, for pharma shipments in air freight, “developed for the industry, by the industry”, with the key objective to maintain product integrity. The programme also aims to support air freight as the modal choice for the transportation of pharmaceutical products, Gruber noted, explaining that the programme is not mandatory, but is dedicated to patient safety and “provides guidance for global shipments, taking into account the full transport lane”.
Of course, the implementation of GDP or CEIV has a cost, and it can take up to a year to be certification-ready. Special training sessions have to be planned for the entire handling team, with CEIV certification, for example, requiring 8 to 10 days of training, depending on the employee’s position and responsibility.
SDV implemented CEIV across its global healthcare network of 16 stations in the US, Europe and Asia. Key reasons to do it are to address customers’ needs, to implement a global standardized certification and to align knowledge and training throughout the network. The initiative was a follow on from SDV’s participation to the initial BRU CEIV Community project and will help build a recognized brand in the industry, SDV believes.
Standardised or tailor made?
The new regulations are welcomed by the logistics industry, says Nathan De Valck, cargo & product development manager, of Brussels Airport who chose CEIV his operations, noting that ground handlers hope it will lead to a more standardized way of handling. While some shippers worry more about costs, many have unrealistically high expectations and demands, and ground handlers and carriers are sometimes confronted with customers that expect special treatment. It creates a very difficult situation for airports, which struggle to apply different standards and procedures for every single customer.
But can a ground handling agent offer an individual service next to his GDP or CEIV processes? No, according to Fabrizio Iacobacci, institutional affairs & special projects manager at Italy’s BCUBE air cargo, another CEIV-certified company. “It is simply not possible, cost or operation wise, to provide a special treatment for every single client,” he pointed out.
But standardisation is able to create more trust among the various actors, as CEIV and GDP raise awareness for good procedures. In conjunction with training, the standardized processes minimize mistakes and bad handling.
Iacobacci says key advantages of CEIV for BCUBE are the common standards, compliance, harmonization, and definitions across the company. During the implementation, the key challenges were resistance (including from airport authorities, airlines and freight forwarders) and contradictions (commercial vs quality; tradition vs standardization; bad practices vs awareness).
However the integrity of the chain is not flawless when only part of the chain is certified and ready. Cargolux’s Evangelakakis raised an alarm on the handling process at destination. Often, carriers are left frustrated when they see pharmaceuticals and perishables left baking on the tarmac for a long time or when overheated trucks load temperature-sensitive goods without special care.
Technology solutions
When processes are failing or customs times add up to weeks, innovation can make a difference.
Opening day two of the event, Bernhard Bärtschi, head of sales at SkyCell, presented one of the latest developments in passive container technology. The container “recharges” when it is put inside a freezer or cooler and the special insulation suppresses effectively all three ways of heat transfer: radiation, convection, and conduction.
He says this passive energy unit can prove life-saving, especially for emerging markets, where temperature controlled infrastructure is commonly lacking. The light weight containers, which come in sizes of 0.77m3 and in 1.54 m3, are fueled by a battery that recharges itself when stored between +2°C and +5°C.
The SkyCell container is used to establish a door-to-door solution by air – similar to a reefer container in sea freight. The key process steps include: ‘Preparation of shipment’; ‘Delivery to loading site’; ‘Transport inclusive pre-carriage’; and ‘Delivery to offloading site’. Return logistics is part of the service provided and the company also provides a risk assessment tool. The longest shipment to date is an impressive 31 days from Basel, Switzerland to Sao Paulo in Brazil.
The current products are dedicated to pharma and air freight, although other sizes are also planned, culminating to a very small container useable by drones or express services dedicated to direct patient delivery.
The penultimate presentation came from the first CEIV-certified airline, Finnair, and Pasi Nopanen, VP of global sales, outlined airline’s advanced capabilities, including a state-of-the-art automated ULD-handling system. Finnair said the recognized modal shift from air cargo to sea freight requires collaboration among the air cargo players in order to regain the confidence of the pharma industry. CEIV certification is a good tool, system, standard, and framework to further build the required true partnerships, Finnair believes.
Shipper perspective
But GDP is often stricter than what the pharma sector wants, according to one pharmaceutical shipper, although the whole industry is on a learning curve and the expectations of all the actors are slowly aligning. Rounding off the conference, Ruud van der Geer from Merck’s UK subsidiary MSD said awareness was shifting in the pharma industry: while logistics had usually been a matter of storage, delivery and transport conditions had gained in prominence.
He said the expectations of the pharmaceutical companies in transport are not necessarily matching the processes of logistics companies and handlers, noting that shipments can be very high value and fragile – especially vaccines. However not every pharma shipment is fragile and needs heightened attention, and it is the shipper’s responsibility to fix the process, with expert guidance from his 3PL, he noted. It is also important to understand the logistics companies you are dealing with. From the shipper’s view, an integrator may not be a better option as they often lack the network coverage, especially in more remote areas.
His presentation covered the whole product-handling pyramid including compliance, product stability, protection, monitoring and KPI tracking, discussing robustness and expectations. In terms of compliance, he referred to the EU GDP 9.2 and “defining control limits”, control measures, and how to ensure process visibility. In terms of risk evaluation, the main purpose is to identify what is Critical to Quality (CTQ) and what is Critical to Business (CTB), he observed.
He stressed that storage and shipping are two different things in pharmaceutical logistics, and shipping ranges are set wider than storage ranges. The combination of product stability and thermal protection systems allow for relatively broad variations in temperature (especially for Controlled Room Temperature – CRT products). At MSD, on average 1,000 shipments would trigger 100 (temperature-deviation) alerts, of which only one shipment would need to be discarded.
The general expectation of the shipper is that when they buy a ‘15-25oC service’, they will actually receive a ‘15-25oC service’, but this is not always the case, he observed. As a result, performance monitoring and a shipment temperature dashboard are important.
Although CEIV certification may be “too much” of a requirement for a number of shipments, the pharma industry endorses IATA’s pharma standard for both strategic reasons (building a sustainable, value-driven health care system) as well as operational reasons (measurability, risk reduction and ROI on services), he said.
