Last week, I discussed Pharma’s IoT RFP process and how its lack of emphasis towards critical performance parameters negatively impacts the quality and consistency of data produced while product is being transported from A to Z.
This week, we’re touching on a similar concept, but instead of IoT we’re focusing on the Pharmaceutical manufacturer’s relationship with 3PLs and partner carriers.
But first, a story:
During my time in Supply Chain with Cummins, I’d frequently meet with Supplier Quality, Operations & Supply Chain Planning ahead of Supplier QBRs and performance reviews to get a holistic understanding of how suppliers are performing.
We would ask both the suppliers and the carriers / 3PLs for their OTIF metrics ahead of these meetings, and the numbers between the suppliers, the 3PLs and our own internal functional teams would rarely match.
Numbers always skewed more favorable performance from suppliers and Logistics Service Providers (LSPs), but were worse internally.It’s difficult to drive accountability through the value chain if everyone is working off of their own source of truth.
It’s best for that source of truth to come from an unbiased, agnostic party that has ‘no dog in the fight.’
Proactive Service is King
Service providers today react to systemic issues in their supply chain when it’s already too late, and typically, once the shipper/customer has brought the issue to light.
PAXAFE has seen platform data drive decision-making around IoT / packaging selection, lane SOP validation, 3PL lane allocation, etc.
The 3PLs that are able to proactively identify, act and resolve network issues routinely outperform their competitors and build trust with their shippers.
Lane Validation
Pharma companies invest a substantial amount of time and money conducting lane validation with each new product launch.
These lane validation studies will typically include a subset of:
- Lane performance mapping or temperature mapping
- Packaging thermal life assessments and stress tests
- Simulations of how various pre-selected parameters will perform on a lane
Pharma validates specific routes that a Carrier should take and a 3PL should enforce as a part of their lane Standard Operating Procedures (SOPs).
These SOPs provide an element of predictability (based on up front validation) and ensure that adequate packaging / thermal life is incorporated into the lane SOP.
When routes are not adhered to, it can impact lane performance, lead time, packaging assessments, CO2 emissions, geopolitical risks and other impact points which were intended to be accounted for during the validation study.
Today, Pharma does not have a scalable mechanism in place to discern when route SOPs are broken, and why.
That’s not to say that 3PLs should not have the ability to override an SOP and deliver a product on time and in full if the situation calls for it. But that should be the exception, not the rule.
And according to PAXAFE data, a shipment taking a non-validated route is 2.5X more likely to experience a temperature excursion, 1.5X more likely to be delayed, and 4X more likely to emit more CO2 over a validated route.
A blue checkmark signifies that this route is in accordance with the lane SOP, and has been validated
Validation studies are typically conducted when a product is first launched across a lane.
The problem? Parameters change. Carriers and carrier performance changes. Seasonality comes into play.
When lane parameters and SOPs are based upon static data from a dataset compiled through one study at one point in time, you start to see supply chain disruptions.
The solution? Pharma should know how their lanes are performing dynamically, in real-time, on a continuous basis. They should be able to drill into root cause and understand exactly where the systemic failures are happening.
A route performance score indicates how the lane is performing and if action is required, while the External Events Impact determines the extent of weather, geopolitical and other external risk impacting this lane/route
Lead Time & On-Time-Delivery (OTD)
Once Pharma gets a handle on route compliance and overall network performance, we dig deeper into specific variables.
Lead time, and the ability to delive shipments on-time means different things to different stakeholders.
In Pharma, delayed shipments can often lead to temperature excursions, or require repackaging along the way (incurring additional labor).
More critically, delayed shipments impact how lane parameters get set, including Contract Lead Time (CLT), buffer stock and inventory turns – which all impact time to revenue.
For example, just a 1-day reduction in the Contracted Lead Time parameter could yield an average annualized savings of $300K.
The comparison between Contracted Lead Time (CLT) and actual Transit Time must be continuously monitored to optimize lane parameters
Shipping SOPs
One of the most under-considered elements of shipment OTIF, yet one of the strongest correlative indicators: shipment departure days and times.
Some organizations will have formal SOPs in place that will instruct to not ship certain products out past 6pm. Or, to not ship products out on Thursday or Friday, when the likelihood of weekend delays / weekend non-delivery goes up.
At PAXAFE, our Gen-AI cold chain analyst, ATHENA, tracks changes to shipping SOPs or shipment patterns and their downstream impact on route performance.
Each lane has its own nuances, but we see interesting correlations between shipment departures and delays at customs, missed flights, and even driver behavior.
ATHENA, PAXAFE’s Generative-AI enabled Cold Chain Analyst, continuously spots trends, patterns and correlations between changes to SOPs and lane performance
Carrier SLAs
With all of the functional silos that exist within Pharma, it’s one thing to be able to capture all of these 3PL performance traits.
It’s an entirely different beast to reference the SLAs and figure out where performance SLAs may have been broken.
The traditional way of enforcing SLAs is complex: pull all sorts of custom reports at the end of the quarter, aggregate all of the data, collect data from your partners, compare and contrast and align on a source of truth, and finally reference the SLA to determine if any action is warranted.
We believe the easiest way to do this is continuous, dynamic monitoring against the SLA via AI.
Upload the SLA (PDF, CSV), set the cadence 🡪 get notified when the SLA is violated. That’s it.
Device Performance
As I wrote in my previous blog, “From RFP Chaos to Clarity,” some 3PLs and carriers partner directly with IoT device and logger manufacturers and can choose which devices they use on specific shipping lanes.
This flexibility can be beneficial, but it also means that the shipper's preferred device might only sometimes be the one used. In such cases, it becomes crucial for both the 3PL and the shipper to have a mechanism to monitor the chosen device's behavior and performance, ensuring that it meets the required tracking and data quality standards.
The Bottom Line
3PLs (Third-Party Logistics Providers), carriers and Logistics Service Providers (LSPs) face enormous pressure to deliver shipments on time and in full. Customer expectations are at an all-time high, and even minor disruptions can have cascading effects, impacting supply chains and eroding customer trust. By leveraging advanced intelligence to drive prescriptive intelligence and proactive action, 3PLs and carriers can better understand their customers' networks, identifying vulnerabilities and potential bottlenecks before they escalate into major problems. This proactive approach allows them to address issues promptly, minimizing delays and disruptions and ensuring smoother operations for themselves and their customers.
The benefits of employing advanced intelligence extend far beyond mere issue prevention. By analyzing historical shipment data, weather patterns, and other relevant factors, 3PLs and carriers can optimize routes, allocate resources more efficiently, and even predict demand fluctuations. This data-driven approach enables them to streamline operations, reduce costs, and improve overall service levels. By avoiding potential problems, 3PLs and carriers can strengthen their customer relationships, demonstrating their commitment to proactive problem-solving and ability to deliver consistent, reliable service.
Adopting advanced intelligence is no longer a luxury but a necessity. By embracing AI, machine learning, and other cutting-edge technologies, they gain a significant competitive edge, improve customer satisfaction, and drive long-term growth. The ability to get more thoughtful about customer networks and fix issues before they become significant disruptions is a game-changer, and those who embrace this proactive approach are poised to lead the industry into a new era of efficiency, reliability, and customer-centricity.
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