COVID-19: the key supply chain weakness behind critical pharmaceutical shortages

20 May 2020 | Web Article Number: ME202019132

Commerce & Trade
Disaster Management
Materials Handling & Bulk Handling
Transport, Distribution & Logistics

THE coronavirus crisis has highlighted a lack of supplier development in South African supply chains. This has contributed to shortages of critical pharmaceutical components like the active pharmaceutical ingredients (APIs) in medicines, according to SAPICS, The Professional Body for Supply Chain Management.

“The South African pharmaceutical industry is experiencing shortages of APIs. Certain pharmaceutical packaging that is sourced internationally such as tubes and ampoules are also in short supply,” said Dave Hudson, SAPICS member and supply chain and operations specialist and executive coach.

He said supply chain professionals were scrambling to source from alternative suppliers with limited success. “This is due to the lack of supplier development that has taken place over the past 10 to 20 years.”

Hudson said a lesson that must be taken from this crisis is that business risk assessments need to include the detailed mapping of supply chains and suppliers.

“Very often, manufacturers look at first tier suppliers and forget about second, third and beyond. To mitigate the risk of supply chain disruptions, businesses’ strategy must include the development of alternative suppliers and batch sizes. The alternatives are sometimes limited, especially for the older pharmaceutical generics in the market.

“Very often there is a single supplier source and a single option for batch sizes that match the current producer. Unit cost can no longer be the overriding factor in setting up supply chains,” he states. “Geographical risk is also very important to continuity of supply.”

Hudson said the crisis has also put supply chain management education into the spotlight and underscored the need to add impetus to addressing South Africa’s supply chain skills deficit and the regulation and professionalisation of the supply chain management profession.

“Supply chain management’s vital role in business hasn’t been widely recognised in the past. Many businesses still fail to see supply chain and operations management as a critical function that requires constant upskilling. The result is that not enough is spent on education and training. This is one of the reasons that some supply chain management personnel are scrambling to mitigate the impact of the COVID-19 crisis.

“They have not been exposed to alternative theories and practices. The benefits and importance of international certifications, such as those offered by SAPICS through its partnership with the US-based Association for Supply Chain Management (ASCM), is that they are built on global standards for supply chain management. They teach globally recognised supply chain best practices and methodologies which are crucial.

“We must start thinking about the cost savings and efficiency enhancements differently. The traditional approach has limited gains, whereas new methodologies open avenues for exploiting weaknesses and promoting effectiveness along with efficiency. This can only be achieved with improved supply chain management knowledge, education and skills. Business needs to recognise and understand how strong, reliable, resilient supply chains and capable, qualified supply chain professionals are essential to mitigate the impact of supply chain disruptions like COVID-19.”

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