Creating A Better Healthcare Cold Chain. 7 expert perspectives on best practices to improve efficiency

Transcription

1 Creating A Better Healthcare Cold Chain 7 expert perspectives on best practices to improve efficiency

2 In cold chain, the stakes have never been higher. At UPS, our people are not only focused on today s cold chain, but also preparing for what comes next. They are innovating better cold chains by countering emerging challenges with capability and creativity. With that in mind, I asked some of them to share their perspectives and insights with you. Opportunities to simplify and strengthen cold chains abound. There is a great solution for every cold chain challenge. Now, there are more ways than ever to help gain the efficiency and product protection levels that you are asked to achieve. Whether you are concerned with QA and complying with tighter regulations or under pressure to contain costs and do more with less, you will find something in this paper that may make you think differently. Temperature-sensitive shipping has never been more complex. A creative and innovative approach, however, can change the picture. Today s cold chain demands the same level of attention you give your core business innovating to improve human lives. At UPS, we also continually innovate, never forgetting our philosophy of, It s a Patient, not a Package. Dirk van Peteghem Vice President, UPS Healthcare Strategy 2

3 Executive Summary Growth in new markets introduces new costs to control, regulations to manage, and supply chain complexities to solve. Longer, more complicated cold chains mean that collaboration with third party logistics providers (3PLs) can help make the difference between profitable simplicity and unmanageable complexity. Companies are increasingly relying on their 3PLs for services such as monitoring and intervention, contingency planning, and cost control. Reduce risk by improving packaging, visibility, and establishing QA best practices. Improved visibility, new tools, new monitoring capabilities and appropriate packaging can also help drive down costs for shippers.

4 Table of Contents 01 New Markets, New Challenges p Compliance in the Cold Chain p Extra Protection for Critical Shipments p Packaging that Protects Product and Profit p Planning for Contingencies p PL Quality Assurance, From Beginning to End p The Last Mile p. 39 APPENDIX UPS Products and Services A Directory of Cold Chain Solutions p. 44

5 Chapter 1: New Markets, New Challenges 5

6 Rules, Red Flags, and Reducing Complexity A focus on compliance, watching for warning signs, and standardizing are three ways to help overcome the challenges of new markets. Meet the Expert: Wanis Kabbaj As UPS s Director of Healthcare Strategy, Wanis Kabbaj is responsible for developing a fast-growing portfolio of transportation products uniquely designed around the specific needs of healthcare customers. Prior to his current assignment, Wanis managed the International Air Freight product portfolio within the UPS Global Forwarding unit. Wanis is a dual citizen of Morocco and France and holds a Master s degree in business from the Paris-based ESSEC Business School. He recently delivered a popular TED Talk drawing parallels between the vascular system and the future of urban transportation. 6

7 Chapter 1 Wanis Kabbaj: New Markets, New Challenges If your shipping costs are growing at a faster rate than your sales, it could be a sign that your organization is fixing local errors by buying faster, more forgiving shipping options. Pharmaceutical companies and other healthcare manufacturers are entering new markets around the globe. Negotiating a new region s customs, routes, language barriers, and cultural differences while maintaining the integrity of the product is critical. Fifteen or twenty years ago, the key markets were North America, Europe, and Japan. As new locations became available, many major companies entered new global markets. This presented two potential challenges: greater weather extremes and underdeveloped infrastructure. In addition, in some emerging markets, Customs authorities and agents were less likely to provide cold chain healthcare shipments the level of prioritization that they sometimes need, says Wanis Kabbaj, director of heathcare strategy at UPS. 7

8 Chapter 1 Wanis Kabbaj: New Markets, New Challenges Today, manufacturers are shipping products further, in more extreme weather, and with less control over the shipping process. Many of them are attempting to manage problems with more local feet on the ground, while regulators require more and more rigor. This mix of challenges, if not outsourced to a third party logistics provider (3PL), can easily soak up a logistics manager s time and budget. may be faced with a myriad of country-specific nuances that could eventually become difficult to manage. Coping with a multiplicity of third-party vendors, packaging requirements, and customs processes can quickly become overwhelming and inefficient, says Kabbaj. Is your cold chain too complex? How to ease new market entry The most important first step when entering a new market is to understand its regulations. Customs regulations governing the new market may require a product to be categorized differently in one market versus another. For example, a pharmaceutical may be deemed a controlled substance in some countries and not others. A miscategorized product on a customs form may cause a significant delay. Simplify by standardizing Once you understand the rules, you should standardize your supply chain operation to the highest set of requirements. This solves two problems: it allows you to track the performance of your supply chain to a common standard, and it helps to ensure product efficacy across your product range. According to Wanis Kabbaj, a director of healthcare strategy at UPS, if you don t standardize your supply chain, you How can shippers know if their temperature-sensitive supply chain is excessively complicated? There are several potential red flags. If your shipping costs are growing at a faster rate than your sales, it could be a sign that your organization is fixing local errors by buying faster, more forgiving shipping options, says Kabbaj. Quality issues may also appear. If you have repeated incidences of product spoilage and temperature excursions in one or more of your markets, it is likely an indication that you may not have the right local vendor(s) in place. Finally, keep an eye on employee churn. An increasing rate of turnover might indicate subpar working conditions. Although new markets present new difficulties, there is a solution for every challenge. If you are a fast-growing healthcare company, a relationship with a 3PL that has deep healthcare expertise and true global capabilities may be the best investment your supply chain department can make, says Kabbaj. Cold Fact: Global expansion posing cost challenges Almost half of healthcare logistics decision-makers in North America say that new market expansion is driving up supply chain costs. Source: UPS Pain in the Chain survey,

9 How UPS Can Help Reduce complexity with the help of a 3PL UPS has world-class expertise in both global transportation and specialized healthcare areas like cold chain packaging optimization. A provider with a global network of infrastructure, freight forwarding, transportation, and dedicated healthcare experts can help you create the right shipping strategy for your product. Start with a thorough cold chain analysis carried out by a good 3PL, and be open-minded during the RFP process. A strong 3PL should have additional insights into your cold chain that you may not have considered. As the world s largest package delivery company, UPS has immense experience with temperature-sensitive supply chains. This knowledge of cold chain best practices can supplement your own knowledge and help benefit your business.

10 Chapter 2: Compliance in the Cold Chain

11 Making the Regulatory Environment Work for You Following the EU GDP guidelines as a general practices through the entire supply chain provides benefits to both the manufacturer and the transportation provider. Meet the Expert: Susan Li Susan Li is senior cold chain packaging strategist for UPS Temperature True Packaging in UPS s Healthcare Strategy group in Atlanta, Ga. She specializes in temperature-sensitive packaging logistics and is a member of ISTA Thermal Council. Her role includes providing cold chain package consulting services to healthcare customers. Susan has an undergraduate degree in Biochemical Engineering from East China University of Chemical Technology, a Master of Arts degree in Biological Science from Smith College, and an M.B.A. from Kellogg School of Management, Northwestern University. 11

12 Chapter 2 Susan Li: Compliance in the Cold Chain When things go awry, it's important that you carry out a full deviation investigation to understand the root cause of the failure. When the EU launched new Good Distribution Practices (GDP) in 2013, the bloc sharpened the global focus on cold chain distribution by extending the GMP (Good Manufacturing Practices) guidance on temperature requirements into transportation and by including over-the-counter drugs. While the GDP guidelines are not mandatory, there are some significant incentives for following them, according to Susan Li, senior cold chain packaging strategist of UPS Temperature True Packaging. An environment of improved compliance can help your bottom line by lowering spoilage rates. 12

13 Chapter 2 Susan Li: Compliance in the Cold Chain Doing well by doing good The guidelines are there to help maintain product quality, safety, and efficacy by helping prevent product spoilage, theft, and counterfeiting, says Li. Ultimately, they help protect both you and your products. Making practical use of the guidelines The Parenteral Drug Association (PDA) has published four technical reports 39, 46, 52, and 58 that set out practical applications from a task force of industry thought leaders, including pharma manufacturers and wholesalers, cold chain packaging and equipment manufacturers, academics, industry consultants, and transportation providers. They translate the guidance into actual practices that your company can adopt, explains Li. Following the guidance provided by these four reports in the design of your operational and quality processes can help protect you from temperature excursions and negative inspection findings. The four technical reports from the PDA (one of the leading global providers of science, technology Temperature Check Is your business compliant? Logistics managers are stepping up their compliance. Healthcare logistics managers say they are becoming more successful at meeting regulatory requirements, with 70 percent reporting success in 2015, up 23 percent from the year before. Source: UPS Pain in the Chain survey, 2015 and regulatory information and education for the pharmaceutical and biopharmaceutical community) cover the following subjects: Technical Report 39 Cold Chain Guidance for Medicinal Products: Maintaining the Quality of Temperaturesensitive Medicinal Products Through the Transportation Environment. This report sets out principles and practices for the transportation of temperature-sensitive product only. Following this guidance may help reduce product spoilage so that your product can help patients. Technical Report 46 Last Mile: Guidance for Good Distribution Practices for Pharmaceutical Products to the End User. This report discusses the processes that will help protect product in the last mile of a distribution chain, and explains the concept of qualification of transportation over the last mile. This is important, since the last mile is where temperature excursions and product spoilage can often occur. The definition of last mile provided by the Technical Report is broad, stating that the term can be considered to start from the manufacturing facility handoff to the wholesaler or pharmacy and continue to delivery to the end user. More frequently, in practice, the term is used to denote the last physical shipment to the end recipient, such as from a distribution center to a patient, doctor, or pharmacy, explains Li. Technical Report 52 Guidance for Good Distribution Practices (GDPs) For the Pharmaceutical Supply Chain. This describes a quality system for pharmaceutical distribution which, when implemented, may help prevent products from being compromised during the distribution processes. (TR 52 covers the entire supply chain which includes storage, transportation and distribution of temperature-sensitive products.) Technical Report 58 Risk Management for Temperature-Controlled Distribution. This helps manufacturers and distributors apply risk management principles to distribution practices. The document 13

14 Chapter 2 Susan Li: Compliance in the Cold Chain includes material to help you devise a checklist, which can help reduce product spoilage. Success in cold chain compliance begins with a risk assessment approach in line with PDA Technical Report 58. This publication explains how to carry out a comprehensive risk analysis of your cold chain. Completing this risk analysis may help to lower those risks, if for no other reason than you ve revealed them. Risks can arise from faulty equipment and processes, but human error and external forces also play a role, says Li. An assessment will identify weak links in the chain and help to strengthen them before product damage or spoilage can occur. PDA technical reports offer expert guidance and opinions on important scientific and regulatory topics and are used as essential references by industry and regulatory authorities around the world. Following the guidance in these reports can help establish best practices to eliminate or reduce potential risks for the supply chain of temperature-sensitive products. When things go wrong When things go awry, it s important that you carry out a full deviation investigation to understand the root cause of the failure. For example, where human actions are the root cause, consider retraining. If a flawed process is at fault, redesign and retest. If the cause is physical, replace or redesign the component. Then your organization must take the necessary actions to prevent it from happening again. Not only will you benefit from not repeating the error, but you may help improve your environment of quality and compliance, says Li. 14

15 How UPS Can Help Staying compliant around the globe Working with a knowledgeable 3PL, such as UPS, can provide expertise in cold chain transportation from the moment your products leave the manufacturing plant. We have global compliance experts who understand the regulations that will impact your shipments while in transit, and how those regulations vary from country to country. Whether you are shipping outbound, or recovering shipments from overseas, our compliance group can provide advice to help facilitate successful trade.

16 Chapter 3: Extra Protection for Critical Shipments

17 Advances in Real-time Monitoring and Intervention How are you currently monitoring shipments to identify at-risk packages? This look at monitoring and intervention services reveals how you can better protect products and potentially improve your customer service. Meet the Expert: MaryBeth Clapper MaryBeth Clapper is the UPS Proactive Response product manager in the UPS Healthcare Strategy group. As such, MaryBeth leverages proprietary algorithms that mine UPS s tracking data and four control towers strategically located around the globe to help healthcare customers mitigate their risks and improve the reliability of their supply chain. Prior to joining the Healthcare Strategy group, MaryBeth worked in various Corporate Marketing roles. MaryBeth holds a B.S. in Corporate Finance from the University of Alabama at Birmingham and a Master s in Business Administration from Mercer University. 17

18 Chapter 3 MaryBeth Clapper: Extra Protection for Critical Shipments Supply chain disruptions like bad weather and other unforeseen events can result in unexpected delays leaving critical packages vulnerable and at risk. Monitoring and intervention services can help protect your critical shipments and improve customer experience. When your business is healthcare, you want every one of your shipments especially those containing time- and temperature-sensitive products to arrive on time and in good condition. If they don t, it can negatively impact your costs, your brand reputation, and, most importantly, your product. However, supply chain disruptions like bad weather and other unforeseen events can result in unexpected delays leaving critical packages vulnerable and at risk, says MaryBeth Clapper, manager of UPS Proactive Response service. That s why some companies are choosing to add on monitoring and intervention services for their critical shipments, Clapper adds. These services may assist in improving your overall cost of shipping and help get your product to those who need it. A transportation provider that can deliver to patients homes, doctors offices, hospitals, or clinics, and also quickly resolve any delivery issues, may contribute to a higher first-time delivery rate. 18

19 Chapter 3 MaryBeth Clapper: Extra Protection for Critical Shipments Meeting a growing demand for monitoring Through decades of working with healthcare manufacturers and distributors, logistics providers have developed a comprehensive approach to shipping temperature-sensitive products. The approach offers customized monitoring and intervention services to help packages arrive in the right place, at the right time, and in the right condition. Customers who are using monitoring and intervention services are receiving higher service levels and have more satisfied customers of their own, says Clapper. It s clear to see the advantages, and more customers than ever before are grasping and realizing the value. Why monitoring and intervention services pay off Clapper says, More healthcare shippers are insisting on these types of protective services that help minimize the probability that high-value, temperature-sensitive products could be spoiled in transit. There are standard protocols in place at most logistics companies that go a long way to ensure that all packages reach the correct destination at the correct time. For an additional layer of protection, the service provided by a top-tier player like UPS offers enhanced tracking and a customer-specific recovery plan. Customers can dictate how they want a problem solved ahead of time which helps ensure a faster resolution should that problem arise, says Clapper. If something goes awry, the logistics provider immediately knows which actions to take. The ability to cost-effectively deliver temperature- or time-sensitive medicines precisely where and when the clinic, retailer, or patient requires them can be a strategic advantage for the manufacturer and distributor. Greater accuracy can help reduce spoilage which can help lower total unit costs. Cost of spoilage higher than you think Customers reveal the true cost of spoiled product to be up to 40 percent higher than supply chain executives think, says Clapper. The costs associated with spoiled product returns may include: Cold Fact: Improved visibility can help to control costs Globally, 60 percent of healthcare logistics executives say that better visibility presents the best opportunity for driving costs out of the supply chain. Packaging and shipping Labor for moving the package and managing shipment information Acquisition and storage of additional inventory required for re-ships Disposal fees for spoiled product Cost of documenting spoilages to meet regulatory requirements Staff time spent handling returned products Cost of expediting replacement products Source: UPS Pain in the Chain survey, 2015 These are all good reasons to select monitoring and intervention services to reduce the chances of spoiled product and help lower the overall cost of shipping, says Clapper 19

20 How UPS Can Help UPS Proactive Response offers superior protection If you need help to lower spoilage rates, cut the rate of re-ships, and improve customer satisfaction, consider this monitoring and intervention solution from the world s largest package delivery company. UPS Proactive Response monitoring services proactively track your highvalue packages all the way to delivery. Our proprietary technology alerts operators if your package comes under threat of being delayed. This means that you can leverage the benefits of a broad global transportation network with the customization of a personalized recovery plan, which can improve the customer experience. Powerful, optimized intervention capabilities If your package is in danger of being delayed, we will quickly assess the situation and draw on our capability to provide global, urgent transportation services to implement a delivery solution that meets your time and cost requirements. This includes air, courier, charter, and international services. Service options With UPS Proactive Response, you will only pay for an expediting service in the event that your package is actually at risk of delay. You can even offset this cost by selecting UPS Proactive Response Secure, which includes insurance coverage for the cost of expediting.

21 Chapter 4: Packaging that Protects Product and Profit

22 Keeping Your Critical Shipments Safe on the Move Optimizing packaging can help reduce spoilage of temperature-sensitive products in transit. Here s how accurate ambient profiles can help enable better packaging design. Meet the Expert: Susan Li Susan Li is senior cold chain packaging strategist for UPS Temperature True Packaging in UPS s Healthcare Strategy group in Atlanta, Georgia. She specializes in temperature-sensitive packaging logistics and is a member of ISTA Thermal Council. Her role includes providing cold chain package consulting services to healthcare customers. Susan has an undergraduate degree in Biochemical Engineering from East China University of Chemical Technology, a Master of Arts degree in Biological Science from Smith College, and an M.B.A. from Kellogg School of Management, Northwestern University. 22

23 Chapter 4 Susan Li: Packaging that Protects Product and Profit A range of useful environmental data exists that engineers can utilize when designing packaging for temperature-sensitive shipments. Tertiary packaging helps to better protect the safety and efficacy of temperature-sensitive drugs. So it s no surprise that specialized tertiary packaging and instrumentation accounted for $2.8 billion or one-third of the $8.4 billion spent worldwide on cold chain logistics in However, 37 percent of healthcare logistics executives surveyed for UPS s Pain in the Chain survey 2 indicated that they were not successful when it came to the challenge of product damage and spoilage. Seeking a superior solution A range of useful environmental data exists that engineers can utilize when designing packaging for temperature-sensitive shipments, says Susan Li, senior cold chain packaging strategist of UPS Temperature True Packaging. Looking at current weather forecasts or 1 pharmaceuticalcommerce.com 2 Eighth annual UPS Pain in the Chain Survey. 23

24 Chapter 4 Susan Li: Packaging that Protects Product and Profit historical climatological information is essential, but those provide only part of the story. At any given point in time, there can be different conditions in a package processing facility, trailer, tarmac, cross-dock, and aircraft. The solution? Measure the actual temperatures of packages throughout the shipping journey. Gathering real world data UPS conducted a study of ambient environmental conditions encountered in our shipping lanes in 2012 and Gathering real-world information using temperature-recording devices shipped via regular UPS services, we created an extensive dataset for the small-package environment. With 12 origins, over 200 destinations, and two service levels in the U.S. alone, the study s size approached 1.5 million package-miles and generated over 270,000 data points. UPS continues to survey our network to improve the efficiency of the model, says Li. Since 2013, we have included more service levels and international lanes to improve the efficiency of the model, she says. Most importantly, the output from the UPS U.S. Small Package Environmental Analysis has now become a critical part of optimized package design for many customers. From data to design and delivery Customers can choose from a range of UPS Temperature True Packaging solutions that can be qualified for individual products and shipping lanes. For manufacturers who ship cold chain products, this can help lower spoilage rates and re-ships. Moreover, the ultimate goal making sure the products arrive safely for the patient is also enhanced by the greater degree of protection. says Li. Temperature Check How can I control supply chain costs? Logistics partnerships create opportunities for efficiencies. More than two-thirds of healthcare logistics executives who say they have been successful in controlling supply chain costs say logistics and distribution partnerships are responsible for their success. Source: UPS Pain in the Chain survey,

25 Chapter 4 Susan Li: Packaging that Protects Product and Profit The continuing discussion around reusable packaging Reusable packaging has been a hotly debated subject for many years now. Though the last mile is typically a one-way system in cold chain we started to see some manufacturers experimenting with high-performance sustainable or reusable packaging for their most valuable products. The packaging is engineered with high-performance vacuum insulated panels and advanced phase change materials to help shippers achieve higher payload and operation efficiency, and minimize package footprint. Not only is it expensive to create, but also there is also a cost to return reusable packaging to the manufacturer after each shipment. Therefore, it s critical to develop a costefficient framework for return logistics something that a skilled third-party logistics provider can assist with. Is packaging taken seriously enough? In 2015, Pharmaceutical & Medical Packaging News, on behalf of UPS, surveyed members of its Supply Chain Expert Community to better understand cold chain packaging practices. It revealed some interesting findings: Fewer than one in five companies has a complete, scientifically customized packaging line. 28 percent of respondents admitted they were not confident in their packaging s efficiency. 22 percent said that they have never had their cold chain packaging reviewed by an expert, and 45 percent reported they had no plans to have their packaging audited. Many packaging professionals recommend that packaging should be reevaluated at least every two years. In addition, a program of continuous monitoring of your packages may help you with your regulatory compliance. Based on these stats, a significant percentage of healthcare shippers may be transporting cold chain products in packaging that is over or under-engineered, increasing their costs or worse, putting their products at risk. Read the survey here. 25

26 Focus on Innovation: A Unique Tool to Help Mitigate Risk for Cold Chain Shipments Sometimes, white-glove treatment for the highest-value controlled room temperature (CRT) shipments is necessary. This tool helps decide when. In temperature-sensitive shipping, the highest-value shipments need the greatest degree of protection. But exactly how much protection is necessary? Meet Dimitri Zacharenko, a UPS solutions manager of global freight forwarding, who created the UPS Thermal Snapshot Tool. This tool analyzes historical and projected weather forecasts to choose shipping services, and can even help decide when less is more protection. Dimitri initially developed the tool out of a personal interest to compare historical climatological information against day-to-day, real-time variants and found it could help save UPS customers money. A climate of curiosity I had always been interested in the question of how much protection was enough, and how much was too much, Zacharenko explains. So I obtained climatological data covering high and low averages over 30 years. He discovered that this data was stable over time, but could be upended by a cold snap or a heat wave. As the environment changes, so does the need for product protection, he noted. What if a higher service level sometimes wasn t necessary? Data brings predictability Then he had a light-bulb moment: incorporating a four-day weather forecast into his database revealed that actual journeys might take place within significantly different conditions than the historical data suggested. Could our customers reduce risk for their products at a lower cost, only as needed, by adapting to current conditions and add protection only when needed? Zacharenko teamed up with UPS s meteorology group and connected the tool to real-time conditions data and global forecasts. The system could then better predict when product protection afforded by a higher- or lower- service level was needed. Soon, customers were asking Zacharenko s team to choose between pharma level and general cargo services on their behalf. Bigger savings, lower risk According to Zacharenko, The tool helps create a transportation plan that is accurate and can help reduce product risk and potentially costs. The tool helps protect temperature-sensitive cargos in the 2-25⁰C range, since products with broader ranges are more tolerant of temperature fluctuations. Overall, we are helping our customers protect their products over the longer period when they permit us to make the best, most efficient bookings using the tool instead of their standard, predetermined bookings, says Zacharenko. Currently, we use this internal tool to help mitigate product risk for our biggest customers who are content to let us choose their shipping services, says Zacharenko. It provides protection when customers need it, as customers need it. Product protection remains key, at any cost. Meet the Expert: Dimitri Zacharenko Dimitri Zacharenko is a manager of temperature-sensitive healthcare solutions within UPS Global Freight Forwarding district in New Orleans, La. He is involved in the creation and establishment of cold chain healthcare transportation solutions. Previously, he held global program manager positions at UPS Supply Chain Solutions and elsewhere. Dimitri holds a Bachelor of Arts in Political Science from San Jose State University. 26

27 How UPS Can Help Packaging that protects UPS offers a complete range of packaging consulting services, as well as access to the testing capabilities of the UPS Packaging Laboratory near Chicago, Ill. Our thermal management service offers customized packaging that is world-class, cost-effective, and provides peace of mind for your temperature-sensitive shipments, including: Single-use and reusable packaging Solutions for small package, pallet, and cargo Regional, continental, and worldwide transport Identifying suppliers that provide effective packaging solutions on negotiated terms UPS wants you to have peace of mind when it comes to your temperature-sensitive packaging needs. Your bottom line is more than packages, it s helping your products reach the patients that need them the most.

28 Chapter 5: Planning for Contingencies

29 Managing Risk and the Need for Contingency Planning Contingency planning means having consistent, well thought-through plans and a backup for each movement of your temperaturesensitive shipment. Meet the Expert: Tim Fosnough Tim Fosnough is Global Director of UPS Freight Forwarding Healthcare, based in Atlanta, Ga. He has more than 30 years of progressive experience directing operating business units in the freight forwarding industry. His expertise in freight forwarding for the healthcare industry includes both temperature-sensitive and general cargo shipping. Since 2013, Tim has been responsible for the healthcare freight forwarding within the UPS Supply Chain Solutions business unit. In that role, he develops the UPS product portfolio for global growth, manages global service performance, and provides expertise in contingency planning. Tim holds a Bachelor of Science from Ball State University. 29

30 Chapter 5 Tim Fosnough: Planning for Contingencies We are ready to step in with a prearranged contingency plan available anytime a customer s product is at risk. As complexity increases, many manufacturers are bringing external expertise to the table and shifting day-to-day risk assessment and contingency planning to their third party logistics providers (3PLs). Trends: Increasing collaboration to help to reduce costs As more products are unprotected by patents and generics become more common, decision-makers are looking much more closely at their transportation costs to save money. To this end, UPS has seen an increase in demand in the last 12 months for more detailed risk assessment and contingency planning in freight shipments. At the same time, customers are requiring more detail and documentation for their own compliance purposes. 30

31 Chapter 5 Tim Fosnough: Planning for Contingencies Drivers: Turning to logistics providers for contingency planning Many manufacturers previously performed contingency planning internally, so they could track the condition of their product throughout the journey. According to Tim Fosnough, director, UPS Global Freight Forwarding, some companies are downsizing internal teams on the manufacturing side as manufacturers attempt to lower production and distribution costs has led to 3PLs increasingly doing this planning often when onboarding new clients. We are ready to step in with a pre-arranged contingency plan available anytime a customer s product is at risk, says Fosnough. However, a cold chain provider with its own network and also a virtual network of other carriers can provide want to break down the time, from end to end, to show where their product is expected to be at any given moment. They want to know which carriers and routings can be used, says Fosnough. They also need to be able to recover their product if it becomes distressed. Businesses have invested a tremendous amount of time and money into their products. If something puts their product at risk, they need to be confident that their 3PL can step in with a prearranged contingency plan, says Fosnough. For example, to help ensure product requirements regardless of which airline moves shipments, UPS healthcare QA specialists carry out vendor inspections, audits, and qualifications of the airlines own pharma programs, so we know the partner airlines we are working with are truly the best. Consequently, we have close relationships with our airline vendors that can help in the event something goes wrong. For example, there s a much greater chance of us being able to get into the hold of a stranded aircraft and get our customer's product out to protect it before pack-out expiration, says Fosnough. customers with more options. Expertise: Developing a solid contingency plan for cold chain The key is identifying the known risks ahead of time and using the expertise of the 3PL to do the detailed, tactical planning. This allows manufacturers to see their supply chain at the lane and product levels, and to refine it down to elements such as lane selection, carriers utilized, and other important factors, according to Fosnough. Nobody understands the nature of transportation risks as well as transportation providers themselves, says Fosnough. A competent 3PL will already have mapped out its network, carried out ambient temperature studies throughout it, and created contingency plans for other customers. Visibility: Having confidence in the contingency plan The most important criteria of contingency planning are visibility and contingency actions. Supply chain managers What are customers who use UPS for freight forwarding surprised to discover? Customers who know that UPS has an airline are surprised to find out that less than 10 percent of freight forwarding travels on our own airplanes. Some are also surprised to discover that, of the hundreds of airlines available to us, we only utilize about 30 key global airlines. We work hard to maintain good working relationships with our airline vendors so that when problems arise we are working cooperatively to resolve them. For example, when delays mean we need to get a customer's product off an airplane quickly, our airline vendors understand the urgency and the need to work quickly as a team. 31

32 How UPS Can Help Temperature-sensitive solutions We offer different levels of protection to match each product s requirements. UPS Temperature True Plus is our white-glove, pharma-level service for the highest value cargos. It features higher levels of monitoring and our highest levels of intervention and remediation. UPS Temperature True Plus also offers QA consultation services and a Solutions Verification Tool to help meet product requirements in transit. In addition, it contains a checklist to make sure we agree on specific steps for the move before we take control of the cargo. We then actively monitor and audit each checkpoint in order to protect the product in transit. UPS Temperature True Standard, our general cargo solution, is designed around the shipper s requirements for speed and monitoring to help faciliate delivery before pack-out expiry. As a further measure to help protect product, UPS Temperature True Standard includes the capability to intervene as necessary to expedite delivery. For example, if a shipment is on the tarmac at London Heathrow and its pack-out expiry is approaching, we will alert the customer and determine what action to take.

33 Chapter 6: 3PL Quality Assurance, From Beginning to End

34 Implementing Quality Systems that Save Money When Quality Assurance (QA) teams from the manufacturer and the logistics provider collaborate, the resulting QA systems can help lower supply chain costs and help reduce the incidence of damage and spoilage. Meet the Expert: Tom Heavrin Tom Heavrin serves as quality assurance and regulatory affairs manager for the UPS Supply Chain Solutions Healthcare Compliance Group in Louisville, Ky. He has more than 25 years of management experience, including 14 years with UPS in everything from small package operations to client account implementations. He holds a Master s Degree in Applied Information Technology (MS AIT) from Bellarmine University. 34

35 Chapter 6 Tom Heavrin: Quality Assurance, From Beginning to End A good transportation provider can help determine where risk exists in transit and how best to minimize it. By working hand-in-hand, shippers and transportation providers can create and implement quality systems to help products remain in good condition during transit. The transportation provider s role in QA While the shipper is ultimately responsible for the product quality, the transportation provider should partner with the shipper to help identify and mitigate risk. Guidelines such as the EU Good Distribution Practices of Medicinal Products for Human Use (2013/C 343/01) (GDP) suggest the shipper adopt a risk-based approach. A good transportation provider can help determine where risk exists in transit and how best to minimize it, says Tom Heavrin, a healthcare-dedicated QA manager with UPS. 35

36 Chapter 6 Tom Heavrin: Quality Assurance, From Beginning to End How does the Quality Agreement work? The Quality Agreement between the shipper and the 3PL governs their respective obligations. It clearly outlines what the shipper is obliged to do, and what the 3PL is obliged to do. This agreement helps the client s QA team understand the limitations of transportation and relevant service offerings. It also helps the 3PL s QA team understand the shipper s product requirements. Most importantly, it helps define what both parties can do together to help protect the products, says Heavrin. Thinking about QA from the outset establishing an independent QA group, the 3PL can help ensure that the services it provides its customers are compliant, explains Heavrin. What do supply chain managers need to know? Supply chain managers need to be aware of the conditions their products could be exposed to in transit. For example, the number of touches, the physical environment, the stops and starts, and the loads and unloads. That way they can build better practices to best protect their products in transit. They also need to find out which service providers have the expertise It is wise to talk about QA from the outset of a client engagement or in discussions with prospects. Efficiency is what UPS has built its reputation on, but from a quality perspective, keeping products in peak condition is also important. According to Heavrin, collaboration is key not only to ensure the obvious requirements can be met, such as documented training and standard operating procedures, but also to upgrade requirements at the request of the client for specific products. In fact, by Temperature Check Are all logistics providers the same? Higher-quality carriers may reduce product damage. 74 percent of healthcare logistics executives who say they have been successful in managing product damage and spoilage say partnering with higher-quality carriers was responsible for their success. Source: UPS Pain in the Chain survey,

37 Chapter 6 Tom Heavrin: Quality Assurance, From Beginning to End and cold chain solutions they need. The truth is, not all transportation providers are equal, says Heavrin. The list of recommended questions on the right will help supply chain managers find the best providers. What the client QA team can learn from the transportation QA team Client quality teams tend to be focused on product manufacturing, and they usually display a very strong sense of compliance with procedures. Often, 3PLs have to help them understand that there are different variables in transportation compared to a manufacturing environment. In the relatively stable manufacturing and storage environments, conditions can be readily controlled, audited and validated. However, transportation decisions must take into account factors such as product type or sensitivity, product value, product stability, shipping lane or route, mode of transport, time in transit, weather seasons (at origin, any transit points and destination), packaging, transportation cost, and other variables. To optimize risk mitigation solutions, your risk-based approach includes working with a transportation partner that can help paint an accurate picture of the transit cycle and the environmental conditions that may characterize it. Characteristics of the most successful shippers The best companies have a deep commitment to serving the healthcare industry. They typically have a culture of accountability, take their own work and their vendors work very seriously, and consistently strive to improve their quality assurance. From a servicelevel perspective, many of these shippers are selecting backup systems such as monitoring and intervention, in addition to choosing the right transportation provider in the first place, says Heavrin. When you are considering 3PL providers, ask potential vendors these questions: What is your expertise in healthcare? Do you have a Quality Assurance group, and how do you impose your QA standards on the wider organization? How do you manage quality when you subcontract to vendors? Having a 3PL provide expertise on transportation and make recommendations on the right approach, as well as identify what might not be in your best interests, can result in a huge benefit for client QA teams, according to Heavrin. 5 What contingencies are built into your system to make it seamless for me? When there is a non-conformance incident (whether a spoiled product or deviation from plan), do you have a structured method to investigate what happened and then reevaluate your systems for continuous improvement? 37

38 How UPS Can Help Healthcare expertise and experience When you engage UPS, you are choosing a 3PL with healthcare-dedicated experts who have unparalleled knowledge of the UPS network and a complete range of cold chain solutions from cryogenic to CRT. Quality Assurance (QA) UPS s QA group comprises more than 250 experts globally whose focus is ensuring your products are compliant while in UPS's control. Nobody understands our shipping environment better, so nobody is better placed to keep your products safe while in our hands. Managing our transportation vendors Our QA team is constantly assessing the performance of the approximately 30 airline vendors who may transport your products. At UPS, QA is an ongoing process, not a one-off exercise. Contingency planning that s seamless We remediate deviations from planned cargo movements seamlessly, in accordance with the QA plan. You may not even know that we ve solved a potential problem unless you choose to be notified. Nonconformance investigations We track and report all deviations from the Quality Agreement, and carry out investigations that reveal root causes. We also take action to prevent recurrence.

39 Chapter 7: The Last Mile

40 Finding Efficiencies in the Chain s Final Link The greatest care to protect cold chain products is taken in manufacturing and storage. That care needs to be extended to the final leg of the product journey. About the Author: Susan Li Susan Li is senior cold chain packaging strategist for UPS Temperature True Packaging in UPS s Healthcare Strategy group in Atlanta, Georgia. She specializes in temperature-sensitive packaging logistics and is a member of ISTA Thermal Council. Her role includes providing cold chain package consulting services to healthcare customers. Susan has an undergraduate degree in Biochemical Engineering from East China University of Chemical Technology, a Master of Arts degree in Biological Science from Smith College, and an M.B.A. from Kellogg School of Management, Northwestern University. 40

41 Chapter 7 Susan Li: The Last Mile Temperature excursions during last-mile distribution may be under-reported because of the general lack of temperature monitoring during the final transportation stage. There is good reason to believe that cold-chain shipments are at particular risk during the lastmile of transportation. In fact, temperature excursions during last-mile distribution may be underreported because of the general lack of temperature monitoring during the final transportation stage, says Susan Li, senior cold chain packaging strategist of UPS Temperature True Packaging. The challenge of the last mile The last mile is challenging for a number of reasons. Larger shipments of product are typically moved between a few origins and destinations, and are protected by expensive packaging equipment or extensive qualification processes. Last-mile distribution, however, typically involves smaller quantities of product moving to a very large number of final destinations with less sophisticated protection. 41

42 Chapter 7 Susan Li: The Last Mile In a paradox, the more complex the shipping environment, the less QA and packaging means are deployed to master that complexity. Therefore, while manufacturers go to great efforts to ensure the quality of their product in manufacturing, the product is likely most at risk in its final stage of transportation, says Li. Optimizing packaging and transportation for many lanes with diverse weather patterns and variability has led to the increased use of universal pack-outs. These can help to reduce operational complexity, improve efficiency and reduce costs. A third-party logistics provider (3PL) can help you analyze these options. Other complexities also exist. Among them, lastmile shipments travel through a far wider range of environments than front-end bulk shipments. There may be few resources available to conduct ambient temperature environment studies across many lanes and design many optimized pack-out solutions. Similarly, budgets may not permit in-transit temperaturemonitoring solutions to be utilized. Some companies are now performing routine performance qualification by testing packaging solutions in real shipping lanes at regular intervals. This helps to ensure that the protection intended for a product works in real time and in real life. The use of a monitoring and intervention service can help identify packages at risk of delay, and protect or expedite them to preserve their contents. To protect their organizations and meet rising industry expectations, companies will have to consider the importance of downstream quality. Companies which empower shipping managers with larger budgets may see financial returns from better quality assurance at the back end of the supply chain. However, the major pharmaceutical companies may be less focused on lastmile challenges and solutions since these are generally outsourced to distributors, Li adds. Trends in the last mile More customers are employing greater speed to market. Reduced time in transit by using air service or an optimized distribution network means less opportunity for spoilage to occur, says Li. There is greater demand for network analyses to determine the optimum shipping strategy. For example, where businesses have just one distribution center, they must use a product like UPS Next Day Air service to cover more or less the entire country. With a second distribution center in a different part of the country you can use more transportation options to reach destinations with the same time in transit. This can help lower shipping costs, says Li. Finally, companies want to monitor the temperature inside the package so they can confirm that the product has not been subject to a temperature excursion. Simple, color-changing indicators are a minimal expense. They provide peace of mind to the customer that the product has maintained its required temperature during transportation. This, together with a rise in the use of sustainable packaging solutions, is not only helping ensure end recipients feel confident in their healthcare products, but can also feel good about the packaging used to safely deliver them. Healthcare and home delivery Manufacturers need to ensure that their product is protected until a patient can retrieve it even if it s left on the front porch in summer. Choosing the appropriate packaging will help the shipper ensure their products are safe for patients. Customers may also want to decrease the time that healthcare packages are on the delivery vehicle, says Li. Temperature indicators on the product or packaging can help reveal whether the product remains in good condition. 42

43 How UPS Can Help Finding efficiencies at the end of the chain UPS can provide you with the expertise to carry out a network analysis that can reveal opportunities to create efficiencies, as well as help to identify weak spots and areas where you might be overprotecting your shipments. We can also help you analyze the efficiency of your current packaging practices and find ways for you to better protect your products, possibly at less cost, by optimizing the shipping speed/ package size and weight ratio.

44 Appendix: Directory of Cold Chain Solutions 44

45 Appendix A Directory of Cold Chain Solutions UPS Products and Services A Directory of Cold Chain Solutions It all comes down to performance: Your products are developed for specific outcomes. If your products aren t properly transported and stored, everyone loses your spoilage rates can go up, your brand can lose prestige, and patients don't get the products they need. That s why we have cold chain technologies that help protect your products, regardless of the conditions outside. We can monitor your shipments across your supply chain to help reduce the risk of spoilage during transit. UPS Temperature True Plus UPS Temperature True Plus provides pharma-level, direct air freight routing on qualified pharma carriers for both active and passive shipments. It is ideal for high-value products requiring the strictest of temperature ranges in transit and includes built-in redundancy and contingency planning, as well as proactive monitoring and intervention services to help provide absolute peace of mind. UPS Temperature True Standard UPS Temperature True Standard offers priority-level direct air freight service on around 30 preferred carriers for passively packaged products, with proactive monitoring and intervention to help expedite delivery and avoid pack-out expiration. UPS Temperature True Saver UPS Temperature True Saver moves shipments cost-effectively between continents via FCL ocean freight service with select carriers, using active refrigerated containers, and shipment monitoring and intervention services. It is ideal for carrying high-volume generics, over-the-counter, and lower-risk pharmaceuticals. 45

46 Appendix A Directory of Cold Chain Solutions UPS Temperature True Dangerous Goods UPS Temperature True Dangerous Goods is available for temperature-sensitive healthcare air freight shipments that are classified as dangerous goods or hazardous materials and move under IATA and ICAO regulations. Due to their temperature control requirements, they receive proactive milestone monitoring from UPS global control towers, with escalation and shipment rescue if needed, according to predetermined contingency plans. UPS Temperature True Additional Services Expert guidance through customs clearance High-value/high-risk product security procedures Thermal packaging consulting services Pickup and delivery in temperature-controlled vehicles Prearranged temporary storage in temperature-controlled environment Reliable access to a global network of top-tier carriers Expanded portfolio of thermal containers and covers from most cold chain vendors UPS Temperature True Packaging UPS Temperature True Packaging provides prequalified packaging systems for your temperature-sensitive products at a competitive cost. We offer packaging options to protect products with a range of time and temperature requirements. From the Med 100, a lightweight alternative ideal for shipping single-dose and smaller-size medicines, to the Med 400, a robust system offering frozen, refrigerated, and CRT temperature options to protect products for extended time in transit, UPS Temperature True Packaging has a solution for virtually every need. 46

47 Appendix A Directory of Cold Chain Solutions UPS Temperature True Cryo UPS Temperature True Cryo, powered by Cryoport, Inc., provides a comprehensive cryogenic shipping solution, from ordering and documentation to packaging and transportation all backed by UPS s reliable transportation network. Monitoring 24/7 throughout the journey is provided by UPS s network of control towers, and the service also includes cloud data storage for later retrieval if necessary. UPS Proactive Response UPS Proactive Response offers a sophisticated monitoring engine and dedicated logistics experts who continuously observe your critical shipments and take action when needed. If a potential risk is identified, or if your shipment can t be delivered as scheduled, we initiate service recovery procedures based on your predefined instructions. The service can: Intercept packages that are at risk of missing their scheduled delivery time Refrigerate or replenish dry ice for temperature-sensitive shipments Attempt a same-day redelivery if the first attempt is unsuccessful Deliver on Saturday Upgrade delayed critical shipments with next-flight-out or same-day delivery Re-route your shipment to an alternate address, including back to shipper Hold a shipment for pickup by the receiver UPS Proactive Response Secure UPS Proactive Response Secure combines the proactive monitoring, package intervention, and remediation of UPS Proactive Response with insurance from UPS Capital Insurance Agency. In the unlikely event your shipments are spoiled or delayed, an easy claims process that allows for reimbursement up to the sale price of the goods. Protection comes with convenient bundled, flat-rate pricing. So if your shipment needs an expensive final move to make its deadline, it won t come out of your transportation budget. 47

48 Need cold chain expertise from people like these? We can help. When you need expertise in healthcare logistics, UPS can offer you a complete set of specialized services. From supply chain analysis to packaging design, our dedicated healthcare experts will help to optimize your logistics operation. Our 250 quality assurance experts can help ensure your products meet your requirements during transportation. If you re thinking of growing globally, we have a network of more than 60 healthcare facilities around the world. Plus, our wide portfolio of healthcare transportation solutions from cryogenic to controlled room temperature means we can help you safely transport your entire product line. LEARN MORE 48