S.D.I. English edition Newsletter : What are the peculiarities of logistics in the pharmaceutical world

Logistics in the pharmaceutical sector presents unique challenges and requirements compared to other sectors, due to the critical nature of the products handled and the strict regulations governing their distribution. The entire pharma world has its own particularities and peculiarities, the technological world that supports it, revolves around it, and the logistics world is no exception, which must follow the demands of the business to adapt to the demands of the market.

Given the type of product handled, pharma logistics often follows the concept of multimodal logistics, i.e. logistics integrating land, sea and air transport. This type of shipment system is based on the co-ordinated use of several modes of transport to move goods from one point to another, exploiting the specific advantages of each mode to optimise efficiency, costs and transport time, while minimising the environmental impact of moving the product

Pharmaceutical sector, as it should be, is heavily regulated, with specific requirements for the production, storage, transport and distribution of drugs. Companies must adhere to regulations such as Good Manufacturing Practices (GMP), Good Distribution Practices (GDP) and other local and international laws to ensure product safety and efficacy. It implies product storage that follows regulatory compliance during the journey, ensuring it is stored correctly, safely and genuinely.

Think for example of cold chain management, many pharmaceutical products, such as vaccines and some biologicals, require controlled temperature conditions throughout the supply chain. This implies the use of special packaging, real-time monitoring of temperatures and dedicated logistics infrastructure to maintain product integrity.

Not least, ensuring product safety and integrity, preventing product contamination, adulteration or damage is critical, requiring safe packaging, proper handling procedures and traceability systems to track products through the supply chain.

Product traceability concept

Product traceability is a fundamental concept in supply chain management, allowing products to be monitored throughout their life cycle, from origin to end consumer. This is particularly important in the pharmaceutical sector, where companies need to be able to trace each product batch to ensure patient safety and facilitate recalls if necessary.

It plays an important part in pharmaceutical logistics for a number of reasons; it ensures product safety and quality; it allows any quality or safety problems to be quickly identified and timely intervention to prevent consumer harm.

It facilitates the tracking of any problems with a product, enables the rapid identification of affected batches and the effective and easy management of recalls; an essential functionality when it comes to pharmaceutical medicines.

Improves supply chain efficiency by monitoring product flows along the supply chain, identifying inefficiencies and opportunities for improvement.

Increases transparency for consumers, allowing them to know the origin and history of the products they purchase, increasing trust in companies and their products

Using blockchain functionality in pharmaceutical logistics

The Colombo’s egg for ultimate traceability? It could be, blockchain technology can be used in pharmaceutical logistics to improve the traceability, transparency and security of products along the supply chain.

Blockchain functionality can be used to create an immutable record of transactions along the supply chain, allowing companies to track products from origin to end consumer. This is also to prevent counterfeiting of quantities, quality, block resale in case of theft in parallel markets; and to facilitate product recalls, if necessary.

Monitoring the cold chain through the chain management in the blockchain to ensure that the temperature conditions of sensitive products along the supply chain are met during multimodal logistics in the product journey, ensuring that products are stored in optimal conditions.

Demonstrate the necessary regulatory compliance for manufacturing companies by providing verifiable proof of their practices along the supply chain and ensure a genuine product in the market, providing quality at the end of the sales journey.

Increase the transparency of the product journey by allowing all parties involved to access information on product transactions and conditions. Again, useful to increase consumer confidence and allow the consumer to independently verify each step in the supply, handling and delivery of the product in an unambiguous and unchangeable manner. These options can also be useful in the event of need or legal disputes.

This established yet fledgling technology requires collaboration with specialised logistics partners who understand the complexities of the industry and can offer tailor-made solutions to meet specific needs.

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FEFO Principles of Logistics

The FEFO concept, which stands for 'First Expired, First Out', is an inventory management principle used in logistics to ensure that products with the earliest expiry date are shipped or used sooner than those with the latest expiry date. This approach is particularly relevant in sectors where products have a limited useful life, such as food, pharmaceuticals, chemicals and other perishable goods. The main objective of FEFO is to minimise product waste and ensure that customers receive high-quality goods within their shelf life.

In what types of warehouses is it used? FEFO is particularly beneficial in regulated sectors, such as pharmaceuticals and food, where compliance with product safety regulations is crucial.

Clearly in food warehouses for both fresh and packaged products, FEFO helps to ensure that food sold is always within its shelf life and can retain its organoleptic qualities.

In pharmaceutical warehouses, where drugs have expiry dates within which they must be used to ensure their effectiveness while minimising health risks.

But also in warehouses of industrial or household chemicals, which can degrade or become less effective after expiry.

FEFO logic is present and used for cosmetics and personal care products. These products moreover have expiry dates and require careful handling to ensure that consumers receive safe and effective products within their shelf life, while maintaining high standards of safety and quality.

In all warehouses that handle fresh goods, in addition to food, there are other types of perishable products, such as flowers or certain biological materials, that require careful management of their shelf life.

Implementing the FEFO principle requires advanced warehouse management systems that can accurately track the expiry dates of each product in stock and facilitate efficient product rotation. Technology comes to our aid with the use of technologies such as barcodes, RFID (Radio-Frequency Identification) and inventory management software.

?This approach is key to reducing waste, improving operational efficiency and ensuring customer safety and satisfaction. By implementing FEFO, companies can significantly reduce waste due to out-of-date products, improving operational efficiency and contributing to environmental sustainability.

Another very important indicator in the case of Fefo logic is accurate planning and forecasting to balance the purchase and production of goods with the expiry dates of products already in stock, thus minimising the risk of surplus expiry products.

FEFO is a fundamental logistics principle for the efficient management of perishable products, which helps companies optimise inventory management, improve customer service quality and reduce waste, but requires sophisticated inventory management systems and careful planning to be successfully implemented.

Internal and external logistics

Logistics, a crucial element of the supply chain, is divided into two main categories: internal and external. This distinction is based on operations that take place within the company versus those involving external parties. Understanding the difference between internal and external logistics is key to optimising both processes and improving the overall efficiency of the supply chain.

Internal Logistics

Internal logistics refers to the management of material handling and storage operations within the company. This includes all handling activities of raw materials, semi-finished and finished products within the production site, up to the dispatch of the finished product to the warehouse or shipping area.

The key elements of internal logistics are manifold, ranging from inventory management to space management; maintaining optimum stock levels is aimed at ensuring continuous production without excessive warehousing costs, through the efficient use of equipment and processes to transport materials within the plant we optimise both handling and storage space and storage techniques facilitate access and handling of materials, while reducing space requirements to a minimum by working closely with production planning and production activities to maximise efficiency and minimise waiting times.

External Logistics

External logistics deals with the movement of products from the company to the end customer, including intermediate processes such as transport, distribution and customer service. This category covers all activities required to physically transfer goods from the point of production to the consumer, as well as the management of related information and financial flows.

Crucial elements of external logistics include transport management, selecting the most efficient and cost-effective transport methods to move products from the factory to customers, distribution management to ensure the operation of distribution centres, and distribution channel management. This includes working with third-party logistics service providers (3PLs) to optimise transport and distribution operations.

Not least, it manages customer service, order processing, and the monitoring of deliveries, returns, and complaints to ensure customer satisfaction including

Integration of Internal and External Logistics

To achieve maximum efficiency, it is crucial to closely integrate internal and external logistics. This ensures that operations within the company are aligned with those outside, resulting in a cohesive, high-performance supply chain. Integration enables better planning, reduces delivery times, optimises transport costs and improves customer service. Technologies such as ERP (Enterprise Resource Planning) and TMS (Transportation Management System) systems play a key role in enabling this integration, providing real-time visibility and facilitating communication between all parties involved in the supply chain.

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What are the peculiarities of logistics in pharmaceutical retail

Logistics in the retail sector is becoming more and more important, ever tighter delivery time requirements, new pharmaceutical portals distributing to the end consumer, and increasingly limited point-of-sale warehouse space all imply an improvement in retail logistics, which has unique peculiarities due to the wide range of products handled, the variety of sales channels, high consumer expectations regarding speed of delivery, and the need to effectively manage inventory to maximise sales while avoiding excess inventory.

Retail logistics must support multi-channel management, different sales methods, including physical shops, e-commerce, mobile commerce and selling through social media. This requires an integrated approach to inventory management and distribution to ensure consistency and efficiency across all channels.

With the rise of e-commerce, consumers expect fast delivery, often within the next day or even the same day. This requires retailers to optimise their logistics networks and fulfilment processes to reduce delivery times. Timely delivery is critical, especially for life-saving drugs or treatment of acute conditions. Supply chains must therefore be highly reliable and flexible.

Maintaining the right level of inventory is crucial in retail to avoid stockouts (which can lead to lost sales) and at the same time limit overstocking (which can tie up capital unnecessarily and generate storage costs), logistics must therefore be highly responsive and based on accurate demand forecasts.

Nevertheless, flexibility is a new parameter in logistics; logistics operations must be flexible to adapt to seasonal peaks in demand, such as during holidays, and scalable to support business growth and expansion into new markets. This also means combining customisation and value-added services for the end customer; retailers are increasingly offering customisation options and other customisable services (such as anonymous packaging) that require flexible logistics processes and customisation capabilities in fulfilment.

A simple and convenient return policy is essential for e-commerce and requires efficient return logistics to manage the flow of goods from the customer to the distribution centre or directly to the supplier. Returns and recall management processes must be efficient and compliant with regulations, given the potential severity of the effects of defective or contaminated pharma products on the public.

Let's not forget environmental sustainability, pressure from consumers and regulations for more sustainable practices is leading retailers to consider environmental factors in their logistics, such as reducing CO2 emissions, using environmentally friendly packaging, reducing waste, and environmentally friendly handling of pharma products, including their packaging and safe waste disposal. It is increasingly relevant, with regulations requiring sustainable practices throughout the supply chain.

Conclusions

Pharmaceutical logistics requires a high level of specialisation, attention to detail and compliance to ensure that products reach patients safely and on time, while maintaining their quality and effectiveness.It requires a balance between operational efficiency, customer satisfaction and technological innovation to remain competitive in a rapidly changing market.

An help comes from the introduction of advanced technologies such as IoT, artificial intelligence (AI), machine learning, drones, warehouse robots and autonomous vehicles; the use of which is becoming increasingly common to optimise logistics operations in retail, improving efficiency and reducing costs, the use of advanced technologies and data management systems is essential for compliance, operational efficiency and traceability, the increasing introduction of AI solutions will give this sector a new boost thanks to a new and growing technology sector.

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