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How digitalization is changing chemical and pharmaceutical logistics

From the cloud to 3D printing

Even if digitalization is one of the big keywords of today’s economy, the topic is anything but new. Information technology has played a crucial role for a long time, especially in logistics with its complex processes, time-critical deliveries and globally active partner networks.

New in the situation of today, however, is the speed with which technologies are progressing and business models and processes are changing. Current CAMELOT Management Consultants market studies show that many chemical and pharmaceutical companies are insufficiently prepared for this development. Although the significance of digitalization is considered high, there’s a large gap in implementation – and thus the risk of simply missing all the potential found in digitalization.

Focus on digitalization in pharmaceutical logistics

As the studies show, digitalization has currently progressed the furthest in the corporate areas of logistics and supply chain management. In the coming five years, too, these areas will be those most strongly impacted by digitalization.

Digitalization efforts are currently focusing above all on Tracking & Tracing in pharmaceutical logistics. New regulatory requirements for transports (GDP) have increased the need for traceability both of the transports themselves as well as of the temperature controls during the transports. With the help of smart technologies these requirements can be fulfilled better and more comprehensively. Besides Track & Trace, serialization is a topic that is very much occupying pharmaceutical logistics in parallel. However, many pharmaceutical companies are approaching projects for Track & Trace and serialization independently from one another and with differing project organizations. Digitalization offers great potential for interweaving these topic areas more closely and thus for achieving crucial synergy effects with shorter project periods.

More transparency in the supply chains

Track & Trace and serialization are components of the general topic of Supply Chain Visibility, meaning the transparency of global supply chains. Creating or improving supply chain transparency represents the greatest potential of digitalization in the short term. The already existing cloud platforms for logistics and supply chain partners such as GTNexus and Axit are one step in this direction. However, there is still a great need for action here due to the lack of standardization and high costs. Also challenging are compliance issues with regard to the entire process design as well as adherence to international framework conditions.

Many pharmaceutical companies are currently reviewing the option of increasing the transparency of logistics and the supply chain with a central supply chain monitoring organization (“Control Tower”) that includes the cloud platforms mentioned. In the future, digital technologies are to be used to improve the horizontal collaboration and networking of individual companies and entire industry networks even stronger in order to come closer to the goal of 100% supply chain visibility.

The future of pharmaceutical logistics: Added value services for patients

In the long term pharmaceutical companies see the potential in digitalization of being able to offer their customers new services within the context of the supply chains and logistics and thus to increase customer loyalty. Currently, any number of pilot projects and developments can be observed in precisely this area. Possible services range from supporting medicinal devices such as individual dosing aides to a faster and more direct patient interaction to new, convenient ordering and delivery options.

Chemical logistics: Digital focus on transport and yard management

In chemical logistics the short- and medium-term digitalization focal points are very similar to the pharmaceutical industry. When it comes to cloud platforms, however, the chemical industry is clearly more advanced. The platform Elemica, existing already since 2000, was jointly developed by the key players in the industry and today represents a very mature form of an SCM industry platform. Here the challenge is to consider how information from the platform – such as delayed deliveries – can be used for the planning of the entire supply chain from beginning to end.

In the chemical industry, digitalization initiatives are currently geared primarily to transportation. Hazardous goods, large volumes and multi-modal transport channels represent complex challenges for chemical logistics. Digital technologies such as the integration of today’s clearly cheaper and more accessible GPS data as well as new transport management systems with better optimization options make it possible to improve transportation processes and their transparency.

The same applies for yard management: Handling procedures over large plant premises continue to be complex and offer little efficiency. Digital applications such as mobile slot-booking, more precise, cost-efficient position fixes for vehicles and equipment as well as better real-time networking of transport information make it possible to reduce idle time and to design handling procedures more efficiently.

3D printing: Revolution in chemical logistics

3D printing is currently one of the topics that is moving the chemical industry. The option of manufacturing products totally differently means new requirements for materials. This on the other hand offers chemical companies the opportunity to position themselves with new business models and offers. Even if there are still many limiting factors and open issues in 3D printing as an additive production method, such as sufficient material know-how or quality approval for the printed products, it will massively influence the supply chains and logistics of the future: New product portfolios are being created by the manufacturers of printed materials; products are being printed locally in accordance with demand; warehouse inventory can be significantly reduced since 3D printing makes on-demand production possible. Logistics service providers could develop into 3D printing providers. These are just a few scenarios that chemical companies and chemical logistics should keep in mind for the future.

All these examples show how strongly digitalization and new technologies have already influenced pharmaceutical and chemical logistics and will continue to do so. In order to exploit the potential of new technologies in the meaning of new business models and process innovations, chemical and pharmaceutical companies are required to stay on the ball and to regularly review new technologies for their innovation potential.

Original article published in German on chemanager-online.com, October 2016

 

For questions regarding digitalization in logistics, please get in touch with

Andreas Gmür
Partner

For questions and inquiries, please feel free to contact us.

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