Postponement: the solution for biotech packaging
Postponement packaging, or late-stage customisation, is the supply chain practice of keeping a product in a standard format for as long as possible, only making it market specific – or even customer specific – at the moment demand arises.
THIS form of packaging has the potential to allow drug firms to supply products more efficiently and respond effectively to variable market demand. This article outlines how adopting postponement packaging could benefit the pharmaceutical industry, including catering for increasingly complex products, such as biotech drugs.
The postponement principle
The idea behind implementing a postponement strategy is to enable drug manufacturers to react quickly to changes in the market. In keeping products market-agnostic until there is a specific market requirement, companies can lower working capital by reducing their finished goods inventory. They can also avoid the waste produced by repackaging products that have previously been prepared for another market or in compliance with a regulation that has since been updated.
Rather than finalising a product and moving it to its relevant country, the product can be partially prepared and then stored in a centrally located warehouse until such time as it’s required. At this point, it can be tailored accordingly and shipped in days or even hours.
Despite being relatively new to the pharmaceutical industry, postponement is not a new concept; rather an adaptation of various lean manufacturing concepts from other sectors. For example, the automotive industry has been effectively employing a postponement strategy for over a decade – only assembling and shipping vehicles to dealers when an order comes in. This provides an effective means of managing the differences between bulk manufacturing and real-time market demand.
Adoption and suitability
To date, the adoption of postponement across the pharmaceutical supply chain has been limited, mostly because implementing such a strategy requires a change in industry mindset. However, given the potential cost, resource and time savings associated with postponement, there could be significant advantages for companies who choose to operate in this way.
The European market is a particularly good use case for postponement packaging, owing to the vast number of differing requirements. Both language and regulations surrounding artwork design differ from one country to another, particularly following the introduction of serialisation regulations. As a result, should demand for certain medicines arise in one part of Europe, supply that was previously intended for another country may need to be repackaged. Hence, there is a tendency to over supply to each market, which generates a lot of waste.
Postponement allows manufacturers to prepare products for Europe up to a certain point, adding country-specific requirements, such as leaflets in native languages, at a later stage.
Using postponement for biotech products
A postponement strategy can also be particularly useful when packaging small volume or orphan drugs, for which market demand is difficult to predict. With an increased number of large-molecule biotech products entering the drug pipeline, companies are faced with the challenge of ensuring these medicines are readily available without generating excessive amounts of high value product that might never be needed.
In addition, a number of biotech products have high fragility, meaning they require very short packaging cycles to preserve their efficacy. Implementing postponement packaging makes it easier for companies to handle these medicines efficiently as they do not need to be packed until they are required. It also provides companies with a unique opportunity to pack on a patient-by-patient basis.
Implementing postponement: the benefits
Implementing postponement offers manufacturers more flexibility. The ability to respond to market demand can offset common problems associated with order forecasting and demand planning, such as waste, stock shortages and tight timelines. It can also allow them to scale their operations up and down more easily to meet unpredictable demand; for example, in tender markets. Consequently, this allows companies to reduce time to market and fulfilment cycles by several weeks, as they need not wait for additional supply to be sourced or manufactured. This ultimately means that medicines arrive with patients more quickly and also helps drug manufacturers make cost savings and reduce working capital.
The main hurdles that companies will face regarding the implementation of postponement are developing a suitable process and handling market agnostic stock that may not be visually identifiable. There is also the not inconsiderable matter of capital investment associated with purchasing machinery and centralising warehouse operations. Contract packaging organisations (CPOs) can help companies trial the postponement process for their products and then fully implement a strategy, while reducing the need for a large upfront investment.
As is the case with serialisation implementation, information flow is also a potential challenge. Supply chain partners will need comprehensive and regular insight into customer forecasting data to ensure there is sufficient stock in the centralised warehouse. This will require suppliers and customers to work together far more closely.
There are huge supply chain improvements to be enjoyed as a result of implementing a postponement strategy, but it involves completely altering traditional operations. As such, in order for companies to fully realise the benefits, a shift in mindset is required in the industry. While implementation will not be without its hurdles, it’s important to consider not only the potential savings that will result from waste and inventory reduction, but also the huge benefit to the patient: a guarantee to receive the right medicine, on time. Proper expertise and processes are absolutely vital, making CPOs with experience of postponement packaging ideal partners for companies looking to explore this type of strategy.
DEXTER TJOA is the Director Corporate Strategy at Tjoapack. He is responsible for devising, implementing and evaluating the mid- to long-term strategies of the company and the services it offers, as well as overseeing the commercial department within Tjoapack. He has been with the company for three years, during which time he launched Meditraq, one of Tjoapack’s sister brands, which offers contract serialisation services. He holds a BSc in Mathematics from the University of London and a MSc in Mathematics and Computer Science from the University of Oxford and has previously worked in the technology sector. Twitter: @DexterTjoa; LinkedIn: https://www.linkedin.com/in/dextertjoa/
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