Blockchain wasn’t invented as a supply management tool; yet, today it is helping to solve some of the most complex problems existing in global supply chains
The technology was first used in 2008, allowing the cryptocurrency market to digitally record transactions in a secure and immutable way. A technology that no individual can edit or manipulate. As the use of blockchain became recognised outside of the crypto industry, the technology was then adopted for smart contracts, trust agreements and supply management.
However, a new use case is now being adopted, focused on addressing bottlenecks in complex global supply chains, as well as increasing transaction processing speeds and facilitating economies of scale.
The pharmaceutical industry faces many challenges in today’s climate, including growing demand, tightening regulations and the circulation of counterfeit products.
No silver bullet exists to solve these challenges, but when applied correctly, blockchain can certainly help alleviate the pressure and make the whole system more reliable and safer – ultimately improving health outcomes.
Increasing transparency and compliance in pharmaceuticals
The digitalisation of pharma, known as Pharma 4.0, aims to close the gap between physical and digital supply management. This is vital to achieve a high-performing and efficient global supply chain.
Immutable and decentralised blockchain technology can record every transaction or track every movement of pharmaceutical products around the world. Therefore, each stage of the supply chain is traceable and accountable.
Closing the gap between physical and digital supply management
Optimal transparency means all stakeholders have more control and oversight, from beginning to end – or manufacturer to patient. It supports faster and more accurate decision-making, helping to reduce inefficiencies, mitigate drug shortages, boost regulatory compliance and ensure product quality.
Furthermore, there is the opportunity to integrate blockchain with AI to unlock more benefits.
Blockchain provides a record that cannot be tampered with nor forged, and AI uses powerful algorithms to detect any anomalies, identify risk and optimise decision-making. When used together, both technologies can provide a further boost to monitoring, transparency and compliance, contributing to a more robust and integrous supply chain.
Defence against counterfeit and falsified medicine
The pharmaceutical industry is one of the largest and most profitable. And that means criminals are increasingly looking for a slice of the pie.
In fact, pharmaceutical products are the most counterfeited globally. The World Customs Organisation estimates that the fraudulent industry is worth more than $200 billion.
Fighting the fakes is an ongoing and costly battle, with most anti-counterfeit defence systems often being cracked within two to three years. It is an ever-changing game requiring continuous research, development and improvements to keep criminals at bay.
An evermore important aspect of this defence is blockchain technology. As explained, this immutable and decentralised record is now more tamperproof than ever. The life cycle of pharmaceuticals is traceable and trackable, which enables the identification and elimination of more counterfeit products from the supply chain before they reach the hands of patients.
Every product is given a unique identifier when entering the supply chain. This is the key to verifying each drug’s origin and authenticity. This has a dual functionality as it aids the identification of counterfeits, and it supports quality control and product recall investigations.
Efficient supply management processes
There are many untapped opportunities to increase efficiency in outbound supply management. This includes all processes involved in packaging to the final delivery of a product. At the centre of these opportunities are lean principles.
Essentially, this means supply management operates in the most efficient and economical manner possible through less reliance on human effort and the requirement for physical inventories needing space and taking up excess time to organise. Responsiveness to market demand is key.
Responsiveness to market demand is key
Blockchain technology reduces the likelihood of human error and expensive delays, plus large amounts of unnecessary paperwork. The ability to host embedded smart contracts allows for automated and predefined rules to be executed without consent or manual action.
The facilitation of automatic payments, regulatory compliance and real-time tracking of shipments can significantly reduce costs and inefficiencies within the outbound supply chain.
Not only does this benefit stakeholders financially, but it also has positive social and environmental impacts too.
Mastering the adoption of blockchain
The advantages of blockchain and AI being used in supply management, particularly within the pharmaceutical industry, are abundant.
However, delays and obstacles are continuously present, which can harm or slow adoption. Skills shortages and outdated IT infrastructure are two significant challenges to overcome if blockchain is going to make a real difference to pharma.
Ringfencing adequate funding to innovative new technologies is key, and so too is phasing out legacy IT infrastructure, skills development and tapping into wider talent pools.
However, this investment will be wasted if the implementation and use of new technologies aren’t managed correctly in the long term. A forward-thinking, adaptable and flexible plan is a necessity to keep up with the pace of technological change and subsequent market shifts.
Pharma companies need to think about which digital functions they’ll need to compete in two, five, or even ten years’ time, not just today. Collaborating alongside tech start-ups is one-way pharma businesses can stay ahead or at least ride the wave of innovation and disruption.
The gains available to those using blockchain and other new technologies confidently and efficiently will support positive change around social and environmental responsibilities and targets. These include the need to create more sustainable manufacturing processes and produce more effective and safer medicines the entire world can afford.
Written and provided by Steve Brownett-Gale, Marketing Lead at Origin.
