The COVID-19 vaccine is ready, but the journey to get it to millions of people around the world is only just beginning — and there’ll be enormous logistical challenges along the way.
The supply chain’s capacity for such a massive rollout is untested. Temperatures, transportation distances, volume — even the timing of the vaccine’s second dose — are all make-or-break factors.
Given these variables, supply chain visibility and transparency are more urgent than ever.
A new GEP paper, Supply Chain Strategies for COVID-19 Vaccine: Preparing for Purchasing, Production and Distribution, explores how pharmaceutical companies and their partners are gearing up for a global inoculation initiative unlike any other in recent history.
This paper is required reading for all supply chain professionals confronting this unique challenge.
As the first COVID-19 vaccine developed by Pfizer and BioNTech is rolled out in the U.S., U.K. and other parts of the world and another 987-odd drugs and vaccines are in development (with 16 in the final phase)1 2 as of Dec. 15, 2020, pharma companies, Contract Manufacturing Organizations (CMOs) and suppliers are racing against time to put in place a sound production and supply chain plan so the vaccines can reach people speedily and securely.
There are, however, considerable uncertainties and variables at this stage that can impact the production and distribution of the vaccine:
This white paper examines the strategies that pharmaceutical companies are currently pursuing to address the challenges in purchasing and supply chain management while factoring in uncertainties, so that when the vaccines are approved, there will be no delay in getting them to customers.
The most recent bottlenecks created by a high global demand for breathing apparatuses, personal protective clothing, sanitizers and medical disinfectants, and COVID-19 test kits, etc., have highlighted the weakest points along the COVID-19 supply chain. There will be even more challenges in the procurement, production and distribution of vaccines.
While there are existing suppliers of respirators, disinfectants and other items needed to control and manage the COVID-19 infection, that isn’t the case for the vaccines. This is not an existing supply chain that only needs to be optimally maintained, but rather, it’s a supply chain that does not exist yet. The management of an existing supply chain can cause considerable problems, but a new supply chain brings with it far greater complexity, which applies to all its individual components — from procurement and production to storage, distribution and transportation.
The COVID-19 vaccine is being developed on an accelerated timeline. Usually, it takes five to 20 years to develop a vaccine and test its stability. Vaccines developed under emergency authorizations typically lack stability data, resulting in stricter temperature requirements along the entire supply chain.
Cross-continental and inter-continental transports are relatively easy to manage, as the logistics infrastructure is welldeveloped at the vaccines’ production sites, which are mainly located in industrialized regions. However, there are also scenario-independent risks in QA/QC release or customs clearance due to the consistent cooling requirements. Considerable problems are to be expected in downstream distribution. That’s because these types of cold chains, especially in like the ones the stricter scenario, do not exist.
The final choice of supply chain distribution model strongly depends on temperature requirements, transport distances, quantities, and factors such as storage capacity and availability of packaging and equipment. Vaccine distribution beyond the 25 countries with the most advanced logistics systems could face cold chain challenges due to the lack of reliable electricity.6 Currently, large parts of Africa, South America and Asia cannot be readily supplied at scale due to the lack of cold chain logistics capacity needed for life science products.7
Many countries had relaxed their restrictions, but lockdowns — some for limited periods — were again being enforced in October to contain the second wave. This will have increased the likelihood of delays and disruptions.
Pharmaceutical enterprises and other companies involved in vaccine development, production and distribution — such as suppliers of raw materials, CMOs, and packaging, transportation and logistics companies — are all preparing intensively for the vaccine. Businesses are using a variety of approaches.
Many pharma companies are pursuing biotechnology partnerships to facilitate vaccine production. This approach is needed, because the machines that are being used to produce COVID-19 vaccines are also busy producing other drugs. Dermapharm, BioNTech and Pfizer, for instance, have partnered on vaccine production and are targeting 100 million doses in 2020 and 1.3 billion doses by the end of 2021.8 Many pharma firms are also pursuing a growth strategy and increasing their number of production plants. For instance, Johnson & Johnson has opened new plants in Europe and Asia.9
Logistics service providers are investing heavily in new pharmaceutical hubs. For example, Kuehne+Nagel has set up two new locations in Brussels and Johannesburg.10 In addition to the development and expansion of suitable locations in the logistical network, partnerships are also being established. The U.S. Centers for Disease Control and Prevention (CDC) has signed a contract with McKesson for that company to be the sole distributor of Moderna’s vaccine in the U.S., once that vaccine receives emergency use authorization.11
Many pharma enterprises are working to help increase the procurement capacities of their key suppliers for packaging, raw materials and chemicals so that there is no delay in starting vaccine production. Usually, raw material suppliers are smaller biotech companies with limited ability to suddenly scale up their operations and capacities; they are dependent on their upstream suppliers, who are themselves facing comparable challenges.
A network of diverse supply chain partners is required to build an agile, responsive supply chain. Focusing solutions on one specific scenario is of little value, as the probability that only that precise scenario will occur is extremely low. One factor is common to all possible scenarios and variants: uncertainty. This uncertainty must be managed.
Enterprises must prioritize these five factors when evaluating procurement and supply chain management solutions:
How can disruptions or delays in the transportation or storage of the vaccines be addressed? How can a lack of quality in the product be tackled? Through what intermediate stations can the cold chain be maintained? To address any of these matters, and more, you need an open, collaborative approach.
Close cooperation between many different companies and external partners in the supply chain is essential for the efficient production and distribution of the vaccines; when working with production partners, it is critical to coordinate quantities, dates and capacities. This cooperation cannot be limited to Tier 1 suppliers either, as efficient production depends on smooth communication and collaboration on requirements, procurement quantities, timing and quality.
Determination of sales volumes and timing also requires collaboration with governments, customers and other parties.
Flexibility across all stages of purchasing and supply chain is equally vital. Some of the issues to consider are:
Because the vaccines’ production and distribution are on an unprecedented scale, problems such as these will arise. Ensuring a steady vaccine rollout will require an agile, responsive supply chain.
Collaboration and agility are only possible when there is real-time transparency and visibility among supply chain partners. Transparency includes the exchange of data, status messages, order quantities and joint planning. Data must be collected in real time and made available to all relevant supply chain partners to enable a quick, purposeful response.
An existing risk management system helps identify procurement and distribution risks, ideally before they occur. In procurement, these risks will typically involve the delivery of raw materials or packaging. The loss of a supplier — whether permanent or temporary — due to lockdowns is also a probable risk. There will be similar risks in production and distribution. Early identification and alerts about possible and likely risks can prevent, or significantly reduce, disruptions in procurement, production and distribution.
Early identification of risks — such as knowing a supplier has problems with the timely delivery of urgently needed coolers for vaccine transportation — is critical and should also be supported by concrete response plans.
Assume that problems and bottlenecks can and will occur and prepare for what-if scenarios. What happens if population segments decide not to be vaccinated? How will this affect the capacities and deadlines for purchasing, production and procurement? These and similar issues — and frequently changing scenarios in the coming months — will require quick, targeted and economically sound decisions, which in the best case will have already been considered in scenario planning.
A digital platform is key to successful vaccine production and distribution. The number of supply chain partners involved, short-term changes of network players, and massive amount of data to be processed and evaluated cannot be managed without robust solutions. Cloud solutions are particularly suitable for this task. Leading platforms also allow for the quick activation of new partners or the removal of previously involved players. And, as the vaccine distribution is a global initiative, the solution must support many languages.
It is crucial that the solution be easily taught, easy to use and intuitive.
The solution must also support all purchasing and supply chain management functions, such as collaboration with suppliers and supply chain partners, joint sales planning, category management and supply chain risk management. A single-provider solution is optimal, and integration of individual parts of procurement and supply chain is critical. Planning without understanding feasibility leads to lost time, avoidable costs and duplication of activities. Too, data must be collected, processed, evaluated and made available to all relevant partners. Data summary and integration can be achieved with supply chain control towers, which leverage modern technologies such as AI, Big Data and analytics to quickly distill critical data to support a targeted response.
A pandemic of this scale has not occurred for decades. How will the supply chain networks respond? The pandemic, resultant lockdowns and COVID-19-specific requirements have already revealed clear weak points in the global COVID-19 supply chain.
Procurement and supply chain management play a key role in the distribution of vaccines. These are by no means the only challenges standing in the way of supplying the global population with vaccines as quickly as possible. But procurement and supply chain management solutions are critical to this effort.
Uncertainties in all areas best describes the various players’ current and future state in the supply chain. To be best prepared for all imaginable and probable scenarios, enterprises need to set the right course now and develop concrete recommendations for action. This will not solve all problems, but implementing these measures will make a significant contribution toward getting the pandemic under control. That should be the primary goal for all of us.