MAY 28, 2024

Don’t Trust the Calm, There’s Always a Storm

At the recent HPCLC conference, supply chain risk was a topic throughout the conference. The overall sentiment was that risk is hard to avoid, so ensure you have the processes, trained personnel, partnerships, and systems in place to be prepared.

Siva Narayanan, Global Logistics Director at SYENSQO, a materials supply company, said it perfectly – “Don’t trust the calm, there’s always a storm”.

Pandemics, Bridge Collapses, Canal Shutdowns, War and Conflict

If anything is certain, it’s that supply chain risk is everywhere and often unavoidable. Fascinating discussion with the HPCLC panel of experts from Bloomberg LP, Nacora International Insurance, Eli Lilly and SYENSQO O&G.

All panelists’ agreed risk is omnipresent, encompassing geopolitical issues, climate change, industrial strikes, earthquakes, maritime blockages, cyber attacks on ports, and increasing black swan events.

“The events that have no end in sight – are the most difficult”, says Mike Broughton, Eli Lilly. 

In addition, pharma manufacturers are greatly affected by disruptions to manufacturing locations and if shipment in/out of the region is impacted.

From a Risk insurance company perspective, having a flurry of activities from one event at one time has the biggest impact, especially if many of the participating companies do not have insurance.

Shannon Schmidt of Nacora Insurance recommends getting a copy of your insurance report and understanding what coverage your company has – especially for a Cyber disruption. Cyber security is predicted to be a $40Billion industry by 2025. Cyber attackers are attacking more small and mid-size companies, average ransom is $10,000. These often are also the companies that don’t have insurance.

Lee Klaskow of Bloomberg explained that actually we are looking at an economic soft landing as inflation has mellowed out, as indicated by ongoing consumer spending. Good news for transportation – freight modes are still growing, and air freight rates are descending from sky high levels.

Risk Management Recommendations for Pharma

Mike Broughton, Eli Lilly, offered insights from his years of experience on risk preparedness, including:

  • Dual sourcing – always have an A and B and sometimes a C.
  • Hire good partners that help be proactive, look ahead and propose contingencies.
  • Have plenty of SMEs, not just a couple.
  • Security and visibility are a must, put the systems in place.
  • Change controls that allow people to use things quickly.  These should be created ahead of time, in place and ready to use.
  • Manufacturing is moving closer to the demand and supply points. Reduce miles if possible.

Trucking 2024: Regulatory Concerns, Innovation, and the Future

Trucking sure gets a bad reputation. Safety concerns, environmental pollution, unions, and the list goes on. But wait a minute – did you order Amazon recently or shop online?  Trucking is a necessary industry in a country where the far majority of the land is contiguous. In fact, 80% of all freight spend, travels on trucks. Of course, air and ocean freight also rely on trucking at ports and airports.

Andrew Boyle, Chairman of American Trucking Associations and Co-President of Boyle Transportation explained trucking is a $1 trillion market in the US, employing 8 million Americans and has an annual spend of $14 billion for safety. Although there are further improvements needed, the reality is that much progress has already been made. New trucks are already cleaner and safer. 60 of today’s trucks would be needed to produce the emissions of 1 truck back in 1988.

To advance sustainability initiatives further, companies like Boyle Transportation and Tucker Company Worldwide can provide environmental impact reports specific to customer shipping lanes, including CO2 emissions that help companies calculate their Scope 3 emissions.

Jeff Tucker, CEO, Tucker Company Worldwide also presented on the role of road freight providing a cost-effective shipping solution, but agreed for high-value shipments like healthcare, the stakes are higher. It’s imperative to establish robust processes with all transportation partners, and in particular ensure compliance is handled throughout the supply chain, including with subcontractors.

In a recent Pharma Freight interview, Tucker explained the need for a new bipartisan bill to address fraud in transportation by proposing civil penalties for fraudulent activities such as falsely obtaining broker licenses. He also talked about freight rates during the pandemic, driver shortage myths, sustainability from Tucker’s perspective, the addressed the new EPA emissions mandate challenges.

What can you do as a shipper or forwarder now?

Boyle says:

Tripartite Relationships in Life Sciences

The HPCLC session highlighted a Moderna life science case study, emphasizing the importance of innovative partnerships between multiple suppliers to solve complex supply chain challenges. During the pandemic, Moderna established tripartite relationships among suppliers, a strategy they now consider essential for future operations. This approach involves creating end-to-end lanes, including ground handlers and packaging partners, to address issues like high tarmac temperatures.

In the current endemic state where transit times are back to normal, which means longer transit times and stringent customs processes. These conditions necessitate robust packaging solutions. Kuehne + Nagel (K+N) highlighted the balance between over-engineering packaging and cost-effectiveness, advocating for collaborative partnerships to find the best solutions for each application whether that’s a thermal blanket, reusable packaging solution or a need for a smart data-enabled packaging system.

Jennifer Haigh from United Airlines underscored the significance of strong relationships between airlines and forwarders, built on trust and mutual respect. She says, “United Cargo maintains these relationships by ensuring transparent communication with forwarders and pharmaceutical companies, aiming to place the right products in the correct capacities”.

The Panel of experts agreed there needs to be movement on data alignment. But! There is so much data out there, what are you actually going to do with it?  The audience suggested it’s time to break down the corporate silos of not sharing data. Let’s be practical and ask the right questions, such as what lane are you considering, then let’s look at that data. Are you considering switching from active to passive? Let’s look at the data.

The group agreed that the data is extremely valuable if you trust it enough to create automation on top of it that adapts processes. This reduces low level tasks and reduces people burnout. However, if that data creates more work for people to manually review, it’s not valuable. Moderna says the foundation of reliable data should be set first, then automation, before predictive analysis – or it will fail.

In these tripartite relationships – data sharing is a necessity, says Moderna.

For more information and to join an upcoming HPCLC conference, please visit https://www.hpclcnet.org/conferences/.