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Digg It - Supply Chain Risk Management: An Introduction
Risk management concepts have been around for several years, but they have generally been bounded to the financial area. Today, according to common experience and evidences, the supply chain is where risk management is assuming a critical role, since it is where risk becomes most damaging for a company: in fact, the last decades have
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
been characterized by several events (i.e. earthquake in Kobe in 1995, terrorist attack to WTC in 2001, SARS in 2002-2003) that have disrupted supply chain operations repeatedly (Tang, 2006).
One of the main factors that contributed to disruptions is the lean attitude (lean production or lean manufacturing) that took a relev
One of the main factors that contributed to disruptions is the lean attitude (lean production or lean manufacturing) that took a relev
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
nt role in academia and industry during the 90s, pulling the demand for streamlined manufacturing systems with expected zero-inventory and just-in-time movement of goods. In current volatile era, with businesses and, more specifically, supply chains becoming increasingly global, the industrial environment is heavily affected by uncert
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
inty, which can potentially turn out into unexpected disruptions.
According to a study funded in 2006 by Accenture Consulting, three out of four top supply chain executives at major U.S. enterprises say they have had a disruption in the past five years from which it took at least a week - and sometimes several months - to recover, an
According to a study funded in 2006 by Accenture Consulting, three out of four top supply chain executives at major U.S. enterprises say they have had a disruption in the past five years from which it took at least a week - and sometimes several months - to recover, an
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
the risks are increasing.
Moreover, as the results of a survey conducted on 1150 companies in UK show (Woodman, 2006), CEO's and top managers are nowadays getting aware that potentially disruptive events have to be explicitly identified, properly prevented and effectively offset.
In contrast, supply chain managers have so far kept
Moreover, as the results of a survey conducted on 1150 companies in UK show (Woodman, 2006), CEO's and top managers are nowadays getting aware that potentially disruptive events have to be explicitly identified, properly prevented and effectively offset.
In contrast, supply chain managers have so far kept
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
heir efforts on efficiency gains, aiming at reducing cost at the expense of an increased risk of disruptions. A study from Forrester Research carried out in 2002 reports that almost 90% of a sample of senior supply chain executives indicated, as their top supply chain priority, the need of improving operational efficiency; only the re
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
aining 10% were more sensitive to flexibility and robustness (Hendricks et al. 2005).
In this context, some concepts have emerged as decisive for the competitive management of modern supply chains: these are declined in literature as operational risk (NSW, 2005 and BCI, 2005), enterprise risk management (Hallikas et
In this context, some concepts have emerged as decisive for the competitive management of modern supply chains: these are declined in literature as operational risk (NSW, 2005 and BCI, 2005), enterprise risk management (Hallikas et
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
al., 2004; Chapman, 2006), business continuity (Christopher, 2003; Sheffi, 2005; BCI, 2005) and business vulnerability (Christopher, 2003).
Hence, I provide some basic definitions that could help in entering this somewhat new world:
- Risk Management: as defined by the ISO IEC Guide (ISO, 2
Hence, I provide some basic definitions that could help in entering this somewhat new world:
- Risk Management: as defined by the ISO IEC Guide (ISO, 2
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
02), it is a set of coordinated activities to direct and control an organization with regard to risk. In other words, a process by which a company tries to ensure that the risks to which it is voluntarily exposed are those ones it is eventually willing to tackle during the course of its routinary activities.
- Enterprise Risk
- Enterprise Risk
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
anagement (ERM): is defined as a rigorous and coordinated approach to assessing and responding to all risks that affect the achievement of strategic and financial objectives of an enterprise (Miccolis, 2001).
- Supply Chain Risk Management (SCRM): can be defined as the systematic identification and assessment
- Supply Chain Risk Management (SCRM): can be defined as the systematic identification and assessment
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
of potential supply chain disruptions with the objective to control exposure to risk or reduce its negative impact on supply chain performance. Management of risk includes the development of continuous strategies designed to control, mitigate, reduce, or eliminate risk.
- Business Continuity Management (BCM): as
- Business Continuity Management (BCM): as
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
defined by the Business Continuity Institute, BCM is "an holistic management process that identifies potential impacts that threaten an organisation and provides a framework for building resilience and the capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand and value creati
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
g activities" (BCI, 2005).
- Business Vulnerability: supply chain vulnerability is defined as an exposure to serious disturbances, arising from risks within the supply chain as well as risks external to the supply chain (Christopher, 2003). In other words, vulnerability is a result of any weakness within a comple
- Business Vulnerability: supply chain vulnerability is defined as an exposure to serious disturbances, arising from risks within the supply chain as well as risks external to the supply chain (Christopher, 2003). In other words, vulnerability is a result of any weakness within a comple
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
system that can seriously jeopardize its activities (Ayyub, 2003). Vulnerability strictly relates to business continuity planning (and, hence, to risk) through the concept of vulnerability management.
- Resilient enterprise: the concept of resilience is related to the ability of the company to recov
- Resilient enterprise: the concept of resilience is related to the ability of the company to recov
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
r quickly from a disruption (Sheffi, 2005). That is, a resilient enterprise is built upon business continuity, which in turn relies on (enterprise) risk management and vulnerability management.
All these concepts have gained attention during the last decade and, very likely, will assume even greater attention in the future.
All these concepts have gained attention during the last decade and, very likely, will assume even greater attention in the future.
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
eferences
- Ayyub, B.M. , 2003, "Risk Analysis in Engineering and Economics", Chapman & Hall/CRC, Florida - ISBN 1-58488-395-2
- (The) Business Continuity Institute (BCI), 2005, "Good Practice Guidelines 2005 - A Framework for Business Continuity Management"
- Chapman, R.J., 2006, "Simple Tool
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
and Techniques for Enterprise Risk Management", John Wiley & Sons. England, ISBN 978-0-470-01466-0Christopher, M., 2003, "Creating Resilient Supply Chains: a Practical Guide", Cranfield University School of Management. ISBN 1-861941-02-1 Hendricks, K.and V.R. Singhal, 2005, "The Effect of Supply
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
hain Disruptions on Long-term Shareholder Value, Profitability, and Share Price Volatility" ISO: International Organization for Standardization, 2002, "ISO/IEC Guide 73 - Risk management - Vocabulary - Guidelines for use in standards" Miccolis, J.A., Hively, K. and B.W. Merkley, (2001), "Enterprise risk management:
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
trends and emerging practices", The Institute of Internal Auditors Research Foudation - Altamonte Springs, Florida NSW Small Business, 2005, "Risk management guide for small business", Department of State and Regional Development - ISBN 0-7313-32490 Sheffi, Y., 2005, "The Resilient Enterprise
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
Overcoming Vulnerability for Competitive Advantage", The MIT-Press, Boston - MA Tang, C., S., 2006, "Perspective in supply chain risk management", International Journal of Production Economics, 103, 451-488 Woodman, P., 2006, "Business Continuity Management (May 2006)", ISBN: 0-85946-445-8.
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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