Tuesday, July 17, 2007

California Dreamin'

Supply chain theorist and professional surfer Chicken Joe (pictured at left) once said: Le mieux est l'ennemi du bien. Translation: “Perfect is the enemy of good.”

Sound advice for serialization fans who are surfing some gnarly waves in advance of California’s 2009 e-pedigree deadline. Serialization by manufacturers will not magically make the supply chain secure, so rushing to meet an arbitrary and unrealistic serialization deadline within 17 months does not promote safety.

Monday’s Pink Sheet (subscriber link) reports that manufacturers are lobbying the Board of Pharmacy to execute a roundhouse cutback on the state’s item-level serialization requirements. From the article:

Pfizer recently told the California Board of Pharmacy that by its best estimate, it would take five to seven years to serialize all products at a cost of $95 million to $100 million. "That's just in one-time implementation costs and does not include the cost to the rest of the supply chain to be able to read the serial numbers and pass along the pedigree information," Peggy Staver, director of product integrity for Pfizer, told "The Pink Sheet."

According to IMS, there were 290 million Pfizer prescriptions last year. If Pfizer spends $20 million per year for 5 years on one time implementation, they will only pay a trifling 7 cents per prescription. So what’s the problem?

Frankly speaking, everyone else in the pharmacy supply chain. A truly closed-loop, interoperable track-and-trace security solution based on serialization will require a massive infrastructure upgrade at the 150,000+ points of pharmacy dispensing in the U.S. John Theriault, Pfizer's vice president of global security, made a similar point when talking about RFID last month. (See Pfizer questions RFID.)

Greg Cathcart from SupplyScape told me that their larger customers are using a “risked based approach to serialization” (RBATS - my term) but aiming for full pedigree compliance by the Jan '09 deadline. In other words, serialize high risk products and rely on pedigree for the rest.

RBATS also makes a lot of sense to me even if the California deadline slips. It’s also one more reason why e-pedigree (not RFID) will not wipe out as an enhancement to supply chain security even if practical serialization takes longer and costs more than many people expect.

2 comments:

  1. AnonymousJuly 17, 2007

    Adam, where are the wholesalers in all this? Realistically they need to be involved. I know they have set up RFID compliant DC's in CA but what if a manufacturer barcodes the serial number and implements case qty requirements? Conceivably this could be done at the packaging line and make it very easy for a manufacturer to comply but what a burden to the wholesaler!

    I am still unclear on the track part of track-n-trace. How does that work even with RFID unless you have the ability for "someone" to monitor the products as they pass through the supply channel ('tracking' thier progress).

    Yep, lots of questions. ePedigree is not perfect but it is a start.

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  2. AnonymousJuly 17, 2007

    Adam I agree with you when you say "Serialization by manufacturers will not magically make the supply chain secure..." and a combination of serialization technologies (RFID Barcode)will only complicate the problem and increase the costs. The real problem in the approach to the adoption of serialization, and pedigree for that matter, by the supply chain constituency is that it is a net cost. Why not start with making all of the supply chain transactions visible to supply chain participants. This is something that could be implemented using current transaction sets and technologies and would provide valuable benefits around product security and supply chain optimization. Let's face it - it would be very difficult for counterfiet product to enter the supply chain without an accompanying transaction. Once this has been ironed out a further level of granularity could be added through mass serialization.

    Surf's up monsieur

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