Transportation Spend Management for Pharmaceutical Companies
Manufacturing and distributing pharmaceutical drugs is a core component of our health system. However, the pharmaceutical supply chain has some unique characteristics, like its highly regulated setting, lengthy development process, and high risk and costs related to research. Together, these features put pressure on pharma supply chain leaders to reduce costs while maintaining the highest quality standards.
As demand changes dramatically in pharma, it’s becoming more common for companies to turn to logistics outsourcing. As a result, pharmaceutical companies can gain greater visibility into all aspects of the supply chain by choosing a trusted logistics partner. Read on to learn how this partnership allows for transportation spend management.
Trax offers a complete transportation spend management solution that is a vital asset to the pharmaceutical industry. From freight auditing software to rate management tools and automated payment solutions, Trax's logistics technology can support pharmaceutical companies of all sizes in today's growing market.
Transportation Spend in Pharma
During the COVID-19 pandemic, specific industries were deemed essential. First, healthcare workers were among the essential workers during quarantine, but one area that many overlooked was the transportation sector. Because shipping vaccinations was a priority during the pandemic, pharma transportation was also essential in saving lives during times of great uncertainty.
Specifically, transportation spend in pharma is tied to quality assurance techniques that are necessary for the niche field - for instance, temperature regulation for biologics and tracking devices to prevent counterfeit drugs. Because of the unique challenges the pharmaceutical industry faces regarding shipping, enterprises have become more innovative in the technologies implemented for pharma logistics.
A solid transportation and logistics strategy cannot be underemphasized in the pharmaceutical industry when manufacturing and delivering vital medications. Therefore, pharmaceutical companies need to shift from considering transportation and logistics as a transactional cost center and move towards a strategic resource approach.
Managing Transportation Spend for Pharmaceuticals
With transportation spend growing at 10x the inflation rate, it’s natural that managing transportation costs in pharma is a growing concern. One method that proves useful is considering different transportation options. For instance, there are times when a single mode of transportation is effective, but other times implementing a combination of air and ocean freight methods or rail transport can significantly reduce costs for pharmaceutical companies.
Another factor influencing transportation costs is the choice of packaging. According to a recent article in Pharmaceutical Commerce, the package should be large enough to hold the product but “snug enough to keep dimensions to avoid inflating shipping costs.” Not only does the size of the package make a difference in costs, but the time spent packaging the items should be kept to a minimum. By packaging products quickly and efficiently, pharmaceutical companies save time and money.
Sustainable packaging materials should also be considered when shipping pharmaceutical drugs to reduce a company’s carbon footprint and work towards Environmental, Social, and Governance (ESG) goals for the supply chain.
In addition, as previously noted, pharmaceutical drugs require higher quality standards like temperature-controlled containers, drivers certified to handle pharmaceuticals, and monitoring and regulatory requirements.
Digitizing the Pharma Supply Chain
Naturally, the pharma supply chain becomes highly digitized as logistics technology advances. With new rules for storing and transporting medications, more and more pharmaceutical companies outsource their transportation and logistics to a 3PL or 4PL.
Global Trade Mag stated that the newest logistics technology implemented in pharma supports reducing and managing risks, allowing for improved visibility of the supply chain.
Companies must choose their logistics partners wisely based on software and technological capabilities that align with growing customer needs.
Automated Freight Audits and Cost Management
Freight audit and payment (FAP) solutions are necessary across the life sciences and healthcare supply chain. At its core, FAP ensures data compliance across all invoices, shipments, and rates, resulting in a faster payment process. While some pharma companies build their own internal FAP system, others rely on a trusted partner like Trax Technologies for automated freight audits and cost management.
Automating freight audits improves efficiency and cuts costs. With the right transportation spend management software, pharma companies can standardize their freight auditing process, increasing accuracy and reducing errors. In addition, by performing regular freight audits, companies become more proactive in identifying and responding to problems, moving toward transportation spend maturity.
Data Management and Emerging Technology
Data management and data governance are key components of a successful pharmaceutical supply chain. Specifically, big data is becoming increasingly important in the pharma supply chain.
According to a report from Pharma Manufacturing, more than half of transportation executives agree that the pharma supply chain is undergoing a major shift in data. Artificial intelligence is emerging as pharmaceutical companies develop more advanced data management techniques. This allows supply chain leaders to make more data-driven decisions.
Several use cases for AI in pharma include predicting and managing transportation capacity, monitoring lead times, making real-time recommendations, forecasting, production, inventory management, and more. In addition, artificial intelligence for pharma must connect all layers of the supply chain such that companies get even closer to achieving transportation spend management maturity.
TSM for Pharma and Life Sciences
Transportation spend management has proven essential for pharma and the life sciences. However, with transportation costs rising faster than the inflation rate, while remaining a critical component of the supply chain, it’s no longer an option to take a reactive approach to transportation spend management.
Pharmaceutical companies wishing to advance their transportation and logistics capabilities can contact Trax Technologies. Reach out to our experts today to discover customized solutions for your specific business needs.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.