How Johnson & Johnson Is Securing the Drug Supply (2016)

How Johnson & Johnson Is Securing the Drug Supply (2016)

Drug manufacturers around the globe are preparing for one of the most vital and comprehensive challenges ever faced by the industry. The goal is total security of the world’s drug supply, not just at the point of manufacturing but throughout the supply chain and the life cycle of these drugs. In concert with governmental agencies and regulatory bodies, this new challenge involves the pharmaceutical manufacturers as well as wholesalers, distributors, retailers, and suppliers. Additionally, this challenge will require the efforts of software, technology, and equipment suppliers. It will be pervasive, and it will require a major fundamental change in the way the pharmaceutical industry thinks about, manages, and moves inventory.

For years, the pharmaceutical industry has been dealing with issues of counterfeit and diverted drugs. Despite the considerable investment on the part of the manufacturers and

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the FDA, a number of counterfeit products continue to make it into the supply chain. These drugs pass through a complex system of distributors, brokers, and wholesalers making detection not only difficult but complicated.

The Johnson & Johnson Family of Companies (J&J) is at the forefront of the effort to ensure the integrity of the drug supply. Through their planning, investment, and commitment, J&J has built and implemented one of the first systems to comply with new federal and global regulations that will protect their drug supply for the patients who use their products, years ahead of the mandated schedule. In the future, every drug that passes through the entirety of the J&J supply chain will be serialized, and will be tracked at each point along the way. Within their distribution centers, their creative and innovative approach relied on the agility of an adaptive software platform making the design and development quicker to implement, much less expensive, and far less risky to their business than traditional alternatives. Their success positions them to initiate improvements beyond the requirements of the mandates. For these reasons, the J&J innovative approach is one from which supply chain companies across industries can benefit.

Evolving Mandates

In 2004 and 2005, Florida and California legislators enacted laws to require drug companies to secure their supply chains. The two states called for the serialization of any drugs entering the states to be captured and tracked. The law also called for a system of reporting on drugs as they moved from manufacturing all the way through to the pharmacy or physician. These two states, with their population size, held force in these efforts. California, for instance, fulfills 9 percent of the total prescriptions in the U.S.

Recognizing the burden the new laws required, first California and then Florida moved the deadlines for compliance to 2009. In those first years, pharmaceutical companies began investigating technologies for labeling and reading serial numbers, and some even went as far as to pilot new systems.

In 2013, the U.S. Congress passed the Drug Supply Chain Security Act (DSCSA). The DSCSA borrowed heavily from the California and Florida mandates, but moved compliancy to the federal level. The DSCSA superseded the state laws in both scope and timing, again pushing the dates for full serialization and compliancy into 2023, with milestones in between for phased tracking and recording.

At the same time California and Florida were developing mandates, similar initiatives were begun in South America, Asia, and the European Union. In addition to the U.S., there are now at least 40 countries that either have passed serialization compliancy laws or have those laws in the legislative process. Some of those countries include China, India, Germany, South Korea, Saudi Arabia, and Turkey. The compliance rules and timelines for each country are different, and they continue to change (for example, Brazil just postponed its deadlines). But the direction is clear: Securing the drug supply has become a global initiative.

Defining the Scope

After several early planning sessions, J&J quickly came to recognize the magnitude of what compliance meant. Major changes were needed to systems, processes, equipment, and packaging as well as the very culture that defined how inventory was managed. These changes would need to be undertaken by their manufacturing plants and distribution centers, and done in coordination with suppliers and customers.

Looking beyond the clear challenges of physically serializing their packages, they also delved into the scope of necessary changes they would need to make to their systems for track and trace, not just to the warehouse management system (WMS), but to the warehouse control systems (WCS). Further, J&J understood that they would need to build a

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serial number repository database for the exchange of serial information. Beyond these factors, an even greater step involved building the integration layer for reporting product serial numbers for their entire supply chain community.

Within the distribution centers, J&J investigated whether to build the solution onto their existing WMS, or whether to replace the legacy WMS with a new system. They decided on the former, but challenged the team to build the solution in a way that would be complementary to their eventual move to a new WMS platform. At the same time, J&J decided to move forward with barcoding technology for labeling with a vision to use RFID in the future.

In the U.S., J&J operates two distribution centers, one in New Jersey and one in Kentucky. Both facilities used the same WMS with an integrated WCS that manages the physical flow of containers. However, the operations were running on different versions of the WMS software. The J&J WMS system was first installed in 1996, but has had many upgrades and technology refreshes. The decision to retain the WMS necessitated a full technology upgrade to both the WMS and WCS, in order that both of the distribution centers would have these systems on exact versions so that the eventual solution would work with both. Recognizing the increased volume of data that serial number tracking would entail, J&J also decided to purchase a new suite of servers for the systems. With these decisions, the design process for how serialized data would be passed within the J&J systems took shape. J&J recognized that they would need to build a new integration layer to pass serial number information between systems. This included the ability to transmit serial numbers to and from SAP AII, but also to exchange information between the WCS and WMS.

J&J built a team of experienced resources to develop a new process design. Having no precedent for a serialization solution, the design team not only had to consider the standard process, but also had to anticipate exceptions and unanticipated events involving damaged goods, goods with labeling issues, inventory discrepancies, returns, and issues involving data transmission errors. This exercise underscored the reality that the solution would need to be even more comprehensive than originally defined.

Important to the entire initiative, J&J adopted a philosophy of using the serialization initiative to fulfill their compliancy requirements but, further, to bring incremental improvements to their operations and to their customers. This approach permeated every design decision undertaken.

J&J needed to determine the extent to which serial numbers would need to be tracked in the distribution operation. The key consideration was the approach of using a parent/child structure for tracking serial numbers. That is, when manufactured, the serial number of each sellable unit (the child), whether a case or an each, would be associated to the pallet (the parent) as depicted in the graphic below:

 SHAPE  * MERGEFORMAT

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In this manner, where pallet homogeneity was maintained, a “goalpost” approach of capturing numbers as they arrived and as they are shipped would be sufficient to provide an acceptable level of reliability. However, where that homogeneity was released, for example, when a case was pulled from a pallet for fulfillment, J&J determined that the child units would need to be positively tracked as they moved within the operation.

Given J&J’s culture of strict standards for inventory accuracy and reliability as well as the recognition of exception processing, J&J determined to implement a solution that would provide maximum verification in the process.

Innovative Solution

J&J began the process of compliance long before the DSCSA was passed, driving their solution toward compliancy with the state mandates. Even though the new federal mandate moved the timeline for compliancy, at that point J&J determined that they would continue with their initiative. Considering the scope of the tasks this initiative required, their logical conclusion was that the solution would necessitate an equally enormous investment in time, people, and capital.

It is sometimes the case, however, that the best solution for the most complex of problems is the simplest one, and herein lies the genius and innovation of the J&J solution.

Once the decision was made to retain their legacy WMS, J&J investigated the cost of creating the serialization capabilities within the WMS. That investigation proved that not only was the investment going to be expensive, but it would take far too long and force J&J into a riskier position involving more pervasive disruptions to the operations. As an alternative, J&J looked to using adaptive software to solve these challenges.

The term adaptive software refers to a new body of software tools that essentially automate the process of building new code to extend and/or enhance the life of existing systems. Doing so empowers the user to customize and personalize their solutions, with minimal or no changes to source code. Adaptive software can be used to create new RF message streams, new screens, or reports. Because these tools have automated functions, much of any solution can be built through point-and-click selections to configure new features and create a decision path for an entire new process flow.

This unique and innovative approach yielded results and benefits beyond expectations. J&J already had an adaptive software tool in use with their WMS at one of their operations. The adaptive software platform that J&J uses is called STEPLogic. The platform is designed to enable users to create new functionality as an alternative, or as a replacement for existing WMS functionality.

The use of STEPLogic fit well with the multiple challenges faced by J&J in terms of mitigating risk and expense, while implementing a solution that met the rigors and timeline of the mandates. What this direction meant for J&J is that they could be flexible in applying “spot solutions” affecting their systems only where change was needed. This allowed them to avoid changing source code that would impact large modules of the system.

With their adaptive software tool in place, J&J gained tremendous agility both in how the system would track and trace serial numbers and in how those numbers would be transmitted between systems.

As the graphic below shows, J&J decided to use the tool to provide new functionality to the WMS, but also as the means to exchange information between SAP AII and the WMS, as well as the WMS and the WCS.

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 SHAPE  * MERGEFORMAT

As an example of developing spot solutions, J&J designed their receiving operation solution to treat homogenous pallets differently than mixed or partial pallets. Relying on the integrity of the inferred parent/child relationship, J&J recognized that the existing WMS was perfectly suited to handle the receipt of full pallets in its current form. As a result, J&J needed to use STEPLogic only for partial pallet receipts, enabling the operation to capture case-level serial numbers. As such, J&J only needed to add a small new process flow for cases, avoiding a significant new investment in their WMS that would have been necessary without the adaptive software tool. The timing and expense saved by not altering the entire receiving module, and the minimal disruption this caused to the operation, proved highly beneficial to the project in terms of both the timeline and investment.

J&J’s innovative use of the adaptive software tool provided similar spot solutions throughout the rest of the operation. With STEPLogic as the integration middleware, full cases that are picked using the existing WMS RF process move along a conveyor through an automated print and apply system. At that point, the WCS scans the serial number of the case for positive validation with the WMS.

Similarly, the existing WMS functionality is used when unit-level items are picked. These items are picked to an overpack container that subsequently moves to a packing operation. At packing, new screens developed using STEPLogic provide the staff with the ability to verify and record the individual bottle serial numbers and associate those serial numbers with the overpack container, and thus with the shipment.

Using their adaptive software system, J&J was able to implement the necessary changes to meet compliancy in their operations without having to change any core code of their WMS.

In both operations, J&J designed a scheme that provided full, positive identification and association of serial numbers with orders while avoiding the time-intensive means of doing so in the course of the pick operation. Therefore, the solution enabled J&J to maintain their current levels of productivity while complying with the mandates.

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Moving Forward

J&J began piloting the solution in their two U.S. distribution centers in October of 2014. Additional drugs continue to be added to the operation. Since its original introduction, the system has been enhanced and upgraded with new functionality, further extending J&J’s capabilities. Additionally, J&J is working with several of their larger customers to extend the tracking and tracing of serial numbers beyond the J&J walls. This progress puts J&J at the forefront of the industry for compliancy, as well as in front of the federal mandate for full unit-level traceability in 2023.

By their estimates, their decision to use the adaptive software brings compliancy to their operation with a total investment of only 30 percent of what it otherwise would have cost them.

Further, their innovative solution has put an infrastructure in place that will require minimal changes as they continue their direction to eventually replace the legacy WMS. J&J also intends to retrofit the solution with RFID technology in the near future.

The direction that J&J took, by retaining their legacy WMS and using the adaptive software tool, now positions them for DSCSA compliancy, years ahead of schedule. And because the solution was designed in a way that minimized large-scale reinvestment, J&J can focus on their plans to move to their next WMS platform independent of the compliancy challenges.

Council of Supply Chain Management Professionals

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