Decentralization – An opportunity to improve the challenges faced by the pharmaceutical and life sciences supply chains.

Just like any other pandemic, the COVID-19 outbreak revealed comprehensive defects in an ample mix of industries and processes. One of such defect is the failure of the present data management systems.

Regarding the global response to the pandemic, poor data management resulted in heightened shortages to unnecessarily long drug development times, which lead to the loss of more lives. In all, this emphasized the significance of proper data management and the opportunities that abound to those who adopt the next generation of data management solutions.

 

The Problem

A useful starting point to understand the importance of data management is The European Union’s attempt to deal with the shortage of personal protective equipment(PPE) at the height of the COVID-19 pandemic.

At the beginning of April 2020, the COVID-19 infection rate increased rapidly across Europe, and PPE shortages grew painfully obvious. In an attempt to ramp up supply, the first step would be to gather data. Who’s producing PPE now? Why can’t they produce more? What materials do they require? Where are the roadblocks?

The EU tried to answer these questions by sending questionnaires to European companies that manufacture PPE for medical use by email. Certainly, this would in no way be effective, at least not for the present pandemic. That is because even if all questioned manufacturers had responded immediately to the survey, the best possible scenario would have the data organized within a week. By then, a lot of the data would have become obsolete, as manufacturers would have their produce reduced due to the spike in demand.

Moreover, what about the suppliers of the manufactures? What about all the up-stream links that make up the global supply chain for PPE?

 

The Possible Solution

So, why can’t we have universal visibility in the medical supply chains? The answer is this: Firstly because legacy communication systems prevent supply chain members from securely and efficiently sharing data; secondly, because many of the parties lack reasons to join such a system.

Both of these problems can be solved in different ways, by the blockchain-supported decentralization.

Blockchain-supported communication systems ensure secure and efficient sharing of data. A blockchain-based distributed communication network defeats the technical obstacles connected with legacy communication systems in supply chains, whilst satisfying security concerns.

Rather than communicating distinctly with each node in the chain as in the conventional centralized systems, blockchain technology empowers participants by utilizing a decentralized ledger, to communicate “all-at-once” to all other participants. This implies that supply chains can overcome the prevailing and restrictive “one-up-one-down” communication model, where each participant has only one step up (to a supplier) and one step down (to a buyer) visibility in the chain.

Besides, modern blockchain networks provide the required granularity and read/write access to ensure that only trusted nodes can add to the ledger; and commercially sensitive information can be protected when needed.

The second — and more difficult — problem preventing the emergence of universal visibility in supply chains is the lack of reasons to attract all participants into the network. This is complex because the inertia of the status quo must be overcome and the active disincentives that are at play must also be addressed. Inertia in this case refers to the investments in and acceptance of legacy systems. It also means that any recommended solution must present enough value-add for participants to make the effort to adopt it.

In terms of disincentives, the problem is upstream suppliers typically do not want to reveal to downstream customers information about their operations, pricing, and sourcing. This could in many cases eliminate their commercial advantage.

 

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