Reverse Supply Chain in Pharma: A Comedy of Errors and Solutions

Ah, the reverse supply chain. If you thought getting products to customers was a headache, just wait until you try taking them back. With the explosion of e-commerce and Quick Commerce, returns have become as routine as your morning coffee. And while the fashion industry leads the pack with a staggering 25% return rate, pharma returns are a special breed. Generic drugs alone contribute to 4-5% of total revenue in returns, and unlike fashion, those returned pharma products are often destined for the trash heap.

Pharma Returns: The Fun Starts Here

Returns in the fashion industry? A breeze. Most items are reusable or resalable. But in pharma, products come with an expiry date, making returned product mostly waste. The pharma supply chain is already a two-legged beast (Primary and Secondary), and the return process just means doubling the fun, but in reverse.

The Journey of a Return: A Misadventure

1.     From Retailer to Distributor: Imagine retailers sending back returns from multiple pharma companies all jumbled together. The poor distributor then has to sort this mess, item by item, company by company. It's like a game of pharmaceutical Sudoku.

2.     From Distributor to CFA: Once sorted, these returns are logged into the distributor’s ERP system (another joyless task) and then shipped off to the CFA. Here’s where it gets even more thrilling: quantities can range from thousands to hundreds of thousands. Sorting through these returns is a task even Sisyphus would balk at.

3.     Validation and Processing at CFA: At the CFA, returns need to be verified and classified. This is a manual process (yay, more manual labor!) involving either a sample check or, heaven forbid, an each-level verification. With returns increasing, pharma companies are desperately trying to streamline this tedious process.

Innovations and Improvements: Because We Can't Keep Doing This

Digitization: The Magic Wand?

An integrated system between distributors and CFAs is the dream. Currently, distributors use one of 20 major ERPs, while pharma companies stick with SAP. These systems don’t talk to each other, meaning data has to be re-entered manually. Enter tools like PharmConnect, which promise to integrate these systems and reduce redundancy.

OCR and the Future of Scanning

Optical Character Recognition (OCR) is another emerging hero. While FMCG has been using OCR for a while, it’s finally gaining traction in pharma. These tools allow CFAs to scan products, automatically registering details and validating them. Imagine: no more squinting at tiny batch numbers!

The Way Forward: A Glimpse of Hope

With digitization and technological advancements on the horizon, the future looks a bit brighter. Integrated systems will make data flow seamlessly between distributor ERPs and principal ERPs. OCR technology will streamline the returns process, making reconciliation and validation a breeze, coupled with serialization, AI and ML will learn patterns and help identify counterfeit products, potentially saving lives.

As the pharmaceutical industry continues to embrace these technological advancements, the reverse supply chain will become more efficient, less labor-intensive, and more capable of handling the growing volume of returns. The journey may be complex, but with the right tools, the road ahead looks promising. With the story continuing, Reverse Supply Chain in Pharma: A Comedy of Errors and Solutions.