Blockchain in Supply Chain – A Pharmaceutical Use Case Example
Blockchain in Supply Chain – A Pharmaceutical Use Case Example
July 30, 2019
Blockchain is one of the most promising technologies to address challenges in today’s supply chains – Modum is at the forefront by already applying the technology in our commercially available environmental condition monitoring solution, as well as providing insight on how such digital supply chain ecosystems could work.
Blockchain has been one of the most used buzzwords in the industry over the last two to three years and although initial hype is over, distributed ledger technology (DLT) is remains a promising approach to solve the current challenges companies are facing or establish new ways of doing business. A report by Business Insider argues that the growing logistics industry in particular, which is expected to reach USD 15.5 trillion in 2023, thus nearly double the amount it was in 2015, can substantially profit from this technology in order to solve the operational inefficiencies it faces on a day-to-day basis. The report strikes a good balance outlining the potential use cases in the logistics industry, but also mentions how use of the technology is still in early stages within the industry, not least due to firms still being unclear about its potential benefits.
Image 1: How Modum’s MODsense monitoring solution utilizes Blockchain
Not surprisingly, Modum is mentioned in the report - we are globally one of the few companies that has not only recognized this potential but also already implemented blockchain in our first commercially available temperature monitoring solution to ensure the integrity of our measurement data by utilizing the data immutability characteristic of blockchain transactions. This is how we create a trusted link between physical world events and a digital ecosystem.
Ensuring such a layer of trust is key to establishing self-governing and decentralized network-based business and operating models promising not only an increase in efficiency, but also new revenue streams.
The applications within such an ecosystem are numerous: end-to-end chain tracking of custody and provenance, micropayments for services rendered, facilitating the resalable returns process, initiating redeliveries for products damaged in transit or handling insurance cases.
Image 2: Creating a network-based model powered by blockchain
One specific example comes from one of the most complex and challenging global supply chains – the pharmaceutical supply chain. Quality Managers require end-to-end visibility of a product’s stability budget from a quality management perspective to ensure that medication can be safely administered and has its desired effect.
The product’s stability budget for temperature is given by the chemical and physical properties of the product itself. In layman’s terms, the product stability budget represents the buffer required for a product to retain its efficacy, and in some cases even safety, in case temperature excursions outside of the products’ tolerated temperature band have occurred. In other words, each temperature excursion results in a reduction of the stability budget – once the budget has reached zero, the product’s efficacy and safety can no longer be guaranteed over the full span of the printed expiry date and therefore the product can no longer be administered to a patient.
End-to-end visibility, however, is not a given – challenges arise as soon as the product leaves pharmaceutical manufacturer’s company boundaries e.g. when shipped to wholesalers. At the same time, the other parties in the supply chain, e.g. wholesalers, hospitals or other medical practices also lack visibility and hence are faced with the same challenge as pharmaceutical manufacturers – and without visibility, there is no possibility to react in a timely manner. This leads to unnecessary waste and in the worst case to life-threatening situations for a patient. In particular, when looking at the trend towards personalized medicine accompanied by the distribution of small unit, high value goods, having environmental conditions under control on a shipment level becomes an even more critical mission.
Image 3: Network-based operating model for precision medicine
Blockchain is the most promising technology to apply to this challenge. By creating a blockchain network with key stakeholders in the supply chain, as outlined in an illustrative example for precision medicine, product stability data can be shared in a secure and trusted manner along the chain without having to interconnect companies’ underlying IT, such as ERP systems. IoT data loggers upload their data to the monitoring backend, which pulls the current stability budget from the blockchain, recalculates the remaining budget and uploads the encrypted data to the blockchain. Once the stability budget reaches zero, certain processes, such as redelivery, can be automatically initiated using Smart Contracts. The cost of maintaining such a blockchain network could be covered by implementing a transaction-based fee model – for each read or write transaction, a small fee is charged. The advantage thereof is clear – network participants pay based on their usage, no more and no less.
Governance in terms of data access rights and privacy is incorporated into the network itself as determined by key stakeholders when building the network. As such, any participant implicitly is in adherence, as related governance policies are embedded in the network by design. In addition, the network can distinguish between shipment and product article level such that the parties handling the shipment see only information pertaining to the shipment, whereas parties monitoring the product quality have access to product stability information on a product article level.
This is where Modum steps in. With our capabilities to integrate product stability budget information into our monitoring system and our blockchain engineering expertise, we are the ideal partner for our customers in the pharmaceutical supply chain to address these challenges with and at the end of the day contribute to the safety and success of patient treatments.
Our cloud-based monitoring solution MODsense has the capability for a pharmaceutical manufacturer to include other 3rd parties in the monitoring process. With our extensive in-house technical and engineering skills, further ERP integration or even the development of a blockchain network model to support further decentralization and automation, does not require an additional partner with onboarding effort.
Interested? Get in touch with us to learn more about how we can help you on your supply chain digitization journey!