Benefits of Vecco Control Tower in Life Sciences – Part 1

Benefits of Vecco Control Tower in Life Sciences – Part 1

Product Traceability and Analysis In Case of Potential Defects Across Multiple Supply and Distribution Tiers

Be capable of tracing materials and process events contained in drugs and or medical devices from root supplier through production and multiple tiers of distribution to final point of sale, and to be able to immediately recall only specific potentially defective lots.

Scenario: A defect in packaging material manufacture is identified by a sub-supplier. The defect is such that, if packaged on the specified packing line in a certain manner that is within packaging quality protocols, the package is nonetheless likely to break around specific aperture and oxygen will leak into the package and cause loss of efficacy in the packaged medicine. This potentially presents a risk to the person consuming the medicine. The products are not serialized individually, but are marked with lot numbers. Once aware of the risk, the Brand owner decides that the product should be recalled and destroyed.

Industry Segment: Pharmaceuticals, Life Sciences, Medical Devices

Company Size: $Any

Example Company in this segment: Merck, Novartis, Johnson & Johnson, Phibro Animal Health, Medtronic

Department(s): Quality compliance, Supply Chain, Procurement, Planning, IT, Account Managers

User: Brand Owner/product GM, Quality managers, FDA compliance managers, Supply Managers, Operations and Fulfillment Planners, Sales Managers, Marketing Managers

Economic Buyers: VP of Fulfillment or VP of Operations

Technical Buyer: IT Manager for Operations Systems & Applications and FDA Compliance Manager

A Day in the Life (Before)

Scene: A contract container supplier, Package Ltd, identifies a risk in the course of its product QC testing. An ingredient supplier is determined to have delivered a bad lot of a key material additive. A large number of lots of finished packages are potentially affected. Package Ltd. is contracted to Packaging Services Inc. who supplies all containers and packaging materials for Pharmaco, a drug manufacturer. Package Ltd informs its customer via email and voicemail of a potential issue. Package Ltd and Packaging Inc’s risk assessment teams discuss the potential issue the following day, because key team members were travelling and do not receive notification until the next day. They decide that the risk is such that the packages in the affected lots should be recalled from Pharmaco. They are not certain if they have been used in production yet. A conference call is held with Pharmaco, and the affected lot data is emailed to their risk team.

Pharmaco’s Risk team responds immediately. They decide the packages should not be used and all previously delivered product should be returned for destruction. Their lot tracing system immediately shows that the packages are largely still in stock, but some have been filled and shipped to multiple tiers of third party distributors in 4 countries. The Supply chain manager (SCM) is asked to determine where the affected product is in the distribution chain. If product has already been supplied to the final point of distribution then, as the product is a ‘take home’ product, it will be necessary to undertake an expensive public product recall involving notices in the press which may also result in negative publicity and provide competitors with an opportunity to take market share from Pharmaco.

Desired Outcome: A public recall is must be undertaken only if there is evidence of sale of the affected product to the public. Otherwise the recall may be conducted via commercial channels without affecting the public. This assessment must be undertaken in a short time to meet the deadlines determined by US FDA, other countries equivalent authorities and legal counsel. Any public press / advertising of a recall should be targeted only in regions where sales to the public have been identified.

Attempted approach: The SCM contacts her production colleague to confirm from the production records which batches of product the defective packages have been used in. The SCM also requests production of a new batch equivalent to the product at risk. Having determined the affected product batches the SCM determines whether any of the products has been dispatched from the production warehouse to distributors. She determines that 10% of the product has left the production warehouse for delivery to international third party owned distributors who must be individually contacted to determine what the status is of the lots shipped to them. Her team must contact each of the distributors by a combination of telephone and electronic communication to determine whether any product has been supplied out of their warehouses to end users. This is complicated by the fact that these distributors sell to lower tier distributors who in turn supply to pharmacies. This process will take several days. Freight forwarders handle most of these containers and the distributors do their own import processing. Legal counsel is concerned that consumers may be harmed while the information is tracked down. Several days have already passed while Package Ltd and Packaging Inc have reviewed the issue and tried to reach Pharmaco. An immediate public announcement may be warranted in the affected markets to protect consumers. This will have devastating impact on public confidence – yet none of the product may yet have reached store shelves.

Interfering Factors: The SCM has no direct way of identifying the status of the lots shipped to these distributors. She has no visibility of their stock cover to assess those most likely to have started use of this stock. She has no understanding whether any of the distributors’ sub-distributors have delivered product to customers either.

With limited resources, the time taken to contact each distributor and await their check to determine whether affected stock has left their warehouse takes the SCM beyond the deadline set by Legal counsel for public notice being given in the affected markets of the potential need for a recall ‘just in case’.


  • Notice is given in four markets of the risk of packages breaking. Based upon commonly used First in, First out principles, the goods may not have been delivered to customers; however, some distributors may not have followed this practice. All product shipped within a fairly broad range of dates is to be considered suspect until further notice. Several days later, the formal recall is narrowed down to only a handful of lots in two of the markets.
  • Consumers react by stopping purchases immediately in all four markets – other of Pharmaco’s brands are affected as well – although they posed no risk.
  • Stores immediately return large quantity of product and restock from competitors
  • No one is hurt.

Economic Consequences:

  • Good product is returned, and stores will not accept it back, as return methods may have involved transport and storage conditions that can spoil the product.
  • Recall costs are significant for Pharmaco and its distributors
  • Lost market share persists for a significant time in four markets
  • Distributors demand compensatory discounts and allowances.

A Day in the Life (After)

New Approach: Using the Pharmaco Vecco Control Tower alert system, Package Ltd notifies Packaging Services Inc and Pharmaco simultaneously when they suspect the package quality issue exists. The QC data from their testing of the affected lots is online in the Control Tower and is visible to all three firms’ risk teams. The Pharmaco risk team notifies the SCM that they think the issue may be serious and may require a recall. The SCM immediately identifies the product batches having the affected package together with their location. Pharmaco’s ERP and QC systems and their logistics providers have a daily feed of ingredient, product and shipping status into the Control Tower. All production inventory lots containing the packages are put on quarantine. The in house distribution WMS and TMS systems provide the Control Tower with information regarding finished goods inventory lots and whether any of the affected stock has been dispatched and to whom. All in house inventory and in-transit inventory is quarantined.

The Control Tower receives overnight data files from all authorized third party distributors with their inventory status by lot number. It sends a message to the appropriate managers within the affected third party distributors to place the affected stock on hold, and asks if any has been shipped since the last overnight update. For those distributors not having batch control the Vecco control tower assesses the likelihood of the affected inventory having been used based on inventory levels, demand and an assumption of FIFO at the distributor’s warehouse. Some may possibly have been received and shipped to pharmacies, but only in one country and in one region. One distributor, without batch control, may have sold some of the affected lots in a second region.

The SCM advises the Risk Management team of the situation enabling them to determine the correct course of action with regard to notifying the public.

At the same time, production and deployment of unaffected stock is replanned taking into account the levels of unaffected stock held throughout the network such that replacement stock can be deployed to those with the greatest need to minimize any period of unavailability and scheduling production to minimize the impact on other co-produced products. Purchasing is electronically notified to replace the affected packages from the approved alternate supplier.

The recall requirement is confirmed by the combined three firms’ risk teams, and the limited recall is executed in the two regions of the one country that are involved. All of this has taken place in one day.



  • Pharmaco, Packaging Inc and Package Ltd all dramatically reduce their own economic impact from the resolution of the issue
  • 99% of potentially affected Consumers are undisturbed
  • Market share impact is minimized
  • No one is hurt

Enabling Factors:

  • Vecco E2E Conductor
  • Daily file exchange between Pharmaco’s existing ERP, TMS and WMS systems, demand forecast systems and Vecco
  • Daily file exchange between Package Ltd, Packaging Inc., Logistics providers, authorized Distributors at all tiers and Vecco
  • Business Procedures configured by Pharmaco’s team using Vecco process visual workflow tool
  • Vecco process alert escalation tool

Resources Not Required:

  • No changes to existing enterprise systems at the company or its suppliers
  • No new IT hardware
  • No increase to Company data center workload, after set up of daily file exchanges

Economic Rewards:

  • Consumer confidence maintained, thus Improved market position versus base case
  • Positive re-enforcement of the benefits of being a Pharmaco preferred partner among all affected parties
  • Reduced Pharmaco Supply/fulfillment chain costs
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