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Blake Watts, Supply Chain & Electronic Product Code Business Consultant, discusses the 2005 industry outlook
1. Much of the current activity around RFID implementation has been in the consumer products industry due to retailer mandates. With the absence of mandates in life sciences, what advantages are there to adoption?
Over the past years, there has been an ever-growing pressure on consumer products companies to better manage their supply chains. Life sciences companies have not been under the same pressure even though as an industry they experience greater inefficiencies. Where a consumer products company is looking for small, possibly single digit gains, a life sciences company has much greater opportunity. With the technology a year older and resources more wiser, life sciences companies will experience fewer growing pains than those of their early adopting consumer products counterparts. Even though there are no active mandates, there is pressure from the Food and Drug Administration to address RFID adoption and effectively implement the technology by 2007.
2. Will the FDA adjust its position and/or timeline on RFID adoption?
The FDA has stated that it will adjust their timeline accordingly. However, the industry should not look to see whole year shifts in the schedule. The timeline calls for the early tagging of cases and pallets in 2005 and continues until 2007 when the FDA expects to see tagging down to the package (item) level at drug stores, hospitals & retailers. The FDA has already shown its interest in working with all companies in the life sciences supply chain to successfully execute this timeline. Finally, the FDA has also taken steps to remove roadblocks, specifically previous label requirements, that it felt were impeding testing and eventual adoption.
3. Is RFID the silver bullet for drug counterfeiting and re-importation?
RFID is not the silver bullet for any issue within any supply chain including counterfeiting and re-importation. RFID's initial attraction is as a tool to increase supply chain efficiencies and product tracking; however implementing the technology over antiquated and inefficient processes will only accentuate current issues and not resolve them. Companies must look at the complete supply chain to gain the real advantages of the technology.
4. If the greatest advantage to RFID is at the item level, then why should the life sciences industry not wait until technology reaches this adoption level?
With the previously stated differences, life sciences companies can take advantage of implementation sooner than many consumer products companies. The same applies for adoption level. Where many CP companies may not get full return until item level, more business impact resides in life sciences because of their regulated and secure operating environment. All firms, consumer products and life sciences alike, need to get exposure and experience with the technology now. All technology implementations are easier when executed through a series of phases, from testing to piloting and into production, instead of one-time fast-paced executions. As RFID expands globally, so will the implementations. Companies should look to execute all RFID based projects from a centralized corporate strategy
5. While the pressure and activity in the consumer products industry is from retailer mandates, where will pressure and activity be in the near-term for life sciences?
Individual state laws and margin pressure will drive near-term projects. Governments, like Florida in 2006 and California in 2007, are looking to protect their constituents through drug pedigree laws. These laws force the tracking of each product produced as it progresses through the supply chain, from raw material to finished good at the pharmacy. This record can either be paper or electronic. With the added labor that paper tracking would bring; companies will need to address their willingness to move to electronic pedigrees. Beyond this, there will be other decisions as firms look to gain greater efficiencies across their supply chains. Executives will have to again decide if it is best to implement older technology or simply become an adopter of RFID as an effective tracking technology.
To find out more about Clarkston's global services please contact bwatts@clarkstonconsulting.com
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