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In the realm of low-volume life science logistics, Andy Clarke, Country Manager at life science logistics provider YSDS, examines the challenges encountered by companies and their logistics partners. Despite growth in the low-volume market, shipping high-value and time-sensitive items poses significant hurdles, necessitating effective communication and a cohesive blend of human interaction and technological advancements.
Low Volume, High Value
The low volume life science market has significant complexities – an educated understanding of Good Distribution Practice (GDP) methods and processes is required before any shipments can commence, whilst the items can range from novel prototypes, up to final stage development pre-trial products, and can also include component ingredients and failed items being returned for analysis. Consequently, the need for add-on features such as unique packaging, individual insurance, and special requests in transit is comparatively high on a “per shipment” basis. Additionally, customs teams in each country are not used to seeing such items regularly, so it’s easy to see why most companies have major concerns when they come to ship their products. Hence, it’s essential to seek out a specialist logistics partner to effectively outsource the process beyond standard logistics provisions.
Close collaboration between the shipper and logistics provider is of the utmost importance to ensure products are delivered intact and on time. The items are often referred to as “high value”, but this is generally a misnomer as the product itself has little monetary value. The value lies in the role it plays in the bigger picture; these are business-critical shipments for companies often in the start-up, spin-out, or SME phase of their existence. The success of a project and conformity to the agreed timelines can have significant impacts on proof-of-concept, funding conversations, and meeting critical strategic markers with mentors. In short, the future of a company may rely on these “low volume, high value” shipments.
The challenges are higher too in the low volume market, but the market interest is lower than it could be. Recent figures shared by Straits Research indicate that “the global clinical trials outsourcing market was valued at USD 40.77 billion in 2022,” and “it is estimated to reach USD 74.38 billion by 2031, growing at a CAGR of 6.91% during the forecast period (2023–2031).” (1) Although figures are not published or widely researched on the growth of pre-trials development, it is common knowledge that many more products are researched and developed that do not make it to the clinical trials phase vs those that do. So, it is fair to assume that the CAGR of low volume, pre-trials items are increasing at a rate in excess of this 6.91%. With this assumption, it would not be excessive to say that this “low volume” market has a CAGR quite easily in double digits and is expected to grow significantly over the next seven years.
Shipping high value, temperature-controlled or time-dependent items nationally and internationally has always been a strategic challenge, but as with any shipper in any sector, many of the conditions impacting and adding to the complexities of each shipment cannot be controlled - such as weather, staffing issues, strikes, transport problems, national holidays, conflicts, political events etc. But it is possible to mitigate the risk, even with shipments that are rarely routine or predictable.
Communication is Key
The logistics process in the life sciences sector is generally split into two areas. The first is aligned with the research and production/manufacturing process. Proof-of-concept, discovery, and pre-clinical work all lean towards valuable ad-hoc or low volume productions requiring specialised, unique solutions. Ad-hoc shipments to differing locations dramatically increase risk, as every time new components are introduced into the equation, the potential for error increases. The second area is high-volume production items, which require a different approach. Whilst considering the same regulations, they generally require routine logistics, with cost forming a much larger part of the decision-making matrix. With repetitive high-volume shipments, the risks are also statistically reduced, as the routine will be similar.
Whilst growth in the low volume sector is high, the related revenue for logistics companies is considerably lower than the high volume, mass production end of the market, and it is therefore not an area of focus for the bigger players — the numbers simply don’t add up to justify them focusing on this area.
How can specialist logistics companies and other service providers help? Communication and collaboration with stakeholders is key. To correctly ship products in the low volume/high value life science sector, it is crucial to correctly understand the commodity, and this can rarely be done by asking the client to complete an online form. By taking the time to discuss the process of manufacture, the rationale for any categorisation (such as UN dangerous goods classification), temperature requirements and the production and shipping schedule, a bespoke solution can be formulated that fits the full needs of both the shipper and the recipient.
Best practice makes perfect?
Logistics companies can take certain steps to ensure their clients’ needs are fully supported.
Avoid too much automation. Ticked boxes in forms and online booking systems often result in the false assumption that both sides fully understand the shipment. Many scientists may not know anything about shipping their valuable goods, and as a result the logistics process is at high risk of failure. There is an education required on both sides - the shipper needs to fully understand what they are moving and the strategic needs of the client’s business; and the client needs to understand the capabilities and limitations of moving high value items domestically and internationally.
- Understand the whole process and keep asking questions. Why that temperature? How much can it fluctuate? For how long is it stable? What is it being used for when it arrives? Can the item easily be reproduced? How long did it take you to produce? Why are you shipping this amount? Would you prefer to ship more or less? If there is an assumption that only 10kg of the product can fit in a box, question it. Doubling the quantity could significantly reduce the cost of goods sold and save the shipper huge sums of money whilst reducing the risk dramatically.
- Provide valuable feedback. Everything may go to plan, but if improvements can be made then they should be discussed. A healthy feedback loop with stakeholders is important to learn and improve the process… Especially when future shipments of similar items are due to take place. When both teams understand what can be improved (and what can’t), they can put their efforts into the right areas in tandem, dramatically increasing the effectiveness of any changes.
What does the future look like?
It now seems almost impossible to write any article related to the Logistics or Life Sciences sectors and not reference the COVID-19 pandemic, due to the huge global health implications, economic impact, and supply chain crisis that followed. For logistics companies, the digitalisation drive has since accelerated, with mainstream established companies across all sectors digitising most of their services and processes (from DHL to Maersk, and many others). This drive has also affected the Life Science sector, with even more niche companies leaning heavily on their forms, CRMs, and processes, fuelled in part by the need to work remotely in the pandemic, but also by the continuation of hybrid working afterwards. Whilst this has led to many efficiencies, it has also meant a move away from the conversations and collaborations that help to build relationships and push innovations forward.
On the one hand, we have the boom in AI and its undoubted impact on the way we interact with digital systems. On the other hand, our latest client feedback survey shows that clients prefer to be able to talk to support staff when arranging a new shipment. Whilst we are optimistic about the future role that digitisation and AI will play in segments of the Life Science Logistics market, we must not neglect the value of human interaction. To learn how each side works, discuss problems, provide reassurance, make changes if required, delegate responsibility, and build trust.
We believe the mid- to long-term future will be strongly influenced by AI, but success for both logistics companies and product manufacturers is, for now, still based on two priceless human skills: communication and collaboration.