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Building Sustainability into the Supply Chain and Pharmaceutical Operations
Incorporating sustainability into operations and the supply chain is an important focus for pharmaceutical companies. While the complete definition of sustainability includes social, environmental and economic impact, the emphasis in this analysis will be on the incorporation of environmentally favored approaches. To gain a perspective of these issues, Patricia Van Arnum, editor of Sourcing and Management and senior editor of Pharmaceutical Technology , discusses the emphasis for industry- and company-wide sustainability practices and the challenges in implementing such an approach with Thomas LaVake, manager, worldwide environment, health & safety at Johnson & Johnson (New Brunswick, NJ). LaVake will be offering a presentation, “Sustainability: A Business Imperative” at the Annual DCAT/ISM Sourcing Summit 09, which will be held Nov. 4–5 in New Brunswick, New Jersey. The summit is presented by the Drug, Chemical, and Associated Technologies Association (DCAT) in partnership with the Pharmaceutical Forum and Chemical Group of the Institute of Supply Management (ISM).
PharmTech: What challenges and opportunities does the pharmaceutical industry face in incorporating sustainable practices in its sourcing, manufacturing, and supply-chain practices?
LaVake: At Johnson & Johnson, we have a long history of sustainability efforts and programs, but the current global economic and business challenges that the pharmaceutical industry is facing puts the effort alongside many other competing initiatives and programs. Once side-by-side, these efforts and programs have the potential to be further scrutinized for business value and impact. Since the terminology associated with sustainability may not be quite common yet, the business case for sustainability becomes that much harder to sell. Harder because the stakeholders may first need to be educated and that has an upfront potential to impact interest level and commitment.
Although first illustrated as a challenge, the education effort may quickly turn into much opportunity. The opportunity comes from people, internal and external, within the supply chain who see the win-win outcomes associated with some basic sustainability efforts such as increasing energy, material, and resource efficiencies. These efficiencies usually have a significant return on the investment. Other win-win outcomes may result from avoiding or minimizing the hazardous components that lead to increased complexity and controls and potential for incidents and business interruptions.
PharmTech: Given the complexity of the molecules used as active pharmaceutical ingredients and the related synthesis and purification of these compounds, the pharmaceutical industry as a whole faces certain technical challenges in greening its manufacturing practices. The 12 Principles of Green Chemistry is a widely used roadmap for best-practice approaches in green chemistry. Can you outline approaches that the industry as a whole and/or that Johnson & Johnson may be employing to incorporate or facilitate efforts in green chemistry? What strategies or approaches may be used to address barriers in terms of training/education or cost constraints?
LaVake: It is critical that the principles and concepts of green chemistry be integrated as early as possible in the pharmaceutical product pipeline. At Johnson & Johnson, green-chemistry efforts are explored in the earliest stages of drug discovery. If the chemistry and chemical syntheses of a product are impacted in later stages, the potential for cost increases, and impact may decrease. Many of the fundamental concepts associated with green chemistry are aligned with standard ‘design excellence’ and ‘lean’ manufacturing programs. The more that the complete pharmaceutical supply chain can speak a common language with common outcomes (e.g., reducing process steps, designing in less material needs), the more efficient and certainly more sustainable the product pipeline will become.
PharmTech: The American Chemical Society’s Green Chemistry Institute Pharmaceutical Roundtable (ACSGCIPR) recently announced that it, along with other industry groups and representatives, is working on drafting a voluntary green standard that will set criteria for chemical producers and users to evaluate the environmental impact and sustainability attributes of chemicals and their derivatives. As a member company of the ACSGCIPR, do you think such voluntary standards will be helpful for the pharmaceutical industry and its suppliers?
LaVake: Johnson & Johnson supports the effort and sees the benefit associated with expanding the understanding and expectations of green chemistry. Standardizing should help the industry be united on common expectations (although voluntary) that in turn should help all manufacturers or suppliers, regardless of their size or current understanding of green chemistry.
PharmTech: Sound sustainability practices for a drug product not only incorporate the manufacture of the drug product, but also include measures throughout the product’s life cycle. Looking at the sourcing of raw materials and pharmaceutical ingredients, what would you identify as key best practices or approaches in achieving sustainability? Can you share any insight into how Johnson & Johnson addresses these issues?
LaVake: When sourcing raw materials and/or pharmaceutical ingredients, we are very much aligned with the statement of Terry Simmons, vice-president of global purchasing with Baxter International Inc., “simple, yet structured process with strong specifications and comprehensive planning helps to set us up for success” (see article, "Evolving Global Pharmaceutical Supply Chain.") We have strong and structured efforts for our external manufacturers and active pharmaceutical ingredient suppliers.
To build on this at Johnson & Johnson, we have begun a simple process within our procurement and external supply chain organizations that seeks answers to three basic questions: (1) Who do you buy from? (2) What are you buying? and (3) Where is it coming from?
To better illustrate this approach, we have developed a scoring system that is determined by Procurement’s understanding of ‘who’ they are buying from. For example, if they know the number of suppliers within their procurement category and have identified their key suppliers, they are just beginning to answer the ‘who’ question and would be assigned a low score. If their suppliers begin to look ‘sustainable’ and a certain percentage have publicly available sustainability reports, the procurement category is assigned a medium score. If the suppliers have sustainability reports and are participating in some key external efforts that Johnson & Johnson supports (i.e., Carbon Disclosure Project and the US Environmental Protection Agency’s Green Supplier Network) then that procurement category is assigned a high score. The higher the score, the more sustainable the external supply chain within that procurement category. A similar set of scoring criteria exists for the other two ‘what’ and “where’ questions.
PharmTech: Can you outline other industry initiatives or company initiatives addressing sustainability practices that you feel are important for the pharmaceutical industry and its suppliers to be aware of? Are there certain approaches in other industries outside the pharmaceutical industry that you think are helpful to consider?
LaVake: Johnson & Johnson currently supports several external initiatives related to sustainability. One example is within the US where we seek external manufacturers and suppliers willing to sign up and participate in the US Environmental Protection Agency’s (EPA) Green Supplier Network. The program has been developed to help small- to medium-sized companies complete a ‘lean and clean’ assessment using expertise coordinated by the EPA.
Another example is at the global level, and in this case, we seek suppliers willing to evaluate, report their energy use and greenhouse gas emissions, and disclose their reduction plans through a web-based questionnaire called the Carbon Disclosure Project (CDP). Johnson & Johnson has completed the CDP questionnaire each year since it was launched. For the past two years, we have approached more than 100 key partners within our external supply chain to complete the CDP questionnaire.