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SAP Support of the Health Care Supply Chain’s Ongoing Effort to Ensure Patient Safety and Drive Business Value
Supply Chain is also known as :
Supply Chain Tools,
Supply Chain Trends,
Just In Time,
Supply Chain Model,
Supply Chain Management,
Supply Chain Modeling,
Supply Chain Optimization,
Demand Chain Management,
A Detailed Look at SAP’s Support for the Center for Healthcare
Supply Chain Research® Blueprint for Data Management & Data Sharing
Table Of Contents
- Executive Summary
- Blueprint Briefing
- EPCIS Application Support.
- Short-term Value Opportunities
- Long-term Value Opportunities
- How SAP enables the Blueprint
- Middleware and Device Management
- Auto-ID Infrastructure – the EPCIS Capture Application
- Object Event Repository
- Serialization Applications
The Center for Healthcare Supply Chain Research (formerly the HDMA
Research & Education Foundation) recently published an important
study concerning data management and data sharing in the healthcare
supply chain1. The key conclusions of the study are paraphrased below:
- The primary goals of the healthcare industry are to ensure
patient safety and to deploy processes and systems that are compliant
with the various state and federal requirements. To this end, certain
data must be shared among trading partners.
recognizes the enormous potential business value of leveraging shared
data to enhance the efficiency and effectiveness of supply chain
processes through enhanced visibility. To the extent possible, industry
would prefer to leverage the investments made in safety and efficient
compliance to also accomplish these business goals.
recommended Blueprint for industry to achieve these goals is to develop
a phased approach and architecture that leverages an important new
EPCglobal standard for data exchange called electronic product code
information services (EPCIS).
EPCIS is a standard mechanism for inter-company collaboration and
data sharing, which can enable healthcare trading partners to deploy
solutions that not only meet the short-term mandates driven by patient
safety, but also to lay the foundation for long-term business value.
Furthermore, the same infrastructure that is recommended in the
Blueprint for data sharing and external collaborative business
processes also is applicable to many internal processes, so that
companies can begin capturing value from these investments now.
The remainder of this paper is organized as follows:
- A brief introduction to some relevant background topics, as well as a summary of the major concepts of the Blueprint.
- A review of short- and long-term business improvement opportunities that can be gained by leveraging EPCIS.
closer look at SAP’s serialization architecture, and how it can be used
to support data management and data sharing as outlined in the Center
for Healthcare Supply Chain Research’s Blueprint.
1- Reference to Rules of Engagement: A Qualitative Business
Case for Data Management & Sharing in the Pharmaceutical Supply
Chain and Rules of Engagement: Phase II • The Blueprint for Data
Management & Data Sharing
The Center for Healthcare Supply Chain Research began an industry
initiative in 2005 to address the issue of managing and sharing data
across the healthcare supply chain.
After an initial Phase I2, which indicated a baseline
consensus for the need and value of product data sharing, a
comprehensive Phase II study was undertaken3, executed by
Forrester Research. Phase II surveyed 90 organizations across all
sectors of the healthcare supply chain. Based on these survey results,
a Blueprint was recommended to guide healthcare companies through the
efforts to achieve the objectives of enhanced patient safety and
increased business value.
The Blueprint provides a three-level "Roadmap." Figure 1 explains
how each level adds incremental business value, and provides an
The Phase II study also included a recommended architecture for the Blueprint, shown in Figure 2.
A key component of this architecture is the Event Information Server, which is based on the EPCIS standard.
2- Reference to Rules of Engagement: A Qualitative Business
Case for Data Management & Sharing in the Pharmaceutical Supply
3- Reference to and Rules of Engagement: Phase II • The Blueprint for Data Management & Data Sharing
The EPCIS standard4 from EPCglobal was ratified in April
2007. EPCIS describes a data model and a reference architecture for
capturing and sharing information about serialized objects (products,
assets, documents identified with unique serial numbers) and their
associated events. The standard is a cross-industry framework, suitable
to a broad set of applications requiring supply chain visibility.
The EPCglobal reference architecture5, shown in Figure 3,
is the cornerstone for the Center for Healthcare Supply Chain
Research’s Blueprint. The EPCIS architecture consists of the following
- A set of devices deployed in manufacturing plants and
distribution centers that read or write serial numbers (RFID and/or
barcode), which connect through standardized interfaces to a "Filtering
and Collection" system (often called "Middleware")
- An EPCIS
Capturing Application, which interacts with the middleware, executes
the relevant business process (packaging, shipping, receiving, kitting,
repackaging, etc.), and sends information about the EPCIS events to the
- The EPCIS Repository itself, which stores object
and event information and provides standard interfaces for capturing
and querying events. This is the basis for data management and data
sharing within and between companies.
- A set of EPCIS
Accessing Applications, which query the EPCIS Repository and uses the
information for collaborative business purposes.
This EPCIS framework assumes the concept of serialization such that
each item/case/pallet is identified by a unique serial number according
to a standard format, which is referenced in data sharing documents,
such as the Advanced Shipping Notice (ASN) and electronic pedigree
Within the EPCIS Architecture, the EPCIS Capturing Application is a
critical component responsible for executing the business processes to
4- Reference URL for EPCIS standard and FAQ
5- URLfor EPCglobal architectural framework
Serialization is a required element for many patient safety
initiatives, including the current California pedigree requirements, as
well as other state and international requirements. Serialization
offers a way to individually identify products with certainty, which
provides the foundation for supply chain partners to defend against
counterfeiting and diversion.
While the tracking benefits of serialization are intuitive, the
implementation of serialization is less straightforward, and has a
profound influence on how companies execute their supply chain business
processes. There are two main elements:
- Serial Number Management: For serialization
to work, every number applied to an item, case or pallet be unique.
This means that companies applying serial numbers must keep track of
what numbers have been already used, and must allocate numbers to
various manufacturing plants and distribution centers in
non-overlapping number ranges. A related requirement is that numbers be
formatted according to standard formats so that they can be read by
trading partners. For the EPCglobal process, the primary formats are
Serialized Global Trade Item Number (SGTIN) for items and homogeneous
cases, and Serialized Shipping Container Code (SSCC) for mixed cases
- Business Process Execution:
Manufacturers, distributors, retailers and hospitals that handle
serialized product will need to integrate serialization steps into
their normal business processes. The list of business process that are
impacted by serialization include packaging, receiving,
picking/packing/shipping, kitting, repackaging and inventory movements
and adjustments (See Figure 4 for the preliminary set of healthcare
business processes impacted by serialization, as defined by the
EPCglobal Healthcare/Life Sciences workgroup) Each of these business
processes operates today in a non-serialized way; for example, picking
and shipping typically are done against an order document. With
serialization, there are additional tasks required to capture the
serial numbers and make sure that they are aligned and consistent with
the orders. For example, additional steps must be taken to check that
the count of serial numbers scanned matches the order quantity. In
summary, accuracy and granularity must go to a new level. It is not
sufficient to have accurate inventory counts. It also is required that
each individual item is correctly identified.
EPCIS Application Support
Information about serialized events is generated by the EPCIS
Capturing Application during the execution of the business process, and
is stored in an enterprise EPCIS repository. The EPCIS repository then
acts as the hub to enable data sharing, and to make key supply chain
information available to trading partners under appropriate security
and authentication rules. It is these applications that ultimately will
deliver the business value and the innovative supply chain capabilities
that are envisioned by the Blueprint.
One such application is e-pedigree. While e-pedigree can be
supported today via EDI and the Drug Pedigree Message Standard (DPMS,
ratified by EPCglobal in January 2007), the data shared using this
standard are contained in a format that makes it difficult to use the
data for other purposes. For this reason, a GS1 US Healthcare workgroup
is defining guidelines that will allow for communicating e-pedigree
data via the EPCIS standard. This guideline, expected in late 2008,
will be important for the realization of the Blueprint, as it will
support companies’ ability to leverage e-pedigree investments to
further enhance business processes. Once serialized product tracking
data are available in EPCIS, market deployment and adoption of these
other applications (recall and expiration management, chargeback
reconciliation, forecasting and replenishment, asset tracking, clinical
trials, cold chain and many more) will accelerate.
Short-Term Value Opportunities
EPCIS and serialization will ultimately enable a variety of data
sharing applications, but in the interim, they can be used today for
internal applications that already generate return on investment. Many
companies in healthcare and other industries are deploying
serialization projects today. These projects do not depend on setting
up a large-scale, collaborative business process with one or more
One such opportunity can be realized by leveraging the use of RFID.
Although none of the e-pedigree mandates today strictly require RFID
and many companies are pursuing compliance based on serialization using
various 2-D and linear barcoding formats, RFID should be considered an
important productivity driver. The U.S. Food and Drug Administration
(FDA) has recommended RFID, and many trading partners in the healthcare
supply chain are using it today, although there are still open
questions about its use for certain biologic products and challenges
about its application where liquids or metals are involved.
RFID does offer direct business productivity benefits, based on two facts:
- RFID tags can be read at a distance, without direct line of
sight, meaning that data collection can take place with little or no
human intervention; and
- RFID tags can be written to and can
carry "user information" in addition to the serial number, which can be
useful in certain business processes.
A number of trading partners have implemented serialization using
RFID in such a way that they can reduce labor requirements by
automating data collection tasks previously requiring barcode scanning
and/or data entry at a terminal. These systems have been set up to
automatically capture various business transactions in ERP and WMS
systems by virtue of an RFID-tagged case or pallet passing through a
portal, which would have previously been captured manually. Such
automated business processes speed up overall supply chain velocity,
and improve data accuracy.
A second class of opportunities has to do with improved statistical
analysis for process improvement based on the tracking and measurement
of serialized objects. It is a fundamental tenet of "lean" supply chain
operations that process measurements can support analyses that will
drive process improvements, and when serialized objects are tracked,
outliers can be specifically identified, and the causes of unacceptable
variances can be traced back to the source. For example, one company
has used serialized product tracking to identify products in a
warehouse that were not shipped according to strict "First Expire,
First Out" sequence. By identifying the serial numbers involved, the
company was able to determine exactly what happened, and correct a flaw
in their business process.
A third class of opportunities involves the internal tracking and
tracing of assets, product and/or employees. As intermediate materials
move from manufacturing to
assembly/packaging, or as controlled substances move from packaging to
the vault and then to the shipment dock, companies are finding value in
serializing products to capture information on the internal movements.
These activities provide full visibility and accountability as to the
location and status of the tracked products. With the recurring recalls
and emergencies in areas such as food, livestock and pharmaceuticals,
upstream (ingredients), internal and downstream tracking are becoming
important capabilities, which can be implemented today using
serialization and EPCIS.
A related application opportunity that healthcare companies can
pursue is counterfeit detection. Companies are applying various overt
and covert anti-counterfeiting measures to the packaging of their
products. Some of these measures involve matching serial numbers, while
other measures involve other technologies such as copy-protection
patterns. Company agents in the field, who today must physically send
suspicious product back to a lab for assessment, will be able to access
various types of online and offline tools to determine product
authenticity. One feature of such tools is the ability to upload a
picture of the suspicious product to have a server-based algorithm
(which may be integrated with an EPCIS) determine if the product is
genuine or has been copied.
A fourth class of opportunity is the tracking of returnable assets
such as pallets and containers. By serializing and tracking these
products, it is possible to keep track of the current location and
status of returns. For example, companies can assess whether they have
to be cleaned, inspected, repaired; or whether they have been out at a
customer site for a prolonged period of time; or whether they should be
requested to be returned; or whether an invoice should be sent.
It is a small step from tracking returned goods to tracking
additional environmental factors, such as temperature, and thereby
improve the cold chain process. These types of applications are also
being implemented via an event repository equipped with event
Long-Term Value Opportunities
Once data sharing models are in place between trading partners in
the healthcare supply chain, opportunity exists for a wide variety of
collaborative applications leveraging EPCIS.
The basic premise of all of these scenarios is extended visibility –
i.e., the ability for a company to know the location, quantity, and
status of products not only within their four walls, but to have access
to similar information in the marketplace, including information about
its products in its customers’, and even its customers’ customers’
Some of the collaborative applications that can be based on EPCIS are described briefly below:
- Authentication: This is the ability for any downstream
trading partner to perform a query to the manufacturer to check that
serial numbers, as well as other information found on product
packaging, matches the numbers on the item. Such a check is one way to
confirm authenticity and to detect possible criminal activity. This
service is already in place using proprietary systems at some
pharmaceutical companies, but most trading partners are waiting for the
wide-spread implementation of a standards-based system (EPCIS) before
adopting an authentication process. Also, authentication is a growing
requirement in Europe, where it is likely to be linked in with national
medical reimbursement processes.
- Visibility Applications: A
number of opportunity areas will arise from the ability of healthcare
trading partners to have extended visibility into the supply chain.
These opportunities include:
- Proof of Delivery – The
ability for companies to exchange serialized receipt confirmations
could eliminate the wasted effort and revenue leakage associated with
deduction claims based on not having received invoiced product.
and Expiration Management – There are many opportunities to eliminate
waste and improve security through improved recall and expiration
management. Companies needing to recall products will be able to
precisely identify where the product has been shipped and more
specifically target recall notices. They also will be able to recall
less than full-batch quantities based on serial numbers. Further, they
will be able to verify that the returned/destroyed product is exactly
the product that was recalled, and they will be able to credit the
correct invoiced price, based on the specific identification of the
original shipment and invoice.
- Chargeback Reconciliation – A significant percentage of revenue is lost each year verifying rebate claims6
to ensure that the product has not beenreturned and/or reshipped, that
the rebate request was not duplicated and that the rebate dollar amount
is correct based on the actual invoiced price. All of these checks
could be potentially performed by leveraging EPCIS event information
about serialized products.
- Supply Chain
Applications: In addition to leveraging serialization for
track-and-trace purposes, there also are many supply chain management
opportunities. It is these types of opportunities that the consumer
products industry has been pursuing for some time based on EPCIS
models. These opportunities include:
- New Product
Introduction Management – This is the ability to track and verify that
new product has been received by the target retailers ahead of a major
product announcement or launch.
- Forecasting and
Replenishment – Enhanced visibility in the supply chain has been
identified as a major driver of inventory reduction and customer
service improvement. Supply chain theory has identified the "bullwhip"
effect as the amplified peaks and valleys in inventory that result due
to time lags and visibility gaps in the supply chain. Extended
visibility from EPCIS observations will enable forecasts and
replenishments to be more accurate and timely.
6- Eric Newmark, IDC, Revenue Leakage: Plugging The Holes In
The Pharmaceutical Channel, 2006. 3-5% duplicate chargebacks, 15%
reverse chargebacks not captured
How SAP Enables the Blueprint
The architecture of the SAP solutions for auto-ID and item
serialization, available today and shown in Figure 5, maps very well to
the Center Blueprint architecture, providing some additional
capabilities to support the compliance goals, while enhancing the
ability to achieve business value.
Working from the bottom up, the major elements of the SAP serialization architecture are described below.
Middleware and Device Management
More than 20 of the leading device management and middleware
suppliers for the healthcare industry have SAP-certified interfaces
between their products and the SAP serialization architecture
Auto-ID Infrastructure – the EPCIS Capture Application
Auto-ID Infrastructure, or AII, is a rules engine that executes the
serialization business processes. It fills the role of the EPCIS
Capture Application, as defined in the EPCIS Reference Architecture.
The AII receives events from the middleware, and based on configurable
rules, commissions, aggregates, maintains and translates serial
numbers, performs validations and maintains the relationships between
the serialized data and the business data residing in the business
applications (whether from SAP or not). The AII is delivered with
pre-configured business processes, such as in-bound receiving,
out-bound shipment, returnable transport items and others.
Object Event Repository
The Object Event Repository (OER) is the enterprise-level serial
number repository for serialization data. Together with the Auto-ID
Infrastructure, this repository is intended to be the system of record
for all enterprise serialized information. It is based on the core
requirements specified by EPCglobal, including the EPCIS Capture
Interface and the EPCIS Query Interface.
The main elements of the Object Event Repository are:
- Capture and query interfaces based on the EPCglobal EPCIS specification
- Data repository for events, observations, hierarchies and associated business information
Management Engine, which tracks the entire product lifecycle of each
serialized object, enabling the configuration of alert notifications if
a process does not execute as expected
- Central number range
management to distribute valid and unique EPC number ranges to each
instance of the Auto-ID Infrastructure, from which they can be
distributed down to edge devices
- Analytics, including
predefined content, which allows for the tracking and reporting of a
range of information derived from serialized events.
Note that two of the key elements called out in Center for
Healthcare Supply Chain Research’s Blueprint, event management and
supply chain analytics are supported as standard elements of the Object
At the top of Figure 5 are the set of current and future
applications that deliver business value based on the serialized data
within the EPCIS. Two of these applications exist today, and many
others are under development.
The two applications existing today are e-pedigree, and product tracking and authentication.
E-pedigree: The leading e-pedigree application
providers in the healthcare market have partnerships with SAP, and have
received SAP certification to interoperate with AII and OER.
Product Tracking and Authentication (PTA): This
application provides basic track-and-trace capabilities based on the
Object Event Repository. This module provides functionality to track
events against serialized objects, both internally, and externally. It
also offers services to authenticate that serialized product originated
from a trusted source and arrived at the intended destination.
Other Business Applications: A critical success
factor in making the Blueprint a reality is the integration between the
serialization architecture and the back-end business systems, including
ERP, supply chain management and other applications. While it is
important to have a repository storing the basic data about products,
aggregations and events, this information is not sufficient to
implement the variety of business applications that drive business
benefits. Additional information from the business systems must be
accessed in order to execute these processes. For example, many
applications have been identified in which the invoiced price of a
serialized item must be retrieved from the ERP system to process a
return or perform a chargeback calculation. This requires that the
serial number be related to a business document (e.g., the order) and
then tracked back to find the invoice and the specific price that was
For this reason, the SAP Object Event Repository is not a
stand-alone EPCIS, but is designed to integrate with back-end business
systems through pre-defined links and through a set of enterprise
services that will enable these new applications.
The industry owes thanks to the Center for Healthcare Supply Chain
Research for providing a Blueprint that will help meet short-term needs
while providing a long-term vision that will provide substantial
The SAP serialization architecture and strategy are in substantial alignment with the Center’s Blueprint.
SAP has been working with many customers in all sectors of the
healthcare supply chain and has identified some important findings,
which have been shared in this paper and are summarized below.
- Although much of the discussions tend to be about IT and
data, many of the challenges associated with serialization and
e-pedigree come from changes to current business processes. Companies
that currently perform receiving, shipping, packaging, kitting, etc.
will have to learn to perform these processes with a much more granular
and detailed focus on accuracy than in the past. More time should be
dedicated to designing these new processes and there needs to
is important to take pragmatic short-term steps, yet anticipate the
long-term value proposition associated with data management and and
track-and-trace technologies. Specifically:
data integration is critical. Business value captured from data sharing
and internal applications based on EPCIS will deliver value over the
long term, but only if EPCIS data are used in the context of other
business data. EPCIS repositories that cannot integrate with back-end
systems will be challenged to achieve the benefits of visibility and
- Even if
a company starts with e-pedigree, it should anticipate serialization in
their process design and interface design (Level 1 of the Center’s
Blueprint). Some e-pedigree requirements today do not involve
serialization, but this will be the major trend going forward.
that start with the DPMS document model should anticipate EPCIS to gain
the business benefits from supply chain collaboration above and beyond
- Companies should look for internal
opportunities to capture value from serialization and EPCIS, as
opportunities exist today (Level II of the Center’s Blueprint).