Amid a powerful storm battering the East Coast, an unassuming tractor-trailer backed into a Connecticut warehouse. It was late Saturday night. Thieves had stolen $60 million in pharmaceuticals by dawn. Missing were 40 pallets of shrink-wrapped medicines, including “cream of the crop” drugs commanding top dollar in the illegal market. Left in their place was a ladder, some tools, a hole in the roof, and a beeping alarm system.
It was the largest theft in the state’s history and serves as an important reminder today: the quality of a warehouse matters.
For pharmaceutical companies outsourcing warehousing operations, cost and location are often the determining factors when selecting a vendor. Minimizing supply chain costs while maximizing supply chain speed is the priority. However, too many companies overlook a crucial third consideration—warehouse quality—until it’s too late. This largely preventable problem costs the industry billions of dollars annually.
Luckily, it doesn’t have to.
A warehouse’s design to prevent and address three key risks—fire, theft, and temperature excursions—can help pharmaceutical companies protect both patients and their bottom line.
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Fire Risks
The National Fire Protection Association reports that about 1,450 warehouse fires occur every year, resulting in almost $283 million in property damage. That means nearly one in every 10 U.S. warehouses will experience a fire within the next 12 months. Beyond inventory loss, fires create costly supply chain disruptions impacting cash flow. They also drive up insurance premiums, labor costs, and third-party expenses. Added together and pharmaceutical companies could face devastating financial consequences if a warehouse’s fire safety measures are insufficient.
Warehouses designed to mitigate fire risks include fire-resistant materials and feature proper ventilation systems. They have modern fire suppression technology, including advanced heat detection and sprinklers specifically designed for warehouse environments. Regular maintenance and inspections ensure optimal performance. Staff undergo routine training on the latest fire safety protocols and procedures. They also practice emergency responses, such as evacuation drills and equipment shutdowns, to guarantee preparedness.
Checklist for Evaluating Fire Safety:
- When were the fire detection and suppression systems installed and/or updated? Are they regularly inspected? What elements do they include to detect, contain, and extinguish fires? (E.g., Pre-action valves, high-pile storage, in-rack sprinklers)
- What fire-resistant materials are part of the building’s construction?
- What are the facility’s emergency fire protocols, including clear evacuation routes and drills? When were the protocols last updated?
- Are there separate storage zones for flammable materials to limit fire risk?
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Theft and Burglary
Cargo theft is a growing concern in the pharmaceutical industry, with annual losses estimated between $15-$30 billion in the U.S. Many assume theft happens over the road between locations, but a significant portion occurs within warehouses. One CVS distribution center discovered a single employee smuggled more than 1,500 bottles of codeine-based cough medicine out of the facility at an estimated value of $1.2 million.
Warehouses can prevent theft using state-of-the-art security systems that include 24/7 surveillance, controlled access, and strict visitor policies. Facilities should include perimeter fencing. Windows, doors, and docks should be equipped with alarms. All systems must have back-up power. When thieves cut the warehouse alarm system in Connecticut, the remote security team assumed it was due to a storm-related power outage. It was a $60 million mistake.
High-security areas may require biometric access to replace easily stolen employee key cards. The warehouse should be well lit and have inventory control procedures to quickly spot discrepancies.
Checklist for Evaluating Theft Prevention:
- Does the warehouse have 24/7 camera monitoring with remote access for managers?
- Are there restricted access points for highly sensitive materials? What are the procedures for accessing these areas?
- Are alarm systems integrated with local law enforcement for rapid response?
- Does the warehouse include security and alarm system redundancies to prevent outages or tampering?
- How does the warehouse manage inventory from the point of entering the facility to its exit to prevent theft? (E.g., Inventory count frequency, monitoring technology, inventory access)
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Temperature Excursions
Temperature excursions—when products are exposed to temperatures outside their specified range—are one of the most significant risks in pharmaceutical warehousing at a price tag of roughly $35 billionin annual losses. Many drugs, including vaccines and biologics, are temperature sensitive. Even a brief exposure to the wrong conditions or a refrigeration system failure can render them ineffective or unsafe. This not only leads to costly product write-offs but can also delay shipments, disrupt patient care, and damage a company’s reputation.
High-quality warehouses have advanced temperature control systems that ensure a stable environment, especially in cold storage areas. These systems include refrigeration units and freezers that ensure products do not deviate from specified temperature requirements. Real-time temperature monitoring technology is essential, allowing warehouses to track conditions 24/7 and automatically alert staff when temperatures deviate. The technology includes door monitoring to keep temperatures stable. Systems connect to back-up power sources to ensure uninterrupted temperature control. The warehouse infrastructure includes insulation materials that minimize heat transfer and help maintain desired temperatures.
Strict protocols ensure that products are stored and handled in temperature-controlled environments from the moment they hit the dock until they leave. Advanced pharmaceutical warehouses also conduct regular mapping to identify temperature excursion risks and proactively resolve them. Refrigeration and freezer units may come with additional technology, such as artificial intelligence, to monitor performance and predict mechanical failures before they occur.
Checklist for Evaluating Temperature Controls:
- What type of refrigeration systems does the warehouse use? How often are they serviced and inspected? Does the warehouse use any advanced technology to prevent equipment failures?
- Is there a real-time temperature monitoring system in place? How does it alert staff of deviations?
- Does the warehouse have backup power generators or other redundancies to maintain temperature control during outages?
- Are real-time temperature logs kept and accessible for audits?
- What protocols are in place to ensure temperature-sensitive products are handled and stored properly throughout their time at the facility?
- When was the last time the warehouse conducted a temperature mapping exercise? What were the key findings and what action was taken?
Quality Vs. Cut-Rate: Why Langham Logistics Warehousing Pays Off
At Langham Logistics, we understand that being a good warehouse partner is about more than proximity and cost. It is about protecting your products, patients, and profits. We design our state-of-the-art facilities for more than storage. They also mitigate risk.
We invest in advanced tracking and monitoring technology. Our warehouses use strict safety protocols accompanied by continuous staff training to prevent costly problems. Langham warehouses feature top-tier fire prevention systems, robust security measures, and best-in-class temperature control equipment. From conception to construction to cargo storage, our facilities and team ensure pharmaceuticals stay in a safe, reliable environment. We operate as if lives depend on it—because they do.
When selecting a warehouse provider, you aren’t just paying for a facility. You are paying for peace of mind. Langham goes the extra mile to ensure every pallet and product that enters our doors remains protected from the risks other logistics companies overlook and undervalue. Our facilities help safeguard your supply chain, maintain product integrity, and protect your bottom line. It is why our warehouses have been assessed as top three percent in the U.S.
Bring us this risk checklist, and all your other quality questions, and we’ll confidently show you why.
