Over the past decade, the pharmaceutical warehousing industry has been one of the most successful. Pharma companies excel in every discipline (research and development, manufacturing, and marketing) while maintaining the highest safety standards. This has led to increased profits and sales than in any other industry.
Recent challenges have presented significant problems for the industry.
The competitive intensity has increased dramatically due to the rapid growth of generics.
With more niche products being available for new markets, the product portfolio is diversifying.
OTC products are subject to the same standards as consumer product companies. Large drugstore chains enforce these high standards (e.g. Large drugstore chains have the same high standards for OTC products (e.g., availability of shelves, promotions) as they do for consumer products companies.
The strong competition among healthcare providers and government reforms continue to drive down prices.
Pharma companies are being forced into strengthening their supply chains to guarantee traceability because of the growing use of counterfeit drugs, quality regulations, and serialization mandates.
This creates new challenges in the supply chain.
Pharma companies are increasingly dependent on global networks of R&D partners, suppliers, logistics providers, and contract manufacturing organizations (CMOs) to develop and test their products. Specialized outsourcing partners can help companies achieve significant cost savings and flexibility in key supply chain activities. Many large pharmaceutical companies outsource at least some of their supply chain activities.
This new outsourcing model adds complexity. How do you manage a tight supply network that is increasingly virtualized? How do you manage an external supply network when your company’s enterprise resource plan (ERP), only sees what is inside the company’s walls? How do you manage information exchanges at multiple levels in your supply chain with third parties?
Management of Supply Chains Redefined
These five initiatives should be a focus for pharmaceutical companies, as they would in other industries like high-tech and consumer goods.
Share and create a business network. The foundation of multi-enterprise supply chains is a digital business network that connects all external suppliers through the cloud. This network is different from the traditional point-to-point model. It works in the same way as the Internet, connecting everyone and allowing all partners to collaborate. This allows for end-to-end visibility as well as collaboration, which facilitates business interactions among the different actors. The network functions in the same manner as an ERP system, but it can be used for the entire supply chain. Without such a platform, it is almost impossible to attain the required level of visibility and coordination between supply chain partners.
Understanding true demand. Forecasts of future demand are only an educated guess. Innovative pharma companies work with consumer products companies to collect large quantities of demand-related information that is then fed into advanced demand sensing systems to better predict real demand. This can be done at the point-of-sale (POS) or via signals such as weather forecasts, flu trends, and social media. All supply chain partners are informed about the improved demand picture. This allows all parties (pharma companies, suppliers, CMOS) to be aligned. Demand sensing results in a significantly higher shelf availability, and lower inventories.
Control the quality of CMOS. Pharma companies need to ensure traceability from beginning to end. Pharma companies should be able to see their partners’ manufacturing operations to monitor the quality of products throughout multi-tiered supply chains. Pharma must be able to connect to the CMO’s manufacturing execution software (MES) to capture relevant data at each stage of production. This allows you to see every factory transaction, which can be used to track material flows, lot genealogy, and other parameters like yields and test results. This information is crucial to track your production. This information is crucial for any serialization project.
You can quickly re-plan across the network. You must also be able to respond quickly to changes in supply and demand. With business networks, companies can see the entire supply chain starting to end. Traditional planning systems can be slow to solve problems and lack decision support capabilities. They can instead suggest alternative scenarios and negotiate trade-offs. These tools allow for rapid evaluation of new information. It is easy to compare plans and choose the best. The new plan is then shared by the business network with all supply chain partners.
Better manage distribution. Pharma companies are increasingly dependent on outside partners for transportation, warehousing, and other value-added services. It is essential to manage distributor partners to ensure product availability. This requires complete inventory visibility from the downstream as well as sophisticated inventory strategies. Proactive management refers to the ability to efficiently allocate products to various channels to maximize profit and deliver the best products to customers. This includes making sure you deliver on time. This is especially important when you’re competing for shelf space at drugstore chains and pharmacies.
Network for supply chain operations
These strategies are based on the experience of consumer product companies but also consider the specific needs of the pharmaceutical sector. A cloud-based network allows for end-to-end visibility and collaboration among supply chain partners. This network can be combined to provide decision support tools that use this data. These are just a few of the many benefits.
Current visibility from all points of supply chains. ‘One version’ of the truth shared by all parties
Quality and traceability must be guaranteed for all CMOS
Higher availability off-the-shelf and usually lower inventories
Smarter channel allocations result in higher market share and better margins.