Pharmaceutical Supply Chain Management

Article / Supply Chain and Quality

Pharmaceutical Supply Chain Management
Anshul Srivastava , Professor, India

Emerging Trends in Pharma SCM

Pharmaceutical Supply Chain Management
• Pharmaceutical Supply Chain is the sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service.
• Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain as efficiently as possible. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.
• The term supply chain management was coined by consultant Keith Oliver, of strategy consulting firm Booz Allen Hamilton in 1982.
• The definition one America professional association put forward is that Supply Chain Management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities.
• Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.
• In essence, Supply Chain Management integrates supply and demand management within and across companies.
• Supply chain event management (abbreviated as SCEM) is a consideration of all possible occurring events and factors that can cause a disruption in a supply chain. With SCEM possible scenarios can be created and solutions can be planned.
• Warehouses
• Factories
• Processing centers
• Distribution centers
• Retail outlets
• Offices
Typical Pharmaceutical Supply Chains
Typical Supply Chain for a Manufacturer
Need for Supply Chain Management
• To Improve operations
• To Increasing levels of outsourcing
• To Increasing transportation costs
• Due to Competitive pressures
• Due to Increasing globalization
• To Increasing importance of e-commerce
• Due to Complexity of supply chains
• To Manage inventories
Elements of Supply Chain Management

Purchasing in Supply Chain Management
• Increasing outsourcing
• Increasing conversion to lean production
• Increasing globalization
Supply Chain Issues
SCOR Metrics
Perspective Metrics
Reliability On-time delivery
Order fulfillment lead time
Fill rate (fraction of demand met from stock)
Perfect order fulfillment
Flexibility Supply chain response time
Upside production flexibility
Expenses Supply chain management costs
Warranty cost as a percent of revenue
Value added per employee
Assets/utilization Total inventory days of supply
Cash-to-cash cycle time
Net asset turns
Supply Chain Performance Drivers
• Quality
• Cost
• Flexibility
• Velocity
• Customer service
• Barriers to integration of organizations
• Getting top management on board
• Dealing with trade-offs
• Small businesses
• Variability and uncertainty
• Long lead times
Supply Chain Benefits and Drawbacks
Problem Potential
Improvement BenefitsPossible
Large inventories Smaller, more frequent deliveries Reduced holding costs Traffic congestion
Increased costs
Long lead times Delayed differentiation
Disintermediation Quick response May not be feasible
May need absorb functions
Large number of parts Modular Fewer parts
Simpler ordering Less variety
Quality Outsourcing Reduced cost, higher quality Loss of control
Variability Shorter lead times, better forecasts Able to match supply and demand Less variety
References :
1. Operation Management , Seventh Edition, by William .J. Stevenson
2. Haag, S., Cummings, M., McCubbrey, D., Pinsonneault, A., & Donovan, R. (2006), Management Information Systems For the Information Age (3rd Canadian Ed.), Canada: McGraw Hill Ryerson
3. Handfield and Bechtel, 2001; Prater et al., 2001; Kern and Willcocks, 2000

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