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8 Most Important Supply Chain Challenges in Pharma Sector

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The most important link between the pharma manufacturing unit and the end consumption units like hospitals, nursing homes, pharmacies, etc; is the supply chain team. Pharmaceutical distributors and whole sellers have a very crucial role over here. Any problems faced at any level of the supply chain directly affects not only the sales revenue, but also the reputation and cause long-term loss to the drug companies.  

#1 Unpredicted Procrastinations 

The procurement of pharma raw materials or other correlated products or pre-requisites, may be a smooth job, but the delivery task may not always be bang on time, particularly with the time differences and a variety of shipping time frames. To be precise, when the procurements are done from different countries, such delays become very common. 

Hence it is important to have buffer stocks. A well detailed and efficient warehouse management system becomes necessary to figure out the time slots at which the need for certain materials can be met, as well as to create a time cushion in terms of delivery to make sure everything runs smoothly. 

#2 Quick paced changes in markets 

A major concern that comes with technological advancements is that the market dynamics keep changing on daily basis. Hence it becomes quite difficult to keep up the right pace and adapt to the variety of innovations in the market. But as it is the ultimate goal is to remain productive and efficient in these changing times, companies need to be more flexible. 

It is clear that we cannot stop the changes that comes out of technological advancement, rather we are in need of them. Hence the way pharma companies adapt to the rapid changes is obviously the one parameter that needs to be managed diligently via usage of various logistics management software. By this, pharma companies would be able to move with the flow and improve the overall output. 

#3 Macro Issues

Some of the most crucial examples of macro environment issues are macroeconomics and political situation like: 

  • Sanctions 
  • Exchange rate fluctuation 
  • Financing issues 
  • Lack of adequate infrastructure 
  • Counterfeit drugs 
  • Lack of transparency and unpredictability of shifts in government economic policies 
  • Highly regulated nature of this business  

#4 Micro Issues

Some of the manjor inter organizational issues or macro issues that hinders supply chain are: 

  • Lack of integration and collaboration between different echelons or levels of supply chain 
  • Lack of information visibility, transparency and sharing, high rate of obsolescence machinery, costly and time consuming R and D processes 
  • Restricted pricing policy influencing the competitiveness and quality of products 
  • Uncertainty in supplying ideal raw materials in the exact required quantity and at the right time 
  • Lack of perfect supplier relationship management

#5 Metrics Derived Issues 

  • High backorders value (Sales loss) Destocking episodes and inventory oscillation Forecast inaccuracy Delay in supply orders
  • High average manufacturing cycle time
  • Lack of on time delivery percentage Lack of response to unpredictable changes 
  • Time consuming R and D process
  • High inventory costs 
  • Long cash to cash cycle time Inactive inventory percentage 

#6 Lack of Information Technology Establishment 

Information is found to be varied between the various verticals and channels of supply chain companies. The probable future market demands is estimated by each of the supply chain units on inadequate information obtained from other units. Hence, every unit needs to keep higher amount of inventory to reduce risk of stock-out and preserve responsiveness to market changes;  which eventually increases the overall expenses. 

In this regard using proper information technology (IT) makes the sales forecasting accurate, so the need for safety or inactive inventory as well as inventory costs is decreased. With proper usage of IT comes proper demand forecast and other estimations, lesser bullwhip effects and increased reliability, and practical plans to respond to demand. 

#7 Sudden Global Events 

Usually rare global events, like the ongoing coronavirus pandemic, can create some of the following disruptions to supply chains:

  • Reluctance to receive raw materials/products from an impacted geographical location
  • Sourcing issues like single source supply (especially damaging if the supply source is impacted and unable to satisfy demands)
  • Site(s) closure(s) impacting production capabilities
  • Transportation disruptions
  • Introduction of counterfeit material in the supply chain
  • Lack of coordination and traceability in supply chain causing either significant build-up or shortage of inventory (bullwhip effect)

Hence, we need to understand that pharma tablet manufacturers in India, cannot solely rely on digital (IT) solutions may not be adequate. Pharmaceutical manufacturers should also evaluate operational strategies to mitigate or minimize disruption impact on their respective supply chain channels. 

#8 Optimizing inventory levels, just in time 

It would hardly be a wise decision for pharma cold chain distribution to allow itself to a lean, just-in-time (JIT) inventory model, as it is medicines and biologics are highly expensive to produce and in no way be stored for longer periods. 

COVID-19 has demonstrated the injection manufacturers in India, such risks with much variations. At the same time, the perishable nature of drugs post specified dates, undermine the resiliency strategies dependent on maintaining safety of stocks. Finding the right balance to optimize inventory based on the product portfolio and on historic demand and shipment patterns will be a continuing challenge.

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