Conducting Inquiries into the Optimization of Pharmaceutical Distribution

Published by Scott Farnum on

pharma air freight

The optimization of the pharmaceutical distribution industry is imperative due to increasing demands. As the complexity of the supply chain in the pharmaceutical industry grows, manufacturers and suppliers must redefine the way they manage the distribution of their products. So, where do they begin their inquiries into keeping up with the latest technologies available and to optimizing their process?

The following three options; supply chain consultants, 3PL’s, digitization and visibility should help with this optimization and will be covered in more detail below.

In the past pharmaceutical companies only had to maintain a smaller number of products, high margins and enjoyed a predictable and very reliable supply and demand. 

However, in today’s marketplace regarding pharmaceuticals, the supply and demand for products have become variable and unpredictable. Thus forcing these companies to focus on streamlining all of their processes including the most important factor, the optimization of their supply chain. 

When streamlining these processes, pharmaceutical companies need to ensure that they are not affecting or causing other problems. For example, overstocking, overcompensating for the unpredictability mentioned above, which could cause issues with inventory management, loss of revenue and, or damage to products due to non-compliance recalls.

medication management

The expectations from the pharmaceutical company’s distribution partners, suppliers, and end customers are always at a high level. If they are not actually at this level, then there are a few key factors that need to be investigated and resolved. These would include the lack of expertise, inadequate infrastructure, or facilities that are not equipped and the increase of regulations.

The following are two key questions that today’s pharmaceutical companies need to be asking themselves

Is their supply chain system currently in place evolving for the better?

If it is not, then how do they begin to make progress?

There are no easy answers as there are many options available on where to start looking, however these decisions need to be made considering how they will affect the company’s business model and future roadmap.

The following are some options to consider as a starting point

Option #1. Pharma Supply Chain Consultants

Pharmaceutical consultants who specialize in the industry supply chain can assist companies manage and resolve issues as they have the expertise and prior experience in dealing with these types of complex supply chain systems.

pharma supply chain consultants

Consultants can provide:

Their knowledge of the industry and assisting other pharmaceutical companies in the past, they can analyze a customer’s current process and assist with the implementations required to streamline existing systems, lowering operating costs and ensuring a high quality distribution system.

However, when using consultants it may take some time between the analysis, what improvements need to be addressed and the actual implementation that will improve the company’s efficiency in the distribution process. There would also be time needed for working out the bugs and fine tuning the system as well.

Option #2. Pharma Distribution using Third Party Logistics

Or 3PL’s is the outsourcing of all or parts of a company’s supply chain management functions such as warehousing, fulfillment and/or transportation services to a 3rd party company.

Just like the consultants mentioned in option #1 above, the 3PL companies also specialize in the pharmaceutical industry and most are very familiar and up to date with the latest technologies and pharma-related compliances. In fact some even have a separate division that only deals with and assists the logistics regarding pharma related distribution. 

3PL’s Can Provide the following:

When it comes to supporting a company’s distribution process, these third party logistics companies can provide the needed assistance where that particular pharma company lacks. For example, the knowledge, the capability and expertise when it comes to managing their inventory, logistics, compliance and regulations.

Please keep in mind that normally most 3PL’s cannot provide any guarantee that the services they provide will increase the overall efficiency of a pharma companies performance process. In other words, they normally are only focusing on the optimization of a company’s supply chain, not on how unexpected issues will affect the company’s business. 

Option #3. Process Digitization

Many pharmaceutical companies are increasingly making investments in digitizing their processes.

Summary & Conclusion

In the world’s current situation with the COVID 19 pandemic companies are finding themselves with challenges never imagined in the past. 

So, improving processes and efficiencies in their supply chain and distribution process takes a lot of effort. This may have lead to staff shortages and reductions in the resources needed to improve to stay in business. 

Pharma companies can try to design and implement these new systems themselves, however there most likely will be issues they will run into for example;

Engineering & Implementation — since doing that without technological expertise makes it next to impossible to implement their own digitized pharma supply chain management system.

Change Management — since implementing new processes means training, groundbreaking changes, and a lot of challenges that your business and/or people might or might not be ready for.

Clearly, the smarter way would be to bypass these steps and the risks involved — you can do without the unexpected breakdowns that could give your competition the break they’ve been waiting for.


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