Elements of Supply Chain Management in Pharmaceutical Industry¹
by Gurumurthy Kalyanaram
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Supply Chain Management
Supply chain management examines all activities that impact customer service and satisfaction. Supply Chain analytics can help a firm identify potential areas of improvement. Cost reduction and/or value addition are the criteria for all the activities.
Cost reduction addresses two important topics: effectiveness and competitiveness. One of the ways to reduce cost is to examine the distribution model: try and reduce the role of the middle person who is also known as the wholesaler. Eliminating the intermediary allows for direct relationship between the patient and manufacturing, where the product is delivered straight to the consumer, cut cost and of course, have better profits. This allows the pharmaceutical companies to sell more products at a competitive rate because less money is being spent paying the middle person. Keeping track of products will reduce the number of counterfeits that are on the market. With the advances in design and manufacturing technologies, firms can offer to the end consumers more competitive prices.
Global outsourcing of manufacturing and clinical trials to destinations with competitive advantages in labor, technology and less burdensome regulations will add value and reduce costs.
In this editorial, I discuss briefly two important elements of Supply Chain Management in Pharmaceutical industry: Inventory Management; and Research and Development.