How to change the pharmaceutical supply chain for better results


describe the imageThis is the time of year when drug shortages come into light, as millions of people are looking to receive a flu shot. However, it's becoming increasingly apparent that if organizations wish to avoid costly shortages, changes to the pharmaceutical supply change must be enacted.

A recent Strategy+Business report noted that the supply chain must transform into one that is a "flexible, cost-efficient and functional system," but, in order for that to happen, an "entirely new set of capabilities is needed." The news provider identified five changes to supply chain management that should go into effect as soon as possible.

1. Adopt specific business streams

In the past, big drug companies have opted for the one-size-fits-all approach that maintained high inventory volumes and service levels for all of their offerings. Such an approach will no longer work, according to the report, as these organizations should instead tailor supply chains to their specific needs and the demand for products.


2. Increase flexibility

This could go a long way for product design and packaging, the Strategy+Business report stated. In place of widely used pack-to-order strategies, companies should have multiple versions of products that will better fill demand in such markets. That's a better idea for warehouse management, as inventory and working capital are reduced.

3. Consolidate the supply chain

The average industry asset utilization level is commonly below 40 percent for pharmaceuticals, as organizations leverage large-scale factories that put out low production numbers. With consolidation, a company can utilize fewer locations while maintaining the same amount or increased production, according to the report.

4. Create a better network

Pharmaceutical manufacturers need to build better relationships in order to deal with disruption and supply chain issues. That will help the organizations better prepare for market dips, where demand is lower and not as much production is necessary, and vice versa.

5. Improve planning capabilities

Any company requires a full view of its supply chain in order to spot both the good and the bad throughout the manufacturing process. With better vision, drug companies can prepare for whatever the market throws at them, according to the report.