In general, the pharmaceutical industry supply chain consists of acquiring raw materials, manufacturing pharmaceuticals, distributing to super- and sub-distributors, retail pharmacies, hospitals, medical centres, and, finally, to patients. The pharmaceutical supply chain is the process by which prescription medications are delivered to end users or patients. The supply chain network is actually quite complex, requiring a number of steps to ensure that medications are available and accessible to patients. Pharmaceutical companies must improve their supply chain performance in order to gain a competitive advantage over competitors. Forecasting, planning, procurement, financing, stock levels, and marketing strategies are all interconnected departments that have a direct impact on the supply chain.
The most significant problems for pharmaceutical companies are inaccurate forecasting, long lead times, a lack of optimal target inventory, and high raw material costs. Increased generic competition, a decreased product life cycle, manufacturing compliance issues and decreased R&D efficiency are just a few of the major roadblocks that pharmaceutical companies face. According to some findings, these companies also face exchange rate fluctuations, financing issues, inadequate infrastructure, a lack of transparency, the unpredictability of changes in government economic policies, and the highly regulated nature of this industry. Strategic policies such as collaborative relationships with suppliers, investment in new technologies, and information technology techniques can help overcome these challenges.
Supply chain management is a dynamic process that frequently involves the movement of goods and materials, as well as the flow of information between and among chain members. With the rapid development of the information technology sector, the fundamentals of the supply chain have evolved to a complex level of interdependence.
Due to stiff competition and high freight costs, the pharmaceutical industry has been focusing on supply chain management since COVID-19. Because some pharmaceutical products have a short life cycle, varying customer demands, and rising manufacturing costs, the importance of the supply chain has been recognised. Pharmaceutical companies geared up by speeding up their R&D division, introducing new innovations, improving customer value, optimizing resource utilisation, and launching new products in a volatile market. On the other hand, these companies attempted to reduce their production, inventory, and transportation costs. The time-based competition strategy is popular for maintaining competitive advantages in modern times. The supply chain must make the most of its time in order to respond and propose, develop, manufacture, market, and deliver pharmaceutical products in a timely manner. Indeed, responsiveness to market demand is a requirement for dependability. The ability of the supply chain to respond deliberately and within an acceptable timeframe to customer demands or changes in the marketplace is classified as responsiveness.
Optimization and supply chain efficiency are critical in this scenario, as they reduce production, inventory, and transportation costs while improving customer service levels. All costs, direct or indirect, directly impact profitability and thus the performance of the pharmaceutical unit; thus, this is one of the most important indicators to evaluate optimization and efficiency. The more these businesses optimise their costs, the more efficient they become.
Because of uncertainties in demand, supply, and various logistics procedures, supply chain systems have a dynamic nature. With the increasing complexity of supply chain dynamics, the use of a system dynamic model has become more popular and cost-effective.
One golden rule applies to all supply chain, logistics, and shipping operations: you must understand your product and its demands. Compliance is critical in the pharmaceutical industry because it directly affects people’s lives. Government regulations, codes of conduct, guidelines, expiry dates, usage, dosage, and so on are mandates that every pharmaceutical company must follow.