Pharmaceutical companies with large turnover place a particular emphasis on supply chain management. This is because any variation in the supply chain could lead to multiple disturbances in the system. Similarly, companies like Pfizer (PFE) spend millions of dollars to ensure the safety and supply of their products, even though they have manufacturing units in multiple locations. Sudhir Mohan Bansal, Vice President and India Head of Supply Chain Management at Pfizer Pharma informs Upamanyu Borah how specialised outsourcing partners for key supply chain activities provides pharma companies with significant cost and flexibility benefits.
Genesis and Operations
Pfizer came into being almost two centuries ago in 1849. Starting from fine chemicals, today we are one of the biggest pharmaceuticals company of the world.
By the dawn of the 20th century, Pfizer was doing great business. It was only during the World War II when Pfizer produced large quantities of Penicillin for the war victims and transported it to Europe. The company made its impact, gaining lot of popularity throughout the world. By the mid-20th century, Pfizer had its empire spread through nearly ten other countries; the expansion followed to other countries in the next few years. Currently, Pfizer is spreading out operations under Pfizer Global Supply (PGS) to across 167 countries around the globe from its manufacturing sites located in 58 countries.
In India, Pfizer has two organisational setups. One is for complete domestic consumption with renowned brands operating more than 7 decades whereas the other have been completely focussed on exports catering to the US, Europe, ANZ, Middle East.
Pfizer harnesses operational and supply chain data from enterprise systems to identify processes to better meet the needs of patients. In 2017, this information helped Pfizer to address drug shortages of several injectable medicines used in hospitals and other clinical settings, enabling us to put appropriate strategies in place in anticipation of need of the patients which culminates into sizeable demand for the pharma sector in general and Pfizer in particular.
There are robust processes and tools that measure inventory levels at each transit point, on-time supply and demand fluctuation index on a daily basis, conducts gap analysis and decides faster to replenish stock and channelise supplies through a flexible supply chain mechanism to let the products reach to the patients when it is most needed. Setting the supply Key Performance Indicator (KPI) in excess of 98 per cent on various categories and continuous review process at various hierarchy level ensures highest availability of medicines for patients at all time.
At present, flexibility should be viewed from a complete value chain perspective that satisfies customer needs even when unexpected changes happen. For this, we are required to build capabilities in the system in anticipation with several situations based on previous experience and market realities.
For instance, increase in demand would necessarily affect line capacity, workmen, quality infrastructure and service level agreements with contractors. For this, we try to make products approved on more than one line, creating a pool of trained manpower/SME and effectiveness of transportation on alternative routes so as to use those when it matters. Vendor Managed Inventory (VMI) would also help to replenish stock at faster speed for which a robust process is to be built besides maintaining good relations with suppliers.
Supply chain encounters various problems since it has to deal with several departments that plan, procure, manufacture, inspect, store, dispatch till last-mile delivery, with each highly influenced by both individual & inter-departmental challenges and bottlenecks. Therefore, changes at demand, either going up or down, would have inherent effects in terms of shortage or high inventory. Supply chain has to walk on tight rope, continuously reviewing situation and exploring various options with an aim to meet customer demand, using technology and troubleshooting at the right volume in the right time.
Steps towards IT
In the last several years, exponential growth of Information Technology (IT) and its application which have largely helped supply chain. Since the last decade, imbibing digital trends has become an integral part of supply chain, helping play a crucial role in optimising decisions for achieving organisational competitiveness, improving higher service levels and lowering inventory, overheads and delivery time, besides preserving the paperless record for an audit trail which is widely acceptable for statutory compliance. Most of our activities are governed by IT applications, viz. EDI, RFID, Barcode, ERP, GPS and data logger (which ensuresthe state of products as continuous surveillance without physical supervision). IT has played a significant role for an accurate and reliable forecast planning despite various geographical, seasonal and periodical factors without which survival of any supply chain would be next to impossible.
At Pfizer, supply chain plays an important role being at the centerstage, as it gets inputs from market network team which is evaluated with forecast planning for any adequate changes, and accordingly sends signals to suppliers and LSPs enabling them to accommodate the variation in terms of SKUs, volume and mode of transit with the aim to maintain desired level of inventory at various stock points. Internally, these signals would be sent to revise priorities of production schedule, packaging, quality release and dispatches which involve production, quality, WH and logistics respectively. There are certain rules and guidelines to be followed for addressing quality, regulatory and safety aspects that supply chain has to ensure with an eye on patient’s well-being, besides continuity and sustainability of business.
Current trend of logistics is highly influenced by the competitive environment. In order to reach first and fast to the market place, yet at minimal cost, it would be prudent to make logistics services outsourced. There is an essential need to use technology and automation in every gambit of logistics that encompasses alternative routes, modes, equipment besides live information availability at all times on 24/7 basis. It would require large funds to be invested with longer gestation period, hence outsourced logistics has become a necessity, helping pharma companies to concentrate on their core area of offering best quality of manufacturing.
Significance of Logistics
Logistics have enormous importance as it has the ability to transform from ‘planning of product’ to ‘physical possession at the patient’s end’. During this, a product undergoes numerous stages, it travels across multiple transit points before reaching the destination within the stipulated time frame. It also deals with 3 major elements of Cost, Quality and Delivery (QCD) that lead to decide for mode of shipment (Road/Air/Sea), packaging style, container size (20/40 Ft, LCL/FCL), efficient documentation and various compliance including temperature control, statutory labelling, transit damage and pilferages.
Outsourcing of Logistics
We have stronger tie-up with our trusted global partners that enable us to capitalise on economy of scale, reliability and load bearing capability during significant volume increase. At the same time, we emphasise on maintaining reasonable share of business with local players based on their credentials and resourcefulness, which helps us during adverse situation that arise due to social/political factors.