The pharma industry operates in a specialised environment where requirements are unique. Therefore, they need to embrace the concept of achieving more, in a shorter time, with new digital technologies. Now that is what we call an agile supply chain. Srinivas Moorthy, AVP – Distribution at Oaknet Healthcare explains Upamanyu Borah how a strong association among process improvement, organisational change and technology implementation is critical in driving agile, purpose-led and transformative change.
Journey so far
Oaknet Healthcare was formed in India in the year 2016 after acquiring South Africa’s second biggest drug maker Adcock Ingram Pvt Ltd. A specialty pharmaceutical company with pan-India presence, Oaknet has three main areas of interest- Dermatology, Gynaecology, and Cardiology and anti-diabetic segments.
A focus on underserved niches and unique marketing approach while creating digital connections with customers and partners differentiates the company from its peers. For example, the company has set up a database gathering together physicians, customers, and consultants which they plan to use as a launchpad for their marketing strategy.
Within few years of operation, Oaknet took over certain anti-biotic products from Novartis AG and cardiovascular products from GlaxoSmithKline.
In three and half years, the company attained the milestone of nearing 200 crores with around 25 per cent growth year on year.
Supply Chain best practices
Oaknet has deployed SAP ERP system which integrates end-to-end supply chain operations and ensures the seamless flow of materials right from forecast and demand planning to supplies.
SAP monitors real-time availability of stock at several locations as well as with C&F agents. We update the stock available with retailers in SAP to monitor the secondary movement of stocks from stockists to retailers.
The global and regional demand planning is anticipated based on the sales trend and seasonality factor which help to derive the production planning.
As every product comes with a shelf life and is blocked for sales 6 months before the expiry of the products, the production planning is done quite meticulously to avoid shelf expiry as far as possible.
Going forward, we look to soon deploy Artificial Intelligence (AI) tools for demand forecasting and supply needs.
Visibility of market inventory is a big challenge the pharma supply chain is currently facing, and Oaknet is no exception. At times, we tend to get a big quantity/value out of certain products from the market which could have been averted if the visibility was transparent.
Therefore, we are now working with some of the tech companies to automate the secondary data and improve the visibility of market inventories.
Drivers of tech-enabled procurement
In a digitally transforming world, one should always look beyond and be ready for an agile supply chain environment.
Scenario-based procurement and defer or prepone procurement based on business scenario as real-time visibility is available due to ERP technologies, order fulfilment can happen from anywhere to meet the plant demands. Besides, removal of GST has helped to achieve significant supply chain cost savings while carrying our sourcing strategies.
Warehousing tactics and strategies
Warehousing plays the vital role in integrating back and front end of the supply chain, however the challenges starts right from the selection of the location.
Oaknet has two major production centers, 60% of the products are being manufactured at Baddi in Himachal Pradesh, 35 % in Goa and the rest in a few other locations.
We have one warehouse in Baddi and one in Goa to cater to the production and dispatch from the manufacturing plants.
Similarly, all the raw and packaging materials required at the production plants are being catered to from the stock at the warehouses.
As the suppliers and hubs are in the vicinity of the manufacturing locations, the seamless co-ordination becomes easier.
Oaknet’s logistics network is strong enough to cater to the pan-India customer base. While the 1000+ work force on the field is tirelessly putting their efforts to rapidly build up capacities; it is duty of the logistics management team to ensure that their effort does not go in vain due to non-availability of a product at any point of time, anywhere in India.
In the case of generic pharma, the patient or the consumer will not wait for the product to arrive at the counter. The product will immediately be replaced with a similar available brand or product, and regaining the doctor’s confidence will take time.
Keeping the same in mind, Oaknet’s complete logistics network is integrated with SAP system to monitor the real-time stock availability so as to arrange immediate replenishment where need arises.
Scopes for LSPs
LSP plays a vital role in ensuring the stocking, supplying and meeting demand of products at accurate at every level. They are crucial pillars and support supply chain processes starting right from procurement till the last-mile delivery.
As such, we have outsourced all the logistical activities to the experts who we believe will manage better and spend time on monitoring activities.
We offer our LSPs a framework of responsibilities which includes primary distribution, warehousing as well as reverse logistics. For instance, stock return or bringing back expired stock to the warehouse for destruction.
Our current LSPs are Mihir Logistics, Spoton Logistics, Gati Express and Scorpion Logistics, to name a few.
Managing back-end supply
We collate centrally-received data from around 1500 distributors which is then uploaded into the SAP to find out the inventories at micro-level and take action on realignment, while the secondary sales and stocks are monitored meticulously and the primary is push is being controlled accordingly. We always insist for primary push not more than 105% of the secondary.
Megatrends and Disruptions
Technology will play a major role in the coming years; a new generation of AI will techniques will enhance demand forecasting process. Also, there will be increased focus on optimisation of channel partners, especially at distributor as well as C&F agent level.
Besides, the recent innovation that has positioned itself as an attractive model in the healthcare space is e-pharmacy. It will throw abundant challenges to the traditional distribution system. Conventional ‘bricks and mortar’ pharmacies usually have controlled drug distribution systems from the manufacturer, sufficient validation, and follow good distribution practices. Home delivery of pharmaceuticals can be a desirable convenience, but sometimes it can lead to problems with uncontrolled distribution.
Also, cold chain infrastructure will get more traction coupled with government pressure to implement the Good Distribution Practice (GDP).