Pharmaceutical industry shows progress with demand-driven model; more work to be done

By adopting B2B technologies such as EDI, the pharmaceutical industry is making significant progress toward enabling a demand-driven model. In many cases, inventory has decreased both at the manufacturer and wholesale levels. “Manufacturers no longer find themselves out of stock because a wholesaler has ordered too much, so they are able to manage production more effectively, as well as ...

02/01/2008


By adopting B2B technologies such as EDI, the pharmaceutical industry is making significant progress toward enabling a demand-driven model. In many cases, inventory has decreased both at the manufacturer and wholesale levels.

“Manufacturers no longer find themselves out of stock because a wholesaler has ordered too much, so they are able to manage production more effectively, as well as their own inventory of finished goods,” observes Adam J. Fein, Ph.D, founder, and president of Philadelphia-based Pembroke Consulting , and author of Facing the Forces of Change: Lead the Way in the Supply Chain (available through the National Association of Wholesaler-Distributors).

At the same time, pharmacies themselves are still experiencing frequent out-of-stocks, according to research conducted by Jim Wilson, RPh, MBA, and president of Wilson Health Information , New Hope, Pa. “Many times the consumer goes to get a prescription filled, and the pharmacy either doesn't have the full amount in stock, so they get a partial fill and they have to come back later—or they don't have it in stock at all,” he says.

Much of this is attributed to a lack of visibility.

“Right now, the customers of the wholesalers—that is, the retail pharmacies—have become so large and consolidated that they are able to do their own distribution,” Fein notes. Because of this, the only window manufacturers usually have into demand at the retail level is through warehouses. “Any of the product that goes from the 14 warehouses to the 6,000 stores—which is about 80 percent to 85 percent of the product that CVS buys—isn't visible to the manufacturer beyond the warehouse,” Fein illustrates.

This pattern is being repeated with other large retail operations.

Hussain Mooraj, a director of life sciences at Boston-based AMR Research , emphasizes that pharmaceutical manufacturers must compile downstream data from a number of different resources to obtain a complete picture. Typically, life sciences companies use third-party data to understand and forecast demand. The problem is it's not always timely.

“Usually, if you take the monthly data from third-party sources, it has a one-month lag time, and by the time you process it and use that information in your operations, it's anywhere from five to six weeks old,” says Mooraj.

The challenge that members of the health-care supply chain face is the business objectives of the different players are not aligned. This is made worse by what Mooraj dubs “the unfortunate lack of trust” that exists between them.

“The manufacturers don't trust the distributors. There is marginal trust between the distributors and the retail pharmacies and the health-care providers themselves,” says Mooraj. “As the demand-driven transformation amongst manufacturing companies matures and gathers momentum, distributors must move from being reactive in their thinking, processes, and technology to a more collaborative model.”

By sharing demand-based information with their suppliers—and with the pharmacies sharing demand-based information with manufacturers and distributors—claims Mooraj, manufacturers could supply product more reliably and better plan for new product launches.

To gain a better view into demand, Mooraj encourages pharmaceutical manufacturers to follow the example set by the consumer packaged goods industries.

“Let's take a page from the retail and CPG industries: In the past, the retailers were always reticent to share data with their suppliers,” Mooraj recalls. “They soon realized—and Wal-Mart led the way with retailing—that sharing data with their suppliers provides benefits for themselves.”





No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2016 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
2017 Lubrication Guide; Software tools; Microgrids and energy strategies; Use robots effectively
Prescriptive maintenance; Hannover Messe 2017 recap; Reduce welding errors
Safety standards and electrical test instruments; Product of the Year winners; Easy and safe electrical design
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Future of oil and gas projects; Reservoir models; The importance of SCADA to oil and gas
Diagnostic functions for system safety; Specifying industrial enclosures; Effective decision support for a crisis
Transformers; Electrical system design; Selecting and sizing transformers; Grounded and ungrounded system design, Paralleling generator systems
Natural gas for tomorrow's fleets; Colleges and universities moving to CHP; Power and steam and frozen foods

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Maintenance Manager; California Oils Corp.
Associate, Electrical Engineering; Wood Harbinger
Control Systems Engineer; Robert Bosch Corp.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me