Pharmaceutical and Life Sciences Supply Chain Management

Abstract

The pharmaceutical industry quite broadly encompasses a large and varied number of logistics and supply chain activities. The industry, as a whole, relies on some standard benchmarking indicators such as months of on-hand inventory and inventory turns; however, the existing metrics do not allow for idiosyncrasies of the industry or provide adequately detailed insight into the key factors that make a pharmaceutical supply chain excellence. Over 75% of the markup on pharmaceutical products takes place at the manufacturer. This causes inventory-carrying costs to increase dramatically once the distribution segments of the supply chain purchase the product. Wholesalers and large pharmacy chains suffer high carrying costs on the final product. Inside pharmaceutical supply chains, companies must also face issues of product expiration and limited shelf lives. Seasonal and short shelf life products such as flu vaccines leave companies without the opportunity to redistribute or reallocate product in order to meet demand.