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Supply Chain

Fraud and pharma inventory control tech reduces rip offs banner
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Fraud and Pharma: Inventory Control Tech Reduces Rip-offs
Fraud and Pharma: Inventory Control Tech Reduces Rip-offs 700 500 Xcelpros Team

At a Glance

Making and selling fake versions of drugs for treating erectile dysfunction, high cholesterol, hypertension, cancer and other illnesses is big business.

  • $75 billion – $200 billion: The current annual revenue lost to counterfeiters
  • 13: The number of new drugs not produced in one year because of fake drugs

By the Numbers: Counterfeit Medicines

Reports by Outsourcing-pharma.com and Statista show just how much money counterfeit costs legitimate pharmaceutical manufacturers. Statista estimates the global market for fake drugs alone at $200 billion, accounting for 13 new drugs not being brought to market each year.

Other numbers of note include:

  • $100 billion – $431 billion: The estimated sales value lost to counterfeit drugs worldwide in 2020
  • 6–28: The number of new drugs not brought onto the market because of the effects of counterfeits through the impact on intellectual property rights
  • $103 billion (€92): The amount of money lost to European producers from 2012-2016 for counterfeit products including medicines
  • $19.45 billion (€16.5 billion): The amount lost to European pharmaceutical manufacturers, which was second only to clothing, footwear and accessories
  • 80,459: The number of pharmaceutical jobs affected by counterfeiters

Sources: Outsourcing-pharma.com, Statista.com

The National Crime Prevention Council has its own statistics on the cost of fake drugs:

  • 10%: The amount of all drugs in the global supply chain that are fake
  • 70%: The percentage of fake drugs in some countries
  • $75 billion: An estimate of global counterfeit drug sales from the Center for Medicine in the Public Interest quoted by the NCPC
  • 15,000: The number of illicit drug factories in India accounting for 75 percent of the world’s counterfeit drugs with other producers primarily in under-developed countries

Spotting a Fake

The Food and Drug Administration protects consumers from counterfeit medicines. “Drug safety and quality no longer begin or end at our border. The U.S. government works with foreign regulatory counterparts when possible to disrupt or close illegal operations involving the production and distribution of counterfeits,” the FDA states.

Figure: 1Identifying counterfeit medicine

Spotting a Fake pharma product

Identifying counterfeit medicine:

  • Packaging different that expected
  • New or unusual side effects
  • Medicine is available for purchase online

Resellers can protect themselves and their customers by only buying from authorized and licensed companies.

Resellers should also read the packaging. Potential fake products from unlicensed sources can be misbranded, adulterated, contaminated, improperly stored and transported, ineffective or unsafe, the FDA states. Some counterfeits have been spotted without a National Drug Code (NDC) number. Others have misspelled labels.

Among the medicines reportedly being copied and sold in the U.S. during the last five years are:

  • Symtuza ® from Janssen Pharmaceuticals (Dec. 24, 2020), used in the treatment of HIV
  • BiCNU ®, a cancer-fighting drug from Emcure Pharmaceuticals, Ltd.
  • Botox ® from Allergan
  • Cialis ® from Eli Lilly

Dangers of Using Counterfeit Drugs

Counterfeit drugs affect more than just legitimate companies: they harm people using them. Citing a 2017 World Health Organization (WHO) study, the OECD iLibrary states the effects on individuals of counterfeit medicines include:

  • Adverse—and possibly toxic—effects from incorrect active pharmaceutical ingredients
  • Ineffectiveness by not treating the targeted disease
  • Loss of confidence in health care professionals and health systems
  • Lost income by users from extended illness or death

The OECD report also referenced a 2019 Novartis in Society Report. Forensic tests of counterfeit medicine samples showing patients could be harmed by 90 percent of the counterfeits.

Fighting Counterfeit Drugs

Pfizer, one of the world’s largest drug manufacturers, supports the international “Fight the Fakes” campaign raising awareness of the dangers from using counterfeit medicines. Pfizer states that counterfeit versions of 105 Pfizer products were found in 113 countries. The company works with law enforcement agencies, wholesalers, pharmacies and others to increase inspection coverage, monitor distribution channels and use other methods to fight back.

One way pharmaceutical companies are fighting back is through the Drug Supply Chain Security Act (DSCSA). Enacted in 2013, the act requires manufacturers, contract manufacturers, repackagers, wholesale distributors and other meet compliance requirements.

A large part of this involves labeling.

For example, a warehouse receiving clerk can print labels after receiving raw materials but before putting them away.

Using Wave label printing, labels are available before workers run the work order on a mobile device. Workers then attach the labels during picking instead of after picking. Label printing options include:

  • According to the number of cartons on a single work line
  • With different sequences such as carton and pallet labels
  • Creating a unique serial shipping container code (SSCC) for each carton and including it on the label
  • Creating globally usable GS1-compliant numbers for bills of lading and SSCCs

Using Labels to Combat Counterfeiting

Among the labeling and packaging methods used to fight counterfeiting are holograms, 2-D barcodes, radio frequency identification tags (RFID) and packaging features that are either visible (overt) or hidden (covert).

NeuroTags, which makes these types of tags, states that it is easy for counterfeiters to make simple holograms and copy legitimate images. Luminescent topcoats revealing patterns and colors under special lighting are difficult to imitate, making it a good anti-counterfeiting solution for pharmaceutical products.

Smart Labels—also known as Smart Tags—have an RFID tag with a computer chip, antenna and bonding wires under a conventionally-printed barcode label. Among their benefits for the pharmaceutical industry —beyond being difficult to copy—is their ability to track temperatures. This is critical for some medications, such as the current Covid-19 vaccines from companies such as Pfizer and Moderna.

Another benefit of smart label technology is letting companies track items in real time. “It fulfills the requirement of tracking objects remotely, effectively, and most importantly at an affordable price,” Packaging Strategies.com states.

Combined with Microsoft Dynamics 365 Supply Chain Management, these types of labels make it difficult for counterfeiters to substitute cheap, ineffective and dangerous knock-offs for real medications.

D365 Supply Chain Management functions let companies track products from the moment raw materials arrive in the warehouse, through the production process and on to the sales floor.

Customers with equipment required to read the labels—and personnel trained in what to look for—will be able to distinguish legitimate goods from the fakes.

Summary

Counterfeiting pharmaceuticals costs the industry billions every year. It affects not only sales profits but intellectual property rights. Combining different types of labels such as Smart Tags with inventory tracking software lets pharmaceutical manufacturers know when real goods arrive at their destinations. It also lets them know when someone along the supply chain stole their products and replaced them with fakes.

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Boosts Supply Chain Resiliency
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Visible and Shareable Data Boosts Supply Chain Resiliency
Visible and Shareable Data Boosts Supply Chain Resiliency 700 500 Xcelpros Team

Introduction

Covid-19 and its variations, a trade war with China and ongoing cyber attacks are just some of the problems supply chain managers are still facing in 2021. Similar issues may occur at any time making supply chain managers nervous and cautious.

One way to improve overall supply chain performance is through accurate data collection plus improved vendor communications. Knowing what you need and when you will need it is important to keeping inventories under control.

Working closely with vendors is especially important when seeking diverse raw materials and active pharmaceutical ingredient (API) sources. Being able to pivot from a supplier in one country to a different firm halfway around the globe can make the difference between a happy customer and an unhappy one. Having more than one source helps make your supply chain resilient.

Critical components of a secure supply chain are:

  • Accurate, real-time data available to decision makers any time, anywhere
  • Detailed knowledge of each supplier and who supplies them
  • A diverse, geographically spread-out network of suppliers
  • Sharing appropriate data with vendors to ensure adequate inventories

Figure: 1Critical components of a secure supply chain are:

Critical components of a secure supply chain

All of this is based on data available through Internet of Things (IoT)-connected devices.

Data Collection in the Digital Age

The IoT lets companies connect real-time monitoring devices to a wide range of production machines. Each IoT device can then be connected to a Microsoft Azure IoT hub. The hub can signal when completing a manufacturing process or reaching an inventory threshold, for example.

Each data point goes into a secure, cloud-based network allowing authorized users to see the real-time progress of each production run. When appropriate, that data can be shared with vendors. Sharing select data with vendors lets companies maintain balanced inventories, informing them when supplies of a particular precursor chemical are running low, for example.

Performance data from many individual machines can be combined into one real-time data stream. When it is analyzed by as Microsoft Dynamics 365 Supply Chain Management inventory forecasting tools, pharmaceutical manufacturers can then reach out to their diverse vendor base, ensuring a constant flow of raw materials.

The same general process for raw materials coming into a plant applies to finished products leaving it.

D365’s Supply Chain Management module includes inventory tracking tools. Pharmaceutical manufacturers will know where every labeled and scanned product is at any point in time.

For example, say a company has part of a product manufactured in Asia and then sent to Europe for additional assembly. A Supply Chain Management dashboard containing data from a Microsoft Power BI report can let a company know of a major shipping delay, such as the Suez Canal blockage last year. Having all of this information in one spot at one time lets company leaders decide if they want to wait for the blockage to get fixed or ship the materials by air.

Having a diverse supply chain in terms of raw material providers and finished product shippers provides additional options and security.

Supplier Knowledge

The more a company knows about its suppliers, the better prepared the company is when disaster strikes.

In an article on supply chain mapping, Sedex states companies should:

  1. 1Learn where primary suppliers and their suppliers are located. Having detailed supplier records helps accomplish this task.
  2. 2Integrate this information into a single data source.
  3. 3Conduct a risk assessment to determine where to focus their attention next.
  4. 4Research each supplier so your company is aware of any risks to them.

Enterprise Resource Planning (ERP) tools such as Microsoft Dynamics 365 Supply Chain Management provide a single shareable data source. If, for example, a trade war breaks in one region, a company can sort through its supplier list and find out which companies are affected.

XcelPros has a unique approach to ensuring decision makers have information critical to them. XcelPros can create analytic reports using intelligence gathered in Microsoft Power BI. The reports can map geographic locations, such as those of raw material providers. The Power Bi report is then embedded in a D365 Supply Chain Management dashboard, giving executives “at a glance” views.

Combining the artificial intelligence capabilities of Supply Chain Management with the analysis functions of Power BI lets executives know what is happening in terms of potential supply chain disruptions and where they might occur.

Power BI features include:

  • Transforming data in shareable graphics
  • Explore data obtained from many sources
  • Share customized dashboards and data, such as between Sales and Inventory Control

Having geographically-dispersed vendors also helps.

Supply Chain Diversity

What happens when your primary API supplier’s workforce is decimated by another round of coronavirus infections? For example, say Supplier A does not have enough healthy workers to produce the quantity of essential materials at the right quality point. If your company has other vendors who can fulfill your order requirements, nothing changes with your customer. If you don’t have back-up suppliers or ways to get the finished products to them, it could cost you.

A study by the Hackett Group found that those with a diverse supply chain had lower overall operating costs and spent 20% less on buying.

Effects include a higher return on investment (ROI), lower prices to the manufacturer’s customer and improved customer service, an article in Supply Chain states.

Working with small and medium-sized business suppliers (SMBs) has several advantages over only dealing with large multi-nationals. These include:

  • Efficiency at the local level
  • Innovative services
  • Faster delivery when the SMB is closer to the plant

Figure: 2Advantages of working with SMB Suppliers

advantages of small and medium-sized business suppliers (SMBs)

“The companies that build resiliency into their supply chains will be best positioned for success and growth as they will have an adaptive advantage in the face of change and volatility,” Supply Chain states. Having options in terms of near-shore and off-shore suppliers lets, “companies spread their risk, mitigating the impact that social, political and geographic incidents could have on raw material price and availability.”

Supply chains that are diverse in terms of location and their ability to provide raw materials and precursor chemicals give pharmaceutical manufacturers the ability to survive disruptions.

Having this information is one thing. Letting the people who have what you need in time to get it to you is also vital.

Supplier Communications

“Effective communication between buyers suppliers helps support long-term goals by building a strong and trusting relationship in which both parties are comfortable sharing information and working together to support these goals,” a report by the ISS Group states.

“Communication builds trust and ineffective communication demolishes it,” a Canadian Center for Science and Education report cited by ISS states.

Giving suppliers advance knowledge of the types and quantities of needed materials can prevent potential problems, such as running out of stock. Companies can improve risk management when vendor communications share real-time data over a secure, cloud-based network. Microsoft D365 provides the data sharing and security functions required by today’s top pharmaceutical manufacturers.

Dynamics 365’s Finance module provides data sharing between a company and up to 15 legal entities. For example, a pharmaceutical manufacturer wants to share some inventory information with a partner to ensure the production plant has enough raw materials on hand for a special project. D365 Finance permits sharing the reference and group data but not transactional information like the name of the customer requesting the project.

Sharing the information between a manufacturer and its vendors is based on an important assumption: there is accurate, timely data.

Supplier communications also lets companies monitor product quality. Quality assurance is critical, especially in terms of medicines, drugs and other pharmaceutical products requiring regulatory compliance.

Summary

Supply chains can be very fragile as the debacles from 2020 have proven. Having accurate inventory information, knowing how each supplier is affected by activities and events beyond their control and communicating with them will help make your supply chain more resilient.

Book a assessment to get started with our data management solutions built for supply chain resiliency.

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warehouse management techniques
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Warehouse management techniques : Tips to increase efficiency
Warehouse management techniques : Tips to increase efficiency 700 500 Xcelpros Team

Introduction

Pharmaceutical and chemical manufacturing companies face greater risks when it comes to inventory control than some other industries. Why? Because some of the same chemicals used to make effective medicines can also create addictive street drugs. For example, ephedrine, which is used to treat breathing problems, is also an active ingredient in methamphetamine. The Food and Drug Administration has strict rules for companies making and distributing drugs. All companies, especially those in the pharmaceutical sector, want to run their warehouses efficiently. Common efficient warehouse management includes:

  • Maximizing and optimizing all available space
  • Keeping inventory to lean levels
  • 50% of enterprises spend more than $1.2 million each year on cloud services
  • Using inventory tracking technology efficiently
  • Organizing the workforce so its time is used wisely

Warehouse management best practices also emphasize the “3 C’s”: control, coordination and communication. Standard practices, where control is maintained by only one department, usually results in difficult coordination and communication between departments such as sales and finance.

Enterprise resource management (ERP) software with warehouse management and inventory control modules can help manage warehouse inventory.

Maximizing Warehouse Space

Maximizing warehouse space includes stacking items logically, and using vertical space to your advantage.

The Centers for Disease Control (CDC) suggests hazardous chemicals be labeled with hazard warnings and the chemical name. Other chemical storage tips from the CDC include:

  • Keeping all stored chemicals, especially flammable liquids, away from direct sunlight and heat.
  • Keeping like chemicals together and away from those that might cause a reaction if mixed.
  • Storing liquids in unbreakable or double-contained packaging.
  • Storing flammable materials, acids and highly toxic or controlled materials in dedicated cabinets designed for those purposes.
  • Storing volatile and odorous chemicals in a ventilated cabinet.
  • Keeping all unused or empty compressed gas cylinders in a dedicated storage area.

Figure: 1Maximizing Warehouse Space

ERPs and Inventory Management Techniques

Use ERP to Run Lean

ERP software often includes warehouse management tools and technology designed to help companies balance inventories with current and future needs.

For example, warehouse management is integrated into Microsoft Dynamics 365’s Supply Chain Management. There’s even a connected Warehousing app available on the Google Play Store and Windows store that connects cellphones and other mobile devices to the network running D365’s Supply Chain Management. Each device must have its own copy of the app and be configured to connect to the local warehouse computer network.

Microsoft’s warehouse management module apps let workers use their cellphones, tablets or other connected devices to perform activities such as:

  • Printing and reprinting labels
  • Generating license plate numbers, confirming item types and quantities on a license plate or pallet and splitting full license plates
  • Starting production orders
  • Get information about particular items in a location

These warehouse management software settings can be configured to allow users different permissions in different warehouse locations. Software such as Microsoft Intune is used to mass deploy settings and service warehouse mobile devices.

Once devices are configured, cellphone cameras can be used to scan many common barcodes, including QR codes.

Another important part of the warehouse management module is the Transportation Management function. It lets workers register when a driver arrives, noting the driver’s name and license number, tractor and trailer number plus the location in the warehouse (e.g., Receiving Bay 1, Shipping Bay 3, etc.).

A key function for the pharmaceutical industry is setting work audit templates to interrupt an inbound order. Since many medicines require strict environmental controls, workers can be prompted through the audit template to check the temperature in delivery containers. They can then be told to check a particular container at a particular point in the receiving process.

Another method of boosting efficiency and controlling warehouse inventory is by requiring warehouse workers to confirm the product, location or quantity when they pick items. This reduces the likelihood of inventory errors caused by inaccurate counts.

Improving Efficiency With an ERP

When IDC conducted its 2018 survey, 45% of independent service vendor customers preferred the lift and shift cloud migration method for moving business applications. Combined with cloud computing, 69% of end customers understand the positive implications of using cloud-based software. These include agility, scalability, cost effectiveness, efficiency and others.

Is Cloud Computing Worth the Cost?

One reason many companies purchase an ERP is its ability to help them run their day to day operations more efficiently. One example is the ability to use an intelligent warehouse management system to cluster purchase order putaways. Workers put away products in a specific area and then pick multiple license plates at once before putting them away in different locations.

In a related activity, workers can check incoming product quality before technically receiving it and taking ownership of it. D365’s Warehouse Management module lets users log these checks with mobile devices.

This same intelligent warehouse management system also lets pharmaceutical companies efficiently process purchase order returns. The item is entered into Supply Chain Management and then scanned, starting the process. Items being returned are picked and sent through the warehouse process using mobile devices. The software also creates the shipment and load.

Similar configuration settings help inventory, procurement and delivery management become more efficient. Workers are no longer moving randomly from place to place within a warehouse, picking items from six different locations for a single order. Instead, they might pick items for six different license plates from the same general location, move to a second spot and add additional items. By using this method, each worker’s time is used to maximize the amount of actual work done, achieving more production.

ERPs and Inventory Management Techniques

Six of the most common inventory management techniques are:

  • Bulk shipments
  • ABC Inventory Management
  • Backorders
  • Just in Time (JIT) shipping
  • Consignments
  • Cycle counting

An innovative warehouse management system helps executives decide when buying in bulk is appropriate and when going lean is better. How? By sharing data with sales, finance and other departments. Warehouse managers can see what sales are coming up and know what raw materials to order.

The same situation applies to deciding what to produce and what to have in inventory based on importance. Data shared between systems lets managers make and adjust these calculations.

Backorders are becoming more common as Covid-19 related issues delay raw material shipments. While using them is a common warehouse management technique, effective ERP software helps firms control backorders and order materials from alternate suppliers.

Just In Time (JIT) inventory management reduces the amount of stock available at any given time to the bare minimum. Using D365 Supply Chain Management lets chief executive officers understand the complete supply chain. They can decide what items to get only when needed and what to buy in bulk.

Combined with precise inventory tracking to know when a specific medication is approaching its expiration date, pharmaceutical manufacturers can use consignment selling with confidence. Alerts will let them know when they need to refresh a seller’s stock.

Cycle counting, where workers count only a small quantity of product, is rendered nearly obsolete by an ERP. Using barcodes and electronic scanners, warehouse managers have an accurate idea of inventory at all times.

The Future of Warehouse Management

The future of warehouse management systems isn’t workers running around with pencils and clipboards. Instead, it’s automating many manual processes with real-time access to critical data.

“Warehouses will be built on current effective process-driven technologies such as widespread supply chain automation, hyper-effective robotic technologies and yes, plenty of drones to go around,” 6 River Systems predicts.

Leading that charge will be artificial intelligence-enabled ERP software coupled with industrial internet of things (IIoT) sensors. This combination will enable pharmaceutical companies to more efficiently track materials as they run their businesses.

Minimize redundancy and maximize your warehouse productivity. Book a consultation to learn how.

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Supply Chain Disruptors
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Major Supply Chain Disruptors
Major Supply Chain Disruptors 700 500 Xcelpros Team

Introduction

Parts of the global supply chain saw major disruptions in 2019 and more in 2020. Companies looking to ensure their supply chains remain intact have two choices: They can plan, prepare and be ahead of the trends, or stay in a wait-and-see mode.

Forward thinking companies are using analytics found in today’s enterprise resource planning (ERP) software to anticipate changes in customer behavior and balance their supply chain. They are closely watching fuel prices for changes that might make obtaining raw materials and shipping finished products more expensive. They are verifying that the quantity of product leaving their facilities meets demand while avoiding compromising quality.

Three supply chain disruptors in 2021 include:

  • Transportation costs
  • Covid-19 fallout
  • Increasing visibility into product compliance

Figure: 1Major supply chain disruptors in 2021

Major supply chain disruptors in 2021

Transportation Costs

US logistics costs dropped 4% to reach $1.56 trillion, or 7.4% of 2020’s $20.94 trillion gross domestic product (GDP). The pandemic forced many global supply chains to screech to a halt and then start back up. Again and again.-CSCMP’s State of Logistics Report 2020

Let’s take a look at the first disruptor: transportation costs. The strong economic growth of 2018 caused commercial transportation costs to rise. 2020’s pandemic made transportation worse as demand continued while the availability of truck drivers and airline flights plummeted. Those were just two of many activities impacting pharmaceutical and chemical companies’ supply chains.

Among the current transportation issues are:

  • 20% – 25%: The national van truckload tender rejection rates (the percentage of electronic requests for capacity declined by carriers) since August 2020
  • 20%: The van truckload spot rate increase in February 2021 affecting 10%-20% of trucking market freight volume
  • 12%: The increase in retail fuel costs in February 2021

Pandemic quarantines meant fewer consumers were making trips to stores. This in turn boosted online orders through companies such as Amazon.com, boosting pressure on the commercial transportation sector.

Figure: 2Current transportation issues

Transportation Costs Effected By Disruption

Truck Driver Availability

Truck driver availability is another major issue plaguing supply chains. Commercial transportation companies are facing major challenges recruiting and keeping drivers, including:

  1. 1.Attracting new talent with 57% of the workforce now 45 or older and 23% 55 or older
  2. 2.Losing 62% of potential workers to warehouse jobs, which are being filled by people under 45
  3. 3.Dealing with workers wanting a work-life balance that requires short trips when demand is for more long haul (over 250 miles) drivers
  4. 4.Posting more jobs than hiring by a 9:1 ratio
  5. 5.Skill and experience gaps between the desired and available drivers
  6. 6.Reducing truck driver job posting activity between 2019 and 2020 by 38%

Adding to this issue are safety regulations limiting drivers to work no more than 14 out of every 24 hours.

Recruiting Drivers

To address the rising shortage of drivers, freight companies are providing incentives to attract more people into the field and increase employee retention. Methods listed by SHRM include:

  • Raising pay so that private fleet drivers now earn an average of $86,000 a year up from $73,000 in 2014
  • Broadening the applicant pool by recruiting women, military veterans and younger drivers
  • Being flexible with time off

Other Transportation Woes

Another growing supply chain transportation issue points to international regulations impacting ocean-freight based shipping. At the start of January 2020, new limits came into play in order to protect the environment and improve air quality. IMO 2020 restricts the amount of sulfur in the fuel oil used by ships. The previous emission limit was 3.5%. Under IMO 2020, this compulsory limit drops to 0.50%.

The emission limit was reduced to 0.10% in four emissions control areas:

  1. 1.the Baltic Sea
  2. 2.the North Sea
  3. 3.the North American area covering parts of the U.S. and Canada and the U.S. Caribbean Sea cover Puerto Rico and
  4. 4.the U.S. Virgin Islands

Reducing the sulfur content of fuel oil helps minimize sulfur oxide emissions that negatively impact human health and contribute to acid rain.

Compliance is expected to boost container shipping fuel costs by $25 billion – $30 billion through 2023, according to a report by BCG.

Covid-19 Fallout

To date, the Covid-19 pandemic has killed more than 4 million people worldwide, more than 606,000 in the U.S. alone.

  • 72% of businesses across trade, finance, plus health and education systems reported a negative effect. 17% of that was a significant negative effect.
  • 3% of firms reported a significantly positive effect
  • 8% of firms reported a mostly positive effect

Firms reporting a positive impact were in the life sciences sector, especially those producing essential products such as vaccines, Ernst & Young’s report noted.

Increasing Visibility into Product Compliance

Compliance in the supply chain is nothing new. Companies in every sector conform to Occupational Health and Safety (OSHA) regulations plus state and local versions. Pharmaceutical companies work on FDA compliance every day.

What is new however, is increased visibility.

Especially when dealing with large, diverse supply chains that might involve hundreds or thousands of suppliers, many companies are switching to integrated networks. Using these networks, though, requires retraining the workforce to adjust to the new digital way of doing business.

“Increased visibility is the TOP priority over the next 12-36 months and a top 3 priority in the next year,” a 2021 report from Ernst & Young states.

Ernst & Young’s survey found that 63% of companies were investing in increasing automation such as using internet of things (IoT) connected devices, machine learning and artificial intelligence (AI) to boost productivity and increase efficiency.

Using enterprise resource planning software lets companies achieve a 360-degree view into supplier performance, customer review and manufacturing outputs while crunching millions of data sets. ERP systems are designed to help companies anticipate potential problems and find solutions before the issues become acute.

For example, a chemical manufacturer installs sensors on reactors that can alert production staff when temperature changes occur. An alert sent from the sensor through SMS messaging directly to maintenance and production crews can let them take action before an expensive batch is ruined.

ERP software such as Microsoft Dynamics 365 Supply Chain Management allows companies to stay on top of issues before they become problems.

Key Takeaways

  1. 1.While a global economic boost is great, we find there’s always a downside that leads to a challenge. A strong economy is great for supply and demand for business, however the shortage of qualified workers to fill those jobs can cause significant issues
  2. 2.There is an increasing concern for disruptions that are beyond human control. Things like the recent COVID pandemic, along with the resulting damages are factors that companies may never have planned for, but we now know the risk exists.
  3. 3.The strong global economy has resulted in a trade war, affecting imports and exports across the globe. The ongoing tariffs between the US and China doesn’t just affect those countries, the entire world will have to deal with the effects of increased import costs.

For more information on implementing Dynamics 365 Supply Chain Management to manage your supply chain disruption in your company, book a consultation with our expert.

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Managing Pharmaceutical Discounts, Rebates Chargebacks
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Managing Pharmaceutical Discounts, Rebates and Chargebacks
Managing Pharmaceutical Discounts, Rebates and Chargebacks 700 500 Xcelpros Team

Introduction

The way pharmaceutical firms price their drugs and administer rebates and discounts, has put the industry in a potential governmental spotlight.

Key topics likely to be investigated include:

  • How discounts are set
  • How drug makers establish and monitor rebates
  • How pharma firms report their pricing details

Background

Around the world, pharmaceutical manufacturers are under increased pressure from governments and the public to reduce consumer drug prices. In some cases, the amount consumers pay for medicines has skyrocketed. One example cited by Endocrine.org is the cost of an insulin dose rising from $170 in 1987 to more than $1,400.

A 2019 Time magazine article attributes rising consumer drug costs to a complex drug supply chain. Pricing is set by a combination of pharmaceutical manufacturers, pharmacy benefit managers (PBMs) who serve as middlemen, and insurers.

Typically pharmaceutical companies set a non-discounted “list” or base price for each product. Many pharmaceutical companies offer discount coupons and rebates. Depending on a consumer’s health insurance coverage though, some patients may be forced to pay the undiscounted list price for specific medications.

According to Time, manufacturers provide discounts based on the drug and the buyer. Typically these discounts are in the form of rebates negotiated with individual PBMs. The PBM gets paid for its efforts to reduce the amount the manufacturer charges. The final price—which may or may not include any rebates or discounts—is then passed to the insurance companies, who in turn pass the pricing on to consumers.

In addition to negotiating pharma rebates, PBMs also wield power by determining where a particular drug appears on an insurance company’s hierarchy, Time states. These middlemen can make a given drug the most discounted, and therefore most prescribed, medication. They can also exclude it, forcing patients who want or need it to pay more.

Prescription drug price negotiations often happen behind closed doors, leaving patients and physicians out of the discussion despite the impact drug pricing has on the health and treatment of patients,” The American Medical Association (AMA) stated in a 2019 online article on how prescription drug prices are determined.

Raising the price of prescription medicines forces patients with limited funds to skip doses, split pills or abandon treatment, the AMA states. All of these actions, plus growing demands for prescription drug price reforms, are causing the U.S. government to further examine medicine prices.

Figure: 1Percentage of Revenue Spent on R &D

Importance of change management in erp implementation

Governmental Scrutiny

Federal government agencies such as the Department of Health and Human Services (DHHS) are paying extremely close attention to how much consumers actually pay. Agencies want to know if the actual prices reflect the research and development (R&D) and other costs of creating and manufacturing new products. Or are consumer prices a way for an unscrupulous company to use its hot new medication as a way to boost profits and stock prices?

The Biden Administration froze drug price reforms started by the previous administration pending further review. One reason for reviewing these proposals is the fear of higher insurance premiums, an online article by Joshua Cohen in Forbes states.

Cohen suggests that the Biden Administration may require health insurers “disclose current list prices and historical net prices for prescription drugs and provide patients with personalized estimates of cost sharing.

Figure: 2Amount of Revenue Spent on R &D

Amount of Revenue Spent on R &D

Setting Discounts

One way pharma companies can protect their integrity is by using Enterprise Resource Planning (ERP) software such as Microsoft’s Dynamics 365. ERP software allows pharmaceutical manufacturers to set various discounts and rules for each price break. For example, one rule in Dynamics 365 Commerce asks, “is a coupon required to obtain a discount?” A slider lets authorized users select Yes or No. When this feature is active, the discount only appears when a coupon or bar code is provided. This section also has “All discounts” and “Pricing and discounts management” workspaces, letting companies create customized discounts.

ERP software works by creating a series of properties for simple pharmaceutical discounts and quantity price breaks. For example quantity tiers must be reached independently for each line or product.

Microsoft Dynamics 365 Commerce lets companies select between four types of discounts: “Discount,” “Quantity,” “Mix and match” and “Threshold.”

Users also have the option to determine which discounts compete on a transaction. Values are “Exclusive,” “Best price” and “Compound” with “Exclusive” always being calculated first.

Individual products or product variants can be selected along with categories, units of measure and many other variables. Other options include setting up sales lines and invoice discounts.

When there are issues with drug quality, the “Quality management” section establishes rules for pharmaceutical chargebacks.

Managing Rebates

Microsoft’s Dynamics 365 Supply Chain includes a “Rebate management module” with an important feature for pharmaceutical companies. “The setup on this page is shared across all legal entities and can be modified by users who have the appropriate security permissions,” Microsoft states.

This module makes it easy to create contracts, deals and agreements with customers and vendors. It lets firms calculate and keep track of rebates, deductions and royalties. The information is stored in a central location for easy review.

Rebates can be created for customers or vendors. The function also allows inputting notes about a specific deal. For example, a pharmaceutical rebate may be given to one company instead of another. A note can explain the reason like a long-standing business relationship.

Since pharmaceutical rebates appear to be a likely focus of government action, documenting a firm’s rebates makes it easier to show what is taking place.

Reporting

With transparency being a likely focus of governmental action on drug pricing, investigators may ask to see pricing reports. ERP programs like Dynamics 365 have a number of powerful reporting features. A Report Wizard lets users select from a series of previously created reports and update them. Tables and charts can be included.

A big part of Dynamics 365 Supply Chain is tracking the status of each rebate for reporting and inquiry purposes. Reports can be linked to web pages, static files and dynamic Office-based files that read data from a Dynamics 365 database. Reports are filtered using SQL or FetchXML queries depending on the software in use.

Summary

Consumer drug pricing is becoming a hot topic in Washington, D.C. Pharma manufacturers are likely to face increased scrutiny on how they set pricing. ERP programs like Microsoft’s Dynamics 365 let firms set and track rules for discounts and rebates, as well as generate all necessary reports.

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Trends influencing the future of pharmaceutical supply chain management banner
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Trends Influencing the Future of Pharmaceutical Supply Chain Management
Trends Influencing the Future of Pharmaceutical Supply Chain Management 700 500 Xcelpros Team

Introduction

Pharmaceutical supply chains continue to evolve even as the worldwide Covid-19 pandemic shows signs of improvement in some countries (the U.S.) and worsening in others (India). Key trends include:

  • Geographically diverse suppliers
  • Sustainable sources of raw and packaging materials
  • Increasing use of computer technology to help manage companies

How chief financial officers (CFOs) and chief operating officers (COOs) of pharmaceutical companies respond to growing demands while facing labor shortages in areas hard hit by the pandemic largely depends on their ability to obtain raw materials and then manufacture and ship finished products.

Reports in SupplyChain Brain, EazyStock and Manufacturing.Net state that supply chain management trends likely to influence the pharmaceutical supply chains near term include increased use of:

  • Diverse (i.e., multiple) suppliers for improved resilience
  • Sustainable supply chain sources
  • Enterprise Resource Planning (ERP) and pharmaceutical warehouse management software (WMS) to improve management of the overall business, including the supply chain
  • Artificial intelligence (AI) to boost productivity and decrease errors
  • Cloud-based technology to permit scaling small and medium businesses as they grow using mutable
  • Industrial Internet of Things (IIoT) to track products ranging from individual batches to complete orders
  • Robots and other forms of automation to perform labor-intensive tasks
  • Flexible supply and delivery sources permitting personalized shipments
  • Layering technologies to eliminate data silos and create actionable data across technology platforms
  • Blockchain to improve transparency in data sharing using immutable databases Smart contracts that automatically execute when a set of conditions is met

Geographically Diverse Suppliers and the PSC

Having a geographically diverse source of raw materials such as active pharmaceutical ingredients (APIs) becomes important in a world proven so susceptible to pandemics. Companies whose primary suppliers are in India (currently suffering an uptick in coronavirus cases), for example, may find their suppliers are short-handed and unable to fulfill orders. CRB Group states supply chain challenges from rare events also include:

  • Transportation issues and disruptions
  • Adding counterfeit material into the supply chain
  • Site closures
  • Lack of coordination and traceability causing inventory build-ups or shortages

According to GoMarketWise, having a diverse supply chain also provides:

  • Access to innovation outside your organization
  • Flexibility to respond when market conditions change
  • Competitive pricing at local levels
  • Specialization many small to medium businesses (SMBs)

Sustainability in the Pharma Supply Chain

Many organizations across all business sectors are looking at climate-smart supply chain planning because of the effect of climate change on the availability of resources and materials, a report in All Things Supply Chain cites a Harvard Business Review study claiming companies advocating for sustainability grow 5.6 times faster than brands that don’t.

One area impacted by sustainability is product packaging. A study by Pelican BioThermal quoted in The LoadStar states that 48% of respondents claim to be looking for packaging that is recyclable or can easily enter the waste stream. Larry St. Onge, president of DHL’s global sector, life sciences and healthcare is quoted as saying his customers’ packaging would become a strategic priority in the near future. “This is of utmost priority because 25% of the global 8.3 billion tons of plastic produced originates from packaging and more than 90 countries have imposed bans on single-use plastic.”

“A more sustainable pharmaceutical supply chain (PSC) should be implemented to match future operations and management of the pharmaceutical products across the entire life cycle,” a look at Pharma Industry 4.0 on ScienceDirect states.

Further restricting the adoption of sustainable processes in the PSC are high costs and time consumption, enforcement of regulations, a lack of business incentives, lack of objective benchmarks, poor end-customer awareness and other issues.

Increasing Use of ERP and WMS in Pharma

Pharmaceutical companies are increasing their use of enterprise resource planning (ERP) and warehouse management software (WMS) from companies like Microsoft to improve management of the overall business, including the supply chain. Software add-ons automate many previously manual tasks, such as inventory optimization and shipping solutions, EazyStock states.

A report by Grand View Research states the market size for WMS programs is expected to grow from $3 billion in 2021 to $8.1 billion with a compound annual growth rate (CAGR) of 15.3% from 2021-2028 with a CAGR of more than 17% in WMS software alone. The WMS market was $348.6 million in 2016.

Grand View Research cites healthcare as one of the biggest growth sectors as companies seek to increase product output and meet rising customer demand. “A WMS helps reduce lead time, increase product delivery speed and minimize distribution costs,” Grand View states.

Much of the increased demand for pharmaceutical WMS software is expected to come from small- and mid-sized businesses using it on a cloud-based computing system. WMS software, “is widely used as a tactical tool by businesses to meet the unique customer requirements of their supply chain and distribution channel,” the report indicates.

Figure: 1 Recent Trends in Pharmaceutical Supply Chain

Pharmaceutical Supply Chain Management Trends

Using Robots in Pharma Factories

Robots offer several advantages over human workers in select conditions, a report by TweakYourBiz states. including:

  • Increasing worker safety when assembling implants and drugs containing radioactive or biohazardous compounds
  • Reducing contamination by having robot-only areas
  • Performing repetitive tasks to perfect efficiency, increase productivity and eliminate human error
  • Retooling and refitting a robotic ensemble to perform different tasks
  • Automating high-throughput screening (HTS) for chemical or biological compounds
  • Scanning products to identify potential counterfeits

“Robots provide improved reliability and result in fewer rejects and material waste,” the TWB report concludes.

Smart Contracts and the PSC

Administrative expenses are a significant part of PSC expenses, which add 7% – 8% to the final cost of a pharmaceutical product, a report by Exyte claims. Administrative staff is required to handle invoices and send payments. These processes are automated when using smart contracts that automatically execute using a transactional computing protocol when stated conditions are met.

However, these contracts use blockchain technology to, “verify, validate, capture and enforce agreed-upon terms between multiple parties,” Finextra states.

Summary

As businesses strive to increase their efficiency and performance, increasing diversity in terms of raw materials sources, APIs, using software to help manage operations with robots and other forms of automation on both factory and warehouse floors continue to rank high among emerging pharmaceutical supply chain trends.

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References: Supply chain trends to watch 

Advantages of material requirement planning
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Advantages of a material requirement planning system (MRP) vs. manual planning
Advantages of a material requirement planning system (MRP) vs. manual planning 700 500 Xcelpros Team

Introduction

While it wasn’t a strong consideration for chemical production in the past, today’s plants are realizing the need to know where they stand in terms of meeting their customer’s needs. Some key demands being placed on the chief financial officer by different departments include questions like.

  • Can we fulfill my customer’s regular orders on time?
  • Are we able to deliver a client’s last minute rush-order?
  • Do we have enough inventory to stay on schedule without impacting other projects?

The only way for a plant to know exactly where they stand in terms of its raw materials, packaging, production and delivery schedules is through proper planning.

The benefits of effective materials requirement planning starts with understanding each product’s formulas, which dictate the required bills of materials (BOMs) in terms of raw or previously refined ingredients along with up-to-date instructions on how to safely use them.

A manufacturing BOM is essential in designing enterprise resource planning (ERP) systems and materials requirement planning (MRP).-Investopedia

Difficulty with Conventional Methods

A conventional method of making sure you’d have all the information required to answer the CFO’s questions was by using Microsoft Excel spreadsheets for production planning. One spreadsheet might list all of the required chemicals for a specific formula from the BOM in the first column followed by others showing the quantities required for each batch and the quantities on hand. Other sections of the spreadsheet might be what is on order, which supplier is shipping it, when it is due and other similar information.

In this format however, ensuring the information on the BOM is accurate usually requires additional diligence and effort to be put forth. This could mean verifying inventories, making phone calls and sending emails when numbers in the warehouse don’t match. It might mean having one manager call another when a shipment arrives with less than the ordered quantity, or rarely, more than what was ordered.

Once the BOM is completely built out and the CFO knows what materials are available, they can schedule labor and resources to produce the products. This can be tricky when the same distillation equipment is to be used for multiple products, with downtime in manufacturing required between batches for cleaning and device maintenance.

Ideally, production teams have a planner who creates a schedule similar to the one in the image below (see Production Planning PPT slide from Xcelpros).

The Downsides to Downtime

You may have heard it before “Poor planning produces poor performance.” When it comes to business however, poor planning can also mean unexpected costs, and unexpected downtime. Downtime is often defined as time when production is scheduled to run but for some reason is not. Unplanned downtime or production stoppages however can seriously impact a businesses bottom line. These include disruptions in the form of reputational damage and customer churn by not delivering products on time. This unplanned lack of production also causes revenue losses, reduced employee productivity, reduced end-user productivity and stressed employees. Stressed employees can result in employee turnover. An HRDive brief puts the cost of replacing an employee at one-third of an employee’s annual salary or roughly $15,000 per worker.

Direct Costs of Downtime

The direct cost of downtime in production across all industries, not just chemical——varies. According to Atlassian and Garvey, downtime costs add up to

 

$247per minute for small businesses

$9,000 per minute for medium and large businesses

$260,000per hour across all businesses in a 2016 study

800 hours of downtime per year on average in manufacturing alone as cited by Garvey

Source: Atlassian & Garvey.com

Tracking Downtime in the Chemical Industry

According to an article by Accruent, unplanned downtime in the chemical industry appears in

  • Reduced production
  • Losses caused by quality issues
  • Costs for equipment repairs
  • Decreased customer satisfaction

One example cited was the quality drop off when a High-Density Polyethylene (HDPE) plant restarts. The plant can take from hours to days to produce right-first-time materials. The transitional goods are either scrapped or sold as reduced quality.

Proper Planning Produces Peak Performance

Figure: 1Production Planner’s View on Manufacturing: Planning & Execution in a Chemical Company

Features Of MRP System

Much of this downtime in manufacturing can be avoided by proper planning, especially when using a Master Plan. Managing master planning processes using software such as Microsoft Dynamics 365 Supply Chain Management can complete a number of critical tasks including

  • Calculates net requirements for the master plan based on actual current orders. This permits day-to-day inventory management.
  • Forecasts gross requirements for long-term planning of materials and production capacity.
  • Calculates net requirements across legal entities, such as different companies providing supply and demand.

The Master planning module determines the supply (materials) and capacity (resources) needs that will meet current demand (net requirements),” which includes the longest lead times.-Microsoft

The Master plan setup includes coverage settings and defining coverage rules for items.

Using a Master plan includes creating a constrained plan, handling safety stock and dealing with delays.

When used with multiple sites, the Master plan creates site schedules, site plans and coverage, the BOM version and other functions.

In terms of intercompany planning, the Master plan lets CFOs and project planners view the outbound intercompany demand and collaborate with internal supply chain customers.

Demand forecasting functions include importing historical data, generating, adjusting and approving a baseline forecast and then monitoring the forecast for accuracy.

Demand Forecasting in Microsoft Dynamics 365

Figure: 2Basic flow in Demand forecasting

Basic flow in Demand forecasting

Having an idea what to order in advance is a “top of the mind” issue for many CFOs. Microsoft Dynamics 365 Supply Chain Management can perform demand forecasting, though it requires the Microsoft Azure Machine Learning Studio, which has limited availability.

  • Predict independent demand from sales orders and dependent demand at any decoupling point
  • Customize it for industry-specific requirements
  • Visualize demand trends, confidence intervals and make forecast adjustments based
  • Remove outliers
  • Authorize the adjusted forecast for planning

Final Thoughts

Proper planning helps CFOs cut costs and reduce downtime in manufacturing at the same time. One way to ensure production facilities have enough of what they need to keep factories rolling is by using an MRP system. These systems are

  • More efficient
  • More accurate
  • Better for long-term planning

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Pharmaceutical inventory management challenges and solutions banner
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Pharmaceutical Inventory Management: Challenges and Solutions
Pharmaceutical Inventory Management: Challenges and Solutions 700 500 Xcelpros Team

Introduction

In the pharmaceutical industry, the task of keeping track of inventory is a critical process where large investments can either make or break a company. There are so many different things to consider that have a significant impact on an organization’s bottom line.

When it comes to pharmaceutical inventory management there are a certain questions that need to be answered for full accountability, including

  • What products or raw materials do we have in inventory?
  • Where is it being stored – both physical location and in the production process
  • Does the physical inventory on hand match what each department is supposed to have?
  • Are there any discrepancies?
  • Are any raw materials or products either approaching, at, or past their expiration dates?

If just a few of these questions are left unanswered, the damages to a company can quickly begin to pile up. This can result in a loss of revenue, fines, or worse, risk to human life. Understanding exactly what issues could arise, and how, is the best first step to approaching inventory management in the pharmaceutical industry.

Understanding common causes

With rapidly rising costs for things like materials, transportation, and fines associated with non-compliance, understanding the most common causes of the issues plaguing the industry, and more, is critical to the operations and success of organizations in the pharmaceutical industry.

This lets businesses plan more carefully to be able to successfully manage their inventories down to the smallest detail. Some of the most widely seen causes of pharmaceutical inventory management errors include

  1. 1.Human error resulting in misinformation being entered into an organization’s enterprise resource planning (ERP) system.
  2. 2. Improper or incorrect storage of finished goods or raw materials.
  3. 3. Waste and/or shrinkage (i.e., theft) resulting in incorrect inventory counts and undocumented loss of revenue.
  4. 4. Errors caused by incorrect measurements or from using inaccurate equipment.
  5. 5. Discrepancies between ordered, shipped and the received quantities.
  6. 6. Failures to properly account for expired, damaged or destroyed items including raw materials and finished goods.

Inventory Management Systems

Efficient, accurate inventory management is critical because it controls the amounts of raw materials, work in progress and finished products available at any given time. More companies are taking advantage of today’s modern solutions to achieve a number of functional benefits along with enhanced visibility of their inventory levels. These new systems all support three major goals, including

  1. 1.Making sure there are enough raw materials to meet current and anticipated demand.
  2. 2.Using working capital on other needs, such as replacing outdated equipment, opposed to buying or storing additional inventory.
  3. 3.Balancing the above goals while allowing the company to make a profit.

Along with achieving these goals, these systems let business perform much of the following

Tracking Production Lots

Unlike other industries that track raw materials and finished products by part numbers, many existing pharmaceutical factories tend to produce medicines and other drugs in lots.

The lot method uses various machines to create various lot and batch sizes of a particular drug or product in common increments such as gallons or pounds. Each lot should then be marked with a pedigree serial number as required by the US FDA Safety and Innovation Act (FDASIA). All drugs distributed by wholesalers, repackagers or distributors must have a pedigree serial number for tracking purposes.

The manual and electronic (ePedigree) versions allow for tracking individual drug production lots from start to sale. Lot numbers let healthcare providers know if a particular batch of product:

  • Is ready for sale
  • Is expired
  • Is part of a recall

Lots have codes unique to each batch, making it easy to learn when problems occur. For example, if Batch A is perfect but Batch B has a problem, the manufacturer can use lot codes to narrow down where the problem occurred and correct it.

Pharmaceutical Lot tracking and the Supply Chain

Lot tracking increases supply chain integrity by tracing the pedigree of each batch of drugs manufactured.-2014 article by Lowry

Figure: 1Pharmaceutical Drugs Management Life Cycle

Banner: Pharmaceutical Drug Management Life Cycle

Specific to pharmaceuticals, lot tracking ensures tracing of each ingredient, dosage units, product family, national drug code (NDC) number, strength, schedules and other information for each batch. Lot numbers permit tracing throughout the production, processing and distribution processes.

Each lot is given an expiration date that determines its shelf life. This lot can be tracked through the supply chain to determine:

  • When it was made
  • Where the lot is at any given moment such as production shipping or a storage warehouse
  • Which customers received it
  • When the customers received their shipment of a specific lot

Typically, batches nearing their expiration date undergo a quality control test. The quality control lab either extends the expiration date or scraps the batch.

The Drug Supply Chain Security Act (DSCSA) plus the FDA and Drug Enforcement Agency (DEA) are constantly updating regulations related to lot and batch labeling.

Enhanced Tracking Methods

A stand-alone inventory management system, or the more robust ERP offerings in products such as Microsoft Dynamics 365 – Supply Chain, uses lot or batch numbers in the pharmaceutical industry, and/or product codes for internal tracking. Many wholesalers use the FDA-assigned NDC number, which is unique to a specific product. These systems can also track products by brand, brand description, strength and dosage as required by the DSCSA and for suspicious order monitoring.

The Global Trade Item Number (GTIN) is a 12-digit number used with a barcode for tracking purposes in the US and Canada. It is also known as a universal product code (UPC). The first 6-9 digits are the company prefix. The next digits reflect the product while the last digit is a check digit based on a calculation of the first 11 digits. An European Article Number (EAN) is similar to a GTN except it has 13 digits. EANs are used everywhere in the world except in the US and Canada.

Modern Inventory Management Systems

An pharmaceutical inventory management system that works with accounting, such as Microsoft System Dynamics 365 – Supply Chain, allows pharmaceutical companies to track, manage and organize inventory levels plus order, sales and deliveries.

The purpose of inventory management software is to maintain an optimal inventory level, track goods during transport between locations, receive new items, manage pharmaceutical warehouse processes such as picking, packing, and shipping, prevent product obsolescence and spoilage, and ensure your products are never out of stock.-Microsoft

Other advantages of using an inventory management system include

  • Inventory optimization
  • Product identification and tracking
  • Asset tracking
  • Reorder point determination

Inventory Management in ERP Systems

When included from the beginning as part of an ERP system, Inventory Management provides a number of additional benefits, such as

  • Direct integration into a company’s Supply Chain Management operations
  • Tracking of individual lots and batches using barcodes
  • Insights from real-time tracking using a cloud-based system, visible on mobile devices at any time
  • Artificial Intelligence (AI) recommendations for determining optimal inventory levels
  • Quicker, easier software updates for cloud-based systems compared to standard on-premise programs

Final Thoughts

The adoption of modern inventory management systems helps businesses reduce the likelihood of having either too little or too much in terms of raw materials or finished goods. For the pharmaceutical industry, inventory management is critical, offering accurate, continuous tracking of batches and lots. This ensures the company meets stringent federal and state regulations and helps ensure that only current—not expired—products are available to customers. To achieve the best results, businesses need to understand the issues and perform enough research to determine how beneficial adopting a modern inventory management system would be.

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Role of technology in optimizing the pharmaceutical supply chain banner
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The Role of Technology in Optimizing the Pharmaceutical Supply Chain
The Role of Technology in Optimizing the Pharmaceutical Supply Chain 700 500 Xcelpros Team

Introduction

The pharmaceutical industry is a rapidly growing industry with strict regulatory requirements. The COVID-19 pandemic has put immense pressure on these companies to meet the changing demands of the market. Meeting these high demands while adhering to requirements can be one of the biggest challenges for these firms. With more and more industries going fully digital, technology is helping these companies overcome challenges as they arise to stay in business. Let’s find out how!

Tech in Pharma Supply Chain infographic

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5 Key Reasons Why Distributors Should Invest in a Robust ERP
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5 Key Reasons Why You Need ERP Software in Distribution
5 Key Reasons Why You Need ERP Software in Distribution 700 500 Xcelpros Team

At a Glance

  • As a distributor, your investments can be severely impacted due to operational or management issues with your transportation system; The day-to-day operations of most wholesale distribution companies can take advantage of optimized systems to avoid inventory stock-outs, transportation bottlenecks, and more.
  • Most operational problems can either be resolved quickly or avoided altogether with ERP software designed for distribution companies.
  • Today, more and more supply chain distribution and transportation companies looking for an advantage are investing wisely in ERP software.

Distribution management, supply chain and logistics planning can be few of the most challenging areas for any wholesale distribution company. If not properly monitored, common occurrences of events like rapidly increasing volumes of new information, varying timelines, and unplanned scheduling issues can become large challenges to overcome. This goes for unforeseen factors that can’t be planned for as well, like breakdowns, natural disasters, and unexpected disruptions to transportation channels. To minimize the impact of these scenarios and more, distribution companies can choose to leverage smart business management software platforms such as ERPs. These solutions designed specifically for distribution companies focus on simplifying operations and shortening the cash cycle with robust out-of-the-box and customizable solutions.

For years, distribution companies have been on the short end of the stick when it comes to implementing IT infrastructure capable enough to support their unique needs and requirements. While a quick search might indicate a majority of wholesale distribution companies operating on a similar model, a more in-depth investigation would highlight numerous differences and intricacies. An effective wholesale distribution ERP software can recognize specific requirements and provide solutions to address them based on the scale, geography, and operating model of a specific organization. This all points to ERP being essential for distribution channel management, boosting overall operational efficiency, and reducing costs.

Below are 5 more important reasons why the right ERP is a must-have for organizations looking to boost distribution and transportation networks

1.Increased agility With today’s market more dynamic than ever before, end-users are not only more aware of what they want but are able to access a growing number of options. This change in behavior requires manufacturers and wholesale distributors alike to rethink their approach. With the right ERP solution in place, both sales and distribution pipelines become much more dynamic, allowing distribution companies to communicate changes in requirements in real-time to simplify the order-to-shipment process.

2.Enhanced Data Management For any distribution company, managing inventory inflow and outflow is an enormous task, susceptible to repetition, recurrence, and multiple errors. This can be avoided by implementing a comprehensive ERP platform to automate data entry and facilitate high-end data and insight generation. The right ERP software in distribution offers significantly enhanced visibility and complete transparency for information being managed in a distribution network.

Figure: 1Why Do Distribution Companies Need ERP

Why Do Distribution Companies Need ERP

3.Efficient Inventory Management Properly managing today’s distribution operations includes actively monitoring supply chains, logistics, and inventory, which, when not managed effectively, can produce a significantly lower ROI. This is where ERP software for a distribution company can make a huge difference with things like built-in automation to track multiple items, real-time monitoring of goods to avoid stock-outs, and improved communication between stakeholders.

4.Streamlined Supply Chain Management To avoid disruptions in supply chains, companies need to take proactive measures to streamline operations and minimize the impacts of any global phenomenon that can potentially disrupt the supply network. An ERP software in a distribution company helps ensure a steady flow of goods, fortified communication amongst stakeholders, and complete visibility of the supply chain.

5.Improved Customer Relationships Today’s wholesale distributors are expected to anticipate their end user’s needs as market demands rapidly change. This helps organizations stay ahead of their competition, and able to respond quickly to their customer’s dynamic requirements. The strengthening of these customer relationships leads to an improved cash cycle, which further helps to avoid overstock. This leads to other, more conventional industries looking to improve customer retention with the right ERP.

Final Thoughts

Modern ERP software in distribution has evolved into complete end-to-end platforms designed to promote growth and improve both suppliers’ and distributors’ ability to do business under quickly changing conditions. Especially today, implementing the correct solution has become much more affordable, offering significantly improved response times, increased efficiency, and stronger customer relationships.

Key Takeaways

  • Choosing the right ERP for distribution is more crucial than ever in making your supply chain and distribution network highly dynamic, leaving your business in a much better position to respond to rapidly-changing market demands.
  • The main focus of ERP isn’t just operations management but also improving supply chain and strengthening customer relations.
  • Overall, sales and distribution cycles become much more profitable when the right ERP solution is in place.

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