Today, biopharma distribution is experiencing surging demand and burdening cost. Distribution networks are being asked two opposing options: first, to plan for a 3-4x expansion and secondly, to plan for closing down the activity. Unique to biopharma are two different working parts of distribution – clinical and commercial.
On the clinical side, a greater number of clinical trials with more delivery sites are needed; primarily on the commercial side, increasing fuel prices, higher labor costs, rising inventory values and more delivery locations are challenging biopharma distribution.
Steps to Fine Tune Your Distribution Network
Here are some practical steps to apply to your distribution network:
- Get a Check Up. Find Out the Condition of the Distribution Network.
How can you get to your goal if you don’t know where you are? The first step: get an accurate picture of your commercial and clinical distribution network.
- Get a Plan. Settle on the Objectives and Move Forward.
After objectives are identified, a plan unfolds. The plan is important because IT enterprise conversion and new technology may require longer timeframes and larger investments.
- Make Decisions. Outsource? Offshore or Nearshore?
Based on the first two steps, your company decides if outsourcing or insourcing is best for the future distribution along with deciding where the activity will take place, offshore or nearshore.
- Work Smarter. Focus on Effectiveness and Efficiency.
Smarter means not only doing things right and improving performance (efficiency) but also doing the right things (effectiveness) while delivering value.
- Reshape Geographic Coverage.
- Reduce the size of the clinical study and / or shrink the geographic coverage
- Adjust geographic area to key commercial inventory and delivery goals
Reducing the geographic area / zones can reap the advantage of economies of scale, increase speed to delivery and lower freight costs.
- Leverage Innovation and Technology.
In some ways you may have to become a Techie, looking at other industries and innovations to see parallel applications. For example: using artificial intelligence (AI) for routing and logistics problem-solving, employing 3D printing for product packaging and utilizing nanotechnology for serialization and scanning. Other applications could be:
- Pull and pick inventory with robots
- Monitor security and traffic via drones and GPS
- Utilize alternative transportation modes: marine transport, railways or airships
- Distribute shipping containers with improved monitoring, payload and performance.
The distribution forecasts indicate unit and total distribution costs will be pushed higher. These challenges open the door to the steps that can customize / fine tune solutions to your company.
The first five steps could produce linear growth. Yet the last step, Technology and Innovation (T&I) could produce significant exponential growth. T&I may be the best solution to deliver greater value and offset rising costs for your company’s distribution.
Look for the full article – “Six Steps to Fine Tune the Distribution Network” in a 2014 edition of Pharmaceutical Outsourcing.
About the author
C. Ray Goff Jr. has over 25 yrs. SCM, IE, distribution, and project management experience at major biopharmaceuticals. Ray is a practitioner, speaker, writer and thought leader. Click here for more insights from Ray.