Inventory management in the pharmaceutical industry involves complex systems that consist of interrelated and interlocking subsystems. Changes made in one part of the inventory management system have both anticipated and unanticipated consequences in the other part of the system. In recent years, we have witnessed several pathbreaking discoveries in the pharmaceutical industry’s inventory management. However, even small mistakes in inventory management can quickly lead to confusion, increased turnaround times, unnecessary expenses or worse, prescription errors that endanger patient health. Furthermore, the advancements in the pharmaceutical industry also entail several challenges in the global health pharmaceutical delivery supply chain, particularly in meeting the demands for new and personalized therapeutics.
Inventory related challenges affecting pharmaceutical companies
Inventory management in global health pharmaceutical delivery supply chain involves complex processes which include quantification and replenishment decisions. However, due to the lack of accurate information, there is often uncertainty that results in a negative impact on the company’s inventory management system.
Dependency on human resources
The lack of qualified individuals to fill the logistics-related positions in pharmaceutical companies is being recognized as a threat that results in heavy workload and ineffective role performance. Aside from this, it also leaves key responsibilities that include making supply chain calculations and decisions unattended. On the other hand, along with the utilization of accessible and user-friendly IT systems, pressure on HR capacity can be alleviated by hiring a dynamic team of responsible and trained people equipped with enough knowledge and skills.
Demand information or data about the availability of products in the different levels of the supply chain are the primary decision-making factors in order management. This translates to the fact that lack of accurate information would make order management to solely rely on assumptions and experience. Consequently, orders may arrive incomplete, inaccurate or delayed, which can negatively affect product availability and overall inventory management of pharmaceutical supplies.
Most warehouses do not possess adequate facilities to support large inventories. Relying on third-party logistics might not always be effective due to poor organization and not enough designated area for different functions such as receiving, shipping and storage for both damaged and expired products. In the long run, such unfavorable conditions may ultimately lead to discrepancies in logistics and inaccuracies in inventory management.
Factors such as environmental conditions, particularly temperature could greatly affect drug potency. Hence, failure to provide the right temperature during storage and shipment of pharmaceutical products may result in major product wastage. Refrigerated containers or storage rooms might be available in the warehouses. However, there are chances of gaps in ensuring and monitoring of temperature level. This makes cold chain difficult to maintain.
Once the manufacturer sends out the product for delivery, it becomes difficult to track its status at different levels of the supply chain. Besides, the exact date when the products will arrive becomes unknown to both the manufacturer and the recipient.
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Overcoming pharmaceutical inventory management challenges
Some of the top pharmaceutical companies are already doing a stellar job at inventory management, but almost everyone has some room for improvement. Here are some best practices for companies in the pharmaceutical industry to optimize their inventory levels:
Get an accurate count
Pharmaceutical companies can’t manage what they don’t measure. Also, a visual scan of the shelves often proves insufficient to provide the sort of accuracy needed. One of the best solutions to combat this is to conduct an annual physical inventory, supported by a computerized inventory system, and monitored by a designated employee.
Maximize the value of inventory management system
Most computerized inventory management systems lack a perpetual inventory management model. Such systems help in keeping tabs on all products in stock and automatically places an order for more product needed to maintain a certain inventory level. The company will need to adjust the parameters depending on the demand. This ensures that the order threshold and amount match the new future demand. Even a computerized system needs to be monitored and maintained for accuracy.
Shed excess inventory
Pharmaceutical inventory loses value as it ages. So, carrying excess inventory amplifies the risk of losing thousands of dollars on expired, unsaleable products. A pharmaceutical company can’t sell products once they pass their expiration date. Although demand can fluctuate from day to day, a week’s worth of inventory should be more than enough to accommodate even unusual spikes in daily demand.
With a capable supply chain and inventory management process in place, there is no looking back for companies in the pharmaceutical industry. But are you there yet? If not, SpendEdge is here to help. Request a free proposal now!
Vendor management today is not just about comparing prices and finding the supplier with the cheapest price for a product or service, it is ultimately about building better vendor relationships that will ultimately benefit both the parties. Vendor management process allows organizations to control costs, strengthen service, and reduce risk throughout outsourcing the processes to vendors while extracting the most value from the investment.
Vendor management process
For successful vendor management process, companies must take a strategic approach to build and maintain relationships with their best vendors. Good suppliers are hard to come by, so it’s important to nurture the relationships with the suppliers that companies don’t want to lose. Vendor management process is typically broken down into four main steps:
Establish business goals
Define the business goals clearly and be as specific as possible. In order to successfully undertake vendor management, you need to know exactly what it is that you’re trying to achieve. Vendor management becomes easier where there are pre- defined performance parameters to compare.
Choose the best vendor
Companies will have to weigh the pros and cons of different vendors. Some questions to ask here include: Does the vendor have extensive experience? Are they stable? Have they worked in similar environments? Do they have standardized processes and provide economies of scale?
This is the routine activity of monitoring performance and output. It’s the best way to make sure that the terms of the contract are being fulfilled. This step involves extensive communication to offer approvals, disapprovals, feedback, changes, and everything that is necessary to deepen the relationship.
Consistently meet goals
Companies aim to consistently meet their goals over the course of their relationship with the vendor. This means managing the vendor regularly to better influence and meet performance objectives on a regular basis.
Whether you’re managing 10 vendors or 1,000, SpendEdge can help you radically simplify how you track, manage, and pay your vendors. Request a demo to know more.
With the emerging need to delicately balance the medical devices’ security and patient safety, medical device manufacturers are facing numerous challenges like reducing costs, better inventory management, improving efficiency, and allocating resources effectively. The need for inventory management solutions is increasing for medical devices manufacturers owing to the surge in demand for better healthcare products.
Poor inventory management or disconnected systems can lead to operational inefficiency and issues with order fulfillment, which rises concurrently with an increase in the demand. Additionally, it can also result in wastage of time, space, and can increase the cost of operations. Therefore, it is important for the manufacturers of medical devices to understand that creating a feasible model for inventory management is central to the sustainability of their business.
At SpendEdge, we understand the impact that an effective inventory management solution can have on your business. And to help companies manufacturing medical devices in the changing landscape of the medical industry, our team of experts has highlighted five ways to examine their inventory management process and improve their efficiency.
Inventory management is one of the most essential requirements for distributors and manufacturers, especially in a rapidly changing landscape where the paper and pen method of record keeping has become obsolete and we all are responding actively to digital transformation. Companies must keep their inventory management techniques up-to-date to have a proper understanding of the factors that influence their product inventory levels. This can help businesses to fasten the fulfillment process, minimize costs, and prevent fraud. An overstocked inventory is both cost and time inefficient and occupies precious warehouse space that could be used to store high demand products. On the other hand, if the lack of inventory makes you lose the sale then this could drive customers to competitors and could lead to poor customer service. Therefore, maintaining the right inventory balance in the warehouses is very crucial. In this article, we have talked in detail about various inventory management techniques and different types of inventory management techniques to help you save more money. (more…)
What is inventory management?
Inventory management essentially refers to the efficient management of stock and inventory. In a nutshell, it is all about having the right amount of stock at the right time, right place, right cost, and in the right quantity. However, the entire process is not as easy as it might sound. It involves the use of various inventory management techniques to control and oversee order placements, ensure the appropriate storage of the stock, and controlling the number of products for sale. It can often get challenging for businesses to keep up with inventory demands while monitoring the inventory process and the needs of their workers, customers, or the buyers.
Inventory management best practices
Track the fast and slow movers
A proven advantage of optimizing inventory management for warehouses is that it can help track sales and orders for each product or customer. These inventory management techniques are extremely useful for companies to gain smart insights into inventory data. This information can be used to track the high sellers. This way, the entire stock management process becomes more efficient, storage and shipping are performed faster, and companies will not have to worry about this task ever again. This is an ideal inventory management best practice to keep the big clients happy.
Categorize the inventory
One of the most common inventory management techniques for categorizing the stock is through ABC analysis. This is the technique of arranging the stock into groups that range from the most important to the least important items. A-items typically the best-selling, highest priority stock and require regular reordering and constant quality review. B items are medium-priority stock and usually require monthly reordering. C-items are often low priority goods that are typically carried in high volumes with minimal reordering. Organizing your stock within the warehouse according to how they sell and how much value they bring the business is an important inventory management best practice that will help companies optimize storage space and streamline order fulfillment.
Automation and Mobilizing the workforce
Another inventory management best practice is to liberate the employees from their desks and allow them to perform daily tasks on the go. But employing modern technology for connectivity and cloud-based services it is possible for the staff to monitor and manage the stock levels without physically being present in the office or warehouse. Furthermore, employees might find repetitive tasks to be monotonous. So, companies must look at ways to automate these manual tasks, helping employees to dedicate more time and attention to other core tasks. Such inventory management techniques are also known to improve employee productivity.
Movable and fixed tracking options
Movable and fixed tracking option is an inventory management best practice that allows you to see where a product has been placed, how it can be accessed, and whether it is ready for shipment. Movable tracking provides insights on where items are located at all times, and it makes the entire stock management process faster, easier, and more intuitive.
Gain more insights into the inventory management solutions offered by SpendEdge
A leading wholesale retail industry client evaluated their existing B2B supply chain in China and recognized the requirement to adapt it to accommodate a B2C model, where they would be selling their products directly to consumers. The transformation required an alteration in mindset as well as capabilities that the customer did not have within their current staff.
As an international strategic partner for leading Fortune 500 companies across various industries, SpendEdge’s strength lies in delivering robust real-time procurement market intelligence solutions that help companies identify the various types of inventory management techniques to make informed decisions.
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A leading wholesale retail industry client based out of India was facing challenges in finding a qualified partner, familiar with omnichannel fulfillment and with a proven track record in developing solutions for companies like their own, became their main priority.
One of the primary objectives for the wholesale retail industry client was to develop a customized solution to bridge the inventory gap and incorporate different types of inventory management techniques with respect to B2C in their capabilities.
The solution revolved around identifying the most effective inventory management techniques to fulfill both B2C and B2B needs in China. The analysis also led to the recommendation to increase the focus on a warehouse in Beijing that would allow the customer to get their products to market quicker across different sales channels. This further helped the client improve margins by cutting out the middleman. The wholesale retail industry client has also begun discussions on expanding into additional countries as a strategic differentiator.
To know more about this engagement, request a proposal or continue reading to know about the types of inventory management techniques.