Pharmaceutical and Chemical Industry Supply Chains

Pharmaceutical and Chemical Industry Supply Chains

John C. Gilmore (3105941)

American Military University

ProfessorDavid Patton

February 15, 2012

Pharmaceutical and Chemical Industries

In today's supply chain industry there are many factors that can contribute to the infrastructure needed to support a given firm's operation. No two supply chains are identical in how they operate or how they must set up their warehouses and transportation needs. Take for instance the pharmaceutical and chemical industries; they both support a product to various retailers around the country and the world, yet they both go about their supply chain differently, why? To answer this question, an evaluation of the industries and their needs to be conducted.

The number one factor that must be taken into consideration is the type of products being pushed and the customer service level goal of the firm. Starting off with the pharmaceutical industry, it can be noted that demand for pharmaceuticals is typically high and access is needed to these products directly by the end users (consumers/customers). The normal supply chain of the pharmaceutical industry goes from the manufacturer to the wholesaler, and then from there to the pharmacy and consumers (The Health Strategies Consulting LLC, 2005). Although not as often as the previously mentioned method; manufacturers can also distribute directly to the pharmacy, hospital, or other medical distributor and bypass the wholesaler completely. This is advantageous for the pharmaceutical industry because many times it can eliminate the need of large quantities of warehouses to house pharmaceuticals.

Another characteristic that should be noted that eliminates the need for a multitude of warehouses are that large amounts of pharmaceuticals can be housed in small packaging thus making it easier for transport. For example, tens of thousands of drugs can be housed in a fairly small package that can supply a pharmacy's needs for months. In addition to that, pharmaceutical drugs have expiration dates which emphasize the need to get them pushed out to the end users as quickly as possible. Thus, the majority of pharmaceutical transportation assets are provided by air transport because it is the quickest method as well as not that expensive considering packaging can be relatively small. With the push on getting drugs and products out to their customers quickly, many manufacturers and wholesalers do not have the need to have multitudes of warehouses to support their operations.

Now take the pharmaceutical industry and compare it with the chemical industry, we can see the need for more warehousing operations by evaluating the characteristics. The chemical