Investigation of Supply Chain Risk in the Indian Pharmaceutical Industry: a Case Study

Topics: Supply chain management, Management, Supply chain Pages: 13 (4179 words) Published: December 13, 2011
Proceedings of the World Congress on Engineering 2011 Vol I WCE 2011, July 6 - 8, 2011, London, U.K.

Investigation of Supply Chain Risk in the Indian Pharmaceutical Industry: A Case Study Haresh Mahendran, Karthik Narasimhan, Nakul Nagarajan and Gopinath S

Abstract -The pharmaceutical industry is faced with the challenge of surviving and succeeding in an environment that has become more complicated and uncertain, and one that is characterized by rapid developments in science and technology, and organizational change. The pharmaceutical industry faces relentless change and fluctuating demand which creates immense challenges in anticipating best sellers and predicting volume. Like the high-technology industry, pharmaceutical industry also suffers from many supply chain ailments including raw material shortages, short product life, quality of the product, and seasonal demand. Though India is growing with Information technology, Communication systems, infrastructure, the industry is facing various supply chain risk and uncertainty and hence Supply Chain Risk Management (SCRM) has become a vital part of this industry. We propose to investigate the types and management of risks faced within the supply chain functions of an Indian pharmaceutical company. The research was done through a case study approach. The results presented in the paper would be the outcome of a research study that was conducted in the operations of a medium scale pharmaceutical company. The paper highlights the risks faced in the pharmaceutical company and also identifies the critical point in each section of the supply chain and also investigates mitigation strategies for dealing with these risks. The critical points at different stages of the supply chain have been identified through a survey and the main reason for the risk has also been investigated. Index Terms- case study, critical point, mitigation strategies, pharmaceutical industry, supply chain risk management

I. INTRODUCTION Risk is defined as: “The combination of the probability of occurrence of harm and severity of that harm.” Risk Management has now become an integral part of every aspect of business operations. Most businesses are illprepared to handle the rising risk levels, caused by more global and complex supply chains that are increasing supplier disruptions, logistics delays, and product recalls and safety issues. Globalisation and the quest for ever more cost effective means of supply have greatly increased the complexity of the supply chain which can often reduce both the knowledge and understanding of the exposure to risk. Increasing threat due to competition, quality concerns, and scarcity of natural resources are major concerns for supply chain managers. In order to insulate business operations from unpredictable, uncontrollable events that can potentially hamper material supply, production and distribution, more and more supply chain managers are turning towards risk management in SCM. Management of risk across the supply chain is key to business sustenance and continued profitability. Risk Management can help organisations safeguard the quality and supply of product to customers and ultimately the end user. It is about anticipating hazards and controlling risk through an ongoing process of risk awareness, reduction and / or acceptance, and review. The pharmaceutical industry in some senses may be considered unique in that as it has a fiducial responsibility in management and production functions. The stated goals of the pharmaceutical industry are to manufacture products with the highest quality, safety and efficacy, at the lowest possible cost. In order to achieve these goals the industry has to focus on eradicating risks in every step of the supply chain process. Supply chain risk management (SCRM) is a new and novel methodology that captures both the operations as well as the financial aspects of decision-making. Supply chain management, in general, is still a...
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