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International incorporation and interdependence because of global sourcing and distribution have established manufacturing further complicated, dynamic and unreliable. The consequence of these has supported to growth in the complexity and length of Pharmaceutical supply chains thereby establishing systems for the supply of Pharmaceutical products less foreseeable, further vulnerable and so riskier.
This fact provided a competitive and stiffer corporate situation which has supported pharmaceutical business to look for working position that effect skills into their activities. According to Trucco, & Ward, (2011), "a business achieves competitive advantage over their opponents through implementing quality and innovation in focused areas" (p, 45). One of these focused areas is the supply chain. Risks establish the supply chain further susceptible and thus, further vulnerable to disruptions. Therefore, the supply chain risks management is important to obtaining supply chain performance.
Current supply chains work in uncertain environments, where the economic crisis, labour strikes, abrupt changes in consumer demand, terrorist attacks, natural disasters (floods, earthquakes, etc.), can happen at any time and affect the normal operation of their activities, affecting the physical flow, cash and information along the chain (Max, 2011). Such situations can generate a wide range of negative impacts from minor consequences to the total disruption of these flows, generating high costs and low sales for companies. According to Mahmood, & Shahab, (2011) the risk is an aspect that is always and will be present in the organisational context, so there is a need for robust models and well-founded to manage risks you supply networks, incorporating techniques and tools from other disciplines that support the assertive decision making. The risks and uncertainty are important aspects in the management of the supply chain. However, the popularity of this topic has been increasing in recent years due to the increasing complexity of the chains, largely derived from a number of business global trends: Increased process outsourcing, globalisation of markets, increased reliance on suppliers and information and communication technologies (ICTs). Although to some extent these options are beneficial for companies, increase the probability of occurrence and magnitude of the result of the risks that threaten supply chains (Rob, 2016).
Supply Chain Management (SCM)
For purposes of providing a better contextualisation against the proposed theme in this research, we must start giving clarity on two specific concepts: "Supply Chain" and "Managing the supply chain (Chuck, 2013)." A supply chain (Supply Chain) is a set of organisations (Suppliers of raw materials, manufacturers, logistics operators, distributors, wholesalers and retailers), whose objective is to generate and distribute products or services to consumers / end customers. In this regard, it is worth noting that the term "chain" has endured over time even though it is universally acknowledged that supply chains are not linear chains but complex network systems companies. There is no universally accepted definition of the concept of Supply Chain Management. However, some of the most accepted are included below: Eyinda, (2009) ensures that the management of the supply chain (Supply Chain Management) is the management of relations upstream and downstream suppliers, distributors and customers the goal of providing customers with the highest value at the lowest possible cost. Bogdanich, (2007) argues that chain management (SCM -Supply Chain Management) refers to the process of material flow management, financial flow and information flow that occur along a supply chain (network organisations). Importantly, it also includes coordination and collaboration with business partners, which can be suppliers, intermediaries, logistics operators and customers. In essence, the management of supply chain management integrates supply and demand within companies and between them.
Supply Chain Risk Management
A common association is made between the terms risk and uncertainty, to the point where they have come to be considered equivalent. However, there is the difference between them despite being closely related. Meanwhile, the risk in the business context represents the possibility that an unexpected event will occur and adversely affect the normal activities of an organisation or prevent these are carried out according to plan, while uncertainty relates to the lack information and little knowledge about the behaviour of a specific situation. The way the two concepts are related as follows: uncertainty involves risks; in other words, there is no certainty of what will actually occur in the future (uncertainty) and therefore there is the likelihood (risk) that an adverse event occurs. Blackhurst, Craighead, and Handfield, (2005) are also common associations of risk concept with concepts such as "disruption", "disturbance", "vulnerability", "security" and "resilience" and present the definitions and relationships of these concepts. In this context, one of the most important terms in the literature and on which more has been developed is the vulnerability in supply networks. It seems consistent also the susceptibility of the supply chain to the damage caused by this situation is of significant relevance. This leads to the concept of supply chain vulnerability. The basic premise is that the characteristics of the supply chain are antecedent to the vulnerability of the supply chain and affect both the probability of occurrence, as to the severity of disruptions occurring in it.
Measuring vulnerability is not easy since it is not directly observable and according to this latter definition of Barroso, Machado, & Cruz, (2010) phenomenon vulnerability is the result of certain "inductors", equivalent to characteristics or background chain catering. Consequently, vulnerability must be measured by variables that enhance vulnerability (inductors), such as the complexity of the supply chain, reliance on a customer or supplier, globalisation, etc.). These variables must be measured, to assess their interrelationships, and add them to obtain a value of vulnerability.
Importance of Risk Management in Supply Networks
Current supply chains work in uncertain environments, where the economic crisis, labour strikes, abrupt changes in consumer demand, terrorist attacks, natural disasters, can happen at any time and affect the normal operation of their activities, affecting the physical flow, cash and information along the chain (Mohamad, 2009). Such situations can generate a wide range of negative impacts from minor consequences to the total disruption of these flows, generating high costs and low sales for companies. The risks and uncertainty are important aspects in the management of the supply chain. However, the popularity of this topic has been increasing in recent years due to the increasing complexity of the chains, largely derived from a number of business global trends: Increased process outsourcing, globalisation of markets, increased reliance on suppliers and increased information technologies that facilitate the control of the activities of the supply chain. Although these options to some extent are beneficial for companies, increase the probability of occurrence and magnitude of the result of the risks that threaten supply chains as Munoz and Zamiska, (2007) mention in their work real case perhaps the most famous of the differences between having and not having a risk management system.
Such cases show that not adequately manages the risks that threaten supply chains can have a very negative impact on organisations. Multiple studies have shown that firms that are exposed to risks and disruptions may experience low operational performance as well as poor performance in its supply chain compared to those companies that are exposed to a lesser degree of risk and disruption of the supply chain. In general terms, the consequences of disturbances and interruptions of the supply chain brings logistical consequences as the failure to meet the requirements of customers, unfulfilled promises delivery customers, low availability of raw materials or finished product, decoupling between demand and supply in the supply chain, among others (Juettner, Peck and Christopher, 2003). The risks to materialise may also affect the financial performance of the company, as they can cause reduced sales, asset utilisation or utility.
Supply Chain Resilience
It is essential to observe that there have been different kinds of literature on supply chain resilience. Blackhurst, Craighead, and Handfield, (2005) explained that obstacles exist to the broad application of this information. Barroso, Machado, & Cruz, (2010), suggested more studies on SC emergency disruptions in industrial and academic areas to analysis the productive response approach to increase supply chain resilience. In this context, Borzooei, & Asgari, (2013) suggested conceptualisation of the resilience model through using particular perceptions to the study on supply chain resilience. This can be obtained through the adaptation of methods which are not only related to services, procedure growth and consumer delivery but also with the association with customers, suppliers, managerial and commercial procedures. Different studies about supply chain resilience have conducted in situations that lack business specificity. So, the generalizability of the outcomes on supply chain resilience is rather complicated. No other business is further dependent on public trust than the pharmaceutical business which currently portrays further susceptibility to troublemaking risks (Bogdanich, 2007).
Pharmaceuticals that concentrate on supply chain resilience properly react to harmful activities quicker than the competition to take market share and outperform, ensuing in an average higher stock performance. A resilient supply chain is a competitive benefit, decreases consumer views about considered risks and moves businesses from risk management to risk resilient development. Different events defined in current news stories impact global supply chains and some companies have evaded wrong business results once supply chain problems have hit the headlines (Eyinda, 2009). The horse meat scandal is one event where supply chain contamination has supported to broad scale consequences across different business partners in the food sector.
Build a Resilient Supply Chain
A resilient supply chain balances risk and costs to prevent or recover quickly from a multitude of dynamic and simultaneous risk-related disruptions. Resilient supply chains are characterised by four pillars (Borzooei, & Asgari, 2013)
The ability to track and monitor supply chain events and patterns, enabling proactive actions:
Monitoring of supplier performance and compliance
Ability to monitor flow of material from tier three suppliers to end-users
Line of sight into end-user consumption and usage patterns
The ability to quickly adapt to disruptions without significantly increasing operational costs:
Identification of alternate suppliers that can manufacture core products in the event of a disruption
Ability of a single manufacturing line to produce multiple products
Ability to re-route materials to meet changing demands
The ability to develop symbiotic and trust-based relationships with supply chain partners and other key strategic networks:
Collaborative planning with suppliers and customers
Collaborative design in products – incorporating customer demands and supplier capabilities
Access to end-to-end supply chain inventory data and supplier capacity constraints
The ability to implement policies and execute processes to prevent disruptions:
Ability to develop products with appropriate levels of quality and safety
Ability to protect end-to-end product flow (e.g. tampering, theft, counterfeiting)
Adequate regulatory, legal and social compliance policies and controls
For a company to have a resilient and robust supply chain, the above four aspects should be present. This can be complicated to obtain but it is probable from small to medium companies to large pharmaceutical multi-nationals.
Inventory optimisation is the important area of working capital that people can focus. An end-to-end system applies different analytical approaches to enhance inventory. The major approach is to establish a supply chain system map that covers the product flow across the system. This is important as this will recognise the involved sites, the comparative volume, and the product flows value, inventory keeping points, the supplier base, and the main markets for the network products (Barroso, Machado, & Cruz, 2010). Concurrently, the lead times across the system are also made and, then, segmented into production, release, quality, and logistics buckets. Once all the data is supported, statistical analytical approaches can be established to decide inventory target positions supported on reviewed demand and supply variability and the required service standards.
The supply chain is globalised in a pharmaceutical business. The pharma supply chain is also complicated, so inventory optimisation must be properly established with the support of a two-step system.
Step 1: Highly strategic inventory locations are reviewed and optimised particularly at single phase. This will get rapid wins and support inventory to be released within a few weeks to months without reducing consumer service positions.
Step 2: The second stage will be to enhance inventory at a multi-echelon position, which is normally performed with the support of an advanced optimisation method.
The supply chain risk is an important issue for different businesses currently as they become dependent on their customers and suppliers to obtain monetary accomplishment. But the performance and procedure are normally complicated to understand beyond the restrictions of their businesses, becoming susceptible to the strange. Since SC lengthens becomes further complicated for control and administration, the question "How can businesses reduce risk and obtain a competitive benefit"? This business transformation needs businesses to assess the managing product design procedure and approaches to communicate the strategic norm of the company (Eyinda, 2009). This line must be added that it is expected that up to 80% of the entire costs of the supply chain are decided initially in the product design phase. Though, there is a rising knowledge that the procedure "starts at the drawing board." This increases the demand for clarity on different concerns initially to fulfil its implications for the overall growth of the chain, in the context of materials` availability, capacity or components issues. Logistics management has linked initially in the design procedure can assist to recognise possible issues, like if elements or packaging stuff with long replacement are observed. It can also support expect limitations on product growth and supply chain management to handle and reduce the logistical administrative costs, whereas service positions are enhanced consumer and logistical performance (Ames Gross, 2013).
The supply chain globalisation has been observed to new competitive corporate hazards, and low prices, are not enough to focus these issues. Businesses should get other approaches of competitive distinction and product design is identified as an essential source in this context, in a market with considerable competition. Whereas higher technological complication of the product, the wider the security need in the production process and transportation thereof, establishing it important to link the supplier; as less expert with the earlier condition, the greater the requirement to control risk (Ames Gross, 2013). The risks are higher for geographically dispersed groups to perform jointly, as it more complicates and extends the productive growth procedure, enhancing the supply chain costs like inventory, production, procurement, and transportation. As supply chains become farther and longer from the market, pharmaceuticals are enforced to get systems they can be further subtle and meanwhile controlling the risks related to global supply chains. These risks are worsened when modifications in product design and production procedures are needed.
The problem is to observe approaches in which the product growth time can be decreased, quick response from the market and compressed time restocking. But the issue is that throughout the years when supply chains are global in the concentration of lower costs, some have extended the delivery time and several products are being prepared away from the last customer, making the risks of failed products on the market are high, which enhances the total costs and not decreasing them! An important issue, which has currently attracted focus, is the influence of product design on the supply chain sustainability. A rising consciousness is there that decisions taken at the design phase can have implications for resource depletion and carbon footprint (Phillip, & Cesar, 2013). Apparently, it is essential that these understandings are comprised in the design decisions of every product. By better cooperation in the entire system, businesses can be further successful in decreasing the entire supply chain cost. So, people can explain that the product design is an important determinant in making a resilient supply chain to make sure a sustainable future, and so businesses will be those who look to extend and incorporate design concerns in all business aspects. According to Ames Gross, (2013), resilience implies agility and flexibility and its suggestions extend beyond the supply chain design, but also relate the establishment of cooperative association supported on greater transparency of knowledge and the implementation of a culture of the supply chain which is encouraged through management and filtering in the business.
Incorporation of supply chains and making end-to-end supply chain prominence in the pharmaceutical business have spawned different issues; this contains development in growing markets, competitive generic equivalents, and unstable consumer demand all of which add to pharmaceutical supply chain issue. Supply chain analytics explained a systematic system to reduce these issues. Enablement of essential supply chain system and standardised functional reporting are essential stepping stones, as these skills will cover the way to enhancing supply chain success. Inventory optimisation will assist supply chain executives with the essential methods to fulfil the ever-transforming requirements of the pharma supply chain condition and support them to keep a competitive advantage. Since supply chain, resilience can be observed from the constructs of supply chain capabilities and vulnerabilities. The aim of every business must be to reduce as much as probable the vulnerabilities. This can be performed through first recognising the skills that match the considerable vulnerabilities related and then supporting these skills. Moreover, it was also observed that the standards imparted on the supply chain for those that implemented the standards into their supply chain processes.
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