Managing High-Intensity Supply Chains for New Age Medicine with New Age Strategies

When it comes to managing a retail pharma supply chain as widespread as Reliance Pharma, how do you balance operational efficiency with maintaining a high level of customer satisfaction?

I think one very, very important thing is that we always try to use the best-in-class solutions in terms of ERPs maintained on SAP, the warehouse, as well as the team. To bring that operational efficiency, we keep or look at the lead indicators rather than the lag indicators i.e. we track the KPIs or the indicators that help us to decide with data rather than gut feeling, and those decisions are more forward-looking.

For example, a lot of organizations look at OTIF which is whether the product was delivered ‘On Time In Full’. However, it’s a backward-looking matrix – if the product was not delivered OTIF, it has been done already and cannot be amended. Whereas we look at what is our R versus C i.e. how much is the requirement and how much can we commit to, basis our stock to norms.

So from a customer serviceability perspective in the supply chain, stock to norms are very important for inventory management. When I maintain a healthy stock to norms, it is a forward-looking decision. So in the future, if I get any order and my stock to norms are scientifically well-defined and data-backed, I will have better serviceability for my end customer. Hence, obviously, my customer satisfaction will be much higher.

What is the ‘Loss Tree and Sunset Forum’? How does it contribute to minimizing order loss and improving forecast accuracy?

Considering that every order is a sales order that generates revenue for us, from a sales loss perspective, when we are not able to service an order, we face a loss and find the reason(s) for it. Amongst these reasons, we can include wrong demand forecasting or logistics unavailability at that location or a delay from the manufacturing team.

We will bucket those losses and tag them to the respective team and share it for them to evaluate, and go through it in terms of as a report card. So the concept of a ‘Loss Tree’ is about allocating losses to the respective loss centers, which brings more competitiveness. It helps in terms of improving forecast accuracy because there are certain losses, for instance, because of wrong demand shared. The demand might fluctuate but the forecast is not accurately shared with respective teams. Such a loss can be tagged to business forecasting, bringing accountability.

Secondly, the ‘Sunset Forum’ is comparable to a control tower. In that control tower, you can say all the stakeholders like logistics, business, planning, procurement, manufacturing, and quality – will be present. Everybody will take accountability for their part and their losses and the problem should be solved in that forum then and there. This helps in better decision-making and risk mitigation.

How would you define end-to-end supply chain planning for a pharmaceutical company and its importance in the face of sudden changes to the operating environment?

An end-to-end supply chain starts right from planning (which starts with business in terms of demand forecasting) and moves to procurement and finally the supply and logistics part.

And in pharma, yes, we have been facing a lot pandemic. Even though we recovered from the pandemic, there’s still a lot of dependency on Chinese sources for procurement. On the other hand, I think there is an equal amount of pressure on getting the right focus because the dynamics across the market changes every season to season.

There is a lot of responsibility for overcoming these changes and challenges in the operating environment in which we work and kind of overcoming that. So there is more expectation, there is more I would say that lies on the shoulders of supply chain fraternity and supply chain stakeholders. For the guests to support this, we have a lot of tools, technologies, and digitalization. AI and ML are the recent additions to the supply chain and are implemented from a technology perspective.

This is an abridged version of the interview published in the March edition of the Logistics Insider Magazine. To read the full interview, click here.

Logistics Insider Magazine: March issue 2024 (Digital issue)

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