Over the last few decades, the supply chain has seen an exponential rise in its importance to the pharmaceutical industry. Today, the supply chain department sits at the heart of an organization, actively playing the role of balancing the business from the top to the bottom.

But first, let me start by clarifying the concept of the supply chain and its importance to the industry:

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In the days before the supply chain came into existence, the company’s top management played a vital role in managing multiple operational departments as well as the business as a whole.

When the concept of the supply chain was put into practice, it merged together several different departments with demand and supply planning, manufacture planning, purchase, business development, and more all coming under one roof. In no time at all, the supply chain became the link between marketing/sales and all other service departments to run efficient operations and the business.

Nevertheless, slow growth and economic downturns can affect the operations of a business. Therefore, the key challenge for supply chain professionals is to meet the expectations of the top management, expecting to minimize the supply chain cost (product and service cost) without affecting the service level.

With the supply chain being one of the most complex processes in pharmaceutical operations, the need for continuous improvement and collaboration with other departments has never been greater. There are many challenges facing the supply chain. Some of them are:

  • Meeting CGMP, GDP regulations
  • The label claims environment for the product
  • Cold chain management and services
  • Price cutting for essential products by the government (India)
  • Different tax structure for each state
  • Internal and external regulatory audit
  • Logistic infrastructure and currency fluctuations
  • Inflation and oil prices.
  • Huge variation in the product pricing in different countries
  • Unpredictable molecule band in the country
  • Track and trace system imposed by the government on pharmaceutical industry
  • Right vendors and the association influence on the business

When facing all the challenges mentioned above and tackling it head on, the supply chain department is able to provide excellent service with minimal cost, and hence, have a huge impact on the business of an organization.

Many organizations have failed to consolidate the sub departments under the supply chain umbrella, and as a result have struggled to provide exceptional service to the customer. This has ultimately led to companies falling behind in the market. The key mantra for a supply chain individual is continuous improvement in optimizing processes, cost and services.

Gradually, the supply chain division is growing above and beyond. Over time it has expanded its scope of work to managing business operations directly and handling international distribution independently. It is also involved in the strategic business change management, as well as being proactively engaged in expanding the business to larger possibilities. The division also approached the Indian government to have a public private partnership model for the betterment of society as well as the brand itself. Our partnership with the insurance/banks also helps the customer in a more direct way, providing them with access to healthcare and access to a medicine global program, while increasing visibility. All these developments are only possible when we apply a VUCA (Volatile, Uncertain, Complex, and Ambiguous situation) model as a leader.

The role of the supply chain head in the organization is to create value and to have a clear visibility both in the short term and long term.

I would like to end this by saying that the Supply Chain department is the heart and soul of an organization with many issues, challenges and hopes.




Rakesh Shah
Supply Chain Asia Pacific (Sub Region II), India and Frontier Market
Merck Limited