Supply Chains for Pharma Products. Time to Penetrate for 3PL-Operators? 1.Major Trends in European...
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Transcript of Supply Chains for Pharma Products. Time to Penetrate for 3PL-Operators? 1.Major Trends in European...
Supply Chains for Pharma Products.Time to Penetrate for 3PL-Operators?
1. Major Trends in European and Ukrainian Pharmaceutical Sectors (a 3PL-Operator’s viewpoint)
2. Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s viewpoint)
3. What a ‘Classical’ 3PL-Operator Offers to Pharma-Sector? (case study)
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Oleg KalenskyDirector for Strategic Marketing & SalesUVK
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Major Trends in European and Ukrainian Pharmaceutical Sectors (a 3PL-Operator’s Viewpoint)
European Pharma-Market Ukrainian Pharma-Market
Globalization Consolidation (of retail)
Diversification (with value-added services to increase their share)
Coping with risks (currency exchange rate), crisis and state’s improper regulation
Innovations and new products Re-structuring of product portfolios (non-medicine categories to increase their
share)
Development of information-exchange platform to connect manufacturers and
customers
Setting-up of direct relations between manufacturers and retailers
High cost of penetration in pharma retail market (crisis of development)
System marketing to increase its role
Objective: to impact on pharma-manufacturers, timely responding to customers’ changing demand
Objective: to save business
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s viewpoint)
FMCG Market Pharmaceutical Market
Turnover = UAH 150 bln (2008) Turnover = UAH 12 bln (2008)
Structure of retail: modern trade (supermarkets), street retail, HoReCa
Structure of retail: drugstore chains, wholesalers, hospitals
# of stores (total) = 75,000 # of stores (total) = 25,000
Consolidation = low level (30 biggest retailers hold 20% of the market)
Consolidation = high level (5 biggest distributors hold over 50% of the market)
Dynamics = +15%-30%, like-to-like (2000-2007)In crisis = -12%-60% (Q4 2008)
Distribution (pref.) = direct(manufacturer -> retail, 60% share)
Distribution (pref.) = indirect(thru distributors, 75% share)
Decrease of customer’s purchasing capabilities, risks (exchange rates, customs duties), ‘manual’ procurement planning, optimization (incl. category management), outsourcing of
non-core activities
Decrease of cap rate of retailers, re-structuring of retail, financing problems, opportunities to acquire competitive advantages (thru M&A)
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s viewpoint)
Common Different
SCM concept Right first time. Every time principle
Operations in all temperature regimes Special regimes (gas, hazardous goods)
Direct (FTL) and indirect (LTL) supplies (Often) small shipments per store
Picking units = pallet, carton, items
High level of IT integration
Developed cross-docking & reverse logistics
System of KPIs and tools to daily control (optimize) operational costs
Necessity to have enhanced distribution logisitcs system
Count by FIFO, FEFO, batch
Pharma-logistics vs. FMCG-logisitcs:
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s viewpoint)
Flows in Pharmaceutical Market:
Goods (logisitcs)
Distributor
Manufacturer Drugstore
Customer
Cash (finances)
Distributor
Customer
Manufacturer Drugstore
Deals (sales)
Distributor
Manufacturer Drugstore
Customer
Marketing
Distributor
Manufacturer Drugstore
Customer
Agency
3PL-Operator
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s viewpoint)
Scopes of Interests of Key Players in Pharmaceutical Market:
Customer: Manufacturer:1) Low price 1) Guaranteed deliveries2) Best quality 2) Guaranteed CF3) Availability4) Consultations
Distributor: Drugstore:1) Maximal margin on trade 1) Delay in payment2) Minimal costs 2) Assortment3) Merchandising 3) Customers’ loyalty
4) Timely supplies
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s viewpoint)
Distributor’s Risks:
1) Own costs 2) Credits3) Regional Distribution 4) ‘Landed’ prices5) Innovations 6) Exclusivity7) Product’s Quality 8) Accounts payable9) Merchandizing 10) Currency rate11) Customs duties 12) Logistics
Distributor’s Tasks:
Internal External1) Optimization of sales channels 1) CF effective management2) Revision of development plans 2) Price and market control3) Strategy correction 3) Strengthening of market
advantages4) Crediting solutions 4) Control of primary / secondary5) Risk management distribution
5) Innovative marketing6) Development / extra revenues
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s viewpoint)
‘In crisis the one who is not changing is the one who’s going to die’ (Ichak Adizes, public lecture, March 31st, 2009, Kiev)
Analysis and decision-making regarding change – from a Client:
Customer -> AgencyCustomer -> DrugstoreAgency -> ManufacturerManufacturer -> Distributor
Change in demands (Customer)->
Change in the structure of activities by adapting and strengthening competitive advantages (Manufacturer, Distributor, Drugstore)
->Change of the format and essence of relations
(Manufacturer, Distributor, Drugstore, ?)->
Timely satisfaction of demands (Manufacturer, Customer)
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
Pharmaceutical Market: Today and Tomorrow (a 3PL-Operator’s viewpoint)
There are too many open questions, but…
1) Will economy be forecastible on a macro-level?2) To which extent will the state regulate the market?3) How fast will Ukraine integrate in the global economic society?4) …
5) How come will distribution transform? (vertical integration vs. disintegration; consolidation of allied merchandize categories vs. specialization by products, regions, functions, niche)
6) How swiftly will new forces (players) penetrate the market (traders, 3PL-operators, consultants)?
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
What a ‘Classical’ 3PL-Operator Offers to Pharma-Sector? (case study)
To Manufacturer To Distributor To Retailer
Professional stock management
Provision of single information platform
Customization of logisitcs services
Sharing of business risks
Platform for expansion Consolidation of stock
Guaranteed availability in retail
Discounts from manufacturers due to direct
supplies to DC
Centralized quality control
Developed network of regional warehouses
Cutting of logisitcs costs Balanced trade channels for deliveries to FMCG-retail
Increase of turnover
Optimization of stock at stores
Focus on core business
Ops inputs:
1) 1 cont. HC (30 plm), 1 plm = 60 cartons, 1 carton = 40 packages, price (1 package) = $2, gross margin = 50%)
2) Inbound = 50% by mono-plm (15 plm), 50% by cartons (900 cartons)3) Storage & warehousing = turnover 1:1, 50% picking by item + stickering (Ukrainian labels), 50% picking by
cartons4) Outbound = w/h-door delivery system, 50% by mono-plm, 50% by cartons
Pre-quotation:
1) …2) Unloading & acceptance = 15 UAH / 1 plm (mono), 1.5 UAH / carton3) Storage & warehousing:
1) Storage = 2 UAH / 1 plm / day2) Picking by item = 0.25 UAH / 1 package; picking by carton = 1.5 UAH / 1 carton3) Stickering = 0.15 UAH / sticker
4) Loading = 15 UAH / 1 plm (consolidated)5) D2D delivery = 300 UAH / 1 plm, 40 plm / 1 carton (average for Ukraine)6) + extra services (returns, documents return, insurance, FEFO, crediting etc.)
Total (invoice idea) = 56,000 UAH, orInbound-Ukraine logistics costs = 4.04% of on-shelf price
www.pharma.net.ua – 2nd Press-Club: Kiev, 15-Apr-2009
What a ‘Classical’ 3PL-Operator Offers to Pharma-Sector? (case study)