How a Leading Pharmaceutical Company Tackled Theft and Inventory Challenges with OTIF Solutions
Ranked among the top 20 pharmaceutical brands globally and number one in the Access to Medicine Index, this company ensures product availability at all its retail locations without overstocking its 30 regional distribution centres by using a robust inventory management system. The company achieved lean resilience by building an On-Time, In-Full (OTIF) delivery process across 10,000 shipments, serviced by over 11 transport partners, using door-to-door shipment monitoring. Here’s how they did it!
The Importance of a Reliable Pharma Inventory Management System
The pharmaceutical industry continuously faces shipment losses, consignment theft, and demand and supply fluctuations. An effective inventory management system helped this pharmaceutical giant minimise losses and improve inventory control.
The Challenge: Drug Theft and Inefficient Inventory Management
The problem began when the company noticed a drug security issue in its South Asian market. Each year, out of the 10,000 shipments dispatched, a full-truck load was hijacked. Theft in the pharmaceutical industry is a serious issue, leading to material loss and impacting human lives, as hijacked drugs are often used to create spurious contraband.
This results in legal repercussions and damage to the brand’s reputation. Vaccines were particularly at risk, as maintaining the correct temperature was not a priority for hijackers. Every time a theft occurred, the company had to blacklist the goods across its retailer networks and invest in countermeasures to prevent the spurious drugs from re-entering the market. Additionally, the company faced a dilemma between maintaining ample buffer inventory across 30 distribution centres or adopting a lean supply chain model. Running lean would save on inventory holding costs and working capital, but the unpredictability of transit inventory arrival increased the risk of stockouts.
As a manufacturer of generics, the company needed to keep costs and availability optimal to maintain a competitive advantage in the price-sensitive South Asian market. The combination of theft and stock management issues caused significant financial and brand impact. They needed better control over their logistics, starting with shipment visibility.
Failed Attempts with GPS Vehicle Trackers and Visibility Aggregators
The company experimented with various tracking systems to achieve shipment visibility and solve theft and inventory optimisation challenges.
GPS Vehicle Tracking Experiment: They installed fixed GPS vehicle trackers on trucks used by their transport partners and mandated tracking for each of their 11 third-party logistics (3PL) partners. However, this approach failed as their 3PLs hired trucks on demand, and visibility services were not part of their core logistics offering. After three years, less than 10% of transport providers had GPS trackers, and the data was neither reliable nor accessible on a single platform.
Visibility Aggregators: Visibility aggregators also failed to meet the company’s needs for granular route visibility, night-time halts, and chain of custody. These aggregators relied on transporters for GPS or ELD tracking data, which could not provide the required door-to-door shipment monitoring.
The Solution
A multi-pronged approach put control back in the company’s hands:
- Wireless Sensors: Monitored shipment location and condition without relying on transport vendors.
- Real-Time Signals: Prevented night-driving (11pm to 5am) in risk-prone areas identified through customer inputs and pattern analytics.
- Live Location Data and Analytics: Accurately estimated arrival times (ETA) at all 30 distribution centres for incoming stock.
The solution included a 24×7 control tower team that responded to suspicious truck movements or ETA delays. This team acted on predefined protocols to manage incidents before they escalated.
The Results
With the technology used by OKgo, the pharmaceutical giant achieved real-time visibility across 100% of its primary distribution network and prevented two hijackings over three years. They eliminated theft by restricting night-time movement in risk-prone areas and maintained complete traceability for incident response. The company also implemented a Just-In-Time (JIT) model through better OTIF compliance, ensuring continuous supply to patients while running lean on stock. In the South Asian market, they moved closer to the global best-in-class inventory average. By addressing supply chain challenges with visibility, data, and analytics, the company retained its preferred brand status with patients, doctors, hospitals, and pharmacies.
This case highlights how an effective pharmaceutical inventory management system can solve supply chain issues and enhance competitiveness. Transform your logistics and supply chain into a competitive differentiator with OKgo’s Logistics Visibility Solution.
