Pharmaceutical and Medical Device
The supply chain activities of the pharmaceutical and medical device industry directly and indirectly affect all individuals. The need to have access to critical lifesaving drugs and equipment when needed calls for advanced and skilful sales and operations planning. This is even more so as companies within the industry are realising that to sustainably remain competitive, a more robust demand planning process that employs Lean approach, releases working capital and reduces obsolesces and write-offs caused by product expiration is crucial. In the United States, majority of pharmaceutical and medical device companies are now targeting a 99%+ demand forecast accuracy that delivers the right product at the right time. A recent research in the United States alone found that a 20% reduction in inventory for the pharmaceutical companies will release a working capital of around $45 billion.
An Integrated Business Planning process that delivers the right product at the right time requires advanced forecast skills and tools. Another recent published research indicated that in the United States, pharmaceutical companies have undertaken huge CAPEX in software solutions aimed at enhancing forecast accuracy. However, the report concluded by pointing out that all companies that invested in such technologies have not been able to demonstrate overwhelmingly a better or more improved forecast results than companies that employ a more basic forecast tools like spreadsheets. The point here is that the mere implementation of expensive ERP or S&OP solution software by itself does not guarantee improved results. However, the part played by the technical knowledge and skills of demand planning professionals required in the planning process is just as important. Also essential is a downstream customer collaboration approach during the demand planning process. Weighted Mean Average Percentage Error, Forecast Bias and advanced safety stock calculation reports are tested and proven tools used in the demand management function to manage forecast error and accuracy. They contribute in reducing forecast error, minimising back order, and avoiding excess inventory hold by providing visibility to the health of your supply chain. Companies that implemented these tools have been proven to significantly improve forecast accuracy, reduce excess inventory releasing working capital, improve DIFOT and improve customer satisfaction.
To obtain a copy of our published research on implementing an advanced demand planning process and tools that integrates Weighted Mean Percentage Error, Forecast Bias and advanced safety stock calculation click here. Better still get in touch with us and we will provide you a customised tool and training fit specifically for your industry and organisation.