5.07.2010

Is the Pharmaceutical Industry Ready for Lean?

I recently read this comprehensive article on the Pharmaceutical Processing magazine website titled "How to Unlock $43 Billion in Value by Improving Working Capital Management." The section on what differentiates the pharmaceutical industry from other industries in working capital performance is quite revealing. Although three main areas are defined -- inventory turns, accounts receivable, and accounts payable -- it is the information on inventory that caught my eye.

The article claims that inventory turns are poor in the pharmaceutical industry due to three specific reasons:

  1. A “no stock-out philosophy" -- the high margins and impact on patients maintain this philosophy.
  2. FDA regulations -- which add to lead times.
  3. Unique labeling requirements and SKUs -- which result in greater inventory complexity.

In regard to improving performance, the article first suggests that pharmaceutical companies should adopt lean production techniques. In addition, it suggests using Toyota's two main metrics: cost structure and return on sales.

Do any readers have any experience working with pharmaceutical companies? Do you agree with the suggestions posited in this article?

8 comments:

Joshua Smith said...

Thank you for your help in informing such interesting facts. Nice review! Also turn your attention that it needs to search for mobile software development companies if you need development mobile.

Joshua Smith said...

Thanks for nice article. Let me mention about auto and home insurance provided by house protection providers. Save on online free quotes on homeowners insurance.

Joshua Smith said...

Thank you for writing this great info. You have great possibility to check gaming affiliate. The most common gambling programs such as paf partners and great poker rooms such as redbet.

Fiverr Work said...

The article claims that inventory turns are poor in the pharmaceutical industry due to three specific reasons: media player classic

Anonymous said...

Many thanks for this brilliant post! Many points have extremely useful. Hopefully you'll continue sharing your knowledge around.
robhuff |

rumieducation |

scfuelcells |

schoolbookbank |

sebrschools |

sebtrschools |

serrera |

silver-atena |

smallcapstockpicks |

socialibrium |

Johnathan Yesson said...
This comment has been removed by the author.
Johnathan Yesson said...

DJ JY London Power Tools Lakedale Power Tools ToolBritannia

addysmith92 said...

All i have to tell is to congratulate you hugely for bringing up this complex issue to public discussion and controlling it so exceptionally well. Good work worthy at least one more return to your blog!
http://www.booksharmexcursions.com |

envisioncentraltexas.com |

http://www.midwestmarketingtesting.com |

adamoagency.com |

http://www.biketowork2013.com |