Research on Risk ldentification of Supply Chain Management in Pharmaceutical Wholesale Enterprises——Taking Enterprise A as an Example

Zhang Zhan,Xue Aoming,Zhang Fang

(School of Business Administration,Shenyang Pharmaceutical University,Shenyang 110016,China)

Abstract Objective To study the current situation of supply chain management in pharmaceutical wholesale enterprises so that supply chain risks can be identified effectively.Methods Through the analysis of the actual situation of enterprise A,combining with the supply chain problem of the enterprise,the enterprise supply chain risks were found out.Results and Conclusion With the development of pharmaceutical circulation industry,the competition among drug wholesalers has become increasingly fierce.For enterprises,the supply chain risks are increasing,and the traditional upstream and downstream supply risks are transformed into multiple-dimensional risks.The goal of carrying out supply chain risk identification in pharmaceutical wholesale enterprises is to enable key enterprises to discover and understand different types of risks in time so as to improve the management of supply chain.

Keywords:pharmaceutical wholesale enterprise; supply chain management; risk identification

In recent years,China’s investment in health and medical care has increased fast.As a result,the level of medical care is improved.In addition to the liberalization of the second-child policy and the aging population,people’s demand for medical and health services has become higher and higher,which expands the rapid development of pharmaceutical circulation industry.However,with the development of pharmaceutical circulation industry,competition among drug wholesalers is becoming increasingly fierce.Besides,the continuous occurrence of drug incidences reduces consumers’ trust in drug safety,which requires strengthening management of all links of the drug supply chain.In order to ensure the validity of risk identification,enterprise A is taken as an example to identify the risks in supply chain by analyzing the actual situation.

Enterprise A is a professional pharmaceutical wholesaler.Since its establishment,it has developed into the largest pharmaceutical wholesaler in the local area,and the number of wholesale medicines is over 20 000.Its core business includes the wholesale of special medicines such as narcotic drugs,psychotropic drugs,antibiotics,and essential drugs.In recent years,it has launched the wholesale of medical equipment,mainly medical glass instruments and medical device products.In addition,its traditional pharmaceutical wholesale business also includes chemical testing business,vaccine business and Chinese medicine business[1].

1 Analysis of the current situation of the supply chain in enterprise A

1.1 Market share

Enterprise A has established a stable and longterm cooperation with more than 800 pharmaceutical factories,which are its suppliers.At present,its business has covered four provinces,19 cities and 73 counties,gradually expanding the scope of drug wholesale in the process of development.Enterprise A has positioned itself as a large pharmaceutical wholesaler enterprise,and has set up branched and subordinate divisions in the cities where its core business is located.As a drug wholesaler,it plays an important role in the drug supply chain.This enterprise serves more than 4 500 clients,including tertiary hospitals,community outpatient clinics and other medical institutions at all levels.At the present,the share of direct to patient (drugstore near the hospital)business of enterprise A in the region has reached 39%,with increasing annual sales.The scope of drug wholesale business of enterprise A is relatively wide,and in the continuous development,it has increased its own market share and market competitiveness.By establishing in-depth cooperation with pharmaceutical factories and hospitals,enterprise A has provided guarantee for the long-term development and laid a foundation for promoting the normal operation of drug supply chain.

1.2 Warehouse size

While developing its own pharmaceutical wholesale business,enterprise A also established a logistics center for drug distribution,drug sorting,and drug warehousing.The logistics center of enterprise A is divided into three departments:management,distribution and warehousing.Its storage warehouse covers an area of about 13 000 square meters and has a cargo space of 21 000 that can effectively store more than 180 000 medicines.In the local area,enterprise A has the largest drug storage capacity.Therefore,it successfully established a wholesale pharmaceutical logistics system covering the whole province,and also set up off-site warehouses in six regions of the province.

In the process of development,enterprise A also pays attention to perfecting the drug storage environment,especially the adoption of advanced cold chain management technology.Enterprise A has 6 special cold storage of medicines.Besides,its existing cold stores have sound and light alarm devices and temperature and humidity monitoring probes,which have obtained professional verification.

1.3 Distribution network

The pharmaceutical wholesale logistics network system established by enterprise A embodies the characteristics of three-level distribution,which includes logistic center,remote warehouse and medical terminal.Based on the drug wholesale logistics center,the headquarters of enterprise A can achieve the goal of fast distribution of drugs to customers directly on the same day in the city.For other cities,relying on drug warehouses in different places,all drugs are distributed to customers by the delivery vehicles of enterprise A.For example,28 refrigerated trucks of enterprise A have installed tracking and positioning systems and temperature and humidity monitoring systems.According to the requirements of drug distribution, the refrigerated vehicles of enterprise A are equipped with different specifications of thermal insulation boxes,and the total number of thermal insulation boxes has exceeded 200.Every drug distribution vehicle of enterprise A is equipped with a bluetooth printer,so as to print information related to cold chain distribution at any time and ensure the efficient completion of drug wholesale business.

1.4 Management system

Enterprise A has applied a modern transportation management system and warehouse management system for the pharmaceutical wholesale business,which facilitates the smooth development of its business.Relying on the pharmaceutical wholesale logistics center and the advanced management system,enterprise A can integrate management of drug procurement,logistics distribution,safety and cost.In this way,the overall ability of enterprise A to control the pharmaceutical wholesale business is improved,which will also ensure enterprise A to prevent risks.Therefore,after adapting the advanced management system,enterprise A can efficiently and conveniently distribute medicines from pharmaceutical factories to hospitals and other medical institutes,and it can provide higher quality value-added services to upstream and downstream enterprises in the supply chain.In addition,pharmaceutical wholesale management system adopted by enterprise A pays more attention to the improvement of the efficiency of drug sales and wholesale services,and the management system involves conference marketing,business management,dealer management,pharmaceutical representative management,fund management,and drug flow management.The goal is to make the operation of the drug wholesale management system more convenient and simple,and help enterprise A to complete the deletion or adding of information such as drug sales,purchasing,inventory,suppliers,customers,etc.which will reduce the workload of staff and improve the efficiency of drug wholesale[2].

1.5 Risk awareness

In order to promote the sustainable development and deal with emergencies in time,enterprise A formulated emergency plans for the safety of drug wholesale and distribution.At the same time,the enterprise was networked with the drug regulatory platform applied by the local drug regulatory bureau,and a professional automatic temperature and humidity monitoring system was installed in the drug wholesale logistics center.If the temperature and humidity of the drug warehouse exceeded the standard,the automatic monitoring system would automatically alarm,so that the staff could find problems in time and inform the relevant departments to take emergency measures to ensure the quality of drugs and the completion of the drug wholesale business.In addition,by installing high-definition cameras on thermal insulation boxes,transportation vehicles and storage areas,we could visualize and track the current situation of drug distribution management and warehousing management in an all-round-way,which would guarantee the safety of drug distribution and wholesale business supply chain.Enterprise A has equipped emergency generators in the drug wholesale logistics center for blackouts and other emergencies.This could ensure that the drug warehouse power supply could be stable to guarantee the quality of drugs[3].

2 Identification of the supply chain risks in enterprise A

According to the analysis of the actual situation of enterprise A and the summary of the problems in the previous work of each department of the enterprise,we identify the possible risks of enterprise A.

2.1 Drug quality risk

In the supply chain risk of enterprise A,drug quality risk refers to the risk caused by the damage of the inherent quality and appearance quality of the drug itself.Based on the principle of systematization,it can be seen quality problems may occur in pharmaceutical manufacturers,drug suppliers and other links,which increases the probability of drug quality risk.As to the wholesale and supply of raw materials for pharmaceuticals,the quality problems of raw materials provided by some enterprises seriously threaten the safety and quality of pharmaceuticals.In the process and manufacture of pharmaceuticals,problems such as unreasonable equipment management,unqualified packaging materials,irregular auxiliary materials and shrinkage of raw materials often occur,which cause the low quality of pharmaceuticals.Because of the wide scope of drug wholesale business in enterprise A,it is easy to meet the needs of distribution equipment and inventory,and the influence of environmental factors such as temperature and humidity on drugs,will affect the quality of drugs.As to consumers’ drug use,the reserved medicines may have expired and consumers’ lack of knowledge drug storage can result in the quality of medicines as well.Therefore,for enterprise A,the drug quality risk is related closely to drug supply chain and drug characteristics.

2.2 Logistics management risk

In drug supply chain of enterprise A,logistics management activities mainly include the procurement,storage,transportation,handling,loading and unloading,packaging and other processes of drugs.The causes of logistics management risks in enterprise supply chain are due to the improper use of logistics management processes and logistics equipment.Besides,the changes in environment and temperature,which may result in the delayed medicine delivery to hospitals and other medical institutions,can also trigger supply chain logistics management risk.Drug supply chain in enterprise A has many characteristics such as a wide variety of products,a wide range of transportation,and a large number of warehouses.With the accelerated development of enterprise A and the increase of pharmaceutical wholesale business,its existing cold chain system has been unable to meet the demands.At the same time,its logistics information system construction and logistics mechanization are low,and warehousing technology is backward,resulting in the unsmooth logistics of drug wholesale supply chain in enterprise A,which in turn affects drug safety and quality.Therefore,the identification and management of supply chain risks need to rely on sound logistics concepts,automated logistics facilities and equipments,and modern logistics information technology.The above technology can also ensure that drugs are reliably and safely distributed to hospitals and other medical institutions,thus completing the pharmaceutical wholesale business.

2.3 Network chain structure risk

Network chain structure is a system in which upstream and downstream mutually promote or restrict each other.The supply chain of enterprise A has a complex and dynamic network chain structure.In operation,each node enterprise cannot consider the supply chain from a holistic perspective,but thinks about how to compete for resources and transfer inventory to downstream enterprises from its own perspective.Meanwhile,the existing cooperation forms of supply chain in enterprise A are rare.Due to the lack of sufficient trust and sincerity between upstream and downstream enterprises the network chain structure cannot play its role,which is also the risk of network chain structure faced by enterprise A.To ensure the wholesale of drug business to be carried out smoothly,enterprises need to identify the risk of network chain structure.Through the identification and analysis of the risk of network chain structure,it is found the risks can also be divided into constraint risks and flexible risks.Among them,the r constraint risks are caused by the differences in the levels and conditions of supply chain node enterprises,which affects the entire supply chain network chain structure.Besides,the wide distribution network of the supply chain can also lead to various restrictions when selecting partners.When determining the number of enterprises in a flexible risk supply chain,the cost of supply chain management must be taken into consideration,and generally only one or two enterprises with competitive strength are selected for cooperation.If the cooperation attitude of such enterprises is poor or other problems occur,it will interrupt the supply chain and reduce the flexibility of the supply chain network structure[4].

2.4 Drug information risk

In the process of communicating and exchanging information between enterprise A and other enterprises in the supply chain,drug information risks are often caused by problems such as untimely information exchange and untrue information.By identifying the drug information risks of enterprises,it is found that such information risks mainly include IT technology failure risk,bullwhip effect risk,and information asymmetry risk.Among them,IT technology failure risk means that the network technology and computer technology used for information exchange are not completely secure,and there are problems of slow information transmission,delay in information transmission,loss of information,data destruction,and unreasonable application software.Irregular technology management will bring serious losses and risks to the supply chain.The bullwhip effect risk refers to the situation in which the demand information is amplified when the customer demand information is transmitted from the upstream enterprise to the downstream enterprise.At the same time,because the information of neighboring enterprises in the supply chain is opaque,the upstream enterprises cannot obtain real demand information,which increases the storage cost of the supply chain and wastes a lot of resources.The information asymmetry risk refers to the risk of drug information caused by untrue communication information and untimely information communication.In the supply chain of enterprise A,because the development goals of each node enterprise are different,they carry out management work from their own perspective,and even transmit untrue information or part of information to protect their own interests,and it affects the long-term supply chain development and overall interests.

2.5 Market fluctuation risk

In the supply chain risk of enterprise A,the market fluctuation risk arises from policy changes,price volatility,and changes in customer demand,which makes the gap between expected income and actual returns uncertain.The changes in the pharmaceutical market are obvious,and the node enterprises in the pharmaceutical supply chain need to recover funds through the market,thereby obtaining profits.By identifying the risk of fluctuations in the pharmaceutical market,it is found that the risks can be divided into policy risk,competitive risk,price fluctuation risk,and customer demand uncertainty risk.Policy risk means restriction or support policies put forward by the government for the pharmaceutical wholesale industry at different stages based on the development level of the industry and the international environment,which affects the drug supply chain and brings potential risks.Competitive risks mainly come from the size of competitive strength and the number of competitive enterprises.If the strength of competitive enterprise is strong,it will affect the structure and survival of the entire supply chain.Price fluctuation risk refers to the rapid changes in drug prices,resulting in significant fluctuations in market demand information.The fluctuation of price is in line with the law of the market,which will affect the market strategy of supply chain node enterprises,and increase the uncertainty of supply chain risks.The risks of customer demand are numerous,and the factors are in a changing state.At the same time,with the increase of listed generic drugs and shortened life cycle,the choice of drugs for customers has increased[5].Besides,the preferences of customers have also changed,which increases the difficulty of forecasting customer demand and the probability of the risks of supply chain.

2.6 Environmental abrupt change risk

The environmental abrupt change risk in supply chain of enterprise A mainly includes the sudden changes in the policy environment and the risk of the natural environment change in the supply chain.Among them,the risk of sudden changes in the policy environment means that the economy is in a recession stage,and the demand situation of pharmaceutical market will be affected.Therefore,the number of the node enterprises in the supply chain will be reduced,and the difficulty of financing will be increased.Drug manufacturers will reduce production scale and human resources as the survival method.At the same time,with the increasing trend of economic globalization,the node enterprises in the supply chain will also be affected by the sudden changes in the global economic environment[6].The natural environment change risk refers to the failure to operate the supply chain due to the destruction of the natural environment.Common environmental changes refer to snowstorms,fires,floods,earthquakes,and typhoons,etc.In addition,the natural environment change risk also comes from the fact that some environmental pollutants will enter the raw materials or auxiliary materials purchased by drug manufacturers,and may even enter the drug manufacturing process,which will affect the safety and quality of the drugs.So it is not conducive to the drug wholesale business of enterprise A.

3 Conclusions

In summary,with the development of the pharmaceutical circulation industry,the competition among drug wholesalers is becoming increasingly fierce.For enterprises,the supply chain risks are increasing consistently,and their traditional upstream and downstream supply risks are transformed into multiple-dimensional risks.The goal of carrying out supply chain risk identification in pharmaceutical wholesale enterprises is to enable key enterprises in the supply chain to timely discover and understand different risk,so as to effectively reduce these risks.Therefore,the implementation of supply chain risk identification can effectively improve the management of the supply chain.In addition,with the increasingly fierce competition in the pharmaceutical wholesale market,the competition among the enterprises in the supply chain has gradually changed from individual competition to comprehensive one.