Challenges
What risks are impacting your bottom line?
High Tech Industry Challenges
To stay competitive, companies are pushed to seek new global markets and to outsource their production.
Today, many companies are forced to utilize low-cost regions such as China and India just to survive. With the tempting cost-savings globalization has to offer, comes considerable risk.
Unfortunately, companies don’t have an adequate understanding of the magnitude of this risk. Without the proper planning and tools in place, they are open targets to three main categories of risk – counterfeiting, unauthorized sales channels, and supply interruption.
These risks affect every facet of your business. They affect your bottom line, stock value, and can end a product even before it is launched.
What’s really driving these risks?
Cost cutting techniques and practices. Back in the early 1990s, company managers turned their production departments into well-oiled machines incorporating just-in-time and lean manufacturing techniques, reducing costs from the processes by which they got electronic components to the right places. More recently global outsourcing was added to the list of cost-saving supply chain solutions. However, these practices brought about considerable risks from supplier interruptions, counterfeits, gray market sales, and demand for a supply chain risk management solution.
More demanding customers leading to demand fluctuations, shorter product lifecycles, greater product variety and price sensitivity have pushed manufacturers to seek new global markets, to outsource their production and find new ways to have a more lean operation. According to a Deloitte report on Supply Chain Risk Management there is a trend toward concentration and globalization, resulting in downsizing and outsourcing production locations and/or sales outlets, with an emphasis on greater efficiency and economies of scale. All of these activities are making manufacturers more vulnerable to risks such as counterfeits, unauthorized distribution and production shutdowns due to supplier failure.
Globalization and outsourcing to low cost regions such as China and India have made the situation significantly more challenging. Companies are struggling with a significantly increased counterfeit and unauthorized distribution problem as well as what to do if a major supplier interruption occurs and how to combat significant fluctuations in component pricing.
Lean manufacturing techniques are another trend that can lead to potential enterprise risks. Should a disruption and sudden demand fluctuation occur, a manufacturer who has incorporated a variety of lean techniques would likely not have inventory on hand to avoid a production shutdown.
According to a research report by Mark Hillman, AMR Research analyst, “As firms race to incorporate global sourcing strategies, integrate contract manufacturing relationships and deal with the increasing number of events that can cause disruptions, managing risk is an increasingly critical need. At stake are billions of dollars of stock market capitalization, market share losses, or even the possibility of going out of business because of an inadequate understanding of the magnitude of these risks.”
Pharmaceutical Industry Challenges
Counterfeit Pharmaceuticals…A Serious Threat to Patient Safety
The Manufacturer’s Bottom Line and Reputation Are in Jeopardy
Pharmaceutical counterfeiting is on the rise in the United States and around the globe, potentially putting at risk the health of millions of patients who take for granted that the prescription medicines they buy are safe and effective. Counterfeit drugs are dangerous by their very nature, because they are not produced under safe manufacturing conditions and they are not inspected by regulatory authorities. Therefore, it is impossible for consumers to know what ingredients these products may actually contain.
Often people think that pharmaceutical distribution in the US is safeguarded from counterfeits. Unfortunately, although the US has some of the most stringent regulations, counterfeits that are produced all over the world without meeting US regulatory requirements, are sold over the internet to US consumers. And, these illegal internet sales continue to increase.
Why is there an increase in counterfeit drugs? There is a growing involvement in the drug supply chain of under-regulated wholesalers and repackagers, a proliferation of Internet pharmacies, advancements in technology that make it easier for criminals to make counterfeit drugs, and the increased importation of medicines from Canada and other countries.
Some of the larger pharmaceutical companies are trying to educate the public about the need for caution when purchasing their medicines and the importance of closing our borders to these potentially dangerous products. Since large and sophisticated criminal organizations with global reach are now behind much of the counterfeiting problem, drug manufacturers are trying to address this problem globally.