| Pharmaceutical distributors and wholesalers form an | | | | drugs being distributed there may be very stringent |
| essential link between drug manufacturers and | | | | conditions associated with the storage and handling |
| hospitals, pharmacies and other healthcare institutions. | | | | of the inventory. For example, handling some |
| The relationships between the drug manufacturers | | | | bio-pharmaceuticals involves strict monitoring and |
| (usually known as Principals), the distributors and the | | | | reporting of chill chain parameters. Also, some |
| end customers are complex and taken with some of | | | | products may be hazardous in nature or may require |
| the physical characteristics of the pharmaceutical | | | | secure storage. In most cases there will be a |
| value chain introduce a number of challenges for ERP | | | | combination of consignment stock and |
| systems. | | | | distributor-owned stock in each warehouse. |
| | | | | - Picking and dispatch. The volume of picks at peak |
| Some of these challenges include: | | | | times can be extremely high – particularly where |
| - Complex pricing models. Pricing in the pharmaceutical | | | | wholesale distribution is being done. Most warehouses |
| distribution value chain is extremely complex, | | | | will have automated picking systems for high-volume |
| particularly where the same organisation works as | | | | items, which will need to be integrated with the ERP |
| both a wholesaler and distributor. There are likely to | | | | system. Often there will be a requirement for multiple |
| be requirements for multiple price lists and contract | | | | pick lists per order, as high-volume and low-volume |
| pricing with a wide variety of discounting models | | | | items will be stored and picked differently. A single |
| including support for rebates, promotional discounts | | | | order may include items at pallet, case and sub-case |
| and bonuses. | | | | levels. |
| - Retrospective claims. Pharmaceutical distributors | | | | - Licensing regulations. For distributors who operate |
| often provide discounts on behalf of Principals, which | | | | across multiple countries, there are regulatory |
| subsequently need to be claimed back. Furthermore, | | | | requirements which must be adhered to. For |
| services outside of physical product storage and | | | | example, pharmaceutical products must be licensed |
| distribution are often performed for Principals e.g. | | | | for each country. |
| sales order entry, invoicing or payment collection. | | | | |
| Billing for services is sometimes based on a | | | | In addition to the points above, the pharmaceutical |
| percentage of sales, but there is also often a | | | | distribution value chain is characterised by a need for |
| requirement for Activity Based Costing so that billing | | | | system flexibility which results from the requirement |
| is more closely aligned to the effort involved in | | | | to meet ever-changing Principal requirements. |
| service delivery. | | | | In summary, the pharmaceutical distribution sector |
| - Principal reporting. Pharmaceutical distributors need | | | | creates some significant challenges for ERP systems, |
| to provide extensive reporting to their Principals | | | | many of which will struggle to support key business |
| covering all aspects of sales, inventory management | | | | requirements without extensive customisation. For |
| and services provision. Reporting needs to be | | | | those the do provide a good level of functional fit, |
| available over the web with strict management of | | | | given the level of change in the sector, careful |
| security. Typically, Principal reporting requirements will | | | | assessment of the overall Total Cost of Ownership |
| differ for each Principal. | | | | (TCO) of the system is vital prior to selection. |
| - Physical Inventory. Depending on the nature of the | | | | |