Company Announcement - Doing business in the African pharmaceutical sector is tough, but network modelling can help take the guesswork out of significantly reducing cost and improving performance.

The challenge
In Africa, the pharmaceutical sector faces several challenges, says Riaan Burger, Solutions Architect at Barloworld Logistics. “While costs pressures and legislation changes are on the increase, companies must cater to pockets of demand while battling sparse infrastructure.” “We face a volatile environment coupled with regulated production and storage activities, strong competition and significant shelf life considerations – all of which demand a sound supply chain strategy,” says Kirk Nash, Aspen Pharmacare SA - Supply Chain Manager.

The good news is the pair have succeeded in beating the challenges thanks to a smart network modelling approach, the highlights of which they will present in a workshop entitled: Reducing the cost to serve through strategic supply chain modelling: An African perspective at the SAPICS 2015* conference, taking place from 31 May - 2 June at Sun City.

Why network modelling?
Network modelling is one of the most effective ways to quantitatively and qualitatively define the impact of an investment decision and logistics strategy on an organisation.

“It gives one a holistic view of costs within the supply chain to realise the total cost saving, bearing in mind that the sum of the individual parts may be greater than the whole,” says Nash. He says the network modelling project Aspen recently embarked upon allowed the company to have a holistic view of its total front end supply chain costs in order to best use its existing fixed network infrastructure, reduce total costs and improve customer service.

Network modelling is essentially about the appropriate use and deployment of capacity to serve a market with a particular service offering at the lowest cost. “Legislation, company policies and investment decisions dictate how that capacity will be used and established over time to serve the market within the competitive advantage drivers of the organisation. Various levers are available to protect and enable that competitive advantage but it is evident that in an ever-changing market the continual review of these investments decisions are needed, specifically around logistics,” adds Burger.

In particular, the dynamic of third party providers versus in-house logistics, even hybrid models, are to be evaluated to find the best service offering to market at the lowest cost. “But, employing a network modelling strategy doesn’t mean that you have to reinvent your entire network,” says Nash. “We have discovered that small, incremental changes within your existing network may have a significant benefit to customer service in terms of speed to market and in full. It also means a reduction in total costs and reduced business risk.”

Some useful advice
“The key challenges that need to be paid attention to in supply chain modelling is data, the definition of relevant and appropriate inputs into the model in addition to finding, building and operating supply chain network modelling software appropriately,” says Burger.

Nash agrees: “When network modelling, it is critical to understand the data fully and to convert it to useful information. The old saying ‘Garbage in-Garbage Out’ applies.” He also recommends that when choosing a business partner and respective tool, it is important to ensure that it is scalable and is able to use the captured data to run unexpected scenarios that one might not have anticipated at the start of the project. “Lastly, I’d say: be brave, think boldly and try many permutations,” Nash concludes. “Then, challenge the answers presented and push back to take your model to the next level.”